G'day All,
Well, the big news locally, apart from the budget, is that Chi-X Australia has a license. This is now up on the ASIC web site and for any interested parties worth a look.
Aussie also makes all the local broker market shares available and these have been released too. Although the concentration of business amongst the top 10 brokers is dominant, there are some interesting moves within the Top 10.
Asia merger mania not really flying high. The model in Asia still very much appears to be the 'dance card' approach. Line up all you partners as in ASEAN. What the Euronext combination showed us was that to have true integration the ownership model needed to be common. JV's are great, but common ownership delivers common purpose. That said, LCH.Clearnet common ownership was a bit 'different'.
MarketPrizm and Colt finish their dancing with a date.
Amazing moves in Swedish market shares.
Great to see TOM market data being more widely disseminated.
EC snoops around the 'c' word...cartel.
Oxera publishes another lovely report...but I just can't get excited by it, or have much faith in it.
I mean these guys are 'experts' and they come out with sweeping generalisations like this...since trading and clearing and settlement services are generally charged on per-transaction basis,” read the report.
Ahhh, so much going on. Just enjoy it!
Warm regards,
Scott.
PLATFORMS ASIA
CHI-X GRANTED OPERATING LICENSE IN AUSTRALIA
Australia's government on Wednesday finally gave a full-operating license to Chi-X, paving the way to erode the trading monopoly held by the the Australian Stock Exchange.
http://www.securitiestechnologymonitor.com/news/-27807-1.html?ET=securitiesindustry:e2484:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=SIN_DailyClose__050411
The CXA licence grant with the remaining conditions is now up on the ASIC web site.
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/Chi-X-licence.pdf/$file/Chi-X-licence.pdf
Also attached from the ASIC web site is the link to Reg Guide 223.
Reg 233.105 (page 32) outlines a 12 months grace period that users have where ASX is considered ‘the’ venue of best execution.
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/RG223-published-29-April-2011.pdf/$file/RG223-published-29-April-2011.pdf
AUSTRALIAN MARKET SHARES
Year-to-date, the top three rankings remain unchanged for 2011: UBS takes the top spot, with total trading volume of $113.3 billion or 12.7 per cent of market share, followed by Citigroup at $98.1 billion (11 per cent) and Deutsche Bank at $77.9 billion (8.7 per cent).
Macquarie is fourth for the year, with a cumulative total of $70.9 billion (8 per cent), while Goldman Sachs is fifth at $66.8 billion (7.5 per cent), and Credit Suisse takes sixth place at $61.6 billion (6.9 per cent).
Rounding out the rankings are Morgan Stanley at $56.1 billion (6.3 per cent), Commonwealth at $44.5 billion (5 per cent), JPMorgan at $39.6 billion (4.4 per cent), Merrill Lynch at $37.3 billion (4.2 per cent) and RBS at $27.8 billion (3.1 per cent).
AUSTRALIAN FINANCIAL REVIEW: UBS Leads Brokers as Exchange Rate Crimps Volumes
LIMITS ON DARK TRADES INEVITABLE: ASIC
(FINANCIAL MARKETS) Regulator to consult on dark pool order thresholds.
In the meantime, it has put in place the market rule to place a minimum threshold for dark pool trades but has set this to a dollar value of zero. This will allow ASIC to respond quickly if there is a visible deterioration in the lit markets following the introduction of market competition.
http://www.businessspectator.com.au/bs.nsf/Article/Australia-regulator-ASIC-limits-on-dark-pool-tradi-GK9BK?OpenDocument&src=eiw&ir=3
SGX CFO MOVES
The exchange’s CFO, Kwong, is leaving SGX to take up a new role as executive vice president and general manager, global markets and global services (Asia Pacific) with custodian State Street Bank and Trust. His last day of service at SGX will be 10 June 2011. Kwong will be replaced in the interim as the acting CFO by Muthukrishnan Ramaswami, co-president of SGX.
