Exchange Invest Weekly 013

This was the rather epic week when the Hong Kong Exchange surprised us all with a bid for the London Stock Exchange who are eager to imprison themselves in a Sisyphean restructuring - or the acquisition of Refinitiv as it is better known.

Transcript

(Links are below)

This Week in the business of bourses, Hong Kong makes a surprise bid for the London Stock Exchange. Welcome to the Exchange Invest Weekly.

Welcome to the Exchange Invest Weekly. My name is Patrick L. Young. Thanks for joining us. In the business of bourses this week, obviously, the Hong Kong exchanges surprise bid for the London Stock Exchange scoops the headlines, a $39 billion dollar offer coming out of the blue in many respects, advised by Moelis, seems quite interesting: why only one small investment bank would be the people who are advising Hong Kong exchanges? True, we don't need to have a plethora such as the London Stock Exchange where it's quite embarrassing to see, well essentially pretty much every bank that's ever been known to man or beast, what how many? Wasn't Refinitiv 36? 39?

Something like that.

Anyway, looking at this bid: quite sensational noise, fire, fury and actually nothing totally significant per se with a lot of curious juxtaposition between Hong Kong and China. It was generally a week for the pooling of ignorance amongst the chattering classes of financial media. Those who appeared on TV channels were generally, well, mediocre, frankly, in terms of their insights. The one thing that the Hong Kong exchanges approach has demonstrated so far very clearly is the rather closed mindedness of white middle aged man in London. Apart from that, it's all to play for in this deal, George Trefgarne, Boscobel, PR comms guru wrote a very good blog piece on the topic of the Hong Kong exchange deal during the week, and the glaring comms shambles which, well, it was worth reading whether or not PR fascinated you. I'd already been discussing that topic previously in the course of exchange Invest daily. There are, generally speaking, only a handful at most, of positive correspondents. Maggie Pagano added in a note for subscribers to the reaction service in the UK. Christian May the editor of City AM give it a positive if obviously guarded welcome. But it's a worrying paralysis of negativity from the section of the ‘media analytical complex,’ who are railing against nations curtailing free thinking, but seem broadly incapable of consideration beyond their own narrow white male bourgeois biases, whether within the M25, or indeed, in the case of former chairman of the CFTC Giancarlo - with whom I finally find something to disagree! - those within the Beltway. It's quite incredible given the fact that actually a successful Hong Kong bid for the London bourse would benefit both cities. This is about creating a mega massive power house between the two largest international financial centres of capital in the world.

Nonetheless, this is of course tinged also with ‘Remoamian’ worry: for this is truly the ultimate deal in Global Britain! Forget LSE Refinitiv. LSE Refinitiv - yes! - built on the principles of global Britain and a post Brexit UK. But of course the terrible problem there is the execution risk. And the more we look at it, the concept of the LSE, itself a not terribly well integrated group trying to swallow whole the frankly irreconcilable to future reconciliation, staff of Refinitiv, nee Thompson Reuters, nee Reuters, is, well... it's impossible to see how they're going to manage to come together. These are people who've survived 10/20/30 years - whole careers, in fact! - with their heads down, effectively avoiding being a finite, organized, progressive, capitalist profitable body. And therefore, while the big data is a very exciting thing about Refinitiv, can we really say that the London Stock Exchange has clearly got the ability to manage to integrate that sort of a takeover?

