News 100408: Anzac, Chi-X Aust, ASIC RG211, LSE pricing, DTCC, R&J Cape Town

…At the going down of the sun,

And in the morning,

We will remember them.

My grandfather rests here in Caserta, Italy (I think from memory plot 6D). Prior to the Italian armistice of Sep ’43 (where the Italians re-entered the war on the allied side) the Italians ran a PoW camp here in Caserta (some called it a concentration camp). My grandfather, one of the “Rats of Tobruk”, died from injuries sustained on night patrol behind enemy lines in Lybia. He was taken PoW in Easter 1941 during the Siege of Tobtuk, shipped off by the Italians to Caserta, where he died on 27^th May 41 at the ripe old age of 33.

http://www.anzacday.org.au/history/ww2/anecdotes/tobruk.html

*** brings the “rats” to life.

http://www.cwgc.org/search/cemetery_details.aspx?cemetery=2005400&mode=1

*** where he rests today.

http://www.docstoc.com/docs/6456356/Siege_of_Tobruk

http://www.awm.gov.au/units/unit_11287.asp

…and to the news.

Lots of activity down under. ASIC release their guidance on Aussie C&S and the media picks up on the implications for Chi-X, especially in the context of the Ministerial approval in principle.

LSE can’t help twiddling with fees..must be like wearing itchy trousers..hard to get comfortable with competition.

A nice piece on where and how much capital LCH.CN is holding.

Some interesting board changes at DTCC too.

..and the IMF proposes a nice FAT tax. I doubt it will fly. If anything it’ll be a RAT (Regulatory Arbitrage Tax).

No blog last week while I was travelling to Cape Town for a wedding. (this weeks piccie on the blog spot).

Heartfelt congratulations to Robin and Joyce.

If you ever want a heart lifting experience – ya can’t beat a great wedding.

Thanks guys….and welcome to my new blog readers.

Have a great weekend all.

And OMG, go the Reds! 16-13 over the Stormers? Yep, it’s true.

Scott.

http://clearingandsettlement.blogspot.com/

Trading

Chi-X’s new hit on ASX monopoly.

http://www.businessday.com.au/business/chixs-new-hit-on-asx-monopoly-20100418-smld.html

The Government announcement on Chi-X's conditional approval to operate a market in Australia is good news for existing AFSL's and AFSSDA. As you may or may not be aware, AFSSDA also aspires to obtain and operate a market license in the future, which our members will own a portion of.

http://content.enewslettersonline.com/18412/35084.html

http://www.afssda.com.au/About_AFSSDA.html

22/04/2010 10:54:00

LSE BID FOR HIGH-FREQUENCY TRADERS MOCKED BY BATS

The London Stock Exchange's decision to change its tariff structure in a bid to win back high-frequency traders just months after scrapping an earlier scheme has been ridiculed by rival outfit Bats Europe.

More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21315

JOHANNESBURG STOCK EXCHANGE PLANS DARK POOL

http://www.finextra.com/news/announcement.aspx?pressreleaseid=33425

CANADIAN ATS ALPHA FILES FOR EXCHANGE STATUS

http://www.finextra.com/news/announcement.aspx?pressreleaseid=33417

Clearing

ASIC releases guidance on regulation of clearing and settlement facilities

http://www.asic.gov.au/ASIC/asic.nsf/byHeadline/10-82AD%20ASIC%20releases%20guidance%20on%20regulation%20of%20clearing%20and%20settlement%20facilities?opendocument

Breakdown of LCH margin assets

Protection Money

In a recent committee discussion in the Lords, Roger Liddell spoke about the levels of risk LCH manage, and the financial assets they hold to protect against the default of a member. Of interest were the amounts of margin and capital available, both when Lehman defaulted, and now.

http://www.linkedin.com/news?viewArticle=&articleID=114142835&gid=2026241&srchCat=WOTC&articleURL=http%3A%2F%2Fweb.me.com%2Fhodgsonb%2FBlog%2FThe_OTC_Space%2FThe_OTC_Space.html&urlhash=ES33

DTCC Names Five New Board Members

The Depository Trust & Clearing Corp. Thursday said it named five new board members and, for the first time, three of them come from companies which are not members of its clearing and settlement organization.

http://www.securitiesindustry.com/news/-25176-1.html?ET=securitiesindustry:e1915:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=SIN_DailyClose_042210

*** Interesting. This includes Christopher Concannon. (Concannon joined Nasdaq in its purchase of Instinet, where he was president of its clearing unit.)

http://www.marketswiki.com/mwiki/Chris_R._Concannon

DTCC ELECTS BOARD MEMBERS

http://www.finextra.com/news/announcement.aspx?pressreleaseid=33427

*** This also includes bios.

Singapore to offer clearing on OTC derivatives
By Kevin Brown in Kuala Lumpur
The Singapore Exchange, Asia's second largest listed bourse, announced plans on Wednesday to change its rules to allow an expansion of its central clearing operation to include over-the-counter (OTC) financial derivatives. The exchange, which already has a substantial OTC clearing business, said it would initially offer interest rate swaps and Asian foreign exchange forward contracts, settled in US dollars.
http://jlne.ws/9X9Q7v

TRADEWEB COMPLETES ELECTRONIC LINKS TO CLEARING HOUSES FOR OTC DERIVATIVES TRADES

http://www.finextra.com/news/announcement.aspx?pressreleaseid=33117

Policy

The IMF has urged the global introduction of 'clean up' taxes on financial firms.

§ http://www.fool.co.uk/news/investing/2010/04/22/banks-face-two-new-taxes.aspx

§

§ The IMF report in full (or rather the “confidential” summary of the G20 April 2010 meeting):

§ https://www.novares.eu/pdfs/IMF-G20-Interim-Report--A-Fair-and-Substantial-Contribution-by-the-Financial-Sector.pdf

§

§ FSA leaders say objectives create a conflict of interest
UK Financial Services Authority officials requested that changes be made to the agency's legal framework, saying its role as a financial regulator conflicts with its objectives to promote London as a global financial hub. "When you start saying that the role of a regulator is to help, as it were, the competitiveness of a location or of the nationally registered firms, that can in a subtle way create a conflict of interest and it would probably be better if we didn't have that objective," said Adair Turner, chairman of the FSA. Financial News Online (U.K.) (subscription required) (06 Apr.)

*** I think this is a pity. Yes, the conflict is apparent, but the FSA / regulators universally expect all firms to have procedures to address conflicts of interest. To step away from this conflict is akin to absolving themselves of any responsibility. To me it reads too much of we want an open mandate for “business prevention” rather than we’ll take a pragmatic view on financial markets i.e. “if not, why not”.

Market Access Proposal: Great in Concept but not in Practice

Broker-dealers and other market players give a thumbs-up for the Securities and Exchange Commission’s efforts to tighten controls on unfiltered sponsored or “naked” access to exchanges and other market centers.

http://www.securitiesindustry.com/monday_monitor/-25007-1.html?ET=securitiesindustry:e1892:171544a:&st=email&zkPrintable=true&utm_source=editorial&utm_medium=email&utm_campaign=SIN_MondayMonitor_040510

UBS CONNECTS TO CHI-TECH MARKETPRIZM

http://www.finextra.com/news/announcement.aspx?pressreleaseid=33347

EQUINIX OPENS AMSTERDAM DATA CENTRE

http://www.finextra.com/news/announcement.aspx?pressreleaseid=33419

Super 14 roadtrips not like in movies

JAMES HORWILL 1:43pm | Last weekend's Super 14 results showed how difficult it is to win away from home in this competition. Not a single team had a win on the road.

Service record states (information supplied by the Red Cross):

During Easter Harrison, Luck, Mayman and Symons were out on patrol. They struck bother. Harrison was wounded and Mayman and Luck went back to help him. Symons joined them. Just afterwards, when they observed the enemy moving around from the rear, Harrison pleaded with the others to leave him so that they could get back. Symons Mayman and Luck were nursing Harrison when the enemy came up to them and took the lot. The men are in my company and I heard the story of their capture almost as soon as it happened.

Mayman survived to be released from prison by the allies in 1943 but his company was bombed by friendly fire when they were marching out and was badly injured.

*** My grandfather was Eric Harrison.

Don’t be afraid to take a big step if one is indicated. You can’t cross a chasm in two small jumps.

- David Lloyd George

If you think education is expensive – try ignorance.

- Derek Bok

Scott Riley

Business Development

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 100401: Nordics and Single CCP, Chi-X Australia, Transaction sizes, Tammy to Cloey

Uh oh…extra long days:
Daylight Savings Time Ends - March 28 (Europe)
Daylight Savings Time Ends - April 4 (Australia)

One very clever (and respected) soul sent this in…..

“
Can I make a recommendation for this week’s blog?
Steve Grob had a comment on fragmentation in the Nordic’s in his latest blog item that I think you should comment on. Here’s the blog:
http://fragmentation.fidessa.com/2010/03/18/smart-routing-the-sat-nav-of-the-trading-world-%E2%80%93-18-march-2010/

He makes the point that increased penetration of SOR technology is the drive for increased fragmentation in the Nordics. Notwithstanding SOR technology is one of the drivers, the main reason for increased fragmentation on Stockholm and Copenhagen is the introduction of CCP clearing for Nasdaq OMX. I don’t have to tell you that CCP clearing is essential for high frequency trading firms as they cannot fully operate without netting. The first effects of the CCP launch are already visible: Citadel has grown its market share on Nasdaq OMX Nordic to 4.59% in February 2010, up from 1.38% in FY 2009, according to Nasdaq statistics.

Nasdaq OMX Nordic is in a special position as it uses the same CCP as the largest European MTFs, Chi-X and BATS. Therefore participants can trade on both the primary exchange and the main MTFs through a single clearing provider. For all trading in Nordic equities participants receive a single net settlement instruction per ISIN wherever the securities are traded. This greatly reduces the complexity and costs of trading. The introduction of the Nordic CCP is therefore expected to bring increased trading volumes and increased fragmentation for the S30, H25 and C20 indices.
“

The excellent point this reader makes is the important virtuous cycle of bringing down the overall frictional cost of trading.
Fidessa only have the top half of the picture.
Consolidation of clearing, and the resulting efficiencies, facilitates overall market liquidity and fragmentation.

Ruben Lee, (whom I certainly don’t always agree with), does give a good example of why sometimes one CCP is enough.
http://www.med.govt.nz/upload/70905/clearing-settlements-systems.pdf

Personally, I think the Nordics is different (NZ wallet size could not support fragmented trading) and it evidences network synergies in a positive light.

That said, of course, we also need competition, as evidenced by the changes we’ve seen in European tariffs.
Sometimes, when the market is mature enough, competition is a pre-requisite to introduce fragmentation.
It would be lovely to have more empirical data, but for now we can only watch the trends.
A single CCP, at the right price point, facilitates fragmentation. In more mature markets we need competition to identify the price point.


Onto the news:
Great week for Chi-X in Australia.
Hirander pops up at Algo Technologies.
LSE transaction sizes continue to fall…and oh woe….an unlevel playing field.
More dark movements.

One of my favourite swims of the year this week-end: http://www.t2cswim.com/tiki-index.php
(piccie on the blogspot:

A hedge between keeps friendships keen.
German proverb

Saving is a very fine thing. Especially when your parents have done it for you.
Winston Churchill

Patience and perseverance have a magical effect before which difficulties disappear and obstacles vanish."
--John Quincy Adams, 6th US president

Have a wonderful Easter one and all.

Scott.
http://clearingandsettlement.blogspot.com/




Platforms

Chi-X in principle approval
http://mfsscl.treasurer.gov.au/DisplayDocs.aspx?doc=pressreleases/2010/032.htm&pageID=003&min=ceba&Year=&DocType=

http://mfsscl.treasurer.gov.au/DisplayDocs.aspx?doc=transcripts/2010/026.htm&pageID=004&min=ceba&Year=&DocType=2
*** A nice transcript of the Ministers announcement to the press.
BOWEN:
Any regulatory powers, I would reserve the right, based on the advice of ASIC or the ACCC, to implement to ensure access to clearing and settlement facilities, which I think is where your question's going.


