Sunday, January 24, 2010

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.

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.



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:
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 ( 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.

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:



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

*** 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.


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.
*** 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 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.

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:]

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

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