Another week in London….and the seasons are
changing.
Already the evenings are closing in.
One thing I’m trying to do at the moment is work out
the best way to back up my contacts. I’m an open source fan, so that puts me in
the Android camp (and a little bit in Apple denial). I do like my smartphone
and how seamlessly Gmail, contacts and calendar synchronise. Then there is the
added benefit of Google providing this blogspot.
Previously I had mentioned that Microsoft is
relaunching Hotmail under the @outlook suffix. (I’ve taken the alias scott_riley@outlook.com). What I do
like about Outlook is it seamlessly integrates with LinkedIn.
For those of
you that are LinkedIn fans I recommend an outlook account just for the benefit
of synchronising all those LinkedIn contacts.
I was also
asked by The Trade to write a short piece on Competition in Australian
Clearing. Extract of that is below…not sure when it will be published and in
which medium. I think in the next week or so.
The Burgundy
acquisition, like Turquoise, I assume is a polite dividend to the founders on
exit. Just as interesting is the switch to Millennium from Cinnober.
Good luck to
Spain-X. I like the white label concept of QuoteMTF in terms of cost
efficiency. I think PAVE might have some interesting thoughts on Spanish
liquidity.
Have a great
week-end all…and don’t be held hostage by the weather.
Scott.
PLATFORMS
Oslo Bors acquires Swedish neighbour Burgundy
Established in
2008 by a consortium of Swedish banks and brokerages as a corrective to the
dominance of Nasdaq OMX, Burgundy currently commands a turnover of
approximately $2 billion in Swedish share trading, a fraction of the $33
billion claimed by its bigger rival.
Under the deal, Oslo Børs will scrap Burgundy's Cinnober-based trading platform and migrate the exchange to the London Stock Exchange's Millennium system. Oslo is moving to Millennium next month and Burgundy will follow some time in 2013.
Under the deal, Oslo Børs will scrap Burgundy's Cinnober-based trading platform and migrate the exchange to the London Stock Exchange's Millennium system. Oslo is moving to Millennium next month and Burgundy will follow some time in 2013.
Capital Partners Group
reaches agreement with QuoteMTF to launch a Spanish trading venue/Spain-X.com
European equity trading venue Quote MTF and
London-based investment bank Capital Partners have outlined plans to enter the
Spanish market.
In February, an MTF, called Pave, that had planned to take on the BME, was forced to put its launch on ice, citing "the very challenging market and harsh financial environment in Europe, especially in Spain".
http://www.finextra.com/News/
In February, an MTF, called Pave, that had planned to take on the BME, was forced to put its launch on ice, citing "the very challenging market and harsh financial environment in Europe, especially in Spain".
http://www.finextra.com/News/
PARTICIPANTS
‘‘This shows how dysfunctional this organization is, to have
this event unfold this way,’’ Whalen said. ‘‘They should have told us
yesterday, unless they didn’t know.’’
Since joining the bank in
December 2007, Pandit has made at least $56.4 million, according to data
compiled for The Associated Press by Equilar, an executive pay research firm.
That includes salary, bonuses,
benefits and perks and stock awards. Pandit also made about $165 million from a
buyout of his ownership stake in Old Lane Partners, a hedge fund he founded
that was acquired by Citi.
STUFF
GP
Receptionists.
I just don’t
understand why GP receptionists are universally obnoxious.
Totally
agree with this post:
Me (exasperated – bad service
always winds me up): “It is not an emergency. I am not actually dying just yet,
which would be an emergency and I probably would not be chatting to you on the
phone about it quite so casually, but the pain in my right knee tells me that
it is urgent because it will only get worse. I know because it has happened
before.”
Receptionist (feeling offended because she thinks that I have
shouted at her): “You can either have a regular appointment and it is three
weeks. Or, if it is an emergency, you can come in today. Better still, go to
casualty.”
Why is swimming the channel so hard?
CLEARING
Competitive Clearing in Australia
Joining the game.
So far in this “Asian Century” it
appears that competition in market infrastructure has been more aggressively
pursued in the Western economies of the US, Europe and Canada. That position is
now changing in Asia with various forms of market infrastructure competition
starting to take shape in locations including Australia, Japan and India.
Materiality, proportionality and
suitability.
Much has been made about the relative
success of competition in trading in Australia. One issue it raises is the
question of materiality. There is a vast difference in the “wallet size” of the
Australian market versus some of the other economies where competition has
become a feature of the local market. As the incumbent exchange, the
ASX in their 2012 annual report for Equity (cash) secondary markets discloses
gross revenues of A$36 million in trading, A$46 million in clearing and A$42
million in settlement. To make a meaningful business case in any of these
segments of the transaction value chain you need to acquire either significant
market share from the incumbent or have a compelling case that you are going to
substantially grow the market.
Another way to make the business case
for competition more compelling is by expanding the range of products. The
recent news of LCH.Clearnet applying to provide clearing services has increased
speculation in this area. The SwapClear product caters for a growing need (if
not regulatory demand) of participants. It is noted the clearing economics and
participants in the OTC market are very different to those of the equity
market.
Progress to date
As a fast to market solution Chi-X
Australia announced it would use the services of ASX clearing. Chi-X Australia
signed up for a 5 year term in Oct 2011 on a non-exclusive basis to use ASX’s
clearing services. So, although Chi-X Australia is free to use any clearing
service provider (incumbent or new entrant), they are committed to paying ASX
an annual clearing access fee of A$275,000 until 2016.
One way the exchange sector has
responded to new entrants is through consolidation. At the end of 2010 SGX and
ASX announced a proposed deal valuing ASX at A$8.4 billion. This deal was
subsequently abandoned however a joint regulatory review of the Australian post
trade structure was triggered by the Council of Financial Regulators. This
review has highlighted the issues between a local “bricks and mortar” operation
and that of an off shore operator. What peace of mind would Australian
regulators have in the event of a foreign operated central counterparty
managing exposures in the event of a default? Which sovereign state would take
priority?
Incumbent position
ASX is certainly not resting on their
laurels. Just as they positioned themselves for the advent of trading
competition they are already doing so in the clearing space. The structure of
clearing fees has already been reviewed and new fees introduced (e.g. the Chess
156 message). Although this move may be “revenue neutral” today, it already
begins to raise a cautionary flag in terms of structural barriers to entry and
a level playing field.
So, does Australia need competition
in clearing? Quite simply, Yes, it does. However any competitive offering will
need to take into consideration the context of the various “drivers” that are
shaping the local market. These include:
· Wallet
Size: business model, scope of services (OTC derivatives, equities etc.) and
pricing
· Ownership
and Governance: Australian locals, International majors etc.
· Barriers
to entry: Government policy settings
· Incumbent
responses: Changes (not necessarily improvements) inspired by the
threat of competition.
The final irony, is that if the ASX
does want to take a more active role in regional and international
consolidation, evidence of a more robust domestic competitive framework could
be exactly the sort of catalyst required to provide regulators and policy
setters with the peace of mind to allow this to happen.
