Sep 5, 2020 10 min read Exchange Invest Weekly Podcast

061 Exchange Invest Weekly Podcast September 5th

The SEC, in the USA approved the New York Stock Exchange proposal to let companies raise cash through direct listings.

Transcript

And in the business of bourses this week, direct public offerings can raise cash at the New York stock exchange while RobinHood is facing the litigators. My name is Patrick L. Young. Welcome to the Bourse business weekly digest. It's the Exchange Invest Weekly Podcast.

For those of you who only interact with this podcast, you may not be aware of Exchange Invest. That's the daily newsletter of the Bourse business. The Exchange Invest advantage for subscribers - who are paying from as little as 250 U S dollars per user per year - is the innate ability to get ahead of the curve.

Years ago, I noted RobinHood were going to eventually meet a lawsuit due to their dubious free brokerage claims, which involved selling the order flow and then saying, “look, our services are free.” It was as clear as day while others failed to notice, or explained this in public, though the Exchange Investor Newsletter frequently did.

I even had a reminder as recently as Wednesday of this week ahead of news of the litigation creeping out that evening. Of course, I feel pleasantly vindicated, but importantly, are you on the inside track in the world of extensions? If not, you need to be a subscriber to Exchange Invest by all means.

Please help us to do an even better job. Pay your subscriptions promptly and encourage a few colleagues to avail of a free trial. Exchange Invest can keep you ahead of the curve in the world of market structure.

Moving on from RobinHood, the other big news of the week, the SEC, in the USA approved the New York Stock Exchange proposal to let companies raise cash through direct listings.

While dangerously close to appearing like the poodles of the sell side, when it comes to market data, the SEC have taken an enlightened step towards a better market with more content in US equities, enabling more DPOs shorn of the ludicrous outmoded processes and costs of the intermediary rich - in every possible sense - IPO process. Capital raising by DPO has been an obvious avenue for 20 plus years.

...Yes. Yes. Somebody might have written a book about that Capital Market Revolution! #Whatevs?

No.

At last DPO is a serious reality for raising money. Here's hoping the rest of the world follows suit ASAP. This reform is desperately needed. Meanwhile, the must read article of the week came out in Fortune. ‘Never waste a crisis, the Sprecher master plan to make mortgages efficient:’ Essential reading to understand better the Intercontinental Exchange machine and its inherent efficiency.

Talking of inherent efficiency, Moody's have completed their periodic review of the ratings of Intercontinental Exchange… And unlike some others who were spooked out by the Ellie Mae purchase a couple of weeks ago: They've announced no change.

Meanwhile at the European parliament this week, the new chairman of an advisory committee to the Commission on the parliament itself. Klaus Luber an ECB career banker was giving testimony: UKs Euro clearing access to EU requires careful analysis, post Brexit. It's a beautifully calibrated statement, actually. In one way, it appeals to the minds of the world's most expensive kindergarten: The European parliament. It gives them everything they want to think about in terms of total protectionism and trying to, well, effectively render the Euro a non-transferable currency, somewhat like say the Chinese Yuan or the South African Rand. At the same time, the ECB still managed to follow the plot, flattering the egos of the Euro parliamentarians on their various perceived biases against capitalism, but at the same time, appreciating the fact that trying to close Euro clearing to outside entities beyond the Eurozone or even the European union itself can only result in endless problems, if not the death of the European currency project.

One project has met its death. In the course of the last month... is of course Wirecard, a spectacular fraud appears to have been executed from within its German beating heart, Deutsche Boerse was rather caught off beat by the whole concept. Indeed, the whole Wirecard entity was still listed in the premier DAX index in Germany, even at the point in time when investigators and indeed liquidators were on the premises of their headquarters in Bavaria.

Now Deutsche Boerse is seeking, at the German parliament, power to name and shame in the wake of the Wirecard fiasco. It's a great idea. Presuming the Deutsche Boerse's management can spot the wrongdoers and indeed presuming that Bafin, Germany’s somewhat discredited regulator, Doesn't raid Eschborn, the headquarters of DB1, under the threat of insider dealing within the stock market itself as has of course been the standard operating procedure of Bafin. Every time someone has complained about a potentially fraudulent German company for some years, including most notably the Wirecard entity itself.

Over in India, the National Stock Exchange they're preparing for their divestment of their 12 and a half percent stake in the CAMS entity....They've withdrawn their directorship. Meanwhile, LIC missed the deadline to divest their 4.9% stake in NSE as mandated by Sebi.

In results this week, one solitary set of results, but quite sensational, the Nairobi stock exchange in Kenya has managed to defy the overall world economy and grow their profits. Four-fold during a period of unprecedented financial market volatility, driven by COVID-19.

In deals. The great news is that the National Stock Exchange of India, albeit we've been here before many, many, many, many times...

Apparently they're likely to get the nod from Sebi, the interventionist Indian regulator for their long overdue IPO in the near future. Elsewhere, the Spanish exchange BME, their shares are going to be delisted from the Spanish market itself. After the acquisition of the company by SiX Swiss exchange. I still wonder whether this isn't a long term tactical error by SiX, given the Swiss exchange likely will never list due to local politics. AKA the delicate balance between UBS, Credit Suisse and the other bank shareholders.

I still think a listed BME would have given optionality for other deals, which we do certainly seem to believe SiX’s CEO, Jos Dijsselhof is apparently eager to complete.

Elsewhere in deals. OANDA the Forex trading platform, they made an interesting agreement now under ownership, of course, by the private equity fund CVC... they bought, I believe their first brokerage, Dom Maklerski, TMS Brokers SA, which is one of Poland's leading Forex market players.

New markets this week, they were dominated by the wonderful news of the arrival of

Tadawul, their derivatives market is now open alongside. Their small, modest, perfectly formed clearing house. Muqassa. Elsewhere in the Middle East DMCC, they've launched an agri commodity trading platform while Coinbase: their CEO has confirmed development of some sort of a service for launching bespoke tokens.

Of course, in the midst of all of this token, terror and other conversations about exciting technology.

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Meanwhile coming soon, mid month, in fact, 15th of September Series Two of the IPO, in Patrick's opinion, livestream is going to be coming to you over Facebook, LinkedIn and YouTube.

In product news this week, CBOE, they listed a new series of CBOE S&P 500 ESG index options. They're coming out on September the 21st. FTSE Russell, they launched a local currency Saudi Arabian government bond index. Meanwhile, the Ant IPO, it may be enormous, but it's avoiding US markets while embracing US banks and indeed in Hong Kong, a lot of discussion during the course of the past week, the Hong Kong exchanges’ outgoing CEO, Charles Li,.is seeking to create another wave of mega IPOs in Hong Kong for the local market to stay ahead of NASDAQ and the other leading exchanges in the world.

At the same time, they're hoping that Hong Kong will surpass NASDAQ as the King of biotech listings in five to 10 years as Chinese scientists dominate the field, quite fascinating news altogether. But on the other hand, tempered with news that that Ant mega IPO... The group there may be planning to raise more funds in Shanghai than Hong Kong for their giant IPO, which is going ahead at the moment.

Technology news this week, the D D O S attacks by extortionists targeting the New Zealand Exchange seem to be over at least for the time being, but they attacked many other entities in the USA,:MoneyGram and Braintree amongst others, apparently, possibly PayPal too. At the same time in New Zealand, they seem to have moved on to trying to attack government entities, which has a somewhat change in pace, but at least away from the parish.

In Sri Lanka, the Colombo stock market is going to be fully digitized from September 17th. While the first company in the Middle East to offer commission free brokerage Thndr have obtained a brokerage license and expect to execute digital commission free trading onto the Egyptian bourse.

Surveillance news, the Swiss exchange unveiled their AI based surveillance platform at the same time as Korean exchange KRX are looking at the same form of robotized artificial intelligence process.

Not a lot of regulation news, there's weak ASIC, the Australian regulator, they unearthed their corporate plan for 2020 to 2024. Skeptics might argue that some parts of this plan could be retitled.

“How ASIC intend to protect the ASX from their own incapacity to upgrade their settlement monopoly.?”Meanwhile in wishful thinking of the week, the Bangladeshi SEC have ordered all kinds of parties in the market directly or indirectly involved with the stock market, not to spread predictions or forecasts on social media.

Well, that ends this week's regulation sector on a truly surreal and somewhat dreamy note methinks.

Over in Crowdfunding news, one piece of interesting information, crowd equity platform, Seedrs, they have opened up their existing secondary market, which has been operating for the last three years to any business, not just those who primarily funded on Seedrs itself.

In people news it's with great sadness that I report the passing of Carlos Lopez Marquez, a longstanding BME staffer and FESE board member. He was an active presence across industry bodies, such as the World Federation of Exchanges back when it was still truly relevant to the parish, never shy of expressing an opinion in meetings.

Carlos, you will be sorely missed.

Elsewhere. The European Union's ombudsman has rapped the knuckles of the European Banking Authority and says the banking watchdog will avoid damaging staff moves in future. There's going to be a two year cooling off period: That's in the wake of the Adam Farkas fiasco, where he jumped straight to the sell side’s bosom to AFME in London, when the European Banking Authority had to leave the UK because of Brexit.

And ladies and gentlemen, that leaves me only to offer you a trigger warning this week. News reaches us via Betfair from Reuters, Donald Trump, the president of the United States of America, the incumbent, has overtaken Joe Biden as the favorite to win in November. After a Rocky patch, the money is back on the incumbent president and on that mysterious and magnificent note, ladies and gentlemen, I wish you a great week in life and markets.

My name is Patrick L. Young. I look forward to catching up with you daily in the Exchange Invest subscriber newsletter.

LINKS

Robinhood Faces SEC Probe Related to Deals With High-Speed Traders WSJ

Robinhood Reportedly Hit By SEC Fraud Probe, Possible Fine Of Over $10 Million Forbes

SEC Approves NYSE Proposal To Let Companies Raise Cash Through Direct Listings Yahoo Finance

Never Waste A Crisis: The Sprecher Masterplan to Make Mortgages Efficient Fortune

Intercontinental Exchange , Inc. -- Moody's Announces Completion Of A Periodic Review Of Ratings Yahoo Finance

UK's Euro Clearing Access To EU Requires Careful Analysis Post Brexit: ECB Official Reuters

Deutsche Boerse Wants Power To Name And Shame In Wirecard's Wake marketscreener.com

Germany's Trading Exchange Manager Seeks To Call Out Rule-Breaking Companies pymnts.com

NSE Withdraws Directorship In CAMS, Set To Divest 12.5% In Ipo Livemint

LIC Misses Deadline To Divest 4.9% Stake In NSE Livemint