The truth is it doesn't. And therefore, equally an LSE Refinitiv deal is going to leave the LSE group actually becalmed for the course of the next five or six years, unable to participate in any other sorts of significant merger or other activity, because it's going to be completely subsumed and consumed by, the acquisition of Refinitiv. That's why ultimately, I've moved away from Refinitiv as a good deal, in favor of the Hong Kong Exchanges bid because this provides a relatively simple clear path towards an integrated ‘win! win!’ There are also templates which we can clearly use in relation to, for example, how the Hong Kong Shanghai Banking Corporation acquired the Midland bank in the UK. There may need to be some political juxtapositions along the way, but at the same time, there is absolutely no justification in competition law, there is no justification in the UK takeover code for, say, Said Javid, the UK Chancellor of the Exchequer who has taken apparently personal control of deciding whether or not this Hong Kong exchange bid is valid: There is no reason for the Chancellor of the Exchequer to try and come in and stop this bid taking place. Indeed, if you think about it another way, it would be absolutely surreal for the UK Government, where even Mrs. May, the notorious frankly left wing, anti capitalist Prime Minister of the Conservative Party of old who wasted the last three years of post Brexit possibility, when even Mrs. May went to China and requested investment... how can she possibly? How can the Conservative Party under Boris Johnson, which claims to be a capitalist enterprise, go against the whole principle of free markets. Moreover, given the fact that HSBC is already the most prominent or pretty much the most prominent bank on the UK High Street… it is absolutely clear that the Hong Kong exchange is much, much less of a threat in terms of the ownership of assets. It doesn't have a particular security angle that anyone could get concerned about. In fact, all it ends up with is a series of transitory trading databases. Look at the London Stock Exchange itself. The London Stock Exchange is only trading 60% of the actual equity - at most - that is listed on the London Stock Exchange. Yes, it's a good business. Yes, it has a lot of useful assets. But is it actually something that is strategic? Something that is ultimately some sort of a national icon? No, and that's exactly where the crazed psychotic frankly, bigoted, closed minded protectionists of the media, who are in thrall to the agitprop of the LSE’s outmoded PR operation, really don't understand where modern markets have gone; apart from the fact that actually modern markets are just as much if not more, so about foreign exchange, about the trading of bonds, about all sorts of things in the world of derivatives, vastly more so than they are about pure equity.

That's not to say there aren't huge advantages in pure equity between bringing together for example, London plus Hong Kong, even Milan: the Italians would have to see it as being very attractive,because let's face it, what was one of the most embarrassing things that they saw in the course of the last number of years? Two key listings that disappeared from what ought to have been a natural home on the Milanese bourse, which was namely Ferrari, which went to the New York Stock Exchange, and more acutely, Prada, which was listed in Hong Kong. Why was it listed in Hong Kong? Because of course, in the last 10 years, Hong Kong has been the top listings generator in the world for IPOs, over five of those 10 years. That therefore gives us a very, very clear understanding of why this is such a powerful potential combination. And indeed, when we dig further into the whole issue of potential antitrust issues, unlike Deutsche Boerse - London Stock Exchange, the merger of equal desperation - where two sets of frankly desperate CEOs and C suites tried to bring together what was never going to be a viable operation thanks to antitrust: this (HKEX-LSE) is a viable deal. For those who start worrying about the clearing houses and so on, bear in mind the fact that very simply the London clearing house’s primary zone of business, its number one business line is not actually owned by the LCH! The LCH is merely the custodian, the operator, effectively a form of lessee of the services that it is providing to SwapClear which is actually owned by the banks. The banks can take that away, roll it up and move it to any financial center or indeed any other Clearinghouse they want to. They already have optionality to keep that in London if for some reason they believe there was some form of, well, cause for concern about the independence of the Hong Kong Stock Exchange.

So therefore, we have to think about the macro picture about Hong Kong. Can we really say that the UK government is going to have the nerve to turn around and essentially enunciate the idea that it no longer has faith in the “one country two systems” law that it negotiated? Will the UK turn its back on the colonial history that it has with Hong Kong? With the incredible process of capitalism and mutual investment that comes out of the Special Administrative Region of China? I personally don't believe so. I think it would be suicide. Indeed, it would be the death of the global Britain strategy. So therefore, where are we in the actual sense of the deal? Clearly, Hong Kong exchange is going to have to do a little bit of polishing in order to manage to make a better impact, it's probably going to have to raise the cash component of its bid, etc. But ultimately, given the fact that the London Stock Exchange has been such a Go Go stock for so long on a speculative basis: finally we have the bid. The bid is not going to come from the Chicago Mercantile Exchange. They told us that this week. It's not going to come from the Intercontinental Exchange. They explained (very painfully) at a Barclays conference during the course of this week, just how badly they'd come off an antitrust dispute with the CMA, the Competition Markets Authority in the UK, the antitrust regulator: when they were looking at the whole problem that arose from their acquisition of Trayport, which they had to divest and subsequently sell to Toronto Montreal Exchange group. Therefore, there are no bidders out there in the exchange Parish, who have the money who can buy and could consider buying the London Stock Exchange or will consider buying it because of course, as we know, Deutsche Boerse clearly cannot do so as a result of the bloody nose which they self inflicted through their, frankly, myopic stupidity in pursuing ‘the merger of equal desperation’ which was never a valid strategy. But still London Stock Exchange and Deutsche Boerse wasted several hundred million on advisors in order to reach the process, which for a lot less I could have told them was never going to work.

So within seven minutes, I knew that DB1 - LSE was a dog: “the merger of equal desperation” wasn't going to happen. This HKEX-LSE deal actually has legs provided that we don't see the British government buckling. And that is a possibility because frankly gutless British Government seems to be the order of the day in the course of the modern era. And despite the early initial promising signs from the UK government under Boris Johnson, it is still possible that Said Javid could turn out to be, well a rather small minded protectionist, but that, again, would be to destroy the Global Britain narrative. And frankly, it would be another huge nail in the coffin of the British Conservative Party, which if it doesn't deliver Brexit by the end of October is probably fatally wounded.

So when we look at that, obviously one issue that has arisen and I mentioned it earlier in relation to what George was saying (George Trefgarne from Boscobel) I'd already been talking about this in the Exchange Invest newsletter because the whole media messaging strategy of Hong Kong Exchanges has been, frankly dismal. I mean, this was a week where there was a great argument for subscribing to Exchange Invest: that sales job was being made indirectly for me by the plethora of half baked, often outright bigoted remarks, by the plodding ignorami some in the media which remain somewhat locked in a Stockholm Syndrome within London. It's quite commonplace. Of course, I mean, you often find the local media see their world as being well non Copernican. They believe that they revolve around the local stock market rather than revolving around all the elements of the stock exchange solar system. Therefore, of course, the LSE’s Dickensian Agitprop holds sway with these sorts of people. And therefore we see equally a large number of, well, apparently financial professionals and a smattering of academics, who frankly don't really have a great deal of perspective outside of what goes on in London. The expert talking Heads that we saw this week, we're statistically good at counting to seven (in terms of bids) and saying as there have been seven bids before, therefore, this one's not going to work. I'm not sure that on the basis of ‘past performance cannot be regarded as being an indicator of future performance, that that's actually statistically valid.’

At the same time, it has to be said Hong Kong exchanges demonstrated singularly some of the worst deal communication I have ever seen, during the course of the last week. Their comms message was woeful. They have a fatal weakness in PR and comms coming out of Hong Kong. That's not unique to bourses. It has to be said, but it's not helpful in bear pit of smugness based on little actual coherent expertise which amounts to British financial media. You know, communication of the bid was just dismal on the PR and IR level. Hong Kong exchanges, really need to up their game here. Having said that what we know from ‘the merger of equal desperation’ was that the London Stock Exchange and Deutsche Boerse also had to hugely revise their comms strategy within days of launching ‘the merger of equal desperation’ bid because they too were somewhat inept at what went on. We actually ended up there with layers of PR on top of layers of PR on top of agencies on top of handlers on top of... well, it was a mess, a total mess, and that's how they got to spending several hundred million on what was ultimately an utterly futile deal. But at the same time, ultimately Hong Kong Stock Exchange need to pull their socks up, they need to improve their whole PR messaging handling. And at the moment, it appears that Hong Kong itself is incapable of doing that. A great deal more strategic communications is needed. They are not actually reaching out and identifying the people overall who are actually in favor of their deal which I find quite remarkable because there are a great many people who see the light who understand what competitive forces mean..Not these old line, archaic fashion unfashionable concepts that we have to adhere to the London Stock Exchange! As I've always said, there will always be at least one major global stock exchange in London. The ridiculous conceit is that that stock exchange needs to be the London Stock Exchange.

Hong Kong exchanges provide an opportunity for London Stock Exchange group to be rescued from their own relative inability to manage to integrate their future purchase of Refinitiv to define, in fact, redefine capitalism so that we can aim across from the UK into Asia and develop a truly, truly amazing new platform. Think about, well, Saudi Aramco, the upcoming Mega IPO that people have been really really fascinated to see coming in the near future.

