Thursday, October 1, 2009

AMCF News: ASX AGM, CP120, LCH.CN results, InterOp, HK

Sanctimonious twaddle. (Thx David Buik).
What a marvellous coupling of words. I really miss some things about England, and their mastery of their language is one of them.
It also strikes me that we don’t have to look far to find an abundance of twaddle.

One area of twaddle is of course vested interests and competition.
It strikes me more and more that the incumbent exchanges have much to lose when they discuss certain order types and functionality.
If you have a system that struggles to cope with capacity and new functionality changes in the market are no longer set at your pace, market reform becomes a constant thorn in your side.
I think it is regrettable that so much confusion surrounds algo, stat arb, dark pools, crossing net works, high frequency, flash etc.
Too often I think this is just scare mongering…or Sanctimonious twaddle (ST).

Some destinations don’t charge per order, DMA users should be allowed to use that business model.
If you do charge per order – what’s the problem?
I’d like to see more industry consultation and feedback on these items.
Commercial partners know their responsibilities and invariably these are underpinned by legal agreement.
Maybe layering is bad – maybe not.
Maybe algo traders are bad – maybe not.
As a child, my parents were fearful that too much TV might zap my brain. (fortunately I preserved my brain cells for a more vicious fight with booze at uni). TV didn’t zap a generation. Maybe PC games will?
My point. Market structures change over time. This is not a bad thing.
Maybe today’s algo trader is just the equivalent of the open outcry floor trader.
Let’s just be a lot less rash about the claims we make. – too much ST I fear.

A nice piece here on layering of the order book:

LCH.CN Group results are finally out.
I was sorry to see a real drop in transparency – see p37.
Revenues by asset type are now mixed with interest income.
We can no longer clearly see clearing revenues by business type.
Oxera – this is such a simple thing. Along with your other work, simple clarity in this table would be hugely helpful in seeing the trends in the costs for the industry as a whole. A lost chance.
What we can see is the equity revenues have fallen 25% whilst every other section of the business (not dominated by competition) has grown.
As noted in the press releases below. I anticipate further falls in profitability next year.

I think the 10 euro payout is as good an out as those 2003? (merger) investors could hope for.
Telling that Euroclear is out of the CCP infrastructure – what a change over a few years.
I’m still not clear on the road map ahead for LCH. (maybe those in Europe are).
Somehow the growth business needs to be separated from the commoditised business.

LSE notes C&S will come to the fore.
The groundwork of interoperability will be in place for them in Nov.
How long until they grasp that opportunity I wonder?

BoE consultation out…
…but more importantly, locally we have CCP consultation out.

Congrats HSBC (on real estate dealings)

Can’t keep up with the news at the moment and not looking likely to either.
Next week will be dominated by CP120.

School holidays here so I’m OoO tomorrow…and a bank holiday here on Monday too.

Have a great w/end all.

Results from the Sydney Bridge Run are out.
This was a great event – all be it directly after Sibos.
They close the bridge for the public for the morning – a rare chance to have the bridge to yourself (and 13,000 other runners of course).

For those that like the Awwww, that’s cute factor…plenty of Kitty cats here:



CHI-X EUROPE CLAIMS SECOND-BIGGEST DARK POOL Chi-X Europe’s dark pool has become the second biggest in Europe less than five months after it launched, as the London-based alternative trading platform continues to challenge established participants in the securities market.

LSE RAISES THE STAKES IN TECHNOLOGY ARMS RACE The London Stock Exchange’s planned acquisition next month of a Sri Lankan trading system vendor is the latest move in the escalating battle between Europe’s top exchanges and their new multilateral trading facility rivals.
*** the closing comment is of interest here. Finally, once trading is commoditised, it will come down to cost…and here C&S comes back to the fore.

BATS to launch second US equities exchange

*** that marvellous coupling of words I mentioned earlier springs to mind here, esp. the 4 bullets raised by the chairman.



London clearing house LCH.Clearnet appears to have finally resolved the wrangling over its future ownership after proposing the redemption of over 40% of its shares at a price of EUR10 a piece - an offer accepted by its biggest shareholder, Euroclear Bank.
Full story:

LCH.Clearnet SA introduces €0.05 clearing fees on cash equity markets
Paris, 15 September 2009
LCH.Clearnet SA is revising its cash equities tariff and introducing €0.05 to trades cleared on cash equity markets from 1 January 2010. With this latest reduction LCH.Clearnet SA offers one of the most competitive clearing services in Europe in terms of pricing, service quality and range of products cleared.

LCH.Clearnet Chairman to step down
London, 21 September 2009
The Board of Directors of LCH.Clearnet Group Limited today announces that Chris Tupker will step down as Chairman of the Group and its subsidiary company LCH.Clearnet Limited in 2010 when a new chairman has been appointed.
A search committee has been formed and the Board hopes to announce the appointment of the new Chairman by the end of 2009.

LCH.Clearnet Group results and announcements
London, 29 September 2009
LCH.Clearnet, the leading independent central counterparty group (CCP), today announced its results for the year ended 31 December 2008.
Financial highlights
· Dividend of €110,898,924 or €1.50 per share to be paid to shareholders;
· Strong growth in net revenue of 14.6% to €573.5 million from record traded volumes in 2008;
· Over 2 billion trades, an increase of 16.4% on 2007;
· Operating profit increased by 14.1% to €293.6 million;
· Repurchase of a further €61.8 million of ordinary shares from NYSE Euronext in July 2008;
· Tariff reductions of €73.2 million across cash equities and energy markets in 2008;
· Impairment charge of €393.4 million for the first seven months of 2009, arising from implemented and proposed tariff reductions.

LCH.Clearnet and EMCF set to interoperate by November 2009
London, 30 September 2009
LCH.Clearnet Ltd (LCH.Clearnet) and the European Multilateral Clearing Facility (EMCF) have signed a master link agreement to achieve interoperability by November 2009.

Operators of clearing and settlement facilities
This consultation paper seeks the views of existing and potential operators of financial markets and CS facilities, and the users and potential users of these facilities, including investors in financial products that may be cleared and settled using CS facilities, on the proposals in this paper concerning clearing and settlement (CS) facility regulation.$file/cp120.pdf


*** This is actually not such a terrifying document. (and only 10 pages).
My take is that BoE extend the reach of the CPSS core principles of payment systems to include, business risk (sustainable enterprise), interdependence, indirect relationships (the many arms of the octopus) and our good friend outsourcing.
All principles based and driven by common sense.
Comments by 20th Oct.


US bank Citi has opened a global research, development, innovation and learning centre at its offices in Dublin and earmarked $24 million for the development of an "intelligent payments" offering.
Full story:
*** amazing how many ideas can be inspired over a Guinness.

HSBC offices in Canary Wharf on brink of £800m sale
Nice 2007, SOLD to Spaniards, 1.1 bill, bought back for 838 mill. Sold again in 2009. I wonder how much it originally cost them?
How much occupancy can you buy with the 200 mill they’ve booked in the last 2 years alone.
Well done chaps.

…now put this in the context of last weeks story:
Canary Wharf files $4.3bn claim against Lehman for unpaid charges Canary Wharf Group has lodged a $4.3bn (€2.9bn) claim with PricewaterhouseCoopers (PwC), the UK administrators of Lehman Brothers, for unpaid rent and other charges linked to the bankrupt firm’s London headquarters. (The Independent)

Can someone pls explain.


With equity markets in Asia having regained the momentum they lost so drastically this time last year, alternative liquidity sources could finally be poised to challenge incumbent exchanges, according to Glenn Lesko, CEO, Instinet Asia.
Read the interview

Seats of power shift to Asia HSBC’s announcement last Friday that chief executive Michael Geoghegan will relocate to Hong Kong means that the top three banks in the world, by market capitalisation, are set to have chief executives based in Asia.
*** the other 2 are: Industrial and Commercial Bank of China and China Construction Bank.

AsianInvestor 2009 Service Provider Awards
Best full-service brokerMorgan Stanley
Best execution-only brokerInstinet
Best venue in Asia-Pacific for algorithmic/electronic tradingHong Kong Exchanges & Clearing
Best venue in Asia-Pacific for block tradingLiquidnet
Best algorithmsCredit Suisse

INTERNATIONAL FINANCING REVIEW ASIA: Come to the Dark PoolBy Wendy Mock9/26/09
In Hong Kong, brokers and investors are interested in dark pools for the anonymity they offer. Hong Kong Exchanges and Clearing (HKEx) require that broker codes be exposed before a trade is completed, therefore opening up the risk that others may trade on that information.
In Hong Kong, brokers are required to report all trades to the HKEx, so regardless of where the transaction is matched or executed, fees still have to be paid to the exchange
In Japan, high-frequency traders are pushing for ATSs. Newer technology at the ATSs has made price discovery significantly faster than the Tokyo Stock Exchange. Average latency on the TSE is seven seconds, compared to the sub-millisecond speeds at the ATSs.
In Europe, from June 2008–July 2009, an average of 91% of trades executed on Chi-X were at or better than the public market spread, according to Chi-X. Instinet’s CBX Japan sees an average 12bp price improvement against the TSE.

Scott Riley
Business Development

Fortis Global Clearing
8th Floor 50 Bridge Street Sydney Australia 2000
((Off)+61 (0)2 8916 9634 È(Mob): +61 (0)418 117 627

No comments: