168 Exchange Invest Weekly Podcast November 5th, 2022

Exchange Invest
Exchange Invest
168 Exchange Invest Weekly Podcast November 5th, 2022
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TRANSCRIPT:

 

This week in the parish of bourses and market structure:       

ICE launched a new LNG suite

Boursa Kuwait profits soar as DFM leads the pack in Q3 results so far

LSEG gets UK antitrust clearance to buy Quantile

ESMA cuts off Indian CCP recognition while EUREX throws cash in an attempt to move Euro clearing away from multi-currency global London to Euro-parochial Frankfurt 

and wild excitement for some of us – well, certainly the host of this podcast (PLY) as the Gibraltar Financial Services Commission approves the acquisition of the Gibraltar Stock Exchange by Valereum including the new management team. 

 

My name is Patrick L. Young.

Welcome to the bourse business weekly digest.

It’s the Exchange Invest Weekly Podcast Episode 168.

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 of the past seven days can be found in Exchange Invest’s daily subscriber newsletter, the unique guide to the bourse business sent daily to your inbox.

More details at ExchangeInvest.com.

The European Securities and Markets Authority (ESMA) has withdrawn its mutual recognition of six Indian CCPs. That stems back to the whole concept of Markets in Financial Instruments (MiFIR) and indeed European Market Infrastructure Regulation (EMIR) more specifically the European market infrastructure regulation, which allows the European Union to have a very, very, very high horse indeed as to what it decides that it is going to allow to occupy the entire prime and solid territory of the Eurozone. Thus, the lack of information sharing and cooperation between India and ESMA has sunk the CCP cooperation agreement for now.

Meanwhile, Australia has opened a consultation on capital market resilience. ASIC conforming the market that the ASX had opened the second round of public consultations regarding market resilience in response to the ASX ‘market outage’ report published in November 2021. 

As you will recall, the ASX has been under the kibosh for quite some time now. Not only is the replacement of CHESS turning into a complete digital asset disaster, but of course, the actual core systems haven’t been functioning that well in the meantime, either. 

Global Brokerage Inc (formerly known as FXCM Inc) had the door slammed in their face this week by the US courts, no leave to appeal the summary judgement order which of course, was involved with their sudden total complete nutter acute mental breakdown of the balance sheet after the Swiss National Bank decided that they weren’t going to concern themselves anymore with the peg between the Swiss franc in the US dollar. 

The headline went in Bloomberg: China Shows The LME There Are Still Buyers For Russian Metal

That’s highly relevant pertaining to my comments last week about what is a rock-hard place repo faced by LME’s simply impossible dilemma and in this case, having a Hong Kong parent company in Hong Kong exchanges makes the Chinese market even trickier still for LME in a world where sanctions are a two-dimensional perspective, depending on which side of the sanctions wall you work from.

The CME meanwhile, has been giving some defense of their FCM application. 

One of the things they said was the CME won’t compete with existing FCM. How does that work? Do we get a tick box in the application saying “Honest governor, I never thought of using an FCM, so I’m going to use CMEs brokerage house? Who knows? These things have yet to be answered. 

The Indonesian Stock Exchange (IDX) has signed an MoU with Singaporean-based green FinTech MVGX to explore opportunities in developing carbon markets . 

It was election week for the Arab Federation of capital markets. One headline there EGX has been elected to the board. Then again, it might have been quite a bit of egg on the face had the new Egyptian Exchange Chairman Rami El-Dokany, not been elected to the board of FCM given that until he was appointed chairman of the Egyptian Exchange, he was of course the man running the Arab Federation of Capital Markets. 

In results this week, it was a frantic week way beyond busy 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 and market structure. For the sake of this podcast, let’s just peruse a couple of edited highlights. 

Glittering stars of the week’s results were Boursa Kuwait and DFM in Dubai, while the S&P and CME were not quite so illustrious, but still moving forward. 

All of those results as I said, just now can be found everyday in Exchange Invest daily, which end if you listen to this podcast and you’re not a subscriber to Exchange Invest daily, how on earth do you keep up with what’s happening in the business of bourses? You need a subscription to Exchange Invest the exchange of information. DM us on any of our social media channels and we’ll get you set up with a 30-day free trial. 

New markets this week, Gosh, rather a busy week all around for new markets. Once again, great to see for the parish, the Hong Kong Exchange (HKEX), announced the launch of its new international carbon marketplace. 

Equally, Trinidad and Tobago are looking to expand in its fashion akin to the Jamaican Stock Exchange, their SME sector listings, and a whole new market. 

The Ethiopians are establishing their own stock exchange, albeit it’s going to take a couple of years before the Ethiopian Securities Exchange (ESX), a joint project between the country’s giant new sovereign wealth fund Ethiopia invest holdings, the Ministry of Finance and Nairobi-based Financial Sector Deepening Africa (FSDA) comes to fruition. 

Always a delight to see new markets coming into existence, even if we have to wait two years for the Ethiopian exchange. Oh, well, I suppose that’s only T+730 more sleeps or thereabouts. 

Finally, this week in new markets, delighted to see that LoopFX has launched its pilot phase. That’s a groundbreaking peer-to-peer foreign exchange trading venue run by the Scotsman Blair Hawthorne.

Deal news this week, Caplight secured $3 million in strategic investment from Deutsche Börse to expand derivatives trading and hedging on private company shares. 

The UK antitrust watchdog has cleared the London Stock Exchange’s takeover of Quantile which will be welcomed by all parties concerned.

Valereum PLC, which is listed on Aquis has been approved to acquire the Gibraltar Stock Exchange. Excellent news as the GFSC issues the Change of Control permission for Gibraltar Stock Exchange to become part of Valereum PLC where of course PLY (the host of this podcast, is the Executive Director)

One tiny accounting kerfuffle this week, ICE has taken a $1.1 billion write down for their stake in the crypto platform Bakkt

Sadly, Bakkt appears to be lost at sea – it’s not a cringeworthy entity with massive issues like Coinbase but it does appear to have rather lost focus on momentum, let alone something like 80% of its original stock value from IPO.

Of course, stocks crashing and things like that are one of those pointers that you can always remember because it’s a “Victory or Death?” world out there. 

Victory or Death?” – Blockchain, Cryptocurrency and the FinTech World help you understand how technology is affecting life and markets. This is the book to help you. “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 Tuesday 6pm London time, 1 o’clock New York time – the IPO-Vid live show. You can catch the back episodes on LinkedIn and YouTube via IPO-Vid. 

Our next show coming up is going to be Dr. Elliot Banks, he’s going to be discussing: BMLL Liquidity Maps: The Data Magna Carta.

Crypto land this week, Hong Kong is doing a reverse face. The volte-face  involves exploring the legalising of retail crypto trading, which is entirely 180% opposed to the previous bond. 

Meanwhile, the CEO of Binance during the course of the week, when he invested $500 million in the takeover of Twitter has said support for free speech is the reason he invested in Twitter. Well said by CZ of Binance.

Meanwhile, Coinbase CEO Brian Armstrong is planning to sell 2% of his stock in the company to fund $54 million worth of scientific research to “help solve some of the biggest challenges in the world.” 

Please no jokes at the back about “Brian Armstrong’s hoping to live to 500 in order to see his stock return to its post-IPO highs”, please. 

Product news this week, EUREX has launched a big new incentive program for Euro clearing in the European Union. 

The new program is designed to incentivize clients running active accounts in the EU. It involves OTC Interest Rate Swaps (IRS), Overnight Index Swaps, Basis Swaps, Zero-Coupon Inflation Swaps (ZCIS) you get the gist of swaps of all kinds at EUREX clearing in 2023, it’s going to be feasible to qualify for an incentive reward up to $50,000. Based on EUREX’s current eligible client base, that incentive pool is expected to get as high as 25 million Euros. 

At the same time then came to the sanguine words from Reuters:

LSEG has repeatedly said that there has been no material shift in volumes from London to Frankfurt, and some 75% of Euro interest rate swaps are traded among non-EU counterparts in any case. 

Cash for clearing is the thing these days, it seems, as clearly other EU incentives have yet to make the breakthrough that was supposed to leave a post Brexit City of London in rubble. The Euro clearing kerfuffle which was supposed to empty the City of London by Christmas has instead turned into a tedious trench war with little to no movement, but occasional charges…all these charges have proven futile to date and DB1 able to turn the narrative – how can it? London has multicurrency offsets. DB1 is trapped in an EU which has proven itself eagerly protectionist – whether you like or loathe the EU, the core risk decision is don’t put collateral in places where the regulators are protectionist. 

Meanwhile, as the European Union has always been trying to protect the gas price by effectively killing the market, ICE have proceeded with aplomb, and they’ve launched a vast new portfolio of LNG contracts right across the contract continent of Europe. ICE is launching European LNG futures for Northwest and Southwest Europe and three supporting French, German, and Italian natural gas futures.

Great innovation on top of the TTF benchmark, which despite accusations from the European Union remains a fair and reasonable and indeed one has to say indupatably doubly balanced market for European Union Gas.

Another good news for ICE this week, ICE bonds have received approval for expansion in Canada. Excellent progress as the silent performer of the bond business ICE TMC move forward while leviathans Tradeweb and MarketAxess are eagerly beating their chests with their achievements. 

The BIS survey is out they’ve dripped a bit of it so far this week, the Triennial Survey shows global foreign exchange trading averaged $7.5 trillion a day in April 2022, OTC interest rate derivatives averaged $5.2 trillion, some words saying that London has lost some ground there certainly it’s no longer it seems the majority of business in the entire world. It’s only at 40-something percent, which really makes you wonder what on earth the rest of those 190 something United Nations nations are actually getting up to in their foreign exchange markets, despite the fact that many in London are saying, oh, once again, it’s the end of the City of London. We think not. 

Finally, in product news this week. Happy birthday, At 14, Bitcoin Is Battered But ‘Battle-Tested’ ran the headline in NerdWallet. 

We ran a simple comment “and outmoded”.

Technology news this week, TSX tech issues broke out during the course of a 40-minute outage across 3 of the Toronto-Montreal stock exchanges stalling equity trading in Canada, leaving some investors frustrated and others refusing to place orders even after the market reopened according to Bloomberg. 

Rather unfortunate to see at all points in time, but nonetheless, it’s a rare rare event these days indeed. The Canadian press runs: A Look At Recent Stock Exchange Outages Around The World and they seem to be slowly pressed to find many of them going back even 5,6,7 years. 

The point of course is here how incredible it was. The COVID crisis was the parish of exchanges finest are of multi month uptime, while cats everywhere were at home strolling across the exchange tech teams’ laptops.

Exchange Invest newsletter has consistently championed this excellent and we continue to be delighted that so many exchanges manage so much uptime that therefore, unfortunately, when things go a little bit pear-shaped somewhere like Toronto, it happens to hit the headlines. 

Aquis Exchange has hit headlines for all the good reasons, QuestDB has been selected by them to monitor their institutional exchanges. 

Finally this week, OpenFin has announced remarkably good numbers for the first half of the year plus some new investors. One invest in particular very, very interesting In-Q-Tel (IQT) that’s a not-for-profit strategic investor serving the US intelligence of national security community and its allies. In other words, it’s basically the CIA’s private venture fund. 

Very, very interesting investor In-Q-Tel (IQT), the “Q” is a deliberate double 007 reference: IQT exists to invest in stuff that will be useful to the CIA and the US intelligence community and other allies around the world. Moreover, here’s a stunning statistic on average, every dollar invested by IQT attracts $15 outside dollars of investment. 

Regulation news this week, ASIC in Australia has found shortcomings in the wholesale market practices in Australia. 

While in America, good grief, the headlines seem to have been pretty cloudy for Gary Gensler. He made one interesting point he said crypto trading is centralized despite the founding principles

At the same time, he was backing his controversial clawback rule. He was drawing attention for his bad performance review and indeed even The Economist was driven to write: Can Gary Gensler Solve Every Problem In American Finance? As we noted in Exchange Invest at the time just like in The Economist magazine, some people still read to remain pleasantly misinformed by the world. Gary Gensler can’t even identify every problem in American Finance, let alone resolve them. 

Career path this week, Qui Yong is serving as the chairman of the Shanghai Stock Exchange. 

Tomasz Dąbrowski becomes an interesting trivia question for future pub quizzes on the parish of exchanges. He resigned as a member of the Warsaw Stock Exchange Management Board before actually taking up his position. He was only announced on July 1st that he was going to have responsibility for IT amongst other functions on the board and it would appear Mr. Dąbrowski has a much better offer looming.

Elsewhere Bucharest Bourse’s CEO Adrian Tanase has had his contract extended by another year. 

In a somewhat cloudy move, Stephan Lutz has been appointed Interim CEO of BitMex after CEO Alexander Höptner left the business with immediate effect. That’s another rapid crypto departure as the former Boerse Stuttgart, Höptner departs BitMex with incredible alacrity and indeed had only joined in 2020. At least it was as crypto so, therefore, we should probably be counting in dog years or something like that. 

Lest you missed it, amidst the seriously horrific Russian invasion of Ukraine that has led to a breakdown of peace talks between Russia and Japan, aiming to end the Second World War. Apparently, Japan’s tough stance against Russia’s invasion has angered the Putin regime. So they’ve stomped out of talks to end the war that we all fought had ended somewhere around the middle of 1945. 

Elsewhere in the thank goodness, someone is saying its department plaudits to Former Goldman Sachs boss Lloyd Blankfein: 

“We lived through the Cuban missile crisis when we were stopping Soviet ships and international water. These are really the most polarised times? I was around in 1968, when there were assassinations of public figures, when kids were blowing up draft centers, and the National Guard was shooting on campuses. We got through that, we’ll get through this.” 

And on that mysterious and magnificent note, ladies and gentlemen, my name is Patrick L. Young. 

Thank you for listening to this 168 Exchange Invest Weekly Podcast. We’ll be back next week for #169. 

In the meantime, I wish you a great week in blockchain, life, and markets.

 

LINKS:

ESMA To Withdraw The Recognition Decisions Of Six Indian CCPs
ESMA

Australia Opens Consultation On Capital Market Resilience
Finance Magnates

Court Dashes Global Brokerage’s Challenge Of Summary Judgment Order
FX News Group

China Shows The LME There Are Still Buyers For Russian Metal
Bloomberg

CME Defends FCM Application
Markets Media

Indonesia Stock Exchange Signs MoU With Singapore-Based Green Fintech MVGX To Explore Opportunities In Developing Carbon Markets
The Korea Herald

EGX Wins Membership Of Arab Federation Of Capital Markets
Sada Elbalad English

Hong Kong Exchange Launches New International Carbon Marketplace
Regina Leader Post

Trinidad And Tobago Looks To Jamaica Stock Exchange To Develop Its SME Sector
Jamaica Observer

Ethiopia To Establish Its Own Stock Exchange As The Nation’s Economy Opens Up
The North Africa Post

LoopFX, A Groundbreaking Peer-To-Peer Foreign Exchange Trading Venue, Launches Pilot Phase
Businesswire

Caplight Secures $3 Million Strategic Investment From Deutsche Börse To Expand Derivatives Trading And Hedging On Private Company Shares
Yahoo

UK Watchdog Clears London Stock Exchange’s Takeover Of Quantile
Reuters

Valereum Approved To Acquire Gibraltar Stock Exchange
Valereum

ICE Takes $1.1 Billion Write Down For Stake In Crypto Platform Bakkt

Yahoo Finance

Hong Kong To Explore Legalizing Retail Crypto Trades In Reversal Of Previous Proposal
TechCrunch

Binance CEO Says Support For Free Speech Is Reason He Invested In Twitter
Reuters

Coinbase CEO To Plough $54 Million Into Longevity Research
Longevity Technology

Eurex Launches New Incentive Program For Euro Clearing In The EU
DB1

ICE To Launch European LNG Futures For North-West And South-West Europe And Three Supporting French, German And Italian Natural Gas Futures
ICE

ICE Bonds Receives Approval For Expansion In Canada
ICE

BIS: Triennial Survey Shows Global Foreign Exchange Trading Averaged $7.5 Trillion A Day In April 2022, OTC Interest Rate Derivatives $5.2 Trillion

Triennial Central Bank Survey Of Foreign Exchange And Over-The-Counter (OTC) Derivatives Markets In 2022
BIS

At 14, Bitcoin Is Battered But ‘Battle-Tested’
NerdWallet

TSX Tech Issue Resolved After Complete Trading Halt
Reuters

Toronto Stock Exchange Outage: Investors Decry ‘Unacceptable’ Trading Halt
Bloomberg

A Look At Recent Stock Exchange Outages Around The World
Yahoo Finance

QuestDB Selected By Aquis Exchange To Power Its Financial Exchange Infrastructure
GlobeNewswire

Aquis Exchange Selects QuestDB To Monitor Its Institutional Exchanges
Hedgeweek

OpenFin Accelerates Growth And Expands To Government Sector
PR Newswire

ASIC Finds Shortcomings In Wholesale Market Practices
Financial Standard

SEC Chair Gensler Says Crypto Is Centralized Despite Founding Principles
Decrypt

Gary Gensler Draws Attention For His Bad Performance Review
Investing

Can Gary Gensler Solve Every Problem In American Finance?
The Economist

Qiu Yong Serves As Chairman Of The SSE
SSE

Resignation Of Mr Tomasz Dąbrowski As A Member Of The Warsaw Stock Exchange Management Board Before Taking Up His Position
GPW

Bucharest Bourse Extends CEO’s Mandate Until End-2023
SeeNews

The Block: BitMex CEO Alexander Höptner Steps Down With Immediate Effect
The Block










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