News 101119: ASX SGX 850B, National Interest, TSE Remote, NYSE CCP, S&P, 'phone folly.

G’day All,

There has been a lot going on in Aust so I’ve put together some previous notes.

People have been asking me about ASX / SGX deal. Personally, I think there are huge political and then national interest barriers.

Still, whether a deal is done or not I don’t think changes much…it just reinforces the drivers that are in play for competition and fragmentation in Aust.

On ownership and the 15% restriction surfers might like (Corps Act Section 850B):

http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s850b.html

If a deal is done, I see it more as a combination of incumbents (think Euronext in 2000).

The driver for change was not combinations, rather competition (ECN’s, MTF’s etc.)

In terms of ‘national interest’ people seldom recall when Australia privatised Telstra we could have paid off the national debt. It was the ASX at that time that said keeping a debt issuance program was in the national interest (especially after they had just bought the SFE, think what would happen to their interest rate contract without a deliverable bond).

"Some market participants argue for maintaining the Commonwealth Government Securities (CGS) market. Given the fiscal strategy, this would require the Government to accumulate a substantial portfolio of financial assets. The Government therefore must assess whether it is necessary to maintain the CGS market and whether doing so will give benefits that are likely to outweigh the risks associated with accumulating substantial assets.
This discussion paper first outlines the arguments that are advanced to support maintaining the CGS market and attempts to specify the key assumptions underlying the arguments to allow them to be tested. Second, the paper considers the options available to the Government."

http://debtreview.treasury.gov.au/content/discussion.asp

Australia “Debt Free Day” 20^th Apr 2006.

http://www.theage.com.au/news/Business/Government-to-pay-off-national-debt/2006/04/20/1145344197792.html

Also some past thoughts on the importance of Aust as a regional financial services hub.

In an ASG / SGX play, both users of the Nasdaq platform I wonder if Tom Kloet, now at TMX is watching (TMX is now on Sola).

Other news:

TSE getting to grips with remote access. Something we now take for granted in Europe.

NYSE adds clarity to their clearing plans. I just don’t see how this is in the best interests of the users.

Eurex clearing fees just a shuffling of the deck.

S&P should be attacked over Cusip fees.

…and please, how silly is taping mobile ‘phones? Sure, you’ll catch the dumbest of the breed…but how cheap and easy is it to have a work around. This is regulation without thought for implementation. Disappointing.

Have a great w/end all…mine starts with a cocktail party!

S

http://clearingandsettlement.blogspot.com/

Platforms

Monthly MiFID Monitor

http://thefinanser.co.uk/fsclub/2010/11/monthly-mifid-monitor.html

IRESS Launches Low-Latency Trading Eco-system in Australia

Australian financial market participants will have an ultra fast, low maintenance, highly connected trading ecosystem to connect them with execution venues in Australia, thanks to the following...(more)

http://www.asiaetrading.com/iress-launches-low-latency-trading-eco-system-in-australia/

ASX / SGX – Merger Implementation Agreement.

The full 92 pages….

http://www.asx.com.au/about/pdf/20101025_asx_sgx_mia.pdf

The key issues of interest to the ACCC are:

1.

The potential competitive impact of the proposed merger on the development of competition between exchanges and associated products or services; and

2.

Whether the proposed merger is likely to impact on the proposed entry of Chi-X Australia, Chi-East or other potential suppliers of listing, trading, clearing and settlement, data services or any other associated services for trading Australian equities or related products.

http://www.accc.gov.au/content/index.phtml/itemId/955801/fromItemId/750991

ITG Launches POSIT Marketplace for Australia

Investment Technology Group (ITG), a leading agency broker and financial technology firm, launched POSIT Marketplace for Australian equity trading October 27. The first of its kind in Australia...(more)

http://www.asiaetrading.com/itg-launches-posit-marketplace-for-australia/

Chi-East launches pan-Asian trading - without Australia

Chi-East, the sell-side dark pool jointly operated by trading venue provider Chi-X Global and the Singapore Exchange (SGX), started trading today, but without Australian stocks after the Australian Securities Exchange (ASX) – SGX’s putative merger partner – pulled its market data feed.