Saudi Aramco were uncomfortable with purely listing in London because of the Brexit conundrum. They were at the same time not quite comfortable that Hong Kong was just broad enough to reach the rest of the world, ex- simply the Hong Kong Southeast Asian firmament, it was attractive, but not quite a killer. Imagine what that sales pitch would have been like if we had been able to pitch them something like an IPO solution which involved London plus Hong Kong, and indeed, possibly also Milan? That I think would be a killer application that could really take the battle directly to the hyper liquid US stock markets and IPO havens of the New York Stock Exchange and Nasdaq. And indeed, it goes without saying that where the LSE is PR and PR where the Hong Kong Exchange has proven tragically wanting on their PR and IR as well, to a point where they're arguably even worse this week than the London Stock Exchange: quite an achievement, it has to be said... The really class entities in this business who can do their PR incredibly well on a remarkably reasonable budget are in fact, the New York Stock Exchange and the Intercontinental Exchange group as a whole and also, of course, Nasdaq. Therefore, Hong Kong Exchange needs to be emulating their best practice as the undisputed top tier players and communications in the parish. It's an exciting time for Hong Kong exchanges. I wish their bid well, but they have a mountain to climb to improve the PR/IR comms dynamics, particularly as they're fighting against the classic reaction, the reluctance to change, which marks so many financial centers, particularly London, which at the moment is going through an appalling period of introversion, driven by many people being simply scared of the future and scared of escaping the shackles of Brussels which is hopefully inevitable on October the 31st.

Meanwhile, some very exciting news which emerged from the Intercontinental Exchange, it has not been confirmed yet, it was first of all picked up by FOW Magazine. It looks as if the Intercontinental Exchange is aiming to launch an Abu Dhabi based futures exchange. What an absolutely brilliant idea! The only evidence we have so far is that the Intercontinental Exchange has submitted an application to the International Organization for Standardization seeking a market identifier code (MIC) for an Abu Dhabi based futures & options marketplace. If it was launched ICE futures Abu Dhabi would be the exchange group's first venture in the Middle East. Now, there has been no confirmation from ICE about this, I hasten to add and it may well just be a speculative administrative venture. But at the same time, the concept is really mouthwatering exciting. Using the excellent world class ADGM regulatory structure that’s Abu Dhabi Global Markets: it really makes a huge amount of sense to be a base for a sound Anglo Saxon legal base, not Sharia law, financial center and financial exchange platform. The ADGM itself exists on a delicious Island. It's isolated by bridges from the main part of Abu Dhabi itself and as you cross those bridges, you go from Sharia law into this perfectly formed, elegant, modern digital pulsing financial center that is ADGM, the Abu Dhabi Global Market. You can be downtown in the center of Abu Dhabi in five minutes, but at the same time while you're in ADGM, you are completely bound by an Anglo Saxon style legal system. Very, very exciting concept similar to what's being done in Dubai, for example. And of course, given the fact that ADNOC the Abu Dhabi National Oil Corporation have been proposing to overhaul the way they trade oil from their Abu Dhabi base recently, that could also provide some very, very exciting opportunity and optionality for the Intercontinental Exchange. Moreover, one emirate across I'm sure there are going to be a lot of people are going to be very worried because, of course, an ICE venture in the region would be a direct shot across the bodies of the DME. Now that's the Dubai Mercantile Exchange, albeit wags I think are nowadays saying that the M between Dubai and exchange stands in this case for Moribund.

In other deal and trade news this week. There are rumors that the Bratislava Stock Exchange in Slovakia has been in talks with the Warsaw Stock Exchange. Certainly they've been incredibly close in terms of discussions over the course of years, although there is no clear evidence they've ever actually been trying to merge. That said, Bratislava exchange, which incidentally is much more a bond marketplace than per se an IPO and stock exchange listed venue, instantly, were quick to offer a very rapid denial that they are not in talks with the Warsaw bourse.

In other interesting market creation plans, Turkey is looking at creating its own national credit rating firm: could be very interesting. Borsa Istanbul wasn't immediately available to comment but it would seem that the plan is based around part of the BIST. Infrastructure as the national chosen infrastructure provider of the Turkish state with very close links to government. But what we certainly know is Turkish politicians have long complained about what they perceive as being unfair treatment at the hands of foreign rating agencies.

Over in Dublin we had some unfortunate post deal news. Another 9.7 million euros of extra costs have been racked up after the sale to Euronext. This really is turning into a rather sorry tale. That brings the costs up to nigh on 24 million euros including a 5.7 million payoff to Deirdre Somers - well good for her - the departed CEO but it really does raise a lot more questions as to why anybody ever thought this was going to be a good deal for Ireland or the Irish Stock Exchange. Perhaps it could be some form of well, tax deal where Euronext are deliberately pushing cost into the Dublin exchange in order to try and improve the future financial position of Euronext as a group... who knows? It's not clear.

Meanwhile, Cum-Ex, the dividends scandal. It continues to fester. Prosecutors raided Commerzbank over the whole fraud during the course of the week. We've heard of many people who are on trial. There are a couple of them looking at potentially 10 year jail terms in Germany from the UK who were in the media this week. At the same time, finally, we do see it touching the parish of exchanges and market infrastructure directly. “Clearstream staff suspected of misleading authorities over tax fraud scandal” ran the headline in Bloomberg. This is worrying. This scandal has not yet reached the front pages in the way I suspect it will in the near future.

Meanwhile, over in the European Union, ESMA, well, sadly we have a defeatist timeline coming out of there. The European Union whose priorities ought to have been a consolidated tape before they indulged in their MIFID II disaster are now making all manner of excuses. Years and years and years, it seems would be the timeline to deliver a unified tape. That's simply not acceptable. MIFID One is well over a decade old since it was implemented. And yet we still don't actually have a single source of market prices. Why? Why did we waste so many years and thousands of pages of poor innocent printed out trees in order to deliver the rubbish which is MIFID II, which as I mentioned a couple of weeks ago, even the Germans, those loyal supplicants to the European Union, are complaining about being overly prescriptive. Indeed it has to be said, had we left the job to just the proven execution skills of say ICE or NASDAQ, I would have thought some form of interim solution for a form of unified EU ticker tape could be found in weeks if only the European Union had the focus and the political will.

Finally amongst our major stories this week: Happy birthday to the New Zealand Stock Exchange: 150 years young. Great to see the Antipodean venue still surviving independently and still looking for some very exciting opportunities for the future. Indeed, the Financial Markets Authority the regulator, and New Zealand exchange along with EY produced a very interesting report this week, ”Growing New Zealand's capital markets” looking 10 years out towards 2029 with a vision and growth agenda to promote stronger capital markets for all New Zealanders. All I can say is happy birthday to the NZX team. And I wish Chairman James Miller and all of the staff at NZX a very, very successful week of celebrations, and moreover, a very exciting prospect of developing their agenda, the NZ’s business and indeed a deeper better capital market for New Zealand and the Kiwi economy throughout the world.

In people news this week BME the Spanish exchange have created a new post. They are going to have a chief data officer. Arturo Marino whose was until this appointment the IT manager in Groupo Morabanca has been given the job. His functions as CDO are, the digital transformation data and analytics, innovation and new technologies! Whoa, that's quite a brief… - support for the implementation of new products, projects and coordination of IT with information security. This is all part of the ongoing well frankly, it seems to be revolution they call it changes and the company's management team as the BME moves on post the Antonio Zoido CEO era.

Over in Scotland, the upstart new Scottish exchange project Heather and parentheses, yet another new UK Stock Exchange just for those who foolishly think the London Stock Exchange is some form of a monopolist - and we haven't even mentioned CBOE yet the largest single trading venue in Europe of shares across the EU 28 who are of course also headquartered in London, let alone other venues like Aquis, and so forth. Anyway, Project Heather have appointed as head of market operations Andy Clarkson who brings 30 years experience in asset management. Having worked Of course in Edinburgh, Scotland, Asset Management Heaven, previously being head of market operations for amongst others Scottish Widows

in Australia, Ken Henry the well, until recently, one might have said indomitable, former chairman of one of the leading banks, director of the Australian Stock Exchange, long standing Treasury Mandarin and man who seems to have run aground in his career over recent banking scandals, etc. There is a huge debate over whether he's going to be allowed to continue as the director of ASX various of the share proxy voting services seem to have come out against his reelection.

I have to admit that ultimately when considering the life and career of Ken Henry, there is now just too much data which suggests he has another well unfortunately overbearing former civil servant with an ego who has ultimately destroyed his own career with some staggeringly unfortunate public remarks. Those remarks, in particular involve a presentation in front of a parliamentary commission over the issue of certain banking frauds that have been taking place in front of a Royal Commission and Australia recently. To that end, I think sadly, Mr. Henry is probably not a valid candidate for the ASX board. And indeed, I think the ASX board in its entirety may have to, well, look at the concept of a large dose of regeneration in the near future.

Too many of those figures seem to have been around too long. And indeed Moreover, the ASX needs to get out of its monopolist mindset and become well the crusader for capitalism, which it was when it was first given the great opportunity of going from a mutual member organization to being an electronically traded entity, to being a for-profit entity to being listed on its own exchange, all at the time, somewhat groundbreaking moves 30 years ago, and yet what we have now is: who grabbed the headlines this week? Well, it was the Hong Kong exchange by grasping the mettle and seeking to buy the London Stock Exchange. The ASX needs to get its mojo back. The ASX needs to become a crusader for capitalism. And unfortunately, so far, it doesn't seem to be doing that. And that's probably why it needs to regenerate the board. And indeed, probably, it is difficult to see what justification there is for reappointing Mr. Ken Henry.

Over at BitMex they have been suffering quite a large quantity of upheaval. Their chief operating officer, their head of compliance, amongst others have all left. Why you might ask? Well, of course, I think it could be somewhat related to the current CFTC probe into their business. But Max aren't taking it lying down. Not only are a large number of staff disappearing, but also they've hired a veteran general console. Derek Gobel, a very experienced figure in the field of US finance is going to be joining and presumably has a remit to try and knock the BitMex exchange into some sort of ship that's going to be more comfortable for the CFTC as a whole.

Now the honourable Christopher Giancarlo has joined the board of directors of the American financial exchange, the latest venture from the brilliant mind, the beautiful mind, of Professor Dr. Richard Sandor, I wish him every success with that appointment, even though if I must say I'm not convinced by his somewhat knee jerk and well I suppose Trumpian remarks against the Hong Kong exchanges bid to buy the London Stock Exchange.

For those who wonder about where the order of the trough has been this week, well, we've had the blob making some rather unfortunate appointments in my opinion. Olly Robbins was knighted by Theresa May in her leaving honors list as prime minister, a standard practice in the UK to daub a few honors on top of those who've served you when you've been Prime Minister and you're leaving office. He's known without much affection in the UK as ‘oily’ in much of the UK media and he's going to... Well, where do you go when you're a blind europhile and you believe entirely in ...well, some sort of a political stitch up? Oh, oddly, he's going to go to Goldman Sachs! Who would have ever guessed that after leaving what was frankly, the UK is dismal strategy of supplication not negotiation per se for Brexit under the auspices of Theresa May herself.

Meanwhile, over in Brussels, they announced the new European Commission and frankly it's a rather sorry affair. Yes, there do happen to be 13 women and 14 men. So we've achieved some sort of parity of the sexes, but really? Well first of all, it looks like the Chicago Mercantile Exchange Board on steroids. I mean, 27 commissioners, we've got eight vice presidents...and some of these vice presidents are charged with frankly rather curious concepts. One of them has the remit of ‘protecting the European way of life.’ What does that amount to: long lunches with wine and lots of holidays? I don't know either. City AM noted with a certain degree of justified cynicism “Yesterday, Margrethe Vestager, the EU’s pitbull in the era of tech powerhouses, was given a second run as chief competition commissioner – except, this time, with superpowers. Now also the vice president for EU digital affairs, she’ll have the ability to expand her reach outside of the antitrust arena and into… well, we’re not quite sure yet.”

At least she isn't actually under investigation. What's absolutely disgraceful about many of these nominees are that several of them are currently under some form of criminal or other investigation by authorities for matters such as well fraud, expenses, fraud, etc. And as we know, indeed, one of the commissioners, he actually got accused and was prosecuted for, insider dealing in the course of the last few years.

True Vestager has been, as a competition Commissioner, coherent in places with relation to say the merger of equal desperation. Albeit that was hardly a challenge. I mean, I think anybody with a nous of common sense could see that this was a blatant monopoly creation from a mile off. It's just a pity Deutsche Boerse, LSE and their advisors had something like half a billion dollars worth of myopia in the process which wasted 18 months of management time or longer. However, Vestager sees American technology as a challenge to Europe, as opposed to wanting to build Europe from the bottom up, which is something the European Union is physically incapable of structuring itself towards, because it's essentially a crypto communist top down organization. The European Union remains rooted in dairy cheese and protectionism. Ah, maybe those are European values! The Von Der Leyen presidency looks frankly highly dubious, and that's just with the appointment of these commissioners and what a ragbag lot many of them are. With such a top tier of protectionist thinking blatantly apparent, I'm frankly not optimistic that the EU will do more than accelerate its existing tailspin or at the absolute best maintain a degree of stasis while trying to paper over the cracks of well, yes. Now then, we come to the Euro: 10 basis points interest rate cut this week 20 billion euros of quantitative easing every month. The eurozone looks sickly Ladies and gentlemen, that's not investment advice. That's just a standard financial health warning. This looks as if well, we started with “whatever it takes.” And as Mario Draghi is departing office as the head of the European Central Bank, the ECB, it really really does look very, very worrying what's going on in the European economy itself.

