Tuesday, September 13, 2011

News: G'day RWC, ASX, HFT, LSE, EMCF....and don't get nominated for the swim leg of a tri!

G’day All, And so it begins...another RWC. The pool games will be a war of attrition. The minnows, ever closer in the first 40 minutes due to the international and professional status of the game...with experience telling in the second half. Improving form throughout the tournament is critical.


ASX announces new management.

HFT firms continue to suffer from a bad perception....I respect the AFME and ISDA call for “valid and un-conflicted evidence”.

LSE back on the dance card at 1byn with LCH.CN (valued at 1.2byn at the time of the merger).

EMCF cuts fees and joins the OTC party with Citi.

Aussie regulators consult on the idea of market users paying for the ‘benefit’ of fragmentation.

I’m all for fragmentation and competition...but somewhere along the line you need to mutualise the cost of market infrastructure.

Someone worked out swimming is deadly....more deadly than tripping over or falling off a bike. Sounds reasonable.

My next Ocean swim is around Heron Island at the end of October. Reef sharks only eat little tasty fish...not old leather barrels.

Enjoy the world cup, one and all. So many great nationalities to emotionally support.

Please note, these thoughts are my own and not my employers blah, blah....



I love this:

England's “Manu Tuilagi” breaks through a challenge from Ireland's Keith Earls to score a try


*** Rugby has truly become the international game.


Fixed Remuneration

Mr Funke Kupper will be entitled to a salary of $1,750,000 (inclusive of superannuation) per annum.




Clearstream, ASX Ink Outsourcing Deal

Clearstream International has struck its second outsourcing deal for collateral management. This time, the customer is the Australian Securities Exchange.


SGX reports strong volume growth in August

Securities: Turnover increased 31% year on year to $41.4 billion; securities daily average value was $1.97 billion.

Derivatives: Total volume increased 53% year on year to 8.1 million contracts; derivatives daily average volume was 360,282 contracts.


European Options Market Embraces High-Frequency Trading

The European equity options market is next to benefit from high-frequency trading strategies, according to New York research firm Tabb Group.


PLUS partners with former Chi-X chief for new technology unit

PLUS Markets Group, a UK-based exchange operator, has teamed up with former Chi-X COO Hirander Misra to establish a division that will offer low-cost trading platform technology.

PLUS Trading Solutions (PLUS-TS) will offer investment banks, brokers and trading venues the ability to buy an off-the-shelf matching engine that is designed to comply with the impending MiFID II and the European market infrastructure regulation, which will result in significant changes to equity and derivatives trading respectively.

Investment banks Nomura, UBS and Goldman Sachs have already launched dark MTFs that operate separately to their internal crossing engines. Nomura’s NX and UBS MTF run on proprietary technology, while Goldman Sachs’ SIGMA X MTF is hosted on NYSE Euronext’s Universal Trading Platform and is located at the exchange group’s data centre in Basildon, UK.


LSE raises no objections to BATS/Chi-X merger

At the end of June, the UK’s Office of Fair Trading referred the deal to the Commission, on grounds that if the two MTFs continued to operate independently, they “would compete more strongly against each other”. The Commission is expected to report its findings by 2 December


Nasdaq OMX puts Nordics on path to interoperability

Nasdaq OMX Nordic, which runs the northern European exchange businesses of global exchange operator Nasdaq OMX, expects to finalise plans to offer its members clearing choice within the next six to nine months

The group’s Copenhagen, Helsinki and Stockholm bourses will initially offer clearing choice between central counterparties (CCPs) EuroCCP, SIX x-clear and EMCF.

The DB/NYSE merger is currently being scrutinised by European competition authorities, with a decision on the deal expected by 13 December 2011.




Thomson Reuters Launches Elektron at the National Stock Exchange of India

Thomson Reuters announced September 8 the launch of Elektron at the National Stock Exchange of India (NSE), to provide trading firms with low latency access to the data that they require



More than two thirds of institutional traders around the world are concerned about the impact of high-frequency trading (HFT) on the equities market, according to a survey from Liquidnet.

More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22936


EU prepares draft law extending and toughening MiFID
The European Commission is preparing to unveil next month a draft law that would extend and bolster the Markets in Financial Instruments Directive. Under the law, vertically integrated stock exchanges would face increased competition. The proposal aims to give banks and investors more choices when it comes to clearing and settling transactions. "Member states shall require that investment firms from other member states have the right of access to central counterparty, clearing and settlement systems in their territory," according to the draft law. Reuters (02 Sep.), Bloomberg (05 Sep.), Financial Times (tiered subscription model) (05 Sep.)


EMCF joins forces with Citi for OTC clearing

Pan-European central counterparty (CCP) EMCF has extended its product portfolio with the addition of over-the-counter (OTC) clearing services for Citi’s Automated Trading Services (CATS) platform.



The London Stock Exchange has confirmed that it has made a majority bid for European independent clearing house LCH.Clearnet, opening up a bidding war with post-trade data group Markit.

The LSE is understood to have tabled a bid of EUR21 a share, which values the clearer at EUR1 billion. This is a significant uplift from Markit's valuation of EUR10 per share.


Just an FYI. In 2003 the newly merged LCH and Clearnet was valued at EUR 1.2byn.


In New World of Swaps, Should Fund Managers Pay Up For Clearing Agents?

Using central clearinghouses to process swap transactions will be a lot safer than the current process of two parties negotiating a contract between themselves, right?

After all, the central counterparty assures that each counterparty can fulfill its end of the deal.

But what happens to a fund manager if its clearing agent goes bust through no fault of its own? This could occur if the agent takes the hit for the financial distress of another institution or a fund manager whose financial health it has vouched for—and whose end of a transaction it has covered.


EMCF cuts fees as CCPs begin to compete for flow

Dutch central counterparty (CCP) EMCF will reduce its fees by 50% for some clients from 1 October, as Europe’s clearers begin to compete for business from interoperable trading venues.


REUTERS: Clients Pressure Europe Bourses on Clearing Choice
By Luke Jeffs
Europe's largest exchanges, including the London Stock Exchange (LSE.L), NYSE Euronext (NYX.N) and Deutsche Boerse (DB1Gn.DE), face growing pressure from their main clients to copy rivals and offer brokers a wider choice of clearing providers.



Australian Treas. Consults on Fin. Market Supervisions Cost Recovery Model

The Australian Treasury Department released a consultation paper on proposed market supervision fee methodology and cost recovery arrangements for the recovery of funding provided to the Australian Securities and Investments Commission (ASIC) to perform market supervision functions. The paper canvasses a proposed cost recovery fee model for cash equities markets based on both trades and messages. Individual market operators and participants will pay a proportional charge based on the number of trades and messages reported from them to the ASIC IT surveillance system. The proposal contemplates that market participants will also be charged a quarterly market supervision fee. The deadline for comment is September 23.


WikiLeaks: Shorten seeks US approval for prime ministership

The cable, covering a meeting on the 11th June 2009, appears to be in part an audition piece, with Shorten presenting his Prime Ministerial credentials to the US Consul General. In the leaked document he talks about his ambition, criticises the union movement, plays up his friendship with Melbourne business elites, and is disappointed about being overlooked in a recent cabinet reshuffle.


The Committee on Payment and Settlement Systems and the Technical Committee of IOSCO have today released for comment a report on the OTC derivatives data that should be collected, stored and disseminated by trade repositories (TRs).

Comments on the report should be sent by 23 September 2011


**** Only 59 pages.

MARKETS MEDIA: ATSs Face Price Improvement Mandate
By Staff
Canadian regulators are proposing a price improvement requirement to limit broker-dealers' use of alternative trading systems to execute trades without displaying quotes.
Under proposed revisions to the Universal Market Integrity Rule (UMIR) published by the Investment Industry Regulatory Organization of Canada (IIROC), dark pools and transparent marketplaces that permit dark orders or icebergs with less than one standard trading unit being displayed would be required to provide meaningful price improvement of at least one trading increment (or in cases where the displayed market has a spread of only one trading increment, at least one-half of a trading increment) to others (other than large orders) that execute with dark orders.

ASIC Consults on Consequential MIR for ASX and Chi-X Markets

ASIC today released Consultation Paper 166 Market integrity rules: non-AFS licence foreign participants and consequential amendments (CP 166). Consultation Paper 166 proposes market integrity rules...(more)

AFME and ISDA say more research into HFT is needed
AFME and the International Swaps and Derivatives Association wrote to the International Organisation of Securities Commissions warning that efforts to crack down on high-frequency trading must be guided by "valid and un-conflicted evidence". The groups called for more research on the trading strategy. "Whilst it is the case that trading volumes have increased and spreads have declined, questions do remain as to a wider array of other impacts ... We consider that further research is therefore required to examine the total impact of high frequency trading," AFME and ISDA wrote. MarketWatch (19 Aug.)

US large trader rule “for the good of the market”

“Any form of regulatory intervention is going to face objections from somewhere – people don’t like having to disclose information, nor do they enjoy the extra work. But the reality is, this is a lot less demanding than it might have been.”




An 8 page paper from Swift on managing liquidity risk.


**** Umm, when it comes to liquidity, I’d have thought cash is king.

U.S. Justice Department joins SEC in investigating rating agencies
The investigation into credit rating agencies and their role in mortgage-bond deals is expanding, an unidentified official said. The Securities and Exchange Commission has been looking into Standard & Poor's and Moody's Investors Service for months, and now the U.S. Justice Department is investigating, although its investigation appears to focus on S&P. The Wall Street Journal (tiered subscription model) (8/19), Reuters (8/18)

**** Yes, S&P is guilty of many things...but this just smacks of a kangaroo court.

Forex traders look to ECB to save euro
Paul Volcker, George Soros and other financial industry veterans expect a collapse of the euro zone, but foreign exchange traders are betting that European Central Bank President Jean-Claude Trichet will save the currency. Europe's debt crisis continues to rage and spread, while the euro continues to appreciate against a basket of nine developed-nation currencies. "A lot of people are scratching their heads and wondering why the euro has been so resilient, and it's because the ECB stepped in the market and took the pressure off the European banking system," said Paresh Upadhyaya, head of Americas G-10 currency strategy at Bank of America. Bloomberg (22 Aug.)

FOLLOWING CHEQUES TUSSLE, MPS BID TO REIN IN PAYMENTS COUNCIL In the wake of a battle over the future of cheques, the UK's Treasury select committee has published a report recommending a range of measures designed to strip the industry-dominated Payments Council of much of its power.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22887




BNP Paribas wins AMP custody contract
BNP Paribas Securities Services, the third-biggest custodian in Australia, has beaten off State Street Corp. in the competition to be the custodian of $130 billion in funds for the merged AMP-AXA Asia Pacific Australia and New Zealand.



A Data Center Where Cost Matters, Not Time

a company named Next Generation Data Europe has set up shop, with a computing facility spanning 420,000 square feet in seven “data halls” not far from Cardiff, the capital.


**** Moving with the times? From rugby capital (OK...many moons ago) to data centre capital?

Schumpeter says Hewlett-Packard's overhaul marks a seismic shift in Silicon Valley


Revenues of Europe's major HFT firms rose nearly 20% in 2010
European regulators are considering ways to govern high-frequency trading, after major HFT firms increased average revenues by 18% last year, according to Financial News research. Average revenues per employee reached $2.7 million. Optiver's revenues increased 36%, to $501 million, while other firms, including Getco Europe and Knight Capital Europe, also earned hundreds of millions of dollars in revenues. Financial News Online (U.K.) (subscription required) (22 Aug.)

With Greece sitting on an estimated 125 tons of gold, worth around $7 billion at current prices, while Portugal holds 383 tons, there’s little wonder that the gold market is skittish at the possibility of a new wave of central bank gold sales.


Why Is Swimming the Most Deadly Leg of a Triathlon?

Nearly all of the deaths you studied occurred during the swimming events. Did this surprise you, given that swimming is the first leg of the triathlon and, presumably, the athletes are not suffering from the heat or from exhaustion at this point in the competition?
Yes, exactly. We were first surprised by this but I note this trend continues beyond the end of our study (also in several non-sanctioned races we did not formally look at). While at first I was surprised, it does make sense for a number of reasons: first, the adrenaline surge and pure number of athletes entering the water at the same time; second the fact that I suspect many athletes come from a background in running or other sports and may be less adept at swimming; third, swimming in a triathlon is totally different sport than doing some laps in the pool due to variability of extremes of waves [as well as] people swimming around you and on top of you; fourth, the inability to rest properly if needed (or call for help) as you could do in the marathon and bike [segments]; and, fifth, the difficulties in being noticed if the swimmer is in trouble due to the number of athletes in a body of water, which is not transparent. I think these are some of the factors that are related.


Carol Bartz blames Yahoo 'doofuses' for firing her in foul-mouthed tirade

Axed Yahoo boss pulls no punches as she tells Fortune magazine of 'worst board in the country'


*** Nice exit interview!


Does anybody know how to cancel a bid on e-Bay?

Yesterday, I put in a bid for a “Cowboy Outfit” and now it seems I’m only six minutes away from owning the Australian Labour Party!

It isn't the mountain ahead that wears you out; it's the grain of sand in your shoe."

--Robert Service,
British-born writer

A creative man is motivated by the desire to achieve, not by the desire to beat others."

--Ayn Rand,
Russian-American writer and philosopher

Never apologise. Never explain. Just get the thing done, and let them howl."

--Agnes Macphail,
Canadian politician

Without leaps of imagination, or dreaming, we lose the excitement of possibilities. Dreaming, after all, is a form of planning."

--Gloria Steinem,
American journalist and women's rights advocate

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