Hide Not Slide

Going to try something new today. Will do a Q&A with @HideNotSlide, an insider in the world of exchanges. It's like a short interview you can watch in real-time (inspired by @ShitFund and @SirBaby6) If you have any good questions you can DM me and I will add if there is time.

Without compromising your anonymity, what brought you into the exchange space and how do you think about it as an investor?

I spent a number of years on Wall Street in close proximity to exchanges, where I witnessed first hand how much power they control & how attractive they are as an asset class. Many are unaware how much of the financial system relies heavily on just a few exchange companies.

As an investor I view exchanges as: A cheap call option on surprise volatility Counter-cyclical, asset-light financial toll-roads Clear winners of the global "analog-to-digital" transition I've been a happy owner of exchange stocks for many years now.

In your substack (which we'll link later) you call exchanges the "new financial kings." What makes them great businesses? What are they key metrics to comp them?

Exchanges are the new kings of finance bc they're picking up what banks dropped after GFC regs forced them to de-risk & surrender valuable business. For example, MarketAxess & Tradeweb both are taking the bond market away from bank dealers via electronic trading platforms.

A key metric to compare exchanges to each other is the size of their market data businesses. Exchange transaction revenue can be cyclical & volatile, but market data is a recurring, stable revenue stream that allows exchanges to put up consistent growth.