Well, 9,000 runners and 1 person to beat…oops.
Evidence of the course run illustrated.
Evidence of my loss here:
Congratulations Daniel.
The Nasdaq initiative (price-size) is just further evidence of the various ways to slice the pie as execution has been utterly commoditised.
(So too will clearing eventually).
The costs of compliance and who wears the bill still have a long way to run in OTC clearing.
I do like transparency and ‘if you can’t measure it…’ but all this does add to costs (or at the very least strips costs out so they are apparent).
CCPs are NOT the cure for everything.
…and this is where I am a little surprised with the LSE view of CCP. It reads as “build it and they will come” to me.
I’m not so sure.
Set aside the economy of scale issues, vertical integration, enterprise vale etc…
Why would you want to build a new CCP?
European clearing fees are now at excellent levels.
Does the LSE, with the increased costs of fragmentation, really feel it is going to deliver cheaper clearing fees?
The banks already have a stake in LCH.CN…do they want more capital invested in more CCPs…to compete with their existing investment?
I’d certainly be tempted to look at the UK settlement model (where Euroclear still charge ‘clearing fees’).
My feeling is European equity clearing is approaching the point where it has been commoditised…pretty much as execution has.
There are still plenty of other dimensions to the exchange revenue model that are maybe not as capital, labour and regulatory intensive.
…now if this LSE CCP is for OTC business that has been mandated to be cleared…that could be a value proposition when offset against ‘on exchange’ flows.
If that was the case, it wouldn’t be appropriate for LSE to sit on the board of LCH.CN where the one product LCH.CN is enjoying strong revenue growth in…(but, hey, Xavier already resigned so that’s lucky).
Swift reduces fees by 20%!?...does that mean Sibos is drawing near?
Have a great w/end all (kids commence 2 weeks school holidays here),
S
http://clearingandsettlement.blogspot.com/
PLATFORMS
Nasdaq OMX to launch size priority venue
Global exchange group Nasdaq OMX is launching a new price-size priority equity trading platform in the US designed to encourage more trading in larger size.
http://www.thetradenews.com/trading-venues/mtfs-ecns/5074
Quote MTF
In a bid to attract flow to its platform, Quote MTF is putting a cap on commission fees at €14,000 until 2012 for all investors that sign up before 1 January 2011. The cap is intended to allow trading members to offer a low, fixed all-in price for their clients while gaining the benefits once the cap is reached.
The MTF is also offering a percentage of its total equity to passive liquidity providers. Bower says that the MTF is in discussions with a number of large investment banks that are interested in providing liquidity. Offering incentives through an equity stake rather than rebates will, he says, help to maintain the quality of liquidity on the Quote MTF order book
its execution pricing model of 0.14 basis points for aggressive trading and free passive trading
http://thetradenews.com/node/5072
QUOTE MTF OFFERS TO GIVE AWAY EQUITY TO ATTRACT BUSINESS
Hungary-based Quote MTF is offering to give away up to 40% of its shareholding to trading firms as it bids to secure participation in a fiercely competitive, consolidating market.
More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21815
BURSA MALAYSIA DERIVATIVES PRODUCTS MIGRATE TO CME GLOBEX
http://www.finextra.com/news/announcement.aspx?pressreleaseid=35665
Tokyo Stock Exchange Selects NYSE Technologies To Build Futures Platform
Based on the successful Tdex+ platform already trading options on the TSE since October 2009, this futures ...
Tdex+ based futures system utilizing its LIFFE CONNECT platform with several customized features.
INTERACTIVE DATA NAMES ALEX GOOR CIO
http://www.finextra.com/news/announcement.aspx?pressreleaseid=35660
BRICKLES EXITS FOR GOOD AS PLUS TAKES AXE TO STAFF NUMBERS AND TECH Plus Markets has narrowed its first half losses as a new management team embarks on an aggressive cost cutting programme that has seen headcount and technology expenditure slashed and the departure of vice chairman Simon Brickles.
