Exchange Invest Weekly Podcast 035

Transcript

This week we reached a little milestone in our daily newsletter of the bourse business: Issue 1700 of Exchange Invest, which coincided with the year Protestant Western Europe adopted the Gregorian calendar, albeit England opted to hold back control until 1752, when it too moved from the Julian to the Gregorian calendar. 1700 feels like quite a milestone for Exchange Invest Daily, our newsletter of the bourse business. If you look at history: 1700 AD left us on the cusp of the early industrial revolution and a great leap forward in all forms of recognizable modernity. EI will endeavor to integrate that historic momentum with our own progress.

And so to the week in bourses, where the headlines include LSE and BME results, the European Banking Federation goes all pro business on Brexit, while TMX falls over, as it seems to be doing once every two years these days, while the London Stock Exchange decries the idea of selling assets so they can do the Refinitiv deal.

Aquis purchase of Nex exchange approved by the FCA. And indeed there's much more including Seth Merin handing over the CEO reins at Liquidnet and NASDAQ appending a great message promoting the parish.

Boca has been cancelled after an apparent delegate outflow as have other parish events. Welcome to the bourse business weekly digest; it's the Exchange Invest Weekly podcast with me Patrick L Young.

And so to results: London Stock Exchange, impressive numbers coming in, in the course of the last week. Indeed, they decried the concept that they were ready to sell assets in order to get the Refinitiv deal across the line, despite a story to the contrary in The Times of London, and indeed Of course, those many bidders circling like sharks in the water such as Deutsche Boerse, and indeed Euronext, if by any chance, European Union antitrust should be able to shake Borsa Milano out of the London Stock Exchange group.

Aquis Exchange: the FCA, the UK regulator have approved their acquisition of the NEX exchange, formerly owned by CME and of course, part of the Michael Spencer NEX Empire. The SME listing bourse and the trading market is now going to be incorporated into the Aquis Group, which gives it a headline European Stock Exchange license, and it's going to be renamed the Aquis Stock Exchange as a group. That's great news for Aquis who are probably pleasantly surprised the FCA didn't take longer to approve the deal which helps further transform Alisdair Haynes fast developing platform.

BME reported the Spanish extend results and net profit of 122.8 million euros in 2019. Meanwhile, the TMX, they've agreed some share buybacks. And for those of you who love the whole concept about, well, investing over the very, very, very long term, and can manage to live, well, essentially longer than the longest humans have managed so far. Interesting news, the four best performing stock markets since 1900. Australia, the US, South Africa and New Zealand.

In terms of new markets, well, at least one demutualised market this week: Nigeria is going to be joining the public company fray as oft trailed in this podcast and indeed the daily pixels of Exchange Invest News. Finally, the Nigerian Stock Exchange via court order is demutualised and is soon going to be listed on its own exchange.

Meanwhile, interesting to see China have launched a registration system for bond sales.

In crypto land some interesting nuggets, local bitcoins weekly volume has dropped to the lowest level since 2013. Very interesting. Does it mean that the exchanges are finally proving fungibly acceptable all around? Well, at the same time, it has to be said that Binance has been undergoing similar to TMX multiple technical problems. Once again this week, the system fell over, resulting in apparently a little bit of a spat between various of the crypto kiddy exchange CEOs.

Extolling the virtues of the industry.this week was a Adena Friedman and the NASDAQ team capital is part of the coronavirus cure, an excellent opinion piece in the Wall Street journal. Very, very welcome. Indeed it notes what finance can do in these and other circumstances and emphasizes the robustness of markets such as NASDAQ during busy times. And indeed, while we may highlight the fact thatTMX and Robinhood were the people whose technology fell over during the course of the week, well done - well run! - by the parish! We've had spectacular volumes, and one must applaud the excellent work of the many exchanges that are being powered by NASDAQ, the London Stock Exchange, Intercontinental exchange, the Hong Kong Exchange, CBOE, indeed the CME and many many others, all of whom have provided 100% uptime during what was a spectacularly volatile high volume week in markets.

Still on the coronavirus, in case you missed it. The biggest victim of this pandemic so far may yet prove to be the credibility of the Federal Reserve System, given their long standing viewpoint of quasi- contempt where it has to be said “quasi” is a polite word for “utter” towards sensible monetary policy via their contemptuously wackily insane insouciance of the well, it has to be said, some might say arrogant nutters, who've been entrusted with the sanctuary of money, masquerading as central bankers. They produced a half point interest rate cut, which is of course in contemporary terms huge, actually as fractions of nothing or surely nothing, at least in my old school mouse, which is probably no longer relevant in the work world of PC maths. Their 50 basis point rate cut was rapidly shrugged off by markets and perhaps that means that coronavirus is drawing a realization that it is dawning that the last decade or so was one of weird misvaluation brought home by very, very, funny money from central banks.

Indeed, bidders for assets may be worth considering scrap value and trying to work out where on the scale everything is now capable of being sold. Or as Philander Chase Johnson memorably mused in Mad Magazine: “cheer up, the worst is yet to come.” True, I expect a bounce is coming. But as a long term investment position, I must admit to being increasingly a fan of foetal.

Of course coronavirus has ripped through industry meetings. IHS Markit led the way: they canceled CERA week. The African Stock Exchange Association, they postponed their ninth Building African Financial Markets seminar. Then at that point in time after we'd started musing on just whether or not the good folks of the FIA could manage to keep their event going... We heard news that Boca had been canceled and then subsequently trailing the field, the World Federation of Exchanges’ micro niche event that was going to take place in Malta at the end of March has also been cancelled as a result of COVID19 concerns. Indeed, it was interesting because with Boca biting the dust, there had been, well, essentially a series of quarantine moves by the FIA as they desperately tried to keep the annual festival of art deco indulgence of the month, of Boca Raton resort going for another year, this being its 45th event that's quarantining had been offered leaving well, several worrying questions. It seems that people who came from generally China were not going to be there, as were many other people from Southeast Asia. Indeed, ultimately, Northern Italy was going to be quarantined too leading us to deep concerns: was the parish’s leading one woman brand. “Antonella” also going to be excluded amongst those northern Italians? Ultimately, cancellations had exploded around the FIA resort, and therefore Boca 2020 was tragically doomed. a real shame for the organizing team of the FIA. elsewhere. Finally, the LSEG they canceled their Romanian Capital Markets Conference this month too. I suppose at least the good thing is, after a bracing week, at least the one good thing for the FIA CEO Walt Lukken is consoling himself with the fact he isn't Mike Bloomberg

Over in coronavirus land. Still various offers have been put out by auditing and accounting bodies throughout the world. But it looks as if actually, despite being offered some delays: for instance, in Hong Kong, they're expecting something like over 80% of listed companies to be able to post their earning results by the expected March 31 deadline without seeking an extension. Very good news for HKEX. So the companies are so well organized. Similarly, the UK and the USA are also looking at attempts to try and manage to mitigate the risks relating to the possibilities of filing in a time of COVID-19.

Ultimately, in people news, the biggest news of the Seth Merrin, the founder, the chairman and the CEO of Liquidnet, is going to relinquish the post of CEO. He's stepping away and giving that position to Brian Conroy who joined the company just over a year ago. It'll be interesting to see. I wish Seth every success in the future. But can he successfully stay away from effectively running the company that he himself gave birth to? It'll be interesting to see. Meanwhile, in India, the Sebi chief AJ Tyagi has got a six month extension to his contract. It'll be interesting to see what goes on subsequently, and whether that is possibly further extended, as many people have been suggesting.

That brings us elegantly to the nexus of Brexit and regulation. Britain wants binding obligations on access to the EU financial market as the sabre rattling goes on between the UK and the EU. As we said, I'm not really sure the EU does ‘binding,’ but this is at least a coherent demand and a weekend where some of the latest wackier thoughts going around in the negotiating vein where a group of French people wanted the body of the exiled King Louis Phillippe I or Napoleon III, as he might have been better known, returned from the UK where he died in exile nearly 200 years ago.

Ultimately eying access, Britain has also said it is not going to seek to undercut EU financial rules: does that ultimately cut the UK‘s opportunities to make free trade deals and better markets the world over? It will be Interesting to see...but clearly behind closed doors, the finance industry is screaming blue murder at the idea that it's not being listened to as much as it used to be under say the Gordon Brown administration where bailouts for banks were a matter of forethought. Ultimately talking about banks: very interesting, best intervention in the Brexit post trade negotiations. This week, the European Banking Federation, the umbrella group for 32 national banking lobbies, and some 3500 lenders across the EU and indeed beyond are planning to ask Brussels to ensure the trading and banking services flows smoothly in both directions across the channel. Echoing appeals from the City of London, the EBF is to be firmly applauded for their coherently pro business and indeed pro prosperity stance. And it has to be said this is a pro EU approach to making the world a better place and ignoring the petty politics of pygmies. Determined to make a stand which to use a Belfast phrase “cuts off their noses to spite their faces.”

We are now beyond the politics of Brexit or at least we ought to be. Now we need to make the new era work and the European Banking Federation are to be applauded for their mature perspective. To which end, of course, the City's fathers have been panicking about the fact that UK finance could be eclipsed by cars in a US trade deal, as was for example, a Reuters headline this week. The City's fathers truly brought this upon themselves and the markets of London with their narrow minded remoaner, and indeed, general moaner behavior ever since the banks were ludicrously bailed out 10 or 11 years ago. Their abject failure to see ahead of the curve has ultimately led to the situation where finance does seem to be somewhat of an afterthought in a trade deal. To that end, an excellent OpEd this week in the City AM newspaper was: “the city must stop complaining and start talking about the opportunities of Brexit.”

PLY: Truly a topic I can relate to. Being right about Brexit (i.e. noting it was a plausible outcome and further noting it had to be executed post referendum). Those things have been frankly expensive… A lot of people have worked hard to keep Exchange Invest and my other ventures out of their spending pattern in recent years for purely political and one might say spiteful and narrow minded, motives. That is, to put it mildly, a disappointing display of their for want of a better term, character. At the same time, a lot of EI readers are passionately pro EU and have been deeply upset by the Brexit process. That is entirely understandable and I appreciate the robust dialogue we have enjoyed on the future of the EU which I hope the EU can manage to succeed and approach the Brexit environment and I appreciate that we have materially agreed to differ in places, my European friends and I... but at least the arguments have been laid out and not hidden like some sadly tarnished legacy media, which have either proven to be entirely remoaner or simply denialist about the Brave New World. On the macro I appreciate Exchange Invest often has harsh words for underperformers. It came as a culture shock to the bourse business, which was used to sycophantic media for all too long when this newsletter appeared and offered opinion without fear or favor. That has upset some, a few are still mega huffy, #theirloss, but the truth is, we want to say positives, we want to say positives about the EU, about the UK and about the markets throughout the world. Covering up for failure does not improve the bourse breed.

To that end, this article that the city must stop complaining and start talking about the opportunities for Brexit. And indeed, the EBF’s intervention hits a raw nerve, the city of London's grandees frequently been scintillatingly out of touch with the Brexit Zeitgeist. And indeed, if I could predict that Brexit was highly plausible from thousands of miles away, it ought not to have been difficult for those with fully staffed information flows. Whereas the City fathers themselves made a rare political declaration: dumbly in my humble opinion. Right now, the City of London's financial leaders need to get behind Brexit. It's time to go beyond the Remain or worse still, remoan labels and just get on with business. A strong Britain, a solid London financial center is good for Britain. It's good for the EU, and it's good for the world. We need to get beyond silly win lose binaries, the future can be prosperous for all parties in and out of the EU, anywhere in the world. This isn't a high-handed call for prodigal son repo. It's a pragmatic call that it's time to win the prosperity of a new era for us all.

And on that note, ladies and gentlemen, I'm going to call a halt to our weekly review podcast. Thank you for listening. This has been the Exchange Invest Weekly with me Patrick L Young. We will be back next week by which stage we have reached - Wow - the dizzying number I do believe: 36 in our podcast series. This has been issue 35 of the Exchange Invest Weekly podcast with me Patrick L. Young, wishing you a great week in albeit volatile markets. Thanks for listening…

Links

London Stock Exchange Group Plc Preliminary Results For The Year Ended 31 December 2019

LSEG

London Stock Exchange On Track To Close Refinitiv Deal As Clearing Jumps

Reuters

London Stock Exchange Chief David Schwimmer Not Ready To Start Horse Trading On Takeover

The Times

London Stock Exchange's Future Depends On Brussels

Wall Street Journal

LSEG Preliminary Results For The Year Ended 31 December 2019 Conference Call

LSEG Preliminary Results For The Year Ended 31 December 2019 Presentation

LSEG