172 Exchange Invest Weekly Podcast December 3rd, 2022

Exchange Invest
Exchange Invest
172 Exchange Invest Weekly Podcast December 3rd, 2022
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Transcript:

 

This week in the parish of bourses and market structure:       

Swap Connect Delay 

Tadawul Buys Vendor

Bye Bye Blockfi

And as crypto contagion deepens it appears 

SBF has only $100,000 in the bank

and CBOE to finally reveals the digital exchange stakeholders

My name is Patrick L. Young

Welcome to the bourse business weekly digest

It’s the Exchange Invest Weekly Podcast Episode 172.

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’s daily subscriber newsletter, the unique guide to the bourse business sent daily to your inbox.

More details at ExchangeInvest.com

Let’s start with some headlines from the week in FTX. If you actually want to know what’s going on with the world of SBF FTX at all, then you need to be reading Exchange Invest daily subscriber. Rates are $300 but they’re going up in the new year, they’re going to be $349. So get in fast before Christmas ladies and gentlemen, in order to secure your front-row seat at the water cooler of the bourse business – the Exchange of Information. 

Anyway, it looks as if when FTX raised $420 million (one of those dope jokes which wasn’t funny even if the money was honestly used in the business). Some $300 million became a kind of property pass through security – not the ‘mere’ $121 million that was first reported last week as a real estate splurge. 

Apparently, a Stanford Professor earned something like $185,000 per annum – which does lead one to wonder just how much AML/KYC went into the $16.5 million Nassau purchase of real estate presumably using this $300 million by the parents of Sam Bankman-Fried. Rumors abounded the parents may yet be forced to resign from their professorial and tenure at Stanford by the way – which would be a pleasant moral touch even though I’m unconvinced it will happen. While SBF’s Father has been in Nassau of late (but clearly not controlling his son unless the strategy is to portray SBF as batbonkers crazy and thus avoid any future penalty) through an insanity plea. His Mother has kept a much lower profile. For the record “Barbara Fried, is a tax expert whose scholarship focuses on moral philosophy and “questions of distributive justice.”” 

Some might say Sequoia, Temasek and all those Ontario teachers who sold their pension funds somewhat, given a haircut of late can all believe La Fried practised what she preaches in terms of “distributive justice” but on this podcast, we could not possibly comment. 

Meanwhile, in a retrospectively hilarious Twitter feed we find from 2020, those were the days way back then SBF on Twitter noted:

“Things changed when I got to crypto. For the first time I was running my own project; and the whole point of crypto is that you have the freedom and the responsibility to build what you think the world needs.”

“Responsibility” – an interesting choice of words. 

Incidentally, Bahama’s real estate turnover broadly doubled in Q1 2021 to $400 million. That’s for the entire country, not just Nassau/New Providence. It was in fact a record year for the Bahamas in a property. But even so, without the largesse passed through from the investors to SBF et al…Bahamian real estate would have been a lot less active. Total real estate transactional activity in the residential sector, including rents in New Providence was $1.3 billion in 2021, $1.8 billion for the entire country of the Bahamas during the course of 2021 of which FTX/SBF and their curious pass through amounted to some $300 million. In other words, the better part of a quarter of the entirety of real estate is transacted in New Providence Nassau alone. 

Over in the world of legacy exchanges, who’s laughing now they do happen to look rather more traditional, reasonable, well finance, and indeed above board when it comes to criminal activity. Hong Kong Swap Connect trading scheme is facing delayed launch. Regulators in Beijing have yet to publish even basic information on the final rules for the programme, nearly five months after its unveiling reported the FT. 

That’s annoying, but nonetheless Swap Connect alongside equivalent bond – and presumably, a full yield curve suite of futures, promises an incredible opportunity for both Hong Kong as the conduit and also China to reposition the RMB in international investors’ minds as a currency of the future leading presumably to full convertibility in due course.

Equally good news in Hong Kong, early momentum is being shown for core climate, Hong Kong’s new international carbon marketplace. 

One area where we’ve got a big energy problem that’s in the EU, where effectively the economics of dally lalala is taking over, or at least are absolutely running rampant within the European Commission. The EU gas price cap proposal would deliver a $33 billion blow to the market, say ICE trying to be the best somber and sober selves when actually pointing to the fact that the empress of Brussels have not only no clothes, but they’re running around in what looks to be the sort of drug-addled orgy that would have been tabloid fodder for those covering FTX just last week. 

Meanwhile, someone else is in the spotlight this week, and not for good reasons. The ASX settlement monopoly is facing price controls and stricter oversight. 

ASX has played almost every card wrong for years, decades even, going from top tier tech innovator in 1987 to the laggard of the field in terms of management thinking, governance, technology, and more…It’s tragic. Absolutely tragic. The least the Oz blob can do right now is start ensuring pricing is more clean for this failed monopoly silo. I am truly saddened by the whole affair – ASX had so much potential which it chucked away in a flurry of narrow minded protectionist greed. 

Meanwhile, Vic Jokovic, the boss of what is now CBOE Asia Pacific (previously Chi-X Australia) has quoted commenting about ASX’s Defunct Blockchain Project:

“When you are driving in the desert and your life depends on it, you need a diesel Landcruiser and not a hybrid Ferrari” (that was an ASX abandons its blockchain project article in AFR  entitled “They Were Building A Frankenstein”).

Better news, congratulations to FESE and European issuers (Federation of European Securities Exchange) just celebrated its 10th award for SMEs Small and Mid-Cap companies just in the course of the last few days. 

Congratulations to the listing venues who had winners BME/SiX, Borsa Italiana, Euronext Lisbon and Euronext Paris, as well as Wiener Borse who had a special mention.

The Indian Energy Exchange (IEX) board are approving a quite substantial share buyback plan, and at the same time, they formed a subsidiary company to explore business opportunities in the carbon market. 

Speaking of the carbon market Archax has partnered with CIC for Institutional

Voluntary Carbon Offsets.

Archax, as readers may recall, is in exchange that has been licenced for two years in the UK without trading anything or even actually trying to trade a single thing and it’s now partnering over hot air. It’s rather like one of those French families still dressing in black tie and bowl gowns for dinner in the Indochinese hinterlands while the Vietnam war rages around them.

News that nobody was talking about this week, because of course, it didn’t suit the narrative of a lot of the media. London’s stock market is actually bigger than Paris as again after the pound went up slightly from an absolutely horrible year, and thus another non-story died.

Reuters actually run a good feature: A Tale Of Two Stock Markets: How London Still Trumps Paris For Investors, balancing the stock market debate – but we’re still not talking about the money market and more where London is essentially as large as the rest of the European Union put together, let alone Paris’s financial centre, whether we’re looking downtown or in La Defense. 

At the same time, the European Union, well, this is their second dilly lala move of the week. Not only are they determined to manage to starve to death and impoverishe their citizens who are going to ultimately actually freeze, over the course of the winter but the EU has settled plans to shift derivatives clearing from London to Frankfurt, which are frankly insane. 

After hopes, the European Union was finally seeing sense, they appear to have lost the plot and the ongoing tale where its role is to act as embittered spurned spouse of Brexit determined to destroy everybody including itself – that “first dig two graves” Chinese revenge maxim is writ large here.

Results news this week, all the details were in Exchange Invest daily – the newsletter no person can afford to be without in capital markets because it is the Exchange of Information. 

For the sake of this podcast, a few edited highlights:

Tel Aviv Stock Exchange (TASE), not bad revenue numbers a little adjusted profit sadly -10% and the Bulgarian Stock Exchange (BSE) Group not doing too badly at all net sales revenue +12.5%, EBITDA on the other hand slightly off -2.5 while profits at South Korean crypto exchange Upbit slide their parent slide 73% to $120 million. It’s almost as if there’s some sort of a crisis of contagion going on in the Bitcoin market and its related entities at the moment. 

