Monday, May 23, 2011

Access & Interoperability, 5% in the Dark, give Ronald a break


Well a flurry of activity sees Access and Interoperability back in the headlines.

I agree with most of Sharon Bowles MEP comments. The bit that worries me is: “hamper the ability of sell-side firms to select between clearing providers based on price and quality of service.”

That assumes interoperability decisions are based on price and service. I disagree, vested interests have a huge weighting in such strategic initiatives. I do expect interoperability to gain traction. I expect the primary drivers for the initial wave of interoperability will be vested interests (those that are stake holders in DTCC (indirectly EuroCCP), LCH.Clearnet and X-clear.

Once the vested interests have settled down, we'll see more of a trend towards CCP of choice based on customer segmentation. (HFTs, multi asset class etc.)

A nice piccie from the Economist portraying superior Aussie intelligence:

http://www.economist.com/blogs/dailychart/2011/05/gambling&fsrc=nwl

will have to wait. I prefer the Somalia pirates piccie.

Appalling news that that stupid goofy footed clown that we used to jam french fries into has been rebranded as a "balanced, active lifestyles ambassador". He's just a pathetic, stupid clown, easy to loath, steadfast in his ability to be ridiculed. And that's what I want from my Ronald. Not some balanced, active lifestyle ambassador. Where's the joy in jamming a french fry in his ear?


PLATFORMS ASIA

Exchange mergers in Asia are unlikely, SGX's Bocker says
Singapore Exchange CEO Magnus Bocker said mergers among Asian bourses are difficult because of regulatory differences and other challenges. "Exchange mergers in Europe were driven by regulations," Bocker said. "After the monetary union was created, Europe needed to make the market more efficient to compete with the US. Asia is a lot different as each country has varied stages of development and rules." Bloomberg Businessweek (12 May.)

BSE turnaround requires patience: CEO
rediff.com

Where are the volumes? That's almost the only question most ask when you talk about the Bombay Stock Exchange
Today, BSE has greater control over its depository, technology and a strong web-based distribution network. Technology was strengthened through acquisition of Market Place Technologies.
We brought a turnaround in the clearing and settlement business by setting up Indian Clearing Corporation, a 100 per cent subsidiary

http://www.rediff.com/business/report/bse-turnaround-requires-patience-ceo/20110513.htm

HONG KONG — Hong Kong's new commodity exchange backed by China's biggest bank and a Russian tycoon began trading Wednesday as the Asian city attempts to challenge established markets in Europe and the U.S
Shareholders in the exchange include Industrial & Commercial Bank of China Ltd., the country's biggest state-owned commercial lender, and Cosco Group, a state-owned shipping company. EN+ Group, a mining and energy group controlled by Russian tycoon Oleg Deripaska, is also a shareholder
Read more: http://www.chron.com/disp/story.mpl/ap/business/7569684.html#ixzz1MsAx9QCO

PLATFORMS

NASDAQ OMX AND ICE ABANDON NYSE EURONEXT BID OVER DOJ CONCERNS Nasdaq OMX and and IntercontinentalExchange (ICE) have dropped their takeover offer for Nyse Euronext after regulators made clear the deal would not clear antitrust hurdles.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22558

Taking Stock of Stocks: The World After NYSE Deutsche Boerse

With the NASDAQ OMX Group and IntercontinentalExchange dropping their bid to take over the company that operates the New York Stock Exchange, the way is cleared for NYSE Euronext and Deutsche Boerse to complete their plan to combine. This is what equities markets will look like, as NYSE Euronext and Deutsche Boerse merge ... and BATS Global Markets becomes a publicly traded player.

http://www.securitiestechnologymonitor.com/photo_gallery/1_50/27943-1.html

Stars align for possible merger of Nasdaq OMX and LSE:

Robert Greifeld, CEO of Nasdaq OMX Group, might have an opportunity to acquire London Stock Exchange Group amid a wave of consolidation and rejection among bourses. Nasdaq OMX and IntercontinentalExchange dropped their bid for NYSE Euronext because of regulatory concerns. LSE is facing a counterbid for its offer to merge with Canada's TMX Group. "It makes sense," said Niki Beattie, CEO of Market Structure Partners. "He's had a look at LSE before, and it would cost him less possibly to do it now. Everything was looking pretty bad for him, and now actually it looks a bit easier. I'm convinced he will explore a deal with LSE." Bloomberg (16 May.)

BATS Global Markets discloses Chi-X Europe payment

Multilateral trading facility (MTF) Chi-X Europe’s shareholders will receive approximately 4.4 million newly issued shares of BATS Global Markets stock and approximately US$36 million in cash, following the latter’s takeover of the MTF.

http://www.thetradenews.com/trading-venues/mtfs-ecns/6185

FINANCIAL NEWS: Bats Europe Tells Half of Chi-X Europe Staff to Go
Bats Europe plans to cut around 50% of Chi-X Europe staff following its acquisition of the pan-European trading platform, according to two people familiar with the matter.
Bats, which has said it will not be keeping the Chi-X Europe technology, will make the bulk of the cuts in Chi-X Europe’s technology and operations department, which currently employs around 24 people.

Plus creates new swap contract for derivatives launch
By Philip Stafford - Financial Times
Plus Markets Group is to make a new interest rate swap contract the centrepiece of its new derivatives exchange as it converts itself from niche UK microcap listings platform to stock and derivatives bourse. The UK group will launch its own US dollar-denominated swap interest contract (SIC) in conjunction with FTSE International, the index compiler.
http://jlne.ws/k3tBgw

CLEARING

BATS EUROPE PLANS PREFERRED INTEROPERABLE CLEARING SERVICE

http://www.finextra.com/news/announcement.aspx?pressreleaseid=39317

SIX X-CLEAR CONFIRMS REGULATORY GREEN-LIGHT FOR INTEROPERABILITY

http://www.finextra.com/news/announcement.aspx?pressreleaseid=39305

LCH looks to interoperability to combat equity revenue slump

Equity clearing revenue fell to €44.3 million from €66.6 million year-on-year, and also declined as a proportion of overall clearing revenue from 27.4% in 2009 to 21.8% in 2010. A statement from LCH.Clearnet CEO Roger Liddell noted, “Tariff reductions in equity clearing fees implemented in 2009 and 2010 largely contributed to a fall in clearing revenue”.

http://www.thetradenews.com/asset-classes/equities/5961

EMIR compromise to put trading costs in the clear

Clearing interoperability in Europe’s equities markets now seems likely to be enshrined in the European market infrastructure regulation (EMIR), but the new framework may not be signed off during the Hungarian presidency of the Council of the European Union, which closes at the end of June.

http://www.thetradenews.com/regions/europe/6199

INTEROPERABILITY, SHARON BOWLES MEP

Concern that post-trade interoperability could spread systemic risk in Europe's financial markets has led one MEP to propose that it should be restricted. But another, Sharon Bowles MEP, chair of the European Parliament's Economic and Monetary Affairs Committee, believes that competition relies upon it.

Delaying interoperability arrangements for cash equity transactions would severely hamper the ability of sell-side firms to select between clearing providers based on price and quality of service.

http://www.thetradenews.com/node/5920

OTC Derivatives Cash at Risk Dropped to $21 Trillion, BIS Says
By Matthew Leising - Bloomberg
May 17 (Bloomberg) -- The amount of cash at risk in the global over-the-counter derivatives market dropped at the end of 2010 as the value of interest-rate swaps declined. Overall trading totals rose 3 percent.
http://www.bloomberg.com/news/2011-05-17/otc-derivatives-cash-at-risk-dropped-to-21-trillion-bis-says.html?cmpid=msnmoney

Clearing houses 'would not have prevented financial crisis'
IFR
The Dodd-Frank Wall Street Reform and Consumer Protection Act – and its mandate of clearing as much of the over-the-counter derivatives market as possible through central counterparties – would not have prevented the financial crisis of 2008, according to renowned derivatives academic John Hull. In a broadly based interview with IFR, Hull indicated the failure of some observers to distinguish between the kinds of non-standardised, illiquid, credit default swaps that AIG sold and the standardised, liquid, single-name CDS that has led to some false conclusions regarding the potential benefits of clearing.
http://jlne.ws/krA01q

ISDA Announces Interest Rate Derivatives Trade Repository Selection
NEW YORK, Wednesday, May 11, 2011 – The International Swaps and Derivatives Association, Inc. (ISDA) announced today that the ISDA Rates Steering Committee (RSC) has chosen Depository Trust & Clearing Corporation (DTCC) to partner with the RSC on the next stage of development of the Interest Rate Trade Repository. This selection is the result of a public Request for Proposals (RFP), which was issued March 14, 2011. The ISDA RSC, which consists of senior business representatives in the interest rate market from both buy- and sell-side firms, issued the RFP and selected the provider

http://www2.isda.org/

POLICY

IOSCO SETS OUT DARK LIQUIDITY PRINCIPLES

The Technical Committee of the International Organization of Securities Commissions (IOSCO) has

published a final report, Principles on Dark Liquidity,

http://www.iosco.org/library/pubdocs/pdf/IOSCOPD353.pdf

33 pages and 6 principles.

BIS Publishes OTC Derivatives Market Activity in Second Half of 2010

The Bank of International Settlements (BIS) published a report on over-the-counter (OTC) derivatives market activity in the second half of 2010 that found that total notional amounts outstanding of OTC derivatives rose by 3 percent in the second half, reaching $601 trillion by the end of December 2010. Notional amounts outstanding of credit default swaps (CDS) continued to contract, falling by 1 percent after the 7 percent decline in the first half, while outstanding equity-linked contracts shrank by 10 percent. Gross market values of all OTC contracts went down by 14 percent, driven mainly by the 17 percent decline in the market value of interest rate contracts. CDS market values fell by 19 percent. Overall gross credit exposure dropped by 7 percent to $3.3 trillion, compared with a 2 percent increase in the first half of 2010.

http://www.bis.org/publ/otc_hy1105.pdf

International Options Market Association (IOMA)

2010 Derivatives Market Survey

http://www.world-exchanges.org/files/statistics/excel/2010_IOMA_Survey.pdf

*** 67 pages of stats here

SA/BoE Publish Joint Paper on Banking Supervision

The Bank of England (BOE) and the Financial Services Authority (FSA) published a joint paper, titled The Bank of England, Prudential Regulation Authority - Our approach to banking supervision setting out the current thinking on how the future Prudential Regulation Authority (PRA) will approach the supervision of banks, building societies, credit unions and investment firms, which outlines the following issues: the principles underlying the PRA's approach; the scope of the PRA; the PRA's risk assessment framework; the PRA's forward looking, judgment-led approach to supervision; the approach to policy-making that will support the judgment-led model; and the approach to authorizing firms and approving individuals. The document complements HM Treasury’s February 2011 consultation and the forthcoming white paper and draft Bill, which lay out the legislative framework.

http://www.fsa.gov.uk/pubs/speeches/boe_pra.pdf



Dark pools break 5% barrier in Europe

Over the past 12 months the proportion of trading in Europe conducted in the dark has increased from 1.83% in April 2010 to 5.24% in April 2011, reflecting in part the increased comfort that buy-side traders have with using dark pools.

http://www.thetradenews.com/trading-venues/dark-pools/6194

S&P AGREES TO CUT ISIN FEES FOLLOWING EU PROBE Standard & Poor's (S&P) has agreed to cut the prices it charges for the distribution of International Securities Identification Numbers, following a two-year probe by the European Commission into allegations of abusive pricing and monopoly practices.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22556

Will U.S. Firms Pay Less for International IDs?

Large U.S. financial firms could end up paying a lot less to receive international securities identification codes and reference data on U.S. securities, as a result of a recent ruling by the European Commission regarding Standard & Poor's pricing policies.
On May 16, Standard & Poor's said it will charge an initial fee of $15,000 a year to financial firms receiving a direct feed from a new identification service for U.S. securities and the same fee to data vendors wishing to redistribute the feed..
S&P will no longer charge any firms that source the ISINs directly from information vendors such as Bloomberg and Thomson Reuters.

http://www.securitiestechnologymonitor.com/news/cusip-isins-united-states-save-fees-27974-1.html?ET=securitiesindustry:e2520:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=STM_BNA_08302010_051911

Speech by the Financial Secretary to the Treasury, Mark Hoban MP at the Markit Conference, The Grange City Hotel, London
HM Treasury
Thank you. It's a pleasure to be here this morning and to talk to you about the regulatory reform of markets. As the Minister responsible for financial services, I spend a huge amount of time on the vast array of European markets' initiatives.

http://www.hm-treasury.gov.uk/speech_fst_120511.htm

Market Watch Newsletter No. 39

Contents

• Zen implementation

• Introduction of additional validation for transaction reports on Zen implementation date (soft go-live)

• Intention to move from FRN to BIC only for reporting firm ID – reminder

• MIC to be used for the EDX London market following its acquisition by Turquoise

• Reliance on LIFFE feed

• Review of the Transaction Reporting User Pack (TRUP)

http://www.fsa.gov.uk/pubs/newsletters/mw_newsletter39.pdf

PARTICIPANTS

Penson's growing dominance in third-party clearing market worries local investors
Brisbane Times
When the global equities clearing house Penson Worldwide suffered a massive 40 per cent fall in its shares last week after disclosing some troubles with horse-track backed bonds, it put the focus squarely on Australia's third-party clearing arrangements.

http://www.brisbanetimes.com.au/business/pensons-growing-dominance-in-thirdparty-clearing-market-worries-local-investors-20110515-1eo3l.html

Northern Trust to Buy Citadel Asset Administration Business

Northern Trust will acquire Omnium, which has about $30 billion of hedge fund assets under its administration and $40 billion from other financial institutions. The firm relies on software delivered online to provide administrative services that are intended to allow clients to trade in stocks, bonds or any other asset class at any time, at any market int he world.

http://www.securitiestechnologymonitor.com/news/northern-trust-citadel-omnium-acquisition-27927-1.html?ET=securitiesindustry:e2508:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=STM_BNA_08302010_051611

What Citadel’s Sale Of Omnium Means For Hedge Fund Investors

For years, hedge funds did that administration in-house. But then the Bernard Madoff scheme was revealed and so-called self administration came to a near halt.

http://blogs.forbes.com/halahtouryalai/2011/05/16/what-citadels-sale-of-omnium-means-for-hedge-fund-investors/

HSBC to Hire over 1,000 Staff in Singapore
Kompas
HSBC Holdings PLC plans to hire more than 1,000 staff in Singapore

http://english.kompas.com/read/2011/05/13/10154674/HSBC.to.Hire.over.1.000.Staff.in.Singapore.

STUFF

LinkedIn and the end of the world: Rational man?

Only 10% of the stock was on offer.

http://news.economist.com/cgi-bin1/DM/t/eCaZ30dHglU0BV4a0XqMK0EI



Google Now Third Largest Maker of Servers, CIO Says

Google has become the third-largest maker of computing servers, behind HP and IBM, according to Ben Fried, its chief information officer.
And all the servers it makes are for its own use, Fried said at the first Bloomberg Enterprise Technology Summit Tuesday in New York.
Building servers rather than buying off-the-shelf machines "dramatically lowers" Google's costs, Fried said.

http://www.securitiestechnologymonitor.com/news/google-third-largest-server-maker-now-fried-27953-1.html?ET=securitiesindustry:e2515:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=STM_BNA_08302010_051711

Price Tag for Somali Piracy Surges
International piracy is emerging as a market in its own right, one that cost the global economy an estimated $8.3 billion in 2010. Efforts to contain the problem are having little impact, and the costs of lost booty, ransom and other costs associated with pirates could double within a few years.

http://www.spiegel.de/international/world/0,1518,763063,00.html#ref=nlint

SEND OUT THE CLOWN

A resolution at MCDONALD'S annual shareholder meeting called on the fast-food chain to axe Ronald McDonald in an effort to stop the firm marketing to children. The company's bosses were unimpressed, though, calling the burger-wielding clown (which it has rebranded a "balanced, active lifestyles ambassador"), a "force for good". - See article http://news.economist.com/cgi-bin1/DM/t/eCaXO0dHglU0BV4a0XmLW0Ep

Don't dream it, be it."

--Tim Curry,

British actor, from "The Rocky Horror Picture Show"

If you hire only those people you understand, the company will never get people better than you are. Always remember that you often find outstanding people among those you don't particularly like."

--Soichiro Honda,
Japanese engineer and industrialist

No comments: