Friday, November 7, 2008

Blogspot, NYSE, Liffe Clear, Consolidation, CDS.

G’day All,

Once again, a rush due to other commitments.
I will circulate this and update my remarks on the blogspot: when I get home. (he, he, weekend starts early down under).

NYSE.EN: (NYX) has become such a large animal / conglomerate that it is hard to read between the lines. The disposals of GL and the LCH.CN stakes are both signs in my view of ‘cleaning up’ or at least understanding the beast. As a monopoly, the myriad investments / tentacles of the octopus could be sustained and cross-subsidised. I suspect there will be a lot more demarcation and accountability of business lines.

Liffe Clear: Wow, I wrote the above, then I read this. I can understand Liffe wanting to do this. One angle for me, is why should Liffe members pay for the DTCC to buy LCH.CN? I guess they now have EUR 260 myn of the required EUR 739 myn. ICE members have flown…hmm, don’t expect LME members to get a fee cut, that leaves equity clear and repo clear to pick up the tab of EUR 500 myn odd.

Chi-X: October Volumes – published on

DTCC merger / LCH.CN
Also need to consider this piece of context
& sunk investments by member firms (I recall the C21 migration issues)

I also want to jump on this story:
Consolidation of Clearing Houses good or bad?
The DTCC buying LCH.Clearnet looks a no brainer deal for both companies with both increasing their business potential and both able to rationalise their cost structures.

If this was indeed the case, why is the ECB saying…
3 November 2008 - ECB hosts meeting on establishing central counterparties for credit default swaps
And what about competition as a force to drive down costs?
Did this consolidation just happen one morning – no, we needed competition as one of the catalysts for change.
Is one CCP really such a good idea?
If this was the case, why is there demand for NCC in the US?
I think there are some sweeping generalizations and assumptions being made here.

Enough for now,

9, yep, nine games of rugby this week end and a rugby league world cup too.
I’ll not be watching half of ‘em.

Have a lovely w/end all,


Former US ECN operator Bats Trading, now a registered US exchange, says its European multilateral trading facility (MTF) has gone live, initially offering trading in 10 UK-listed securities, with a complete roll out slated to be complete by 19 November.
More on this story:

NYSE Euronext plans to axe 200 European jobsNYSE Euronext has posted a 33% drop in third-quarter profit and announced plans to eliminate 15% of its workforce in Europe over the coming year, as the transatlantic exchange group comes under increasing pressure from low-cost rivals.

And Then There Was One (Platform) The head of NYSE Euronext’s Universal Trading Platform on how consolidating trading systems will alter the trading landscape.

Earlier this year, NYSE Euronext embarked on a plan to create a single platform for all its products and markets. Dubbed the Universal Trading Platform (UTP), it will consolidate the various systems brought under one umbrella by last year's merger of Euronext and the New York Stock Exchange's parent company.
The transition of the NYSE and NYSE Arca systems in the U.S. and the European platforms NSC and Liffe Connect is slated to start at year-end, said Anthony Attia, executive director and head of the UTP program, beginning with the European cash markets--set to be completed by the second quarter of next year. Arca, whose technology will form the base of UTP, is expected to finish its transition in the third quarter, and NYSE before the end of 2009. The derivatives migration is still being assessed, said Attia, but should get under way in 2009.

To terminate its LCH.Clearnet clearing contract the London-based derivatives exchange owned by Nyse Euronext will make a one-time payment of EUR260 million.
More on this story:

TOKYO STOCK EXCHANGE TO FIRE 'ARROWHEAD' IN 2010 The Tokyo Stock Exchange is to delay the launch of its next generation trading system from late 2009 to the first business day of 2010 following consultation with CIOs from major trading firms on the Exchange.
Full story:

DOW JONES NEWSWIRES: NYSE Euronext Delays European MTF Launch Until Jan. '09By Doug Cameron 10/31/08NYSE Euronext (NYX) said Friday it will delay the launch of a new European share-trading platform until January. Duncan Niederauer, chief executive, said on a conference call that the launch of the NYSE Arca Europe unit had been pushed back "in deference" to the wishes of clients. The unit aims to defend the position of the transatlantic exchange operator amid intensifying competition in European equity trading. Bats Trading, a rival exchange that has already claimed 12% of U.S. equity trading, said Friday it had brought forward the launch of its own European platform to Nov. 19. NYSE Arca Europe and Bats Europe will join the flurry of new platforms targeting high-frequency traders in the region that are challenging established operators, including the four bourses controlled by NYSE Euronext. Nasdaq OMX Group Inc. (NDAQ) and the bank-owned Turquoise platform have already launched, competing with Chi-X, the first of a new breed of so-called multilateral trading facilities.

FINANCIAL TIMES: Mifid Opens Door for US Platforms in EuropeBy Jeremy Grant
Mifid, which came into effect a year ago Saturday, kicked off that revolution by breaking the monopoly the region’s stock exchanges had long enjoyed on where a share is traded – and thus on how tariffs were charged to traders. The directive required brokers and other intermediaries to ensure that they were achieving “best execution” when they carried out a trade for a client, which opened the way for other trading platforms to challenge the exchanges.Best execution means not only getting the best price for a share for your client, but ensuring that the trade is cleared and settled in the most efficient and cost-effective way.

Euro Millennium to use BNP’s new MTF post-trade service
LSE discloses details of onward routing fee
Trading on LSE now cheaper via Nasdaq OMX Europe

Nasdaq OMX has acquired Chicago-based Bloom Partners, a supplier of market intelligence services to public companies. Terms of the deal were not disclosed.
More on this story:


The New Zealand Stock Exchange, the largest shareholder in the Bond Exchange of South Africa (Besa), has poured cold water over the Johannesburg Stock Exchange's proposed R173 million takeover of its compatriot.
More on this story:

DUTCH REGULATOR AFM SIGNS FOR ACTIMIZE MARKET ABUSE SYSTEM The Netherlands Authority for the Financial Markets (AFM) is rolling out market abuse technology from Actimize to improve its surveillance and supervision of the Dutch market.
Full story:

3 November 2008 - ECB hosts meeting on establishing central counterparties for credit default swaps
The European Central Bank (ECB) today hosted a meeting with European stakeholders concerning the establishment of central counterparties (CCPs) for credit default swaps. Participants included the potential providers of such CCPs, their regulators and the main users (dealers and buy-side). The meeting complemented initiatives by the Federal Reserve Bank of New York and the European Commission in this field.
The Eurosystem shares the views of the Financial Stability Forum and of the European Commission on the importance of reducing counterparty risk and of enhancing transparency in OTC derivatives markets, especially in those parts of the market that are of systemic importance (e.g. credit derivatives, including credit default swaps). There are a number of initiatives aiming to achieve these goals through the introduction of centralised clearing solutions for OTC derivatives. The Eurosystem sees the introduction of CCPs for OTC derivatives as an appropriate solution to tackle the aforementioned issues because CCPs, by virtue of concentrating outstanding positions in one place, (i) reduce the counterparty risk to which market participants are exposed; (ii) increase market integrity, transparency and the availability of information; (iii) standardise the criteria for evaluation of exposures; and (iv) free up collateral.
Participants at the meeting underlined the merits of multiple solutions in general and of at least one European solution.
The Eurosystem stands ready, in cooperation with the other authorities, to facilitate the effective collective action of the private sector in this regard.

EUROPEAN COMMISSION SETS YEAR-END DEADLINE FOR CREATION OF CDS CLEARING COUNTERPARTY The European Commission has set an end-year deadline for financial market participants to draw up a blueprint for the clearing of credit default swaps.
Full story:

ICE in clearing head searchThe Intercontinental Exchange, which is setting up a new US-based credit derivatives clearing house, is searching for a chief executive to head up the venture, Financial News has learnt.

Watchdog eyes government bond and repo clearingEurope's competition watchdog is to expand its study of European government bond trading to include clearing and settlement of repos and cash bonds, Financial News has learnt.

Consolidation of Clearing Houses good or bad?
The DTCC buying LCH.Clearnet looks a no brainer deal for both companies with both increasing their business potential and both able to rationalise their cost structures. This is certainly the case at LCH.Clearnet where it has been common knowledge that they need to modify their systems.We will not know if the deal will be concluded for some months until due diligence is completed but as far as the market is concerned it will surely be welcomed.The many new trading venues that have emerged after MiFID will also be keen to see this deal completed, as it clearly benefits their cost structures as it will the users. The Stock Exchanges will see the merger of the two businesses as attractive because it increases the overall attraction of companies listing and the operational efficiencies and costs in financial services firms. The investors should also benefit with reduced risks and costs.In the minority of those that may not see this deal as good for them might be OM NASDAQ who stated a little while ago that they will compete with the DTCC. This deal makes this less likely. Could they look towards Deutsch Börse and Clearstream for a merger? This would be an aggressive move and offer the European markets good competition.With the markets in turmoil and needing to recover lost confidence of the investors this type of deal is exactly what's required. It could spark a new round of mega changes to the infra stricture of the markets on the way to building a better, more secure and cost efficient financial industry.


THE TRADE NEWS: Trading on LSE Now Cheaper Via Nasdaq OMX EuropeBy Staff11/4/08Nasdaq OMX Europe, the exchange backed multilateral trading facility (MTF), has said it will not pass on to clients the onward routing charge imposed by the London Stock Exchange (LSE).The LSE announced a revised pricing structure yesterday, which included a one-basis-point charge for orders routed to it via other displayed markets. In addition, MTF routed orders will not qualify for the value-based discounts that apply to brokers’ orders from other sources.Nasdaq OMX Europe is the only MTF with onward routing at present, having teamed up with Citi to provide the service on its behalf. The charge for routing orders to the LSE is 0.25bps.“We are not passing on the LSE charge to our members,” confirmed a Nasdaq OMX Europe spokesman. “The 0.25bps all-inclusive pricing promotion is on as planned as we will continue to offer fast and cost-efficient trading in European blue chips.”As a result, trading on the LSE will be cheaper through Nasdaq OMX Europe rather than directly on the exchange itself. "The least expensive way to trade aggressively on the LSE – i.e. for removing liquidity – is via Nasdaq OMX Europe during our current price promotion,” Todd Golub, head of markets development, Nasdaq OMX Europe, told cheapest charge for an aggressive execution on the LSE is 0.45 basis points, but a firm would need to be trading more than £30 billion a month on the exchange to qualify for this. Those trading £7.5 billion or less on the LSE pay 0.75 basis points for an aggressive execution.The LSE has denied that the tariff is anti-competitive. “It is fair and right to distinguish between client business and our competitors,” LSE spokesperson John Wallace told, when the plans were first revealed. “Nasdaq OMX Europe remains free to compete with us in equity trading, as others are doing.”

1. How do you define optimism? A banker who irons five shirts on a Sunday. 2. What's the difference between an investment banker and a large pizza? The pizza can still feed a family of four. 3. What do you call five hedge fund managers at the bottom of the ocean? - A good start. 4. The credit crunch has helped me get back on my feet. The cars been repossessed. 5. The bank returned a cheque to me this morning, stamped: 'insufficient funds.' Is it them or me? 6. A man went to his bank manager and said: 'I'd like to start a small business. How do I go about it?' 'Simple,' said the bank manager. 'Buy a big one and wait.' 7. Everyone Says Money talks. Trouble is, mine knows only one word: 'Goodbye.' 8. What have an Icelandic bank and an Icelandic streaker got in common? They both have frozen assets. 9. A director decided to award a prize of $50 for the best idea of saving the company money during the credit crunch. It was won by a young executive who suggested reducing the prize money to $10.

Italy v Australia
England v Pacific Islands
Wales v South Africa
Ireland v Canada
Scotland v New Zealand
France v Argentina
USA v Uruguay
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