Monday, July 19, 2010

News 100709: EMCF Fees, Chi-X Japan, Australian Supervision, Consolidated tape....Hup Holland Hup!

Congratulations to EMCF!

I don’t think their announcement of fee cuts to 3 euro cents (and the 1 cent for volume) got as much recognition as it deserves. To put this into context, let us think of where we were in 2006, pre MiFID. What was the average price paid to clear a European equity? North of 60 euro cents is not an unreasonable guesstimate. Remember fee schedules based on notional values, order sizes, etc. etc. Since 2007 EMCF has introduced transparency, consistently delivered volume based fee reductions, rationalisation of pricing, harmonisation of process….making cross boarder…domestic. What is more, these prices, and this business model stands on its own economic merits. There is no retrocession…no cross subsidy of clearing fees from other asset classes or products...etc.

In 2006 a derivative contract was cleared at LCH for 3 pence. A derivative has a longer tenure and a more complex risk profile, yet it was cleared at a fraction of the price of an equity. How different that is today. Now you clear an equity contract for less than a derivatives one….and that kinda makes sense. When we started in 2006 no one hoped to believe we could achieve clearing fees at these levels in this timeframe. But we have.

So…congratulations to the users / participants. To Chi-X Europe and the rest of the MTFs. The flow providers. The distributed network of developers and vendors. And of course to the EMCF team and management. Europe is a better place for it…and what better time to reduce industry costs than during a GFC?

Chi-X Europe continues to grow and consolidate.
Congratulations to Chi-X Global on Japan license and on the market improvements they have already been a catalyst for in Australia.
A nice flash crash summary at:

Lots of noise also about consolidated trade tape. I think this is a good thing. The exchanges know it is a good thing too. They charge for it. I confess I don’t yet know the answer…but the status quo is not the right answer. Something must change and it should be driven by the mantra of transparency and utility. I do believe ‘regulatory’ intervention could assist this process, but I certainly do not believe regulators should have anything to do with the operation, management or any other aspect of the day to day practicalities of a consolidated tape.

Where I’m following the Tour de France:

And the long awaited Tri-Nations begins….
Round 1: NZ to win at home against SA.

I’ll also continue to support the Dutch in the World Cup…and I continue to hate the Vuvuzela (which now appears to have its own radio station).

A billion is a difficult number to comprehend, but one advertising agency did a good job of putting that figure into some perspective in one of it's
A billion seconds ago it was 1959.
A billion minutes ago Jesus was alive.
A billion hours ago our ancestors were living in the Stone Age.
A billion days ago no-one walked on the earth on two feet.

A billion Pounds ago was only 13 hours and 12 minutes, at the rate the UK government is spending it.
And for those visiting Sydney, this is really useful if you want to avoid running in the rain.
I learnt this after getting drenched today.

Hup Holland Hup!

Have a great w/end all.



Monthly MiFID MTF Monitor: June 2010

Chi-X Japan’s PTS license granted; trading expected to begin July 29

BATS Exchange Reports 11% US Market Share, Sets Tape B Record in June
Press Release
BATS Global Markets, an innovative financial markets technology company, announced that BATS Exchange set a monthly matched market share record in Tape B securities for the second consecutive month, while BATS Europe set new monthly market share records in several different indices in June.

BATS Options, Still Small, Finds Momentum In June
The nascent options exchange from BATS Global Markets nearly doubled trading volume in June, as the platform completed a month of trading in all options symbols and lifted restrictions on market makers.

LSE Sets New Migration Schedule for MillenniumIT Data, Trading Platform
Inside Market Data - Exchange Data
In a letter dated July 1, the exchange told clients that it has completed development of the new technology platform, but has postponed the go-live date by around two months in response to client requests for "a sufficient window to continue their development and testing."

LSE Group pushes back Millennium migration over NYSE date clash
The migrations to the platform are later than had been planned, due to a potential clash with NYSE Euronext’s intended move to its new Basildon data centre in September, which would have caused strains on common customers’ IT resources. The LSE and Turquoise changeovers will now take place in November and October 2010 respectively.
*** Ahh, that makes more sense.

NYSE Technologies and Markit Group said Thursday they will consolidate their pools of data on trading in over-the-counter stocks in Europe.

NYSE Euronext strikes a deal for data on European OTC trades
NYSE Euronext formed a joint venture with Markit, a data provider and trade processor, to route more information on over-the-counter trades from Europe through the former's system. The move comes as European officials review the Markets in Financial Instruments Directive. "This is not meant to pre-empt regulators but to respond to the issues our customers have voiced in a proactive fashion," said Mark Schaedel, senior vice president of global data products at the technology arm of NYSE Euronext. Reuters (01 Jul.)

Its Amazing What a Little Exchange Competition Will Do
While it was widely expected and long overdue on March 31, 2010 Chris Bowen the Minister for Financial Services, Superannuation and Corporate Law announced that the Australian Government did, at long last,...(more)

ASX Group Monthly Activity Report - June 2010
Press Release

ASX raids investor fund
Patrick Durkin
Friday 9 July 2010
The Australian Securities Exchange will pay $3.14 million to back the Australian Securities and Investments Commission's new role of market supervision. However, money will come from the National Guarantee Fund, meaning the funds will not be available to assist victims of corporate failures affecting Opes Prime, Lift Capital or Sonray Capital. The Australian Shareholders Association says the fund should remain. ASX rival Chi-X has queried whether it was possible to request the fund to pay its ASIC fees.

ASIC ready for market supervision
ASIC welcomed the announcement today by the Minister for Financial Services, Superannuation and Corporate Law, the Hon Chris Bowen MP, of a 1 August 2010 start date for the transfer to ASIC of the market supervision role now being performed by the Australian Securities Exchange (ASX). 10-151MR. 8 Jul


Cantor cuts
Cantor Fitzgerald's Hollywood Stock Exchange, which was hoping to sell futures based on movie box office results, laid off most of its staff yesterday, according to The HSX plan got ensnared in a Capitol Hill roadblock when lobbyists persuaded lawmakers to write a ban on such futures into FinReg legislation.

**** Not a happy ending.

Analysis of the "Flash Crash"

NYSE EURONEXT WINS WARSAW TECHNOLOGY TENDER Nyse Euronext has won a beauty parade to provide a new trading platform for the Warsaw Stock Exchange.
Full story:


As from 1 July 2010, EMCF will charge €0.01 for all executions in excess of 100,000 per Clearing Participant per day and €0.03 for the first 100,000 contracts cleared, across all markets. This is a significant reduction of the already competitive clearing fee rate of €0.03 per contract cleared for the UK market, with all other markets priced at €0.05 per contract.

Nasdaq OMX challenges vertically-integrated exchange model
Jochumsen added that the door is still open for other trading venues that want to take a stake in EMCF.

European CCPs expect interoperability by end-2010


Over 50 Tons of Gold at Deutsche Boerse Commodities
Press Release
Deutsche Boerse Commodities: Deutsche Boerse Commodities' gold reserve backing the Xetra-Gold bearer bond has grown to 50.038 tons. Each unit of the security is backed by exactly one gram of physical gold held in the vaults. At a price of E32.54 (Xetra price on 30 June) per unit of Xetra-Gold or per gram of gold, the current value of gold in custody is more than E1.6 billion.

Bankers voice concerns about clearinghouse collateral
Some risk managers at banks are concerned about the range of collateral accepted by central counterparties as more over-the-counter derivatives trades are about to be routed through clearinghouses. Meanwhile, some dealers are welcoming the idea of broadening the range of eligible collateral, according to Risk magazine. magazine (07 Jul.)
*** One: Collateral should be liquid – of such high quality it is readily realised.
*** Two: The most informed people on acceptable collateral are the users (those pledging the collateral).
*** Wrong way risk is an interesting angle (e.g. an equity CCP taking equity collateral).

08/07/2010 10:50:00
Just days after US-based Depository Trust & Clearing Corporation outlined plans to launch a European trade repository, Euroclear-owned Xtrakter says it might develop its own.
More on this story:

DTCC BUYS REFERENCE DATA FIRM AVOX; PLANS EUROPEAN TRADE REPORTING REPOSITORY The Depository Trust & Clearing Corporation (DTCC) has acquired Avox, a UK-based reference data firm majority-owned by Deutsche Börse in a cash deal valuing the business at a "low double digit million GBP figure".
Full story:


The best possible outcome from the MiFID review for buy-side traders would be the introduction of consolidated post-trade tape, according to the latest monthly online poll.
*** CESR is acting as a technical advisor to the EC as part of the MiFID review. On 13 April 2010 it released a consultation paper which supported a mandated tape, noting that “...without further regulatory intervention, market forces are unlikely to deliver an adequate and affordable pan-European consolidation of transparency information.”
**** I agree. Too many vested and fragmented interests with market forces now. A clear regulatory mandate is required in this area to deliver an economy of scale.

08/07/2010 11:23:00
European stock exchanges are promising to eliminate fees on 15-minute delayed data by the end of the year as they step up their campaign against the introduction of a mandatory consolidated tape for EU market data.
More on this story:

Full statement from FESE available here:
*** FESE members try to defend monopoly pricing for recharging the data provided by their customers.

AMF (Autorité des marchés financiers) CALLS FOR TIGHTER REGULATION OF MTFS
More interesting, the actual AMF press release includes the composition of the working group (incl. NYSE and no MTF representation)
The full findings are available here (NB: French readers only!):
*** I didn’t read anything in this coming down hard for a consolidated tape.

CESR plans to outline its position on MiFID II, MTFs and dark pools
Eddy Wymeersch, chairman of the Committee of European Securities Regulators, said the group is scheduled to meet on 16 July, then offer its take on the Markets in Financial Instruments Directive, multilateral trading facilities and dark pools. After that, CESR's comments will be considered by the European Commission and the European Parliament.

List of banks covered by the 2010 EU-wide stress test exercise
the 91 banks represent 65% of the EU banking sector.

ICMA Regulatory Policy Newsletter Third Quarter 2010


Bank of America Merrill Lynch Rolls Out Global Liquidity Platform
Bank of America Merrill Lynch has launched a global liquidity platform, a centralized hub it said offers ...

Daily chart: Leaders of the fee world
*** Politicians pay V’s GDP.

Rights wronged: North Pacific right whale nearly extinct in Bering Sea
One of the world's only two populations of North Pacific right whale has declined to the point where it will probably not survive
*** Utterly sad.

Corporate "firewalk" ends in tears
*** I guess they call it common sense (or self preservation) for a reason…

Don’t bother just to be better than your contemporaries or predecessors.
Try to be better than yourself.
William Faulkner

A good listener is the wisest of persons.

I have opinions of my own – strong opinions – but I don’t always agree with them.
George Bush

People do not change with the times; they change the times.
PK Shaw

The respect of those you respect is worth more than the applause of the multitude."
--Arnold Glasow,
American author

Scott Riley
Business Development

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

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

No comments: