Friday, February 19, 2010

News 100219: CCP market shares, LCH results, Naked access, Langen belongs on the Bismark

The Value of Short-Sale Restrictions

Happy Lunar New Year

恭喜发财 or 恭喜發財

The Value of Short-Sale Restrictions

The headline results from LCH are rather dramatic to be fair. The key to the so called loss is the impairment charge. The above graph, courtesy of gives a graphical explanation.

I also note with interest the update on the Spanish timeframes.

On the clearing policy side the so called Langen report should be shot down.

Also a good paper from on naked access. I have always believed Pre Trade Risk Management belongs with those who are handing over their car keys.

Lots of news from the platforms too:

Chi-X keeps up the good work.

I am puzzled / disappointed in the indices providers and their seeming lack of desire to reflect accurate data and trends.

I guess just like the ratings agencies before them, they don’t take any responsibility for what they publish.

LSE implement changes at Turquoise; and

Deutsche Bourse adjust to their results.

This is an excellent and recommended read:

Sink the Bismarck!: Brewery Releases World's Strongest Beer At 41% ABV

In the name of RSA (responsible service of alcohol) this made me laugh out loud.

It is important that you be careful with this beer and show it the same amount of sceptical, tentative respect you would show an international chess superstar, clown or gypsy.

Robin Hood Tax

Richard Curtis's (he of Four Weddings and a Funeral and Love Actually fame) short clip with Bill Nighy for the Robin Hood Tax campaign:

Bar dealers from owning CCPs, says European Parliament report
Derivatives dealers should not be allowed to own stakes in central counterparties (CCPs) or their risk management systems - and CCPs should not be allowed to compete with each other, according to advice from the European Parliament's committee on economic and monetary affairs (Econ). If parliament members vote in line with the advisory, it would force dealers to divest stakes in clearers Ice Trust and LCH Clearnet - an outcome which bankers have attacked.

Grrrr. Madness. Call me a cynic:

a) The advice - known as an ‘own initiative' report - was circulated to committee members by rapporteur Werner Langen

b) The Langen report will be translated from the original German version…

…and Deutsche Bourse is a shareholder profit machine that is not user owned.

Funny that.

ML back into commodities….de ja vu.

…on the Beach.

Glorious swim and conditions at Bondi. Schools of fish.

Another beautiful journey swim coming up this week-end,

…6 Nations.

Interesting, 100% call on the games last week but none played in the style I expected.

France to beat Wales at home, which will see France as 6 Nations champs this year.

Scotland to win against the wooden spooners.

England to beat Ireland at Twickenham. (leaving the 6 Nations title to be decided with the final match on 20th March)

…And my Reds? (Super14).

The Reds had led the game almost throughout but ….with the Reds 10 points in front with 10 minutes to go…and with a NSW player set off with 5 mins to go….Somehow…

The Waratahs snatched a 28-30 victory from the Reds in the final minute with a try from Wycliff Palu and conversion from Daniel Halangahu.

Oh, woe was I.

Will the Reds win at home against the Crusaders? Nah, but I’m still going for the Reds.

….and this is what I should be saying about the Reds match….(Guest spot for Wayne whenever he wants it!)….

Look at the good. They dominated for 75% of the match and played good positive successful attractive rugby. Then we make some substitutes - a young prop having his debut, a young flanker, and take off the most effective player on the park, Genia.

We get a scrum penalty on half way, all we have to do is win the scrum and kick it to the corner... but our scrum gets stuffed and we loase the ball and they go to the corner with a good kick and chase. Our lineout, new combinations and we lose the lineout and they score a try... but the last pass was about 1.5metres forward. I was sitting directly in line in row 3 and it was a mile forward... but forget that, that's rugby.

The young flanker then gets penalised for the same stupid mistake of not releasing and puts us under pressure and they score.

I would be questioning the coach and his substitutions which seemed to be part of a pre-match plan rather than playing the situation in front of him.

There was enough there to say the reds at home this week in the heat against the Crusaders will step up and win.


Have a great w/end all,



Six weeks after becoming the new chief executive of Europe’s most successful new trading platform in terms of growth in market share, Alasdair Haynes wants to right a few wrongs.

Chi-X Europe wants its prices in rivals' indices
By Jeremy Grant in London
Chi-X Europe, the share trading platform that recently became Europe's second-largest bourse by turnover, plans to push for its prices to be included in the indices run by its main rivals, the region's established exchanges, according to its new chief executive.

*** The question in my mind, is why aren’t the indices working in there users interests by improving the quality of their data with this information?

A Hand in a House of Cards
With all the hand-wringing over the role of Wall Street banks in the financial crisis, one group of key players in the mess has been keeping - and undoubtedly enjoying - a relatively low profile: the rating agencies.

Winning over the buy-side will be a key focus for Chi-East, the joint venture dark pool between Singapore Exchange (SGX) and Chi-X Global, as it gears up for its planned end-of-Q2 launch, says new CEO Ned Phillips.

Read the interview

LSE Completes Turquoise Takeover; Names Lester CEO

The London Stock Exchange on Thursday said it completed its purchase of 60 percent of multilateral trading facility Turquoise and installed the exchange’s former chief information officer David Lester as Turquoise’s new chief executive to replace Eli Lederman.

LESTER PUSHES ASIDE LEDERMAN AND WILSON TO TAKE BAIKAL/TURQUOISE HOT SEAT The London Stock Exchange has completed the acquisition of Turquoise Trading and installed former LSE CIO David Lester as chief executive, ahead of Turquoise incumbent Eli Lederman and Baikal CEO John Wilson.

Full story:


Asia Trading Volumes To Grow 20-30% Per Year
Still, while undergoing change, the Asian landscape has real need for improvement, according to a new ...

17/02/2010 11:13:00


German exchange operator Deutsche Börse has outlined plans to save EUR50 million through an unspecified number of job cuts and outsourcing initiatives after reporting a EUR33 million net loss for the fourth quarter.

More on this story:

17/02/2010 11:16:00


Nasdaq OMX has upped its stake in Agora-X, an ECN for trading over-the-counter (OTC) commodity contracts, from 20% to 85% through a $6.6 million investment.

More on this story:

*** 65% for 6.6 myn

CME Group and BM&FBOVESPA to Become Global Preferred Strategic Partners, Jointly Develop a New Multi-Asset Class Trading Platform and to Expand Cross-Equity Ownership
CHICAGO and SAO PAULO, Feb. 12 /PRNewswire-FirstCall/ -- CME Group, the world's leading and most diverse derivatives marketplace, and BM&FBOVESPA, the world's third largest exchange company by market capitalization, today announced they have agreed to become Global Preferred Strategic Partners and to develop a new multi-asset class electronic trading platform that will be deployed by BM&FBOVESPA for use in its cash equities and derivatives markets.

NZX signals $20m writedown from carbon trading venture
Sharemarket operator NZX is signalling a $19.9 million hit to its balance sheet from a carbon trading business it has sold, blaming a lower priority given to carbon trading and "lack of a global political agenda around carbon."

Liquidnet Planning to Offer Dark Pools in New Zealand, Malaysia
By Jonathan Burgos
Feb. 12 (Bloomberg) -- Liquidnet Holdings Inc., which runs alternative stock trading platforms, is planning to offer so- called dark pool trading in New Zealand, Indonesia and Malaysia as demand for the services increase.

Liquidnet to offer trading in Polish equities

No outcry as LME changes price discovery method
The London Metal Exchange has changed the price discovery method for polypropylene and linear low density polyethylene futures from today. The exchange announced in July last year that its official prices, which are announced each trading day, would no longer be arrived at in open outcry trading. The relatively small amount of plastics futures trading since its launch in 2005 has been mostly through the electronic system LMESelect and by telephone between traders.

Pink OTC Markets has changed, its investor website for financial news and information on over-the-counter (OTC) securities, to

*** They claim: Pink OTC Markets operates the third largest U.S. equity trading venue.



Competition squeezes LCH.Clearnet
By Jeremy Grant
LCH.Clearnet, Europe's largest independent clearing house, on Tuesday highlighted the increasing competitiveness of the post-trade business by reporting a net loss for last year amid a fall in exchange trading volumes. The loss was E91m, compared with a record profit of E219.8m after tax last year.


*** bit sensational to be fair, due to:…. recognised an impairment charge of €393.4 million. This does not affect the Company's cash or regulatory capital position.

REGULATORS APPROVE FRAMEWORK FOR CLEARING LINKS British, Dutch and Swiss regulators have agreed a new framework for linkages between clearing counterparties in an effort to allay fears about systemic risks and inject fresh competition into the market.

Full story:

Thai Bourse To Transfer Clearing and Settlement

The Stock Exchange of Thailand (SET) will transfer the Securities Clearing and Settlement Unit from Thailand Securities Depository Co., Ltd. (TSD) to Thailand Clearing House Co., Ltd.(TCH) on February 15. The move will make a clear.... Read More Here

Citi admitted as SGX bank clearing member for securities Singapore
Citi's Securities and Fund Services, a division of Global Transaction Services, has been admitted as a Bank Clearing Member for securities by Singapore Exchanges Limited (SGX). In receiving membership approval, Citi's Securities and Fund Services can now offer SGX Trading Members an array of value-added clearing services, including Third Party Clearing enhancements.

Spain opens up market reform consultation
By Mark Mulligan in Madrid / FT Trading Room
Spain's stock market regulator has opened to public consultation planned reforms to the country's clearing and settlement system in the latest step towards opening of Europe's most protected share trading market.

*** A committee representing regulators, financial institutions, the Bank of Spain and the BME has been set up to review public submissions on the planned reforms, which must be lodged by March 15. A report will then be prepared and used to make the necessary legislative amendments to effect the reforms “over the course of 2011 and 2012”, according to the BME.

*** I had in mind a timeline closer to Q4’10


Clearstream and Luxembourg Central Bank to Launch New Depository

Prompted by the European Central Bank’s proposed launch of a single securities settlement system for the Eurozone, international depository Clearstream said that it will start a new local central securities depository in Luxembourg in 2011.

*** LuxCSD


My gut feeling has always been anti regulatory controls on naked access (Pre Trade Risk Management). I liked this piece:

* Leaving discretion to brokers to establish baseline controls and procedures is not such a good idea as it ensures inconsistency across brokers and subjectivity during SEC examinations.

* Differentiation between intended and erroneous orders might not be as easily detected by basic pre-trade controls. This shortcoming is amplified by the consideration that the broker implementing the controls is often not privy to the details of the strategy.

* Intense competition among brokers for high volume trading clients, combined with the reluctance of HFT firms to reveal their strategies, almost guarantees that brokers will compete amongst each other by offering HFT firms the least intrusive risk analyses and fewest controls.

* A change in leverage or required risk capital among sponsored access clients would make these arrangements more expensive, potentially resulting in the migration of algorithmic and HFT strategies to other geographic markets or to other businesses altogether where the perceived returns become relatively more attractive.

* There has been talk in the industry that eliminating naked access would simply result in users of that service (notably HFT firms) to establish themselves as brokers.

Paulson: Financial regulatory reform is needed immediately
Henry Paulson, former secretary of the Treasury Department, writes that it is time to overhaul the financial regulatory system and that delays are creating uncertainty in the market, which is not helping the situation. "Our overriding goal in restructuring our financial architecture should be that taxpayers never again have to save a failing financial institution," Paulson writes. The New York Times (2/15)

BofA Merrill Lynch builds London commodities team
Bank of America Merrill Lynch has moved on to the London leg of expansion plans for its global commodities business, a little over two years after closing its commodities and energy trading desk in the UK capital in the lead up to the financial crisis.

Icap to reorganise cash equities arm
Michael Spencer, chief executive of Icap, the world's biggest interdealer broker, said he is considering abandoning the company's foray into cash equities.

S&P Providing Data about How Structured Instruments Get Priced

Standard & Poor’s said it has started to provide customers of its securities evaluation data and pricing feed with free information online about the inputs used to price structured instruments.

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


No comments: