Chit Chat Stocks - Stock Exchanges: The Best Businesses In The World? (4 Case Studies)

Episode Date: March 11, 2026

On this episode of Chit Chat Stocks, Brett and Ryan have a lengthy discussion on stock exchanges and what makes them great businesses. We discuss: (00:00) Introduction (03:51) Understanding the Stock Exchange Business Model (06:50) Revenue Streams of Stock Exchanges (15:44) Case Study: London Stock Exchange $LSE (18:27) Case Study: Warsaw Stock Exchange $GPW (32:54) Poland's Economic Surge and Stock Market Performance (42:22) The Mexican Stock Exchange $BOLSAA (50:40) Philippine Stock Exchange Warsaw company name: Giełda Papierów Wartościowych w Warszawie ***************************************************** Sign up for our stock research service, Emerging Moats: emergingmoats.com  ********************************************************************* Chit Chat Stocks is presented by Interactive Brokers. Get professional pricing, global access, and premier technology with the best brokerage for investors today:  https://www.interactivebrokers.com/  Interactive Brokers is a member of SIPC.  ********************************************************************* Fiscal.ai is building the future of financial data. With custom charts, AI-generated research reports, and endless analytical tools, you can get up to speed on any stock around the globe. All for a reasonable price.  Use our LINK and get 15% off any premium plan: ⁠https://fiscal.ai/chitchat  ********************************************************************* Disclosure: Chit Chat Stocks hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Learn more about your ad choices. Visit megaphone.fm/adchoices

This episode is presented by Interactive Brokers. Interactive Brokers is the best platform for global investors. From their one-of-a-kind market coverage to their best-in-class pricing, IBKR truly has it all. If you're serious about investing, head on over to IBKR.com. Stay tuned for more Interactive Brokers later in this episode. Welcome to Chit Chat Stocks. On this show, hosts Ryan Henderson and Brett Schaefer analyze businesses and riff on the world of investing. As a quick reminder, Chitchat Stocks is a CCM Media Group podcast. Anything

discussed on Chitchat Stocks by Ryan, Brett, or any other podcast guest is not formal advice or recommendation. Now, please enjoy this episode. Welcome into the Chit Chat Stock Podcast, a podcast to help you find your next great investment. Today, we are driving into a new thematic episode. We are talking about stock exchanges. And Ryan, I have this question in the notes, so you see it here. So you probably already know this since we researched along with the episode. But did you know that there upwards of 40 publicly traded stock exchanges globally including jamaica uh some other smaller ones hong kong i think in india singapore not all of them are available for u.s investors some of

them are a little harder to invest in but was this higher or lower than what you thought initially before doing research for this episode honestly it's probably about what i was expecting maybe maybe i would have i i guess i just assume most countries had their own stock exchange whether they were publicly traded or not uh it's the amount available to u.s investors i'm guessing is probably more in the ballpark of 25 uh depending on well depending on your broker i guess of course ibkr has the widest selection our sponsor obviously but there's a you know some countries have more than one, United States, Europe has a lot. And then there's also some that are conglomerate of many different ones, as we'll get into with the London Stock Exchange

today. What, well, maybe this is something for the question for when we get into the actual first section here, but these are some of the best businesses in the world. We're going to go through some of the examples. We have two case studies for the listeners each. So Ryan has a case study or two case studies. I have two case studies. And we're also going to start out with going through the general stock exchange business model and why they are some of the most attractive businesses in the world, natural monopolies, kind of national champions sometimes. And if you look at the company Intercontinental Exchange, ticker is ICE, it's not ICE, different ICE. They're the New York Stock Exchange as well as some other businesses, and they have gone on a

17% total annual return to Tagger since 2005. That is while some may argue they diversified their business, the NASDAQ, the CME Group have done wonderfully for long-term shareholders as well. And the questions we're going to try to answer today is why and whether there are some interesting opportunities around the globe with a few of these case studies. We're going to get right into it, but first, quick housekeeping. I don't mention this in every episode, but If you like these episodes, if you like our podcast, if you listen to it at all, please give us a five-star review on Spotify or Apple. Check out our newsletter, Emerging Moats Stock Research.

The link is in the show notes there. And if you're on YouTube, just comment, like, give us a subscribe. Ryan, I'm going to let you kick things off. Let's get right into the episode. What is the stock exchange business model? Why are they attractive businesses in your opinion? And then I'll follow up with some of my own notes as well. Yeah, the way I think we're going to go about this is I'll explain some of the basics behind the business model, how they actually make money, because I think a lot of people have some concept of it, but maybe don't understand the exact specifics.

And there's also other revenue drivers under the hood that are less discussed. And then, Brett, you can talk through some of the competitive advantages as well. And after doing research on this sector, I've become pretty convinced that these are maybe the best business models in the world. Some of the whitest moat companies around. Better than software? What do you think? I would take these over software. It is such a self-reinforcing network effect.

And we'll talk about why that is. But there's also their local monopolies, most of them. And I think that's important. I'll talk about why the local part is important. But before we do, there are basically four types of ways that stock exchanges make money. And they're actually all fairly meaningful depending on the specific exchange. So some will have higher listing fees, some will have higher software revenue, whatever it is. But there's typically sort of four common ways. The first one is transaction and execution fees. So for most exchanges globally, this is the largest source of revenue. And it's probably what most people think about when they picture a stock exchange.

So these are micro fees for every share or contract executed on their platform. This is typically when i say micro fee in the u.s i believe new york stock exchange it is three tenths of a share three tenths of a cent per share uh or or the pricing model can vary depending on the security that's traded but that's kind of how small they are and this is it's basically the underlying fee that the exchange provides for its matching engine so it's matching you to a buyer or seller depending on which side you're on that's a markup for their services for a long time investors basically paid this so brokers would just pass on this cost which i am assuming used to be higher uh as these exchanges have become more digitized the cost has probably come

down but brokers would just pass this on to the investors they pay the commission and the broker would probably tack on some some extra costs there as well to generate revenue for themselves however now you see this with a lot of brokers offering commission-free trading it's basically just a different entity will pay the cost to the exchange whether that's a bank or a broker dealer and then they'll just pass the cost on to you in some way um sometimes you're referencing like a citadel in this situation correct correct and actually as i was reading into this the high frequency trading firms and the exchanges are more closely connected than i thought so we'll talk about that in a second but transaction and execution fees micro transactions all very very

small on their own as you uh amass tons of scale and more and more investors are on your platform or on a brokerage platform, and they're using your matching engine, you end up collecting billions. So that is usually the largest source of revenue. The second one is listing and corporate services. So companies pay a substantial one-time fee to list their shares, usually. Again, all these kind of vary by exchange, but you can just, this is the IPO fee. And then they have recurring annual maintenance fees to remain on the exchange again pricing models can vary here but the new york stock exchange for example charges fees based on the total number of shares that you list so it's typically a balance depending on the year like in 2021 2020 new york stock exchange and

nasdaq saw a big boost in one-time listing fees right because the new ipos maintenance is going to be more gradual, assuming you don't get a bunch of delistings. But yeah, that's sort of the second pillar. And then the third one is market data and information services. So this is what most exchanges will refer to as their recurring revenue segment. And there's a ton of different data sets that exchanges can sell. But the premise here is basically that as the actual exchange operator, as the matching engine, they generate a ton of first party data. So think bid ask the real-time stock price i mean they are they are generating that data they're the first party to have access to they have an insane amount i mean if you go back to new york stock exchange

or london stock exchange that's depending on the record keeping 200 years of data and there's not really any other entity that has that treasure trove and that's probably part of what builds up that competitive advantage over time yeah so that's i mean like what you're referencing there is like historical data which they can sell on an ongoing basis forever and they'll they'll usually sell that to like quant funds or something like that for like so universities back test or yeah universities as well um but the real-time data they get it faster than anyone so if you're a research platform physical ai for example and you want to offer real-time data uh you want to offer the latest stock price quote whether that's through a reseller it's ultimately going to come

from the exchange uh and then the last one here that i mentioned is technology and connectivity this is one i actually didn't know existed prior to researching these businesses but large trading firms like the citadels or high frequency traders will place they'll pay rent to the exchange to place their servers physically inside the exchange's data center to reduce latency this is how far high frequency trading has come they are literally renting space near the as close to the exchange's matching engine as possible so that they can get they can shave off microseconds to go seconds i mean it's the speed of light from chicago and miami is not fast enough they want to be right in it's definitely not new york right it's new jersey i don't know why for whatever

reasons in new jersey they want to be right next door at the data center which is quite interesting yeah so and there's probably some revenue generators that i didn't mention here but that's kind of how i think of these businesses is execution or transactions you can picture that as the people running around the stock exchange floor transacting even though that's not actually what happens anymore there's the listing fees there's the data selling and then there's the tech or basically befriending hfts the the thing i mentioned here is that these are kind of self-reinforcing so as you generate more listings there's more incentive to transact as you have more transactions and volume that data becomes more valuable to sell more in demand so like a

fiscal ai for example i keep going back to them you know the first priority is getting stock data for u.s equities uh or north american equities usually i think most research platforms think that way too because it's the biggest market whereas argentine equities for example might be a little slower might not be as in demand i'm using argentina as an example here but other emerging markets as well so these all become sort of self-reinforcing and we'll talk about the network effect in a second but it really creates a bunch of and i know this is a dangerous term optionality for what they can sell last thing i'll say here before brett gets into the competitive advantages that stock exchanges have and they have plenty i do want

to talk about why every country tends to have their own exchange not every country but why 40 stock exchanges are publicly traded. And the companies, global companies don't all just aggregate to a single exchange. Because that was kind of a question that popped up into my mind is why wouldn't a company in the UK just prefer to list on the New York Stock Exchange, go get the most capital that they can. And there's sort of a few reasons. So first one is if you're a company in the Philippines, for example, you're probably smaller than most U.S. companies that are listed on an exchange. So smaller exchanges tend to have more localized listing requirements and they're much more attainable for local companies to list. So the small Filipino company might not

be able to list on the New York Stock Exchange. It's more practical for them to list on the Philippine exchange. The second one, and this is probably the biggest, is investor familiarity. So local investors exhibit home country bias which means they prefer to invest in brands that they use every day brands that they know i think about this a lot with canada actually it seems like a lot of investors what was it not bridgewater what's the well constellation software and then what's the investment conglomerate oh uh starts with a blank brookfield brookfield and then fairfax you got your yeah there's just a tendency yeah yeah to prefer uh you're sort of like a national champion i guess when you're on that actual exchange there's availability for local

brokerages if you're in the united kingdom you might not have access to everywhere else so you probably have it much easier if it's on the london stock exchange it just makes sense yeah and the other part is you get you get more analyst coverage so if you know you're a u.s citizen you probably read a lot of U.S. analyst reports if you're into that. And you get index inclusion, stuff like that as well. Last couple ones here, it eliminates some currency risk, just being on your own exchange. And then fourth, government and commercial favorability. So governments and other businesses might be more likely to treat you better, more likely to deal with you if you're seen as more of a company from the country. And I use Coupang as an example here. Coupang

listed on the New York Stock Exchange, I believe, an American company that only does business in South Korea. And we saw recently the Korean government not reacting so positively to this data breach or maybe giving them less favorable treatment than they would have if they were actually a Korean headquartered company listed primarily as their primary listing on the Korean exchange. So when we say local monopoly, it's got wonderful benefits. Brett's going to talk about the competitive advantages, but there's some local advantages that prohibit. You might see dual listings, but it encourages companies to keep their primary listing in their home country. Yeah. And you also have, like you mentioned, the dual listing, some major stocks and NVIDIA,

what have you. You could have 10 different listings around the world. Let's go through, yeah, some of the competitive advantages. I think you can see multiple at play. If we look at the broad note categories that we look at, there are more, but the general ones we like to start with are network effects, branding, economies of scale, and switching costs. I think they might have all four if they're a strong one that's run well, has a long history of success, such as the New York Stock Exchange. First, network effects. The more traders linked up to your exchange or market makers or what have you, the more liquidity you can provide customers. And this gives you an advantage in pricing power versus any upstart. I mean, just the larger scale you have, which some

might say economies of scale, but I think you can maybe put it differently. For example, if a new stock exchange popped up in Dallas or Miami, which there's been murmurings about, remember the long term stock exchange, I think there's talks about a Dallas one, I'm not exactly sure. But you'd have to convince every part of the financial ecosystem that flows for buy and sells and listings to go from the New York Stock Exchange to also list there instead. And why? I mean, sure, other players such as the Citadel, they have a lot of power in the system, in the sector. But the network effect of the New York Stock Exchange and the NASDAQ, for that matter, is incredibly strong. Now, if we go to branding, I'd say similar to luxury houses, stock exchanges have a history tied to

a nation or a culture that gives them a feeling of prestige over any competitor. Sure, again, you could replicate every part of the New York Stock Exchange at the, quote, Dallas Stock Exchange, but that has no prestige. No one wants to tell others that they are listed on the Dallas Stock Exchange. Again, this is made up. This isn't real. They want to tell them that they rang the opening bell and they IPO'd on the New York Stock Exchange. They want to tell their potential clients, we're a Fortune 500 company listed on the New York Stock Exchange. You should trust us. Only legitimate companies, and this has been a problem with the NASDAQ actually because of the Chinese scam codes that have populated their exchange, but this comes with the prestige and

branding and trust that has been built up over 200 years for the New York Stock Exchange. Line of Stock Exchange is the same. Then there's also economies of scale. At greater volumes comes the ability to drive down pricing if you want versus the competition and still make money. out. They don't necessarily have to do this because there's no competition, but it gives them tons of operating leverage, which I'd say is similar to the software industry, and then there's switching costs. I mean, imagine how hard it would be to convince every part of the financial ecosystem to switch trading to a random exchange in Miami or Dallas. I cannot even really conceive of why a company would want to list on some random exchange instead of the New York Stock Exchange,

if they're an American company, or NASDAQ again. There are dual listings, but the most volume is going to flow to the best player. And with so many moving parts that come with buying and selling of stocks, it would take a mountain to get volumes to move somewhere else. And if we look here, there's a, and I misspelled when I made the title here, but you can see it in the economics of Intercontinental Exchange and their exchanges revenue business. It's grown at a steady, if we go back to 2018, eight and a half percent CAGR. Since then, operating income has grown at nine percent. And what are we at? About a 50 percent profit margin there. I'm sure they go higher, but it's like a 90 percent gross margin business. It's insanely good. Again, anyone

watching the video, ignore my misspelling, but you can see that they're just a steady business, consistent cash flow, consistently high margins, and really one that's very, very easy for them to defend. If you're a regular listener to Chitchat Stocks, then you've probably heard us talk about Interactive Brokers. Here are three reasons why we think Interactive Brokers is better than any other brokerage platform. Number one, they've got it all. Stocks, bonds, ETFs, options, crypto, you name it. 170 markets, 36 countries, 28 currencies. Number two, they've got best in class pricing. They have zero commissions on US listed stocks and ETFs and offer margin rates up to 54% lower than the industry. Number three, you can ditch the separate high yield cash account.

Interactive Brokers offers up to 3.14% interest on instantly available cash held in your investment account. Head on over to IBKR.com. Rates subject to change. Margin involves risk. Restrictions apply. Interactive Brokers is a member of SIPC. I think the branding point is important to take home because there's a lot of investors that, or a lot of firms that won't even consider certain securities if they are not listed on specific exchanges i mean even think about if you're looking into a company and you see that they're listed on an otc market or an otc exchange and it's really illiquid it's kind of a deterrent so that kind of i mean that part of that is the supply and and the the network effect and having all that capital to begin with that's also you

know giving you an actual bid or an ask but it's also i think there's just a stigma if you're not the leading exchange uh in that it might be hard to get in or out uh and that maybe the company isn't credible enough that's fair that's fair all right let's go to my first case study which is going to be actually a company called, at first, NUAM, N-U-A-M, which is the combined stock exchanges of both Chile, Colombia, and Peru. It's kind of like the Andean Corridor, excluding Ecuador, I guess, but they're too small. However, when I looked it up, this stock is not even available to trade on IBKR. It looks extremely promising, though, and I guess for our sponsor and a shareholding

of mine, still shows the long runway to grow for IBKR getting global distribution for clients and the long runway to grow and modernize financial technology within Latin America. Two themes that we have covered time and time again on the show. They're working with NASDAQ to update its infrastructure. So hopefully these markets will open up soon for global trading. It's currently, and again, I'd have to look at the numbers deeply to kind of confirm everything, but it's currently trading at 10 times earnings and one times book value. But the actual pick, something that is available for all listeners of the show generally, would be the London Stock

Exchange Group. The ticker is going to be LSEG, and it's on, you know, naturally, the London Stock Exchange, LSE for the abbreviation. This is perhaps the oldest continuing company we've ever covered, which makes sense given that the English and the Dutch were the largest innovators in joint stock trading back a few centuries ago. The LSE was part of the Royal Stock Exchange in the 1500s. But funny enough, the stockbrokers were apparently kicked out because they were too, quote, unruly for the aristocrats of Great Britain, which is a nice stereotype for that country,

for everyone that knows the history of them. And they had to start trading from Jonathan's Coffeehouse, which I wonder if this is a place you can actually visit. It'd be quite interesting. That would be where I would go if I visited the United Kingdom. The tower, what is it? The clock tower? I don't even know.

