G’day All,
SEC SETS SIGHTS ON SPONSORED ACCESS AND EXCHANGE CO-LOCATION…
“I liken it to giving your car keys to a friend who doesn't have a license and letting him drive unaccompanied," says SEC chairman Mary Schapiro
OK, lets run with this analogy. Sure, sometimes I throw the car keys to a mate that might be visiting. But I have different levels of mates. Some, I say bring the car back when it suits, and I turn my back and I don’t give it a 2nd thought (they’re equally aware of the risks as me). Others, I might say “Sure, I’ll hop in with you for the ride”. When people risk their assets (or balance sheet / capital) they know what they’re doing. They have protections and recourse in place. If they don’t, they won’t be an enduring part of the financial landscape. We take risks every day, and so we should. It’s just understanding the magnitude of those risks that differentiates the teenagers from the adults.
Or as another person said:
He who is not courageous enough to take risks will accomplish nothing in life."
--Muhammad Ali, American boxer and three-time world heavyweight champion
A lot about Nasdaq this week.
I’m surprised they “suspend” their US equities ambitions. I’m sure this is only the headline and the real reasons must run deep. I hope they keep this under review. Somewhere, I believe there is a niche for them to explore.
Right to exit the Securities white label servicing business, a much better fit for Waterhouse.
X-Stream gets placed in Dubai.
Chi-X takes 2nd spot in Europe’s “exchanges” (read trading venue) on Thursday.
(home page has updated, but worth a look)
www.chi-x.com
A shame about delays to access and interoperability.
I believe contagion and default fund contributions were always a meaningful issue.
http://www.eachorg.eu/each/
http://www.eachorg.eu/digitalAssets/49/49401_AccessInteroperabilityGuideline.pdf
84. Risk Management:
CCPs will recognise the specific status of each other as CCPs and not as risk-taking
intermediaries.
• The CCPs involved have to arrange an adequate collateralisation scheme to cover
the exposure of potential losses.
• No CCP is obliged to contribute to the other CCP’s participants’ default fund or
other post default backing schemes.
• A default of a Clearing Member at one CCP should not affect the other CCP unless
the first CCP itself is in default.
This weekend sees us celebrating Halloween…in fancy dress.
I’ll be going as Patrick Star(fish) – (for those not familiar with Patrick, just watch Spongebob square pants – Patrick makes a goldfish’s short term memory look impressive – my kids recommended Mr Crabs, tight and cranky, but I couldn’t source the claws).
…and for those doing the Noosa eyeline events this week-end best of luck,
….meanwhile I’ll be clearing up after our Halloween party.
Great w/end all,
S
http://clearingandsettlement.blogspot.com/
Platforms
Exchange group Nasdaq OMX is betting on its INET trading technology and its BX secondary equities trading platform to help it recover lost US equities market share, says Brian Hyndman, the group’s senior vice president of transaction services.
Read the interview
….an extract…
Last week the exchange announced it would revive the dormant equity licence from its 2007 acquisition of the Philadelphia Stock Exchange to create a third US equity platform. The new exchange will match orders according to price/size priority rather than the price/time systems used on the Nasdaq Stock Market and BX.
http://www.thetradenews.com/node/3765
Bats surges past Turquoise on UK fee cuts Bats Europe, the alternative trading system operated by US-based Bats Global Markets, has almost doubled its share of UK equity trades in just two months and has overtaken rival Turquoise for the first time, thanks to an aggressive price promotion that critics warned would have only a temporary impact on volumes.
CLS BANK TO ESTABLISH FX TRADE DATA REPOSITORY Foreign exchange settlement outfit CLS Bank is to establish a trade data repository for the global FX market, in a move designed to head off regulatory pressure for more transparency in the over-the-counter currency markets.
Full story: http://www.finextra.com/fullstory.asp?id=20671
Clearing
THE TRADE NEWS: Japan’s Alternative Platforms to Get CCP ClearingBy Staff10/26/09The Japan Securities Clearing Corporation (JSCC), the central counterparty for Japan’s stock exchanges, will be able to clear trades from the country’s alternative trading platforms, known as proprietary trading systems (PTSs), from July next year.
http://www.thetradenews.com/asset-classes/equities/3794
TRAYPORT AND PERCIVAL TEAM ON CLEARING AND SETTLEMENT
http://www.finextra.com/fullpr.asp?id=30508
Nasdaq ‘suspends’ plans to launch US equities clearing Nasdaq OMX has said it was "suspending" its plans to launch US equities clearing, with Bethany Sherman, a spokeswoman for the transatlantic exchange group, claiming the "threat of competition had forced the Depository Trust & Clearing Corporation, the market leader, to cut costs. (Financial Times)
TD WATERHOUSE COMPLETES ACQUISITION OF OMX SECURITIES
http://www.finextra.com/fullpr.asp?id=30608
DUBAI FINANCIAL MARKET LAUNCHES X-STREAM TRADING PLATFORM
http://www.finextra.com/fullpr.asp?id=30583
Policy
High- Frequency Trading: New Study Finds Divide on ImpactInstitutional investors are of mixed mind about whether the activities of high-frequency trading firms help or hurt their own trading operations, according to research conducted by Greenwich Associates.
http://www.securitiesindustry.com/news/-24116-1.html?ET=securitiesindustry:e1729:171544a:&st=email
27/10/2009 15:52:00
SEC SETS SIGHTS ON SPONSORED ACCESS AND EXCHANGE CO-LOCATION
After taking on dark pools and flash orders, the Securities and Exchange Commission has now turned its attention to high frequency trading and the practice of sponsored access to exchanges.
More on this story: http://www.finextra.com/fullstory.asp?id=20660
*** lets run with the car analogy
SEC looks into effects of high-frequency tradingThe Securities and Exchange Commission is looking into how high-frequency trading, which some estimate accounts for 50% or more of all equity trading in the U.S., affects markets, sources said. As lawmakers are scrutinizing the trading practice and other market developments, the SEC is not expected to publish a discussion paper on the strategies until December at the earliest. A congressional committee will discuss high-frequency trading, dark pools and other developments on Wednesday. Reuters (10/26)
Congress, White House will address "too big to fail"Legislation likely will be introduced in Congress this week that would make it easier for large financial institutions to be taken over by the government and wound down in an orderly fashion during a crisis. The bill, to be introduced by Rep. Barney Frank, D-Mass., after consultation with the Treasury Department, would likely make it more costly to be a large financial company whose failure would threaten the entire system. SIMFA President and CEO Timothy Ryan supports the effort, but warns that legislation could remove key provisions of the Bankruptcy Code given financial institutions. The New York Times (free registration) (10/25)
Chicago mayor, CME heads discuss future of futures industryThe Obama administration's plan to increase oversight of the derivatives markets is expected to have a substantial effect on Chicago's futures industry. CME Group Chairman Terry Duffy, Vice Chairman Charlie Carey and Chicago Mayor Richard M. Daley met recently to discuss how the changes would affect the futures industry. Daley's concerns center on how the changes would affect employment, while the CME leaders are urging Congress to quickly pass legislation that would require more over-the-counter derivatives to be traded on exchanges. Financial Times (tiered subscription model) (10/26)
*** CME leaders are urging Congress to quickly pass legislation that would require more over-the-counter derivatives to be traded on exchanges. – this just exposes their entire desire as self serving. Some of their arguments have merit, if only they were unbiased.
Regional
THE TRADE NEWS: Buy- and Sell-Side Welcome ASEAN Link, According to TABBBy Staff10/26/09Buy- and sell-side firms agree that efforts to harmonise equity trading in the Association of South East Asian Nations (ASEAN) will encourage more investment and faster technological evolution in the region, according to the latest study from research firm TABB Group.Five ASEAN countries – Indonesia, Malaysia, Philippines, Thailand and Singapore – agreed to create an electronic linkage between their exchanges in February 2009 for the trading of equities. A sixth nation, Vietnam, joined the initiative in September.
European success spurs Nomura's Asian ambition Nomura is launching a Japanese dark pool to compete for a larger share of the increasingly important Asian market, having already established itself as one of the top trading firms in Europe since acquiring parts of Lehman Brothers’ business a year ago.
*** A report from research house Tabb Group last month estimated the market share of Japanese alternative trading systems at 1.6% but predicted this number will increase to 3.5% by the end of 2011.
The Treasury provides advice on policies that promote competitive, efficient markets that work to enhance consumer wellbeing, a secure financial system and sound corporate practices, and foreign investment consistent with Australia’s national interest.
http://www.treasury.gov.au/contentitem.asp?NavId=036&ContentID=1649
SMARTS GROUP LAUNCHES MARKET SURVEILLANCE PLATFORM IN US
http://www.finextra.com/fullpr.asp?id=30575
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
Friday, October 30, 2009
Sunday, October 25, 2009
AMCF & News: Demonising the dark, EC derivs blueprint, FSA DP, a Marigold for Lily.
I hang my head in shame.
Last week-end we had the http://www.7bridgeswalk.com.au/
Dreadful weather, but when did a drenching to the bone ever hurt anyone?
Congrats to my female colleagues (who finished) that showed my son and I up (we stayed in bed).
More Demonizing of the Dark.
(speaking of demonizing, I’ve just done my first full presentation in Powerpoint 2007, .pptx – and there are a few demons in there too).
Of no doubt, the dark has a role to play.
At a level, the lit market place may be compromised if too much price discovery moves to the dark.
I have no idea what the correct thresholds should be…and frankly, I don’t think regulators do either.
The markets are a complex ecosystem.
Dropping a bomb on a coral reef may take out all the crown of thorn star fish (a pest / demon) but has other consequences too.
The fact that institutions themselves are so evenly divided on the merits of the dark makes me feel drastic actions are probably not the right measure for today.
Much to read this last week.
Cinnober liquidity, EC derivatives reform, FSA DP on too big to fail. Locally CP120 (ongoing) and the RBA payments system board annual report.
So, finally the Lily consortium gets a Marigold.
I still feel there is much more to change with LCH.Clearnet.
Increased ownership opens the door to increased accountability.
I still can’t reconcile the commoditised elements of the business (equities) with the growth components (OTC).
Have a great week all. I need to get back to the books and drafting these responses.