Market commentators have noted that SGX’s investment cycle is to reach a peak this summer, with capital expenditure on the back of its REACH technology programme, Chi-East, and OTC derivatives clearing programme reaching S$65 million (US$52.5 million) at the end of the financial year in June 2011
http://www.thetradenews.com/trading-venues/exchanges/6110
SINGAPORE MERCANTILE EXCHANGE CEO QUITS
Thomas McMahon, CEO of the Singapore Mercantile Exchange (SMX), resgined last Friday.
http://www.asiaetrading.com/singapore-mercantile-exchange-ceo-quits/
SINGAPORE EXCHANGE IS READY TO DISCUSS OTHER MERGER IDEAS
Muthukrishnan Ramaswami, president of Singapore Exchange, said the bourse is interested in discussing other mergers after being spurned by Australian regulators. "If Hong Kong came to us and said, 'Shall we merge?', we wouldn't say no at all," Ramaswami said. "Hong Kong would bring us size. We have no problem being a junior partner. But it would be all about the detail." He said SGX is concentrating on expanding derivatives clearing, developing collaborative agreements and increasing company listings. Bloomberg (02 May.)
INDIAN EXCHANGE SEEKS COLLABORATION RATHER THAN MERGER
Ravi Narain, CEO of National Stock Exchange of India, said the bourse is interested in collaborating rather than merging with other exchanges to bolster growth. "We are busy focusing on internal organic growth," Narain said. "Broader alliances outside India work well for us. The moment you do a merger with one exchange, you lock out all other exchanges. We are more interested in looking at product-by-product alliances to see what are the gaps and needs in the Indian financial firmament that we can fill." The exchange is working to launch derivatives that would be based on the FTSE 100 Index and denominated in the rupee. Bloomberg (05 May.)
JSE: BALANCING THE ORDER BOOK
Leanne Parsons, chief operating officer at Johannesburg Stock Exchange (JSE), says that competitive pressures on an exchange don’t necessarily force it to choose between long-only buy-side and high-frequency trading (HFT) firms. It is possible to take a new approach.
The JSE has been reducing trading fees over the last three years, she adds, despite some resistance from shareholders. The firm’s strategy is that by proving more cost effective it will attract greater trading volumes. The JSE saw turnover grow by 63% to €24.6 billion in Q1 2011 from €15.1 billion in Q1 2010.
“When you start out, it’s revenue negative, but then volumes improve and it becomes revenue positive - that's been proven true every time we have made a fee adjustment,” she says
http://www.thetradenews.com/node/6052
GREEN LIGHT FOR HK COMMODITIES VENUE
The first product to trade on the exchange will be a one kilo gold futures contract offered in US dollars with physical delivery in Hong Kong.
The exchange is expected to roll out a series of standardised products which will either be physically or financially settled, covering precious and base metals, energy, agriculture and commodity indices.
All transactions on HKMEx will be cleared through London-based LCH.Clearnet, the central counterparty serving several international exchanges
http://www.thetradenews.com/regions/asia/6104
PLATFORMS
NIEDERAUER SHOULD REPLACE BLANKFEIN AT GOLDMAN, SHAREHOLDER SUGGESTS
The woman who never hesitates to speak her mind at the most public of annual shareholder meetings Thursday suggested that NYSE Euronext CEO Duncan Niederauer would make a good replacement for Lloyd Blankfein at the helm of Goldman Sachs Group.
NYSE Euronext chairman Jan-Michiel Hessels:
60% of the company is German, that's not entirely true. Based on the present market caps, the exchange ratio is 60:40. But in the governance, in the management structure, there is much more of a balanced situation with a very international Board, a very international management committee. And don't forget, at this time, about 60% or 65% of the total shares are owned by non-German investors. How will that develop? We don't know. But in the end, (it) is the shareholders, according to Dutch law, -- and this will be a Dutch company -- who decide who is in the Board and who is CEO.
http://www.securitiestechnologymonitor.com/news/-27756-1.html?pg=2
ICE FIRST QUARTER NET INCOME JUMPS
ICE's ability to transform acquisitions into opportunities for future growth has been a defining characteristic of ICE and a major point of distinction in the exchange sector
http://www.finextra.com/news/announcement.aspx?pressreleaseid=39020
ALTERNATIVES VENUES TAKING MAJORITY OF SWEDISH MARKET SHARE
Burgundy reported its market share in Swedish equities continued to decline, reaching 3.44% in April on a turnover of SEK27 billion (€3.01 billion), down from SEK 29 billion (€3.23 billion) 3.73% in March and 4.32% in February.