Back to the jobs news in the parish this week, IEX co founder and chief operating officer John Schwall is going to retire. All the very, very best to him. And we also have a story of redemption of one sort. Elmer Funke Kupper, the former CEO of the ASX, the Australian Stock Exchange: he was forced to resign as a result of a kerfuffle that had been alleged during the course of his previous time as the boss of Tab Corp. a large parimutuel betting organization in Australia which was originally owned by the government. So he is, as he said, “delighted with the outcome and looking forward to getting on with my life” after actually spending what must have been a very stressful three and a half years. There are many many ways in which we have disagreed with Elmer Funke Kupper over the years many things which he did when managing ASX which I find very difficult to stomach. But I wish him all the best rejuvenating his stalled career. He is a free man, he has been cleared, and I hope that he will manage to prosper in the future as he returns to Australian corporate life.

Over in markets and regulation, the National commodity clearing limited that's the CCP Clearinghouse which is a wholly owned subsidiary of the national commodity derivatives exchange NCDX in India has got a renewal of its license for three years from SEBI, I have to say I find it quite remarkable that Sebi is so prescriptive that it keeps everybody hanging with their licenses over these sorts of three year terms, but at the same time good news, just as SEBI itself appears to be increasing access to commodity derivative markets in India

In technology, not a huge amount of news this week, IOSCO are recommending synchronizing clocks used for Time Stamping to put them all into UTC: the Universal Time Zone. Yeah, it's a great story. But what about tolerance? I mean, the problem is: a unified measure is one thing, but we all know that time is not actually uniform across every server network due to a multiplicity, a cornucopia, a near infinity of different issues. There is a danger here the regulators are trying to have precision where the metric doesn't exist at the micro, let alone the quantum level.

Exciting technology and product development news: the Turkish Takasbank that's essentially part of the settlement house and clearing house of the Bursa Istanbul group: they've announced that they're going to create a blockchain platform for gold trading. it's dubbed BIGA I don't know if that's going to be “Big-er”, or indeed “BIG - A” which sounds a bit like a rap star. Anyway, Takasbank’s new project aims to enable people to transfer physical gold stored at the Bursa Istanbul Stock Exchange. Very, very interesting move. Welcome, given the fact that of course, one of the exchanges that were added to the portfolio of the original borsa Istanbul - when was that, five years ago? - in terms of a series of sort of government engineered mergers was also of course the Turkish Gold Exchange itself.

Meanwhile, Eurex: they're scrapping fees to attract euro clearing from London ahead of Brexit. They've launched incentive programs to support their Brexit preparations they've launched into product spreads for fixed income futures. Look, good luck to EUREX. They have to try this. I'm not convinced that they're going to prove a big winner at the portfolio level, but they essentially have to try it. At the same time it looks well, probably like something which is more akin to being a Sisyphean effort but it's essential. EUREX must try this even though I think it's going to be very, very difficult to break the bank - SwapClear monopoly within LCH or at least operated by LCH, as we should remember. And a sister entity of the London Stock Exchange to LCH itself Curve Global have rolled out their “all you can eat” trading fee scheme: Good luck to them, the MCX the Multi Commodity Exchange in India, they are launching trading in three stock indices. Meanwhile SEBI has started fresh talks on weather derivatives after receiving a proposal from NCDEX, the National commodity and derivatives exchange.

Or in Asia, the Singaporean low sulfur fuel price that's an oil index created by Argus: APEX the upstart market there in Singapore have signed on to license that for some proposed new derivatives.

