Friday, November 6, 2009

AMCF News: MiFFed, 25%, BME, JSCC, TAs

Happy second birthday to MiFID. The idea of the terrible 2’s does so resonate with me.

On MiFID, we’ve seen some negative comment from the RIE’s. It may be valid, but it just comes across as so self serving I can’t be bothered to read it.

On platforms yet again we see more evidence about getting the ownership and governance model right. How times have changed since we embarked on demutualisation.
Congratulations to ELX. I remain a supporter (well, in spirit, bravo chaps, if not liquidity) and a believer.

Some records came tumbling down in late Oct. Chi-X up in the European exchange ranking (over 25% FTSE market share on some days for those are not following the numbers, yep, 25%) and likewise EMCF, averaging 2 million trades a day.

As for Madrid.
Yes, I applaud a European initiative….but there is something about this that does not ring true with the playground child in me. Why should BME get the support of European markets on the one hand, whilst on the other hand, the markets still have to live with the put through rule. Best execution suffers yet the market users are being asked to reward that behaviour? Don’t put me down as a subscriber just yet.

On educated reader did some analysis of the LCH results. My point on transparency was between equity revenue in LCH Ltd and Clearnet SA. I think the SA pricing model, of cheap blue chips, and slightly more for the less liquids is a step in the right direction. No one ever intended to cross subsidise the two types, but now it is recognised it makes sense to start measuring and addressing the issue (akin to tick sizes).

Japan opens JSCC and moves to T+3.

Broadridge pulling out of clearing I believe is right and removes a conflict of interest (perceived or otherwise). Just like Nasdaq OMX story last week. Good luck to Penson.

What is it with Trade Associations? They’ve got too much alphabet soup. Welcome SAA…AFME…CISI. (Sounds like a drunk springbok asking directions to the city….and as if we’d ever give them the right ones).

This was published in SMH where readers were asked to sum up the core values of Australia in seven sentences in response the prime minister's list.
*** quite insightful.

The spirit in which a thing is given determines that in which the debt is acknowledged; it's the intention, not the face-value of the gift, that's weighed.
Seneca (5 BC - 65 AD), Letters to Lucilius, 100 A.D.
*** what a clever chap, Seneca. I assume Lucilius had written explaining how disappointed he was with his most recent “gift”

Have a great week-end all…and give a little, to family or friends…and be happy for the memories shared. They last forever.



NYSE EURONEXT PROFITS SLIDE; SELLS OFF STAKE IN US FUTURES BUSINESS Nyse Euronext has reported a 28% drop in third quarter profit amid steep declines in revenue from cash equity trading in Europe and the US. The exchange operator has also sold off a significant equity stake in its futures business Nyse Liffe US to a group of five leading banks and liquidity providers.
Full story:
*** …and the investors are: Citadel Securities, Getco, Goldman Sachs, Morgan Stanley and UBS

Does inverted pricing work in Europe?Multilateral trading facility
BATS Europe's retention in October of the FTSE 100 market share it won with its September price promotion may indicate that inverting fees can generate liquidity on a sustained basis, but it also suggests the continued growth of high-frequency trading in London.**** BATS and inverted? You would think prices were hung upside down. (this remark from Lothian is cringe worthy, but funny)

Liquidnet Is Liquid In APAC
Liquidnet recently reported its quarter ended September 30, 2009 where, among other achievements, notional executed in Asia-Pacific increased 52% to US$3 billion from the previous quarter. And...
Read More Here

Volume in European ‘dark pools’ trading soars The value of trades undertaken within independently owned “dark pools” of liquidity in Europe soared from €2.2bn ($3.2bn) in January to €9.5bn in October, Thomson Reuters said. (Financial Times)

02/11/2009 11:54:00
Deutsche Börse has launched a pan-European market, based on its Xetra electronic trading platform, as it looks to take on the raft of new competitors to have emerged in the wake of MiFID.
More on this story:

FINANCIAL TIMES: LSE Close to Turquoise AgreementBy Jeremy Grant 10/29/09No cash will change hands in the deal. Instead, Turquoise will be merged with Baikal, the LSE’s nascent “dark pool” block trading facility, while the LSE will retain a 51 per cent controlling stake.

Dispute among futures exchanges is about to intensifyNYSE Euronext and Depository Trust & Clearing have agreed to jointly develop a clearinghouse for cash Treasuries and Treasury futures. ELX, a fledgling exchange backed by some of the largest names on Wall Street, has attacked the venture as being anti-competitive because it will likely prevent ELX from striking a similar deal with DTCC. The new futures exchanges are trying to break the near-monopoly on Treasury futures held by CME Group. Financial Times (tiered subscription model) (10/29)

ELX FUTURES REPORTS RECORD VOLUME FOR OCTOBER 2009 ELX Futures, L.P. (ELX Futures) announced today record trading volumes in the month of October for its four U.S. Treasury futures products. Since its launch on July 10th, ELX Futures has been gaining volume and market share, and October has turned out to be a breakout month for the new fully regulated electronic exchange.

Eurex plots European energy tie-up Frankfurt-based Eurex has become the latest European exchange to push into power derivatives, agreeing to a new link with Germany’s European Energy Exchange a month after transatlantic rival Nasdaq OMX launched a similar market in the UK.


Increase in MTF trading drives EMCF volume growth
EMCF’s daily clearing volume exceeded 2.6 million trades for the first time on 21 October, and clearer expects the monthly average for October to be 2 million trades a day. Its average daily clearing volume in 2008 was 600,000 transactions.
“EMCF is proud to be at the heart of these two fundamental shifts in the European trading landscape – the adoption of full CCP clearing in the Nordics and the growing importance of multilateral trading facilities, as both of these changes provide more efficiency to the post-trade environment, leading to more liquidity and cost advantages for our clients and for the European equities market in general,” said Jan Booij, CEO, EMCF


Madrid bourse challenges U.S. DTCC in derivativesBy Huw JonesLONDON, Nov 3 (Reuters) - The Madrid bourse (BME.MC) scored a first in Europe on Tuesday by unveiling plans to open a warehouse for derivatives contracts, pitting itself against America's DTCC as it seeks to exploit a regulatory crackdown.

BME TO TAKE ON DTCC WITH TRADE REPOSITORY PLAN Spanish bourse Bolsas y Mercados Españoles (BME) has announced plans to create a trade repository for over-the-counter (OTC) financial instruments, in a move that will pit the European exchange operator against the US-based Depository Trust and Clearing Corporation (DTCC).
Full story:

LCH.CN Group results are finally out. (Blog 2nd Oct)
This analysis was offered by one reader….

Eur M Equities FI Deriv/Swaps Comm/Energy Total %

Gross 137 81 210 144 572

CLR fees 115 30 121 63 328 57%
Net Int 22 51 90 81 244 43%

Tariff reductions on the Group’s equity markets contributed to a reduction in revenue from €189.0 million to €137.3 million. The
Group delivered a 25% reduction in clearing fees on the London Stock Exchange (LSE) and SIX Swiss Exchange’s trades in January 2008, and the same reduction on NYSE Euronext cash markets from April 2008.
Together these tariff changes reduced clearing fees charged to members by €52.7 million.
Volumes across the NYSE Euronext cash markets rose by 20.6% from 161.1 million to 194.3 million trades in the year. The LSE’s volume rose by 37.9% to 189.9 million trades in the year, and SWX Europe’s volume rose by 60.4% to 24.3 million trades.
At the end of 2008 SIX x-clear gained access to LSE and commenced a rival clearing service to the Group. To date, this has attracted two member.
Page 8.

A progress report by the European Central bank on the controversial Target2Securities integrated settlement project descended into a three-way spat between agent banks, securities depositories and the central bank over costs, timetabling and information transparency at a hot and heavy Sibos session in Hong Kong.
Full story:


TRANSCRIPT: Robert C. Gasser’s Testimony on Dark Pools, Flash Orders, High Frequency Trading and Other Market Structure Issues before the U.S. Senate Subcommittee on Securities, Insurance and Investment”10/29/09

While the need for a standardised European consolidated tape and best bid & offer is undisputed in Europe's fragmented post-MiFID equities market, participants are divided on where it adds the most value, according to the result of the latest TRADE poll.
Read the article


EASTERN EXCHANGES LOOK TO THE WEST FOR TECHNOLOGY The six exchanges that plan to launch a pan-Asian equities market have approached Nasdaq OMX and NYSE Euronext to provide technology for the system.
*** This headline is a bit misleading – s/be ASEAN (Indonesia, Malasia, Philippines, Singapore, Thailand and Vietnam), a totally different wallet size consideration.

Japan’s alternative platforms to get CCP clearing
The Japan Securities Clearing Corporation (JSCC), the central counterparty for Japan’s stock exchanges, will be able to clear trades from the country’s alternative trading platforms, known as proprietary trading systems (PTSs), from July next year.
Rather than developing a separate clearing function for PTSs, JSCC will adapt the interface to its current clearing processing system to allow it to receive transaction data from the PTSs’ matching engines. Work to adapt the system is already underway and testing will begin in the second quarter of next year. The clearer also needs to revise its rules and obtain approval from Japan’s Financial Services Agency.

Implementation Date of Abolishment of T+4 Settlement and Trading Suspension
The Tokyo Stock Exchange (TSE) recently announced that the implementation date of the abolishment of T+4 settlement and trading suspension for a predetermined period shall be Monday, November 16, 2009 as previously notified on April 1, 2009.(Note)The TSE will abolish T+4 settlement and unify the settlement cycle to T+3 settlement for regular transactions of stocks [...]

Trade Associations

SDIA becomes SAA
The Securities and Derivatives Industry Association on Sunday became the Stockbrokers Association of Australia, after receiving approval from its members at the association's annual meeting last week.
AFMA ( ), not the Australian Fisheries Management Authority (, now looks to take over the running. I think this is a good thing. I don’t think the “stockbroker” bit of SDIA sat well with representing wholesale security market needs. This came through in their last conference – some speakers spoke to the retail audience, some on securities policy.

I also understand this week the LIBA and SIFMA merger completes for the Association for Financial Markets in Europe (

Securities & Investment Institute Becomes Chartered Institute For Securities & Investment
The SII is pleased to announce that from 1st November 2009 it changed its name to the Chartered Institute for Securities & Investment (CISI).

PENSON BUYS BROADRIDGE CLEARING CONTRACTS; OUTSOURCES TECH SERVICES Penson Worldwide has entered into a deal to buy the clearing contracts of Broadridge Financial Solutions' Ridge business for up to $70 million and then outsource some technology and processing services to the seller.
Full story:

Madoff: SEC Could Have Had Him EarlierJailed former financier Bernard Madoff says lack of basic investigatory moves by the SEC allowed his ...
*** scum bag…if he had any ethics he could have stopped it the day it began, that would have been early and worthy enough in my book. (haven’t bothered to read the story).

Anne Frank:
No one has ever become poor by giving.

Gifts allow us to demonstrate exactly how little we know about a person.
Pam Davis, House M.D., It's A Wonderful Lie, 2008

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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