Dec 21, 2023 13 min read Exchange Invest Weekly Podcast

225 Exchange Invest Weekly Podcast December 23rd, 2023

This week in the parish of bourses and market structure: T+1 Month Settlement Window For The UK Group To Suggest A T+1 Plan, TMX Buys VettaFi, Hearty Congratulations To Bonnie Chan On Becoming The First Female CEO of Hong Kong Exchanges, CBOE Unifies Its Canada Assets,

Transcript:

This week in the parish of bourses and market structure:

T+1 Month Settlement Window For The UK Group To Suggest A T+1 Plan

TMX Buys VettaFi

Hearty Congratulations To Bonnie Chan On Becoming The First Female CEO of Hong Kong Exchanges

CBOE Unifies Its Canada Assets

My name is Patrick L Young

Welcome to the Bourse Business Weekly Digest

It's the Exchange Invest Weekly Podcast Episode 225

Good day, ladies and gentlemen, this is a very brief reduction of highlights amongst the key headlines from the week in market structure. All the analysis of the many events and happenings from the past 7 days can be found in Exchange Invest Daily subscriber newsletter, the unique guide to the bourse business sent daily to your inbox.

More details at ExchangeInvest.com

And don't forget if you want to keep up with what's happening in the world of bourses, now is the time to make your New Year's resolution. Sign up at ExchangeInvest.com. You can have a 30-day free trial to the ‘exchange of information’

Over in Bitcarnage:

In the run up to Christmas, in the parallel universe of Crypto V1.0, it seems Forbes is looking for a crypto Messiah ahead of, you know, “Happy Holidays” as the politically correct Americans moronically intone…Anyway, the former NYSE President is Forbes’ choice for crypto-Messiah, a role currently open the informal Kingly role having several pretenders like CZ and SBF who are currently awaiting jail sentences, while Brian Armstrong barely seems to be capable of opening his mouth without distributing his foot inside it.

Thus Forbes asks, Will Former NYSE Boss Tom Farley Be The Next Crypto King?

Meanwhile, the one lesson every crypto V1.0 entity appears to have learned from SBF’s antics is that you really can't try to buy the government. So here we have V2.0 ahead of the US General election next year: Ripple, Coinbase, a16z Invest $78 Million In Pro-Crypto PAC Ahead Of US Elections (ZeroHedge)

Unsurprisingly, that approach is not meeting a warm welcome from Senator Fauxcahontas as: Elizabeth Warren pushes back at Blockchain lobbying efforts.

In lawfare, the death of one theme of the year: “4:FUD!” has been further confirmed by the US court system as the CFTC action has been approved by a judge and thus CZ loses $150 million and Binance another $2.7 billion from the CFTC action. The US SEC of course is still fighting Binance.

In bankruptcy news, with a 90% return possible apparently after the recent crypto comeback, FTX resolves dispute with Bahamian liquidators allowing a joint settlement through either the Bahamian or US process respectively. Pragmatic and sensible, good news.

However, this week's Bitcarnage lawfare shock volte face in Podgorica: Montenegro court cancels extradition approval for Do Kwon.

No trip to the US for the time being then for now the Do Kwon case is returning to the lower courts in Montenegro to be reheard.

Let's end the year in Bitcarnage by visiting the optimistic side of the ledger suggesting V1.0. crypto can limp into survival mode and beyond, Morningstar reports: How A Big, Messy 'Cleanup' In Crypto Could Pave Way For A More Regulated, Mature Market In 2024.

Thanks to all of those of you who've been reading Bitcarnage all year. If you enjoyed this excerpt you may be interested to know you can read Bitcarnage everyday in Exchange Invest. Alternatively, if you want to follow Bitcarnage, the daily update on happenings in the world of crypto and digital assets then you can find Bitcarnage as a standalone on Substack.

In the world of legacy mega exchanges, Hong Kong Exchanges has named Bonnie Chan as their first woman Chief Executive succeeding Nicolas Aguzin as head of Asia's third largest stock market.

After talk of perhaps a 1 year extension, CEO Nicolas Aguzin has opted to move on. All the very, very best to “Gucho”. Hearty congratulations to elevated Co-COO Bonnie Chan who become CEO. It's interesting that ahead of her retirement as Chairman next year, Laura Cha has secured a woman for the top HKEX role, having now appointed 2 CEOs during her term. The arrival of the accomplished banker, lawyer and long-term exchange practitioner, Ms. Chan is a terrific message to send along to the listed companies resisting board diversity in the SAR - all the more so, when the message has been sent by the inestimable Chairman Ms. Cha!

Hong Kong is at a very interesting position and I just don't buy the doom-laden tales of woe.

On any level.

At all.

Yes, the Chinese equities business is cyclically challenging right now but La Chan is spot on when she says there are “immense” opportunities ahead. That's not just the next mainland bull market and equities but take the incredible, value revolution in HKEX which will be the yield curve trading in RMB coming soon…The ongoing expansion of Connect is a huge success masked by the Chinese bear market…The Connect link exists, functions and will flourish more and more as the Chinese equity cycle turns bullish again. The arrival of ETD yield curve trade has the potential to double or triple the valuation of Hong Kong Exchange stock in the next 5-7 years, if not sooner, regardless of any other product set. I remain incredibly excited at the prospect for HKEX even if it seems most writing about the company have aligned their views with Dr. Seuss' seasonal Grinch.

Meanwhile, it's been a great year for the US stock exchanges, NYSE welcoming 32 transfer listings, the second highest total since 2002, including 20 operating company transfers adding a market cap of $120 billion.

NASDAQ had a great run of listings, raising $13 billion from 125 IPOs (the more listing restrictive NYSE doesn't publish their grand total says they wouldn't actually allow under their eligibility rules many of those that are listed elsewhere). The 26 switches to NASDAQ represented $374 billion, a record including the largest of all time to NASDAQ, Linde ($200 billion in its own right).

The conclusion? Well, as you may recall, a statistic I've been banging on about recently: 15 year growth trajectory for EU: 6% in total, USA growth since 2008? 82% - congratulations to both US exchanges NYSE and NASDAQ on another magnificent year leading the parish stock markets.

Meanwhile, the BBC invited NASDAQ's Global Head of Listings onto their primetime breakfast radio show, and Karen Snow noted: Nasdaq Is On The Hunt For More UK Firms To List In US, according to the BBC’s headline.

No surprise that they're getting ‘a lot of calls’ from UK companies. But at the same time when you deal with the UK there is a certain element of parochialism, making it a tough issue. You ought to be listed in the US right now as London is a risk off parochial financial center. But then again, to succeed in the USA, you need a success focused mindset which is bigger than many UK management teams can readily conceive. Nevertheless, absolute zeroshock that NASDAQ's Global Head of Listings Karen Snow is seeing her team receive a lot of calls from UK companies eyeing wistfully the great valuations across the GoGo Atlantic.

Meanwhile, the London Stock Exchange empowers the modernization of Mauritanian’s financial markets through innovative collaboration with BCM. As you rush off to try and find Mauritania on a map, I can safely say I didn't see this innovation coming.

North of NASDAQ HQ, within a fortnight of Josh Schmitt’s retirement as President and CEO of CBOE Canada. The CBOE has rationalized all their Canadian assets into one hierarchy. Makes sense on first glance.

Big appeal news law fare in the conventional exchange world, the US fund Elliott can appeal the London court decision on the LME lawsuit. That's a concern for LME that the Nickel Nightmare is not over and other London venues will be concerned lest Elliot can move the dial on what was a rather comprehensive loss, upholding the primacy of exchange venues in the UK at the original trial.

Meanwhile, LME says new sanctions may curb UK entities’ Russian metal deals.

LME launched a consultation on when to suspend the market in volatile trading as it seeks to move on from the Nickel Nightmare.

T+1 equity settlement is coming, there'll be another step forward in T+1 month at least for the consultation stage as the UK Settlement taskforce to deliver T+1 report in January as timeline debate rumbles on.

Elsewhere, Kazakhstan’s boss is showing interest in joining Stock Connect program with China and Hong Kong.

A very coherent idea from KASE boss Alina Aldambergen who was of course one of our many great guests on IPO-Vid LiveStream during the course of the year. In this case, it was Alina Aldambergen: Making The KASE For Kazakhstan (January 31^st, 2023)

In results this week, just one key result and it came from a private company. Nonetheless, it's the private company a lot of people think about in the world of exchanges, the Swiss Exchange, they've been driven into an expected loss. That was a $1 billion-plus impairment charge. They're eating a broadly in relation to writing down their strategic 10.6% stake in Worldline, amongst other issues.

