Dec 5, 2020 10 min read Exchange Invest Weekly Podcast

074 Exchange Invest Weekly Podcast Dec 5th 2020

Akira Kiyota head of Japan Exchange Group, which owns the Tokyo Stock Exchange has taken over as head of TSE temporarily replacing the hosted Koichiro Miyahara.

TRANSCRIPTION

This week in the parish of bourses and market structure:

If I say the ongoing drip, drip, drip, drip, drip of media criticism of ASX as a monopoly is akin to Chinese water torture, is that tantamount to cultural appropriation?

Rumors abound of children, writing to Santa, seeking a cowboy outfit, being offered ASX, that continues to haunt Australia, which seems eager to cement its status as a third world financial center.

From the Tokyo bloodbath to the deal of the week S&P Global IHS Markit:

Is it a panacea or a complex big data can kicking?

My name is Patrick L. Young. Welcome to a diverse issue of the bourse business, weekly digest: It's the Exchange Invest Weekly Podcast.

Good day, ladies and gentlemen, this is a very brief reduction of highlights amongst the key headlines from the weekend market structure and what a week it has been veritably, an EPIC!

You missed an enormous number of stories, which could all be found during the course of the past week in Exchange Invest daily subscriber newsletter. - The unique guide to the bourse business sent daily to your inbox. More details at exchangeinvest.com.

Hong Kong exchanges, London metals exchange finds they're going to freeze trading fees for 2021 "In light of market conditions and the global pandemic, no change is proposed to the LME Group trading and clearing fees." They stated earlier this week. At the same time earlier this week, China was making notable strides into the international copper market.

Does anybody consider there's an element of causation / correlation to the LME’s announcement?

Elsewhere Europe's finance sector has apparently hit peak uncertainty over Brexit...Strikes me there. Isn't a lot of uncertainty. The European Union is desperate to try and close the door on UK financing of their marketplace, which is going to destroy the Euro.

However, anyway, there is a degree of uncertainty and we have a plethora of newspapers with stories being populated by articles constructed by AI robots. I think it's fair to say that such definitively artificial and well, maybe not quite yet. So intelligent objects write the PR quotations for a league of unimaginative boors, which are then processed without creativity within the bowels of legacy media ...officers. And then of course, I read this gem lurking at the bottom of the Financial Times article after they'd quoted speak your weight machines, AI bots, or possibly CEOs of other entities within the market structure parish and the banking industry. So the quote read

“The reason we've invested in the UK for so long is that it's the center of global markets and the UK regulators have a deep understanding of the importance of frictionless access to them. There's an opportunity for the UK to stand up and focus back on what made their market successful. Namely principles based regulation.”

Take a bow, Ben Jackson, President of the Intercontinental Exchange. It just demonstrates that ICE management are alive. kicking and looking to the future. Good grief. They're even seeking opportunity while the competition at best resembles those plumbers who on quadruple time of a Sunday night in the middle of winter, suck in their lips and make noises as the contents of your central heating boiler is effortlessly easing the wallpaper off its vertical plane.

The parish has proven it can work around COVID. Brexit is a bump in the carpet, which is pregnant with opportunity. Once the often mendacious careerist mediocrities inadequately stewarding other financial vessels can get past their depressive glass, half empty attitude, and actually look to craft the future and the future of markets,...the power of exchanges has never been so full of opportunities.

And yet, and yet a tiny minority of companies in the financial market infrastructure seem to be actually eager to build that sustainable future, which works for all stakeholders and delivers greater prosperity. Nope. I'm not even angry at saying this yet again, I'm just bored. At the same time. I'm delighted that some people such as Ben Jackson get the idea of “future” and “growth” not being abstract words excluded from the same sentence, as bedevils far too many in this stale Stockholm syndrome of the Brexit debate and much more.

Overall, it was by its very definition. a diverse week. This week, NASDAQ are advancing diversity through new proposed listing requirements, trying to raise the boat of every possible minority that they can find. Primarily of course, the 50% of our population women, I applaud NASDAQ pushing the agenda to better represent the female 50% of the population alone and all other Minorities. The economic studies show that the more diverse a company and its management, the better it performs, thus it ought to be self-evident that pale male and stale is not the winning formula, even without recourse to big data.

