My @MicroCapClub Club Conversation with James Davolos from @HorizonKinetics is now live! We discussed $ICE, $CBOE, $CME, and we did a deep dive on $MIAX. James Davolos is a portfolio manager at Horizon Kinetics, where he has spent nearly 21 years studying exchanges and what the firm calls croupier businesses. These are companies that earn fees on trading volume without putting their own capital at risk. One of his first projects at the firm was the New York Stock Exchange’s reverse merger into Archipelago, and his team later bought exchange seats ahead of demutualizations at the CBOE, the Minneapolis Grain Exchange, and others. In this episode, James explains why exchanges have outperformed their local markets over 20 years, why derivatives are the strongest moat in the industry and why inflation and volatility work in exchanges’ favor. He also breaks down $MIAX: how it took close to 17% of the multi-listed options market, whether perpetual futures threaten the business and what the Bloomberg futures bet could be worth. The conversation closes with James’s reflections on Horizon Kinetics founder Murray Stahl. Chapters 00:00 Intro 02:42 The croupier model 06:30 Why exchanges beat their local markets 08:28 How exchanges make money 13:34 What drives trading volume 17:20 Why inflation helps exchanges 18:29 The worst decade for exchanges 21:29 Buying exchange seats for equity 24:51 Why traders leased their seats 27:41 What MIAX does 31:43 Why traders pay for data 34:50 MIAX’s speed edge 39:59 Can competitors catch up? 43:57 Why MIAX fell from $57 50:32 Can MIAX keep taking share? 52:11 How to value MIAX 54:40 The Bloomberg futures bet 57:30 When we’ll know if it works 59:23 What would prove him wrong 1:02:10 Remembering Murray Stahl