http://www.thetradenews.com/trading-venues/exchanges/5359

NASDAQ OMX LAUNCHES NORDIC DARK POOL

Nasdaq OMX Nordic is launching a dark pool for regulated cash equity markets in Stockholm, Copenhagen, Helsinki and Iceland.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22001

MTS to Launch E-Trading in Euro Corporate Bonds

MTS, the electronic fixed-income trading platform, says it plans to launch a pan-European corporate bond platform for the wholesale broker-dealer market.

http://www.securitiestechnologymonitor.com/news/mts-european-corporate-bonds-trading-26400-1.html?ET=securitiesindustry:e2164:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=SIN_DailyClose__111510

MTS PLANS PAN-EUROPEAN CORPORATE BOND PLATFORM MTS, the electronic fixed income trading market majority owned by London Stock Exchange, says it plans to launch a pan-European corporate bond platform for the wholesale market.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22002

Brazilian Exchange Cuts Fees to Attract High-Frequency Traders

Brazilian exchange BM&F Bovespa is hoping to attract high-frequency traders through hefty price breaks.

The fees will range from 0.019 percent for firms trading R20 million ($11.6 million) in average daily trading volume up to 0.01 percent for firms trading over R500million ($291 million) daily.

http://www.securitiestechnologymonitor.com/news/brazil-cuts-fees-hf-traders-hft-26392-1.html?ET=securitiesindustry:e2164:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=SIN_DailyClose__111510

Pan-Asian Dark Pool Launched

Chi-East opens unlit trading of Asian securities, with full post-trade reporting of price and volume information.

"We believe it will stimulate liquidity in the region and provide additional execution opportunities for participants,'' said Zach Tuckwell, head of Electronic Execution and Program Distribution in Asia at Morgan Stanley,

http://www.securitiestechnologymonitor.com/news/-26381-1.html?ET=securitiesindustry:e2164:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=SIN_DailyClose__111510

DEUTSCHE BÖRSE LAUNCHES ALGO NEWS FEED IN AUSTRALIA

http://www.finextra.com/news/announcement.aspx?pressreleaseid=36733

Tokyo Stock Exchange welcomes Hong Kong broker-dealers

Fri, 2010-11-12 11:42

The Tokyo Stock Exchange (TSE) has introduced a new remote membership scheme designed to allow Hong Kong-based broker-dealers to trade directly into Japan for the first time.

http://www.thetradenews.com/trading-venues/exchanges/5370

LSE POSTS H1 PROFIT RISE

http://www.finextra.com/news/announcement.aspx?pressreleaseid=36797

Clearing

NYSE Euronext’s clearing plans take a step forward

Wed, 2010-11-17 12:19

Exchange group NYSE Euronext’s plans to overhaul its clearing services have moved ahead with the appointment of a new team to lead the implementation of its new strategy and consult with market participants.

http://www.thetradenews.com/trading-venues/exchanges/5390

MONTE TITOLI CEO ANDREA GIOCHETTA QUITS

http://www.finextra.com/news/announcement.aspx?pressreleaseid=36772

TSE and JSCC Select Calypso for CDS Clearing Service

Calypso Technology Inc., a global application software provider of an integrated trading, risk and processing platform to financial institutions and corporate treasuries, announced October...(more)

http://www.asiaetrading.com/tokyo-stock-exchange-and-japan-securities-clearing-corporation-select-calypso-for-cds-clearing-service/

SINGAPORE EXCHANGE INTRODUCES OTC CLEARING FOR FINANCIAL DERIVATIVES

http://www.finextra.com/news/announcement.aspx?pressreleaseid=36724

At launch, nine banks were admitted as SGX Bank Clearing Members for the clearing of OTC traded financial derivatives products. The nine banks are: Barclays Bank PLC, Citibank N.A., DBS Bank Limited, Deutsche Bank AG, The Hongkong and Shanghai Banking Corporation Limited (HSBC), Oversea Chinese Banking Corporation Limited, The Royal Bank of Scotland plc (RBS), Standard Chartered Bank and United Overseas Bank Limited.

Singapore Exchange is first in Asia to clear interest-rate swaps
The Singapore Exchange has started clearing Singapore and US dollar interest-rate swaps, expanding the bourse's reach into the over-the-counter derivatives market. SGX President Muthukrishan Ramaswani called the development a "significant milestone" for Singapore's financial-services industry. Securities Technology Monitor (15 Nov.)

Chris Lee ABN Amro: An iPhone, a Global Clearer and a Data Centre

Rather than renting trading permits to traders on the floor of the exchange...... today we rent rack space in data centres. Firms no longer pay premiums to position their trading booths as close to the...(more)

http://www.asiaetrading.com/chris-lee-abn-amro-an-iphone-a-global-clearer-and-a-data-centre/

Eurex Clearing slashes clearing costs of cash equities

Eurex Clearing, the clearing operation of the Deutsche Börse Group, is to introduce a 50% reduction in its fixed clearing fee and expand the discount models for Xetra cash market transactions from 1 December 2010.

http://www.thetradenews.com/asset-classes/equities/5385

Policy

Recent changes to Australia’s supervisory powers

A speech by Belinda Gibson, Deputy Chairman Australian Securities and Investment Commission http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/Recent-changes-to-Australias-supervisory-powers.pdf/$file/Recent-changes-to-Australias-supervisory-powers.pdf

Market structure developments in the clearing industry: implications for financial stability

http://www.bis.org/publ/cpss92.pdf

Issues Raised by Dark Liquidity

IOSCO Consultation Report

http://www.iosco.org/library/pubdocs/pdf/IOSCOPD336.pdf

The European Commission has confirmed that new legislation to update MiFID, initially promised by Q1 2011, will now not be issued until Q2.

http://www.thetradenews.com/asset-classes/equities/5386

FPL CALLS FOR INDUSTRY-LED EUROPEAN CONSOLIDATED TAPE

FIX Protocol Limited (FPL) has submitted a proposal to securities regulators urging an "industry led solution" for the establishment of an authority overseeing the delivery and governance of a European consolidated tape.

More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22020

S&P ATTACKED OVER CUSIP FEES

Three influential US trade bodies have called on the Securities and Exchange Commission to crack down on the fees charged for securities identifiers by Standard & Poor's.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21998

FSA TO TAP TRADER MOBILE CALLS DESPITE BANK PROTESTS OVER COSTS The UK's Financial Services Authority is set to make investment banks record and store traders' mobile phone calls despite industry opposition to the move which could cost more than £10,000 a handset a year.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21999

Australia as a Financial Services Hub

The Government welcomes the Australian Financial Centre Forum's report on Australia as a Financial Centre (the Johnson Report)

http://ministers.treasury.gov.au/DisplayDocs.aspx?doc=pressreleases/2010/003.htm&pageID=003&min=ceba&Year=&DocType=0

Australia as a Financial Centre: Building on our Strengths

Report by the Australian Financial Centre Forum, November 2009

See page 121, recommendation 4.5

http://www.treasury.gov.au/afcf/content/final_report/downloads/AFCF_Building_on_Our_Strengths_Report.pdf

An older paper on the theme of Australia as a financial services hub

http://www.treasury.gov.au/afcf/content/reference_papers/downloads/Reference_Paper_Australia_as_a_Financial_Services_Hub.pdf

On 25 October, 2010 the ASX announced that the ASX Limited and Singapore Exchange had entered into a merger implementation agreement to “combine to enable customers globally to capitalise on listing, trading, clearing and settlement opportunities created through the expanded platforms, leveraging on the importance of Asia Pacific as the driver of global growth”.

The Stockbrokers Association has adopted a cautious approach to the proposal. The Association is open minded about the prospect of regional consolidation of exchanges in Asia Pacific and the inclusion of ASX in that process.

The Association concedes it is important for Australia to be part of Asia. Much work has been done by the Australian Financial Centre Forum (AFCF) to identify strategies to foster Australia as a regional financial centre.

http://www.stockbrokers.org.au/MediaCentre/MonthlyNewsletter/tabid/245/Default.aspx

Stuff

GETCO becomes Trading Member of Singapore Exchange

Singapore Exchange (SGX) announced today that GETCO Asia has become a Trading Member of its securities market. "We are pleased that GETCO has joined our securities market. GETCO's...(more)

The US mortgage crisis infographic

from Chris Skinners blog: http://thefinanser.co.uk/fsclub/2010/11/the-us-mortgage-crisis-infographic.html

Original content:

http://www.mortgagerates.info/dyk/cdos/

Open mindedness is often confused with weakness of character.

PK Shaw

employees join companies and leave managers."

--Leila Bulling-Towne, executive coach

Scott Riley

Business Development

8th Floor | 50 Bridge Street | Sydney | Australia | 2000

((Off)+61 (0)2 8916 9634 È(Mob): +61 (0)418 117 627

* scott.riley@au.abnamroclearing.com

News: Chi-X, SIX, ASIC, FIX, Jan B, Nordic data...miners and an insolvency rant.

Impossible is a word only to be found in the dictionary of fools."

--Napoleon Bonaparte, French military and political leader

Chi-X Europe opens its kimono (to select parties).

Glad SIX has considered wider consultation.

Locally ASIC has said it wants to be uniform after the flash crash. One interesting analogy I heard this week: The flash crash took 3 minutes…and the SEC had to analyse over 54 million data events. In the 5 months since the flash crash there have been another 900 billion data events. If post trade investment lags trading investment….what does this say about regulatory lag?

Hats off to those Nordic boys, who I assume are now being demonised. Give ‘em a job at the regulator I say. They obviously know how to process data…and how to filter data.

I think regulators asking for more and more data is maybe not always the best way to go. They want meaningful data they can use and analyse. I am not a fan of data provision for the sake of it. Use it…or lose it.

It just feels like an endless push to get OTC ‘stuff’ onto some form of regulated market.

I’ve not seen the Jan Booij FT clip yet (inhouse firewall) but great to see Jan in the spotlight. EMCF, with Chi-X Europe (how else could you have an anonymous CLOB) was the first to market and lead the step change in European clearing fees.

Some interesting stuff on T2S.

I also dislike insolvency practitioners. Once they get a ‘case’ they like to charge endlessly for their services….before other creditors of course. I do like the idea of auctioning insolvencies. Ha, make the insolvency practitioners commercial…and force them to put a value on what they are robbing from creditors.

…ahhh, and Aussie. We’ve lost 3 test matches in a row hardly that bad I would have thought but apparently this is our worst performance in 22 years! Dreadful stuff. I guess it’s all over for the Ashes them….then again, maybe not.

http://www.theroar.com.au/2010/10/14/australias-worst-test-losing-streak-in-22-years/

…what else are we Aussies world leaders at? Digging holes in the ground (inevitably with some sort of pot of gold at the bottom). So who did they send to Chile? Yeah, of course it was Aussie drillers…

Have a great w/end all.

Pretty dreadful weather here.

S

http://clearingandsettlement.blogspot.com/

PLATFORMS

TOM MTF STARTS TRADING DUTCH EQUITIES

http://www.finextra.com/news/announcement.aspx?pressreleaseid=35999

REUTERS: Trading Platform Chi-X to Open Books to Suitors
By Luke Jeffs
10/12/10
Chi-X Europe plans to open its books to rivals wanting to bid for its business, a source close to the group said, as consolidation of alternative share trading platforms heats up.

http://www.reuters.com/article/idUSLDE6810HR20101012

REUTERS: Swiss Exchange Delays New Data Fee
By Luke Jeffs
10/13/10
Swiss Exchange has delayed a controversial plan to impose a fee on rival trading platforms for use of its data under pressure from its largest clients and the Financial Services Authority.
The Zurich-based exchange group planned to introduce a 100,000 swiss franc ($103,700) annual fee on Nov. 1, but it said this week it has "deferred" the new tariff pending "a wider consultation with market participants and regulators".

THE TRADE NEWS: Algo Technologies Goes Live with Low-Latency Swiss Trading Link
By Staff
10/13/10
Algo Technologies, the trading technology supplier set up by former Chi-X Europe COO Hirander Misra, has launched high-speed connectivity for trading on SIX Swiss Exchange.
http://www.thetradenews.com/trading-venues/exchanges/5209

ASIC has insisted that any trading curbs introduced will be uniformly implemented across all new stock exchanges in Australia.

http://www.theaustralian.com.au/business/asic-says-any-changes-wil-be-uniformly-implemented-across-all-new-exchanges/story-e6frg8zx-1225937850785

HUMAN ERROR BLAMED FOR EURONEXT OUTAGE

Nyse Euronext has blamed human error for a 40 minute outage in its European cash markets yesterday, which appears to be "unrelated to any system of software components".

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21901

MTS INTRODUCES SINGLE DEALER PAGES FUNCTIONALITY FOR BONDVISION MTS, the electronic fixed income trading market majority owned by the LSE, has signed up six major banks to support its new Single Dealer Pages functionality for the BondVision platform, designed to enhance liquidity and best execution.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21885

13/10/2010 14:27:00

LSE EXTENDS UNAVISTA TO SWAPS MARKET

The London Stock Exchange has extended its UnaVista service to the swaps market, automating the trading of CFDs and other equity derivatives and enabling users to communicate and match data through the platform.

More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21895

HKEx releases detail on new trading platform

The upgrades to AMS/3.8, the exchange’s matching engine, and MDS/3.8, its market data platform, are scheduled for completion by the end of 2011

http://www.thetradenews.com/trading-venues/exchanges/5196

The Calling: International Securities Exchange CIO Danny Friel

The ISE declines to release specifics, but expects to see a latency reduction of more than 75 percent with additional plans for latency improvements in mid-2011 of perhaps another 50 percent. “I’m happy to say the system is meeting and exceeding the original performance goals,” Friel says.

The platform is a joint development project with Deutsche Börse Systems (DBS), the technology subdivision of parent exchange Deutsche Börse AG. DBS will deliver the base architecture but the ISE’s technology team will be responsible for US-specific components such as the matching engine and the interfaces. While the platform will eventually be rolled out in Europe, Deutsche Börse is not yet talking about its target date for launch.

The platform being replaced was developed specifically for the ISE by Nordic exchange operator OMX—now part of Nasdaq OMX. Plans to build a new platform changed when the ISE was acquired in December 2007 by Eurex, which is co-owned by Deutsche Börse and SIX Swiss Exchange. Eventually, the ISE teamed with DBS to create the new platform about to go live.

http://www.waterstechnology.com/waters/feature/1741742/calling-international-securities-exchange-cio-danny-friel

WARSAW STOCK EXCHANGE PUBLISHES PROSPECTUS

http://www.finextra.com/news/announcement.aspx?pressreleaseid=36108

Electronic Trading Industry in Asia Q3 Highlights

http://www.asiaetrading.com/electronic-trading-industry-in-asia-q3-highlights/

QUOTE MTF TRUMPETS MATCHING ENGINE LATENCY TEST RESULTS

http://www.finextra.com/news/announcement.aspx?pressreleaseid=36034

STOCK EXCHANGE OF THAILAND EXTENDS NASDAQ OMX AGREEMENT

http://www.finextra.com/news/announcement.aspx?pressreleaseid=36031

Nasdaq OMX's Third Exchange: Are There Too Many?
Nasdaq OMX's EVP Transaction Services Eric Noll told CNBC that the innovation it brings is worth the ...

http://wallstreetandtech.com/articles/227701163?cid=nl_wallstreettech_daily

CLEARING

Price war in clearing cash equities

Oct 11 2010 A price war is raging between the incumbents in the clearing of cash equities. Jan Booij, chief executive of EMCF, one of the clearers involved, explains why fees are coming down. He also predicts interoperability, a process which allows traders a choice over where their trades are cleared, will begin in the first quarter of 2011, despite a seeming lack of progress. (3m 54sec)

http://video.ft.com/v/627322219001/Price-war-in-clearing-cash-equities

CESR SAYS MIFID REVIEW SHOULD MOVE MORE OTC TRADING TO REGULATED EXCHANGES

http://www.finextra.com/news/announcement.aspx?pressreleaseid=36098

DTCC NAMES BODSON CHIEF OPERATING OFFICER

http://www.finextra.com/news/announcement.aspx?pressreleaseid=35998

T2S pricing taking shape

http://www.ecb.europa.eu/paym/t2s/html/pricing.en.html

The most recent issue of T2S OnLine:

http://www.ecb.europa.eu/paym/t2s/html/pricing.en.html

POLICY

Exchange execs advocate price limits to avoid a crash repeat
A panel of exchange-operator executives agreed that limiting moves of individual stocks within a given time frame could be a better way to avoid a repeat of the May 6 "flash crash" than circuit breakers implemented after the market plunge. "While I think the circuit breakers are doing a good job, they were implemented pretty quickly and they are working as intended, I think limit-up limit-down would work more effectively," said Brian Hyndman, senior vice president of transaction services for Nasdaq OMX Group. Eric Noll, executive vice president of transaction services at Nasdaq, will be a featured speaker at the SIFMA 2010 Annual Meeting. Securities Technology Monitor (10/12)

ICMA Regulatory Policy Newsletter Fourth Quarter 2010

http://www.icmagroup.org/Emails/icma-regulatory/ICMA-Policy-Newsletter-101013.html

Expert Group on Market Infrastructures (EGMI)

http://ec.europa.eu/internal_market/financial-markets/clearing/egmi_en.htm

UBS expects a wave of hedge fund startups
Stuart Hendel, global head of prime brokerage at UBS, said the Swiss bank has been speaking with proprietary traders worldwide who are considering hedge fund startups, as banks make changes to comply with the US Dodd-Frank Act. "A lot of it is just talk and chatter, but there are very advanced discussions as well," Hendel said. "In the next 12 months, there is going to be much more of a startup phase than there has been in the last couple of years." Bloomberg (14 Oct.)

FIA TO PRESENT ALTERNATIVE TRADE REPORTING SYSTEM TO CFTC The Futures Industry Association has fired the latest salvo in its campaign to head off onerous new record-keeping rules by pressing ahead with plans for an alternative ownership and control reporting system that it claims will form a 'practical and cost-effective' alternative to that proposed by industry watchdogs.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21887

NORWEGIAN DAY TRADERS CONVICTED OF BREAKING ALGO AND MANIPULATING PRICES A pair of Norwegian day traders have been convicted of cracking the algorithms of US broker Timber Hill and manipulating share prices, according to the Financial Times.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21898

Rethinking Our Markets

By Larry Tabb

Sen. Ted Kaufman (D.-Del.) has come out with a very thoughtful response to the May 6 crash, proposing a nine-point plan that includes

1. accelerating the SEC's market structure analysis and rule making,

2. strengthening regulation of high-frequency firms,

3. re-allocating market infrastructure cost based on message traffic,

4. streamlining market data,

5. centralizing and harmonizing market center rules,

6. incentivizing deep markets over speed and tight spreads,

7. eliminating payment for order flow and market center rebates,

8. draining dark pools, and

9. eliminating the ban on locked markets.

http://advancedtrading.com/articles/227500287?cid=nl_at_daily

ABN AMRO EXTENDS IBM SERVICES CONTRACT

ABN Amro has extended its infrastructure services agreement with IBM, tapping Big Blue's technology to integrate recently merged Fortis Bank.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21886

'One-man show' insolvency will not do, says judge

Justice Finkelstein has proposed ''auctioning'' the administrators' role.

http://www.smh.com.au/business/oneman-show-insolvency-will-not-do-says-judge-20101013-16k4p.html

''The miners were found 17 days after the disaster in Chile and the drill that found them was led by an Australian,'' he said. ''Since then we have been hand-in-hand with Australia and other countries and mining communities.''

Scott Riley

Business Development

8th Floor | 50 Bridge Street | Sydney | Australia | 2000

((Off)+61 (0)2 8916 9634 È(Mob): +61 (0)418 117 627

* scott.riley@au.abnamroclearing.com