We're skipping that. We're going to Jonathan's Coffee House. That's where I'll spend a few hours. But by around 1800, a formal stock exchange was formed. And with the rise of the British Empire dominating the globe over the next 100 years, the London Stock Exchange was the center that financed things such as railroads across the globe. Many of the U.S. railroads had London investors, which have created some hilarious anecdotes when reading throughout that history where investors would report back or the companies would report back to investors that the company was doing great, but they were simultaneously at war with a native tribe or civilization on the Western Front, which is, you know, there's some analogies that can be played in modern times today. hey, don't worry, everything's fine about our business.

And it turns out our FTX is about to collapse. If you think management teams are able to lie today, the companies could report whatever they wanted back to their London investors back at this time. That's true. That's true. It was all based on trust. Now, in 1986, they went electronic. They deregulated.

And in 2000 to 2001, they transformed from a private partnership to a publicly traded corporation. and in 2021, they acquired Refinitiv for $27 billion. The question here was maybe this was a diversification, but it's a Bloomberg competitor. I'm sure it's a European focus maybe along with some other data analytics services. Seems like a solid business, honestly. So maybe they overpaid, but who knows? It's essentially vertical integration where they can provide more analytics on top of LSE listings revenue. Now, the problem with LSE is that for basically over the last 100 years, UK capital markets have become less and less relevant. I mean, the country has

become smaller on the global scale relative to other countries. There is zero excitement about the UK economy and new listings have become non-existent. Many stocks trading on the LSE have actually said there is a discount and want to switch primary listings to the United States. For example, Arm Holdings, one of the hottest stocks out there that went public over the last few years is an English company, but they decided to list in New York. Interestingly, very little of LSE's revenue comes from actual stock trading. Today, you have Clearinghouse, you have a majority stake in TradeWeb, which is bond trading, and then they have data analytics and subscriptions from that acquisition. Now, TradeWeb is, I think, fascinating. That seems like a good asset.

We looked at market access before, but I think TradeWeb is actually gaining market share from them. And the electronification of bond trading seems quite, quite interesting. If you look at LSE, it's trading at a PE of 37. But the big, what I saw for the bull case was a potential margin expansion story. And they're also trading at, according to Fiscal AI, an EV to EBITDA of 15, if that matters to you. But right now, look, they have gross margins, which shows the attractiveness of these business models, you know, stock exchanges and the stuff that is associated with them, it's 90%. But their operating margin is only 25%. They are currently, and this kind of shows how old this business is, they're still on an ongoing migration to the cloud. And they are

supposedly reinvesting to modernize while merging everything from the 2021 acquisition. You got 90% gross margins, price to sales ratio of five, probably some good pricing power. If you get back to a 40 margin maybe there's something there uh i guess without going too long any interest in lse stock yeah i mean they recently uh elliot management has been acquiring a stake in the london stock exchange little activist that could be nice for them yeah i'm curious why they've struggled so much so the stock is up i mean it's not terrible but the stock the stock is up 20 percent over the last five years total return it just obviously they've got a phenomenal competitive advantage phenomenal branding people are still

you know even though it has maybe lost its status to the new york stock exchange as sort of the global leader for the financial center it is still what the second largest exchange in terms of trading volume i would guess other than maybe nasdaq well probably yeah i'm sure the u.s dominates with both of those yeah you know it's hard to get bullish on the united kingdom economy but at the right price is interesting something that concerns me this is more hearsay than any evidence is we have seen a number of companies change their primary listing um so arm like you said uk company chose to primary list i think on the new york stock exchange that might have been what you said or in the u.s uh and wise for example another uk company has announced that

they are moving their primary listing from the london stock exchange to the new or to an american exchange it feels like maybe they have such high listing requirements that they're deterring companies which that is for an exchange that should be basically priority number one get as many companies as you can uh within reason credible companies i should say you know validate that they are real businesses to list and give investors as many options as possible i'm not super excited by the london stock exchange although i do think refinitiv's got a pretty good data analytics or uh data business and i think they are more of like a cap iq competitor than a bloomberg although they do have refinitiv's got their like news arm as well so i guess all right rat run

we don't need to go in the weeds of data analytics competition let's go to uh your first case study as we move along here a company that is going to challenge your pronunciation probably more than any country in the world poland yeah okay so this is the polish the leading polish stock exchange so i'm going to give this a go but i believe in i'm going to botch this uh the gielda papirao word of shower wish e warsawi i'm going to have it written down in the show notes the only reason i do that, I'm going to call it the Warsaw Stock Exchange or the WSE. The only reason I do that is on some research terminals, you're not going to be able to find the company by looking up Warsaw Stock Exchange. So if you're interested, just look it up on Google or whatever and get

the actual name. And it should be on Fiscal.ai or whatever your research terminal is. The Warsaw Stock Exchange is the largest stock exchange, not only in Poland, but in all of Central and Eastern Europe and its roots date back to 1817. I think that's going to be sort of a recurring theme this episode in that all these businesses seem to have been around for basically a century or as long as the economy has existed in those markets. So anyway, the modern history dates back more to 1991. So following the overthrow of the communist regime in 1989, the current Warsaw Stock exchange was created as a joint stock company by the state treasury in 1991. And they hosted their inaugural trading session four days later, with only five formerly state owned companies

