News 100219: CCP market shares, LCH results, Naked access, Langen belongs on the Bismark

Happy Lunar New Year

恭喜发财 or 恭喜發財

The headline results from LCH are rather dramatic to be fair. The key to the so called loss is the impairment charge. The above graph, courtesy of http://www.spring-associates.nl/ gives a graphical explanation.

I also note with interest the update on the Spanish timeframes.

On the clearing policy side the so called Langen report should be shot down.

Also a good paper from http://woodbineassociates.com/ on naked access. I have always believed Pre Trade Risk Management belongs with those who are handing over their car keys.

Lots of news from the platforms too:

Chi-X keeps up the good work.

I am puzzled / disappointed in the indices providers and their seeming lack of desire to reflect accurate data and trends.

I guess just like the ratings agencies before them, they don’t take any responsibility for what they publish.

LSE implement changes at Turquoise; and

Deutsche Bourse adjust to their results.

This is an excellent and recommended read:

Sink the Bismarck!: Brewery Releases World's Strongest Beer At 41% ABV

http://www.huffingtonpost.com/2010/02/16/worlds-strongest-beer-sco_n_463975.html

In the name of RSA (responsible service of alcohol) this made me laugh out loud.

It is important that you be careful with this beer and show it the same amount of sceptical, tentative respect you would show an international chess superstar, clown or gypsy.

Robin Hood Tax

Richard Curtis's (he of Four Weddings and a Funeral and Love Actually fame) short clip with Bill Nighy for the Robin Hood Tax campaign:

http://www.youtube.com/watch?v=ZzZIRMXcxRc&feature=player_embedded

Bar dealers from owning CCPs, says European Parliament report
Risk.net
Derivatives dealers should not be allowed to own stakes in central counterparties (CCPs) or their risk management systems - and CCPs should not be allowed to compete with each other, according to advice from the European Parliament's committee on economic and monetary affairs (Econ). If parliament members vote in line with the advisory, it would force dealers to divest stakes in clearers Ice Trust and LCH Clearnet - an outcome which bankers have attacked.
http://www.risk.net/risk-magazine/news/1591821/bar-dealers-owning-ccps-european-parliament-report

Grrrr. Madness. Call me a cynic:

a) The advice - known as an ‘own initiative' report - was circulated to committee members by rapporteur Werner Langen

b) The Langen report will be translated from the original German version…

…and Deutsche Bourse is a shareholder profit machine that is not user owned.

Funny that.

ML back into commodities….de ja vu.

…on the Beach.

Glorious swim and conditions at Bondi. Schools of fish.

Another beautiful journey swim coming up this week-end,

http://www.rainbowclubaust.com.au/oceanswim/course.htm

…6 Nations.

Interesting, 100% call on the games last week but none played in the style I expected.

France to beat Wales at home, which will see France as 6 Nations champs this year.

Scotland to win against the wooden spooners.

England to beat Ireland at Twickenham. (leaving the 6 Nations title to be decided with the final match on 20^th March)

…And my Reds? (Super14).

The Reds had led the game almost throughout but ….with the Reds 10 points in front with 10 minutes to go…and with a NSW player set off with 5 mins to go….Somehow…

The Waratahs snatched a 28-30 victory from the Reds in the final minute with a try from Wycliff Palu and conversion from Daniel Halangahu.

Oh, woe was I.

Will the Reds win at home against the Crusaders? Nah, but I’m still going for the Reds.

….and this is what I should be saying about the Reds match….(Guest spot for Wayne whenever he wants it!)….

Look at the good. They dominated for 75% of the match and played good positive successful attractive rugby. Then we make some substitutes - a young prop having his debut, a young flanker, and take off the most effective player on the park, Genia.

We get a scrum penalty on half way, all we have to do is win the scrum and kick it to the corner... but our scrum gets stuffed and we loase the ball and they go to the corner with a good kick and chase. Our lineout, new combinations and we lose the lineout and they score a try... but the last pass was about 1.5metres forward. I was sitting directly in line in row 3 and it was a mile forward... but forget that, that's rugby.

The young flanker then gets penalised for the same stupid mistake of not releasing and puts us under pressure and they score.

I would be questioning the coach and his substitutions which seemed to be part of a pre-match plan rather than playing the situation in front of him.

There was enough there to say the reds at home this week in the heat against the Crusaders will step up and win.

Faith.

Have a great w/end all,

S

http://clearingandsettlement.blogspot.com/

Platforms

PROFILE: HAYNES SETS RECORD STRAIGHT AT CHI-X
Six weeks after becoming the new chief executive of Europe’s most successful new trading platform in terms of growth in market share, Alasdair Haynes wants to right a few wrongs.

http://mail.efnmail.co.uk/r/187902294/MjU3MzA2OjI0MDk5/

Chi-X Europe wants its prices in rivals' indices
By Jeremy Grant in London
Chi-X Europe, the share trading platform that recently became Europe's second-largest bourse by turnover, plans to push for its prices to be included in the indices run by its main rivals, the region's established exchanges, according to its new chief executive.
http://jlne.ws/cFPjxy

*** The question in my mind, is why aren’t the indices working in there users interests by improving the quality of their data with this information?

A Hand in a House of Cards
By ANDREW ROSS SORKIN
With all the hand-wringing over the role of Wall Street banks in the financial crisis, one group of key players in the mess has been keeping - and undoubtedly enjoying - a relatively low profile: the rating agencies.
http://jlne.ws/bAkhsH

Winning over the buy-side will be a key focus for Chi-East, the joint venture dark pool between Singapore Exchange (SGX) and Chi-X Global, as it gears up for its planned end-of-Q2 launch, says new CEO Ned Phillips.

Read the interview

LSE Completes Turquoise Takeover; Names Lester CEO

The London Stock Exchange on Thursday said it completed its purchase of 60 percent of multilateral trading facility Turquoise and installed the exchange’s former chief information officer David Lester as Turquoise’s new chief executive to replace Eli Lederman.

http://www.securitiesindustry.com/news/-24710-1.html?ET=securitiesindustry:e1846:171544a:&st=email

LESTER PUSHES ASIDE LEDERMAN AND WILSON TO TAKE BAIKAL/TURQUOISE HOT SEAT The London Stock Exchange has completed the acquisition of Turquoise Trading and installed former LSE CIO David Lester as chief executive, ahead of Turquoise incumbent Eli Lederman and Baikal CEO John Wilson.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21099

ASX TAPS NASDAQ OMX FOR TRADING PLATFORM

http://www.finextra.com/news/announcement.aspx?pressreleaseid=32342

Asia Trading Volumes To Grow 20-30% Per Year
Still, while undergoing change, the Asian landscape has real need for improvement, according to a new ...

17/02/2010 11:13:00

DEUTSCHE BÖRSE PLANS LAY-OFFS AND OUTSOURCING AS INCOME DIPS

German exchange operator Deutsche Börse has outlined plans to save EUR50 million through an unspecified number of job cuts and outsourcing initiatives after reporting a EUR33 million net loss for the fourth quarter.

More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21095

17/02/2010 11:16:00

NASDAQ OMX UPS AGORA-X STAKE TO 80%

Nasdaq OMX has upped its stake in Agora-X, an ECN for trading over-the-counter (OTC) commodity contracts, from 20% to 85% through a $6.6 million investment.

More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21096

*** 65% for 6.6 myn

CME Group and BM&FBOVESPA to Become Global Preferred Strategic Partners, Jointly Develop a New Multi-Asset Class Trading Platform and to Expand Cross-Equity Ownership
CHICAGO and SAO PAULO, Feb. 12 /PRNewswire-FirstCall/ -- CME Group, the world's leading and most diverse derivatives marketplace, and BM&FBOVESPA, the world's third largest exchange company by market capitalization, today announced they have agreed to become Global Preferred Strategic Partners and to develop a new multi-asset class electronic trading platform that will be deployed by BM&FBOVESPA for use in its cash equities and derivatives markets.
http://jlne.ws/cvoxJ0

NZX signals $20m writedown from carbon trading venture
Sharemarket operator NZX is signalling a $19.9 million hit to its balance sheet from a carbon trading business it has sold, blaming a lower priority given to carbon trading and "lack of a global political agenda around carbon."
http://jlne.ws/aFZrT7

Liquidnet Planning to Offer Dark Pools in New Zealand, Malaysia
By Jonathan Burgos
Feb. 12 (Bloomberg) -- Liquidnet Holdings Inc., which runs alternative stock trading platforms, is planning to offer so- called dark pool trading in New Zealand, Indonesia and Malaysia as demand for the services increase.
http://jlne.ws/cTYpSo

Liquidnet to offer trading in Polish equities
http://jlne.ws/aGdvwx

No outcry as LME changes price discovery method
The London Metal Exchange has changed the price discovery method for polypropylene and linear low density polyethylene futures from today. The exchange announced in July last year that its official prices, which are announced each trading day, would no longer be arrived at in open outcry trading. The relatively small amount of plastics futures trading since its launch in 2005 has been mostly through the electronic system LMESelect and by telephone between traders.
http://jlne.ws/cNZFAF

Pink OTC Markets has changed pinksheets.com, its investor website for financial news and information on over-the-counter (OTC) securities, to otcmarkets.com.

*** They claim: Pink OTC Markets operates the third largest U.S. equity trading venue.

BATS OUTLINES PRICING FOR NEW OPTIONS EXCHANGE

http://www.finextra.com/news/announcement.aspx?pressreleaseid=32298

Clearing

Competition squeezes LCH.Clearnet
By Jeremy Grant
LCH.Clearnet, Europe's largest independent clearing house, on Tuesday highlighted the increasing competitiveness of the post-trade business by reporting a net loss for last year amid a fall in exchange trading volumes. The loss was E91m, compared with a record profit of E219.8m after tax last year.
http://jlne.ws/aREr2G

LCH.CLEARNET SINKS TO NET LOSS

http://www.finextra.com/news/announcement.aspx?pressreleaseid=32284

*** bit sensational to be fair, due to:…. recognised an impairment charge of €393.4 million. This does not affect the Company's cash or regulatory capital position.

REGULATORS APPROVE FRAMEWORK FOR CLEARING LINKS British, Dutch and Swiss regulators have agreed a new framework for linkages between clearing counterparties in an effort to allay fears about systemic risks and inject fresh competition into the market.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21082

Thai Bourse To Transfer Clearing and Settlement

The Stock Exchange of Thailand (SET) will transfer the Securities Clearing and Settlement Unit from Thailand Securities Depository Co., Ltd. (TSD) to Thailand Clearing House Co., Ltd.(TCH) on February 15. The move will make a clear.... Read More Here

Citi admitted as SGX bank clearing member for securities Singapore
Citi's Securities and Fund Services, a division of Global Transaction Services, has been admitted as a Bank Clearing Member for securities by Singapore Exchanges Limited (SGX). In receiving membership approval, Citi's Securities and Fund Services can now offer SGX Trading Members an array of value-added clearing services, including Third Party Clearing enhancements.
http://jlne.ws/8ZJlXN

Spain opens up market reform consultation
By Mark Mulligan in Madrid
FT.com / FT Trading Room
Spain's stock market regulator has opened to public consultation planned reforms to the country's clearing and settlement system in the latest step towards opening of Europe's most protected share trading market.
http://www.ft.com/cms/s/0/10f843be-1a36-11df-b4ee-00144feab49a.html

*** A committee representing regulators, financial institutions, the Bank of Spain and the BME has been set up to review public submissions on the planned reforms, which must be lodged by March 15. A report will then be prepared and used to make the necessary legislative amendments to effect the reforms “over the course of 2011 and 2012”, according to the BME.

