This week in the parish of bourses and market structure:
The LME floor is saved from closure as China erroneously claims most listings’ top spot.
My name is Patrick L. Young,
Welcome to the bourse business weekly digest.
It’s the Exchange Invest Weekly Podcast, Episode 098.
Good day ladies and gentlemen, this is a very brief reduction of highlights amongst the highlights from the key headlines we’ve accumulated during the weekend market structure within the pixels of Exchange Invest – the bourse business daily newsletter sent to your inbox every day of the week, Monday through Friday with an additional free issue on the weekend.
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There was a fascinating strand of conversation this week – Google announced their new data services headlined: Google Cloud Launches Datashare For Fin Serv | Press Releases.
It’s a groovy way to share data and potentially monetize data sets in a new way albeit that may not please some incumbents because well, they like being incumbents, and not being challenged by trying any form of “new new” thing.
However, then in conversation, the question arose of just how much Google can be trusted? I make no comment here as there are matters sub judice. There are also parallel concerns, e.g. with Amazon where some say they have used data in a manner that exploited their platform to allow them to tweak proprietary sales over third-party listings… That’s not exactly cricket in the exchange world, which is why the parish of bourses is held as a standard-bearer for decency and fairness.
The Google accusations circle around “Project Bernanke” something for which doubtless a certain former central banker was ecstatic to hear his name being used in: Google used a secret program to game its ad-buying system, documents show when the market was a story, it can be summarised thus, by quoting from the Wall Street Journal story:
“Google’s secret ‘Project Bernanke’ revealed in Texas Antitrust case”
…and I quote: “Google, for years, operated a secret program that used data from past bids in its digital ad exchange to allegedly give its own ad-buying system an advantage over competitors, according to court documents filed as part of an Antitrust lawsuit.”
This potentially raises serious questions about the parish and the data services of Google, if at least tangentially… and of course, one could place a cloud by proxy on AWS given Amazon’s alleged platform shenanigans too.
One wonders if the Gensler era SEC will get this far in its investigations, but certainly, a “big tech” financial data angle might yet raise some ructions?
Shanghai Stock Exchange Takes Global Crown In IPOs Trumpeted a headline in Chinadaily USA this week, with Shanghai Stock Exchange being given the world’s most IPOs in 2020 title by Chinese media outlet The Paper.
That said, perhaps Shanghai won on a technicality with 233 IPOs, or perhaps it wasn’t anything like a knockout at all.
Take NASDAQ, for instance, which welcomed 300 new listings. And then there was that flurry of DPO and SPAC business too!
There and again, when it comes to less liquid offerings, plaudits to the Channel Islands-based TISE – The International Stock Exchange Group, which brought some 831 new instruments to market during 2020.
Could we be facing fake news from China?
Meanwhile, when it comes to the ESG world, the simple truth is the blob is way behind the innovative capitalists right now – and actually, if only the sub-investment grade politicos empowered with governing could see it the realpolitik is this free market thing is way ahead of the hot air emission emitting blob.
Take a look at data: ICE for example has added to their burgeoning data sets in the ESG arena by announcing an enhancement of their reference data in the field to cover the STOXX 600 Europe Index (that’s 600 large, mid, and small-cap companies across Europe). That neatly complements their existing ICE® U.S. 1000 Index, measuring the performance of the largest 1,000 US companies.
The STOXX 600 is a powerful indication of how major European corporations can still generate profits, often despite the EU, often it has to be said due to a coalition of regulatory protectionism, which is the core ethos of the Brussels blobs working practice. Thus, they may exhibit a lot more regulatory capture through Brussels’ answer to Stockholm Syndrome than their US counterparts.
Anyway, ICE has this week published data analysis showing some pretty meaningful differences between American and European public companies ostensibly framed around companys’ intentions on their actions. For example:
- 74% of European companies have committed to the UN Development Special Development Goals on Climate action, while 25% of American companies have outlined this as a priority, a wonderful 49% gap in the approach.
- Equally European companies are also much more likely to report greenhouse gas emissions 74% of scope 1 and 74% of scope 2, while the data for American companies sits at 46% and 45%, respectively.
- 58% of European companies identified the Sustainable Development Goals on Gender Equality as an objective compared to 21% of American companies.
That’s an interesting data set -the PLY insta-take is that the US has a much more insular concept of multinational (the ICE itself the Intercontinental Exchange Group, being a rare example of a US Corporation where its international income has traditionally been greater than domestic revenues, as opposed to most US industrial combines where an international tail feels to wag the very large US National dog’s body).
That attitude probably powers a more parochial mentality, whereas even in the largest of EU mount landmasses, such as Germany, it’s tough to prosper without selling to foreigners. On the other hand, many EU folks may prefer to see these results through the prism of Brussels being the world’s traditional haven for virtue-signaling (the European Parliament is built to produce a little else).
Either way, these are interesting data and above all else, it’s good to see parishioners leading the debate where the blob is still building committees to try to cobble together rule sets, which I suspect will already be framed by other private combines before being adopted by ESG-IFRS or whatever the other semi-competing entities are in the field of avoiding greenwash meets hogwash and overly prescriptive regulation.