And then of course, there was perhaps the most interesting product news of the week, it came from the Intercontinental exchange. Again, look at the Intercontinental exchange: no acquisitions, no high level bids. What are they doing? Incrementally growing the pie. One of their moves we think is going to be energy oil and gas in Abu Dhabi: What an interesting prospect in the Middle East that could be. Then also they signed a deal this week- fabulous deal trade with Tradeweb markets, part of course, of the Refinitiv group at the moment, but a separate listed entity in its own right. Very, very clever. Can you believe there was never actually a proper closing settlement benchmark price for US Treasury bonds? US cash treasury bonds, I mean. How incredible that everybody missed that out? ICE benchmark administration IBA have signed a deal with Treadwell markets. It's a brilliant first cooperation between ICE and Tradeweb. It provides top tier reference data to the world. It builds elegantly on what has been the almost stealth rise to prominence of the ice bond business itself following the launch of ice bonds after the Bondpoint and TMC acquisitions. That's not to forget the excitement we have upcoming: the ETF hub between ICE and BlackRock for bond trading. Anyway, for those who are interested, the methodology minutiae can be found on the ICE website, but prices are being taken off the Tradeweb platform every day at 1500 Eastern and published at 1545. The process is now live and clearly it's exciting that we have a proper IOSCO friendly financial benchmark principle, coherent benchmark closing price for the US Treasury market.

Of course, there's a lot of speculation still on LIBOR, multiplicity of links, which I will post below this post all about different stories and in fact we had dozens more during the course of the week in exchange invest if you're not a subscriber: remember, you're getting some information some past the weekend. You could have had this information every day on your desk every morning. If only you were paying the licensing fee for the exchange invest daily newsletter, the business of bourses delivered straight to your trading desk

LCH, they've set a euro swap clearing launch that's going to be launched on October the 21st based on the European Central Bank's new euro overnight risk free rate.

Meanwhile, demonstrating the fact that for all those who say Chinese protectionism, worries about bids from Hong Kong, etc, etc. the CME are getting their hands dirty - and quite rightly so: they're launching a new Shanghai gold futures contract on October the 14th. Connecting global market participants to the Chinese physical gold market through the Shanghai Gold Exchange. SGE

Good on the CME. But at the same time it does lead you to wonder about, well, all the speculation about what's happening in the LSE in Hong Kong and how potentially the UK government might step in to stop that. And by the way, here's a little footnote fact for you A factoid to bear in mind. During the course of even last year, trading in Chinese Yuan / US dollar pair in forex was actually doing bigger volume than the Euro / US dollar pair in? Yes, you've guessed it, the London financial center. If the UK turns its back on the Hong Kong exchange deal, it does so at the peril of truly endangering the city of London's global free market prominence in a way that is vastly by an order of magnitude greater than any possible risk to a no deal Brexit.

Meanwhile, China is working proactively towards launching a live pig financial futures contracts. That's going to be good news as port prices have been soaring during the course of recent weeks.

Equally, apparently we've got the Saudi Aramco IPO going forward with nine banks getting top roles on what could be the world's biggest IPO.

And of course, equally, an interesting story came out this week from Bloomberg repeated in the Singapore Straits Times amongst other syndicated sources. “The battle for IPOs is heating up amongst Southeast Asian exchanges.” Of course, QV if you have well say, a London Hong Kong powerhouse, how would that look when it came to bidding for this IPO flow in Southeast Asia? #askingforafriend.

Ladies and gentlemen, that brings us to the end of a Hong Kong London centric week in markets. If you've enjoyed this, come along, drop by and Subscribe to exchange invest weekly where you can read the PLY pith daily. We have covered at least another hundred and 50 stories during the course of the weekend our newsletter, but this has given you some of the headline attractions of what's been going on in the business of bourses. My name is Patrick L Young. Thanks for joining me on the Exchange Invest podcast. I wish you a great week in markets.

Show Links

NB All links were previously in Exchange Invest Daily Issues for the past week along with over 100 other stories you missed by only listening to the podcast and not paying for our daily email newsletter:

Story 1: Hong Kong Exchanges Bid For LSEG

Hong Kong Exchanges And Clearing Proposes Merger With LSE

Reuters

Unsolicited US$36.6 Billion LSE Bid Kicked Off By A Surprise Visit

South China Morning Post

Hong Kong Exchange faces Uphill Battle With $39 Billion Bid For LSE

Reuters

Factbox: How The Lse And Hkex Stack Up

Reuters

It’s Tempting, But The Devil’s In The Details

City AM

UK Could Block Hong Kong Bid For London Exchange