Deal news, a couple of things happening that are worth looking at Tadawul Goup their Wamid FinTech subsidiary acquired 51% of the tech vendor Direct FN for $35.67 million.

Meanwhile, CBOE Global markets finalized their investor partners for CBOE’s digital business. That’s of course the exchange formerly known as ErisX, in which CBOE wrote off a significant amount of their investment just a few months ago. All of the original named partners seem to have been there barring Optiver who appears to have dropped out. But the final results include shareholders: B2C2, DRW, Galaxy Digital, GSR, Hidden Road, IMC, Interactive Brokers, Jane Street, Jump Crypto, Robinhood, Susquehanna International Group, Tastyworks and Virtu Financial. 

Don’t forget if you’re trying to get to grips with the overall history of why we managed to get here in terms of what’s been going on in the world of developing blockchain, cryptocurrency, and the FinTech world. Pick up a copy of my book “Victory or Death?” published by DV Books and distributed by Ingram worldwide. 

While you’re waiting for that copy of “Victory or Death?” to arrive, check out our live stream, Tuesday 6pm CET or 1pm New York time –  it’s the IPO Video live show. Catch the back episodes on LinkedIn and YouTube via IPO-Vid. 

Most recently, we were talking to Professor Balaji Prabhakar discussing Accelerating The Cloud. A fascinating discussion from start to finish about all manner of networks from transportation all the way to high finance and low latency trading. 

Coming this week, it’s the first of our review shows of the year 2022 and what a year it has been. 

In product news this week, T+1 settlement cycle notices have been issued for all Indian Futures and Options stocks from January 2023. 

EEX (European Energy Exchange) confirmed it’s going to be hosting German carbon auctions for another 3 years. That comes just weeks after the Intercontinental Exchange (ICE) had confirmation that they’ll be hosting multiple different options for amongst others the United Kingdom for a similar period of time. 

Technology news this weak, Euronext’s Commodity Futures had a bit of an oops nasty. A one-hour outage on a Tuesday, including in their flagship milling wheat futures. 

Meanwhile, the Eurasian Economic Union is exploring a common payment system with the BRICS region. 

Oh, that takes you back, doesn’t it? No, I haven’t heard the word BRICS used as an acronym for months in this podcast years even. 

Over to regulatory news, aclearing houses in India are going to have to seek ESMA recognition all over again. 

Frankly, this is sort of plainly stupid protectionism that once upon a time, the European Union would have accused India of deploying amongst its licence. Spiteful, stupid, and the sort of protectionism by regulation for which we should have seen an end during the analogue era.

Market maker Virtu sued the US SEC over a records request. They’re seeking more details on the market structure overhaul which will be a fascinating case to see if they get those documents released from Gary Gensler’s grasp. 

Career news this week the Bombay Stock Exchange (BSE) has received SEBI approval to appoint a new CEO, Managing Director(MD) Sundararaman Ramamurthy will be taking over, which is interesting because he’s an old hand from the National Stock Exchange. So therefore subject to shareholder approval, we have a beautiful example of the Indian circular economy because, of course, we have seen the chief executive of BSE who formerly worked at NSE going back to NSE to become CEO and at the same time, an employee of NSE is now coming over to become the CEO of BSE. 

Chittagong Stock Exchange have had an addition to the board Mohammed Nasir Uddin Chowdhury Managing Director of Lanka Bangla Securities Limited will be joining the board.

Sebi flex their muscles and the band the former Managing Director and CEO of MSEI (Metropolitan Stock Exchange of India) Udai Kumar for 6 months. 

More interesting still in India, we even had a bit of a movement in the NSEL scandal. In the time it has taken India Inc to not really get to grips with the NSEL scandal, crypto V1.0 has emerged, bubbled and is now precipitous declines. 

