G’day All,
End Feb. Scary.
MTFs: Story was Quote, welcome Quote MTF but of course this is overcome by events at Chi-X. Chi-X notes a management change as first reported in the FT. The bit I like most about the FT story is: Neither Chi-X Europe, Chi-X Global, Instinet nor Nomura would comment. And that is pretty much how I’m going to leave it. I think it shows a nice, tight, line / team / group. Congrats too, to Equiduct on completing testing.
Clearing: Great that there is commitment to an EU solution (in or out of the Eurozone). Even with clearing there are limits to concentration risk / systemic risk. Clearing, to me at least, is of EU significance. The rush to CDS continues to dominate. I agree, but with reservations, and these are touched on in the fin news story – commoditisation of product and extent of participation. The absence of the European houses does not mean European houses are not active CDS participants. This needs to be respected. Interesting to see Eurex prepared to share governance. Recommendation 6 of the EACH paper on clearing benefits also interesting. They state A&I may increase systemic risk. Finally, Clearing fees at LCH.CN. Yes, please do reconsider fees…how about ad valorem fees with a 6 euro cent cap? That would inject some interest in the debate. Robbing Peter to pay Paul is not the level playing field the industry deserves. (NB, sorry LCH.CN readers, this is just my view – not personal attack)
Surveillance: I was unaware Cinnober was in this space…Burgundy, a Nordic multilateral trading facility, and the Hong Kong Mercantile Exchange (HKMEx) have signed up to Scila Surveillance.
LSE: Towergroup research reaching the already known conclusion. In my view: 1. Participants typically do their own due diligence (every firm has a different context) and 2. so what if national exchange x is cheaper than national exchange y, the issue is do you have access and fungibility. Still, if it increases awareness it is a step in the right direction.
Asian Exchange Alliance: At the outset of the project C&S is recognised. "Brokers will benefit from building on their relationships with their home clearing houses and need not take on foreign counterparty risks". This sounds like a monster A&I (Access & I/Op) project. Much to be learnt from Europe here.
On the trivia bit.
Australia is certainly a great Southern Land. I was unaware of the significance of the floods in Queensland to Lake Eyre (in South Australia). Hard to grasp this country, floods in one state, bush (wild) fires in another (Vic), and lakes the size of the Netherlands popping up in another state. Meanwhile, here in NSW we have sharks….which leads me to…
Well, this weekend sees a swim with the sharks…Sydney Harbour where a navy diver got bitten 2 weeks ago, literally losing an arm and a leg.
http://www.theaustralian.news.com.au/story/0,25197,25075692-5006784,00.html
For the swim itself: http://www.sydneyharbourswim.com/
Wish me an ‘uneventful’ morning.
Can’t believe I’ve missed 2 rounds of 6 nations. Important w/end for Wales to win away against the French, England will beat the Irish and the Scots will book the only home game win against Italy. Not that hard is it?
So, that’s it for me. I’m off to start my w/end (11pm here).
Whatever your pleasure, have a great week-end all.
S
Chief to go as Chi-X Europe faces a shake-up
By Jeremy Grant
Published: February 25 2009 23:06 Last updated: February 25 2009 23:06
Chi-X Europe, the pan-European share trading platform, is to lose its chief executive in a reorganisation by controlling shareholder Nomura of Japan, people familiar with the move said.
The move will come as a shock to market participants because Peter Randall, 53, has been credited with rapidly building Chi-X to the point where it is now the fifth-largest share trading venue in Europe by volume.
His departure, a date for which has not yet been set, was for personal reasons, the people said. Chi-X is the first of a breed – known as multilateral trading facilities – that took advantage of European Union rules enacted in 2007 that broke the exchanges’ monopolies over where shares can be traded.
Since it was launched almost two years ago, Chi-X has captured about 15 per cent of trading in FTSE 100 shares. The arrival of Chi-X, and later Turquoise and BATS Europe, prompted the London Stock Exchange and others to cut fees and speed their trading systems.
The departure of Mr Randall, a vocal critic of the LSE, comes as Chi-X is trying to develop a more global business, including a possible push into the US. It is also planning to collaborate with some exchanges. In November, Chi-X bought Cicada Corp, a trading technology group.
The development comes weeks after Chi-X Europe’s complex ownership structure changed after a fresh fundraising round. That cut the stake of its majority owner, broker Instinet Europe, to a minority ownership, although the broker retains full voting rights until the end of the year.
Instinet is owned by Nomura, which is expanding its brokerage and trading operations in Europe, spearheaded by the former Lehman Brothers equities operations it recently acquired.
The rest of Chi-X Europe is owned by 14 shareholders, including Getco, a Chicago-based electronic market making group, hedge fund Citadel, UBS and Morgan Stanley.
Neither Chi-X Europe, Chi-X Global, Instinet nor Nomura would comment
Eurex plans to offer up to a 90% ownership stake in its new credit derivatives clearing service to bank participants, with a potential launch date at the end of 1Q09.
Lake Eyre is an extensive 'salt sink' which derives its mineralisation from the evaporation of floodwaters over countless years. The lake has only filled to capacity three times in the past 150 years. It can harbour water nine times as salty as the sea.
When Lake Eyre does fill, it becomes the biggest lake in Australia. The massive Lake Eyre system covers an area of 9,690 square kilometres, or roughly the size of Holland. Nearly one-sixth of Australia's landmass drains into Lake Eyre.
http://www.southaustralia.com/LakeEyreNationalPark.aspx
Sex, lies and the internet Protecting kids from harassment in cyberspace
(as a Dad how could I not read this?)
19/02/2009 15:24:00
CDS DEALERS BOW TO PRESSURE AND COMMIT TO EU CLEARING COUNTERPARTY
Nine of the leading dealer firms in the credit default swaps markets have committed to the use of central counterparty clearing for CDS in the European Union by end-July 2009.
Concerned that the U.S. will dominate the sector via a stateside clearing solution, EU officials, exchanges and brokers have pushed for a European-based initiative. After a prior agreement with the global dealers collapsed, internal market commissioner Charlie McCreevy had threatened to pass legislation that would force the banks to use a European clearinghouse for eligible CDS contracts.
The letter of commitment, signed by Barclays Capital, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan Chase & Co., Morgan Stanley and UBS.
More on this story: http://www.finextra.com/fullstory.asp?id=19659
20/02/2009 14:57:00
LSE CONFIRMS INTEREST IN LCH.CLEARNET CONSORTIUM
The London Stock Exchange has confirmed its interest in the consortium of inter-dealer brokers and investment banks that is considering a cash offer for LCH.Clearnet.
More on this story: http://www.finextra.com/fullstory.asp?id=19663
EUROPEAN CCPS ISSUE PAPER ON OTC CLEARING BENEFITS
http://www.finextra.com/fullpr.asp?id=26142
Recommendation 6 (on A&I)
Different CCPs have taken diverse approaches to the risk management model and
service portfolio of financial instruments, resulting in different product specifications and
service offerings. Therefore any interoperability may be practically difficult to achieve at
this point in time and may increase systemic risk for the market.
CCP for European CDS edges closer as banks add support
LCH.Clearnet mulls revamping fees LCH.Clearnet, Europe's largest independent clearing house, is weighing a major shift in the way it charges fees, which would cut clearing costs for some of the region's largest market participants. (Financial Times)
French working group readies a clearing assault A high-level French working group has prepared a controversial report detailing secret plans for the creation of a super Euro-zone clearinghouse, in an attempt to boost Paris's profile and to face off clearing competitors from the UK and US.
French banks hold the key to European clearing enigma There were two big developments in clearing last week – and the key to understanding them is how they connect. First, the revelation of French plans for clearing in Paris and the formation of the Europlace scheme and, second, the announcement that nine large dealers had committed to clearing their EU-eligible credit derivatives trades in Europe through a European-based clearing house.
ECB offers lifeline to London-based clearers The European Central Bank has said there will be no preferential treatment for credit derivatives clearers based in the eurozone over their non-eurozone based European rivals, Financial News has learnt.
Chi-X fees a tenth of European incumbents' – TowerGroup
LSE undercuts European rivals by 50% The London Stock Exchange has been boosted by news that its trading costs are lower than those of its main European counterparts.