According to figures published by Burgundy in cooperation with Thomson Reuters, incumbent exchange group Nasdaq OMX Nordic accounted for 35.95% of trading in Swedish stocks in April, worth €29 billion, compared to 50.31% (€37.8 billion) in March.
http://www.thetradenews.com/trading-venues/mtfs-ecns/6122
TOM MTF MARKET DATA INCLUDED IN THOMSON REUTERS EUROPEAN REAL-TIME FEEDS
http://www.automatedtrader.net/headlines/76062/reuters-includes-tom-market-data
ERIS EXCHANGE PICKS CHIP DEMPSEY AS WINNER OF PLATFORM NAME CONTEST FOR "ERIS SWAPBOOK"
Eris Exchange has selected Chip Dempsey as the winner of its naming contest for its trading platform to be deployed on May 18, 2011. Dempsey's entry of "Eris SwapBook" (TM) is being used as the name of the exchange's central limit order book and RFQ trading platform. For his effort, Dempsey will be presented with an Apple iPad 2. The exchange also thanks Joe Meissner for his support in the matter.
An explanation of how Eris SwapBook (TM) plays into the Eris Exchange strategy can be found at http://www.erisfutures.com/contest-results
DIRECT EDGE CONNECTS TO 7 MAJOR DARK POOLS
Direct Edge said it connected its high-speed multivenue trading network to include seven major dark pools.
The operator of the EDGA and EDGX national stock exchanges said it had begun providing access to Barclays Capital's LX, Credit Suisse Crossfinder, Getco Execution Services, Goldman Sachs SIGMA X, Knight Link, Knight Match, and LeveL ATS.
Direct Edge is owned by a consortium that includes the International Securities Exchange, Knight Capital Group, Inc., Citadel Derivatives Group, The Goldman Sachs Group and JPMorgan Chase.
http://www.securitiestechnologymonitor.com/news/-27768-1.html?ET=securitiesindustry:e2475:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=STM_BNA_08302010_050211
INSTINET TO SELL MAJORITY STAKE IN MARKETPRIZM TO COLT
Telecoms firm Colt has agreed to buy a majority stake in trading technology company MarketPrizm, with current owner Instinet maintaining a minority interest.
Current CEO John Lowrey will continue to provide "strategic oversight" and be a member of the MarketPrizm board.
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22513
CHI-X CANADA REPORTS RECORD DAILY VOLUME
Canadian alternative trading system (ATS) Chi-X Canada, a subsidiary of alternative trading venue operator Chi-X Global, traded 71,731,700 shares, more than 10% of total Toronto Stock Exchange listed share volume on 27 April 2011, according to the firm’s own figures.
http://www.thetradenews.com/trading-venues/mtfs-ecns/6119
OMEGA ATS ELIMINATES SUBSCRIBER FEES
Omega ATS, the low cost alternative trading system for Canadian exchange-listed equities and fixed income instruments, today announced changes to its standard pricing and subscriber model
http://www.finextra.com/news/announcement.aspx?pressreleaseid=39021
An unregulated market for Facebook takes off Facebook has become in recent months, one of the hottest shares traded on a market. Yet given that it is unlisted and an initial public offering (IPO) is not expected until 2012 at the earliest, how is this managed? The answer is that there is an exciting, and unregulated market. A pioneering approach to share dealing is taking off in the US, with the prospect of it expanding worldwide by plugging a significant hole in currently available facilities.
http://www.edhec-risk.com/latest_news/featured_analysis/RISKArticle.2011-04-26.2231?newsletter=yes
CLEARING
EC LAUNCHES ANTITRUST PROBE INTO CDS MARKET
The world's biggest investment banks are being investigated in two European Commission antitrust probes into the credit default swaps (CDS) market.
More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22505
Meanwhile, a second case against nine of the banks and ICE Clear Europe will investigate whether the preferential tariffs granted by the clearer have the effect of locking them in the ICE system to the detriment of competitors.
The banks involved are Bank of America Corporation, Barclays, Citigroup, Crédit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan Chase, Morgan Stanley and UBS.
ICE LINK CONNECTS TO CME CLEARING FOR CDS
http://www.finextra.com/news/announcement.aspx?pressreleaseid=38986
CCP Paper
BoE on CCP for securities Lending
http://www.bankofengland.co.uk/markets/gilts/ccpcslm.pdf?utm_source=Central+Counterparty+White+Paper&utm_campaign=5c063e8687-Central+Counterparty+Update+End+April+2011&utm_medium=email
LME PROPOSAL FOR SELF-CLEARING JOLTS LCH.CLEARNET
The London Metal Exchange has announced proposals to consider building its own clearing house, jolting its current supplier LCH.Clearnet.
More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22510
BASEL III PROPOSAL PUTS PRESSURE ON CENTRAL COUNTERPARTIES
Rules have bolstered the position of central counterparties, but a proposal from the Basel Committee on Banking Supervision could hinder their business model. The panel suggested that banks acknowledge risks associated with reinvested collateral. "We understand the ability of the CCP to invest, or to rehypothecate, the collateral is commercially desirable for the CCP," said Mark White, chairman of the risk-modeling group at the Basel Committee. "We are not trying to remove a profitable line of business from a CCP -- we are trying to reflect the risk for the bank posting the collateral." FinancialCAD (03 May.), Risk.net/Risk magazine (subscription required) (03 May.)
EU MOVES TOWARD EXEMPTIONS FOR DERIVATIVES CLEARING
EU leaders continue to debate legislation to bolster oversight of the derivatives market, but a consensus has emerged in regard to clearing. The European Council appears to be leaning toward exempting most companies and some foreign exchange instruments from derivatives clearing. Companies that use derivatives to hedge risk will not be required to send trades through central counterparties, a source said. MarketWatch (21 Apr.), FinancialCAD (21 Apr.)
EUROCLEAR BANK AND CLEARSTREAM DEVELOP INTERNATIONAL SECURITIES INDUSTRY FRAMEWORK
http://www.finextra.com/news/announcement.aspx?pressreleaseid=39001
DTCC EXPLORES HOW TO LIMIT LIQUIDITY RISK
Thomas Sakaris, vice president at the Depository Trust & Clearing Corp., said the company is looking into a new process called CNS for Value to reduce the liquidity risk when a company defaults. "This initiative [CNS for Value] is designed to mitigate the systemic risk associated with the potentially unlimited liquidity demands on [National Securities Clearing Corp.] in the event of a large default," Sakaris said at SIFMA's Operations Conference. Securities Technology Monitor (5/3)
POLICY
OXERA ON BEHALF OF THE EUROPEAN COMMISSION (EC),
Monitoring prices, costs and volumes of trading and post-trading services
HTTP://WWW.OXERA.COM/CMSDOCUMENTS/OXERA%20REPORT%20ON%20TRADING%20AND%20POST-TRADING%20MAY%202011.PDF
During the period studied, Oxera found that the average size of an equity trade fell by 60%, from €25,000 in 2006 to €10,000 in 2009. Across Europe’s major financial centres, the decline in trade size ranged from 46% to 80%.
One trade order (as seen from the fund manager’s perspective) today requires more trading and post-trade transactions than it did in 2006, potentially increasing investors’ cost per value of trade, since trading and clearing and settlement services are generally charged on per-transaction basis,” read the report.
HTTP://WWW.THETRADENEWS.COM/TRADING-EXECUTION/6127
EUROPEAN PARLIAMENT COMMITTEE ISSUES OPINION ON OTC DERIVATIVES REGULATION
The European Parliament’s Committee on Industry, Research and Energy issued an opinion on the proposal for a regulation of the European Parliament and of the Council on over-the-counter (OTC) derivatives, central counterparties and trade repositories. While recognizing the importance of regulations of financial instruments and coordination with the major international partners is an important process in the post-crisis period, it noted that any regulation should be attributed in a “carefully measured dose” so as not to include other end-users. The suggested amendments: make some definitions clearer; facilitate some procedures; help avoiding clearing shocks and other disproportionate burdens to the businesses; suggest the cancellation of the information threshold, considering that the clearing threshold provides sufficient assurance; introduce more coherent and transparent criteria, related to regulatory decisions; make clear the procedures when classifying and declassifying OTC derivatives and counterparties as eligible for clearing.
http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+COMPARL+PE-456.881+04+DOC+PDF+V0//EN&language=EN
SIFMA OPS 2011: 100 STOCKS A DAY TRIP CIRCUIT BREAKER
BOCA RATON, Fla. -- The first anniversary of the Flash Crash is three days away. And since that huge bungee jump in stock prices, where the Dow Jones Industrial Average dropped nearly 1,000 points before bouncing back in the same afternoon, what's happened?
Lots of mini-crashes, for individual stocks. According to an industry lawyer, citing statistics developed by the Securities Industry and Financial Markets Association, roughly 100 stocks are tripping the "circuit breakers" established by the Securities and Exchange Commission. Every day.
In February, the fewest times the breakers were tripped in one day was 56. The most? Nearly 300 -- 276, actually -- in the wake of Japan's earthquake and tsunami, according to Kevin J. Campion, a partner with Sidley Austin LLP, at the 38th Operations Conference of the Securities Industry and Financial Markets Association.
http://www.securitiestechnologymonitor.com/news/100-stocks-a-day-break-circuit-27781-1.html?ET=securitiesindustry:e2480:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=STM_BNA_08302010_050311
TABB FORUM: WHAT’S CHANGED SINCE THE FLASH CRASH?
By Sal Arnuk, Joseph Saluzzi and R.T. Leuchtkafer
05/02/11
Again, we come to those 18 words: “Even in the absence of extraordinary market events, limit order books can quickly empty and prices can crash.” This paradigm was unthinkable except to a tiny circle of critics before the Flash Crash and totally unthinkable just a decade ago. Those words tell how profoundly stock markets have changed, and how exchanges now manage their brands, technology platforms and government licenses, but can’t control their own order books.
Can the Flash Crash happen again? Yes it can. It happens almost every day in individual stocks and ETFs. Our markets will continue to remain vulnerable as long as we as an industry remain in denial of the fact that volume does not equal liquidity, and as long as we tolerate the for-profit exchange model, which places its revenues from encouraging speed above all other concerns and safety
http://www.tabbforum.com/opinions/what's-changed-since-the-flash-crash
PARTICIPANTS
ABN AMRO CLEARING SIGNS FOR TCS BαNCS TECHNOLOGY
http://www.finextra.com/news/announcement.aspx?pressreleaseid=38978
EUROPEAN MULTILATERAL CLEARING FACILITY (EMCF) ENGAGES GREENLINE FOR MAGNIFIX®
Business Wire
CHICAGO--(BUSINESS WIRE)--Greenline Financial Technologies, Inc., a leading provider of electronic trading marketplace solutions, today announced that the central counterparty (CCP) clearing provider European Multilateral Clearing Facility N.V. (EMCF) has selected MagniFIX® to monitor its FIX-based clearing infrastructure. EMCF delivers CCP services in 19 European markets for 7 multilateral ...
http://www.businesswire.com/news/home/20110428005539/en/European-Multilateral-Clearing-Facility-EMCF-Engages-Greenline
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