Tuesday, August 17, 2010

News 100813: Aust, HK Hours, BCNs, ETFs, C2S

Well, the worlds biggest fun run has come and gone. I’m delighted to report it was a fun run.

Running amongst a squadron of storm troopers is ‘different’, but one of the highlights for me was jogging along with a couple of ‘super heros’ (batman and spiderman) with their supa soakers. Said super heros were cheered on by some enthusiastic kids at the sideline only to be super soaked. They then jeered…”I hate spiderman”. Ahhh, the youth of today, so fickle.

And the course:


(it only took 7 mins to get to the start line after the gun went off).

ASX results.

Aussie market reforms.

NYSE continues to cash in on Liffe

Short lunch hour appears to be big news…for Macca’s in HK.

SBI reduces fees and picks up volume.

Why do some quarters insist on assuming CCPs are the answer to everything OTC?

Broker Crossing Networks are good. Curtailing them at 0.5% is not good.

It is a near-universal truth that creditors recover more from a going concern than a liquidated entity.

ETFs are material and relevant.

Couldn’t cover all the reading this week…oh well…if it’s important it’ll surface again.

Months that start with a Sunday…always have a Friday the 13th.

Superstition is foolish, childish, primitive and irrational -- but how much does it cost you to knock on wood?"

--Judith Viorst,
American author, journalist and psychoanalysis researcher

Have a great week end all,



(sorry to those that follow the web site, my postings are a little behind. What am I doing on my w/ends?)



Trading – Cash markets (including equities, interest rates and warrants trades)

The All Ordinaries Index closed at 4507.4 points on 30 July 2010, a rise of 4.2% over the course of the month. The index has fallen 7.7% in the calendar year-to-date.

• Total cash market trades for July 2010 were 10.8 million, up 8% on the pcp.

• Average daily trades for July 2010 of 488,998 were 13% higher than the pcp.

• Total cash market traded value was $97.8 billion in July 2010, down 4% on the pcp, with a daily average value of $4.4 billion, in line with the pcp.

• In July 2010 the average value per trade was $9,089, down 11% on the pcp of $10,236. The percentage of traded value crossed was 26% (28% in the pcp).


ASIC Market integrity rules

The Corporations Amendment (Financial Market Supervision) Act 2010 provides for a new type of rule called market integrity rules. These rules are made by ASIC and apply to market operators, market participants, other prescribed entities and financial products traded on the relevant markets.
The following ASIC market integrity rules were made on 1 August 2010 and are based on legislation and regulations as at 1 August 2010. Our approach in making market integrity rules has been to not change the substance of the pre-existing obligations that apply to participants of the relevant markets at this time.

Derivatives Lead the Show at NYSE Euronext

NYSE Euronext said its average daily volume in derivatives contracts increased 17.5 percent in July, worldwide, versus a year ago. But the exchange operator and technology supplier said its volume in derivatives fell 13.6 percent from a month ago. And its volume in equities transactions in the United States fell, both year over year and month against previous month.


Hong Kong exchange considers extending trading hours
Hong Kong Exchanges and Clearing is considering aligning its trading day with mainland China's markets by extending its hours, CEO Charles Li said. The trading day would start a half hour earlier, at 9.30am, and reduce the noon break from two hours to one. The trading day would still end at 4pm. The move would be another step toward integrating securities markets in China with the rest of the world. Bloomberg (11 Aug.)

Hong Kong brokers react to plans to halve their lunch breaks
Bloomberg (13 Aug.)

SBI Japannext Sees Substantial Volume Increase in July

SBI Japannext, Japan's largest Proprietary Trading System (PTS) operator, saw notional value traded increase nearly 75% approaching pre-Arrowhead levels. "It is largely due to reduction in our commission rate from 0.4 bps to 0.2 bps.” cited Chuck Chon, CTO SBI Japannext.


Emerging markets welcome high-frequency traders
High-frequency trading is being scrutinised in the US after the "flash crash" of 6 May, but emerging markets are opening their arms to the strategy, according to The Economist. High-frequency trading accounts for 30% of derivatives trades on the Singapore exchange, up from 10% in 2008. Exchanges must invest heavily to satisfy technology needs of high-frequency traders, but overseas expansion makes sense for the traders, the magazine notes. The Economist (12 Aug.)

** nice piccie!


Dutch Pension Plans Oppose Central Clearing of Derivatives

The three main lobbying groups for pension plans in the Netherlands are asking the European Commission for an exemption to a requirement in pending legislation on derivatives and market infrastructure that all firms trading in over-the-counter derivatives act through centralized clearinghouses.


Regulatory Announcement - SGX seeks to widen participation in clearing of OTC financial derivatives
6 August 2010 – Singapore Exchange (SGX) is consulting the public on its proposal to extend its Central Counterparty Clearing Services for Over-the-Counter Traded Financial Derivative (OTCF) contracts to participation from non-bank financial institutions.

On 21 April 2010, SGX made a proposal to allow Bank Clearing Members (BCMs) to participate in the clearing of OTCF contracts through SGX-DC. SGX is now proposing to admit non-bank financial institutions as General Clearing Members (GCMs) to clear their proprietary positions in similar contracts once admission and other relevant requirements are satisfied.


LSE's Derivatives Push Weighs New Approach To Fees, Clearing

London Stock Exchange Group PLC (LSE.LN) plans to introduce a new approach to trading fees as part of a bold effort to create a pan-European derivatives platform early next year, according to people familiar with the situation.

The home of the benchmark FTSE 100 share index aims to launch futures and options tied to major European share-trading indexes with a so-called "maker-taker" pricing plan, and a clearing model that would allow users to combine their stock and derivatives portfolios



FINANCIAL NEWS: Traders Fear New Restrictions on Use of Crossing Networks
By Tim Cave
Estimates on what the proposed limit of BCN (Broker Crossing Networks) activity will be vary between 5% and 0.5% of total European equity trades, but Bowley believes it is likely to be nearer the bottom of the scale. “It would seem unlikely that a size limit is set on BCN activity that doesn’t have an impact on some venues, otherwise what is its point,” he said.

*** I agree. 5% is too high…but 0.5% is too low. BCNs do add value and should be embraced.

AFME examines how "bail-ins" would work in practice
A study by AFME indicates that if regulators had used "bail-in" capital -- bonds that are forcibly converted to equity -- senior Lehman Bros debt holders likely would have recovered most of their investments. "It's a near-universal truth that creditors recover more from a going concern than a liquidated entity," said Gilbey Strub, managing director at AFME. "Bail-in capital could also help stem the contagion effect." Financial Times (tiered subscription model) (12 Aug.) , Telegraph (London) (13 Aug.)

*** I agree: "It's a near-universal truth that creditors recover more from a going concern than a liquidated entity,"

BlackRock Seeks Uniform Circuit Breakers for Stocks and ETFs


By Tom Steinert-Threlkeld

The head of the BlackRock product team for exchange-traded funds in the United States urged the Securities and Exchange Commission and Commodity Futures Trading Commission to establish circuit breakers across all exchanges that were uniform for both stocks and ETFs.

Noel Archard, a managing director at investment adviser BlackRock in charge of its iShares ETF business, told a joint advisory committee of the SEC and CFTC that is addressing issues raised by the May 6 Flash Crash that reforms should include:

Uniform “circuit breakers” for stocks and ETFs across all exchanges,

Exchange trade error cancellation rules which are less arbitrary and more transparent,

Clearer guidelines for inter-market order routing rules,

A replacmeent of “stop loss” orders with “stop loss limit” orders to specify a limit price, and and

Expanding the role of lead market makers to ensure orderly market functioning.

ETFs have become widely accepted investment vehicles for both institutional and retail investors, Archard noted. There are currently 985 exchange traded products available in the US market with $797 billion in assets invested. They represent 30% of the total volume traded on national exchanges, he said.


J.P. Morgan Joins EuroCCP as general clearing participant
EuroCCP and J.P. Morgan Worldwide Securities Services announced today that J.P. Morgan has become a general clearing participant (GCP) in EuroCCP, which provides clearing and settlement services for a wide range of European markets.

*** Interesting. EuroCCP still gaining traction 3years after launch. I am bias, hence I’m not sure about the claim of EuroCCP being a driver in the reduction of fees. Fee reductions are driven by wallet size (materiality) in my view.

OSAKA SECURITIES EXCHANGE DISCIPLINES DEUTSCHE BANK OVER ALGO TRADING ERROR Deutsche Bank has been hit with an "admonition" by the Osaka Securities Exchange over a problem with a trading algorithm in June that saw sell orders worth Y16.7 trillion made by mistake.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21688

*** Big difference between an order and a trade (executed / filled order).

France digs deep for nuclear waste

Geologic storage of long-lived radioactive material is moving closer to reality in Europe

*** An observatory, created jointly in April with France's agricultural research agency, INRA, will monitor this ecosystem for at least a century.

Scott Riley

Business Development

ABN AMRO 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.abnamroclearing.com

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