Exchanges As Dividend Safe Havens

Securities and derivatives exchanges are often classified as "financials", but in many ways operate and pay dividends more like airports, with relatively low competition.
In this article, we survey four American exchanges, three European exchanges, and four Asia-Pacific Exchanges.
The main risks I see to investing in exchanges are major structural changes that seem very unlikely to happen.
Of these exchanges, I prefer the Asia-Pacific ones for their higher yields and my greater personal familiarity with them.
It wasn't long ago that I remember securities and derivatives exchanges being exclusive quasi-monopolies, where you either needed to own a seat (which could cost over $3.5 million in 2005), or you needed to pay a toll to a broker that owned a seat if you wanted to participate in financial markets. In the first decade of this century, many of the world's exchanges went public, and so it became possible to own a piece of the Nasdaq market as easily as you could trade any of the stocks traded on Nasdaq.
Many of these exchanges tend to be classified as "financials" but like Visa (NYSE: V) and Mastercard (NYSE: MA), have very different economics and competition dynamics when compared with banks and insurance companies, and tend to be under-represented in many portfolios I've seen. The main ETF I've seen which even tries to cover this sector is the iShares US Broker-Dealers & Securities Exchanges ETF (IAI), which is all US, and more weighted to the Broker-Dealers than to the exchanges.
Exchanges are in many ways like airports, which as I reviewed earlier tend to be very insulated from competition, as many cities (and in the case of exchanges, even whole countries) tend to have only one or two, and most of us simply pay tolls for using them without thinking about it. Unlike airports, KraneShares' CIO Brendan Ahern noted that Chinese under quarantine tended to spend more time trading stocks, not less.
In this article, I outline a brief... Read more