Aussie market structure issues continue to dominate domestic debate.
e.g. ASIC is aiming to perform market supervision on a cost recovery basis. Most of those costs, (29.9myn over 5 years, or 6myn / year) are paid by ASX (3.7 myn per year). That leaves 2.3myn per year to be paid for by other MLO’s: (CXA, National Stock Exchange, Bendigo, APX etc.).
Full list of Aussie market licences at:
http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Licensed%20domestic%20financial%20markets%20operating%20in%20Australia
Lots of news also in Canada. Not all of which I follow, but it appears in response to a record month for Chi-X Canadsa, Omega is reducing fees and Alpha is stirring up the maple syrup with exchange status and a rival TMX bid via syndication.
Interoperability takes a step forward(?), or is this just the resumption of the previous LCH / X-Clear status?
I'm not surprised the OTC market is smaller than claimed. I'd rather see more effort put into accruately measuring our markets and then managing the risks rather than blindly prescribing lets CCP clear 'everything' that moves. If you can't measure it....
For those enjoying the Northern Hemisphere Spring; Yes, I'm jealous. 6 weeks from now we have the soltice...and the days will start getting longer here. Enjoy it while you can!
I don't know who won the Eurovision, but a nice interactive map attached. I do know my Reds are the top of the Super 15 Rugby...and that is simply wonderful!
Have a great week all,
S
PLATFORMS ASIA
REUTERS: AUSTRALIA FACES CLEARING AND SETTLEMENT CONUNDRUM IN WAKE OF CHI-X LICENCE
By Nathan Lynch
The Australian government's decision to grant a market licence to Chi-X this week has highlighted two inconvenient truths about the Australian exchange landscape - inconvenient truths that go by the names of clearing and settlement.
Fairweather said the general consensus in the markets - based on the experience from overseas - is that there is room for competition in the clearing space but settlement, by its very nature, is non-contestable. As such, any review would need to take account of governance arrangements for clearing and settlement services, the facilitation of competition in relation to clearing and the fair pricing of the ASX's settlement's services.
http://www.reuters.com/article/2011/05/05/australia-exchanges-regulation-idUSL3E7G50F420110505
AUSTRALIAN FINANCIAL REVIEW: ASIC FUNDS IN QUESTION AS EXCHANGES FLOURISH
By Patrick Durkin, 05/12/11
The federal government, its corporate regulator, the stock exchanges, brokers and investors are all looking at each other over who will pay the $29.9 million bill it will cost to police the stockmarket.
When the Australian Securities and Investments Commission took over supervision of the stockmarket from the Australian Securities Exchange last August, the legislation included the unusual ability for the regulator to recoup its costs, rather than being shouldered by the government. That cost has now been estimated at $29.9 million over five years and in the first year the ASX was required to pay $3.4 million, of a $3.7 million annual fee, to help fund ASIC's new role.
That is expected to leave about $2.3 million for the new stock exchange Chi-X and other smaller exchanges to meet each year. But the government has said it will consult with the industry again later this year on exactly who will pay.
TRADE NEWS: CHI-X JAPAN MAINTAINS POSITION AS LARGEST PTS
Chi-X Japan, the proprietary trading system (PTS) owned by market operator Chi-X Global, has continued its solid start to the year as it battles to become the largest alternative market in Japan.
According to its own figures, Chi-X Japan accounted for 1.62% market share of blue chip index the Nikkei 225 in April 2011, up from 1.2% in the previous month and 1.16% in February. The increase saw Chi-X Japan maintain its position as the largest PTS in the country for the second month in a row, just ahead of SBI Japannext.
http://www.nomuraholdings.com/news/nr/asia/20110509/20110509.pdf
CHI-X GLOBAL IN STAKE SALE TALKS; Chi-X Global is in advanced talks with four trading firms and banks to take a minority stake in the alternative share trading platform operator reports the FT, citing "three people familiar with the matter".
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22487
Chi-X Global is in advanced talks with four trading firms and banks to take a minority stake in the alternative share trading platform operator reports the FT, citing "three people familiar with the matter".
The group is in talks with Getco, the Chicago-based proprietary trading firm, Quantlab Financial, a Houston-based rival, Deutsche Bank and Bank of America Merrill Lynch about taking a stake as part of a deal which values Chi-X Global at around $50m, the UK broadsheet reports.
INDIA'S EQUITY MARKET MICROSTRUCTURE EVOLUTION
India's equity market microstructure has undergone a significant transformation over the past few years. The key drivers of this change have largely been..
HTTP://WWW.ASIAETRADING.COM/INDIA-EQUITY-MARKET-MICROSTRUCTURE-EVOLUTION/
HKEX APPOINTS CHIEF ADMINISTRATIVE OFFICER
HKEx has appointed Joseph Meyer as its first CAO.
Hong Kong Exchanges and Clearing Limited (HKEx) has created a Chief Administrative Officer (CAO) position to oversee its major projects, Administration Department and Human Resources Department.
His most recent position was Representative Director of Chi-X Japan.
" there are several major projects, including the introduction of OTC Clearing (the clearing of derivatives traded in Hong Kong’s over-the-counter, or OTC, market) and Hosting Services, major IT upgrades and the completion of our Next Generation Data Centre, that require organisation-wide coordination”
http://www.hkex.com.hk/eng/newsconsul/hkexnews/2011/110509news.htm
HKEx Publishes its 2011 First Quarter Results\
http://www.hkex.com.hk/eng/newsconsul/hkexnews/2011/Documents/110511news.pdf
SINGAPORE EXCHANGE ENHANCES SECURITIES CLEARING FUND STRUCTURE
The enhancements and accompanying changes to the CDP Clearing Rules will take effect from 3 May 2011.
The revised Clearing Fund structure is scalable, linking clearing members’ contributions more closely to the level of risk they bring to the clearing system. Their clearing fund contributions will change in line with their securities traded values. Previously, the contributions remain fixed in aggregate.
Under the revised structure, CDP only requires a portion of clearing members’ increased contributions to be deposited upfront. Clearing members will be called upon to deposit the remaining contributions under conditions of increased risk or to meet losses arising from clearing member default.
Details are available on SGX website at:
http://www.sgx.com/wps/portal/corporate/cp-en/regulation/rulebooks_manuals/cdp_clearing_rules/amendments
http://www.asiaetrading.com/singapore-exchange-enhances-securities-clearing-fund-structure/
ASIC CONSULTS ON MARKET INTEGRITY RULES FOR THE FEX MARKET
ASIC today announced it has released a consultation paper proposing new market integrity rules which will apply should Financial and Energy Exchange Limited (FEX) be granted an Australian market licence.
http://www.asic.gov.au/asic/asic.nsf/byHeadline/11-97AD%20ASIC%20consults%20on%20market%20integrity%20rules%20for%20the%20FEX%20market?opendocument
Exchanges in Asia: Trends and perspectives
Australian Securities and Investments Commission
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/Speech-Exchanges-in-Asia-IOMA-IOCA-Tony-DAloisio-20110504.pdf/$file/Speech-Exchanges-in-Asia-IOMA-IOCA-Tony-DAloisio-20110504.pdf
*** 27 pages.
PLATFORMS
BATS SCORECARD: UPTIME HIGH, MARGINS TIGHT. CHI-X? A RETAINED DEFICIT.
The S-1 Registration Statement filed Friday by BATS Global Markets to commence its bid to raise as much as $100 million from public investors gives the first glimpse of its financial footing, as it tries to build a business worldwide that lives up to its name
• Principal shareholders. Holders of 5% stakes in BATS include Citgroup Financial Products, Credit Suisse First Boston Next Fund, DB Investment Partners, GETCO Strategic Investments, LabMorgan Investment Corporation, Lime Brokerage Holdings, Lehman Brothers Holdings, ML IBK Positions. Strategic Invesmtnets I and Tradebot Ventures Fund
http://www.securitiestechnologymonitor.com/news/bats-global-markets-uptime-high-margins-low-27925-1.html?ET=securitiesindustry:e2507:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=STM_BNA_08302010_051411
CHI-X EUROPE POSTS RISING TRADING STATS; PARTNERS RUSSELL INVESTMENTS ON INDICES
http://www.finextra.com/news/announcement.aspx?pressreleaseid=38762
CHI-X REVOLVING DOOR SPITS OUT CFO O'KEEFE
The revolving door is spinning again at Chi-X Europe as chief financial officer Kevin O'Keefe confirms his intention to depart the European MTF in the wake of its recent take-over by Bats Global Markets.
More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22480
LSE LOOKS LIKE FACING COMPETITION FOR TMX FROM BANK-BACKED ALPHA ATS With Canadian banks looking for ways to block TMX Group's merger with the London Stock Exchange (LSE), traders have begun betting on the proposal being trumped, according to Bloomberg.
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22529
LSE's Rolet says exchange mergers could unify regulation
London Stock Exchange CEO Xavier Rolet said the consolidation wave hitting the exchange sector could harmonise global trading regulations. "If you look at the existing exchange mergers, including the trans-Atlantic mergers, there's not a unified regulatory environment," Rolet said. "This is the greatest opportunity the financial crisis has presented -- to unify regulation." He also scrutinised European policymakers for their treatment of equities as opposed to bonds. Reuters (10 May.), Global Financial Strategy (11 May.)
LONDON STOCK EXCHANGE UPBEAT AS PROFITS RISE; FILES WITH CANADIAN PROVINCES FOR TMX MERGER
http://www.finextra.com/news/announcement.aspx?pressreleaseid=39203
TMX SOLA PLATFORM GOES LIVE AT TURQUOISE
http://www.finextra.com/news/announcement.aspx?pressreleaseid=39202
ALPHA ATS AIMS FOR Q4 LISTINGS LAUNCH
Canadian alternative trading system (ATS) operator Alpha Group expects to become an exchange by Q4 2011 and aims to challenge the listings dominance of the TMX Group, following its regulatory filing last month.
http://www.thetradenews.com/asset-classes/equities/6151
MAPLE CONSORTIUM LAUNCHES TMX BID
A consortium of Canadian banks and pension funds have made a C$3.6 billion offer for TMX Group in a bid to scupper the exchange operator's planned merger with London's LSE.
The Maple members are understood to be Toronto-Dominion Bank, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Caisse de Depot et Placement du Quebec, Canada Pension Plan Investment Board, Ontario Teachers' Pension Plan, Alberta Investment Management and Fonds de Solidarite des Travailleurs du Quebec.
More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22555
Bonds.com, Inc. (Bonds.com) is a new model for the trading of fixed income instruments in small size. The management team is working to anticipate industry developments and is working to provide innovative approaches to the trading of fixed income securities. To date these approaches have resulted in a neutral electronic platform to access liquidity and live orders; the opportunity for price discovery and negotiation; and a reduction in the time, labor, and cost of execution across a range of asset classes all of which trade large volumes in small size.
http://www.bonds.com/
CLEARING
LCH.CLEARNET AND X-CLEAR GET FSA APPROVAL FOR INTEROPERABILITY
European clearing house interoperability has moved a step nearer after the UK's FSA approved new arrangements between LCH.Clearnet and Switzerland's X-Clear.
More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22548
DEUTSCHE BANK'S JONATHAN HITCHON ELECTED TO DTCC BOARD
http://www.finextra.com/news/announcement.aspx?pressreleaseid=39073
EUROPEAN OTC MARKET FAR SMALLER THAN CLAIMED - STUDY Around 16% of European share trading is over-the-counter (OTC), far less than claimed by stock exchanges, according to a study from the Association for Financial Markets in Europe (Afme).
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22489
IMPACT REPORT: THE COST OF OPERATIONAL FAILURE
Failure to settle trades on time are rare and on average amount to less than one percent of a firm’s trading volume. But each fix can cost as as much as $1,000 per transaction.
The challenges -- and what to do about them -- are in this analysis by Securities Technology Monitor in its latest Impact Report. The focus: operational risks.
http://www.securitiestechnologymonitor.com/reports/22_14/-27809-1.html
*** 35 pages
CORPORATES, CREDIT AND SEFS
Dodd-Frank will directly or indirectly affect nearly every segment of the capital markets. In the fixed income arena, OTC derivative regulation, such as clearing and execution requirements, will have a profound impact on counterparty risk management and trading. Its impact will extend to the cash credit markets and will serve as the catalyst for increasingly electronic and centralized trading. This will be most apparent in the corporate bond market, where we should see tighter spreads, increased volume, and deeper liquidity. Corporate trading will likely mirror that of CDSs and migrate to platforms that allow a more flexible execution protocol than exists in the current two-tiered market structure.
http://www.woodbineassociates.com/uploads/Woodbine_Opinion_-_Corporates_Credit_and_SEFs_-_March_30_2011.pdf
PARTICIPANTS
PENSON'S STOCK PLUMMETS AFTER DISCLOSURE OF ILLIQUID RECEIVABLES
The stock of Penson Worldwide tumbled after it disclosed it had $97.4 million of "nonaccruable receivables."
Of that amount, about $42.6 million is collateralized by bonds issued by Retama Development Corp and related interests. Retama Development Corp. owns the Retama Park racetrack in Selma, Texas near San Antonio.
Penson, the only publicly traded and non-bank owned clearing firm, cited the non-accruals under the category of risk factors in its quarterly filing with the Securities and Exchange Commission on May 9. Penson, whose stock trades on the NASDAQ Stock Market, closed at $3.12 a share, down 81 cents or 20.61 percent on Thursday
http://www.securitiestechnologymonitor.com/news/-27911-1.html?ET=securitiesindustry:e2503:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=STM_BNA_08302010_051211
OTHER
DUMPING CHEQUES COULD "SPELL DISASTER" FOR UK CHARITIES Plans by Britain's banks to abolish cheques by 2018 could "spell disaster" for many of the country's charities, according to the Institute of Fundraising.
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22527
...and then the days start getting longer.
WooHoo!
WINTER SOLSTICE (SOUTHERN HEMISPHERE) - EDUCATION NETWORK ...
24 Mar 2011 ... On the day of Winter Solstice, Earth's south pole is tilted away from the Sun. ... Start Date: 22 June 2011. End Date: 22 June 2011. Duration: 1day ... Coverage: Australia. Region: All Australian states. Language: en ...
http://www.edna.edu.au/edna/go/events/cache/offonce;jsessionid=51273830EB6EFB737E319FB9B5474684?nbpath=1981,601834&action=item&keywords=&from-display=&from=&until-display=&until=&location=All%20Australian%20states§or=&calendar=all
Eurovision (interactive)
http://www.spiegel.de/flash/flash-25968.html#ref=nlint
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