News WE100129: EMCF, BATS, Spain, ELX, Eire, Mona Vale

The photo was taken just using the b/berry as an experiment more than anything. It’s from the headland overlooking the Mona Vale course. Warriewood (out of view) is around to the right (south) and the beach in shot, with the breakers which rolled us in, is Mona Vale.

Happy Aussie Day.

Lots of BATS announcements. Options approval of interest.

No surprise that DB looks at its cost base. All the RIEs will have to do this for the foreseeable future.

Great news on ELX, the CME position looks like their interest, not the customers. Couching it in risk terms is regrettable.

ASX quantifies its project risk appetite at 450K + 10% GST pa. for the pleasure of taking a trade feed and then getting to charge you a clearing fee.

So, BATS has a record day, and now Chi-X is circa 6 byn a day, the logical implication of course is new records for EMCF.

The lesser known fact is that this now puts EMCF as the number one equity CCP in Europe.

Heartfelt congratulations to all the EMCF team.

The MTFs entering Ireland does raise the issue of domestic bias. But it also highlights what we have know from 2007. The index calculators are nowhere near as proactive as they should be in looking at alternate execution destinations and including this data in index calculations. Just like the ratings agencies. It feels to me they think they can get away with it, so they do.

A couple of points on Spain. A mental reminder for me to be more transparent on dates (CNMV approval etc.).

Well, no city induced morphine highs or hangovers for me this week, just a debt headache - a drop in the ocean you say….

…and last week was the Warriewood to Mona Vala swim.

This was just a glorious swim and atmosphere. It was raining and overcast on the morning, but the water was warm and wow, the visibility was sensational. Crystal clear water and depths. Glorious.

This swim also had a bit of dimension to it. Often the break / swell is very light. This swim had surf. Not a lot of fish, but still plenty to look at and no stingy thingys. The swell was certainly active, often tossing us about, but nothing sinister. Great Swim.

Nice photos of the day here:

http://www.oceanswims.com/nsw90/100124.html

But this week-end is what the season is all about…The Big Swim. Palm Beach to Whale Beach.

http://www.thebigswim.org.au/

..and as for the puppy…we had an excellent Russian name suggestion, Farkov, but it failed to pass muster.

What breed is Buddy? He’s a Goldie, a Golden Retriever.

He doesn’t retrieve anything but he has demonstrated an early ability to dig….flowerbeds (existing).

He appears to have no conscience….but this does not worry him, he’s getting on and having a very nice life…indeed.

Why can a puppy poo on the laundry floor and I can’t put my shoes up on the sofa?

So, have a dogs life of a week end (get fed and pampered, do what you want, when you want…not a worry in the world).

S

http://clearingandsettlement.blogspot.com/

Platforms

BATS Europe Surpasses E2 Bn Notional Traded For 1st Time - Surpasses Record Set Previous Day
BATS Europe, an innovative and technology-leading European Multilateral Trading Facility (MTF), continued its record-setting month, trading E2 billion notional value for the first time on Thursday 21st January.
http://bit.ly/6ONVQD

BATS Receives SEC Approval For US Options Exchange

BATS Exchange received approval from the U.S. Securities and Exchange Commission to operate a US equity options platform and expects to go live on Friday, February 26th, pending industry-wide options symbology consolidation and testing.
http://bit.ly/cEz9pI

BATS Europe takes on Nasdaq MTF with SOR
http://www.thetradenews.com/asset-classes/equities/4151

DEUTSCHE BÖRSE MULLING STAFF CUTS, OUTSOURCING - HANDELSBLATT Deutsche Börse is to cut up to 10% of its 3,300-strong workforce as it bids to lower costs in the face of strong competition, according to a report in German business daily Handelsblatt.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21011

CME insists it doesn't have to accept rival's trades; its stock falls
Shares of CME Group fell 6.8% after a US regulator issued a statement that could weaken the basis for the futures exchange operator's dominant market position.

CFTC SLAPS DOWN CME - ELX
http://www.finextra.com/news/announcement.aspx?pressreleaseid=31960

BIDS Trading Breaks Volume Record in Q4 2009

NEW YORK--(BUSINESS WIRE)--BIDS Trading, the alternative trading system (ATS) designed to increase competition and liquidity in the U.S. equity block trading market, achieved an average daily volume of over 25 million shares* in Q4 2009, breaking its previous quarterly volume record of 23 million shares* per day. Since its launch in the spring of 2007, BIDS Trading has traded over 13.8 billion shares*.
http://bit.ly/4SZpmx

PIPELINE ADDS BLOCK EQUITY OPTIONS CAPABILITY TO BUY SIDE PLATFORM

http://www.finextra.com/news/announcement.aspx?pressreleaseid=31949

BM&FBOVESPA HIRES CATHRYN LYALL TO LEAD NEW LONDON OFFICE Brazil's BM&FBovespa has hired former Icap executive Cathryn Lyall to head up its new London office, from where the exchange plans to build up a presence in Europe, the Middle East and Africa.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21003

GENERAL ATLANTIC MAKES $250 MILLION INVESTMENT IN MARKIT General Atlantic has taken a $250 million stake in financial data and post-trade services group Markit.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21001

London Stock Exchange CEO Xavier Rolet Fights Back
Rolet is fighting to retain the exchange's market share in equity trading.

**** Good background on Rolet.

TRAYPORT REPORTS TWO CARIBBEAN EXCHANGE DEALS

http://www.finextra.com/news/announcement.aspx?pressreleaseid=31973

http://www.asx.com.au/professionals/trade_acceptance_service/index.htm

Trade Acceptance Service (TAS): 10K Application, 450K + GST (10%) pa, min terms 3yrs.

Clearing

EMCF volumes reach 4m trade sides Amsterdam, 22 January 2010 – European Multilateral Clearing Facility (EMCF) reached a new milestone as the number of trades cleared surpassed 4 million in a single day for the first time on Friday, 22 January 2010.
http://www.euromcf.nl/index.php?NW=1

EMCF SELECTS SWIFT FOR SETTLEMENT OBLIGATION MESSAGING

http://www.finextra.com/news/announcement.aspx?pressreleaseid=31967

EACH OUTLINES CCP RISK MANAGEMENT RECOMMENDATIONS

http://www.finextra.com/news/announcement.aspx?pressreleaseid=31943

http://www.eachorg.eu/digitalAssets/66/66090_2009_each_supplementary_risk_recommendations.pdf

The Luck of the Irish – 27 January 2010'

http://fragmentation.fidessa.com/2010/01/27/the-luck-of-the-irish-%e2%80%93-27-january-2010/

bilateral settlement procedures and excluded from the application of mechanisms to guarantee the delivery. IBERCLEAR will assign the

Register Reference (RR) to the trades processed by this service.

http://www.iberclear.com/IBERCLEAR/Noticia/pdf/NEWSLETTERRULEMODIFICATIONPROPOSAL.pdf

Proposal to Modify IBERCLEAR's Regulations

On 28th September 2009, we distributed the Informative Note No. 38 to the participating entities. The Note explains the modifications that have been proposed for IBERCLEAR's Regulations, which allow settlement and registration of sales transactions of securities admitted for trading on Stock Exchanges and carried out in OTC ( Over The Counter) markets. They also allow the signing of agreements with entities which perform similar functions, CCPs, governing bodies of regulated markets,

multilateral trading systems and others. This proposal to modify the Regulations has been sent to the National Securities Market Commission (CNMV) for approval

http://www.iberclear.com/IBERCLEAR/Newsletter/Boletin07i.pdf

Oxford Finance Group: The Governance Of Financial Market Infrastructure - Major New Report By Ruben Lee

Or http://www.mondovisione.com/index.cfm?section=news&action=detail&id=88048

Also includes a short summary...to tempt you into 596 pages of explanation.

CFTC GRANTS ICE CLEAR EUROPE REGISTRATION AS CLEARINGHOUSE IN US

http://www.finextra.com/news/announcement.aspx?pressreleaseid=31914

Icap launches post-trade FX joint venture
UK-based Icap has revealed the launch of a foreign exchange post-trade service, backed by several of its largest customers, in what is the interdealer broker's latest move to diversify its product offering and capitalise on the rise in FX trading.

Policy

IOSCO Completes Global Framework To Fight Against Cross-Border Market Abuse
The International Organization of Securities Commissions (IOSCO) has announced that it has achieved its goal, set in 2005, of having its eligible membership sign onto or committed to sign the Multilateral Memorandum of Understanding concerning Consultation, Cooperation and the Exchange of Information (MMoU).
http://bit.ly/54eHpe

The Regulatory And Supervisory Reform In Europe: Speech By Jos Manuel Gonzlez-Pramo, Member Of The Executive Board Of The European Central Bank, Presentation Of The Report Observatorio Sobre La Reforma De Los Mercados Financieros 2009, Realizado Por La Fundacin De Estudios Financieros, Madrid, 22 January 2010
http://bit.ly/4OI1PC

Financial chiefs warn of economy's 'morphine high'
The majority of chief executives at global financial institutions do not believe there will be a wider economic recovery for at least another two years, according to a new report published a day after the UK became the latest country to edge out of recession.

THE DEBT HANGOVER

Andrew G Haldane*

Executive Director, Financial Stability, Bank of England

If UK banks had reduced dividend payouts ratios by a third between 2000 to 2007, £20 billion of extra capital would have been generated.13 Had payouts to staff been trimmed by 10%, a further £50 billion in capital would have been saved. And if banks had been restricted from paying dividends in the event of an annual loss, £15 billion would have been added to the pot. In other words, three modest changes in payout behaviour would have generated more capital than was supplied by the UK government during the crisis.

http://www.bankofengland.co.uk/publications/speeches/2010/speech422.pdf

Scott Riley

Business Development

[Please note my new email address: scott.riley@au.fortisclearing.com]

Fortis Global Clearing

8th Floor | 50 Bridge Street | Sydney | Australia | 2000

((Off)+61 (0)2 8916 9634 È(Mob): +61 (0)418 117 627

* scott.riley@au.fortisclearing.com

News WE 100122: Chi-X surges to #2, LSE circles EMCF, 596 pages of OFG and welcome Buddy.

LSE dominates the news (at least in so far as I have had the chance to stay abreast if developments this week).
How LSE will manage to extend its services into the post trade space continues to attract attention. (Circling EMCF).
Whilst Chi-X continues its onwards march through the market share tables – surging past NYSE Euronext.

Ruben Lee pops back up with his updated position on governance. No wonder he’s been under the radar. Its 596 pages. Read at your leisure.
(I’ll happily put up a review if anyone has done one).

I really enjoyed the piece on burying the Tobin tax. Nicely written.

I was worried after last weeks swim. I though it’s either a bad time or they extended the course on me.
It wasn’t until later I realised they hadn’t adjusted the times for the handicap start. Phew.
This week-end sees a lovely journey swim (my preference) from Warriewood to Mona Vale.
http://www.oceanswims.com/nsw90/monavale10.html

This weekend also sees the Rileys welcome a new puppy into the family. My suggestion of “getaway” (as in, come ‘ere getaway) was dismissed. My brothers compromise of Shoe, pronounced Shooo, was also rejected. Kids just don’t respect their elders these days. I wonder why? Looks like we’ll settle for Buddy.

Have a great w/end all.

S
http://clearingandsettlement.blogspot.com/




Platforms

LSE REPORTS REVENUE DIP AS CHI-X MOVES TO NUMBER TWO SPOT IN EUROPE The London Stock Exchange is reporting a nine per cent slide in third quarter revenue as competition from rival execution venues intensifies.
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=20982
The chief beneficiary is Chi-X, which now commands 24% of trading in FTSE100 stocks and on Tuesday surged ahead of Nyse Euronext to become the number two exchange across Europe measured by trading volumes

Dark Pools: Where's the Transparency?
This is the fifth in a series of releases in the CBOE Newsroom (www.cboenews.com) that will offer background, status and CBOE views on issues in the regulatory spotlight. Other regulatory topics recently covered include high frequency trading, flash trading and short sales. In this installment, CBOE Executive Vice Chairman Edward Tilly shares CBOE's perspective on dark pools and points out the differences between a dark pool and a grey pool.
http://cboenews.com/dark-pools/

DEUTSCHE BÖRSE TO TAKE EUR200 WRITE-DOWN AGAINST UNDER-PERFORMING ISE Deutsche Börse is to take a write-down of EUR200 million on its 2009 earnings following a poor showing in US equity options trading by the International Securities Exchange.
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=20975

DEUTSCHE BÖRSE AND SIX PUT THEIR STAMP ON STOXX
http://www.finextra.com/news/announcement.aspx?pressreleaseid=31835



Clearing

LSE names post-trade head and nears deal to buy EMCF
London Stock Exchange chief Xavier Rolet is poised to complete the first phase of his plan to make the UK market operator a top European clearing firm as he today appoints a new head of post-trade and closes in on a deal to buy Dutch clearer EMCF.

Japan might require foreign clearing of OTC derivatives
The Financial Services Agency of Japan is considering requiring over-the-counter derivatives transactions to be routed through foreign clearinghouses to boost transparency and reduce risks. "There is a possibility of centralising in foreign clearinghouses," said FSA Deputy Minister Kouhei Ohtsuka. "Developing the infrastructure of the Japanese market further is important, but we want healthy development." Bloomberg (21 Jan.)


The Governance of Financial Market Infrastructure
The governance of infrastructure institutions in the financial markets – namely exchanges, central counter-parties, and central securities depositories – has become a matter of significant commercial, regulatory, legislative, and even political concern. Such institutions play a fundamental role in the operation of financial markets and more generally in economic development, and the manner in which they are governed critically affects their performance. There is, however, great debate both about how they are governed, and about how they should be governed. This report analyses these two fundamental issues
http://www.oxfordfinancegroup.com/

*** Ahhh, come on Ruben, this is 596 pages! BTW (p63 – ref 79). EMCF commenced services on 30/Mar/07, the same day Chi-X commenced services. You can’t have an anonymous central limit order book (CLOB) without a CCP. As you know, they are concomitant.


Policy

Obama's proposals throw global banking industry into turmoil
US President Barack Obama proposed a sweeping overhaul of Wall Street that is reverberating around the world. The proposal calls for banks to be prohibited from "owning, investing in or sponsoring" private-equity groups and hedge funds. It would also ban them from running their own trading desks. The moves have been pushed by former Federal Reserve Chairman Paul Volcker for months. The reforms could force the restructuring of Goldman Sachs, JPMorgan Chase and other major financial institutions. Next week, US officials are set to meet leaders in London about how Obama's proposals could be implemented in the UK. Critics of Obama's plans said they show a lack of global coordination on financial regulation. Financial Times (tiered subscription model) (22 Jan.) , The Guardian (London) (21 Jan.) , Bloomberg (21 Jan.) , Financial Times (tiered subscription model) (21 Jan.) , Financial Times (tiered subscription model) (21 Jan.)


Commentary: Rest in Peace
Why Dr. Tobin's big idea should remain buried
January 20, 2010 Eight years after being buried, it appears that Dr. James Tobin's dream of a tax on transactions is being resurrected.
http://www.tradersmagazine.com
*** I very much enjoyed this piece.


LSE names post-trade head and nears deal to buy EMCF
Luke Jeffs
18 Jan 2010
London Stock Exchange chief Xavier Rolet is poised to complete the first phase of his plan to make the UK market operator a top European clearing firm as he today appoints a new head of post-trade and closes in on a deal to buy Dutch clearer EMCF.
Rolet has hired post-trade specialist Kevin Milne to head the exchange’s push into clearing and settlement services.
Milne, who starts at the exchange today, became a director at the LSE’s settlement provider Euroclear after the Brussels-based depository last year bought post-trade specialist Xtrakter, where Milne was chief executive.
Before Xtrakter, Milne had stints with buyside vendor SS&C, matching specialist Omgeo and, between 1985 and 1991, the LSE.
As head of post-trade services, Milne will replace in that role the group’s deputy chief executive Massimo Capuano. Capuano continues as Rolet’s deputy.
The UK exchange had begun talks in July last year with Fortis, the major shareholder in Amsterdam-based clearing house EMCF, over taking its majority stake, a move first reported by Financial News. The LSE has in recent weeks stepped up these talks and a source close to the exchange said last week a deal could be struck in “a matter of weeks”.
A spokesman for the LSE declined to comment. The chairman of EMCF, Jan Bart de Boer, was unavailable for comment.
Sources close to the talks said the principles of a deal had been agreed but there were a number of outstanding issues, including the EMCF stake owned by the LSE’s rival Nasdaq OMX.
In October 2008 the transatlantic exchange bought a 22% stake in the Dutch clearing house for about €40m, according to a source close to EMCF. The value of the proposed LSE deal is unclear at this stage.
A spokeswoman for Nasdaq OMX declined to comment.
The planned acquisition would have implications for the LSE’s relationship with its clearing house LCH.Clearnet. A spokeswoman for the Anglo-French clearer said: “LCH.Clearnet has a compelling and competitive offering.”
Rolet is keen to expand the LSE’s post-trade services, which accounted for 19% of group revenues for the six months to the end of September last year.
He said in November last year: “We have growth ambitions in post-trade and we will seek to execute opportunities either organically or inorganically.”
The LSE move comes as EMCF, LCH.Clearnet and the other European clearing houses prepare this year to start competing, though this effort has been threatened recently by regulatory intervention.



NOMURA'S NOT AFRAID OF DARK POOLS
Nomura's Andrew Bowley talks with Finextra about the relaunch of its NX crossing network as a dark pool, multilateral trading facility. Due to go live on January 25th, and born from the ashes of the Lehman Brothers/Baikal project, the NX MTF dark pool will rely on established liquidity sources.
http://www.finextra.com/fullfeature.asp?id=1231


When websites ask 'Forgot Your Password?' I always mutter "No, but I have forgotten it".


Junk Mail remedy:
When you get those 'pre-approved' letters in the mail for everything from credit cards to 2nd mortgages and similar type junk, do not throw away
the return envelope.

Most of these come with postage-prepaid return envelopes, right?
It costs them more than the regular postage 'IF' and when they are returned. It costs them nothing if you throw them away! In that case, why
not get rid of some of your other junk mail and put it in these cool little, postage-prepaid return envelopes.

Send an advert for your local chimney sweeper to American Express... they might need one!
Send a pizza coupon to HSBC... in case their canteen packs up. You get the idea.
If you didn't get anything else that day, then just send them back their blank application form.... after all, it is their form!

If you want to remain anonymous, just make sure your name isn't on anything you return.




Scott Riley
Business Development

[Please note my new email address: scott.riley@au.fortisclearing.com]

Fortis Global Clearing
8th Floor | 50 Bridge Street | Sydney | Australia | 2000
Off)+61 (0)2 8916 9634 Mob): +61 (0)418 117 627
scott.riley@au.fortisclearing.com

News: WE100115 TSE latency, A&I EMCF EuroCCP, T2S, Direct Access.

A blunt (but constructive) remark on TSE latency from Paul Penrose.
Another government think tank comes out with a report recommendation for competition in equities trading. (This time an Aussie one).
EMCF has published it’s paper on moving forward with interoperability. Now DTCC comes out with its version.
I’ll have to hold over comment on this till next week – busy start to the year an’ all.
BTW, many thanks Bill for the correction on the Gensler link last week.
T2S targets a different year. I still believe in T2S. DvP in Europe should be commoditised.
LCH.Clearnet waves the monopoly flag?

Looks like the other issue of the week has been direct access.
I must say, I’ve always been a fan of direct access. And I continue to be.
The “sponsoring” firms know the capabilities of the people they give direct access to. It’s their problem.
I think putting a barrier to entry in place for direct access participants is simply making a distinction / customer classification (e.g. retail / wholesale) when at the end of the day, those firms requiring direct access are probably as sophisticated (and possible more so) as any of the sponsoring firms anyway.

Accenture taking a few hits. Losing LSE and now Barclays.

I usually try and keep the blog impartial and free of plugs. However, Eric Andreetti has founded a new recruitment agency in Paris. So for those looking for assignments or have searches to fill:
http://www.asrecruitmentfinance.com/
As they say…it will take more entrepreneurs on main street for wall street to recover…great to see Eric doing his bit. ATB.

…and to the water (a change from the snow flurries)..
Well, the Bondi Roughwater is an aptly named swim, the water was indeed rough out the back. However the skies were clear as a bell and powder blue, the water cool, but not cold, and the visibility fantastic. Lots of little fishies and the occasional big one too. This is what ocean swimming is all about and what an introduction to 2010. I went back into the surf for another swim after the race just to enjoy the setting. Magic.
Results available here: http://www.oceanswims.com/results90/nbroughwaterres102.html
I’m happy w/ 441/951 in the race or 316/619 in the mens.

Off to Avalon this w/end: http://www.oceanswims.com/nsw90/avalon10.html
As a “deep keel” kinda chap I’m told I can look forward to my belly being tickled by the seaweed. This swim also takes in a tour, over and past, the local shark net.

Health is worth more than learning.
--Thomas Jefferson,
3rd American president

Be always at war with your vices, at peace with your neighbours, and let each new year find you a better man."
--Benjamin Franklin,
politician, inventor and author

…and this was too good not to share…Aussie TeleStubbies
http://www.youtube.com/watch?v=ffDFAkyCOuI&feature=player_embedded

Have a great w/end all,

Scott
http://clearingandsettlement.blogspot.com/




Platforms

TOKYO FIRES BLUNT ARROWHEAD
Paul Penrose
http://www.finextra.com/community/fullblog.aspx?id=3686

THE TRADE NEWS: Chi-X Grows Trading Volumes, Secures More Investment
By Staff
1/15/10
Pan-European multilateral trading facility Chi-X Europe has reported sustained trading growth on both its lit and dark platforms and has confirmed it has received additional investment from members via its 2009 equity participation scheme.

Chi-X Europe follows rivals into Ireland
http://www.thetradenews.com/asset-classes/equities/4087
*** I think the term “follows” is misleading. I recall having face to face discussions with the Irish revenue in 2008. The issues then were stamp duty. No point coming to market if the structures are not in place. Anyway, the journey to the destination is now history. Every success now moving forward.
What looks like a nice paper from Nasdaq on Irish requirements (for direct access)
http://nasdaqomxeurope.com/digitalAssets/50/50689_NASDAQ_OMX_Europe_Irish_Stamp_Duty_Pack__v1_0_.pdf


Optiver-backed TOM exchange appoints CEO
Sign of drive in Europe for trading platcforms to attract retail order flow
http://tomtrading.eu/content/Benoeming_WillemMeijerUK.pdf


FXall Joins CLS Bank to Mitigate Settlement Risk
FXall's Settlement Center will automatically recognize CLS-eligible trades and support CLS matching, ...

ITG Hires Duncan Higgins, Fomerly at Turquoise
Higgins joins ITG as a director within the electronic sales group in Europe.

BSE Introduces Maker Taker Charges in the Equity Derivatives Segment
On December 29, 2009 the Bombay Stock Exchange (BSE) introduces a maker / taker transaction model in its equity derivatives segment. The targeted reduction in effective spreads and impact costs, along with the innovative ... Read More Here

Pratip Kar: Taking stock of the exchanges
The introduction of rolling settlement and derivatives has made multiple stock exchanges economically irrelevant
http://www.business-standard.com/india/news/pratip-kar-taking-stockthe-exchanges/382297/
*** An Indian perspective on consolidation of domestic exchanges (post fragmentation).

NASDAQ OMX Commodities and Nord Pool Spot Launch UK Power Market N2EX
LONDON, Jan 12, 2010 (GlobeNewswire via COMTEX News Network) -- NASDAQ OMX Commodities, a business unit of The NASDAQ OMX Group (Nasdaq:NDAQ), and Nord Pool Spot today announced the successful launch of N2EX, its marketplace for physical UK power contracts. The launch included a day-ahead auction and a prompt market.
http://ir.nasdaqomx.com/releasedetail.cfm?ReleaseID=437121

LIQUIDNET INVESTS IN RESEARCH OUTFIT OTR GLOBAL
Liquidnet has made a strategic, unspecified, investment in OTR Global, an alternative research company providing market intelligence for institutional investors.
More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=20940

Recommendation 4.5: Increased competition on exchange traded markets
On page 121 of Australia as a Financial Centre, Building on our Strengths
Report by the Australian Financial Centre Forum
http://www.treasury.gov.au/afcf/content/reference_papers/downloads/AFCF_Building_on_Our_Strengths_%20Report.pdf




Clearing

EMCF seeks to end gridlock over European clearing
By Masa Serdarevic and Jeremy Grant
Efforts to break a gridlock on creating clearing choice in Europe have taken a step forward after European Multilateral Clearing Facility (EMCF), a pan-European clearing house, sought to clarify how it would co-operate with rivals in a proposed three-way link with LCH.Clearnet and X-Clear, a Swiss clearer.
http://www.ft.com/cms/s/0/61f8045a-fabc-11de-a532-00144feab49a.html

EuroCCP Warns Against Margin Sharing for CCP Links
http://www.euroccp.co.uk/news_centre/press/2010/reducing_risk.php

EMCF Interoperability Position Paper.
http://www.euromcf.nl/


LCH.Clearnet Tells EU Of Monopoly Concerns In Stoxx Clearing
By Adam Bradbery
LONDON (Dow Jones)--LCH.Clearnet, the European clearing company, has raised concerns with the European Commission about the potential for monopolistic practices resulting from the purchase by Deutsche Boerse (DB1.XE, DBOEF) of a controlling stake in STOXX Ltd., the stock index provider, according to people familiar with the matter. LCH.Clearnet is concerned that Deutsche Boerse--the German exchange company that has a majority stake in Eurex, the trading platform, and its subsidiary Eurex Clearing--could make it difficult for LCH.Clearnet to get a license to clear derivatives trades in instruments based on EURO Stoxx indexes in order to leave its own clearing unit with a monopoly, according to the letter from LCH.Clearnet, obtained by Dow Jones Newswires.
http://online.wsj.com/article/BT-CO-20100111-711468.html

ECB TO SET BACK T2S TIMETABLE TO BEYOND 2013
The European Central Bank has been forced to set back the deadline for the introduction of a new pan-European securities settlement system by up to a year as negotiations over pricing and governance continued to hamper the project, according to a report in the Financial Times.
More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=20957




Policy

Re:
Remarks of Chairman Gary Gensler, “OTC Derivatives Reform”, Council on Foreign Relations
Scott,
I noticed you had the wrong Gensler speech link below. That link contains a 12/3/09 speech. This link contains the 1/6/10 speech.
http://www.cftc.gov/ucm/groups/public/@newsroom/documents/speechandtestimony/opagensler-23.pdf

Observers Say Obama's Proposed Bank Fee Wouldn't Work, Won't Happen
I didn’t read this story but I wanted to read the headline Obama says proposed….

SEC BEGINS OVERHAUL OF US EQUITY MARKETS WITH BAN ON DIRECT MARKET ACCESS The US Securities and Exchange Commission has proposed new rules prohibiting broker-dealers from providing customers with unfiltered or naked access to an exchange or ATS. The watchdog has also called for comment on issues relating to high-frequency trading, co-locating trading terminals and dark pool trading as it seeks to re-write the rule-book for a new era of computer-driven trading.
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=20950




ICAP Equities launches algorithmic trading platform ICAP ALX
London 12 January 2010 ICAP Equities, the global agency broker, announced on Tuesday that it has launched its algorithmic trading platform ICAP ALX and is beginning the process of onboarding clients. The platform, developed together with execution technology and algorithmic strategies provider, Arctic Lake Systems, is operational and is scheduled to be delivered to ICAP Equities' client base in Q1 2010.
http://www.icap.com/

Barclays to bring IT back inhouse as Accenture outsourcing deal expires
Barclays has decided not to renew a six-year, 400 million IT outsourcing contract with Accenture when it expires in June, taking the work back in-house.
http://www.finextra.com/news/fullstory.aspx?newsitemid=20934



Scott Riley
Business Development

[Please note my new email address: scott.riley@au.fortisclearing.com]

Fortis Global Clearing
8th Floor | 50 Bridge Street | Sydney | Australia | 2000
((Off)+61 (0)2 8916 9634 È(Mob): +61 (0)418 117 627
* scott.riley@au.fortisclearing.com

News : WE 100108 Asset bubbles, TSE, MTF pricing, OTC clearing EU v US

G’day All and Happy New Year.

Much news down under of the big chill up North.

An amazing spread of temperatures, just 29C (positive) here today and I think I got a touch of sunburn during my lunch time swim.

Sound familiar? Maybe not.

I found the economist piece on warning about bubbles timely.

What really resonated with me was the Nomura piece on “balance sheet recession”. I totally agree.

Yet again, the ratings agencies can wield more harm than good if they are not questioned, challenged and understood in context.

Likewise, during a deleveraging, people aren’t going to borrow at zero %, their deleveraging.

Certainly this was my favourite piece of the week.

Some changes to MTF fee schedules.

Arrowhead appears to be flying straight and true. I hope it continues to do so for all parties concerned with the markets.

A more vibrant TSE is a pre-requisite for more market initiatives.

For those of you looking at the snow, or trapped in snow it is the North Bondi rough water this weekend.

http://www.northbondisurfclub.com/html/s02_article/article_view.asp?id=926&nav_cat_id=198&nav_top_id=72&dsb=1488

This outing is just to burn off the Xmas excess, it sure doesn’t get any easier after a break.

If you are in the snow, enjoy it while it lasts. As for slush and black ice…you can have it!

Have a great week-end all and for those coming back, welcome back and hello 2010.

Warm regards,

S

http://clearingandsettlement.blogspot.com

A warning about bubbles

http://news.economist.com/cgi-bin1/DM/y/eB66U0bscdF0Mo0GJ6K0EY

Volatility Falls to Pre-Lehman Lows
The VIX's decline to a 16-month low shows an absence of anxiety on Wall Street, reports Barrons.com's ...

Interview with Richard Koo, chief economist, Nomura Research Institute:

Barron's: What are the other implications of the balance-sheet recession?

Koo: Many countries will continue to run massive fiscal deficits for the foreseeable future. There are two issues. One is how to rate the sovereign debt of countries that have fallen into balance-sheet recessions and require heavy fiscal stimulus. Issuing more government debt when an economy isn't in a balance-sheet recession leads to a variety of problems, including higher interest rates, crowding out, inflation, and inefficient distribution of resources. Any of these would be ample justification for a rating downgrade.

But increased issuance of government debt during a balance-sheet recession is a positive. Unless the government issues a sufficient amount of debt and boosts fiscal expenditures, the economy will fall into a deflationary spiral. At such times, rating agencies that don't understand the concept of balance-sheet recessions can send the wrong signal with credit downgrades, preventing governments from doing what is necessary and sparking further weakness in the economy. Of the two main U.S. rating agencies, Moody's appears to be paying much more attention to this issue. Standard & Poor's, on the other hand, remains entirely indifferent and continues to apply orthodox rating criteria in a doctrinaire fashion.

It was the haphazard assignment of AAA ratings to sub-prime CDOs by these two organizations that enabled those instruments to be bought by investors around the world, ultimately triggering the global financial crisis. The problem of sovereign-debt downgrades represents another opportunity for these agencies to exacerbate problems in the global economy. National and international authorities urgently need to pursue further regulation and reform of the rating agencies as part of their efforts to tighten regulation of the financial sector.

http://www.efinancialnews.com/investmentbanking/content/1056193452/29243/

Platforms

Chi-Delta extends pricing promotion
Chi-X Europe Ltd (Chi-X) has announced the extension of the Chi- Delta pricing promotion. Following the initial pricing promotion announced in November 2009, the revised pricing structure will be extended to 31st March 2010.In November 2009 "Chi-Delta was the largest traded pool of non-displayed pan-European liquidity" according to Thomson Reuters' Equity Market Share Reporter (EMSR)' with 27.3% market share.Chi-Delta executions resulting from a passive order type* will qualify for a reduction in trading.
http://www.automatedtrader.net/news/mtf-news/28512/chi_delta-extends-pricing-promotion

The promotion, which started on 10 November and was due to expire at the end of 2009, halved the fee for adding liquidity to the platform to 0.15 basis points from 0.3 bps. Passive order types on Chi-Delta are non fill-or-kill and immediate-or-cancel orders. The fee reduction will now run until 31 March 2010. Aggressive orders sent to Chi-Delta will continue to be charged at 0.3 bps.
By comparison, BATS Europe charges 0.15 bps per order on its dark pool, while NEURO Dark, Nasdaq OMX Europe’s non-displayed order book, charges 0.2 bps.
According to data vendor Thomson Reuters, Chi-Delta accounted for 32% of dark European liquidity in December 2009, making it the largest pan-European non-displayed trading venue.

PRESS RELEASE: Chi-East Appoints Ned Phillips as CEO
SINGAPORE - 6 January 2010 – Chi-East, a joint venture of Chi-X^® Global Inc. and Singapore Exchange Limited (SGX), announced today that it has appointed Ned Phillips as its Chief Executive Officer, effective immediately.

The new ownership structure of pan-European multilateral trading facility Turquoise following its takeover by the London Stock Exchange will be key to stepping up competition with market-leading MTF Chi-X Europe, according to those involved with the deal.

Read story

http://www.thetradenews.com/asset-classes/equities/4061

Nasdaq MTF to boost passive routing fees for second time

http://www.thetradenews.com/asset-classes/equities/4044

NYSE ARCA CLAIMS SUB-MILLISECOND SPEED FOR ORDER EXECUTION

http://www.finextra.com/news/announcement.aspx?pressreleaseid=31624

CITI TO SELL LAVAFX PLATFORM TO FXALL

Electronic multi-bank foreign exchange trading portal FXall has agreed to buy rival platform LavaFX from Citi. Financial terms of the deal were not disclosed.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=20907

FINANCIAL TIMES: Trading Platform Launch Lifts Tokyo Stocks
By Lindsay Whipp
1/5/10
The Tokyo Stock Exchange’s new trading platform successfully completing its first day of operation.
A relatively easy day to launch its new trading platform – called Arrowhead – which brings its technology in line with global standards.
The TSE hopes that it will give a much-needed boost to trading in the world’s second-largest equity market.
One market participant said “everybody was very concerned about the first day” but it was “smooth and without problems”.
Market participants expect volumes to grow on the TSE as investors take advantage of the much faster system where trades now take five milliseconds to complete compared with seconds on the outgoing platform.

TOKYO STOCK EXCHANGE RELEASES ARROWHEAD

http://www.finextra.com/news/announcement.aspx?pressreleaseid=31591

Tokyo Exchange Girds for Tech Race
By ALISON TUDOR
TOKYOThe Tokyo Stock Exchange on Monday is set to launch a high-tech replacement to its creaky trading platform after years of embarrassing trading gaffes, a move that may unleash a technology war between brokers in Japan.
http://online.wsj.com/article/SB10001424052748703916304574631881787110234.html

NASDAQ OMX AND BM&FBOVESPA SIGN COMMERCIAL PARTNERSHIP CONTRACT

http://www.finextra.com/news/announcement.aspx?pressreleaseid=31589

THE TRADE NEWS: Exchanges' 2009 Figures Highlight European Equities Slump
By Staff
1/5/10
Several of Europe’s major stock exchanges have reported significant declines in equities trading volume and value for the full year of 2009 compared with 2008, but activity in exchange-traded funds bucked the general trend.
The exchanges’ figures echo the trend across Europe. According to figures from data vendor Thomson Reuters, total equities trading turnover for the continent in 2009 was €7.56 trillion, a 68.5% drop from 2008’s €24.05 trillion. Trading volumes across Europe fell to 1.15 trillion trades, down 48.5% from 2008’s 2.23 trillion.
Exchanges' 2009 figures highlight European equities slump

ELX Futures Announces 2009 Results as Total Volume Exceeds 5MM Contracts; Average Daily Volume Surpasses 41K Contracts; Open Interest Tops 20K Contracts; ELX Becomes Best Performing New Financial Futures Exchange in Decade
http://www.marketwire.com/press-release/Elx-Futures-LP-1097903.html

Trayport(R) Exchange Systems Goes Live with Sibiu Monetary Financial and Commodities Exchange
LONDON, Jan. 6 /PRNewswire/ -- Trayport Exchange Systems today announced that Sibiu Monetary Financial and Commodities Exchange (SIBEX) in Romania has gone live with Trayport's Exchange Trading System for the trading of single stock, interest rate, currency and gold futures and options.
http://finance.yahoo.com/news/TrayportR-Exchange-Systems-prnews-1797545548.html?x=0&.v=1

Clearing

[Video] Diverging OTC reform
FT Trading Room
Anthony Belchambers on different plans of EU and US
http://www.ft.com/markets/trading-room

European firms want exemptions for OTC derivatives rules
More than 160 of the largest nonfinancial companies in Europe signed a letter in opposition to proposals by the European Commission for stricter regulations for over-the-counter derivatives markets. The businesses argue that the changes could hinder economic growth and increase the cost of hedging market risks. Last month, an official in the commission's division of internal market and services said staff thought it would be impossible to exclude OTC derivatives users unrelated to the financial industry. Financial Times (tiered subscription model) (05 Jan.) , The Wall Street Journal/Dow Jones Newswires (05 Jan.)

05/01/2010 12:17:00

EUROCLEAR NAMES HSBC MAN HOWELL CEO

Brussels-based depository Euroclear has appointed HSBC veteran Tim Howell chief executive officer, replacing Pierre Francotte who is quitting after 10 years in the role.

More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=20912

Garry O'Connor takes the helm at IDCG
International Derivatives Clearing Group, LLC (IDCG), a majority owned, independently operated, subsidiary of The NASDAQ OMX Group, Inc.(SM) today announced that the IDCG Board of Directors appointed Garry N. O'Connor as CEO of IDCG, effective immediately.
http://bit.ly/8WJ14G

Policy

Industry Reacts to Dark Pool Proposals
As the SEC looks to improve market transparency, dark pools have come under renewed fire. Three regulatory ...

http://advancedtrading.com/crossingnetworks/showArticle.jhtml;jsessionid=UMQT24G43UW2LQE1GHPSKH4ATMY32JVN?articleID=222100088&_requestid=59193

*** includes SEC link: SEC's Fact Sheet About Dark Pools,

http://sec.gov/news/press/2009/2009-223-fs.htm

Remarks of Chairman Gary Gensler, “OTC Derivatives Reform”, Council on Foreign Relations

January 6, 2010

http://www.cftc.gov/ucm/groups/public/@newsroom/documents/speechandtestimony/opagensler-22.pdf

BUSINESS DEMANDS TO OUTPACE TRADING TECH BUDGETS IN 2010 - TABB Speed will continue to be the name of the game for US equity brokers in 2010 but business demands beyond latency may outpace trading technology budgets, according to a study from Tabb Group.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=20919

*** and if you can’t measure it, you can’t manage it.

FINANCIAL TIMES: Quick View -- Fast, But Just How Fast?
By Jeremy Grant
1/4/10
A next step forward – and a potentially big one – comes in the next few weeks from NYSE Euronext. It is working with Corvil on setting up a website that aims to standardise latency measurement, allowing traders to see how they did across various exchanges and platforms.
NYSE Euronext plans initially to publish the latency of the exchange’s own data feeds. Traders will be able to compare that with other exchanges.
Stanley Young, chief executive of NYSE technologies, tells FT Trading Room the hope is that other exchanges and platforms will join in and publish their data feeds too, kicking off an industry standard. “We are hoping that everyone will publish so you can check all venues.”

BarCap starts trading equities in Japan
http://www.thetradenews.com/regions/asia/4066

Suppose Gordon Brown is right on fiscal stimulus...
UK Prime Minister Gordon Brown has drawn flak from opposition politicians for sticking to his policy of spending his way out of the recession. But according to a Barron's interview with the influential chief economist at the Nomura Research Institute, the research arm of the Japanese securities firm, extensive public spending may be the only way to address a private sector-led recession. The full interview, which incidentally makes no mention of Brown or the UK, follows below.

Yes there are two paths you can go by, but in the long run there's still time to change the road you're on."

--Led Zeppelin,
British rock band, from "Stairway to Heaven"

Young men are as apt to think themselves wise enough, as drunken men are to think themselves sober enough."

--Philip Dormer Stanhope,
4th earl of Chesterfield

Scott Riley

Business Development

[Please note my new email address: scott.riley@au.fortisclearing.com]

Fortis Global Clearing

8th Floor | 50 Bridge Street | Sydney | Australia | 2000

((Off)+61 (0)2 8916 9634 È(Mob): +61 (0)418 117 627

* scott.riley@au.fortisclearing.com