Sunday, October 25, 2009

AMCF & News: Demonising the dark, EC derivs blueprint, FSA DP, a Marigold for Lily.

I hang my head in shame.
Last week-end we had the
Dreadful weather, but when did a drenching to the bone ever hurt anyone?
Congrats to my female colleagues (who finished) that showed my son and I up (we stayed in bed).

More Demonizing of the Dark.
(speaking of demonizing, I’ve just done my first full presentation in Powerpoint 2007, .pptx – and there are a few demons in there too).
Of no doubt, the dark has a role to play.
At a level, the lit market place may be compromised if too much price discovery moves to the dark.
I have no idea what the correct thresholds should be…and frankly, I don’t think regulators do either.
The markets are a complex ecosystem.
Dropping a bomb on a coral reef may take out all the crown of thorn star fish (a pest / demon) but has other consequences too.
The fact that institutions themselves are so evenly divided on the merits of the dark makes me feel drastic actions are probably not the right measure for today.

Much to read this last week.
Cinnober liquidity, EC derivatives reform, FSA DP on too big to fail. Locally CP120 (ongoing) and the RBA payments system board annual report.

So, finally the Lily consortium gets a Marigold.
I still feel there is much more to change with LCH.Clearnet.
Increased ownership opens the door to increased accountability.
I still can’t reconcile the commoditised elements of the business (equities) with the growth components (OTC).

Have a great week all. I need to get back to the books and drafting these responses.
(and don’t give the ATM card to Aussie pizza delivery boys)



Chi-X Europe Launches Chi-Velocity Chi-X Europe has launched Chi-Velocity, a proximity-hosted risk management software layer co-located ...

Demonizing the DarkAdam Sussman, TABB Group's director of research, comments on the SEC and dark pools, specific to yesterday's ...;jsessionid=1T2OETHF5UFDBQE1GHRSKHWATMY32JVN?articleID=220800127&_requestid=636309

SEC Takes Dramatic Stance on Dark Pools with Rule Proposal In an SEC meeting yesterday in Washington, D.C., the regulator proposed a new rule that ultimately aims to ...;jsessionid=1T2OETHF5UFDBQE1GHRSKHWATMY32JVN?articleID=220900046&_requestid=636730

NYSE MAKES MOVE TO IMPROVE DARK POOL TRANSPARENCY With dark pools under the regulatory microscope, Nyse Euronext has struck a deal with five firms behind ATSs and off-exchange market centres to print trades made on the venues on the reporting facility it operates with Finra and display daily activity on
Full story:

Senator Schumer's Six Proposals for ATS Regulation Following yesterday's press conference call with NYSE chief executive Duncan Neiderauer, Senator Chuck ...;jsessionid=QHVWACIJ0BBALQE1GHOSKHWATMY32JVN?articleID=220800113&_requestid=265259

21/10/2009 16:46:00
The US Securities and Exchange Commission has unveiled proposals aimed at shedding more light on dark pool trading by introducing new rules that would require enhanced public disclosure of stocks passing over alternative trading networks.
More on this story:

Leading independent exchange technology provider Cinnober today announced the publication of an in-depth whitepaper on latency on their web site.
The whitepaper can be downloaded at

FINANCIAL NEWS: LSE Moves Forward with Acquisition Plans By Luke Jeffs10/20/09The London Stock Exchange has confirmed its determination to compete with both its large European exchange rivals and the new breed of European trading platforms, by acquiring a tech firm and forging ahead with talks to buy one of its new rivals Turquoise.The LSE said yesterday that it had completed the acquisition of Sri-Lankan trading system specialist MillenniumIT for $30m (€20.4m), a deal the LSE hopes will reposition it to compete more effectively with the new breed of tech-savvy platforms, known as multi-lateral trading facilities.Separately, the LSE said it is progressing with exclusive talks to acquire MTF rival Turquoise, the trading system set up by seven investment banks to challenge the UK exchange and its large European counterparts NYSE Euronext and Deutsche Börse.A spokesman for the LSE confirmed that the exclusive talks with Turquoise, first revealed by Financial News Online on October 1 this year, are ongoing, but declined to comment further on specifics.The LSE and Turquoise are keen to reach an agreement that will enable an offer to be made, and sources close to the talks said the plan is to have that agreement in place at least by the end of next year, or possibly before the end of next month.The Millennium and Turquoise deals reflect the ambition of the LSE’s new chief executive Xavier Rolet. The former Lehman Brothers banker has shown his intention to draw a line under the tenure of his predecessor, Dame Clara Furse, in the five months since he joined the firm.Since the end of May, in addition to completing the Millennium acquisition and moving ahead with the Turquoise deal, Rolet has scrapped a controversial fee aimed at high-frequency traders and opened talks to buy a stake in European clearing house EMCF.Rolet also said, last month, that the exchange is looking to extend the company’s Italian clearing house, CC&G, into the UK to reduce the “very high cost of clearing and settling UK equities through LCH.Clearnet and Euroclear”.The London Stock Exchange’s bid to establish itself as one of Europe’s most robust and efficient markets suffered a setback last week however, as invalid data entered by a customer forced the exchange to suspend trading in six blue chip stocks for over an hour.



The full text (and background papers) are available here:


LCH.CLEARNET LOOKS AHEAD AFTER BUYBACK LCH.Clearnet will reach a milestone today when it announces the results of its €444m ($666m) shareholder buyback, a bid to hand greater control to its users and sidestep a takeover bid by a consortium of banks.

FINANCIAL TIMES: Consortium Prepares to Drop Bid for LCH.ClearnetBy Jeremy Grant 10/20/09A consortium of banks and
Icap, the world’s largest interdealer broker, was on Tuesday preparing to abandon its attempt to take over LCH.Clearnet amid signs that Europe’s largest clearing house would secure its future through a shareholder buy-out plan, two people familiar with the matter said.Goldman Sachs and Morgan Stanley last week quit the consortium, which last year approached LCH.Clearnet with an offer designed to trump an existing offer from The Depository Trust & Clearing Corporation, the US post-trade services group. The DTCC pulled out in April.The bid battle highlighted how clearing has shot to prominence in the wake of the financial crisis as regulators push for greater use of the process to safeguard the financial system. A clearing house stands between parties in a trade, guaranteeing that trades are completed even if one side defaults. The lack of clearing in most over-the-counter derivatives has been widely criticised, and regulators are calling for as many OTC derivatives as possible to be processed through clearing houses to reduce so-called counterparty risk in the financial system.The consortium included 13 of the world’s largest banks active in OTC derivatives. Icap is the world’s largest interdealer broker in the OTC markets.It wanted control of LCH.Clearnet largely for its SwapClear interest rate swaps clearing business, turning the clearer for the London Stock Exchange, Euronext and the London Metal Exchange into the most prized post-trade asset in Europe.The consortium believed that with regulators pushing for more clearing, market structures like LCH.Clearnet would become increasingly important businesses. LCH.Clearnet tried to fend off the consortium earlier this year by coming up with a plan to streamline its base of 120 disparate shareholders, many of which are small and rarely use the clearer’s facilities. The consortium in May submitted an €11-per-share cash offer for LCH.Clearnet, valuing the clearing house at about €830m ($1.1bn).LCH.Clearnet later revised the shareholder streamlining plan, offering to buy up to 33.3m shares from shareholders at €10 per share. Including a dividend announced last month of €1.50 per share, the return to shareholders could total €444m.People familiar with the consortium’s thinking said that its remaining members believed that the revised LCH plan contained many elements that would satisfy the consortium, including ensuring that the clearer’s shareholder base more accurately reflected its users.LCH.Clearnet last month announced that chairman Chris Tupker would be retiring early next year. Shareholders have until Tuesday to tell LCH.Clearnet whether they want to redeem their shares under the clearer’s revised streamlining plan, codenamed “Marigold”.Euroclear, the post-trade services group and the largest shareholder, has already signalled its intention to redeem its stake of 11.7m shares, which amounts to 15.8 per cent of LCH.Clearnet’s share capital.The LCH.Clearnet board will then decide whether to complete the plan on November 5.


AFME -- A New Trade Body for EuropeAs regulation of the financial markets takes on an increasingly global dimension, the London Investment Banking Association and the European operations of the Securities Industry and Financial Markets Association have joined forces to form the Association for Financial Markets in Europe. The former affiliates of SIFMA -- the European Covered Bond Dealers Association, the European High Yield Association, the European Primary Dealers Association, the European Securities Services Forum and the European Securitisation Forum -- will be integrated into AFME's business policy divisions. Learn more.


NOMURA LAUNCHES LOW-LATENCY EUROPEAN TRADING SERVICE Nomura has launched a low latency trading service that taps networking technology from Colt to offer clients co-located software hosting connectivity to major exchanges and MTFs in Europe.
Full story:


The DP (Discussion Paper) is available here:

PIZZA BOY USES ATM MANUAL TO STEAL A$30,000 IN UNDER AN HOUR An Australian pizza boy who hacked into ATMs and changed their settings before stealing around A$30,000 in under an hour has escaped a prison term, according to local press reports.
Full story:

This is a good paper on Aust development, including....

Today's population is about 22 million. So we are now projecting an increase of 13 million people, or around 60 per cent, over the next 40 years.
A population expansion of this order has a host of implications for the Australian economy and society; and it raises a number of profound issues for economic policy.
First set of issues: Where will these 13 million people live – in our current major cities and regional centres or in cities we haven't yet even started to build? We have given this matter some thought in the Treasury. On quite reasonable assumptions, we can imagine Sydney and Melbourne growing from 4½ and 4 million people today to cities of almost 7 million. Brisbane will, we think, more than double in size, to be 4 million people 40 years from now. Among them, Sydney, Melbourne, Brisbane and Perth will have almost as many people as the entire Australian population today.
How will Sydney cope with a 54 per cent increase in its population, Melbourne a 74 per cent increase and Brisbane a 106 per cent increase? Surely not by continuing to expand their geographic footprints at the same rate as in the past several decades. Surely not by loading more cars and trucks onto road networks that can't cope with today's traffic.

The Shape of Things to Come - Address by Dr Ken Henry to the QUT Business Leaders' Forum

'I Physically Felt the Radioactivity' The Chernobyl disaster happened over two decades ago, but its effects continue to be as present as ever. German photographer Rüdiger Lubricht spent months documenting what has been left behind in the exclusion zone which now surrounds the stricken reactor. In an interview with, he talks about his experiences.
Photo Gallery: Ghost Towns and Gas MasksPhoto Gallery: The Wildlife of Chernobyl
*** Based on the constant battle I have with my garden, I’m surprised at the relative lack of invasion of overgrowth / regrowth in the cities.

Scott Riley
Business Development

[Please note my new email address:]

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

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