Clearing and Settlement News: Chi-X

Showing posts with label Chi-X. Show all posts

Monday, January 17, 2011

News 110114: Qld soaks it up, Europe worries about liquidity leakage, the ashes are sunk, ownership and goverance keeps coming up, dutch and Ava'lon.

G’day All from the land down under and welcome to 2011.

During the ‘break’ I had a quick look at my distribution list (and sorting of contacts / groups) and noticed some omissions. FYI I just post my emails at http://clearingandsettlement.blogspot.com/ . So for those that are interested, it’s all there.

This week-end I’ll be going on a ‘Dreamy sojourn on the Pittwater peninsula’, otherwise know as the Avalon Beach Surf Swim.

http://www.oceanswims.com/Events.asp?EventID=99

As it happens, Ocean Swimming is a booming sport in Aust. The lure of the ocean swim :

http://www.smh.com.au/executive-style/fitness/monster-wave-of-support-for-a-sport-with-deep-satisfaction-20110106-19hmy.html

As a Queenslander, I have more than a passing interest in the flood developments. I’m pleased to report none of my Brisbane family and friends have been harmed. As for material losses….that will become clearer over time as communications resume and the flood waters recede. I must that those of you who asked. It is hard to know how to communicate an event of biblical proportions.

An area bigger than Texas and California making up more than 75 percent of Queensland has been declared a disaster zone.

http://www.businessweek.com/news/2011-01-11/brisbane-floods-worsen-as-queensland-death-toll-climbs-to-21.html

To put European countries in perspective with US states try this site.

http://goeurope.about.com/od/europeanmaps/l/bl-country-size-comparison-map.htm

Queensland is Australia's second largest state measuring more than 1.72 million square kilometers, 25% of Australia's land mass, which is four times the size of Japan, nearly six times the size of the UK and more than twice the size of Texas in the US.

http://www.australearn.org/destinations/australia/regions/queensland/

FYI, the Netherlands is 37.3K sq KMs, so about 46 Hollands in Queensland alone. Or think of 4 UK’s being declared a disaster ‘zone’…with probably the area of one of them still immersed. (Let’s not get into if that is a good thing or a bad thing).

There is some remarkable footage at:

http://www.abc.net.au/news/video/

News Video | Tue, 11 Jan 2011 14:19:00 +1100

Toowoomba resident captures the extraordinary moment when the Chalk Lane Creek overflowed, carrying away cars.

*** Can’t see a direct link for this one, but it gives a real flavour.

And who would have thought…all this rain and it still didn’t help us in the cricket.

….shame on me. I forecast 3:1, just got the teams the wrong way round. Before the floods started the local press was giving Ponting and the boys a real serve. Excellent, they deserved to be lambasted. Now their just forgotten. I was lucky enough to hit the beaches just after New Year but unfortunately this meant I missed the Barmy Army in full flight at the Sydney test. I would have enjoyed seeing that. Good on ‘em I say. Great to see them genuinely delighted to win so convincingly against an opposition that in hindsight they overrated. We’ve managed to clear the prima donnas out of our Rugby team…just in time to start on our cricketers.

Now, the real news:

More snippets on the CXE (Chi-X Europe) / BATs combination. I do believe this is the best combination.

I do sincerely believe ASX and SGX will give the combination a sincere and good try…I just personally can’t see the deal happening in the current Aussie political environment. How does the deal need to change in order for it to happen? I dunno. But ownership thresholds and governance will have a role to play.

NXZ takes an axe to AXE. I guess the syndicate participants had their axe to grind and now they have their desired result: the threat of competition has reduced fees. Personally I would of held onto the shell company…just in case.

I don’t expect HKEx to fall into the net of the new competition rules….although the law makers remarks are encouraging.

I found the piece on India exchanges interesting. Yet again it comes back to ownership and governance models.

ICE withdrawing its clearing application took me by surprise. Still, a nice piece in the WSJ. And what crops up?....the theme of ownership and governance.

I’m glad CFTC continues to consider the ownership and governance model in light of Dodd Frank.

Why is the right ownership and governance model? Well that is another rant and needs to be taken in context. Competition and commoditisation have a role to play, as does user owned and user governed for utility services and of course to cap it all we need independence etc. It’s a fine balance but it certainly is not a ‘one size fits all’ model.

On the Eurozone…I don’t think it is wrong to charge rescued nations a debt premium….I do think it is wrong to charge them at penalty rates.

The AFM position paper of HFT is out. I have a lot of respect for the Dutch regulators who I think punch to or above their weight in Europe.

I must stress, all these opinions are entirely my own and not those of anyone else in my distributed professional and social network blah blah.

Have a great week-end all.

http://clearingandsettlement.blogspot.com/

Trading

FINANCIAL NEWS: Bats Closes in on Chi-X Tie-Up
By Tim Cave
01/10/11
The two companies revealed last month they had entered into exclusive talks lasting until February 11, and such a tie-up does not come as a great surprise given the more-than-50% crossover in shareholders between the groups.

According to sources, an agreement is likely to take the form of a share swap, with investors in Chi-X Europe in line to exchange five of their shares for one share in the merged business.
Once this has been secured, Bats will then have to negotiate a successful integration with Chi-X Europe, a takeover process that, according to sources, can take up to nine months.

Liquidity spillage is key post-merger challenge for BATS, Chi-X

The talks are expected to result in an all-share deal valued at around US$300 million.

