May 10, 2024 11 min read Exchange Invest Weekly Podcast

244 Exchange Invest Weekly Podcast May 11th, 2024

This week in the parish of bourses and market structure: All Weather Excellence Says Leading Exchanges Grow More Than 20% In Q1, There’s A Dash of Spring MOU Madness In The Air, While Europe’s Leading Financial Industry Bodies Warn The Flywheel Needs To Turn

Transcript:

This week in the parish of bourses and market structure:

All Weather Excellence as Leading Exchanges Grow More Than 20% In Q1,

There’s A Dash of Spring MOU Madness In The Air,

While Europe’s Leading Financial Industry Bodies Warn The Flywheel Needs To Turn

My name is Patrick L Young

Welcome to the Bourse Business Weekly Digest

It's The Exchange Invest Weekly Podcast Episode 244

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

Over in Bitcarnage a frequent complaint in Bitcarnage has been the lack of self awareness of those involved in the crypto V1.0. economy. The metaphoric peak may have been reached during the course of the past week - for I doubt it was self-irony when Patrick Gruhn, the former FTX Europe head paid $1.5 million for a gold watch recovered from the Titanic. Apparently with funds from the sales of his companies, not from running FTX. The watch once belonged to hapless honeymooner John Jacob Astor IV.

Meanwhile, there is a sense of shock about CZ sentence after all the talk of at least 18 months from various quarters - Bitcarnage team included! Cointribune discussed the issues in crypto Why Was CZ's Sentence So Light?

Meanwhile, it's time to give up the wheeling and dealing for a while at least, former Binance CEO Changpeng Zhao says he will remain passive holder of crypto after receiving his prison sentence, notes The Daily HODL.

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 and happenings in the world of crypto and digital assets market structure then you can find Bitcarnage as a standalone on Substack.

This week in exchanges, everybody is worrying about listing power from London to Morocco to Lagos via Nairobi, Dublin, Singapore and beyond. The only patch of optimism outside the USA et al last week was in Azerbaijan of all places…

A raft of MOUs have been signed, will they impress or conform to Young's Law of MOUs (AKA the ultimate deliverable being less valuable than the air miles expended to sign the cooperation)?

DFM in Dubai and SIX in Switzerland to look to enhance market accessibility while JSE signed a Tadawul MOU this past week.

NSE India was knocked back as it sought to extend market trading hours.

And while this amounts to not even #zeroshock, it's way more underwhelming than that.

According to the Business Standard: NSE Investors May Face Further Delays For Its Initial Public Offering.

NASDAQ were singing their own praises this week because NASDAQ Stockholm and the broader Scandinavian markets remain a tribute to what can be achieved in European equities. That dovetails neatly with the first logical salvo in the ongoing whataboutery concerning how to kick start European Union capital markets.

The capital flywheel European Capital Markets report was produced this week. 37 interviews later on the European Banking Federation, EFAMA (the fund managers) organization, and FESE of securities exchange firm have put together a joint report via the offices of Oliver Wyman.

It looks at the issues from a systemic perspective and it's a smart idea. PLY has for a long time looked at the problem from the issuer perspective and talked about the “staircase of capital”. As I noted in Bigworld above, the consequences of 15 years or more of appalling political laggardship across Europe has resulted in an EU now appreciably poorer than the US which it once ‘rivaled’.

Hence, this report seeks to engage the gearing of a flywheel and push the EU capital markets forward - a vital consideration for future economic growth and, let's face it, the EU surviving in the medium term. The report sensibly notes a supply side is not the big issue, it's demand that is required and that immediately has a major piece of friction against it: the core EU precautionary principle.

The solution doesn't seem overly complex. Instead of the mad monopoly thesis from the apparatchiks de facto subsidized by Brussels, this paper has a simple set of theses with logical conclusions. The difficulty, of course, is easing the EU out of its dismal anti-innovation corporate socialist protectionism into a brave new digital world of innovation. The key takeaway from this report is the markets are ready - where on earth are the advocates of capitalism to promote the economic well being of society to the vastly higher levels of American success?

Plaudits to EBF, EFAMA, FESE and Oliver Wyman on an excellent, thought provoking brief, which actually requires a lot less legislation and a lot more elbow grease to make Europe great again.

In results this week, take a bow, CBOE, ICE, NASDAQ, NSE and others amongst them Saudi Tadawul for being in the 20%+ revenue growth club this quarter. Fabulous results which show dynamic management of markets pays where monopoly milkers atrophy. While Jeff Sprecher’s quarterly masterclass discussed AI in detail, the reality is, as these exchange groups exemplify, the human growth thought nexus looks to be pretty strong in the companies that allow/encourage/nourish thinking to happen.

Where do you start if you aren't ICE or NASDAQ and want to begin thinking? Exiting the box is a good start, but then again, self-identifying as a lateral thinker, I suppose I would say that…and I think the future of bourses needs a lot more lateral thought unless you want to be satisfied with single figure growth like CME, LSEG, and others.

If you're not already reading Exchange Invest daily, of course, you need to start there, ExchangeInvest.com

It was a busy week for results in the parish all the details were in Exchange Invest daily, the newsletter no person can afford to be without in capital markets on market structure. Once again, subscribe at ExchangeInvest.com and enjoy a free seven-day trial.

Deals this week, it was not the busiest week for deals, but all of the information was in Exchange Invest daily, the LSEG bought back something around about a billion dollars worth of shares. The problem is the LSEG bought the stock back via their own platforms? Oh no, they bought them over the country, ladies and gentlemen, what does that tell us? What having confidence in the stock market of the London Stock Exchange Group.

Meanwhile, the longest running on / off M&A deal in the history of the parish may soon be resolved in favor of the Philippine Stock Exchange, as the Bankers Association of the Philippines announced they're willing to sell their stake in Philippine Dealing Systems Corp, the bond market.

If you're trying to get to grips with PSE PDEX or indeed the masterclass over AI by Jeff Sprecher in the course of the last week, and much more, you want to be reading my most recent book “Victory or Death?” Blockchain, Cryptocurrency, and the FinTech World to understand how technology is affecting life and markets, “Victory or Death?” is published by DV Books and is distributed by Ingram worldwide.

While you're waiting for your copy of “Victory or Death?” to to arrive check out our livestream Tuesdays at 5 o'clock London time, midday New York time - it's the IPO Video live show. Catch the back episodes on Linkedin and Youtube via “IPO-VID”.

This week we had an epic show, actually record live stream viewers for our guest Brian Hyndman in IPO-VID #142, discussing Blue Ocean - A New Market Tide all the way at the most exciting ATS in the American market at this juncture.

Coming up on Tuesday, we've got Thapelo Tsheole, talking about Botswana Rising . He's been the man who's been running the stock exchange there for the course of the last 8 years. And it's actually off to become the head of the Rwandan regulatory agency in the near future.

Our “Finance Book of The Week” this week, which of course you can learn about in advance by reading our free macro newsletter, EI Weekend. You can sign up to that also at ExchangeInvest.com.

The “Book of the Week” from our serial guest on IPO-VID Rainer Zitelmann’s “Unbreakable Spirit” exploring how people with disabilities accomplish the extraordinary in life and set milestones that seem almost impossible even to most people without disabilities. It profiles 20 unique high achievers. And indeed also, you can read and listen to more about the book by watching our IPO-VID livestream on the topic which is now also a podcast available via Spotify and all the usual sources of excellence for audio information.

Product news this week, a very odd headline from the US Senator Rick Scott, Sen. Rick Scott Leads Colleagues In Calling Out NASDAQ For Listing Chinese Military Company On U.S. Exchanges

Frankly, this strikes me as a sort of grubbing charlatanism, which reminds me the political class has remained as mediocre as the ghastly leader vacuum we've had for a generation in the UK and Europe, for instance. Coming from the wondrously International and thriving state of Florida, which is perma-impressive to visit these days. I might have expected more of Senator Scott.

Let me turn his thesis on its head. Why doesn't Senator Scott, instead of whingeing and promoting negativity of China, instead offered the narrative “Senator Scott, along with Senators Bob Casey, Josh Hawley and Marco Rubio, today offer their congratulations to NASDAQ… US markets are so successful, even the Chinese military is using our markets to fund their operations. As always, caveat emptor is a key factor for investors, and we advise them to consider their investment portfolio appropriately.”

I wonder will the good folks of NASDAQ come out swinging. Certainly, the markets don't deserve to be criticized here, particularly given the interventionist approach of regulators who demand to prove prospectuses et al.

Also in product news, ICE benchmark administration have launched ‘Beta’ USD SOFR ICE swap rate swap spreads, and euro €STR I swap rates.

NASDAQ plans more short-term options on commodity Treasury ETFs.