A new beef for former Chi-X chief
Once a fierce critic of European exchanges that were slow to respond to MiFID, Hirander Misra, new CEO of trading technology firm ALGO Technologies, has turned his fire on tardy vendors of exchange and trading technology.
Read the interview; http://www.thetradenews.com/node/4368


22/03/2010 11:20:00
CHI-X EUROPE TO OFFER CO-LOCATED DIRECT FEEDS AND REFERENCE DATA VIA THOMSON REUTERS
Chi-X Europe has rolled out Thomson Reuters' pan-European low latency direct feed, pricing and reference data service, offered through the firm's hosting centres in London.
More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21203

30/03/2010 11:10:00
WARSAW BOURSE LOOKS FOR PARTNER TO OVERHAUL PLATFORM
After last year's failed effort to sell off a majority stake, the Warsaw Stock Exchange has changed tack, asking the world's major bourses to bid for a contract to modernise its trading platform and form an alliance.
More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21236
**** Chi-Tech to the rescue….



Value of LSE trades falls by a third
http://business.timesonline.co.uk/tol/business/markets/article7075488.ece#cid=OTC-RSS&attr=1185799

LSE says UK equity market lacks level playing field
The London Stock Exchange is voicing concerns about the UK equity market, saying it bears more of the regulatory burden than competitors. "There clearly seems to be an imbalance," said Xavier Rolet, CEO of the LSE. "This is a not-so-theoretical debate on how the playing field between exchanges and [multilateral trading facilities] could be leveled." Bloomberg (29 Mar.) ,




Instinet Plans a Dark Summer for Asia
TOKYO-Alternative trading system (ATS) operator Chi X Global expects to launch its Chi-X Japan and Chi-East non-displayed trading platforms this summer, officials tell DWT.
http://db.riskwaters.com/public/showPage.html?validate=0&page=dwt_login&url=%2Fpublic%2FshowPage.html%3Fpage%3D873845

UBS PLANS EUROPEAN DARK POOL
Swiss bank UBS is planning to launch a dark pool multilateral trading facility (MTF) for crossing orders in European stocks.
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21164



ITG LAUNCHES ASIA DARK POOL
http://www.finextra.com/news/announcement.aspx?pressreleaseid=32827

TGE Agrees to Implement TOCOM Trading Platform
Following discussions since August last year, the Board of Directors of the Tokyo Grain Exchange Inc. (TGE ) decided at the meeting March 16 that is was possible to make an agreement on the conditions to implement the... Read More Here

BATS EUROPE ADDS RECYCLE FEATURE TO SMART ORDER ROUTING SERVICE
http://www.finextra.com/news/announcement.aspx?pressreleaseid=32897

PLUS MARKETS POSTS FY PRELIMINARY RESULTS
http://www.finextra.com/news/announcement.aspx?pressreleaseid=32992
*** Interesting. They’re back to looking at how to unlock value in the RIE status.

NASDAQ OMX BUYS NORD POOL
http://www.finextra.com/news/announcement.aspx?pressreleaseid=32850

CINNOBER TRUMPETS TRADEXPRESS BENCHMARK RESULTS
http://www.finextra.com/news/announcement.aspx?pressreleaseid=32713

TSE TAPS RED HAT ENTERPRISE LINUX FOR ARROWHEAD
http://www.finextra.com/news/announcement.aspx?pressreleaseid=32903

BURSA MALAYSIA SELECTS PATSYSTEMS FOR DERIVATIVES TRADING OMS
http://www.finextra.com/news/announcement.aspx?pressreleaseid=32711

JAKARTA FUTURES EXCHANGE AGREES TERMS WITH TRAYPORT AND 3I INFOTECH
http://www.finextra.com/news/announcement.aspx?pressreleaseid=32915

REALTICK EXPANDS NOMURA RELATIONSHIP
http://www.finextra.com/news/announcement.aspx?pressreleaseid=32922
*** I liked this story because:
Nomura is part of RealTick's global multi-broker network, which includes, among many others, Bank of America Merrill Lynch, Barclays Capital, BNP Paribas, BNY Convergex, CA Cheuvreux, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Instinet, JP Morgan, MF Global, Morgan Stanley, RBC Capital Markets, Societe Generale, and UBS.

NYSE brings high-tech Getco onto floor as market maker
Starting today, Getco, one of the pioneers of computer-driven, high-speed share trading, will become a "designated market maker" at the New York Stock Exchange. "This is validation that the NYSE can compete in terms of technology and price with the rest of the playing field," said Jamie Selway, managing director of White Cap Trading. The Wall Street Journal (3/29)

NYSE EURONEXT AMSTERDAM APPOINTS CEES VERMAAS CHAIRMAN, MANAGING BOARD
http://www.finextra.com/news/announcement.aspx?pressreleaseid=33057



Clearing

EUROCCP INTRODUCES COMPARABILITY OF ALL-IN TRADING COSTS
http://www.finextra.com/news/announcement.aspx?pressreleaseid=32927
*** Clearing Fee / Notional Value * 100 (bps) * 100 (%) = basis points cost per trade. Magic!

LCH.Clearnet's French arm plans to launch clearing of CDS
The French arm of LCH.Clearnet will start clearing euro-denominated credit default swaps with four major French banks, including BNP Paribas and Societe Generale, in Paris. Some might see the move as a blow to London, which has dominated the CDS and other over-the-counter derivatives markets. Financial Times (tiered subscription model)

LCH.CLEARNET BEGINS CDS CLEARING IN PARIS European clearing house LCH.Clearnet has launched a clearing service for credit default swaps with the support of four leading French dealers.
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21235
**** He, he….Allez les Bleus! First the 6 Nations….now CDS.


European Commission gets seat in influential regulatory working group
The European Commission obtained a seat on the joint working group of the International Organisation of Securities Commissions' technical committee and the Committee on Payment and Settlement Systems. The European Commission said it will help ensure that global regulation remains coherent. The working group is assessing standards for central counterparties in the over-the-counter derivatives market and other financial-market infrastructures. Risk.net/Risk magazine (29 Mar.)

UK House of Lords adds to debate about clearinghouse regulation
According to a report from the UK House of Lords, EU authorities cannot be charged with overseeing clearinghouses because the EU would not be able to cover a rescue of a large clearinghouse. The report adds to discussion about clearinghouses, which have taken on a more important role in the wake of the financial crisis. Financial Times (tiered subscription model) (31 Mar.) , Reuters (31 Mar.)
*** "We found that in the absence of any cross border fiscal burden sharing arrangements for failing financial institutions, central counterparites cannot be supervised at an EU level because the EU does not have the financial resources within the budget to bail out a large central counterparty," the report said.
Britain obtained backing from EU leaders last year that a planned new EU markets supervisory authority would not be responsible for authorising and supervising clearing houses.

Triple Play, as IDCG, LCH, CME Heat Up Clearing of Swaps
International Derivatives Clearing Group said Wednesday it will begin to accept interest-rate swaps for clearing, via a link with MarkitServ, an electronic processing house for over-the-counter derivatives. The announcement followed the disclosure by LCH.Clearnet that it had successfully cleared its first credit default swap index contracts, on Monday. And that followed the confirmation Tuesday by CME Group of Chicago that it was preparing to start clearing interest-rate swaps.



Policy

UK MPS GRILL PAYMENTS COUNCIL ON ABOLITION OF CHEQUES Plans to abolish cheques in the UK by 2018 have been slammed by a group of MPs hearing evidence from charities on the effect the move could have on older people.
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21193




Other

ICAP TO SHUTTER CASH EQUITIES BUSINESS; £51M CHARGE AND LOSSES OF £25M
http://www.finextra.com/news/announcement.aspx?pressreleaseid=32904

SAXO BANK LAUNCHES EQUITY PLATFORM
http://www.finextra.com/news/announcement.aspx?pressreleaseid=32896

Analysts resign from RBS Australia
Investment bank loses 10 staff; most to join rival Nomura.
http://www.businessspectator.com.au/bs.nsf/Article/Analyst-walkout-at-RBS-pd20100323-3T36R?OpenDocument&src=hp6&src=pmm

Getco appoints former Fed governor as advisor
By Jeremy Grant in London
FT Trading Room
Getco, the US-based electronic trading and market-making firm, on Wednesday made a high-profile appointment to its business by naming Randall Kroszner, a former Federal Reserve bank governor, as an advisor. The move is a sign of how the privately-held firm is becoming more engaged in current policy debates over the future structure of markets and how they should be regulated in the wake of the financial crisis.
http://jlne.ws/bb40rJ




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