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
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