JPMorgan Chase slashed its shareholder dividend from 38 cents a share to 5 cents. The news surprised investors. The bank maintained that its first-quarter performance so far is “solidly profitable” and capital is “strong”. Its decision will save it $5 billion a year.
Rates market should attract more interest from clearers A panel of practitioners was asked recently to predict how many of the five or six clearing solutions being developed for credit derivatives would be live with at least one trade by the end of this year. The general response was two or three, although one contrarian posited that it would either be all or none.
***this is Natsha’s article / view which I like.
23/02/2009 11:38:00
ASEAN EXCHANGES COLLABORATE ON E-TRADING LINK
Bursa Malaysia Berhad, Indonesia Stock Exchange, Philippine Stock Exchange, Singapore Exchange and The Stock Exchange of Thailand, have signed a Memorandum of Understanding (MOU) to form an Asean electronic trading link
More on this story: http://www.finextra.com/fullstory.asp?id=19666
Custodians to play bigger role on risk mgmt
Custodians can best serve their clients following last year's crisis by working more closely, over the long term, to develop custodial processes that can highlight risk management issues before they pose serious problems.
Read more »
Turquoise faces liquidity challenge Turquoise faces a key test next month when the agreements that helped the bank consortium-owned trading system build market share run out, although the European equity platform insists it has enough liquidity from other sources to remain competitive.
THE TRADE NEWS: QUOTE MTF Reveals Launch Date, Appoints CCPBy Staff2/19/09QUOTE MTF, a Hungarian-based multilateral trading facility, plans to start trading on 5 June and has selected European Multilateral Clearing Facility (EMCF) as its central counterparty (CCP).QUOTE MTF, which was announced on 9 February, is majority-owned by Canadian firm BRMS Holdings, which also owns Canadian alternative trading system SwiftTrade. The platform will operate its own proprietary trading engine based in London and will offer trading in pan-European equities.The new trading platform aims to use its low-cost Hungarian operation to offer competitive trading fees. “Based on our novel pricing mechanism, QUOTE MTF will pay the highest rebates, attracting liquidity from day one, said Tamas Madlena, CEO of QUOTE MTF, in a statement. “The recent success of EMCF, as well as our partnership with them, is a clear justification for European traders to join QUOTE MTF if seeking a low-cost, state of the art equities trading platform.”Jan Booij, CEO of EMCF, added, “Adding QUOTE MTF to the existing platforms and exchanges for which we act as CCP will benefit the clearing and trading participants on the various platforms and exchanges.”QUOTE MTF is the second trading platform that has signed up to EMCF in the last two weeks. Last Monday, Burgundy, a regional MTF for Nordic stocks due to launch in Q2 this year, also appointed EMCF as its clearing house.EMCF is jointly owned the Dutch government and exchange group Nasdaq OMX. It provides CCP services for Chi-X, Nasdaq OMX Europe and BATS Europe. The provision of services to QUOTE MTF is subject to regulatory approval.
=====================THE TRADE NEWS: CCPs Forging More Links, But Progress Could be SlowBy Staff2/20/09Two links have already been forged between European central counterparties (CCPs), and more are being worked on amid growing demand for trading platforms to have multiple clearing houses. But several barriers – not least the reluctance to share business with competitors – could impede progress.Swiss clearing house SIX x-clear has been involved in both the links announced so far. It started interoperating with the UK arm of European clearing house LCH.Clearnet on 12 December last year, following the London Stock Exchange’s introduction of competitive clearing, and on 3 February this year it signed a memorandum of understanding to interoperate with pan-European CCP European Multilateral Clearing Facility (EMCF).According to Marco Strimer, CEO of SIX x-clear, more links are in the pipeline in response to demand from clients. “We have requested trade feeds from Deutsche Börse and