listed. Today, WC's main market lists exactly 400 companies. So there's been plenty of growth in well, actually, I think Poland has had the fastest growing economy in Europe over the last 30 years, partly because they were coming off a lower base. But it's been helpful for their listings as well. If we look at the total return over the last 10 years, things have been pretty good. Up until sort of 2025, they were fine. I don't think it was a home run investment. But over the last year, they've basically almost tripled because, and i'm going to talk about this uh they may have hit sort of an inflection point and maybe we can kind of debate whether or not this is an inflection point or just a temporary boost but i mentioned

that they're the leading exchange they also do a lot more than that they also have new connect which is a separate exchange designed for smaller companies and they'll they'll often have small companies list on the new connect and then as they grow they'll graduate them up to their main exchange so they have done that a number of times and then they also operate the leading fixed income exchange the leading options exchange and leading commodities exchange for poland as well they really are a one-stop shop for polish capital markets the interesting part here and the reason i was interested in this other than brett saying that he was interested in it i should do it as one of my case studies was uh they honestly may have reached an inflection point and we're seeing

that in trading volume. So over the last month, so February, they released like trading volume data for month by month. We saw the following growth in trading volumes. They call it turnover value, but you can think of it as trading volume. Main market grew 24%. New Connect trading volume grew 63 percent. Global Connect, which is smaller, grew 367 percent. The debt instruments market volume grew 39 percent. ETFs have seen explosive growth. They grew 180 percent. And the derivatives declined 20 percent. It's not a very big business for them, so it doesn't really matter. And then commodities are all over the place. I wasn't going to go into every single one, but those are obviously very commodity specific. What is driving this heightened activity? I think is the most

important question to ask. And it's hard to point to one specific thing. But here's what I found. First, equities are performing really well in Poland. So the Poland MSCI index was the second best performing index in the world over the last year since January 1st, 2025. So a little over a year ago the ms poland msci index is up 78 second is increasing interest from polish investors as well as global investors so partly this is partly because stocks are doing well people get more interested it's kind of that self-reinforcing cycle but also in august poland introduced the ok i personal accounts that allow citizens to invest up to a hundred thousand polish lottie tax-free so maybe you can kind of think of this as like a roth IRA comparison for Poland and

them rolling that out naturally is going to be a boost to trading volumes and then the last sort of catalyst here and it's hard to tell exactly how much this is actually mattered is that they launched the v1 of their Warsaw automated trading system this is supposed to be like a multi-asset trading platform developed from scratch to replace their old trading platform. Apparently, it's extremely low latency. Basically, newest tech unifies all the different assets onto a single platform. I don't know all the specifics, but this is, when you look at the emerging markets, a lot of the stock exchanges that I saw kind of rest on their laurels a bit and just have a wonderful place in the local economy and they just benefit.

We're about to talk about another one of those next. right uh warsaw seems to be proactive and i think part of that is that poland uh and specifically some of the bigger cities in poland are sort of tech hubs i mean they are do you want to guess the gdp per capita of poland right 2024 no i'm afraid i'm going to be too off all right let me give you some reference us is like 70 to 90 i can't remember say it's 80 and someone like brazil mexico argentina are 10 to 15 000 i'll go 35 52 interesting yeah 1990 when the communist wall fell 6 000 it's almost passing some of the quote-unquote western european markets that are supposed to be on par with the united states that people are you are de-emerging united kingdom france spain i think

they're already higher than places like spain and italy i mean it's been an insanely strong economic growth and that's probably part of the reason why the stock exchange is now doing well and it's it's a very common like tech outsourcing place i know um like a lot of people will have developers abroad in poland or a lot of like american companies will do that especially in the age of remote work and you're also seeing a lot more i think business development there like there's a lot of gaming studios uh based in poland i think one of the big ones is uh oh yeah the one that does the the daily household stuff right yeah there's also cd project red or something like that yeah cyberpunk which is actually kind of a flop but anyways yes there's a lot of

development talent over there so it doesn't totally shock me it just there's a lot of i mean there's more to the economy than that it's uh but yeah i mean example yeah there's a lot of tech stuff same with estonia some of those other former eastern bloc countries and i will say for anyone's to stickler in macroeconomic data it's purchasing power parity so maybe not apples to apples but for local citizens i mean the economic power now is just phenomenal and when you get past that we're going to talk about this for the next case study mexico when you get past a certain level of gdp or incomes people are able to save more spend more on not necessarily luxury items but discretionary items and with those savings people learn about investing and that can

grow much faster than the underlying economy once more people hit that middle class upper class become wealthier yeah and i mean you can kind of get a sense sometimes when governments are trying to get investors involved in the economy. And I think, you know, having a 100,000 Polish zloty tax-free account is certainly a step in that direction. Real quick, free cash flow per share has grown at a 7.8% CAGR over the last decade, and it's likely going to inflect this year and over the next few years, given the trading volume increase. Right now, they trade an EV to EBIT of 16.4, and they pay out most of their cash flow, almost all of it, in dividends each year. So about a 4% dividend yield right now. I do want to talk about this real quick because

this is sort of a competitive advantage that we may be glossed over, but a lot of these are sort of quasi-government entities. So the Warsaw Stock Exchange in particular, I think the Polish government has like a 35% stake in the business, which is probably why they're required, well, maybe not required but required in air quotes to pay out a big chunk in dividends as the government wants that recurring revenue but i mean you think about it it's great incentives and it also leads to a massive moat and even though they're technically independent i don't think most governments want a bunch of different exchanges they want one or two dominant exchanges and i think there's a couple of reasons. One, market stability. You can aggregate supply into one