*** I had in mind a timeline closer to Q4’10

SPANISH POST-TRADE PRACTICES UP FOR REVIEW

http://www.finextra.com/news/announcement.aspx?pressreleaseid=32259

Clearstream and Luxembourg Central Bank to Launch New Depository

Prompted by the European Central Bank’s proposed launch of a single securities settlement system for the Eurozone, international depository Clearstream said that it will start a new local central securities depository in Luxembourg in 2011.

*** LuxCSD

Policy

My gut feeling has always been anti regulatory controls on naked access (Pre Trade Risk Management). I liked this piece:

* Leaving discretion to brokers to establish baseline controls and procedures is not such a good idea as it ensures inconsistency across brokers and subjectivity during SEC examinations.

* Differentiation between intended and erroneous orders might not be as easily detected by basic pre-trade controls. This shortcoming is amplified by the consideration that the broker implementing the controls is often not privy to the details of the strategy.

* Intense competition among brokers for high volume trading clients, combined with the reluctance of HFT firms to reveal their strategies, almost guarantees that brokers will compete amongst each other by offering HFT firms the least intrusive risk analyses and fewest controls.

* A change in leverage or required risk capital among sponsored access clients would make these arrangements more expensive, potentially resulting in the migration of algorithmic and HFT strategies to other geographic markets or to other businesses altogether where the perceived returns become relatively more attractive.

* There has been talk in the industry that eliminating naked access would simply result in users of that service (notably HFT firms) to establish themselves as brokers.

http://woodbineassociates.com/uploads/The_SEC_Risk_Management_Proposal_-_A_Fair_Start_but_Lacking_Specifics_-_Feb_15_2010.pdf

Paulson: Financial regulatory reform is needed immediately
Henry Paulson, former secretary of the Treasury Department, writes that it is time to overhaul the financial regulatory system and that delays are creating uncertainty in the market, which is not helping the situation. "Our overriding goal in restructuring our financial architecture should be that taxpayers never again have to save a failing financial institution," Paulson writes. The New York Times (2/15)

BofA Merrill Lynch builds London commodities team
Bank of America Merrill Lynch has moved on to the London leg of expansion plans for its global commodities business, a little over two years after closing its commodities and energy trading desk in the UK capital in the lead up to the financial crisis.

Icap to reorganise cash equities arm
Telegraph
Michael Spencer, chief executive of Icap, the world's biggest interdealer broker, said he is considering abandoning the company's foray into cash equities.
http://jlne.ws/9wsWqW

S&P Providing Data about How Structured Instruments Get Priced

Standard & Poor’s said it has started to provide customers of its securities evaluation data and pricing feed with free information online about the inputs used to price structured instruments.

Scott Riley

Business Development

[Please note my new email address: scott.riley@au.fortisclearing.com]

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

News 100212: Interoperability thoughts, Spreads, Short Selling, HFT, STUPID

Chinese New Year begins: Happy New Year!
恭喜发财 or 恭喜發財

This snap from the b/berry overlooking Sydney Harbour from a customers meeting rooms. The bay in the foreground is Farm Cove (part of the Harbour Swim). The bay behind it (where you see the crane) is where a shark attacked a navy seal (diver).

Some thoughts on Interoperability, or access and interoperability (A&I)

It is time however to organise some of my thoughts and blog posts.
(One reason I do the blog is so that I can search it to pull together the different threads).
(There is a google search bar on http://clearingandsettlement.blogspot.com/)

I commend both the EMCF and EuroCCP papers.

I like the EMCF paper and it aligns itself with minimum disruption of participants and respect of domestic market practice. A key issue is the existing CCP market practice of rehypothecation of collateral.
I also like the EuroCCP paper. The primary difference to me is the concept of pushing back the margin requirements of interoperability onto the users (as they are the ones who commercially benefit from competition).
Both EMCF and EuroCCP call for transparency. (As I have done since 2008, but at least documented in the blog (search “Doha”) in Jun last year).
LCH / X-Clear have responded to that this week with their one page outline of the MCLA terms (I think the industry was looking for the full agreement, but hey, from small acorns…)

I do not think the answer is immediately with the CCPs. It is out there with the customers and users of the CCPs.

So, I’m pro interoperability and I think it will happen. The best model to make it happen I think will evolve through industry consultation (and being transparent on who, what and where the risks are). Once we can measure it, we can price it. Once we price it, then we know the impact it will have on market participants who can in turn inform their clients.

There is significant work that has already been undertaken on A&I. There are some precedents that have been set. Not always in equities. Test cases include derivatives (non material) and fixed income (Clearnet and CC&G). The annex of the final paper from this ECB meeting details some of the links.
http://www.ecb.int/pub/pdf/other/rolecentralcounterparties200707en.pdf

Europe is an excellent test case.
Always worth occasionally checking the EU site on the monitoring group of the code of conduct on C&S.
http://ec.europa.eu/internal_market/financial-markets/clearing/mog_en.htm

And then we have several important actors and positions:
EMCF
http://www.euromcf.nl/editor/uploads/emcf%20position%20paper%20on%20interoperability.pdf
The main conclusions are:
��Interoperability is vital to make European securities markets more efficient
��EMCF is a proponent of interoperability
��Interoperability requires inter-CCP risk management that mitigates risk transfer between CCPs
��Existing interoperability models employ collateralisation and source collateral from participants’ margins
��In short term EMCF will implement a framework replicating the existing link for UK and Swiss equities
��EMCF is supportive of EU legislation to harmonise CCP standards
��EU legislation should introduce a single public model for interoperability that recognises the specific nature of a CCP

EuroCCP
http://www.euroccp.co.uk/docs/leadership/EuroCCP_InteroperatingCCPs.pdf
EuroCCP concludes the following:
1. Use an augmented default fund to cover interoperability
2. An Interoperability Convention should be quickly implemented.
3 Commercial barriers to interoperability should be removed.
4 An inter-CCP netting process should be considered as a long-term approach to the need to minimise inter-CCP obligations.

This week LCH / X-Clear responded to the transparency question on Master Clearing Link Agreement (MCLA) with:
LCH.CLEARNET AND SIX X-CLEAR PUBLISH INTEROPERABILITY SUMMARY
http://www.finextra.com/news/announcement.aspx?pressreleaseid=32127

And the importance is not lost on international regulators. IOSCO will have an update of their guidelines available in early 2011.
REGULATORS FAST-TRACK GLOBAL REVIEW OF OTC DERIVATIVES CLEARING Global banking and securities regulators have fast-tracked a review of clearing arrangements for over-the-counter derivatives as part of a far-reaching re-appraisal of existing standards for payments, clearing and settlement systems.
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21029

Europe's post-trade dilemma
By Jeremy Grant
Competition between trading venues in Europe is so brutal that the fees charged by exchanges and their smaller rivals - such as Chi-X Europe - are at rock-bottom levels.
http://jlne.ws/cJCUpL
*** I do like Jeremy…but
“lack of competition has kept trading costs high”…I get what you mean, but trading costs are not so high (thx Chi-X), post trade costs require greater understanding. (I think we’re getting there with transparency).
“guidelines on how interoperability should work between LCH.Clearnet, EMCF (a small Dutch clearer) and X-clear of Switzerland.”…ummm, check your numbers Jeremy, EMCF is actually the largest equity CCP.
“Xavier Rolet, says, a way must be found to harmonise standards across Europe when it comes to clearing houses' regulatory capital and risk management policies.” Well, well. An intelligent opinion if I don’t say so myself.

Other bits:
Chi-X to no2 (by any measure)….but that just means there are still Europeans not getting best exec.
Short selling back in the news
HFT not all evil
Why is Getco blue and not green on the NYSE floor?
I do worry about Greece….and then Goldman profiting from that…yet UBS gets the bonus claw back.
As much as I worry about Greece, STUPID is as stupid does.

…and as for the w/end. Well, this week’s Valentines ocean special is:
North Bondi SLSC Classic Ocean Swim 2010
http://www.northbondisurfclub.com/html/s02_article/article_view.asp?article_id=935&nav_cat_id=-1&nav_top_id=-1

...and the 6 Nations, (sorry, overlooked this last week).
Overall, I’d like to back Ireland to win, just not sure if their form will pull them through.
Wales whump Scotland at home (easy).
Next a tester, I’ll go for French flair to win at home to topple the Irish, Heineken Cup experience won’t be enough for the boys in green today.
Italy V England. I wonder? Wooden spoon again for the Azzurri I’m afraid.

…and can you believe it is the first round of the Super14!
My good old reds will yet again valiantly hold up the rest of the table.
So, Sat night, I fear I’ll watch the Reds lose at home to the Wooftas oops, Waratahs
http://www.super14.com/fixtures/


60-SECOND SCIENCE PODCAST
Gunfight Tip: Faster to Draw Second
Reacting to a movement, such as being drawn on in a gunfight, is faster than initiating the movement
*** I enjoyed this tale: Sometimes accuracy (strategy) is more important than a millisecond (and the relatives points in where we measure latency).


Have a great weekend all.
I know mine looks like flying by, pretty much like this week.

Cheers,

S


Platforms

Chi-X becomes second largest European bourse
By Jeremy Grant
Chi-X Europe has overtaken Deutsche Börse, the London Stock Exchange's UK markets and the Spanish exchange to become the second largest European bourse by turnover less than three years after it was launched.
http://jlne.ws/bxujgP
*** Strap line says it all, Best Execution? Best check Chi-X. Looks like there are still some customers not getting best ex.

Chi-X passes exchange giants en route to number two spot
Chi-X Europe, one of the new breed of alternative trading platforms, became the second largest European equities market by value traded in January, leapfrogging incumbent exchanges including the London Stock Exchange and Deutsche Börse for the first time.

MiFID narrows European blue-chip spreads – TABB
*** The study found that average spreads declined in 92% of the equities measured, with spreads in some stocks reduced by half.

Tokyo's Arrowhead system slashes trading costs – Nomura
*** spreads again.

ASEAN EXCHANGES SELECT NYSE TECHNOLOGIES TO BUILD TRADING NETWORK A group of Asean stock exchanges have appointed Nyse Technologies to build a direct market access electronic trading link.
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21052

NYSE Euronext, Nasdaq: The Profits Are Back
NYSE Euronext reported its third straight quarter of growth in revenue and earnings per share. For all of 2009, Nasdaq OMX Group, though, reported higher profits.
Beginning with first quarter 2010 results, NYSE Euronext will change how it reports results for different segments of its business. The new reporting segments will be: Derivatives, Cash Equities & Listings and Technology and Information Solutions.
*** i.e. derivs is a growth business (watch ELX), 2ndry equities trading is commoditised (and a basket case), listing is seasonal, IT is bread & butter.


ASX ALGO TRADING REVIEW: REGS NEED UPDATING BUT NO PROBLEM WITH MARKET INTEGRITY
http://www.finextra.com/news/announcement.aspx?pressreleaseid=32134

Theret takes helm of PLUS amid board reshuffle
http://www.thetradenews.com/asset-classes/equities/4215
*** In September 2009, a group of investors from the Gulf Cooperation Council (GCC) countries bought a 19% stake in PLUS for £5.5 million via a special-purpose vehicle, Amara Dhari Investments.

SPECIAL REPORT!
Citadel Tries to Make a Market in Berlin
Citadel already owns 19.9 percent of Direct Edge, a Jersey City-based trading network which matched 11.8 percent of US trades in September.
Citadel has about 175 retail brokerage clients, including Charles Schwab and TD Ameritrade; and now handles an estimated 9 percent of daily US stock trades and 30 percent of trades in US equity options.

10/02/2010 16:13:00
PRAGMA LAUNCHES DARK CROSSING NETWORK
US trading systems supplier Pragma Securities is to launch a dark crossing network designed to capture liquidity before the open and close of US markets.
More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21066

CME GROUP TO TAKE CONTROL OF DOW JONES INDEX BUSINESS THROUGH JV CME Group has struck a deal to take control of the Dow Jones stock index business through a joint venture with current owner News Corp that values the business at $675 million.
Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21068



Clearing

LCH.CLEARNET AND SIX X-CLEAR PUBLISH INTEROPERABILITY SUMMARY
http://www.finextra.com/news/announcement.aspx?pressreleaseid=32127

ICE CEO: Linking Clearinghouses May Repeat 2008 Bank Turmoil
By Jacob Bunge Of DOW JONES NEWSWIRES
The top executive of IntercontinentalExchange Inc. (ICE) warned Wednesday that linking up derivatives clearinghouses could create systemic risk issues similar to those that pushed the global banking system to the edge in 2008. Spreading contract positions across several clearing facilities could make it harder to value a firm's positions if it defaults, raising the threat to other investors, according to ICE CEO Jeffrey Sprecher.
http://jlne.ws/cjkRaR
*** given ICEs vested interest in the clearing space, these remarks are just that, vested interest. Wasted opportunity to make a meaningful contribution to the debate.
https://www.theice.com/clear_overview.jhtml


DTCC Receives Fed Approval for Warehouse to Be Member of Federal Reserve System
NEW YORK--(BUSINESS WIRE)--The Depository Trust & Clearing Corporation (DTCC) announced today that the Federal Reserve Board had approved its application to establish a DTCC subsidiary that is a member of the Federal Reserve System to operate the Trade Information Warehouse (Warehouse) for over the-counter (OTC) credit derivatives.
http://jlne.ws/92bse0


Policy

Sants resignation leaves confusion at FSA
Hector Sants has resigned as head of the City watchdog, in a dramatic move that throws the direction of financial regulation into question
http://jlne.ws/byCMeD
The Tories let it be known they would be interested in recruiting Mr Sants for another job if they win the election. “As far as George is concerned, this is not the end of [Mr Sants’] public sector career,” said an aide. Speculation centred on a post at the Bank or a minister’s role relating to financial services or negotiating with the European Union in Brussels.

Financial risk: Our special report
http://news.economist.com/cgi-bin1/DM/y/eCATi0bscdF0Mo0GOtp0EK


The effects of short-selling public disclosure regimes on equity markets
http://www.managedfunds.org/downloads/Oliver_Wyman_Financial_Services_Report.pdf
As short-selling liquidity decreases there are material impacts to the markets for the affected securities:
..Trading volumes decrease
..Bid-ask spreads widen
..Price discovery becomes less efficient
..Intraday volatility increases


the Reserve Bank's 50th Anniversary Symposium on 9 February 2010 have been published on the Bank’s website.
http://www.rba.gov.au/publications/confs/2010/index.html
Symposium Papers
• Fifty Years of Monetary Policy: What Have We Learned? [PDF 183K]
Glenn Stevens, Adam Cagliarini and Christopher Kent, Reserve Bank of Australia
Panellist Comments [PDF 99K]
Jean-Claude Trichet
• Financial Stability: 10 Questions and About Seven Answers [PDF 109K]
Jaime Caruana, Bank for International Settlements
• What Have We Learned in the Past Fifty Years About the International
Financial Architecture? [PDF 100K]
Andrew Crockett, JPMorgan Chase International
• Increased Understanding of Supply Side Economics [PDF 164K]
Anne O. Krueger, Johns Hopkins University

IMPACT OF HIGH-FREQUENCY TRADING IS LESS THAN FEARED
High-frequency trading, which uses state-of-the-art software to spot patterns and benefit from tiny price movements, has attracted plenty of attention from regulators in the past few months. But there is growing evidence in Europe and the US that asset managers are not overly concerned about its impact.
http://mail.efnmail.co.uk/r/184980887/MjU3MzA2OjI0MDIx/

Board to Investigate Compensation of FINRA Executives
Pressured by a brokerage firm, the board of governors of the Financial Information Regulatory Authority (FINRA) will meet Wednesday (Feb. 10) to determine whether Securities and Exchange Commission Chairman Mary Schapiro and other former FINRA executives were overcompensated in 2008.
*** Former chairman and CEO Schapiro received about $3.25 million in compensation.
*** Douglas Schulman, now commissioner of the Internal Revenue Service, was paid compensation, severance and accumulated benefits valued at $4.43 million in 2008 while vice chairman at FINRA
*** Choice. CVs to Washington DC, http://www.finra.org/AboutFINRA/ContactFINRA/index.htm (can you afford not to?)

Thinking the unthinkable
Stephanie Flanders
All eyes are on Brussels, as we await more details of the "co-ordinated measures" on offer to help Greece. There's just one problem. Even a bail-out - if that is what it turns out to be - won't solve the basic problem facing Greece, or the eurozone.
http://jlne.ws/bKBWBH


Other

NYSE to Add Global Market Maker GETCO as NYSE Designated Market Maker
New York City and Chicago, IL, Feb. 11, 2010 NYSE Euronext and GETCO LLC, a global electronic trading and technology firm, today announced that GETCO is expected to become a New York Stock Exchange ("NYSE") designated market maker ("DMM"), and that GETCO has purchased approximately 350 NYSE DMM assignments from Barclays Capital. Financial terms of the transaction were not disclosed.
http://jlne.ws/c1y4RY

Quick View: Getco goes back to the floor
Many high-frequency trading firms prefer to describe themselves as "market-making" firms or, in the jargon that increasingly pervades the trading world, "liquidity providers".
http://jlne.ws/bZkcS1
*** I assume green was already taken?

Penson Australia Announces D2MX Signs Long-Term Clearing Agreement
Penson Worldwide, Inc. (NASDAQ: PNSN) announced today that its Australian subsidiary, Penson Financial Services Australia Pty, Ltd (PFSA), has signed a 5-year exclusive agreement to provide clearing services for equities and ... Read More Here

Fidelity reduced its commissions for US equity trades from a tiered plan – ranging from $8 to $19.95 – to a flat $7.95. The company will also offer no commission trading on 25 BlackRock ETF funds for at least three years. TD Ameritrade has offered flat pricing at $9.99 since 2006, while Schwab made the move – at $8.95 – last month.
*** This is why the MTFs job is not finished in Europe.

09/02/2010 16:44:00
MERRILL LYNCH LAUNCHES JAPANESE DMA TRADING PLATFORM
Merrill Lynch Japan Securities (MLJS) has unveiled the country's first third-party co-located service for low-latency electronic trading and direct market access to multiple execution venues.
More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21060

How Goldman Sachs Helped Greece to Mask its True Debt
http://www.spiegel.de/international/europe/0,1518,676634,00.html
…Goldman Sachs charged a hefty commission for the deal and sold the swaps on to a Greek bank in 2005.

UBS Claws Back $282 Million of Bonuses After Posting 2009 Loss
By Elena Logutenkova
Feb. 10 (Bloomberg) -- UBS AG's loss in 2009 will trigger the bank's bonus claw back mechanism for the first time, depriving senior bankers of 300 million Swiss francs ($282 million) of deferred pay they were due to receive this year.
http://jlne.ws/d7QJPP

Fortis market access unit links to Sol-3 trading platform
The Trade News
Fortis Bank Global Clearing (FBGC), a provider of post-trade and market access services, has connected its low-latency trading network to Sol-3 Trader, an execution management system offered by German IT firm Sol-3.
http://jlne.ws/aFX66T


STUPID idea
NEWSPAPERS love a good acronym - it saves precious space - so it's no surprise that many seized an easy label when several economies in southern Europe fell on hard times.
The embattled countries were Portugal, Italy, Greece and Spain, and the acronym spelt PIGS, which encouraged London's Financial Times to publish the rather questionable headline ''PIGS in muck''.
How the mighty have fallen. More recently, the acronym has been spelt PIIGGS, after Great Britain and Ireland joined the slide into recession.
Now even that tag is obsolete.
Charlie Aitken, of Southern Cross Equities, points out in his latest note to clients it's now Spain, Turkey, the United Kingdom, Portugal, Ireland and Dubai that are worrying global commentators.
As Aitken says, welcome to the STUPID Index.









Scott Riley
Business Development

[Please note my new email address: scott.riley@au.fortisclearing.com]

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

News: WE100205: Dave, Chi-X, LSE, WFE, ECNs, neighbours.

'Dave the Banker' keeps his job

http://www.smh.com.au/business/dave-the-banker-keeps-his-job-20100205-ni0q.html

Rightly so too. “Accidents happen” and is opening an email a sin?

Chi-X: some amazing Jan market shares. Congratulations to Chi-X. Check out Equity Market Share Reporter. Couples nicely with Chi-X as largest dark pool.

LSE: Fast to…Millennium….and more EMCF rumours.

NYSE correctly point out the folly of a Tobin tax, yet the WFE doesn’t even include this on their short list. That looks like an omission to me.

Multiple platforms and market models continue to take hold in the US.

PIGS: Europe had its own bad day as renewed fears about the PIGS - Portugal, Ireland, Greece, Spain - sent the benchmark Dow Jones Stoxx 600 Index down 2.7 per cent. A case of swine flu perhaps?

Gotta dash.

Have a great week-end all.

(Rain forecast here…and 7 reasons below from Ocean Swims on why to have a w/end off.)

S

Well, the Big Swim. What a fantastic swim this was. Lovely day for it and enough surf so you could catch a wave in. One lady I spoke to after the race had spotted some turtles. Sometimes I think there is such a focus of competing on time during these swims that you “lose sight” of some of the beauty of the event. I’d almost like a half way stop so you can just bob up and down like a cork for a while and watch the life of the ocean pass by. The Whale Beach headland churns the water like a “washing machine”. Although it looks crafty to cut across the headland I stay wide and in the deep water – less currents and chop from the intersecting waves.

Some great snaps of the day here:

http://www.oceanswims.com/nsw90/10013031.html

Results here:

http://www.oceanswims.com/results90/bigswimres10oall.html

(and at 50.05 mins I managed to shave a little bit off last years 54:23).

[This weeks image, from a b/berry overlooking the finish line]

What does this mean?

Hawks Nest swim: Organisers have cancelled this swim in the interests of swimmer safety, due to ""increased marine activity along Bennetts Beach". Entries received will be refunded.

…nice…”increased marine activity”….draw your own conclusions but ambiguity does make you think the worst.

…and great news on Buddy our Golden Retriever puppy. He’s excellent at obedience training.

Not even with us for 2 weeks and already he has the wife and kids schooled in how he likes to be treated. A simple nod of the head is all it takes to get people running around “fetching” like crazy. Ahhh, I have much to learn from Buddy.

http://www.longnow.org/about/

A powerful tool to conceptualise the problems of tomorrow today.

Platforms

The Financial Services Club is pleased to announce that we have recently agreed a partnership with Thomson Reuters Equity Market Share Reporter (EMSR) to provide a monthly MiFID MTF Monitor. Our aim is to show how the pan-European investment markets are changing as a result of the MiFID and the entry of the new MTFs

http://thefinanser.co.uk/fsclub/2010/02/monthly-mifid-monitor-january-2010.html

*** some pretty powerful graphics here.

LSE TO MIGRATE CASH MARKETS TO MILLENNIUM IN SEPTEMBER The London Stock Exchange is planning to migrate the UK cash market to its new Millennium IT trading platform in September 2010.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21031

Dark pool duo enjoy strong trading volumes
Two fledgling dark pools have revealed strong trading volumes for January, as they seek to increase their transparency in the face of increased scrutiny by regulators.

** Chi-X Europe remains Europes largest dark equities venue

Duncan Niederauer: Beware of the Taxman
The proposals out of Washington to tax securities transactions will do much harm, warns Duncan Niederauer, CEO of NYSE Euronext. "The negative implications of a transaction tax would ripple throughout the economy, harming average investors and the very companies being counted on to create jobs."
http://www.iimagazine.com/

World Federation of Exchanges (WFE)Announces Priorities for 2010

Madrid (February 1, 2010) – The officers and members of the Board of Directors of the World Federation of Exchanges (WFE) today announced priorities for the year in which WFE celebrates its 50^th anniversary. The WFE brings the world’s regulated exchanges together in order to improve the quality of markets.

http://www.world-exchanges.org/

*** Basically, the 3 priorities as I read them: 1) regulate OTC markets (sensible vested interest, more exchange fees), 2) intermarket mechanisms (sensible vested interest, rhetoric where required, reduce frictional costs of trade should increase exchange fees), 3) fixed income (sensible vested interest, how can we capture more exchange fees from other asset classes? We have equities and derivs, what about FI?).

*** But what about the stupidity of a Tobin Tax? Working against that would not only be in the exchanges self interest, but the industry as a whole. A collective service to make markets better. Is market structure reform on the WFE agenda? Nah, not even a GFC and daily policy announcements can get it over the line. A sad omission.

*** NYSE has 5 memberships (A’dm, Bxls, Lbn, NY, Paris) of the WFE

http://www.world-exchanges.org/member-exchanges/member-exchanges

ETF Exchange (ETFX) Announces The Addition Of Barclays Capital To Join The Worlds First Third Generation ETF Platform Today
ETF Securities Ltd (ETFS), the global pioneers in Exchange Traded Commodities (ETCs) and independent provider of Exchange Traded Funds (ETFs), is pleased to announce that Barclays Capital has joined ETF Exchange (Europe) (ETFX), the worlds first third generation ETF platform, as an authorised participant and swap provider. ETF Securities is initially working with BofA Merrill Lynch, Citi, Rabobank International, and Barclays Capital who are participants on the platform, with scope to add additional participants in the future.
http://bit.ly/9D9pOA

BLOOMBERG: Nasdaq OMX to Start Inet in Europe, Says Trading Costs Fall
By Nandini Sukumar
2/4/10

Nasdaq OMX plans launch of third stock platform in May
Nasdaq OMX Group is targetting a May 2010 launch for a new stock exchange platform, which will be called Nasdaq OMX PSX.

BLOOMBERG: Bats Plans Second U.S. Stock Market by End of Second Quarter
By Nina Mehta
2/3/10
Bats Global Markets, owner of the fourth-largest U.S. stock venue, plans to open a second trading network in late May or June to offer brokerages and investors new incentives and pricing. The International Securities Exchange said it’s considering another options platform.

01/02/2010 15:59:00

CME CLOSES IN ON DOW JONES INDEX BUSINESS - WSJ

Exchange operator CME Group is in talks to buy Dow Jones' index business for up to $700 million, according to the Wall Street Journal.

More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21021

01/02/2010 10:53:00

LSE RETAIL BOND TRADING PLATFORM GOES LIVE

The London Stock Exchange's electronic retail bond trading service has gone live, opening up the market to private investors.

More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21018

QATAR EXCHANGE APPOINTS DEPUTY CEO, COO AND CCO

http://www.finextra.com/news/announcement.aspx?pressreleaseid=32081

*** Mr. Andre Went, the CEO, Mr. Saif Khalifa al-Mansoori as Deputy CEO, Mr. Olivier Gueris as Chief Operating Officer and Mr. Karim P. Hajali as Chief Commercial Officer.

Clearing

LSE contemplates acquiring Dutch clearer
http://www.ft.com/cms/s/0/c18ea8ee-0d3e-11df-af79-00144feabdc0.html

EMCF appoints Deutsche Bank as CEE Markets settlement agent
January 29th, 2010 - European Multilateral Clearing Facility appoints Deutsche Bank as settlement agent in Czech, Hungarian and Polish markets
http://www.automatedtrader.net

*** EMCF was among industry participants in a recent hearing before the Public Finance Committee of the Polish Parliament that resulted in proposed changes to stamp duty that will, if passed, exclude international companies from duties on most equity trades.

Opposition Mounts To CME Group's Credit Derivatives Clearing
By Jacob Bunge, Of DOW JONES NEWSWIRES
CHICAGO -(Dow Jones)- CME Group Inc. (CME) faces growing opposition from futures brokers and Wall Street banks uncomfortable with the structure of its new credit default swap clearing service. Brokers that post collateral for futures and options trades at CME said they remain wary of letting their customers' funds stand behind credit default swap transactions, a riskier and more opaque market.
http://bit.ly/c4WOsB

REGULATORS FAST-TRACK GLOBAL REVIEW OF OTC DERIVATIVES CLEARING Global banking and securities regulators have fast-tracked a review of clearing arrangements for over-the-counter derivatives as part of a far-reaching re-appraisal of existing standards for payments, clearing and settlement systems.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21029

CENTRALISED CLEARING FOR OTC DERIVATIVES RECEIVES INDUSTRY SUPPORT BUT CONCERNS REMAIN The majority of financial institutions and corporations around the world agree that moving OTC derivatives trading to a system of centralised clearing would help manage risk but many market participants still harbour serious concerns about the prospect, according to a survey from Greenwich Associates.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=21043

EUROPEAN CCPS STEP UP REGULATORY PUSH
Europe’s clearing houses have stepped up the pressure on regulators, in a bid to boost competition and reduce the cost of clearing in the region.

http://mail.efnmail.co.uk/r/181995569/MjU3MzA2OjIzOTQ1/

The London Stock Exchange is keen to ensure that its post-trade division keeps pace with the evolution of trading both across Europe and within its own four walls, says Kevin Milne, the unit's new head.

Read the interview

EUROCCP TO BEGIN CLEARING EXCHANGE-TRADED CURRENCIES

http://www.finextra.com/news/announcement.aspx?pressreleaseid=32059

Policy

Publication:

The 2010 Intergenerational Report - 1/2/2010 http://www.treasury.gov.au/igr/igr2010/default.asp

*** a very specific report (well, as specific as 190 pages can be) on the issues around funding Australia’s aging population.

Cuomo sues Lewis and BofA over ill-fated Merrill deal
New York Attorney General Andrew Cuomo is suing Bank of America, its former chairman and chief executive Ken Lewis, and Joe Price, the present BofA chief financial officer, for "intentionally” misleading investors about Merrill Lynch's "massive" $16bn (€11.7bn)-plus losses. (The Daily Telegraph)

*** What a piece of stupidity initiated by Cuomo. I wonder what his motivation is.

DAILY MAIL: Nomura Sets its Sights on Winterflood
By Mark Foxwell
2/1/10
Nomura, the Japanese investment bank, is weighing up a £500 million takeover bid for Winterflood Securities, one of the City's biggest market-makers.

Miranda Kerr and the market

Given Wall Street and European market's performance overnight, you too would rather be ogling at Miranda's or Hugh Jackman's pics today. Perhaps the RBA knew what happened overnight would happen.

http://www.financialstandard.com.au/news/view/27975/

Neighbours

A new council tax-evaluation policy wants to charge us more if we live in a nice area.

That ought to mean discounts for those of us who live in rough areas.

There is a huge council house in our street. The extended family is run by a grumpy old woman with a pack of fierce dogs. Her car isn't taxed or insured and doesn't even have a number plate, but the police still do nothing.

Her bad-tempered old man is notorious for racist comments. A shopkeeper blames him for ordering the murder of his son and his son's girl-friend, but nothing has been proved. All their kids have broken marriages except the youngest, who everyone thinks is gay.

Two grandsons are meant to be in the Army but are always out partying in nightclubs. They are out of control.

I just hate living near Windsor Castle….

7 reasons why I won’t be swimming the Cole Classic this week-end:

1. Most swims -- no other swim -- will attempt to force you to enter seven weeks ahead to q ualify for lower, earlybird rates.

2. Most swims -- no other swim -- will charge you $57 to start with a copy of The Sun-Herald as the only added inducement. Most swims charge in the vicinity of $25-$35 dollars.

3. Most swims -- no other swim -- will require you to turn up either in the city on Fridee or at Brookvale on Sat'dee to collect your timing chip and swim cap. All other swims are able to organise themselves to distribute these at registration on swim day. Even the Pier to Pub at Lorne in Victoria, with 4,000 swimmers, feels secure enough to hand out chips and caps on swim day. Goodness knows how swimmers from interstate or outside Sydney, or even from the far corners of Sydney, cope with these unreasonable requirements.

4. Most swims are happy to take however many swimmers they can in order to raise the maximum funds for their causes, usually the surf club that organises the swim. We're unaware of any other swim in NSW -- only the Pier to Pub again, in Victoria -- which closes off entries beforehand (although it is true that some swims, such as The Big Swim, advertise a cap which would trigger an early closure if reached).

5. No other swim requires swimmers dressed in cossies and dripping wet straight out of the water to produce photo id to collect their prizes.

6. All other swims -- save for one or two privately organised events -- donate part of their proceeds, if not all their proceeds, to charity of one kind or another. Fairfax Meeja makes a donation to Manly LSC under an arrangement that it inherited from the Cole family, and it encourages individual swimmers to raise funds through its heroes program, but otherwise it donates nothing to charity and walks away with what we assess to be c. $100,000 or more as pure profit from this event. This is not par for the course in ocean swimming, and that's where you exorbitant entry fees are going: into Fairfax's consolidated revenue. If Fairfax Meeja wishes to challenge this, then they should publish their accounts from the Cole.

7. Most swims -- all other swims in our experience -- are happy to allow their events to be used to publicise and promote other ocean swim events. Fairfax Meeja promotes no other swim apart from Bondi-Bronte, indeed the wording of its website would have you believe that Bondi-Bronte and the Cole are the only two swims on in Sydney worth doing. Indeed, the Bondi-Bronte organiser, who works for Fairfax Meeja in running the Cole -- or did last time we heard -- himself told swimmers in a circular after his own event back in early December that the next swim in Sydney is the Cole Classic. Tell that to the organisers at Bilgola, Newport, North Bondi, Avalon, Mona Vale, and Whale Beach, plus all the other swim organisers around NSW who have run swims between Bondi-Bronte and the Cole.

Scott Riley

Business Development

[Please note my new email address: scott.riley@au.fortisclearing.com]

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