By its own admission, BATS Europe has a breakeven mark of around €88 billion in monthly turnover, but its 6.2% share of pan-European trading during 2010 left the firm with an average monthly turnover of just €41 billion, according to data provider Thomson Reuters. Last August, BATS Global Market’s vice president of global communications, Randy Williams, confirmed that BATS Europe needed “around €4 billion worth of turnover in Europe per day to be consistently profitable” and predicted a €3.8 million 2010 loss for the MTF based on prevailing volumes.

Chi-X Europe’s breakeven is estimated at around €100 billion in monthly turnover, but the MTF averaged €130 billion per month last year and achieved a 2010 pan-European market share of 16.6%. As such, Chi-Europe reported a profit every month last year.

Broadly speaking, there are three sources of liquidity leakage during a merger of trading venues:

First, the volume of trading by the two merging venues will suffer some net reduction as arbitrage business conducted between the markets vanishes.

Second, liquidity may also dissipate as trading systems are recalibrated to take account of the change in number of available destinations.

Third, rival trading venues are likely to try to take advantage of any disruption to attract liquidity through price promotions.

http://www.thetradenews.com/trading-venues/mtfs-ecns/5596

BATS HIRES UNDERWRITERS AHEAD OF POSSIBLE IPO - WSJ Exchange operator Bats Global Markets could be set to embark on an initial public offering after hiring underwriters, according to the Wall Street Journal.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22140

LCH.CLEARNET AND CHI-X EUROPE LAUNCHES CFD CLEARING

http://www.finextra.com/news/announcement.aspx?pressreleaseid=37335

SGX chief says ASX bid will go ahead: report

(FINANCIAL SERVICES) Bocker pledges to give merger 'a sincere and good try'. 28 Dec 2010 11:18 AM read more

http://www.businessspectator.com.au/bs.nsf/Article/SGX-CEO-says-will-press-ahead-with-bid-to-buy-ASX--CK275?OpenDocument&src=eiw&ir=4

A 2011 wishlist for the Singapore stock market
AsiaOne
IT'S customary at this time of the year for observers and commentators to draw up a wishlist of changes and improvements they would like to see in the new year. So without further ado, here is some food for thought on how to take the Singapore market to its next level of development.

First, the launch and flourishing of a proper domestic derivatives market that includes structured warrants, options and possibly futures on the major indices and single stocks.

Second, we'd like to see regulators go after all manipulators, including the large and not just the small. One of the biggest complaints from brokers is that SGX disciplinary action is almost exclusively directed at small retail brokers and almost hardly ever at the big institutions.

Third, details of all investigations and actions should be made transparent and publicised. Stated differently, the exchange should do away with the private censure that it sometimes employs when disciplining listed companies and instead make all such action public.

http://business.asiaone.com/Business/News/My%2BMoney/Story/A1Story20110106-256784.html

NZX winds up JV market on Aust securities

January 14, 2011 - 7:54AM

NZPA

New Zealand sharemarket operator NZX is winding up its joint venture effort to offer a high-speed, low-cost market for trading securities listed on the ASX.

NZX said on Friday that it, along with the other shareholders of electronic communications network company AXE ECN -- Citigroup, Macquarie, Merrill Lynch, Goldman Sachs and Commonwealth Bank -- had decided to stop operations of AXE ECN as a trading entity and wind up the company.

"After a review and careful assessment of the market today, AXE does not see opportunities for its business model to generate sustainable economic returns."

AXE was established in 2006, and made its original application for an Australian Markets Licence in early 2007.

NZX wrote down the entire value of the investment in AXE ECN to zero in June 2009, saying it made the move given the ongoing reluctance of the Australian government to address the granting of a licence.

http://news.smh.com.au/breaking-news-business/nzx-winds-up-jv-market-on-aust-securities-20110114-19q5v.html

South China Morning Post: HKEx tops world for trading costs
10 January 2011
By Amanda Lee

…

Lawmakers are debating a bill that would inject more competition into the economy by reining in business practices such as price-fixing and abuse of market power.
But the stock exchange, nearly 6 per cent owned by the Hong Kong government, which controls about half the board seats, looks likely to be exempt from the new law.

….

Hong Kong's chief executive will have the final say, but in the meantime, the government is likely to face tough questions from legislators. Lawmaker Regina Ip Lau Suk-yee said the government should not exempt the exchange from the competition law without a thorough study of the consequences.
"In sum, I object to its automatic exclusion," Ip said in an e-mailed response to questions. "The Hong Kong stock exchange is no doubt a monopoly, and it is worth investigating whether Hong Kong's economy would benefit if there is more competition to HKEx."

http://topics.scmp.com/news/hk-news-watch/article/HKEx-tops-world-for-trading-costs

NYSE Euronext Begins Doubling Capcity of Options Exchanges

By Tom Steinert-Threlkeld

NYSE Euronext said it completed the first phase of an upgrade of the technology underyling its two U.S. options exchanges, which it expects will double their capacity.

Upon completion of the capacity upgrade, NYSE Arca and NYSE Amex each will be capable of processing 1 million orders and 8.4 million quotes a second with sub-millisecond average acknowledgment (ACK) times, NYSE Euronext said. That is up from the 500,000 orders and 4.2 million quotes before the upgrade began.

Currently, NYSE Arca and NYSE Amex options combine “open-outcry” trading facilities with advanced electronic trading platforms. The upgrade will improve each exchange’s core matching engines and add a variety of functionality. The foundation will be NYSE Technologies’ Universal Trading Platform.

http://www.securitiestechnologymonitor.com/news/nyse-euronext-doubling-capacity-options-exchanges-26762-1.html?ET=securitiesindustry:e2233:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=STM_BNA_08302010_011111

80,000 Mutual Funds Set to Begin Trading on German Exchange

By Tom Steinert-Threlkeld

Deutsche Börse and Clearstream said they began their joint effort at introducing exchange trading in mutual funds.

As of Thursday, Jan. 13, more than 80,000 investment funds that are currently on Clearstream's order routing platform, Vestima+, can be introduced for trading on Deutsche Bank’s cash market, Xetra, by funds specialists.

After execution, the funds will be settled through Clearstream's post-trade facility for mutual funds, the Central Facility for Funds (CFF).

ELX Sets New End-Of-Day Total Market Share Record In U.S. Treasury Futures
New York, Jan 10, 2011 – ELX Futures, L.P. (ELX), a leading electronic futures exchange, announced today that it has established a new end-of-day (3 p.m. EST) trading record for total market share in its U.S. Treasury futures contracts, with an electronic share at 5% on January 10, 2011.

http://www.elxfutures.com/News-Events/ELX-Sets-New-End-of-Day-Total-Market-Share-Rec-%281%29.aspx

Five Minutes with Neal Brady
Neal Brady has spent the last five months or so working to get the Eris Exchange up and running as the first swaps futures exchange created after Congress passed the Dodd-Frank financial reform bill ordering swap trades onto public exchanges. As the deadline looms on finalizing Dodd-Frank, Eris aims to be the venue of choice for clearing services to reduce systemic risk in the over-the-counter market. Thus far, the new exchange for interest rate swap futures has handled over $19 billion in notional value since trading started in August.
Q: How did you get involved with the Eris Exchange?
Brady: I was previously managing director and head of business development globally for the CME. While I was at CME I was very involved in a variety of initiatives related to OTC clearing and trading. After leaving CME to run a venture fund where I was involved with many of the Eris founding partner firms, we began discussing with CME the possibility of clearing an interest rate swap futures product as a way to broaden access to the OTC interest rate swap market and respond to the new regulatory environment. I've been in the exchange and derivatives business for a long time and founded a venture several years back called Liquidity Direct which was eventually acquired by the CME. A number of proprietary trading firms were involved in that earlier venture as well as founders and partners, and that's how I ended up being involved with Eris.
Read the entire interview on MarketsWiki at http://www.marketswiki.com/mwiki/Five_Minutes_With_Neal_Brady

Clearing

SECURITIES TECHNOLOGY MONITOR: ICE Trust Withdraws Application to be Named Swaps Clearer
By Tom Steinert-Threlkheld
InterContinental Exchange has withdrawn the application of its ICE Trust U.S. subsidiary to be declared a derivatives clearing organization, on an expedited basis.
“Upon review of the ICE application, the (Swaps & Derivatives Market Association) finds several areas of concern where ICE is not incompliance with the express provisions of the Dodd Frank Act,’’ that calls for the creation of derivatives clearing organization, the association said, in its comment.
“Specifically, ICE’s membership artificially links execution to clearing which results in limited clearing broker participation. In addition, ICE goes beyond its clearing mandate by restricting the methods of swap execution, and the free trading of swaps, by requiring that all trades be executed through a dealer member,’’ said James Cawley, co-founder of the association.

http://www.securitiestechnologymonitor.com/news/ice-trust-withdraws-application-swaps-clearing-26671-1.html

Derivatives Rules on ICE
Wasn't Dodd-Frank supposed to reduce systemic risk?
WSJ Opinion Journal
Two years ago we warned against concentrating all of the risks in the credit-default swap (CDS) market inside a clearinghouse called ICE Trust. Now it appears that even the managers of ICE Trust are coming around to our point of view. A few days before Christmas, this largest of CDS clearinghouses quietly withdrew its federal application to be . . . a CDS clearinghouse.

In other words, clearing arrangements do not eliminate risks; they transfer them from the two trading parties to the clearinghouse. But the Obama Administration and the authors of Dodd-Frank claimed to believe two things that aren't true: that the structure of the derivatives market—as opposed to housing or monetary policies—was a root cause of the financial crisis, and that clearinghouses would eliminate risk from derivatives.

But two weeks ago, ICE rescinded its application to the CFTC. The company would only say that "given the significant changes proposed to the commission regulations" for derivatives-clearing organizations, it decided to wait until it is required to come under CFTC jurisdiction later this year.

An immediate seal of approval from the commission would have allowed ICE to seek many new customers, so why would this company want to leave money on the table?

Probably because ICE would have had to admit weaker members into its clearinghouse. CFTC's new rules allow clearing members to have less capital than they are required to hold under ICE's existing rules.

http://online.wsj.com/article/SB10001424052748704694004576019851275439150.html?mod=googlenews_wsj

Financial News: In praise of dark pools of liquidity

10 January 2011

By Xavier Rolet

….

Infrastructure is in fact different from other services: if a motorway operator charged excessive fees and failed to keep up with the maintenance, would you build five motorways on the same route to promote greater efficiency? Or would you seek another way to fix the under-performing operator?

Parties debate central bank liquidity for CCPs
The push to clear some over-the-counter derivatives trades through central counterparties has raised many questions and concerns. Some regulators are calling to give CCPs access to central bank liquidity. Major CCPs said the access is not needed. "Access to central bank liquidity is not necessary," said Roger Liddell, CEO of LCH.Clearnet. "We have a huge amount of liquidity, and we manage it very conservatively." Meanwhile, central banks are hesitant to provide such access. Risk.net/Risk magazine (10 Jan.)

14 Pacific Firms Adhere to Protocol on Derivatives Reconciliation

Fourteen of the largest financial firms in the Asia-Pacific region have agreed to follow a set of recommendations published by the International Swaps and Derivatives Association for how to reconcile portfolios in over-the-counter derivatives.

The fourteen firms are Bank of Tokyo-Mitsubishi; Deutsche Bank; Mizuho Corporate Bank; Morgan Stanley & Co; Morgan Stanley & Co International; Morgan Stanley Capital Group; Morgan Stanley Capital Services; Morgan Stanley MUFG Securities; National Australia Bank; Nomura Securities; Standard Chartered Bank; Sumitomo Trust and Banking Company; and UBS.

http://www.securitiestechnologymonitor.com/news/isda-asia-pacific-otc-derivatives-portfolio-reconciliation-26719-1.html?ET=securitiesindustry:e2235:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=SIN_DailyClose__011211

Policy

CFTC delays vote on clearing, trading governance
* Vote delayed on first of final Dodd-Frank rules
* Rule to be considered at another meeting-spokesman
* Had been expected to stand pat on bank voting limits
By Sarah N. Lynch and Roberta Rampton
WASHINGTON, Jan 12 (Reuters) - The U.S. futures regulator said on Wednesday it would delay plans for a vote to finalize regulations aimed at limiting the voting power of banks on clearing and trading venues, a key vote that had been slated for a Thursday hearing.
http://jlne.ws/hWJy1I

CFTC Delays Vote on Ownership, Governance Rules for Swaps Market
By Silla Brush
The U.S. Commodity Futures Trading Commission delayed a vote on rules that would limit bank ownership and control of clearinghouses and trading systems in the $583 trillion swaps market.
Bloomberg
http://jlne.ws/hyVUbW

Lehman case reveals a gap in swaps-deal interpretations
The International Swaps and Derivatives Association has a single master agreement used by parties involved in derivatives trades in London and New York, but how that agreement is interpreted can vary significantly between the two places, according to The New York Times. The bankruptcy case of Lehman Brothers Holdings demonstrates the wide range of interpretations. NYTimes.com/DealBook blog (1/7)

Euro zone's debt crisis is close to spiralling out of control
Yields on Portugal's debt jumped, and contagion is starting to hit Belgium as well as Spain -- indications that the debt crisis that has been plaguing the euro zone could be spreading. The European Central Bank aimed to push down yields by buying Portuguese, Irish and Greek bonds, but the ECB has not widened emergency purchases to other nations. The situation leaves Belgium on its own. Telegraph (London) (10 Jan.) , Reuters (10 Jan.) , The Wall Street Journal (11 Jan.)

The interest rate charged on rescue packages should be slashed to allow EMU debtors to claw their way out of their traps. The fund is currently charging Ireland 5.7pc for rescue loans – which were arguably forced upon it – even though the EU raised the money at an average 2.59pc. The punitive rate has caused bitterness in Ireland.

"We think the EFSF should charge its own average funding cost, or even below it, offering an interest rates subsidy," said Frank Engels, Barclays' Europe economist. "This should be done under IMF-style conditionality to prevent moral hazard."

Mr Engels said the European Investment Bank should buttress the policy with €30bn of spending on infrastructure projects to underpin growth in the debt-stricken states.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8251389/EMU-debt-crisis-edges-ever-closer-to-the-core.html

AFM evaluates use of high-frequency trading (HFT) in European financial markets

he Netherlands Authority for the Financial Markets [Autoriteit Financiële Markten, or “AFM”] sees no grounds for restricting the use of ”high-frequency trading” (HFT). The AFM sees HFT not as a separate strategy, but as a technique for applying short-term trading strategies that have been in use for years. This assessment changes if HFT were to be used to implement an illegal trading strategy, but in this respect as well HFT is no different from other trading strategies. The AFM reaches this conclusion in its study on the role of HFT in the European financial markets published today.

http://www.afm.nl/en/professionals/afm-actueel/rapporten/2010/hft-rapport.aspx

Full report available here:

http://www.afm.nl/layouts/afm/default.aspx~/media/files/rapport/2010/hft-report-engels.ashx

CESR MORPHS INTO ESMA; ELECTS MANAGEMENT BOARD

http://www.finextra.com/news/announcement.aspx?pressreleaseid=37379

FPL Releases Standardized Guidelines for Risk Management
http://www.fixprotocol.org/documents/5537/FPLEquityRiskControls_final.pdf

Dutch regulator for top finance watchdog job
By Nikki Tait in Brussels, James Wilson in Frankfurt and Brooke Masters in London - Financial Times
A Dutch regulator is set to become the first head of the new influential watchdog which will oversee securities markets in the European Union, while a Portugese official will take the top position at its counterpart overeeing the bloc's insurance and pension industry.
http://jlne.ws/epSpwf

ICMA Regulatory Policy Newsletter First Quarter 2011

http://www.icmagroup.org/Emails/icma-regulatory/ICMA-Policy-Newsletter-110112.html

Participants

FINANCIAL NEWS: Nomura Shelves Plans to Offload Instinet
By Michelle Price
1/10/11
Japanese bank Nomura has shelved plans to sell its global agency brokerage subsidiary Instinet and is considering rolling the company into its investment bank’s growing equities business, according to several sources.