place, especially in emerging countries. You want people to participate in the economy. You can give them a fair price if everyone's aggregating to the same exchange. And then second, they want to be able to police the market. So if there's a flash crash, for example, and you have to halt trading or whatever, and this is kind of a rare scenario, but in the case that it happens, I don't think a government wants to have to talk to a hundred different exchanges and get them to shut down they want one centralized place where they can kind of control things if they need to so I think it's sort of the case with Poland you're basically more or less making a bet on the economy with yeah somewhat with the stability of a four percent dividend yield as well all right

folks before we move on let's talk about our home for investment research fiscal ai fiscal ai is a complete stock research platform for fundamental investors we use it every single day here at chit chat stocks it has everything you need to research individual companies from 20 years of financial data to company specific segments and kpis earnings call transcripts morningstar reports and insider ownership data and much much more and they just lowered the price of their highest tier by 60%. If you want a complete enterprise-grade financial data terminal, check out Fiscal.ai. If you use our link, fiscal.ai slash chitchat, you will automatically get two weeks of Fiscal Pro for free, no card required. And if you want to upgrade, our link will get you 15%

off any paid plan. Again, that's fiscal.ai slash chitchat. The link will be in the show notes. Okay. When I sell my business, I want the best tax and investment advice. I want to help my kids and I want to give back to the community. Ooh, then it's the vacation of a lifetime. I wonder if my head of office has a forever setting. An IG Private Wealth Advisor creates the clarity you need with plans that harmonize your business, your family, and your dreams.

Get financial advice that puts you at the center. Find your advisor at IGPrivateWealth.com. New from Nespresso. Blend wellness into your coffee routine with the Coffee Plus range. infused with functional benefits. Choose the coffee you love with added B vitamins, like Coffee Plus B12 to help support immune function and Coffee Plus B6 to keep your day moving. Or go with the flow and choose Ginseng Delight, our new double espresso with ginseng

extract. Whatever lies ahead, don't change your morning. Let your morning change you. Discover Coffee Plus on Nespresso.com. man what an opportunity 100 ago late 2024 i mean if you look at the kind of the growth of their economy it wasn't slowing down at all and yeah what an opportunity it's still not that expensive today but of course there's geopolitical risks with them and you know 16 times if people believe maybe there's some over-earning that could not be that cheap but i mean compared to london stock exchange i'm much much more interested in this one let's keep moving though or ryan one last thing i'll say is despite already being one of the best performing indexes the poland msci index

also still remains one of the cheaper indexes for the average valuation ratio so i think this is starting off a pretty low base and there is like i talked about the momentum that you get when volume is growing, valuations are growing, more global investors, more incentive to buy data. I think this could be sort of the beginning of honestly a big, a big volume growth tailwind for them. Yeah. I saw some, uh, as a person that, well, I guess I live, uh, living in South America right now, so I'm not patriotic or anything, but I thought it was interesting where there was like a chart when Poland became its own country again in 1990 or 1989. The GDP of the country was, say, like $200 billion, something like that. In today's dollars in South America, the GDP was

something like a trillion. And today, Poland's GDP on its own is almost the same size as South America, which is astonishing, given the population differences. So I mean, they've just been done phenomenally. It's a really interesting economy to look at. And there's also some interesting individual stocks, but we got to keep moving. I have one that's a little stickier. It's a company I've owned in the past. I don't own right now, but it's maybe one that, you know, over the next decade could turn into the next Poland. And any long-time listener of the show knows what company this is going to be. It is Bolsa Mexicana de Valores, or as I'll just call it, BMV, or the Mexican Stock Exchange, naturally. You can buy its shares on the Mexican

Stock Exchange. The ticker is going to be BMV colon B-O-L-S-A-A. You can buy this through Interactive Brokers. And I will mention, we've used charts throughout this episode. Let's highlight our friends at fiscal.ai. Use our link in the show notes to get 15% off any paid plan. They aggregate the data from the providers from the Stock Exchange for you so you can analyze stuff really, really quickly, save you time, make you a better investor. The link will be in the show notes. All right. For BMV, for the Mexican Stock Exchange, I've actually owned this one in the past. We did a full episode on them two years ago. And I don't think it was our most listened to episode. In fact, it was probably on the lower end. But I think it was quite informative on a

fascinating business. And for a full hour breakdown, I would go back to that episode. I don't think much has really changed. Bolsa Mexicana is pretty much a pure play stock exchange. Makes money on listings, equity trading, derivatives, debt listings, clearinghouse, and selling data on top. So if you don't want the Intercontinental Exchange or London Stock Exchange kind of mixing in other businesses, maybe this is something that's more for you. It was started before 1900 in Mexico City and went through a classic electronification process similar to that what we saw with other exchanges. It used to be a monopoly, but a few years ago, excuse me, the Mexican government it wanted some competition, so they added a new exchange. Bolsa still holds 80% share of trades,

so not really a huge concern. And if it turns into a duopoly, well, they're going to be the biggest winner there. What's interesting is that there's this chart that I have in the show notes, which is retail trading accounts in Mexico. It ends in 2023, but really, it just has been explosive growth as the economy has gotten a little more modern with fintech and a little wealthier. For 2019, there was basically none retail trading accounts, and now it's into the $7 million as of 2023. And I assume with the rise of things like NewBank, Interactive Brokers, and others, MercadoLibre is probably over $10 million and is going to steadily grow with the population of that country over $100 billion. Now, as we sit here in 2026, trading volumes

across Bolsa or Mexican stock exchange have not exploded higher despite solid growth in the mexican economy and the iShares mexico etf absolutely ripping in 2025 a lot of that was on the back of silver and stuff like that but the glass half full would argue that trading is going to eventually follow economic growth like it has in poland now the glass half empty approach would argue that listings you know the geographical proximity and the fact that you have companies such as new bank and mercado libre not even touching the mexican market i don't think at least as a primary listing uh the glass of empty would say well look you know it's going to still center on new york this isn't europe it's the north american block canada