And a bit of a problem for Taiex in Taiwan. Taiex futures are facing a US trading ban as they're going to be classified it seems, as a narrow based security index.

Technology news, outgoing MCX CEO Padala Subbi Reddy has noted in an interview with Mint: For MCX, The Tech Transition To TCS Was Akin To Changing Airplane Engine At 30,000 Ft. It has to be said I'm not sure blindfolding the pilots before the plane took off was advantageous to the process.

In regulation, the FCA’s boss in the UK is ‘not convinced’ private equity poses systemic risk. I haven't thought it posed a systemic risk either, but now the FCA are saying it too, one feels inclined to re-examine the data, just to be sure. Meanwhile, the FCA remain defiant about their “name and shame” investigation move despite the fact that the exchanges are obliged not to publish the names of those actually fined for transgressions amongst their intermediary members. That strikes me as utterly bizarre.

In career path this week, IEX, the flash boys, got some fascinating news, Bryan Harkins, who's got a truly illustrious record across multiple different platforms is joining IEX as Group President to lead IEX’s Commercial Growth IEX’s Co-Founder Ronan Ryan steps into the role of Group COO and Florian Seifferer is promoted a Group Chief Strategy Officer. Congratulations to one and all.

And finally this week in career paths, a fond farewell to Lieve Mostrey and welcome officially in situ to new CEO of Euroclear Valerie Urban at the head of Brussels’ most systemically important financial bureaucracy.

Over in Bigworld, back to that report FESE along with EBF and EFAMA have issued interesting Oliver Wyman report about the future of EU Capital markets, as I mentioned earlier. It's a good read and a pleasant 16 pages make it approachable in a world of bigger, boring verbosity being far too commonplace.

Anyway, PLY has made much in recent months of the shocking example of the 15-year plunge of the European Union's economy. The Eurozone and the US were roughly at parity in 2008 ($14.2 trillion of versus $14.8 trillion on a “current prices basis” and the source of that, by the way is not a neocon or right wing paper, it's Le Monde in Paris. By 2023 the Eurozone GDP was just over $15 trillion, while US GDP was $26.9 trillion.

Remember, fun fact, actually not fun at all, tragic fact growth over the 15 years from 2008 to 2023 for the EU as a whole 9%, growth over the same 15 year period for the USA 86%.

The FESE report notes how EU equity market capitalization has grown from 2016-2022 by 48%-66% of GDP whereas the US with far superior economic growth leaped from 104% to 157% of GDP. Liquidity (measured by turnover velocity) was constant in the US at 145% of GDP whereas in the EU, it actually declined from 68% to 52%, barely a little over 1/3 of the US number.

US pension insurance, and household assets are 6X US GDP, whereas even in the largest EU economies, they are barely 2x-3x in for example, France, Germany and Spain. There are some bright spots. Whereas USA is 622% of GDP as a stock market, in Europe, EU market leaders include Denmark at 654% even higher than the USA and Sweden 483% - which of course fall in the epicenter of what I was discussing earlier, the NASDAQ SME stock listing center of excellence.

In capital market direct investments, the US sit at 288% of GDP compared to 40% to 100% of GDP in EU nations. Indirect allocation is a whopping 525% of US GDP versus 130% - 200% in the major EU nations.

The fascinating part is, if the European Union could only match the US, that would mean an additional €35 trillion of capital in Germany, Italy and Spain alone putting that in perspective, however, the equity market capitalization of the entire European Union in 2022 was a paltry €13 trillion.

…And on that mysterious and magnificent note, thank you for listening to this Exchange Invest Weekly Podcast 244.

Join us daily via ExchangeInvest.com or if you have a new exchange you'd like built, get in touch.

My name is Patrick L Young and I wish you a great week in life and markets.

LINKS:

What Will Bring Back Retail Investors To The Nairobi Bourse Through IPOs
Business Daily

Morocco's Bourse Hopes To Lure More Listings, Foreign Investors
ZAWYA

Dubai Financial Market And SIX Forge Strategic Partnership To Market Accessibility
SIX

SEBI Rejects NSE Proposal To Extend Trading Hours As Brokers Protest
The Economic Times

NSE Investors May Face Further Delays For Its Initial Public Offering
Business Standard

The Capital Flywheel– European Capital Markets Report
FESE

LSEG To Buy Back $624 Mln Of Shares From Refinitiv-Linked Investors
Reuters

Bankers Association Of The Philippines Willing To Sell Stake In Philippine Dealing System Corp.
BusinessMirror