Morgan Stanley to Spin Off Prop Trading Unit
Morgan Stanley will spin off its proprietary trading business into an independent firm in 2012, joining ...

http://www.wallstreetandtech.com/articles/229000478?cid=nl_wallstreettech_daily

Banks prepare for Volcker rule as SIFMA study raises concerns
The Financial Stability Oversight Council is preparing to issue proposed regulations related to the Volcker rule, which restricts proprietary trading by banks. Some industry observers say the Volcker rule has already been too watered down to do much good. However, a study commissioned by SIFMA shows that a restrictive approach to the rule could threaten some bank practices. The Politico (Washington) (1/12)

Credit Suisse plans to launch stock-trading venue Light Pool
Credit Suisse Securities runs the largest equity dark pool in the world and now plans a stock-trading venue called Light Pool. The U.S. network will start operating by the end of March, said Dan Mathisson, who leads the broker's electronic-trading division. "There's a real need for a new kind of displayed market where all the rules are set with long-term investors in mind," Mathisson said. Bloomberg (1/11)

ABN Amro Clearing Adds Access to Chi-X Europe

The access comes as ABN Amro expands the market coverage of its tick-TS TradeBase MX platform, it said.

http://www.securitiestechnologymonitor.com/news/abn-amro-clearing-chi-x-europe-26779-1.html

Responding to criticism last year that it had not acted in the best interests of its clients before the financial crisis, GOLDMAN SACHS produced a report into its business and the steps it would take to become more open. Among the changes, Goldman has split its trading business in two (so it now has four reporting divisions rather than three), which creates a new investment and lending group that will spell out the profits it has made with its own money. - See article http://news.economist.com/cgi-bin1/DM/t/eCU4z0dHglU0Mo0NvmO0EH

Stuff

Ken Griffin Writes Letter to Investors For 20th Anniversary of Citadel
GuruFocus.com
Similarly, almost a decade ago, when no one thought Citadel could be a meaningful player in theoptions space, we launched an electronic options market-making business. Back then, our competitors predicted that 'no one will want to trade with a hedge fund.' Today, we transact approximately 30 percent of the market volume and are the leading options market maker in the United States
http://jlne.ws/gaz4SB

I. Hire the Best People and Create a Culture of Opportunity

II. Take Calculated Risks

III. Embrace Opportunities

IV. Never Lose Sight of What is Important

10 Easy Ways to Improve Your Prospects in 2011:

1. Do less social networking and more real networking.

2. Forget 2010. learn what you can from the experience and move on.

3. Quit whining.

4. Stop stressing and deal with it.

5. Put the gadgets down.

6. Have more fun.

7. If it isn’t working, change it.

8. Take care of yourself.

9. Take risks.

10. Stop wasting your time.

http://www.bnet.com/blog/ceo/10-easy-ways-to-improve-your-prospects-in-2011/6359

'I Am Deeply Sad and Don't Know How to Go On'
Two out of the 10 Somali pirates on trial in Hamburg for hijacking a German container ship testified for the first time this week. Their stories provided a glimpse of the hardships of life in their lawless homeland.

http://www.spiegel.de/international/world/0,1518,738881,00.html

Bridging the gap between our online and offline social network

Paul Adams, Google UX team on social networks.

http://www.slideshare.net/padday/the-real-life-social-network-v2?from=embed

*** I found this piece on groups / social networks interesting.

The unifying force driving businesses to Twitter today is a simple concept: Consumers don't like being ignored and businesses know they need to listen."

--Ben Grossman, communication strategist

*** In my view Ben, consumers that rely on a 156 character (or whatever) tweet are twits.

Let’s hurry to love people, they leave so quickly…”

Jan Twardowski

Scott Riley

Business Development

Friday, June 25, 2010

News 100625: Aussie PM, ASIC on supervision, competition consultation, fees. Japan. FSA and funny money.

What is going on? England win at the Rugby….well Giteau gave it away ( a la Scotland style).

Then Ireland win the first Cricket ODI for England. Well, just gunna have to put it right this week-end against the men in green.

Chi-Tech…making global local.
SGX. Bit more context.
BNY Mellon ups the ante both in the dark and with clearing positioning.
Japan consolidation framework.
Movie futures rightly get there moment of fame.

Farewell FSA. Personally I thought there was a role for both the FSA and the BoE. I’ll be sorry to see the end of the FSA. I’d have rather seen more effort in identifying and addressing the ‘shortfalls’ of the regulatory framework. My daughter thinks chucking all the mess in one big cupboard makes the problem go away. I remain to be convinced.

Lots of changes trickling through in Australia right now. Phase one sees plenty of issues on the transition of supervision from ASX to ASIC. Phase two will see just as much activity on the issue of ‘fragmentation’ a scary word that just means the introduction of market forces (i.e. competition). And with all this going on how could I fail to mention our first female Prime Minister came to office yesterday, 24th June. (I guess we’ll have elections on 9th of Oct 2010).

Only 190 Billion outstanding on TARP. Woo hoo. Surely no one would notice just one little million for me?

Oh, Kerviel. He’s vile….and an idiot.

Who would have thought Marmalade comes from the house of the Orange Nassau?

And that money? It is funny.

The picture for the blog spot: http://www.economist.com/node/16379907?story_id=16379907

I’m looking forward to a lovely re-union with some of the Bafana bafana boys on Sat, whilst I get to gloat about our win over the Irish. Sunday I’ll be warhammering and smugly watching us turn around the ODI’s. If there is even a sniff of us choking…I’ll be out the door to puppy training.

Have a great w/end all.

S
http://clearingandsettlement.blogspot.com/

Trading

CHI-TECH EXPORTS MARKETPRIZM TO NORTH AMERICA
http://www.finextra.com/news/announcement.aspx?pressreleaseid=34496

Chi-X to Connect North America to European Venues Chi-Tech said Thursday that its network for connecting to trading venues across Europe will now be available to securities firms based in North America.
*** this headline much catchier.

SGX INKS IT INFRASTRUCTURE OUTSOURCING DEAL WITH HCL The Singapore Exchange (SGX) has signed a five year, S$110 million IT infrastructure outsourcing contract with India's HCL Technologies.
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21491 Since becoming

CEO of the Singapore Exchange (SGX) in December 2009, Magnus Böcker has accelerated the exchange's moves into high-frequency trading and commodities while continuing to pursue the firm's long-held strategy as the investor's gateway to Asia.
http://www.thetradenews.com/node/4685
***Böcker also played a major role in the combination of OMX with Nasdaq, the US-based exchanges group, following which he became president of Nasdaq OMX and took responsibility for business areas including corporate services, market technology, software development and global IT services.
See also: http://www.sgx.com/wps/portal/corporate/cp-en/about_sgx/management_team SGX

INVEST $250M IN 'WORLD'S FASTEST' TRADING ENGINE The Singapore Exchange (SGX) has outlined plans to spend $250 million and tap technology from Nasdaq OMX to build what it claims will be the world's fastest trading engine.
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21459

BARCLAYS CAPITAL TO LAUNCH DARK POOL FOR EUROPEAN EQUITIES
Barclays Capital plans to launch a pan-European dark pool for equities trading in the third quarter, building on the US platform it inherited from its acquisition of Lehman Brothers in 2008.
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21490

BNY MELLON LAUNCHES DARK POOL FOR DEBT BNY Mellon has launched an auction marketplace where fixed income securities buyers and sellers can transact anonymously in real time.
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21487

NYSE Euronext Outsources Billing to Firm58
http://advancedtrading.com/infrastructure/showArticle.jhtml;jsessionid=0MVYQEIZG1HFNQE1GHPCKHWATMY32JVN?articleID=225700160&_requestid=389649

NYSE Euronext Opens Latency Kimono with Free Web Portal Sell-Side Technology - Latency http://www.waterstechnology.com/sell-side-technology/news/1686464/nyse-euronext-opens-latency-kimono-free-web-portal
*** I like this.

LUIS LAGINHA DE SOUSA APPOINTED CHAIRMAN AND CEO OF NYSE EURONEXT LISBON http://www.finextra.com/news/announcement.aspx?pressreleaseid=34254

SIX SWISS EXCHANGE INCREASES CAPACITY
http://www.finextra.com/news/announcement.aspx?pressreleaseid=34253

FINANCIAL TIMES: Japan Outlines Plans to Merge Exchanges By Lindsay Whipp and Mure Dickie 6/18/10 The Japanese government has unveiled a proposal to merge the country’s major exchanges by 2013 in a bid to make the bourses more competitive regionally and attract more funds. The idea is contained in the government’s new growth strategy, approved by the cabinet on Friday, that the ruling Democratic party hopes will rescue Japan from chronic deflation and double the country’s long-term real growth rate to 2 per cent by 2020. The proposal could eventually see the merger of the Tokyo Stock Exchange, the Osaka Securities Exchange, the Tokyo Financial Exchange and the Tokyo Commodities Exchange.
http://www.ft.com/cms/s/0/2441feac-7a7f-11df-9cd7-00144feabdc0.html

US clears movie futures trading Opponents, led by big Hollywood studios, warn that complex trading brought down the housing market and this idea could do the same to the movie industry
http://news.smh.com.au/breaking-news-business/us-clears-movie-futures-trading-20100616-ydr0.html
*** What a load of CMO. The fault is not with the product, it is with how it is represented / sold. Cars don’t kill people. Drivers do.

Clearing

Nasdaq OMX Stockholm starts clearing crown interest-rate swaps Nasdaq OMX is conducting a pilot project with SEB bank and the Swedish Debt Office to route Swedish crown interest-rate swaps through a central clearinghouse. "It is the first centrally cleared interest-rate swap ever in krona," said Erik Thedeen, president of Nasdaq OMX Stockholm. "The next step is to handle full-scale clearing, and we need to have a dialogue with the main banks to achieve that." Reuters (22 Jun.) , The Wall Street Journal/Dow Jones Newswires (22 Jun.)
*** He he, and a CCP catering to 2 participants…is a bilaterally cleared market. Yeah, yeah, it’s a process not an event.

Malaysia, Hong Kong plan common bond-settlement platform The central banks of Hong Kong and Malaysia started working on plans for launching a common platform for settling securities. The move comes after the governments of the Association of Southeast Asian Nations plus China, Japan and South Korea called off plans for creating a common bond-settlement platform in 2003. Indonesia and Thailand are participating in the discussions as observers. Risk.net/Asia Risk (11 Jun.)
*** T2S hits Asia?…maybe not.

BROADRIDGE LAUNCHES CONNECTIVITY SERVICE TO SWIFT ACCORD http://www.finextra.com/news/announcement.aspx?pressreleaseid=34488

Policy

Quick View: Ill-timed FSA reforms setback for markets FT.com / Markets By Jeremy Grant The abolition of the Financial Services Authority could not come at a worse time for anyone in the UK’s market structures industry.
http://www.ft.com/cms/s/0/a7aa328e-7a0a-11df-9871-00144feabdc0.html

Sants hopes the legacy of the UK's FSA will survive The UK Financial Services Authority, which effectively will cease to exist in 2012, hopes its legacy will survive for its replacements. FSA CEO Hector Sants said he hopes the "tough" legacy of the regulator will be taken over by the Bank of England and the other replacement agencies. The Prudential Regulation Authority -- to be part of the Bank of England -- will set the size of firms' capital and liquidity buffers, the Financial Stability Committee will have tools to head off threats such as asset-price bubbles, and the Consumer Protection and Markets Authority will ensure financial firms treat customers fairly. The Wall Street Journal (24 Jun.)
*** Who remembers SIB, TSA, IMRO, AFBD and was there one for Life insurance etc?

Market supervision moves to ASIC – what does it mean for brokers?
Speeches by ASIC Deputy Chairman, Belinda Gibson and Head of Market and Participant Supervision Division Greg Yanco, at the 2010 Annual Stockbrokers' Conference, 9 June 2010 Read Belinda Gibson's speech Read Greg Yanco's speech
http://www.asic.gov.au/ASIC/asic.nsf/byHeadline/Market%20supervision%20moves%20to%20ASIC%20-%20what%20does%20it%20mean%20for%20brokers%3F?opendocument

ASIC’s power grab.
*** the ASX and SFE having to pay ASIC initial fees of $3.7 million, Financial services Minister Chris Bowen wants the lion's share of that - $3.145 million - from ASX, justifying it on the basis that ASX will no longer have the costs of carrying out the supervision themselves.
*** the last annual report showed ASIC spending $295 million and collecting $558.5 million in fees and sales for the Treasurer.
http://www.smh.com.au/business/asics-power-grab-20100623-ywdz.html Reforms to the

Supervision of Australia's Financial Markets - Exposure Draft of Fees Regulations and Consultation Paper
The four categories are:
– small financial markets; (10 byn annual turnover, eg. he National Stock Exchange, Bendigo Stock Exchange, Asia Pacific Exchange, and IMB Ltd) at $9,375 / Qtr
– wholesale financial markets; (Bloomberg, Mercari, BGC, and Yieldbroker are initially exempt, hence there will be no wholesale financial markets supervised by ASIC) at $9,375 / Qtr
– the Sydney Futures Exchange; at $555,000 per annum; and
– the Australian Securities Exchange at $3,145,000 per annum.
http://www.treasury.gov.au/contentitem.asp?NavId=037&ContentID=1836

competition for market services.
PJC report that includes a list of issues that ASIC intend to consult on
http://www.aph.gov.au/senate/committee/corporations_ctte/asic/asic_june10/index.htm
*** read from page 21 (22 issues)

One of the unintended – albeit anticipated – consequences of MiFID has been the impact of its pre- and post-trade transparency regimes on the price formation process. http://www.thetradenews.com/operations-technology/pre-post-trade-reporting/4689

Off-exchange trading has overtaken displayed market trading in Europe over the last two months, reigniting the debate on the effectiveness and reliability of the price formation process. But many market participants remain sceptical about the quality of the underlying data, emphasising the need for reform of MiFID's trade reporting rules
http://www.thetradenews.com/operations-technology/pre-post-trade-reporting/4701
*** approved publication arrangements (APAs)

WEEKEND ECONOMIST: Europe's dark clouds BILL EVANS The mood in Europe is one of great uncertainty, but three issues stand out: Spanish banks, Italian sovereign debt, and government austerity packages. 12:01 AM
read more http://www.businessspectator.com.au/bs.nsf/Article/WEEKEND-ECONOMIST-Europes-dark-clouds-pd20100618-6J9XJ?OpenDocument&src=wes

Amount repaid by TARP recipients surpasses outstanding balance Banks and other recipients of funds through the Troubled Asset Relief Program have repaid $194 billion, while $190 billion remains outstanding. "TARP repayments have continued to exceed expectations, substantially reducing the projected cost of this program to taxpayers," said Herbert Allison, assistant secretary for financial stability at the Treasury Department. "This milestone is further evidence that TARP is achieving its intended objectives: stabilizing our financial system and laying the groundwork for economic recovery." Los Angeles Times (6/12) , The Wall Street Journal (6/11)

GLOBAL SECURITIES REGULATORS ADOPT NEW PRINCIPLES AND INCREASE FOCUS ON SYSTEMIC RISK
http://www.finextra.com/news/announcement.aspx?pressreleaseid=34249
Full list of 38 objectives:
https://www.iosco.org/library/pubdocs/pdf/IOSCOPD323.pdf

Participants

Nomura Goes Live with NX in Hong Kong
Nomura, the global investment bank, has announced that NX (NomuraCross), its non-displayed global crossing network, has gone live in Hong Kong. Nomura received approval for an Automated Trading Services... (more)

BNY MELLON LAUNCHES CLEARING UNIT BNY Mellon is creating a new company to clear futures and derivatives trades on behalf of its institutional clients.
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21526

Citigroup will sell $3.2 billion in US auto loans to Santander Banco
Santander's Santander Consumer USA plans to buy about $3.2 billion in vehicle loans from Citigroup's CitiFinancial Auto, marking a major move into the US consumer-credit market for the Spanish bank. The companies said Santander also will take over servicing for $7.2 billion in loans that will stay on Citigroup's books. Santander, Spain's biggest bank, wants to expand its presence in the US and China. Bloomberg (24 Jun.)
*** this scares me. Spain on the cusp on a liquidity crisis. Citi dumping assets to allow it to emerge from a liquidity crisis. I guess the ratings agencies will accurately reflect this…just like they did with the GFC.
See also “The pain is Spain”: http://www.economist.com/blogs/buttonwood/2010/06/indebtedness_after_financial_crisis

Debate continues to rage across both sides of the Atlantic about the impact of high-frequency trading on the dynamics of the equity market, but for Jeff Wecker, CEO of US-based Lime Brokerage, institutional investors must accept that latency matters for them too now.
*** In that case, you’ll want to cancel fast enough so that the guy who is bidding with you at the higher bid is not the same guy that’s selling you the stock at the old price just as it becomes the offer. If you can get off that bid and onto the next one fast enough, you’ll get a better execution. But right now, because he’s invested more than you in the infrastructure underlying the algorithm, the high-frequency trader is the guy that’s selling to you just as your bid becomes the offer.”
http://www.thetradenews.com/node/4656

Kerviel Says Hid Risky Bets to "Save Appearances"
Rogue trader Jerome Kerviel kept his unauthorised risky bets at Societe Generale hidden to "save ...
*** Kerviel is an idiot.
*** Kerviel is an absolute idiot. That said, I have some empathy for Daniel Bouton (former boss of Societe Generale). “banking, it’s all about money, and fraud is inherent in money.” http://www.businessspectator.com.au/bs.nsf/Article/Why-banks-attract-fraud-pd20100623-6P82M?OpenDocument&src=pmm
**** I guess where there is a will there is a way. Fraudsters rely on peoples inherent good nature of trust. Certainly risk controls will be better…but risk is just a stress ball…you can’t eliminate risk, although you can shift it. Unfortunately we can usually only challenge the lies of fraudsters when we have the confidence to apply our own common sense…and this is not always a career advancing move.
*** I hate to think of the trust and friendship Kerviel abused in all his dealings with Operations staff. He’s a disappointment to himself and doubly so to those that trusted him. My word is my bond…but unfortunately…I don’t expect you to believe it.

Important stuff
South African gamblers smoke endangered vulture brains for luck As the World Cup launches in South Africa this week, conservationists fear that gamblers looking for a little extra luck will turn to a source those of us in the West might not expect
*** I didn’t need to smoke any vulture brains to know the Socceroos were a long shot against Germany. Personally, I hate the buzzing noise of the “Vu-vu-zela”. Sounds no more interesting than a swarm of bees. But this guy, Henson, does it justice. http://www.metro.co.uk/sport/oddballs/831274-vuvuzela-song-makes-light-of-world-cup-instrument-with-umbrella-mock-up?ito=1537

Women behind the rise of the house of Orange-Nassau
WHEN the house of Orange-Nassau finally became monarchs in The Netherlands in 1815, it was the result of hundreds of years of manoeuvring: battles physical and political and, Susan Broomhall contends, a solid effort by generations of the family's women. And one story they are hoping to verify concerns a novel habit of William's German-based granddaughters, Louise Henriette and Henriette Catharina: distributing marmalade as ceremonial gifts to visitors to their husband's courts. "They put in kitchens with everything Dutch, including the Delft tiles, and we understand they made the marmalade there," Broomhall says. "The oranges symbolised the house of Orange and the sugar they used represented the conquests of the New World." http://www.theaustralian.com.au/higher-education/women-behind-the-rise-of-the-house-of-orange-nassau/story-e6frgcjx-1225871264764
*** so now I know where Marmalade comes from.

The Long Now.
http://fora.tv/2010/02/01/Long-Term_Thinking_in_the_Next_10000_Years
*** More on the long now…which I’m drawn to.

101 Funny Quotes About Money
http://www.karlonia.com/2008/07/24/101-funny-quotes-about-money/
We didn’t actually overspend our budget. The allocation simply fell short of our expenditure. — Keith Davis
Money isn’t everything but it sure keeps you in touch with your children. — J. Paul Getty
My formula for success is rise early, work late and strike oil. — J.P. Getty
I wish that dear Karl could have spent more time acquiring capital instead of merely writing about it. — Jenny Marx
Women prefer men who have something tender about them - especially legal tender. — Kay Ingram
It is only by not paying ones bills that one can hope to live in the memory of the commercial classes. — Oscar Wilde

Sport.
Gutted we lost the Rugby. Shame we didn’t bring the same intensity to the Sydney test. A disappointment for fans and coach Deans.
Cricket. Who’s this Eoin Morgan playing for England?

Scott Riley Business Development Fortis Global Clearing 8th Floor | 50 Bridge Street | Sydney | Australia | 2000 ((Off)+61 (0)2 8916 9634 È(Mob): +61 (0)418 117 627 * scott.riley@au.fortisclearing.com

G'day & Welcome. Why a Blog?

The little blog that I send out is just a way to stay in touch with family, friends, industry contacts, prospects and customers.
It’s a real mixed bag.
I just got so busy I never had time to give the attention I should to all the different groups.
I also hated calling people up to ask a favour when I hadn’t been in touch for x months (or years).
Hence the blog – basically it says I’m alive and what I’m interested in (C&S – and more C than S).
I do it when I can, as I can. Sometimes I just don’t read anything if I have a deadline to meet.

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