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21801
CBOE Stock Exchange Attracts Retail and Algo Order Flows with New Rebate Program
CBSX experiences 900 percent growth in volume with inverted "maker-taker" pricing program ...
After a slow start, Japanese proprietary trading systems are seeing an uptick in turnover despite the overall decline in market volumes, says Takayuki Saito, the new head of electronic trading, Japan at Morgan Stanley MUFG Securities.
http://www.thetradenews.com/asset-classes/equities/5103
CLEARING
European Commission plans to migrate OTC derivatives to clearing via central counterparties will make the market more secure, but could hike trading costs for buy-side firms.
http://thetradenews.com/asset-classes/derivatives/5093
SCI report on CDS Clearing.
LSE in talks over London clearing house
By Jeremy Grant
FT.com / Companies / Financial Services
The London Stock Exchange is in talks with a group of Wall Street and European banks about jointly building and funding a clearing house in London, people familiar with the matter said.
http://www.ft.com/cms/s/0/56f78ffa-c26f-11df-956e-00144feab49a.html
EC Publishes Proposals on Derivatives, Market Infrastructures
The European Commission published a proposal for the regulation of over-the-counter (OTC) derivatives and market infrastructures that introduces a reporting obligation for OTC derivatives, a clearing obligation for eligible OTC derivatives, measures to reduce counterparty credit risk and operational risk for bilaterally cleared OTC derivatives, common rules for central counterparties (CCPs) and for trade repositories, and rules on the establishment of interoperability between CCPs. The commission notes the proposal is consistent with the recently adopted U.S. legislation.
The proposal introduces the following measures: requires the use of CCP clearing for OTC derivatives that meet predefined eligibility criteria; sets specific targets for legal and process standardization and bilateral clearing of OTC derivatives transactions; requires market participants to report all the necessary information on their OTC derivatives portfolios to a trade repository or, if that would not be possible, directly to regulators; and requires the publication of aggregate position information. The European Securities and Markets Authority (ESMA) will also be responsible for the surveillance of trade repositories and for granting or withdrawing their registration. The proposed regulations are scheduled to take effect starting at the end of 2012.
http://ec.europa.eu/internal_market/financial-markets/docs/derivatives/20100915_proposal_en.pdf
Nasdaq OMX, GFI to Clear Power Contracts in U.S.
Nasdaq OMX Group and GFI Group Inc. plan to clear trades in power and natural gas on EnergyMatch, GFI’s electronic platform for trading in commodities. The clearing service will be Nasdaq OMX Commodities Clearing Company.
SWIFT To Reduce Message Prices By An Average 20 Percent - Customers Will Save EUR 70 Million In 2011 - Largest Price Decrease Since 1995
Press Release
SWIFT, the provider of global financial messaging services, announced yesterday that it is reducing the price of messages on its core FIN service by an average of 20 percent. This will represent an estimated saving of EUR 70 million for SWIFT customers in 2011. The new pricing plan takes effect on 1 January 2011.
http://jlne.ws/cxgbC5
21/09/2010 11:54:00
SWIFT LINKS SECURITIES MATCHING SYSTEM TO MULTIPLE CCPS
Financial messaging outfit Swift is set to link its securities matching system to a range of central clearing counterparties, including EuroCCP, Six x-clear and LCH.Clearnet, enabling brokers to direct their matched off-exchange trades to a variety of providers.
More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21811
Singapore Exchange – First In Asia To Clear OTC Traded Financial Derivatives
Starting with the clearing of Interest Rate Swaps (IRS) denominated in Singapore and US Dollar, the new service is scheduled to be operational by October 2010, subject to regulatory approval.
To date, ten banks have initiated membership processes. They are Barclays Bank PLC, Citibank N.A., Credit Suisse AG, DBS Bank Limited, Deutsche Bank AG, The Hongkong and Shanghai Banking Corporation Limited, Oversea-Chinese Banking Corporation Limited, The Royal Bank of Scotland plc, Standard Chartered Bank and United Overseas Bank Limited.
http://www.exchange-handbook.co.uk/index.cfm?section=news&action=detail&id=92903
EMCF Clearing Fund contributions.
http://www.emcf.com/upload/uploads/Regulation%20Clearing%20Fund%20101001.pdf
*** increase as of 1st Oct.
POLICY
EU Council Publishes Texts on ESMA, EBA and ESRB
The EU Council published the latest regulatory proposals for the following: the European Parliament and the Council establishing a European Securities and Markets Authority (ESMA); the proposal for a regulation of the European Parliament and the Council establishing a European Banking Authority (EBA); and the proposal for a Council Regulation entrusting the European Central Bank (ECB) with specific tasks concerning the functioning of the European Systemic Risk (ESRB).
CFTC's Gensler offers insight into swaps oversight
Gary Gensler, chairman of the Commodity Futures Trading Commission, outlined a plan for implementing measures in the Dodd-Frank act. Gensler estimated how many companies might be affected by changes to the massive swaps market and said the CFTC is working to define "swap dealer, "major swap participant" and other terms. "Initial estimates are that there could be in excess of 200 entities that will seek to register as swap dealers," Gensler said. Read Gensler's full remarks. The Wall Street Journal (9/17)
Real-Time Swaps Reporting May Start in Sept '11-CFTC
The head of the U.S. futures regulator said Tuesday that mandatory real-time reporting of swaps trades, a key measure to promote market transparency, could begin as early as September 2011.
CFTC plans to consider and vote on rules for derivatives
Gary Gensler, chairman of the Commodity Futures Trading Commission, said regulators are poised to vote Oct. 1 on rules for clearing of derivatives. Gensler said the rules include governance procedures at exchanges, swap-trading platforms and clearinghouses. The CFTC also will consider rules for clearing venues that are deemed systemically important. The Wall Street Journal (9/22)
PARTICIPANTS
Deutsche Bank's plans for Basel III add pressures to competitors
Deutsche Bank announced a €9.8 billion cash call on the same day that Basel III capital rules were unveiled, piling pressures on its rivals. Deutsche Bank vowed to meet the rules five years before it is required to do so, making it more difficult for other banks facing capital concerns to bide their time. "Reaching Basel targets before the official schedule will, I think, become a point of excellence ... There will be some pressure on other banks that are not able to meet this sort of target," said Konrad Becker, an analyst at Merck Finck. Bank Systems & Technology (16 Sep.)
Deutsche Bank fixes subscription price for new shares at EUR 33.00 per share
http://www.db.com/ir/en/content/capital_increase_2010.htm
Singapore, 15 September 2010 – Deutsche Bank today announced that it is the first institution to implement Third Party Clearing services for a client on the Singapore Exchange (“SGX”). The client, Cantor Fitzgerald (Singapore) Capital Markets Limited (“Cantor Fitzgerald”), is a leading global financial services firm serving the institutional equity and fixed income markets. Cantor Fitzgerald has appointed Deutsche Bank to provide Third Party Clearing services for its clearing and settlement activities.
BANK OF AMERICA MERRILL LYNCH TO FORM DERIVATIVES CLEARING UNIT
http://www.finextra.com/news/announcement.aspx?pressreleaseid=35747
Don't be afraid your life will end; be afraid that it will never begin."
--Grace Hansen,
American dance director
The shortest way to do many things is to do only one thing at once.
- Samuel Smiles
An Austrian zookeeper enlisted the help of unwitting rhinos by growing cannabis in their enclosure. The scheme worked for years until a stool pigeon betrayed him.
http://www.spiegel.de/international/zeitgeist/0,1518,718603,00.html#ref=nlint
Price of Stolen Credit Card Data Has Dropped to $1.50
http://www.banktech.com/blog/archives/2010/09/price_of_stolen.html?cid=nl_bnk_daily
Scott Riley
Business Development
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