Anyway, as part of the ongoing and seemingly momentous NSEL investigations Sebi has banned the 5 major commodity brokers for 6 months, which only leaves us to consider our ‘big world’ statistic of the week ladies and gentlemen, that’s in week when the incredible roller-coaster career of Malaysian politician Anwar Ibrahim resulted in his becoming the 10th Prime Minister of Malaysia that seemed rather bleak when he was in a jail cell only a decade or so ago, following a hung parliament requiring a bit of judicious coalition building in the subsequent days. However, the statistic I would like to leave you with today is, Nomura estimate that 20% of the Chinese economy is now impacted by COVID restrictions up from just 9.5% a month ago. 

And on that mysterious and magnificent note ladies and gentlemen, my name is Patrick L. Young, publisher of Exchange Invest, the Exchange of Information and I wish you a great week in blockchain, life, and market.

 

Hong Kong’s Swap Connect Trading Scheme Faces Delayed Launch
FT

Early Momentum For Core Climate, Hong Kong’s New International Carbon Marketplace.H
KEX

EU Gas Price Cap Would Deliver $33bn Blow To Market, Says ICE
Financial Times

ASX Settlement Monopoly Faces Pricing Controls, Stricter Oversight
AFR

FESE: Winners Of The European Small And Mid-Cap Awards 2022
FESE

Indian Energy Exchange Board Approves Rs 98 Crore Share Buyback Plan
The Economic Times

Board Of IEX Approves Buyback Of Shares At ₹200, Stock Ended On A Green Note
Mint

IEX Forms Subsidiary Company To Explore Business Opportunities In Carbon Market
Power Line Magazine

Archax Partners With CIC For Institutional Voluntary Carbon Offsets
Archax

London’s Stock Market Edges Back Above Paris After Pound Surge
BNN Bloomberg

A Tale Of Two Stock Markets: How London Still Trumps Paris For Investors
Reuters

EU Sets Out Plans To Shift Derivatives Clearing From London To Frankfurt
Reuters

The Tel- Aviv Stock Exchange Reports The Results Of The Financial Statement For The Q3 Of 2022
TASE

The Tel-Aviv Stock Exchange (TASE) Announces Its Financial Statements Results For Q3 2022
PR Newswire

Transcript : The Tel-Aviv Stock Exchange Ltd., Q3 2022 Earnings Call, Nov 29, 2022
Marketscreener

Bulgarian Stock Exchange Group Report For The Q3 2022
BSE

Q3 Profit At South Korean Crypto Exchange Upbit’s Parent Slides 73% To 160 Billion Won ($120 Million).
CoinDesk

Tadawul Group’s Wamid Acquires 51% of Tech Vendor DirectFN For SAR 134m ($35.67m)
Argaam

Cboe Global Markets Finalizes Investor Partners For Cboe Digital Business
PR Newswire

Cboe Digital Closes On Investments From Robinhood, Virtu, Interactive Brokers
Seeking Alpha

T+1 Settlement Cycle For All Indian Future & Options Stocks From January 2023: Stock Exchanges
Zee Business

EEX Exchange To Host German Carbon Auctions For Another 3 Years
Reuters

Euronext’s Commodity Futures See One-Hour Outage
Reuters

Eurasian Economic Union Explores Common Payment System With BRICS
The Economic Times

Clearing Houses Will Have To Seek ESMA Recognition Again
Mint

Market Maker Virtu Sues U.S. SEC Over Records Request
Reuters

Virtu Sues SEC To Get More Details On Market-Structure Overhaul
Bloomberg

BSE Gets SEBI Approval To Appoint Sundararaman Ramamurthy As MD & CEO
Moneylife

Old NSE Hand Takes Over Reins At BSE
The Financial Express

Nasir Uddin Chowdhury Becomes CSE Director
The Business Standard

Sebi Bars Former MD And CEO Of MSEI Udai Kumar For Six Months
The Economic Times

NSEL Scam: SEBI Bans Five Major Commodity Brokers For Six Months
Business Standard

Malaysia Election 2022: Anwar Ibrahim Named PM, Swearing In At 5pm
South China Morning Post



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