In new markets this week, India has a Social Stock Exchange.

Meanwhile, the world's largest bourse building has also been inaugurated in India indeed, it's the world's largest corporate office building, the Surat Diamond Burse, not quite at the epicenter of the regulated parish, but nonetheless an exchange - has been officially opened by none other than the Indian Prime Minister Narendra Modi.

Deals news this week, two interesting deals to highlight for the last Exchange Invest Weekly Podcast of 2023.

The TMX Group has announced an agreement to acquire the 78% of VettaFi stock, they didn't already own for $848 million, well over a billion dollars Canadian. In other words, very interesting TMX made a strategic investment in Vettafi in January 2023, acquiring 22% and now comeback to buy all of the company. Vettafi is a fascinating US-based data play with original data and indices. It makes for a bold play and I can't help but feel it's the first move by Chairman Luc Bertrand to diversify the TMX. Ultimately, there is a relatively modest opportunity in Canada for TMX to grow but South of the border it's a different story. And Vettafi gives them plain and simply a very solid physical base in the major US financial centers. Besides “The transaction is expected to be accretive to adjusted earnings per share** in year one, excluding any potential synergies.” Good luck to Chairman Luc Bertrand, formerly CEO of the Montreal Exchange, who has had an incredible track record as an out of the box thinker and deal doer in the parish of exchanges.

Finally, this week in deals news, final deal of the year in fact, Leonteq (specialist in issuing their own structured products) acquired 10% stake in BX Swiss from the Stuttgart Stock Exchange. BX Swiss is now based in Zurich but as you will recall that was originally the Berne Stock Exchange.

Meanwhile, if you're looking for something for reading over the Christmas holiday period, you may just have time to manage to get a copy. If you want to understand how technology is affecting life and markets, check out my most recent book “Victory or Death?” Blockchain, Cryptocurrency, and the FinTech World. “Victory or Death?” is published by DV Books and distributed by Ingram worldwide.

If you're looking for something to watch over the holiday period, don't forget you can catch all the back issues of our LiveStream “IPO-Vid” on Youtube, Facebook, and Linkedin - just search “IPO-Vid”.

Then there's our “Finance Book of the Week”, this week's book was written by Bethany McLean and Peter Elkind.

“The Smartest Guys in the Room” takes the reader deep into Enron's past — and behind the closed doors of private meetings. It's a story of greed, arrogance, and deceit – a microcosm of all that many may think is wrong with American business today. Above all, this is a fascinating human drama that will prove to be the authoritative account of the Enron scandal of 20 years ago.

You can get our “Books of The Week” free via our weekly newsletter which is coming out on a Saturday that’s are more macro look at the world, Exchange Invest Weekly. You can sign up at ExchangeInvest.com. Equally, if you want to subscribe to Exchange Invest the ‘exchange of information’ the daily newsletter of the bourse business, get in quick it's only $349 per user per year to join right now, but it's going up to $375 in the new year. Jump on board now before the end of the year. Get yourself a free trial for 30 days and then you'll be paying $349 a year.

Product news this week. NCDEX (the Indian Commodity Exchange) continues to fight back from having 70% of their market destroyed in 2021 when 7 key commodities were banned from trading. They're planning to launch more non-agri commodity futures in 2024.

LME are planning new metal contracts using Shanghai Futures Exchange prices according to sources.

In the Green Market, carbon futures to transform Green Market led The Australian headline this week with a profile of FEX Global. Congratulations to Brian price and the FEX team on pioneering the carbon market where ASX had been talking about 2023 launch for their carbon platform but that too seems to have slipped back a while into next year.

Technology news, ICE and Blockstream are out in cryptocurrency options data joint offering on the crypto ICE consolidated data feed.

NASDAQ published a very interesting paper this week about cloud adoption amongst financial market infrastructures. In case you haven't noticed the future of market infrastructure is in the cloud and here's NASDAQ explaining how the ducks line up and indeed how the future looks in a world beyond “on-prem”...