However, my concern is with privacy, Pierre Trudeau memorably noted during a challenging personal period. “The government has no business in the bedrooms of the nation.” While holding a zero tolerance approach to discrimination. I think privacy is a vital, right... And we have no right to force anyone to disclose private data, to fill a quota.

Deals this week, the Qatari investment body have acquired 10% of Borsa Istanbul, interesting deal. One of many between the Qatar sovereign wealth fund and the Turkish government in recent years, it's as much geopolitical as it is bourse stake buy. The Borsa Istanbul is a good business, but Turkey is somewhat on the naughty step of international relations, as president Erdogan has been less liberal than his predecessors. Similarly, Qatar has found itself somewhat challenged by the neighbors isolated in the midst of the middle East as a result of various political shenanigans, not unrelated sometimes to Al Jazeera media. In that respect. It was quite obvious I suppose, with hindsight that Qatar would make this sort of an investment. Meanwhile, the Turkish opposition leader has slammed the deal and the Turkey sovereign wealth fund, which controls Borsa Istanbul have said that they are hoping in the course of the next couple of years to finally manage the Borsa Istanbul IPO that has been mooted for a long time.

However, the big deal of the week was S & P Global buying IHS Markit in a $44 billion deal. The largest deal of 2020 no less. Recurring revenue will make up the bulk of rating agency S and P Global's business after it acquires IHS Markit. It's a deal that can close. It probably has some modest antitrust avoidance divestiture in the resources arena, such as Opis, the oil, energy business of IHS Markit.

The biggest shock to the deal was the exit of a Lance Uggla, who was widely expected to stick with IHS Markit through thick and thin, although it's mostly been thick and thicker ...for the course of, well, the foreseeable future, and arguably beyond nonetheless, this is a decent S&P purchase that ought to complete.

The one downside to the deal It strikes me was that IHS seemed to have sold out relatively cheaply. And the analyst call had a lot of confusion on the near 5% premium to the deal. “The price doesn't feel right to me” as one analyst noted.

For the rest of the insights into this deal of which there have been many this week, please subscribe to Exchange, Invest, catch us at exchangeinvest.com for the in-depth analysis provided daily.

Meanwhile, if you're looking forward towards Christmas. Yeah. You're looking for some stocking fillers. Don't forget my latest book, Victory Or Death, Blockchain Cryptocurrency, and the FinTech world published by DV books and available in distribution from Ingram world wide. Equally this week, we had a sensational live stream with the brilliant comedian come financial analyst and investor Dominic Frisby discussing all manners of taxation, Bitcoin, and much, much more.

Product news this week, the Financial Times stepped in with a huge concern over the power of stock market indices. It was rather powerful, editorial in fact. “Thanks to the relentless rise of passive investing.” They shouted “indexes have never been more powerful.”

“There is more than $12 trillion invested in index funds globally and trillions, more benchmarked against the major indices, which means that admission into one of these benchmarks has never been more potentially lucrative.”

Many moons ago, I mused on footsie: on the sale of the wrong assets. When Xavier Rolet met his first inspired dealer, CEO of the LSE buying the 50% of Footsie that the ft owned and indeed the London stock exchange did not, Marjorie Scardino and the Pearson management then spent years divesting of the stuff they ought to keep before finally they even dumped FT itself a while back into the hands of Nikkei.

Of course Nikkei, themselves not unknown for their index involvement of which there was no mention in the FT’s editorial...Well, a decade or so on and suddenly the Brussels Bugle has decided it doesn't like this index malarkey having been in the Vanguard of promoting it in the first place. I can't say they're entirely wrong, but it's certainly an interesting, indeed rather brave one for an often spineless Financial Times, editorial board.

Technology this week, nothing spineless in Japan, the Tokyo stock exchange CEO resigned over the system failures, which plagued the exchange on October. 1st. Akira Kiyota the head of Japan Exchange Group, which owns the Tokyo Stock Exchange has taken over as head of the TSE temporarily replacing the hosted Koichiro Miyahara who stepped down last Monday as president and chief executive. Meanwhile Kiyota will take on the extra responsibility of running the Tokyo stock exchange for the time being. But he's also going to be taking a 50% pay cut for four months while two other executives will take pay cuts of 20% on 10% respectively. The company has said it issued stern warnings to two other executives, a massive loss of face all round in the wake of October 1st, the FSA of Japan have been swift and sought to put behind it the loss of face by Japan at this fiasco. At the same time. One does wonder if ASIC can escape its somewhat messy - and given the history of outages - counterproductive relationship between ASX and its regulator.

Of course that brings us neatly to the ongoing drip, drip, drip of the ASX meltdown and the aftermath there. All of the ASX has grappled with its justifications. It has written some more letters of apologies, but it just provoked media comment, which has been coming close to withering in its derision. The Sydney Morning Herald offered a spectacular headline “They’re in the stone age.”

“Is the ASX monopoly, short changing investors?”. Equally there was also the story, “unbelievable state of affairs, options. Traders burnt by ongoing ASX.outage.” And indeed, it's incredible to think that Over two weeks after the ASX, down on November the 16th, the tailor made combination service, which enables a huge amount of trading of options for multiple lagged options, which are of course the majority of orders, Most of the time.. is still suspended. That is surely a farce as one market participant noted “a fundamental part of the market is broken.” Fundamentally ladies and gentlemen, the ASX is a joke. This is a disgrace, and it brings shame to the parish. A total farce. The tragedy is the regulators appear to be hoping to sleepwalk their way to Christmas at which stage the summer holidays will kick in, in the Southern hemisphere And things may have died down by the time everyone returns. I'm not convinced the genie bottle lid repo thing is now a case of easy return to the cask. Even if Australia ultimately lockdown for Q1 in its entirety. Then came the interesting thing where once again, if you'd been reading exchange invest, you would have seen the value of the subscription in one fell swoop.

The ASX trading sparks calls for accountability “jobs for the boys” was a headline again in the Sydney morning Herald. And indeed, thus, we have a winner, well, of sorts barely days after the ink had dried on the ISS purchase. Dutch Boerse’s new subsidiary is quite rightly getting laid into the festering mass, which is the Australian securities exchange: the business where the only security is tenure of the pale male and stale management - for investors it is a national Monopoly of insecurity these days, given the ASX’s urgent desire to Blamestorm their way from tech crisis to tech crisis. How long will it be before we hear the new ISS parents Deutsche Boerse as being behind a nefarious attempt to undermine the Australian model market monopoly silo. Oh, the ironic multifaceted challenges of arm's length subsidiaries.

Over in China another regulatory crackdown. Finally, by the middle of November, China had shut down all of its peer to peer lending platforms. That's a story we've been looking at throughout the course of the year.

And thus ladies, & gentlemen in a week where we also saw the commodity finance industry in Singapore, get a code of best practices and also the 10 cent backed futu drawing legions of new users in an online IPO frenzy. Two little factoids.

Hong Kong has already hosted 120 IPO's raising 39.1 billion us dollars so far this year, putting it on track to finish 2020 with the highest funds raised in 10 years. On the other hand in mainland China, they are on track for another record year for corporate bond failures.

Well, on that mysterious and magnificent note, in a week of wild diversity. Let me encourage you once again, ladies and gentlemen to consider subscribing to exchange, invest for all the information on the bourse business every day of the week. Thank you for listening to this episode, 74 of the exchange investor, weekly podcast, giving you the highlights of what has been an Epic week in markets.

I hope you enjoy another great week in markets next week. We'll be back with. Most of the news headlines and all of the top stories here on the Exchange Invest weekly podcast.

LINKS

Hong Kong Exchanges And Clearing : London Metal Exchange To Freeze Trading Fees For 2021
marketscreener.com

London Metal Exchange To Freeze Trading, Clearing Fees For 2021
Livemint

Europe’s Finance Sector Hits ‘Peak Uncertainty’ Over Brexit
FT

Nasdaq to Advance Diversity through New Proposed Listing Requirements
Nasdaq

Qatari Investment Body To Acquire 10% Share In Borsa Istanbul
Daily Sabah

Qatar To Buy Stake In Istanbul Stock Exchange
FT

Qatar Inks Deal For Minority Stake In Turkish Stock Exchange
Bloomberg

CHP Leader Slams Sale Of 10 Percent Of Borsa Istanbul To Qatar
Hurriyet Daily News

Turkish Sovereign Wealth Fund's Share Of Borsa Istanbul Same As Last Year: Erdogan
Daily Sabah

S&P Global To Buy IHS Markit in $44 Billion Largest Deal of 2020
Reuters

IHS Markit CEO Says 'Nobody Forced Me' on $39 Billion Sale
Bloomberg