And the great news, London’s last floor has been saved! After a COVID shutdown, the London Metals Exchange ring will return in September.
As the author of Capital Market Revolution! – the first best-selling FinTech book dating back to 1999, which championed closing non-economic pit trading, I happen to welcome the maintenance of the LME ring – the key issue is economic utility. LME’s ring sets prices in a unique cost-effective fashion, which gives them an ongoing lease of life.
Where human intervention adds value, let’s rejoice in its utility. Where humans can be improved upon by computerized intervention, let the digital world flourish.
Meanwhile, ladies and gentlemen, don’t forget to pick up a copy of “Victory or Death” – Blockchain, Cryptocurrency, and the FinTech world. Whether you’re still in lockdown, whether you’ve been well locked out of your summer holiday due to still being in Ambra zone, or whether you’re perhaps in Ambra zone itself.
COVID-19 remains a killer, but can it really kill your career? Or is it the impact of FinTech destroying your business? It’s a Victory or Death, a world of risk and opportunity. So to understand how technology is affecting life and markets, I would like you to buy a copy of Victory or Death. The book comes 20 years on from the excitement of the original FinTech bestseller Capital Market Revolution.
Victory or Death – Blockchain, Cryptocurrency, and the FinTech world, is an easy read, explaining the differing and diverging role of banks and exchanges, explaining the winning business models of the new world order, and placing in perspective just what Bitcoin, Blockchain, and cryptocurrency mean for markets.
It’s a binary world, your career will sustain or collapse in the next stage of the digital marketplace, hence the title, Victory or Death. Lastly, you need reminding of the exciting times for finance in which we’re living. 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 arrive, check out our Livestream, Tuesdays at 6 pm London, time 1 pm New York time. It’s the IPO Vid live show.
Catch the back episodes on LinkedIn and YouTube via IPO-Vid. This week we enjoyed a fascinating tale from the heart of the Wall Street edition with Kenny Polcari who is a long-standing member of the New York Stock Exchange with some 40 years of experience trading from the floor. This coming week, we’ve got the excitement of David Weild IV, father of crowdfunding, he’ll be joining us in the studio live on Tuesday.
In product news this week:
There’s something seismic afoot in the world of energy. In many ways the benchmarks are in flux: there’s the march of Brent, the curiously precarious position of WTI futures, at least those based around Cushing. CME’s own propaganda says that West Texas Intermediate is the big big thing, but actually, the Exchange Traded Derivatives struggle to show market leadership (at least in those Cushing-settled contracts).
Thus, in a move – nay headlong politically naive splurge – towards net zero (#chancewillbeafinething), we see a particularly fascinating diversification in the benchmark world. Murban is on route to becoming a key benchmark pillar, after only weeks as an oil futures contract through ICE futures Abu Dhabi of which of course, I was making more comments in the national newspaper of the UAE just a few weeks back. However, as we can see, it’s no longer just about oil. It’s the gas too: JKM (Japan Korea Marker) and LNG (Liquefied Natural Gas). Both were carefully cultivated by the Intercontinental Exchange as futures for many years.
Further interesting read: How The Fukushima Crisis Led To A Revolution In LNG Trading a useful background primer.
Technology news this week:
Dominated by one big deal happening, the SIX is going to consolidate the Swiss and the Spanish Exchange platforms, having recently completed the acquisition of the Spanish Exchange BME
In crypto news this week:
This was the week of Ransomware… Ransomwhoops. The US federal authorities are to be applauded for regaining most 63.7 out of 75 bitcoins that were paid to the colonial pipeline hackers. The frustrating part is that colonial paid $4.4 million and has only got back about $2.3 million at the time of recording (that might even prove to be a high valuation by the time you’re listening to these ladies and gentlemen in the current frothy market for Bitcoin itself).
However, the key aspect is demonstrating high electronic money can run and it can hide for a bit but when it breaks cover, it’s likely to be caught (not so easy with old fashioned numbered USD bills and particularly tricky if you happen to use something like a hot wallet for your Bitcoin it seems).
Meanwhile, in other news this week:
Jeff Bezos says headed into space – presumably, it helps his tax returns if he spends a day or two in orbit.
Certainly, the week’s G7 Finance Minister meetings seem to be decided by folks who find commercial competition an alien concept.
And on that mysterious and magnificent note, ladies and gentlemen.
My name is Patrick L. Young,
Thank you for listening to this 98th EI weekly Podcast. We will be back with a review of the week next week, as we sit on the precarious pre-run number of 99 Episodes, good grief a hundred insights at last!
Meanwhile, if you want to get all of the news and analysis of the exchange world daily, drop by ExchangeInvest.com and sign up for your Free Trial.
Exchange Invest, the daily bourse business newsletter delivered to your inbox, think of us as the watercooler of markets.
My name is Patrick L Young, thanks for listening. Have a great week in life and markets.
Shanghai Stock Exchange Takes Global Crown In IPOs