Alas, NASDAQ also had a little bit of a glitch this week, which was a rather frustrating impacting stock orders and affecting 50 clients after the had to start again. before they had to roll back the concerned application to a previous version.

Meanwhile, TCS has gone and done it again they're gonna be modernizing the post-trade market infrastructure for Switzerland SIX.

Another TCS client sign up after a spectacular Q4 and yet, I have to say… I remain rather unconvinced given the recent track record of delivery where several clients are seemingly delayed and we know the MCX move away from 63 Moons to TCS was to put it mildly challenging.

Not sure if TCS will be involved here, but the New Latin American market NuamX which is a merger of several key practices in South of America, they're going to be involved in integrated clearing and post-trade network. Of course, previously, they announced on December 6^th that they have a pivotal partnership with NASDAQ to develop their overall tech platform.

In regulation news, as we rush to the end of a bumper edition to finish out the year, the US regulators have floated a cybersecurity plan in response to the ION hack, which is entirely unsurprising, the ramifications of the ION mega-SNAFU will continue to see regulatory intervention for some time to come.

Career paths, the biggest news of the week was CEO Nicolas Aguzin, leaving the firm at the same time as Bonnie Chan is elevated to CEO on a three-year contract having been Co-Chief Operating Officer until the announcement last week.

SGX Group has announced a new Head of Equities effective mid-2024 Ng Yao Loong and Janice Kan will be Co-Head of Equities. The search for new CFO is underway and Ng Yao Loong will continue to serve as CFO until then.

And then we have a story ladies and gentlemen to finish the year at the epicenter of BigWorld and the parish:

The disgraced BP Chief Executive Looney Bernard has missed out on a £32m pay package after ‘serious misconduct’ allegations.

At the intersection of BigWorld was an announcement which might have parish ramifications. This was of course a UK multinational BP, but there is still pending the case of former CBOE CEO Ed Tilly, who'd received $70 million during his decade long tenure as CEO of CBOE. Might CBOE yet be in a position where they similarly either hold back remuneration or indeed - as is the case with Mr. Looney - claw back some of the already paid remuneration?

Please note, I've no idea what has happened in either case, and indeed CBOE has been coy with details, but there may be an issue for the CBOE board to consider - watch this space, in 2024 perhaps?

Finally, let's look at a rather more sticky succulent topic, and a diversion from the usual stuff about macro politics and more a useful fun fact to end the year on a sweet note. The Netherlands is the world's largest per capita consumers of liquorice, consuming 4 lbs (that is 1.8 kilos) annually per head of population.

The almost unpronounceable Glycyrrhizin is a natural sweetener which is found in the liquorice plant and it's 50 times sweeter than sugar.

One could therefore extrapolate, this makes the Dutch the sweetest people on Earth.

…and on that mysterious and magnificent note ladies and gentlemen, my name is Patrick L. Young, builder of markets the world over.

I'm looking forward to some very exciting projects in 2024 as well of course as leading the team with Exchange Invest the ‘exchange of information’ which can be yours for only $375 per annum as a subscriber from the first of January ($349 if you get in fast!)

I wish you all a very Happy Christmas, a wonderfully peaceful, healthy, happy, and prosperous New Year.

We'll be back in 2024 with Episode 226 of the EI Weekly Podcast.

Thanks for listening!

LINKS:

HKEX Names Bonnie Chan As Its First Woman Chief Executive, Succeeding Nicolas Aguzin As Head Of Asia’s Third-Largest Stock Market
South China Morning Post

The New York Stock Exchange Leads Industry In Transfers For A Second-Straight Year, Reports Major Technology And Community Milestones
ICE

Nasdaq Welcomes 125 IPOs And 26 Exchange Transfers In 2023
Nasdaq

Nasdaq Getting 'A Lot Of Calls' From UK Firms Seeking A Listing, Says Top Exec
City AM

LSEG Empowers The Modernization Of Mauritania's Financial Markets Through Innovative Collaboration With BCM
LSEG

US Fund Elliott Can Appeal London Court Decision On LME Lawsuit
Reuters

LME Says New Sanctions May Curb UK Entities' Russian Metal Deals
Bloomberg Tax

LME Launches Consultation On When To Suspend Market In Volatile Trading
Nasdaq