mexico are going to have the problem where a lot of companies are going to want to do primary listings on the new york stock exchange if you look at their trading or listings activity uh i think there's arguments for both sides because the debt offerings on their platform if you look at just Q4 2025, the amount of medium and long-term debt placements, there's 30 new listings. Short-term debt, there's 341. There was 95 medium and long-term debt listings in 2025 and over 1,000 short-term debt listings in 2025. I mean, that's really solid business there and that's doing great. But in 2025 alone, there's only two new listings for equities. Both came in Q4 2025. And maybe this is

when the market's going to unlock because there's talks about new listings coming in 2026. But if you look at it, this isn't a business firing all cylinders like the Warsaw Stock Exchange. Trading and listings revenue has been fairly stagnant, although still very profitable. You can kind of look

at the segments and KPIs that fiscal AI has to kind of dig into the specific details there. But their information services business has been growing nicely. Maybe it's growing at 10% year over year. Yeah, Ryan's going to show the chart here. I guess the question I'm on the fence on is, is equity trading going to be a multi-year thing that kind of follows economic

growth eventually in Mexico? Or in the future, would a company like MercadoLibre and NewBank want to list in Mexico, among many, many other companies? Or will trading brokerages in Mexico connect to the New York Stock Exchange or NASDAQ and make it irrelevant? This is kind of the catch 22 when associating with the IBKRs of the world because, well, if you're, say, an investor in Mexico or any other South American market, or sorry, Latin American market, you open up an IBKR account or any competitor, hopefully IBKR, given they're our sponsor, and they give you access to invest not only on the Mexican Stock Exchange if you're in Mexico, but the New York Stock Exchange. And if MercadoLibre is listed on the New York Stock Exchange and you have access

to that in Mexico, well, why do you care? So I think that's interesting. Could be downside of the thesis. If I look back at my specific notes, my thesis on BNB was one, high quality asset, Mexican economy is booming, and it was trading at a cheap price. I think I agree on both that it's still a high quality asset, clearly not as high quality as something like the New York Stock exchange, which is the gold standard. The Mexican economy is still booming, and I still think that's going to continue. Today, it trades at a dividend yield of 5.4%, PE of 13, on very depressed trading volumes. Yeah, maybe you could argue you're getting a pay-to-wait situation here. I feel like you could work out. Even in a tough period, their average revenue growth over the last 10

years has been five and a half percent per year thoughts on this one ryan any interest yeah i think mexico when i think about the economies that i've have some grasp on they're probably one of the ones i'm the most encouraged by most excited by i do think there is like you said some risk that global investors can just go straight to the new york stock exchange and maybe the massive companies will primary list on the biggest exchanges like new york stock exchange or nasdaq but i still think there's going to be home country bias especially for sort of the middle tier type aero mexico they came out of bankruptcy boom bmv mexican right right so and we talked about why that is and why there's advantages to listing on your local exchange but

i think they're going to be in a good spot and i mean with it's very rare i think that you see a chart like what we saw with the warsaw stock exchange where it's just grown like doubled in a year these usually i would guess i mean growing a country it's more like or growing an economy is more like probably like an oil tanker than a speedboat you know it takes a long time for things to develop and mexico has a lot of the right conditions in place i think to make that happen where you've got the right uh you've got a young age generally across the population the population is growing gdp per capita is growing there's near shoring we've talked a lot about the positives of mexico generally and i think it would be very surprising if that did not flow

through to increased trading volume for bolsa yeah and just for context on the size of their economy and per capita numbers their gdp per capita in u.s current u.s dollar terms has gone from about 11 000 to 14 000 to a little in between 14 and 15 000 from 2022 to 2024 and on a purchasing power parity basis they're around the low 20s so there's still a lot of room to grow if that thesis catches on but let's close things out ryan with the final case study here this is another interesting economy uh with u.s relations philippines huh how did you find this one um i mean i don't uh i don't know exactly how i discovered it i think asian century stocks did a write-up on them a long time ago that i found uh which kind of helped with some of the

research here as well shout out to michael fritzell i recommend looking out as looking at his service the i'm calling this a one to watch because you can't actually buy shares on interactive brokers at the moment that may change at some point and if it does i encourage people to look out for this because it is a solid business and it'll probably we're going to talk about it here i think trades at a fair price. So the Philippine Stock Exchange, PSE, was formed in 1992 out of a, quote, shotgun marriage. It was thanks to Chimney for giving me that one. Basically between two rival exchanges in the Philippines. So the first one was the Manila Stock Exchange, founded in 1927, which, again, these exchanges are durable. If you are primarily concerned about capital

preservation in your investing strategy i recommend looking at exchanges it's literally you just get shut down if a socialist takeover happens or communist takeover happens that's the only time with poland like oh we have a capitalist economy again okay we're gonna have one of these stock exchanges right uh the second exchange there was the mockety stock exchange which was formed in 1963 apparently these were basically rival exchanges for the better part of 30 years until in 1992 the government forced them to combine and the merger was apparently a key condition for the country to receive a development loan from the asian development bank which they greatly needed at the time so that was the shotgun marriage part for about 10 years after that

philippine stock exchange was a member-owned non-profit but in 2001 they demutualized and became a shareholder-based corporation. Two years later, they went public on their own stock exchange under the ticker PSE. Note, I mentioned it, you can't buy shares on IBKR at the moment, but IBKR has done a great job of expanding to new markets over time. I think it's possible at some point, so maybe keep an eye out for it. Today, they are the exclusive stock exchange for the country of roughly 117 million people, and that population continues to grow. you know that's way bigger than i thought way way bigger than i thought yeah yeah same at the population and density and this place just blows my mind yeah yeah uh there are 285

companies in total listed on the pse with a combined market cap of about 345 billion us dollars uh now here's the issue that has prevented them from growing at the rate that they maybe should have up until basically 2020 they had very strict listing requirements so companies were required to list at least 20 of their float and they would have an ipo tax for three to four percent of their share sales share sale value which they were the only asian country that had one of these left, a specific IPO tax. And this deterred, as you can imagine, a ton of companies from listing. Well, in 2021, that tax was appealed. In 2025, there was another tax called the stock transaction tax that was reduced from 0.6%

of share sale value to 0.1%. And then there was another tax, I guess there's a whole bunch of taxes involved in the IPO process that was also further reduced. And on top of that, they dropped the float listing requirement from 20% to 15%. I think there's a very specific reason why this happened. We'll talk about this in a second, but they're clearly making a push to encourage more companies to list on their exchange. And the CEO, Ramon Monzon, sorry if I'm pronouncing it wrong, he's a former entrepreneur and Chicago business school grad, and he has explicitly said his three goals are to introduce more products get more businesses or more companies listed and introduce more retail investors the i think the reason that this is happening is because gcash which is i

think the product it's not the actual company name they are the leading mobile wallet in the philippines they are they've said for some time that they're planning to go public and now there's all these taxes being reduced there's this float reduction change and it seems like it's because gcash has announced that they're planning to go public in the second half of 2026 this would be the largest ipo in philippine history so it seems like they're kind of trying to accommodate for them but in general i think it's encouraging that they're doing sort of everything they can and it's both sort of from the government's perspective with the tax appeal and the exchange perspective to get as many companies to list as possible. The current market cap is $281 million U.S. dollars.

They've got $53 million in net cash on the balance sheet, so about $228 million enterprise value. Last year, they earned $28 million in earnings before taxes, so EV to EBT of eight times. again they pay out most of their cash and dividends so uh looking at about a five percent dividend yield at the moment okay when i sell my business i want the best tax and investment advice i want to help my kids and i want to give back to the community oh then it's the vacation of a lifetime i wonder if my head of office has a forever setting an ig private wealth advisor creates the clarity you need with plans that harmonize your business, your family, and your dreams. Get financial advice that puts you at the center. Find your advisor at IGPrivateWealth.com.

New from Nespresso. Blend wellness into your coffee routine with the Coffee Plus range, infused with functional benefits. Choose the coffee you love with added B vitamins, like Coffee Plus B12 to help support immune function and Coffee Plus B6 to keep your day moving or go with the flow and choose ginseng delight our new double espresso with ginseng extract whatever lies ahead don't change your morning let your morning change you discover coffee plus on nespresso.com that's juicy dude that that's come on ipk give us the opportunity here let us buy yeah it's it's been a lumpy decade for them but it feels like they're taking the right steps to encourage more listings not only from philippine companies but

from other asian companies as well letting local investors get in on the action yeah and this if you get a large i don't know the size of gcash but that can be kind of the anchor for a stock market which which can be quite nice all right we're going long we're hitting our hour mark here ryan as we close things out any final thoughts and i want you to rank your top five favorite stock exchange stocks that you are interested in this could be one that we covered or didn't on today's episode my number one's probably poland my number two we didn't really talk about it today but honestly it might be the intercontinental exchange it diversified though it's tough yes yeah that's true but i just keep looking at all these exchanges and thinking

all the biggest ones here as they graduate and grow they're going to do a list on the nyse and they were the nasdaq and it's like they they have the bit they are the meta of if we're making the social media network effect comparison even better yeah yeah uh third one i'd say the mexican stock exchange bolsa is probably up there for me and then fourth and fifth i haven't looked at but i'm interested in is japan tokyo stock exchange they i think are the their largest economy in the world um and then taiwan but again don't know that one's about 40 tsmc i think probably yeah but hey that's maybe not a bad economy to bet on it's done quite well uh geopolitical risk aside i'll go mine i have mexican stock exchange one i guess i cheated because i have a couple that

i that are available right now but i think new wong is quite interesting as well as and this my fifth one is the argentina one which you can buy i believe i believe that one is just absolutely dead but if you kind of look at the transition from socialist policies to capitalist policies you could have a well quite risky a multi-decade tail when i think that stock has gone up a bit on the anticipation of that which makes total sense when you have the the malay coming in but if you look at nuam chile has gone way more capitalist with the recent election it was a total blowout. They're the leading economy within the NUOM stock exchange network. And then you have Colombia, which, well, not a cinch, may be moving into the more capitalist areas. And they've had

restrictions on stock investing in the past. So if NUOM can, again, get global coverage, open up internationally, that could be quite interesting. Third, I'll put the Philippines, like i said quite again interesting fourth poland and then fifth argentina i think generally when looking at stock exchanges you want to pair it up of course with a good valuation but an economy you think it can continue to grow and those are kind of the four or five uh groupings that i think are quite interesting all right ryan anything else before we close out no i i would say i've become very concrete in my beliefs that these are impossible to disrupt usually unless the government wants it to yes and uh if you're bullish on an economy and you don't know

where specifically to put money stock exchange would be one of the first places i would stock exchange in airports those are those are the two monopolies that are very very hard to disrupt yeah exactly exactly toll roads on the economy that's going to do it for this episode thank you to our sponsors again check out fiscal ai sponsor interactive brokers and any other sponsors throughout this episode give us a review on spotify or apple podcast check out the newsletter emerging moats in the show notes and check out anything else that we have to offer within the podcast show notes as a disclosure we are not financial advisors anything we say on this show is not formal advice or recommendation.

Ryan, I, or any podcast guests may hold securities discussed in this podcast, may have held them in the past, and may buy, sell, or hold them in the future. Thank you, everyone, once again. And we'll see you next time.