Euronext and want to interoperate with their incumbent CCPs,” he told theTRADEnews.com. X-clear is also seeking a trade feed from Turquoise and interoperability with its clearing house, EuroCCP.A big driver for CCP linkages could be MTFs seeking multiple CCPs, especially as many may no longer be comfortable only having one clearing house. EMCF, for example, was rescued by the Dutch government following the near collapse of its parent company Fortis last year.Although EMCF now has government backing, this event alerted many to the fact that a CCP could fail. EMCF is the clearing house for the majority of the pan-European multilateral trading facilities (MTFs) that have been launched in Europe – it serves Chi-X, BATS Europe and Nasdaq OMX Europe. While declining to comment on specific interoperability initiatives his firm is working on, Wayne Eagle, managing director of LCH.Clearnet’s equity clearing service, EquityClear, said, “I think there will be more CCP linkages, and it is likely to be driven by liquidity providers being uncomfortable with single or lighter CCP solutions,” he said. “It is easier to add more CCPs in the MTF space than the incumbent markets, which tend to have a greater regulatory burden.” He added, “We constantly talk to MTFs about the possibility for LCH to clear for them.”Diana Chan, CEO of EuroCCP, agrees. “After the market events of last September, we received a lot of demand for us to become an alternative CCP for some MTFs as there was a widespread concern about the safety of CCPs,” she said. But she adds that there are three barriers to CCP interoperability. The first is regulation – some jurisdictions, such as France and Germany, require CCPs to be registered as banks. The second is risk – the fact that interoperating CCPs are exposed to the risk of each other’s failure. The third and, argues Chan, the most important, is commercial. “Incumbent CCPs have no interest whatsoever in sharing their lunch with anybody,” she said. “An incumbent CCP would prefer to interoperate with those that pose the least competitive threat, which by definition brings the least value to most of the incumbent’s users. The Code of Conduct is a good framework for interoperability, but everyone knows there are a lot of requests that have been stuck for a while.”Miranda Mizen, senior consultant at research firm TABB, said in a recent report on European equities clearing that there were more than 80 interoperability requests outstanding. “Most of the 80 will never see the light of day,” she wrote. Chan said EuroCCP is in discussions about clearing for new platforms that have yet to appoint a CCP, although she declined to name them, and is working on becoming an alternative CCP for the Nasdaq OMX Nordic markets. Nasdaq OMX has appointed EMCF, in which it owns a 22% stake as one of the CCPs, but is hoping to offer a range of clearers.=====================
THE TRADE NEWS: Burgundy and HKMEx Sign up to New Surveillance ToolBy Staff2/19/09Burgundy, a Nordic multilateral trading facility, and the Hong Kong Mercantile Exchange (HKMEx) have signed up to Scila Surveillance, a new market surveillance tool jointly developed by systems provider Cinnober and technology firm Scila. The firms said the new system can be implemented on any trading system on the market. Scila Surveillance is designed for exchanges, banks and regulatory bodies. According to the two firms, the focus of their partnership was to develop a solution with a shorter time-to-market, low cost of ownership and improved usability compared with other surveillance systems.“Confidence is one of the most important assets for any marketplace and where a modern and effective market surveillance tool is a key component”, said Olof Neiglick, CEO of Burgundy, in a statement. “I’m impressed with the Scila system, especially the connectivity solution, which allows for a quick and efficient implementation.”Lieven Van den Brande, chief information and operations officer at HKMEx, added, “The short implementation process and seamless integration with the trading engine were key considerations in choosing a surveillance tool when building our new marketplace.”Scila is a newly founded Stockholm-based company, in which Cinnober has a minority stake.
See also:
Website www.cinnober.com
Founded 1998
Headquarters Stockholm, Sweden
Owners Overall majority - founders, employees and Catella Fokus (12,4%)
Contact Nils-Robert Persson, Executive Chairman, nils-robert.persson@cinnober.com, +46-(0)8 503 47 80
Website www.scila.se
Founded 2008
Headquarters Stockholm, Sweden
Owners Founders/employees and Cinnober Financial Technology (23,1%)
Contact Mats Wilhelmsson, COO, mats@scila.se, +46-(0)70 361 52 81
Source: Financial News OnlineA high-level French working group has prepared a controversial report detailing secret plans for the creation of a super Euro-zone clearinghouse, in an attempt to boost Paris's profile and to face off clearing competitors from the UK and US.The backers of the plan appear to foresee the split-up of the Anglo-French LCH.Clearnet Group, and the subsequent combination of Eurex Clearing and Clearnet SA, the London-based central counterparty's Paris arm. The plan also anticipates the potential consolidation of other Euro-zone CCP providers.LCH.Clearnet and Eurex were not immediately available for comment.The confidential document, obtained by Financial News yesterday, was written by a working group headed up by the Banque de France and prepared for the Haut Comité de Plaçe, a body formed by French finance minister, Cristine Lagarde, to promote Paris's position in the financial markets. Contributors to the document include individuals from BNP Paribas, CACEIS, Calyon, NYSE Euronext, Société Générale, the Bank of France, the financial market regulator (Autorité des Marchés Financiers), the French banking federation (Fédération Bancaire Française), the finance ministry and Paris Europlace, the capital's financial markets organisation.The plan is likely to yield strong reactions from banks, infrastructure providers, regulators and politicians outside the Euro-zone because it reveals a dramatic attempt to promote Euro-zone providers above their non-Euro-zone rivals. The plan covers the working group's concerns about the current clearing providers as well as the potential that current developments might weaken Paris's position in the financial markets. The document also outlines a possible set of actions, including the development of a proposal for clearing in Europe, the urging of French authorities to both campaign for a Euro-zone solution and to secure a commitment from French banks, and their Euro-zone counterparts to "work towards creating a clearinghouse for the Euro-zone."It recommends that in order to best promote Paris, a consortium comprised of Euro-zone banks and infrastructure providers should be formed to develop an integrated Euro-zone clearing infrastructure covering multiple products, including cash equities, fixed income and derivatives.Under the scenario detailed in the document, each Euro-zone infrastructure provider would contribute its principal systems to the project – the examples given, being Eurex Clearing for derivatives and LCH.Clearnet SA for cash equities.The document also suggests that the Eurosystem (the Euro system of central banks) should effectively sponsor a series of "specifications" that would form a road map for the project. These would set out the principal characteristics that would later be required of an over-the-counter derivatives clearinghouse in the Euro-zone "for reasons of financial and monetary stability." The set of principals would specify the clearinghouse's scope, the instruments to clear and its risk management parameters.The document will prove particularly controversial in London where most clearing in Europe is currently conducted and where LCH.Clearnet Group is based. It says that LCH.Clearnet SA, the Paris-based arm of the CCP, is "threatened because it belongs to a group whose decision-making structure has been located in London," and because the bids for the clearer that are now being tabled by both the US-based Depository Trust Clearing Corp. and the consortium of banks and Icap "could lead to an increase in the weight of the London financial market" or "the relocation of governance to the United States." The document states: "[LCH.Clearnet SA] is weakened by the current fragmented position of clearing in Europe, which makes it unable to effectively resist the growing competition from infrastructures based in the United States. The strategic nature of this business sector means that it is important to create a pan-European clearinghouse for the Euro-zone with sufficient critical size to face down these challenges."
THE TRADE NEWS: Turquoise Prepared for End of Market-Making DealsBy Staff2/19/09Turquoise, a broker-backed pan-European multilateral trading facility, expects a drop in order flow when its market-making agreements expire in mid-March, but said this will be alleviated by improvements to its trading service.“This was a major commitment from nine large trading firms so we are expecting some evidence of change when the period ends. However, the effect will be countered by the increase seen in natural flow on the platform from our growing member network,” Duncan Higgins, head of client relationship management, Turquoise, told theTRADEnews.com. “We’ve introduced enhanced rebates, are continuing to reduce trading latencies and are delivering further innovation in our trading model. These initiatives benefit all firms and incentivise increased trade volumes.”Since the start of 2009, Turquoise has announced a series of improvements to its platform. In January, the MTF introduced a new fee structure that incentivises high-volume users. It also expects to implement speed and capacity upgrades by 6 March, and launch a dark pool aggregation service in Q1.Turquoise’s nine backers – BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley, Société Générale and UBS – committed to making markets on the MTF from its launch until mid-March. All nine banks also had a hand in recapitalising the platform last month, another sign of confidence in and commitment to trading on the platform, according to Higgins.According to the Fidessa Fragmentation Index, which tracks where equity trades are executed in Europe, Turquoise had a 5.86% share of trading on the 11 indices covered by the index in the week ending 13 February.
Burgundy Readies for May LaunchSTOCKHOLM-Officials at Nordic multilateral trading facility (MTF) Burgundy are in the final stages of preparation for the MTF's scheduled May launch.
No comments:
Post a Comment