(and don’t give the ATM card to Aussie pizza delivery boys)
S
http://clearingandsettlement.blogspot.com/
Platforms
Chi-X Europe Launches Chi-Velocity Chi-X Europe has launched Chi-Velocity, a proximity-hosted risk management software layer co-located ...
Demonizing the DarkAdam Sussman, TABB Group's director of research, comments on the SEC and dark pools, specific to yesterday's ...
http://advancedtrading.com/crossingnetworks/showArticle.jhtml;jsessionid=1T2OETHF5UFDBQE1GHRSKHWATMY32JVN?articleID=220800127&_requestid=636309
SEC Takes Dramatic Stance on Dark Pools with Rule Proposal In an SEC meeting yesterday in Washington, D.C., the regulator proposed a new rule that ultimately aims to ...
http://advancedtrading.com/crossingnetworks/showArticle.jhtml;jsessionid=1T2OETHF5UFDBQE1GHRSKHWATMY32JVN?articleID=220900046&_requestid=636730
NYSE MAKES MOVE TO IMPROVE DARK POOL TRANSPARENCY With dark pools under the regulatory microscope, Nyse Euronext has struck a deal with five firms behind ATSs and off-exchange market centres to print trades made on the venues on the reporting facility it operates with Finra and display daily activity on Nyse.com.
Full story: http://www.finextra.com/fullstory.asp?id=20632
Senator Schumer's Six Proposals for ATS Regulation Following yesterday's press conference call with NYSE chief executive Duncan Neiderauer, Senator Chuck ...
http://advancedtrading.com/regulations/showArticle.jhtml;jsessionid=QHVWACIJ0BBALQE1GHOSKHWATMY32JVN?articleID=220800113&_requestid=265259
21/10/2009 16:46:00
SEC PROPOSES DARK POOL RULES; INSTITUTIONS DIVIDED OVER MERITS OF HIGH FREQUENCY TRADING
The US Securities and Exchange Commission has unveiled proposals aimed at shedding more light on dark pool trading by introducing new rules that would require enhanced public disclosure of stocks passing over alternative trading networks.
More on this story: http://www.finextra.com/fullstory.asp?id=20639
Leading independent exchange technology provider Cinnober today announced the publication of an in-depth whitepaper on latency on their web site.
The whitepaper can be downloaded at www.cinnober.com.
FINANCIAL NEWS: LSE Moves Forward with Acquisition Plans By Luke Jeffs10/20/09The London Stock Exchange has confirmed its determination to compete with both its large European exchange rivals and the new breed of European trading platforms, by acquiring a tech firm and forging ahead with talks to buy one of its new rivals Turquoise.The LSE said yesterday that it had completed the acquisition of Sri-Lankan trading system specialist MillenniumIT for $30m (€20.4m), a deal the LSE hopes will reposition it to compete more effectively with the new breed of tech-savvy platforms, known as multi-lateral trading facilities.Separately, the LSE said it is progressing with exclusive talks to acquire MTF rival Turquoise, the trading system set up by seven investment banks to challenge the UK exchange and its large European counterparts NYSE Euronext and Deutsche Börse.A spokesman for the LSE confirmed that the exclusive talks with Turquoise, first revealed by Financial News Online on October 1 this year, are ongoing, but declined to comment further on specifics.The LSE and Turquoise are keen to reach an agreement that will enable an offer to be made, and sources close to the talks said the plan is to have that agreement in place at least by the end of next year, or possibly before the end of next month.The Millennium and Turquoise deals reflect the ambition of the LSE’s new chief executive Xavier Rolet. The former Lehman Brothers banker has shown his intention to draw a line under the tenure of his predecessor, Dame Clara Furse, in the five months since he joined the firm.Since the end of May, in addition to completing the Millennium acquisition and moving ahead with the Turquoise deal, Rolet has scrapped a controversial fee aimed at high-frequency traders and opened talks to buy a stake in European clearing house EMCF.Rolet also said, last month, that the exchange is looking to extend the company’s Italian clearing house, CC&G, into the UK to reduce the “very high cost of clearing and settling UK equities through LCH.Clearnet and Euroclear”.The London Stock Exchange’s bid to establish itself as one of Europe’s most robust and efficient markets suffered a setback last week however, as invalid data entered by a customer forced the exchange to suspend trading in six blue chip stocks for over an hour.
Clearing
EUROPEAN COMMISSION SETS OUT BLUEPRINT FOR DERIVATIVES REFORM
http://www.finextra.com/fullpr.asp?id=30410
The full text (and background papers) are available here:
http://ec.europa.eu/internal_market/financial-markets/derivatives/index_en.htm
LCH.CLEARNET AND OSLO CLEARING TO INTEROPERATE
http://www.finextra.com/fullpr.asp?id=30439
LCH.CLEARNET LOOKS AHEAD AFTER BUYBACK LCH.Clearnet will reach a milestone today when it announces the results of its €444m ($666m) shareholder buyback, a bid to hand greater control to its users and sidestep a takeover bid by a consortium of banks.
http://mail.efnmail.co.uk/r/143528272/MjU3MzA2OjIyOTQ5/
FINANCIAL TIMES: Consortium Prepares to Drop Bid for LCH.ClearnetBy Jeremy Grant 10/20/09A consortium of banks and Icap, the world’s largest interdealer broker, was on Tuesday preparing to abandon its attempt to take over LCH.Clearnet amid signs that Europe’s largest clearing house would secure its future through a shareholder buy-out plan, two people familiar with the matter said.Goldman Sachs and Morgan Stanley last week quit the consortium, which last year approached LCH.Clearnet with an offer designed to trump an existing offer from The Depository Trust & Clearing Corporation, the US post-trade services group. The DTCC pulled out in April.The bid battle highlighted how clearing has shot to prominence in the wake of the financial crisis as regulators push for greater use of the process to safeguard the financial system. A clearing house stands between parties in a trade, guaranteeing that trades are completed even if one side defaults. The lack of clearing in most over-the-counter derivatives has been widely criticised, and regulators are calling for as many OTC derivatives as possible to be processed through clearing houses to reduce so-called counterparty risk in the financial system.The consortium included 13 of the world’s largest banks active in OTC derivatives. Icap is the world’s largest interdealer broker in the OTC markets.It wanted control of LCH.Clearnet largely for its SwapClear interest rate swaps clearing business, turning the clearer for the London Stock Exchange, Euronext and the London Metal Exchange into the most prized post-trade asset in Europe.The consortium believed that with regulators pushing for more clearing, market structures like LCH.Clearnet would become increasingly important businesses. LCH.Clearnet tried to fend off the consortium earlier this year by coming up with a plan to streamline its base of 120 disparate shareholders, many of which are small and rarely use the clearer’s facilities. The consortium in May submitted an €11-per-share cash offer for LCH.Clearnet, valuing the clearing house at about €830m ($1.1bn).LCH.Clearnet later revised the shareholder streamlining plan, offering to buy up to 33.3m shares from shareholders at €10 per share. Including a dividend announced last month of €1.50 per share, the return to shareholders could total €444m.People familiar with the consortium’s thinking said that its remaining members believed that the revised LCH plan contained many elements that would satisfy the consortium, including ensuring that the clearer’s shareholder base more accurately reflected its users.LCH.Clearnet last month announced that chairman Chris Tupker would be retiring early next year. Shareholders have until Tuesday to tell LCH.Clearnet whether they want to redeem their shares under the clearer’s revised streamlining plan, codenamed “Marigold”.Euroclear, the post-trade services group and the largest shareholder, has already signalled its intention to redeem its stake of 11.7m shares, which amounts to 15.8 per cent of LCH.Clearnet’s share capital.The LCH.Clearnet board will then decide whether to complete the plan on November 5.
Other
AFME -- A New Trade Body for EuropeAs regulation of the financial markets takes on an increasingly global dimension, the London Investment Banking Association and the European operations of the Securities Industry and Financial Markets Association have joined forces to form the Association for Financial Markets in Europe. The former affiliates of SIFMA -- the European Covered Bond Dealers Association, the European High Yield Association, the European Primary Dealers Association, the European Securities Services Forum and the European Securitisation Forum -- will be integrated into AFME's business policy divisions. Learn more.
EQUINIX TO ACQUIRE SWITCH AND DATA IN $689 MILLION DEAL
http://www.finextra.com/fullpr.asp?id=30441
NOMURA LAUNCHES LOW-LATENCY EUROPEAN TRADING SERVICE Nomura has launched a low latency trading service that taps networking technology from Colt to offer clients co-located software hosting connectivity to major exchanges and MTFs in Europe.
Full story: http://www.finextra.com/fullstory.asp?id=20643
FSA PROPOSES LIMITS ON TOO-BIG-TO-FAIL BANKS
http://www.finextra.com/fullpr.asp?id=30447
The DP (Discussion Paper) is available here:
http://www.fsa.gov.uk/pages/Library/Communication/PR/2009/142.shtml
or
http://www.fsa.gov.uk/pubs/discussion/dp09_04.pdf
PIZZA BOY USES ATM MANUAL TO STEAL A$30,000 IN UNDER AN HOUR An Australian pizza boy who hacked into ATMs and changed their settings before stealing around A$30,000 in under an hour has escaped a prison term, according to local press reports.
Full story: http://www.finextra.com/fullstory.asp?id=20648
This is a good paper on Aust development, including....
Today's population is about 22 million. So we are now projecting an increase of 13 million people, or around 60 per cent, over the next 40 years.
A population expansion of this order has a host of implications for the Australian economy and society; and it raises a number of profound issues for economic policy.
First set of issues: Where will these 13 million people live – in our current major cities and regional centres or in cities we haven't yet even started to build? We have given this matter some thought in the Treasury. On quite reasonable assumptions, we can imagine Sydney and Melbourne growing from 4½ and 4 million people today to cities of almost 7 million. Brisbane will, we think, more than double in size, to be 4 million people 40 years from now. Among them, Sydney, Melbourne, Brisbane and Perth will have almost as many people as the entire Australian population today.
How will Sydney cope with a 54 per cent increase in its population, Melbourne a 74 per cent increase and Brisbane a 106 per cent increase? Surely not by continuing to expand their geographic footprints at the same rate as in the past several decades. Surely not by loading more cars and trucks onto road networks that can't cope with today's traffic.
Speech:
The Shape of Things to Come - Address by Dr Ken Henry to the QUT Business Leaders' Forum
http://www.treasury.gov.au/contentitem.asp?NavId=008&ContentID=1643
'I Physically Felt the Radioactivity' The Chernobyl disaster happened over two decades ago, but its effects continue to be as present as ever. German photographer Rüdiger Lubricht spent months documenting what has been left behind in the exclusion zone which now surrounds the stricken reactor. In an interview with seen.by, he talks about his experiences.
Photo Gallery: Ghost Towns and Gas MasksPhoto Gallery: The Wildlife of Chernobyl
*** Based on the constant battle I have with my garden, I’m surprised at the relative lack of invasion of overgrowth / regrowth in the cities.
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
Last week-end we had the http://www.7bridgeswalk.com.au/
Dreadful weather, but when did a drenching to the bone ever hurt anyone?
Congrats to my female colleagues (who finished) that showed my son and I up (we stayed in bed).
More Demonizing of the Dark.
(speaking of demonizing, I’ve just done my first full presentation in Powerpoint 2007, .pptx – and there are a few demons in there too).
Of no doubt, the dark has a role to play.
At a level, the lit market place may be compromised if too much price discovery moves to the dark.
I have no idea what the correct thresholds should be…and frankly, I don’t think regulators do either.
The markets are a complex ecosystem.
Dropping a bomb on a coral reef may take out all the crown of thorn star fish (a pest / demon) but has other consequences too.
The fact that institutions themselves are so evenly divided on the merits of the dark makes me feel drastic actions are probably not the right measure for today.
Much to read this last week.
Cinnober liquidity, EC derivatives reform, FSA DP on too big to fail. Locally CP120 (ongoing) and the RBA payments system board annual report.
So, finally the Lily consortium gets a Marigold.
I still feel there is much more to change with LCH.Clearnet.
Increased ownership opens the door to increased accountability.
I still can’t reconcile the commoditised elements of the business (equities) with the growth components (OTC).
Have a great week all. I need to get back to the books and drafting these responses.
(and don’t give the ATM card to Aussie pizza delivery boys)
S
http://clearingandsettlement.blogspot.com/
Platforms
Chi-X Europe Launches Chi-Velocity Chi-X Europe has launched Chi-Velocity, a proximity-hosted risk management software layer co-located ...
Demonizing the DarkAdam Sussman, TABB Group's director of research, comments on the SEC and dark pools, specific to yesterday's ...
http://advancedtrading.com/crossingnetworks/showArticle.jhtml;jsessionid=1T2OETHF5UFDBQE1GHRSKHWATMY32JVN?articleID=220800127&_requestid=636309
SEC Takes Dramatic Stance on Dark Pools with Rule Proposal In an SEC meeting yesterday in Washington, D.C., the regulator proposed a new rule that ultimately aims to ...
http://advancedtrading.com/crossingnetworks/showArticle.jhtml;jsessionid=1T2OETHF5UFDBQE1GHRSKHWATMY32JVN?articleID=220900046&_requestid=636730
NYSE MAKES MOVE TO IMPROVE DARK POOL TRANSPARENCY With dark pools under the regulatory microscope, Nyse Euronext has struck a deal with five firms behind ATSs and off-exchange market centres to print trades made on the venues on the reporting facility it operates with Finra and display daily activity on Nyse.com.
Full story: http://www.finextra.com/fullstory.asp?id=20632
Senator Schumer's Six Proposals for ATS Regulation Following yesterday's press conference call with NYSE chief executive Duncan Neiderauer, Senator Chuck ...
http://advancedtrading.com/regulations/showArticle.jhtml;jsessionid=QHVWACIJ0BBALQE1GHOSKHWATMY32JVN?articleID=220800113&_requestid=265259
21/10/2009 16:46:00
SEC PROPOSES DARK POOL RULES; INSTITUTIONS DIVIDED OVER MERITS OF HIGH FREQUENCY TRADING
The US Securities and Exchange Commission has unveiled proposals aimed at shedding more light on dark pool trading by introducing new rules that would require enhanced public disclosure of stocks passing over alternative trading networks.
More on this story: http://www.finextra.com/fullstory.asp?id=20639
Leading independent exchange technology provider Cinnober today announced the publication of an in-depth whitepaper on latency on their web site.
The whitepaper can be downloaded at www.cinnober.com.
FINANCIAL NEWS: LSE Moves Forward with Acquisition Plans By Luke Jeffs10/20/09The London Stock Exchange has confirmed its determination to compete with both its large European exchange rivals and the new breed of European trading platforms, by acquiring a tech firm and forging ahead with talks to buy one of its new rivals Turquoise.The LSE said yesterday that it had completed the acquisition of Sri-Lankan trading system specialist MillenniumIT for $30m (€20.4m), a deal the LSE hopes will reposition it to compete more effectively with the new breed of tech-savvy platforms, known as multi-lateral trading facilities.Separately, the LSE said it is progressing with exclusive talks to acquire MTF rival Turquoise, the trading system set up by seven investment banks to challenge the UK exchange and its large European counterparts NYSE Euronext and Deutsche Börse.A spokesman for the LSE confirmed that the exclusive talks with Turquoise, first revealed by Financial News Online on October 1 this year, are ongoing, but declined to comment further on specifics.The LSE and Turquoise are keen to reach an agreement that will enable an offer to be made, and sources close to the talks said the plan is to have that agreement in place at least by the end of next year, or possibly before the end of next month.The Millennium and Turquoise deals reflect the ambition of the LSE’s new chief executive Xavier Rolet. The former Lehman Brothers banker has shown his intention to draw a line under the tenure of his predecessor, Dame Clara Furse, in the five months since he joined the firm.Since the end of May, in addition to completing the Millennium acquisition and moving ahead with the Turquoise deal, Rolet has scrapped a controversial fee aimed at high-frequency traders and opened talks to buy a stake in European clearing house EMCF.Rolet also said, last month, that the exchange is looking to extend the company’s Italian clearing house, CC&G, into the UK to reduce the “very high cost of clearing and settling UK equities through LCH.Clearnet and Euroclear”.The London Stock Exchange’s bid to establish itself as one of Europe’s most robust and efficient markets suffered a setback last week however, as invalid data entered by a customer forced the exchange to suspend trading in six blue chip stocks for over an hour.
Clearing
EUROPEAN COMMISSION SETS OUT BLUEPRINT FOR DERIVATIVES REFORM
http://www.finextra.com/fullpr.asp?id=30410
The full text (and background papers) are available here:
http://ec.europa.eu/internal_market/financial-markets/derivatives/index_en.htm
LCH.CLEARNET AND OSLO CLEARING TO INTEROPERATE
http://www.finextra.com/fullpr.asp?id=30439
LCH.CLEARNET LOOKS AHEAD AFTER BUYBACK LCH.Clearnet will reach a milestone today when it announces the results of its €444m ($666m) shareholder buyback, a bid to hand greater control to its users and sidestep a takeover bid by a consortium of banks.
http://mail.efnmail.co.uk/r/143528272/MjU3MzA2OjIyOTQ5/
FINANCIAL TIMES: Consortium Prepares to Drop Bid for LCH.ClearnetBy Jeremy Grant 10/20/09A consortium of banks and Icap, the world’s largest interdealer broker, was on Tuesday preparing to abandon its attempt to take over LCH.Clearnet amid signs that Europe’s largest clearing house would secure its future through a shareholder buy-out plan, two people familiar with the matter said.Goldman Sachs and Morgan Stanley last week quit the consortium, which last year approached LCH.Clearnet with an offer designed to trump an existing offer from The Depository Trust & Clearing Corporation, the US post-trade services group. The DTCC pulled out in April.The bid battle highlighted how clearing has shot to prominence in the wake of the financial crisis as regulators push for greater use of the process to safeguard the financial system. A clearing house stands between parties in a trade, guaranteeing that trades are completed even if one side defaults. The lack of clearing in most over-the-counter derivatives has been widely criticised, and regulators are calling for as many OTC derivatives as possible to be processed through clearing houses to reduce so-called counterparty risk in the financial system.The consortium included 13 of the world’s largest banks active in OTC derivatives. Icap is the world’s largest interdealer broker in the OTC markets.It wanted control of LCH.Clearnet largely for its SwapClear interest rate swaps clearing business, turning the clearer for the London Stock Exchange, Euronext and the London Metal Exchange into the most prized post-trade asset in Europe.The consortium believed that with regulators pushing for more clearing, market structures like LCH.Clearnet would become increasingly important businesses. LCH.Clearnet tried to fend off the consortium earlier this year by coming up with a plan to streamline its base of 120 disparate shareholders, many of which are small and rarely use the clearer’s facilities. The consortium in May submitted an €11-per-share cash offer for LCH.Clearnet, valuing the clearing house at about €830m ($1.1bn).LCH.Clearnet later revised the shareholder streamlining plan, offering to buy up to 33.3m shares from shareholders at €10 per share. Including a dividend announced last month of €1.50 per share, the return to shareholders could total €444m.People familiar with the consortium’s thinking said that its remaining members believed that the revised LCH plan contained many elements that would satisfy the consortium, including ensuring that the clearer’s shareholder base more accurately reflected its users.LCH.Clearnet last month announced that chairman Chris Tupker would be retiring early next year. Shareholders have until Tuesday to tell LCH.Clearnet whether they want to redeem their shares under the clearer’s revised streamlining plan, codenamed “Marigold”.Euroclear, the post-trade services group and the largest shareholder, has already signalled its intention to redeem its stake of 11.7m shares, which amounts to 15.8 per cent of LCH.Clearnet’s share capital.The LCH.Clearnet board will then decide whether to complete the plan on November 5.
Other
AFME -- A New Trade Body for EuropeAs regulation of the financial markets takes on an increasingly global dimension, the London Investment Banking Association and the European operations of the Securities Industry and Financial Markets Association have joined forces to form the Association for Financial Markets in Europe. The former affiliates of SIFMA -- the European Covered Bond Dealers Association, the European High Yield Association, the European Primary Dealers Association, the European Securities Services Forum and the European Securitisation Forum -- will be integrated into AFME's business policy divisions. Learn more.
EQUINIX TO ACQUIRE SWITCH AND DATA IN $689 MILLION DEAL
http://www.finextra.com/fullpr.asp?id=30441
NOMURA LAUNCHES LOW-LATENCY EUROPEAN TRADING SERVICE Nomura has launched a low latency trading service that taps networking technology from Colt to offer clients co-located software hosting connectivity to major exchanges and MTFs in Europe.
Full story: http://www.finextra.com/fullstory.asp?id=20643
FSA PROPOSES LIMITS ON TOO-BIG-TO-FAIL BANKS
http://www.finextra.com/fullpr.asp?id=30447
The DP (Discussion Paper) is available here:
http://www.fsa.gov.uk/pages/Library/Communication/PR/2009/142.shtml
or
http://www.fsa.gov.uk/pubs/discussion/dp09_04.pdf
PIZZA BOY USES ATM MANUAL TO STEAL A$30,000 IN UNDER AN HOUR An Australian pizza boy who hacked into ATMs and changed their settings before stealing around A$30,000 in under an hour has escaped a prison term, according to local press reports.
Full story: http://www.finextra.com/fullstory.asp?id=20648
This is a good paper on Aust development, including....
Today's population is about 22 million. So we are now projecting an increase of 13 million people, or around 60 per cent, over the next 40 years.
A population expansion of this order has a host of implications for the Australian economy and society; and it raises a number of profound issues for economic policy.
First set of issues: Where will these 13 million people live – in our current major cities and regional centres or in cities we haven't yet even started to build? We have given this matter some thought in the Treasury. On quite reasonable assumptions, we can imagine Sydney and Melbourne growing from 4½ and 4 million people today to cities of almost 7 million. Brisbane will, we think, more than double in size, to be 4 million people 40 years from now. Among them, Sydney, Melbourne, Brisbane and Perth will have almost as many people as the entire Australian population today.
How will Sydney cope with a 54 per cent increase in its population, Melbourne a 74 per cent increase and Brisbane a 106 per cent increase? Surely not by continuing to expand their geographic footprints at the same rate as in the past several decades. Surely not by loading more cars and trucks onto road networks that can't cope with today's traffic.
Speech:
The Shape of Things to Come - Address by Dr Ken Henry to the QUT Business Leaders' Forum
http://www.treasury.gov.au/contentitem.asp?NavId=008&ContentID=1643
'I Physically Felt the Radioactivity' The Chernobyl disaster happened over two decades ago, but its effects continue to be as present as ever. German photographer Rüdiger Lubricht spent months documenting what has been left behind in the exclusion zone which now surrounds the stricken reactor. In an interview with seen.by, he talks about his experiences.
Photo Gallery: Ghost Towns and Gas MasksPhoto Gallery: The Wildlife of Chernobyl
*** Based on the constant battle I have with my garden, I’m surprised at the relative lack of invasion of overgrowth / regrowth in the cities.
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
Thursday, October 8, 2009
AMCF News: Up, MTF consolidation, RBA, JSCC open to PTS
School holidays here so last Tuesday I took the kids to see Up (the latest Disney Pixar offering)
I thought this was a harrowing story in parts, about how life’s dreams can pass us by as we become embroiled in the day to day demands of life.
The kids liked it, but most of all I liked my mum’s remark:
As to Pixar, experiences provide the filters we use to look at things and it seems to me that by and large it is right that the older we get older the more complexity we bring to bear. (Mum – but what Mum wouldn’t say something like that?).
So to T(urquoise). Personally, I didn’t have the LSE at the front of the bidding list but to me it does strike a tidy solution. I read the merit in this of connecting and engaging with your customers. What price can you put on that? I also think it a useful piece of consolidation that LSE can extract its own value from. It is the connectivity / network effect that brings value in my view. This also mitigates some of the “pump and then dump” speculation.
Regardless, whatever, good luck to them. Each of us needs to focus on our own business plans. It’s nice to be aware of what is around the corner, but no point in being a slave to it.
On the post trade side it certainly throws up some interest. The CC&G asset becomes interesting, more questions than answers for DTCC, and free and open access to the trade feed in terms of interoperability have yet to play out.
Who knows, what next. Maybe the Members of LIBA will sell out to FESE rather than merge with SIFMA. Lovely!
More on mixed messages: RBA following a course of Fiscal prudence by raising rates yet the politicians are still busy piling on the debt with fiscal stimulus packages.
It reminds me of the old parental weakest link. If I don’t get a bag of sweets from mum I’ll try dad (or visa versa).
Then a hop to Thains comments re leveraged product pricing. A shameful confession. But then, we have yet to develop a super computer than can tell me the weather on the way home. That said, I can look out the window and make a value judgement of whether I need an umbrella or not. (tis a question of granularity and certainty – context).
Anyway, as I mentioned, school holidays here so I’m off to teach the kids some more surf skills (I hope) and also do some ocean training. I’ll be just down from Forries.
(http://www.oceanswims.com/nsw90/nswcalendar90.html#forresters)
…Oh, and my reading:
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/cp120.pdf/$file/cp120.pdf
(CONSULTATION PAPER 120, Operators of clearing and settlement facilities)
Have a great w/end all,
….and if your Mums about, get her to make you a cuppa and a piece of toast, for some reason, it always tastes better when its handed to you.
S
http://clearingandsettlement.blogspot.com/
Platforms
BATS sets sights on new markets, asset classes
http://www.thetradenews.com/trading-venues/exchanges/3663
*** Mwwwwaaaahhhhaaaaa
BATS Europe ups price war with new taker fee
http://www.thetradenews.com/trading-venues/exchanges/3663
Clearing
LSE outlines clearing switch to reduce trading costs
http://www.thetradenews.com/trading-venues/exchanges/3668
Burgundy announces CCP launch date
http://www.thetradenews.com/trading-venues/mtfs-ecns/3684
LCH, Euroclear bid to cut European post-trade costs
http://www.thetradenews.com/regions/europe/3681
Policy
Europe's broker-owned dark pools or crossing engines will be more open to toxic flow and less able to provide price improvement if they are forced to register as multilateral trading facilities, brokers claim.
Read story
http://www.thetradenews.com/asset-classes/equities/3686
High-Frequency Trading On SEC's Agenda The SEC, which already has proposed banning flash orders, says it will look into the fairness of high-frequency ...
ASX's algo review may tighten trading rules
http://www.thetradenews.com/trading-execution/algorithmic-trading/3682
INSTINET TO LAUNCH PATENT-PENDING 'AGGREGATED' DARK POOL Instinet is set to launch a new US dark pool that combines multiple smaller buy and sell orders up to a specific volume threshold in an effort to attract more anonymous block trade order flow.
Full story: http://www.finextra.com/fullstory.asp?id=20568
JOHN THAIN: MERRILL'S STRUCTURED PRODUCTS WERE SO COMPLEX THAT NOBODY UNDERSTOOD THEM Former Merrill Lynch chief John Thain says that the structured products created by his firm were so complex that it could take up to three hours to model one traunch of a single CDO correctly when using "one of the fastest computers in the United States".
Full story: http://www.finextra.com/fullstory.asp?id=20584
Regional
FINANCIAL TIMES: TSE Faces Competition From Small PlatformsBy Lindsay Whipp10/5/09The Tokyo Stock Exchange will face greater competition as a marketplace for buying and selling Japanese shares from next year after the country’s main clearing house unveiled plans to support smaller alternative trading platforms.The Japan Securities Clearing Corporation said it would start providing clearing services for the country’s alternative share trading platforms from next July, a move that market participants said would help increase liquidity.
At its meeting today, the Board decided to raise the cash rate by 25 basis points to 3.25 per cent, effective 7 October 2009.
http://www.rba.gov.au/MediaReleases/2009/mr-09-23.html
Nomura sees massive investor interest for share offering Nomura is poised to raise 433bn yen (€3.3bn) to finance its global expansion, after Japan's top brokerage on Monday priced a heavily oversubscribed offer of 800 million shares at 568 yen each, sources said. (The Wall Street Journal)
Other
"Farewell America".
http://www.wegelin.ch/download/medien/anlagekommentar/kom_265en.pdf
*** A remarkable commentary of unintended consequences
BLOOMBERG INTRODUCES NIGERIAN STOCK EXCHANGE DATA FEED
http://www.finextra.com/fullpr.asp?id=30167
***surely a scam?
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
I thought this was a harrowing story in parts, about how life’s dreams can pass us by as we become embroiled in the day to day demands of life.
The kids liked it, but most of all I liked my mum’s remark:
As to Pixar, experiences provide the filters we use to look at things and it seems to me that by and large it is right that the older we get older the more complexity we bring to bear. (Mum – but what Mum wouldn’t say something like that?).
So to T(urquoise). Personally, I didn’t have the LSE at the front of the bidding list but to me it does strike a tidy solution. I read the merit in this of connecting and engaging with your customers. What price can you put on that? I also think it a useful piece of consolidation that LSE can extract its own value from. It is the connectivity / network effect that brings value in my view. This also mitigates some of the “pump and then dump” speculation.
Regardless, whatever, good luck to them. Each of us needs to focus on our own business plans. It’s nice to be aware of what is around the corner, but no point in being a slave to it.
On the post trade side it certainly throws up some interest. The CC&G asset becomes interesting, more questions than answers for DTCC, and free and open access to the trade feed in terms of interoperability have yet to play out.
Who knows, what next. Maybe the Members of LIBA will sell out to FESE rather than merge with SIFMA. Lovely!
More on mixed messages: RBA following a course of Fiscal prudence by raising rates yet the politicians are still busy piling on the debt with fiscal stimulus packages.
It reminds me of the old parental weakest link. If I don’t get a bag of sweets from mum I’ll try dad (or visa versa).
Then a hop to Thains comments re leveraged product pricing. A shameful confession. But then, we have yet to develop a super computer than can tell me the weather on the way home. That said, I can look out the window and make a value judgement of whether I need an umbrella or not. (tis a question of granularity and certainty – context).
Anyway, as I mentioned, school holidays here so I’m off to teach the kids some more surf skills (I hope) and also do some ocean training. I’ll be just down from Forries.
(http://www.oceanswims.com/nsw90/nswcalendar90.html#forresters)
…Oh, and my reading:
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/cp120.pdf/$file/cp120.pdf
(CONSULTATION PAPER 120, Operators of clearing and settlement facilities)
Have a great w/end all,
….and if your Mums about, get her to make you a cuppa and a piece of toast, for some reason, it always tastes better when its handed to you.
S
http://clearingandsettlement.blogspot.com/
Platforms
BATS sets sights on new markets, asset classes
http://www.thetradenews.com/trading-venues/exchanges/3663
*** Mwwwwaaaahhhhaaaaa
BATS Europe ups price war with new taker fee
http://www.thetradenews.com/trading-venues/exchanges/3663
Clearing
LSE outlines clearing switch to reduce trading costs
http://www.thetradenews.com/trading-venues/exchanges/3668
Burgundy announces CCP launch date
http://www.thetradenews.com/trading-venues/mtfs-ecns/3684
LCH, Euroclear bid to cut European post-trade costs
http://www.thetradenews.com/regions/europe/3681
Policy
Europe's broker-owned dark pools or crossing engines will be more open to toxic flow and less able to provide price improvement if they are forced to register as multilateral trading facilities, brokers claim.
Read story
http://www.thetradenews.com/asset-classes/equities/3686
High-Frequency Trading On SEC's Agenda The SEC, which already has proposed banning flash orders, says it will look into the fairness of high-frequency ...
ASX's algo review may tighten trading rules
http://www.thetradenews.com/trading-execution/algorithmic-trading/3682
INSTINET TO LAUNCH PATENT-PENDING 'AGGREGATED' DARK POOL Instinet is set to launch a new US dark pool that combines multiple smaller buy and sell orders up to a specific volume threshold in an effort to attract more anonymous block trade order flow.
Full story: http://www.finextra.com/fullstory.asp?id=20568
JOHN THAIN: MERRILL'S STRUCTURED PRODUCTS WERE SO COMPLEX THAT NOBODY UNDERSTOOD THEM Former Merrill Lynch chief John Thain says that the structured products created by his firm were so complex that it could take up to three hours to model one traunch of a single CDO correctly when using "one of the fastest computers in the United States".
Full story: http://www.finextra.com/fullstory.asp?id=20584
Regional
FINANCIAL TIMES: TSE Faces Competition From Small PlatformsBy Lindsay Whipp10/5/09The Tokyo Stock Exchange will face greater competition as a marketplace for buying and selling Japanese shares from next year after the country’s main clearing house unveiled plans to support smaller alternative trading platforms.The Japan Securities Clearing Corporation said it would start providing clearing services for the country’s alternative share trading platforms from next July, a move that market participants said would help increase liquidity.
At its meeting today, the Board decided to raise the cash rate by 25 basis points to 3.25 per cent, effective 7 October 2009.
http://www.rba.gov.au/MediaReleases/2009/mr-09-23.html
Nomura sees massive investor interest for share offering Nomura is poised to raise 433bn yen (€3.3bn) to finance its global expansion, after Japan's top brokerage on Monday priced a heavily oversubscribed offer of 800 million shares at 568 yen each, sources said. (The Wall Street Journal)
Other
"Farewell America".
http://www.wegelin.ch/download/medien/anlagekommentar/kom_265en.pdf
*** A remarkable commentary of unintended consequences
BLOOMBERG INTRODUCES NIGERIAN STOCK EXCHANGE DATA FEED
http://www.finextra.com/fullpr.asp?id=30167
***surely a scam?
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
Thursday, October 1, 2009
AMCF News: ASX AGM, CP120, LCH.CN results, InterOp, HK
Sanctimonious twaddle. (Thx David Buik).
What a marvellous coupling of words. I really miss some things about England, and their mastery of their language is one of them.
It also strikes me that we don’t have to look far to find an abundance of twaddle.
One area of twaddle is of course vested interests and competition.
It strikes me more and more that the incumbent exchanges have much to lose when they discuss certain order types and functionality.
If you have a system that struggles to cope with capacity and new functionality changes in the market are no longer set at your pace, market reform becomes a constant thorn in your side.
I think it is regrettable that so much confusion surrounds algo, stat arb, dark pools, crossing net works, high frequency, flash etc.
Too often I think this is just scare mongering…or Sanctimonious twaddle (ST).
Some destinations don’t charge per order, DMA users should be allowed to use that business model.
If you do charge per order – what’s the problem?
I’d like to see more industry consultation and feedback on these items.
Commercial partners know their responsibilities and invariably these are underpinned by legal agreement.
Maybe layering is bad – maybe not.
Maybe algo traders are bad – maybe not.
As a child, my parents were fearful that too much TV might zap my brain. (fortunately I preserved my brain cells for a more vicious fight with booze at uni). TV didn’t zap a generation. Maybe PC games will?
My point. Market structures change over time. This is not a bad thing.
Maybe today’s algo trader is just the equivalent of the open outcry floor trader.
Let’s just be a lot less rash about the claims we make. – too much ST I fear.
A nice piece here on layering of the order book:
http://www.londonstockexchange.com/traders-and-brokers/rules-regulations/change-and-updates/stock-exchange-notices/2009/n3309.pdf
LCH.CN Group results are finally out.
I was sorry to see a real drop in transparency – see p37.
Revenues by asset type are now mixed with interest income.
We can no longer clearly see clearing revenues by business type.
Oxera – this is such a simple thing. Along with your other work, simple clarity in this table would be hugely helpful in seeing the trends in the costs for the industry as a whole. A lost chance.
What we can see is the equity revenues have fallen 25% whilst every other section of the business (not dominated by competition) has grown.
As noted in the press releases below. I anticipate further falls in profitability next year.
I think the 10 euro payout is as good an out as those 2003? (merger) investors could hope for.
Telling that Euroclear is out of the CCP infrastructure – what a change over a few years.
I’m still not clear on the road map ahead for LCH. (maybe those in Europe are).
Somehow the growth business needs to be separated from the commoditised business.
LSE notes C&S will come to the fore.
The groundwork of interoperability will be in place for them in Nov.
How long until they grasp that opportunity I wonder?
BoE consultation out…
…but more importantly, locally we have CCP consultation out.
Congrats HSBC (on real estate dealings)
Can’t keep up with the news at the moment and not looking likely to either.
Next week will be dominated by CP120.
School holidays here so I’m OoO tomorrow…and a bank holiday here on Monday too.
Have a great w/end all.
Results from the Sydney Bridge Run are out.
http://results.au.eventdirector.net/View.asp?EventID=3478&Bib=48358
This was a great event – all be it directly after Sibos.
They close the bridge for the public for the morning – a rare chance to have the bridge to yourself (and 13,000 other runners of course).
For those that like the Awwww, that’s cute factor…plenty of Kitty cats here:http://icanhascheezburger.com/page/9/
S
http://clearingandsettlement.blogspot.com/
Platforms
CHI-X EUROPE CLAIMS SECOND-BIGGEST DARK POOL Chi-X Europe’s dark pool has become the second biggest in Europe less than five months after it launched, as the London-based alternative trading platform continues to challenge established participants in the securities market.
http://mail.efnmail.co.uk/r/132093977/MjU3MzA2OjIyNjM0/
LSE RAISES THE STAKES IN TECHNOLOGY ARMS RACE The London Stock Exchange’s planned acquisition next month of a Sri Lankan trading system vendor is the latest move in the escalating battle between Europe’s top exchanges and their new multilateral trading facility rivals.
http://mail.efnmail.co.uk/r/132093993/MjU3MzA2OjIyNjM0/
*** the closing comment is of interest here. Finally, once trading is commoditised, it will come down to cost…and here C&S comes back to the fore.
BATS to launch second US equities exchange
http://www.thetradenews.com/trading-venues/exchanges/3637
ASX AGM
http://www.asx.com.au/about/pdf/agm_2009_chairman_md_ceo_address_300909.pdf
*** that marvellous coupling of words I mentioned earlier springs to mind here, esp. the 4 bullets raised by the chairman.
TURQUOISE REDUCES TARIFFS FOR NON-DISPLAYED ORDERS
http://www.finextra.com/fullpr.asp?id=30030
Clearing
LCH.CLEARNET BIDS TO RESOLVE OWNERSHIP
London clearing house LCH.Clearnet appears to have finally resolved the wrangling over its future ownership after proposing the redemption of over 40% of its shares at a price of EUR10 a piece - an offer accepted by its biggest shareholder, Euroclear Bank.
Full story: http://www.finextra.com/fullstory.asp?id=20548
LCH.Clearnet SA introduces €0.05 clearing fees on cash equity markets
Paris, 15 September 2009
LCH.Clearnet SA is revising its cash equities tariff and introducing €0.05 to trades cleared on cash equity markets from 1 January 2010. With this latest reduction LCH.Clearnet SA offers one of the most competitive clearing services in Europe in terms of pricing, service quality and range of products cleared.
http://www.lchclearnet.com/media_centre/press_releases/2009-09-15.asp
LCH.Clearnet Chairman to step down
London, 21 September 2009
The Board of Directors of LCH.Clearnet Group Limited today announces that Chris Tupker will step down as Chairman of the Group and its subsidiary company LCH.Clearnet Limited in 2010 when a new chairman has been appointed.
A search committee has been formed and the Board hopes to announce the appointment of the new Chairman by the end of 2009.
http://www.lchclearnet.com/media_centre/press_releases/2009-09-21.asp
LCH.Clearnet Group results and announcements
London, 29 September 2009
LCH.Clearnet, the leading independent central counterparty group (CCP), today announced its results for the year ended 31 December 2008.
Financial highlights
· Dividend of €110,898,924 or €1.50 per share to be paid to shareholders;
· Strong growth in net revenue of 14.6% to €573.5 million from record traded volumes in 2008;
· Over 2 billion trades, an increase of 16.4% on 2007;
· Operating profit increased by 14.1% to €293.6 million;
· Repurchase of a further €61.8 million of ordinary shares from NYSE Euronext in July 2008;
· Tariff reductions of €73.2 million across cash equities and energy markets in 2008;
· Impairment charge of €393.4 million for the first seven months of 2009, arising from implemented and proposed tariff reductions.
http://www.lchclearnet.com/about_us/corporate_governance/financials.asp
LCH.Clearnet and EMCF set to interoperate by November 2009
London, 30 September 2009
LCH.Clearnet Ltd (LCH.Clearnet) and the European Multilateral Clearing Facility (EMCF) have signed a master link agreement to achieve interoperability by November 2009.
CONSULTATION PAPER 120
Operators of clearing and settlement facilities
This consultation paper seeks the views of existing and potential operators of financial markets and CS facilities, and the users and potential users of these facilities, including investors in financial products that may be cleared and settled using CS facilities, on the proposals in this paper concerning clearing and settlement (CS) facility regulation.
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/cp120.pdf/$file/cp120.pdf
Policy
BANK OF ENGLAND OUTLINES PLANS FOR PAYMENT SYSTEMS OVERSIGHT
http://www.finextra.com/fullpr.asp?id=29952
http://www.bankofengland.co.uk/publications/other/financialstability/oips/oips090928.pdf
*** This is actually not such a terrifying document. (and only 10 pages).
My take is that BoE extend the reach of the CPSS core principles of payment systems to include, business risk (sustainable enterprise), interdependence, indirect relationships (the many arms of the octopus) and our good friend outsourcing.
All principles based and driven by common sense.
Comments by 20th Oct.
Participants
CITI OPENS DUBLIN R&D CENTRE
US bank Citi has opened a global research, development, innovation and learning centre at its offices in Dublin and earmarked $24 million for the development of an "intelligent payments" offering.
Full story: http://www.finextra.com/fullstory.asp?id=20558
*** amazing how many ideas can be inspired over a Guinness.
HSBC offices in Canary Wharf on brink of £800m sale
http://www.officebroker.com/blog/2009/09/28/HSBC+offices+in+Canary+Wharf+on+brink+of+%C2%A3800m+sale_FTOC28092009320034/
Nice 2007, SOLD to Spaniards, 1.1 bill, bought back for 838 mill. Sold again in 2009. I wonder how much it originally cost them?
How much occupancy can you buy with the 200 mill they’ve booked in the last 2 years alone.
Well done chaps.
…now put this in the context of last weeks story:
Canary Wharf files $4.3bn claim against Lehman for unpaid charges Canary Wharf Group has lodged a $4.3bn (€2.9bn) claim with PricewaterhouseCoopers (PwC), the UK administrators of Lehman Brothers, for unpaid rent and other charges linked to the bankrupt firm’s London headquarters. (The Independent)
Can someone pls explain.
Asia
With equity markets in Asia having regained the momentum they lost so drastically this time last year, alternative liquidity sources could finally be poised to challenge incumbent exchanges, according to Glenn Lesko, CEO, Instinet Asia.
Read the interview
Seats of power shift to Asia HSBC’s announcement last Friday that chief executive Michael Geoghegan will relocate to Hong Kong means that the top three banks in the world, by market capitalisation, are set to have chief executives based in Asia.
*** the other 2 are: Industrial and Commercial Bank of China and China Construction Bank.
AsianInvestor 2009 Service Provider Awards
http://www.asianinvestor.net/article.aspx?CIaNID=113350
Best full-service brokerMorgan Stanley
Best execution-only brokerInstinet
Best venue in Asia-Pacific for algorithmic/electronic tradingHong Kong Exchanges & Clearing
Best venue in Asia-Pacific for block tradingLiquidnet
Best algorithmsCredit Suisse
INTERNATIONAL FINANCING REVIEW ASIA: Come to the Dark PoolBy Wendy Mock9/26/09
….
In Hong Kong, brokers and investors are interested in dark pools for the anonymity they offer. Hong Kong Exchanges and Clearing (HKEx) require that broker codes be exposed before a trade is completed, therefore opening up the risk that others may trade on that information.
In Hong Kong, brokers are required to report all trades to the HKEx, so regardless of where the transaction is matched or executed, fees still have to be paid to the exchange
….
In Japan, high-frequency traders are pushing for ATSs. Newer technology at the ATSs has made price discovery significantly faster than the Tokyo Stock Exchange. Average latency on the TSE is seven seconds, compared to the sub-millisecond speeds at the ATSs.
….
In Europe, from June 2008–July 2009, an average of 91% of trades executed on Chi-X were at or better than the public market spread, according to Chi-X. Instinet’s CBX Japan sees an average 12bp price improvement against the TSE.
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.fortis.com
What a marvellous coupling of words. I really miss some things about England, and their mastery of their language is one of them.
It also strikes me that we don’t have to look far to find an abundance of twaddle.
One area of twaddle is of course vested interests and competition.
It strikes me more and more that the incumbent exchanges have much to lose when they discuss certain order types and functionality.
If you have a system that struggles to cope with capacity and new functionality changes in the market are no longer set at your pace, market reform becomes a constant thorn in your side.
I think it is regrettable that so much confusion surrounds algo, stat arb, dark pools, crossing net works, high frequency, flash etc.
Too often I think this is just scare mongering…or Sanctimonious twaddle (ST).
Some destinations don’t charge per order, DMA users should be allowed to use that business model.
If you do charge per order – what’s the problem?
I’d like to see more industry consultation and feedback on these items.
Commercial partners know their responsibilities and invariably these are underpinned by legal agreement.
Maybe layering is bad – maybe not.
Maybe algo traders are bad – maybe not.
As a child, my parents were fearful that too much TV might zap my brain. (fortunately I preserved my brain cells for a more vicious fight with booze at uni). TV didn’t zap a generation. Maybe PC games will?
My point. Market structures change over time. This is not a bad thing.
Maybe today’s algo trader is just the equivalent of the open outcry floor trader.
Let’s just be a lot less rash about the claims we make. – too much ST I fear.
A nice piece here on layering of the order book:
http://www.londonstockexchange.com/traders-and-brokers/rules-regulations/change-and-updates/stock-exchange-notices/2009/n3309.pdf
LCH.CN Group results are finally out.
I was sorry to see a real drop in transparency – see p37.
Revenues by asset type are now mixed with interest income.
We can no longer clearly see clearing revenues by business type.
Oxera – this is such a simple thing. Along with your other work, simple clarity in this table would be hugely helpful in seeing the trends in the costs for the industry as a whole. A lost chance.
What we can see is the equity revenues have fallen 25% whilst every other section of the business (not dominated by competition) has grown.
As noted in the press releases below. I anticipate further falls in profitability next year.
I think the 10 euro payout is as good an out as those 2003? (merger) investors could hope for.
Telling that Euroclear is out of the CCP infrastructure – what a change over a few years.
I’m still not clear on the road map ahead for LCH. (maybe those in Europe are).
Somehow the growth business needs to be separated from the commoditised business.
LSE notes C&S will come to the fore.
The groundwork of interoperability will be in place for them in Nov.
How long until they grasp that opportunity I wonder?
BoE consultation out…
…but more importantly, locally we have CCP consultation out.
Congrats HSBC (on real estate dealings)
Can’t keep up with the news at the moment and not looking likely to either.
Next week will be dominated by CP120.
School holidays here so I’m OoO tomorrow…and a bank holiday here on Monday too.
Have a great w/end all.
Results from the Sydney Bridge Run are out.
http://results.au.eventdirector.net/View.asp?EventID=3478&Bib=48358
This was a great event – all be it directly after Sibos.
They close the bridge for the public for the morning – a rare chance to have the bridge to yourself (and 13,000 other runners of course).
For those that like the Awwww, that’s cute factor…plenty of Kitty cats here:http://icanhascheezburger.com/page/9/
S
http://clearingandsettlement.blogspot.com/
Platforms
CHI-X EUROPE CLAIMS SECOND-BIGGEST DARK POOL Chi-X Europe’s dark pool has become the second biggest in Europe less than five months after it launched, as the London-based alternative trading platform continues to challenge established participants in the securities market.
http://mail.efnmail.co.uk/r/132093977/MjU3MzA2OjIyNjM0/
LSE RAISES THE STAKES IN TECHNOLOGY ARMS RACE The London Stock Exchange’s planned acquisition next month of a Sri Lankan trading system vendor is the latest move in the escalating battle between Europe’s top exchanges and their new multilateral trading facility rivals.
http://mail.efnmail.co.uk/r/132093993/MjU3MzA2OjIyNjM0/
*** the closing comment is of interest here. Finally, once trading is commoditised, it will come down to cost…and here C&S comes back to the fore.
BATS to launch second US equities exchange
http://www.thetradenews.com/trading-venues/exchanges/3637
ASX AGM
http://www.asx.com.au/about/pdf/agm_2009_chairman_md_ceo_address_300909.pdf
*** that marvellous coupling of words I mentioned earlier springs to mind here, esp. the 4 bullets raised by the chairman.
TURQUOISE REDUCES TARIFFS FOR NON-DISPLAYED ORDERS
http://www.finextra.com/fullpr.asp?id=30030
Clearing
LCH.CLEARNET BIDS TO RESOLVE OWNERSHIP
London clearing house LCH.Clearnet appears to have finally resolved the wrangling over its future ownership after proposing the redemption of over 40% of its shares at a price of EUR10 a piece - an offer accepted by its biggest shareholder, Euroclear Bank.
Full story: http://www.finextra.com/fullstory.asp?id=20548
LCH.Clearnet SA introduces €0.05 clearing fees on cash equity markets
Paris, 15 September 2009
LCH.Clearnet SA is revising its cash equities tariff and introducing €0.05 to trades cleared on cash equity markets from 1 January 2010. With this latest reduction LCH.Clearnet SA offers one of the most competitive clearing services in Europe in terms of pricing, service quality and range of products cleared.
http://www.lchclearnet.com/media_centre/press_releases/2009-09-15.asp
LCH.Clearnet Chairman to step down
London, 21 September 2009
The Board of Directors of LCH.Clearnet Group Limited today announces that Chris Tupker will step down as Chairman of the Group and its subsidiary company LCH.Clearnet Limited in 2010 when a new chairman has been appointed.
A search committee has been formed and the Board hopes to announce the appointment of the new Chairman by the end of 2009.
http://www.lchclearnet.com/media_centre/press_releases/2009-09-21.asp
LCH.Clearnet Group results and announcements
London, 29 September 2009
LCH.Clearnet, the leading independent central counterparty group (CCP), today announced its results for the year ended 31 December 2008.
Financial highlights
· Dividend of €110,898,924 or €1.50 per share to be paid to shareholders;
· Strong growth in net revenue of 14.6% to €573.5 million from record traded volumes in 2008;
· Over 2 billion trades, an increase of 16.4% on 2007;
· Operating profit increased by 14.1% to €293.6 million;
· Repurchase of a further €61.8 million of ordinary shares from NYSE Euronext in July 2008;
· Tariff reductions of €73.2 million across cash equities and energy markets in 2008;
· Impairment charge of €393.4 million for the first seven months of 2009, arising from implemented and proposed tariff reductions.
http://www.lchclearnet.com/about_us/corporate_governance/financials.asp
LCH.Clearnet and EMCF set to interoperate by November 2009
London, 30 September 2009
LCH.Clearnet Ltd (LCH.Clearnet) and the European Multilateral Clearing Facility (EMCF) have signed a master link agreement to achieve interoperability by November 2009.
CONSULTATION PAPER 120
Operators of clearing and settlement facilities
This consultation paper seeks the views of existing and potential operators of financial markets and CS facilities, and the users and potential users of these facilities, including investors in financial products that may be cleared and settled using CS facilities, on the proposals in this paper concerning clearing and settlement (CS) facility regulation.
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/cp120.pdf/$file/cp120.pdf
Policy
BANK OF ENGLAND OUTLINES PLANS FOR PAYMENT SYSTEMS OVERSIGHT
http://www.finextra.com/fullpr.asp?id=29952
http://www.bankofengland.co.uk/publications/other/financialstability/oips/oips090928.pdf
*** This is actually not such a terrifying document. (and only 10 pages).
My take is that BoE extend the reach of the CPSS core principles of payment systems to include, business risk (sustainable enterprise), interdependence, indirect relationships (the many arms of the octopus) and our good friend outsourcing.
All principles based and driven by common sense.
Comments by 20th Oct.
Participants
CITI OPENS DUBLIN R&D CENTRE
US bank Citi has opened a global research, development, innovation and learning centre at its offices in Dublin and earmarked $24 million for the development of an "intelligent payments" offering.
Full story: http://www.finextra.com/fullstory.asp?id=20558
*** amazing how many ideas can be inspired over a Guinness.
HSBC offices in Canary Wharf on brink of £800m sale
http://www.officebroker.com/blog/2009/09/28/HSBC+offices+in+Canary+Wharf+on+brink+of+%C2%A3800m+sale_FTOC28092009320034/
Nice 2007, SOLD to Spaniards, 1.1 bill, bought back for 838 mill. Sold again in 2009. I wonder how much it originally cost them?
How much occupancy can you buy with the 200 mill they’ve booked in the last 2 years alone.
Well done chaps.
…now put this in the context of last weeks story:
Canary Wharf files $4.3bn claim against Lehman for unpaid charges Canary Wharf Group has lodged a $4.3bn (€2.9bn) claim with PricewaterhouseCoopers (PwC), the UK administrators of Lehman Brothers, for unpaid rent and other charges linked to the bankrupt firm’s London headquarters. (The Independent)
Can someone pls explain.
Asia
With equity markets in Asia having regained the momentum they lost so drastically this time last year, alternative liquidity sources could finally be poised to challenge incumbent exchanges, according to Glenn Lesko, CEO, Instinet Asia.
Read the interview
Seats of power shift to Asia HSBC’s announcement last Friday that chief executive Michael Geoghegan will relocate to Hong Kong means that the top three banks in the world, by market capitalisation, are set to have chief executives based in Asia.
*** the other 2 are: Industrial and Commercial Bank of China and China Construction Bank.
AsianInvestor 2009 Service Provider Awards
http://www.asianinvestor.net/article.aspx?CIaNID=113350
Best full-service brokerMorgan Stanley
Best execution-only brokerInstinet
Best venue in Asia-Pacific for algorithmic/electronic tradingHong Kong Exchanges & Clearing
Best venue in Asia-Pacific for block tradingLiquidnet
Best algorithmsCredit Suisse
INTERNATIONAL FINANCING REVIEW ASIA: Come to the Dark PoolBy Wendy Mock9/26/09
….
In Hong Kong, brokers and investors are interested in dark pools for the anonymity they offer. Hong Kong Exchanges and Clearing (HKEx) require that broker codes be exposed before a trade is completed, therefore opening up the risk that others may trade on that information.
In Hong Kong, brokers are required to report all trades to the HKEx, so regardless of where the transaction is matched or executed, fees still have to be paid to the exchange
….
In Japan, high-frequency traders are pushing for ATSs. Newer technology at the ATSs has made price discovery significantly faster than the Tokyo Stock Exchange. Average latency on the TSE is seven seconds, compared to the sub-millisecond speeds at the ATSs.
….
In Europe, from June 2008–July 2009, an average of 91% of trades executed on Chi-X were at or better than the public market spread, according to Chi-X. Instinet’s CBX Japan sees an average 12bp price improvement against the TSE.
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.fortis.com
Tuesday, September 29, 2009
AMCF News: Sibos, Dust, RBA review
G’day All,
Yikies, I can’t believe the week has gone. (Sorry, I sent this Friday 25th, just forgot to post to blogspot)
Sibos. (Swift International Banking Operations Seminar)
The McKinsey view: Be in Asia or be irrelevant.
Nice but I think the missing aspect of this (and a lot of the week) is context and materiality.
Asia is certainly full of potential – on materiality todays wallet size and tomorrows potential are different things.
And in context – one of the best questions for me on the week was when are we going to have a common character set (Chinese, Japanese, Korean, Western).
In Europe we get so caught up on single currency, single economic zone, MiFID, common(ish) political objectives, and by and large one commercial language we kinda over look Asia still has no interoperability on language – let alone currency.
Will have to do more on Sibos next week.
The Sydney dust storm was hard to capture.
http://theaustralian.newspaperdirect.com/epaper/viewer.aspx
Visibility was literally this bad and the dust made everything look orange. I woke to an orange sun rise and it just stayed that way. Weird.
'Best job in the world' is no holiday
TIM RICHARDS Writing about your every move while on the road can be a double-edged sword, as the "best job in the world" winner Ben Southall has quickly discovered.
http://www.smh.com.au/digital-life/mobiles/best-job-in-the-world-is-no-holiday-20090915-font.html
http://www.islandreefjob.com.au/
I still feel “dark pools” get a bad rap just because of their name. More education required. But come on, an order type called “Hide to Comply” is hardly helpful to the public perception of the debate.
For those that follow Market Infrastructure, and the CPSS-IOSCO recommendations I found the RBA paper a good read. Happy to comment on this if you have questions. For those covering operational risk I recommend Section 6 from page 49.
Yippee Lloyds. Good to see securitisation re-opening.
Interchange fees. Normally I’d ignore this, but the fines in Hungary resonate with the local authorities here not trusting self regulation. Gouging springs to mind.
Canary Wharf 4.3 byn claim is just ridiculous. If Lehman was paying rents like that no wonder they went under, thing is, it’s unbelievable. Yet again it smacks of insolvency practitioners lining their own pockets at the expense of creditors.
Our poor little Koalas. L
Luckily I was travelling so I didn’t see the last wallaby game. What a relief!
Great w/end all,
(sorry have to be brief on news this week)
S
Platforms
CHI-X EUROPE AND LIQUIDNET SUPERNATURAL TO INTERCONNECT
http://www.finextra.com/fullpr.asp?id=29815
FFASTFILL EXTENDS MIDDLE OFFICE SERVICES TO JAPAN EXCHANGES
http://www.finextra.com/fullpr.asp?id=29797
New Hide to Comply Order Type Added to Citi's LavaFlow ECN
http://advancedtrading.com/crossingnetworks/showArticle.jhtml;jsessionid=SKMACLMJGDRSHQE1GHRSKH4ATMY32JVN?articleID=220100519&_requestid=407824
LSE UPDATES ON STAFF CUTS AND IT AHEAD OF HALF YEAR RESULTS
http://www.finextra.com/fullpr.asp?id=29904
LSE to use "partnerships and acquisitions" to expandLondon Stock Exchange CEO Xavier Rolet said the exchange will expand its business through "partnerships and acquisitions". Rolet said he is striving to lower clearing costs as part of a way to reduce overall costs of dealing in FTSE shares on the exchange. Financial Times (tiered subscription model) (24 Sep.)
JASDAQ STARTS USING OSAKA SECURITIES EXCHANGE PLATFORM
http://www.finextra.com/fullpr.asp?id=29894
Controversy rages regarding dark pools despite innovationDark pools are continuously coming up with innovative, eye-catching ideas, but they have failed to shake the controversy surrounding their existence. The Federation of European Securities Exchanges claimed in a letter to the Committee of European Securities Regulators that dark pools run by banks are "unregulated venues" that operate with "full opacity". Banks said the federation is simply exploiting concerns highlighted by the crisis to persuade authorities to require stock trades to be routed through regulated exchanges. Financial Times (tiered subscription model) (24 Sep.)
Clearing
CME AND CITADEL DITCH CDS TRADING PLATFORM PLAN TO FOCUS ON CLEARING CME Group and Citadel have abandoned plans to launch a credit default swaps (CDS) trading platform and will instead focus on offering clearing services for the $27 trillion market.
Full story: http://www.finextra.com/fullstory.asp?id=20518
GLOBAL ASSOCIATION OF CENTRAL COUNTERPARTIES ELECTS EXECUTIVE COMMITTEE
http://www.finextra.com/fullpr.asp?id=29908
http://www.ccp12.org/
· Clearing house alert on up to 15 brokerages
http://www.rba.gov.au/PaymentsSystem/StdClearingSettlement/Pdf/2008-09-report-clrg-settlment-facilities.pdf
Policy
EU'S MIFID REVIEW TO LOOK AT DARK POOLS
The migration of share trading from regulated platforms to dark pools is to be examined by the European Commission as part of a wider review of the Markets in Financial Instruments Directive (MiFID).
Full story: http://www.finextra.com/fullstory.asp?id=20519
Nice list of failed US banks (94 in 2009 to date)
http://www.fdic.gov/bank/individual/failed/banklist.html
HUNGARY FINES VISA, MASTERCARD AND BANKS OVER INTERCHANGE FEES Visa, MasterCard and seven of the biggest banks in Hungary have been fined a total of $10.42 million by the country's competition authority for running an interchange fee cartel.
Full story: http://www.finextra.com/fullstory.asp?id=20535
At its meeting on 21 August, the Payments System Board considered whether the conditions have been met for the removal of interchange regulation. The Board was not yet satisfied that such conditions have been met.
http://www.rba.gov.au/MediaReleases/2009/mr-09-18.html
Lloyds' deal helps reopen securitisation marketsLloyds Banking Group sold £4 billion worth of mortgage-backed bonds to institutional investors, the first substantial mortgage-securitisation deal since the market dried up with the credit crunch. The deal, which included more than 513,000 prime UK residential home loans, was twice oversubscribed. HBOS wrote the mortgages before it merged with Lloyds TSB. The Independent (London) (24 Sep.) , Telegraph (London) (23 Sep.)
Participants
BNP PARIBAS PRIME BROKERAGE UNIT SELLS COLOCATION BUSINESS TO OPTIONS IT BNP Paribas' prime brokerage division has sold its hedge fund outsource technology business to vendor Options IT. Financial terms of the deal were not disclosed.
Full story: http://www.finextra.com/fullstory.asp?id=20521
Investment Technology Group In Asia08/09/09 12:36 from Asia Etrading BlogInvestment Technology Group (ITG) reported that during the second quarter of 2009 which was released July 30 that they had realigned its organizational structure from three distinct businesses to four. The International Operation was split..
FIDELITY INVESTMENTS LAUNCHES CANADIAN CLEARING UNIT
http://www.finextra.com/fullpr.asp?id=29911
ANZ snaps up rest of ING
Danny John 10:29AM Banking group will buy the remainder of its wealth management joint venture with ING for $1.8 billion.
Canary Wharf files $4.3bn claim against Lehman for unpaid charges Canary Wharf Group has lodged a $4.3bn (€2.9bn) claim with PricewaterhouseCoopers (PwC), the UK administrators of Lehman Brothers, for unpaid rent and other charges linked to the bankrupt firm’s London headquarters. (The Independent)
AIDS-like retrovirus threatens Australia's koalas with extinctionUp to 50 percent of the koalas are also infected with chlamydiosis, made all the more deadly by the retrovirus, which can compromise the animals' immune systems
Scott Riley
EMCF Business Development
European Multilateral Clearing Facility
8th Floor 50 Bridge Street Sydney Australia 2000
((Off)+61 (0)2 8916 9634 È(Mob): +61 (0)418 117 627
* scott.riley@au.fortis.com
Yikies, I can’t believe the week has gone. (Sorry, I sent this Friday 25th, just forgot to post to blogspot)
Sibos. (Swift International Banking Operations Seminar)
The McKinsey view: Be in Asia or be irrelevant.
Nice but I think the missing aspect of this (and a lot of the week) is context and materiality.
Asia is certainly full of potential – on materiality todays wallet size and tomorrows potential are different things.
And in context – one of the best questions for me on the week was when are we going to have a common character set (Chinese, Japanese, Korean, Western).
In Europe we get so caught up on single currency, single economic zone, MiFID, common(ish) political objectives, and by and large one commercial language we kinda over look Asia still has no interoperability on language – let alone currency.
Will have to do more on Sibos next week.
The Sydney dust storm was hard to capture.
http://theaustralian.newspaperdirect.com/epaper/viewer.aspx
Visibility was literally this bad and the dust made everything look orange. I woke to an orange sun rise and it just stayed that way. Weird.
'Best job in the world' is no holiday
TIM RICHARDS Writing about your every move while on the road can be a double-edged sword, as the "best job in the world" winner Ben Southall has quickly discovered.
http://www.smh.com.au/digital-life/mobiles/best-job-in-the-world-is-no-holiday-20090915-font.html
http://www.islandreefjob.com.au/
I still feel “dark pools” get a bad rap just because of their name. More education required. But come on, an order type called “Hide to Comply” is hardly helpful to the public perception of the debate.
For those that follow Market Infrastructure, and the CPSS-IOSCO recommendations I found the RBA paper a good read. Happy to comment on this if you have questions. For those covering operational risk I recommend Section 6 from page 49.
Yippee Lloyds. Good to see securitisation re-opening.
Interchange fees. Normally I’d ignore this, but the fines in Hungary resonate with the local authorities here not trusting self regulation. Gouging springs to mind.
Canary Wharf 4.3 byn claim is just ridiculous. If Lehman was paying rents like that no wonder they went under, thing is, it’s unbelievable. Yet again it smacks of insolvency practitioners lining their own pockets at the expense of creditors.
Our poor little Koalas. L
Luckily I was travelling so I didn’t see the last wallaby game. What a relief!
Great w/end all,
(sorry have to be brief on news this week)
S
Platforms
CHI-X EUROPE AND LIQUIDNET SUPERNATURAL TO INTERCONNECT
http://www.finextra.com/fullpr.asp?id=29815
FFASTFILL EXTENDS MIDDLE OFFICE SERVICES TO JAPAN EXCHANGES
http://www.finextra.com/fullpr.asp?id=29797
New Hide to Comply Order Type Added to Citi's LavaFlow ECN
http://advancedtrading.com/crossingnetworks/showArticle.jhtml;jsessionid=SKMACLMJGDRSHQE1GHRSKH4ATMY32JVN?articleID=220100519&_requestid=407824
LSE UPDATES ON STAFF CUTS AND IT AHEAD OF HALF YEAR RESULTS
http://www.finextra.com/fullpr.asp?id=29904
LSE to use "partnerships and acquisitions" to expandLondon Stock Exchange CEO Xavier Rolet said the exchange will expand its business through "partnerships and acquisitions". Rolet said he is striving to lower clearing costs as part of a way to reduce overall costs of dealing in FTSE shares on the exchange. Financial Times (tiered subscription model) (24 Sep.)
JASDAQ STARTS USING OSAKA SECURITIES EXCHANGE PLATFORM
http://www.finextra.com/fullpr.asp?id=29894
Controversy rages regarding dark pools despite innovationDark pools are continuously coming up with innovative, eye-catching ideas, but they have failed to shake the controversy surrounding their existence. The Federation of European Securities Exchanges claimed in a letter to the Committee of European Securities Regulators that dark pools run by banks are "unregulated venues" that operate with "full opacity". Banks said the federation is simply exploiting concerns highlighted by the crisis to persuade authorities to require stock trades to be routed through regulated exchanges. Financial Times (tiered subscription model) (24 Sep.)
Clearing
CME AND CITADEL DITCH CDS TRADING PLATFORM PLAN TO FOCUS ON CLEARING CME Group and Citadel have abandoned plans to launch a credit default swaps (CDS) trading platform and will instead focus on offering clearing services for the $27 trillion market.
Full story: http://www.finextra.com/fullstory.asp?id=20518
GLOBAL ASSOCIATION OF CENTRAL COUNTERPARTIES ELECTS EXECUTIVE COMMITTEE
http://www.finextra.com/fullpr.asp?id=29908
http://www.ccp12.org/
· Clearing house alert on up to 15 brokerages
http://www.rba.gov.au/PaymentsSystem/StdClearingSettlement/Pdf/2008-09-report-clrg-settlment-facilities.pdf
Policy
EU'S MIFID REVIEW TO LOOK AT DARK POOLS
The migration of share trading from regulated platforms to dark pools is to be examined by the European Commission as part of a wider review of the Markets in Financial Instruments Directive (MiFID).
Full story: http://www.finextra.com/fullstory.asp?id=20519
Nice list of failed US banks (94 in 2009 to date)
http://www.fdic.gov/bank/individual/failed/banklist.html
HUNGARY FINES VISA, MASTERCARD AND BANKS OVER INTERCHANGE FEES Visa, MasterCard and seven of the biggest banks in Hungary have been fined a total of $10.42 million by the country's competition authority for running an interchange fee cartel.
Full story: http://www.finextra.com/fullstory.asp?id=20535
At its meeting on 21 August, the Payments System Board considered whether the conditions have been met for the removal of interchange regulation. The Board was not yet satisfied that such conditions have been met.
http://www.rba.gov.au/MediaReleases/2009/mr-09-18.html
Lloyds' deal helps reopen securitisation marketsLloyds Banking Group sold £4 billion worth of mortgage-backed bonds to institutional investors, the first substantial mortgage-securitisation deal since the market dried up with the credit crunch. The deal, which included more than 513,000 prime UK residential home loans, was twice oversubscribed. HBOS wrote the mortgages before it merged with Lloyds TSB. The Independent (London) (24 Sep.) , Telegraph (London) (23 Sep.)
Participants
BNP PARIBAS PRIME BROKERAGE UNIT SELLS COLOCATION BUSINESS TO OPTIONS IT BNP Paribas' prime brokerage division has sold its hedge fund outsource technology business to vendor Options IT. Financial terms of the deal were not disclosed.
Full story: http://www.finextra.com/fullstory.asp?id=20521
Investment Technology Group In Asia08/09/09 12:36 from Asia Etrading BlogInvestment Technology Group (ITG) reported that during the second quarter of 2009 which was released July 30 that they had realigned its organizational structure from three distinct businesses to four. The International Operation was split..
FIDELITY INVESTMENTS LAUNCHES CANADIAN CLEARING UNIT
http://www.finextra.com/fullpr.asp?id=29911
ANZ snaps up rest of ING
Danny John 10:29AM Banking group will buy the remainder of its wealth management joint venture with ING for $1.8 billion.
Canary Wharf files $4.3bn claim against Lehman for unpaid charges Canary Wharf Group has lodged a $4.3bn (€2.9bn) claim with PricewaterhouseCoopers (PwC), the UK administrators of Lehman Brothers, for unpaid rent and other charges linked to the bankrupt firm’s London headquarters. (The Independent)
AIDS-like retrovirus threatens Australia's koalas with extinctionUp to 50 percent of the koalas are also infected with chlamydiosis, made all the more deadly by the retrovirus, which can compromise the animals' immune systems
Scott Riley
EMCF Business Development
European Multilateral Clearing Facility
8th Floor 50 Bridge Street Sydney Australia 2000
((Off)+61 (0)2 8916 9634 È(Mob): +61 (0)418 117 627
* scott.riley@au.fortis.com
Friday, September 11, 2009
AMCF News, trade reporting, PATS, Euroclear, VdM, Asian exchange profitability, HK T+2
G’day All,
Lots of platform developments this week but the Barclays Transaction Reporting issue caught my eye.
I don’t want to comment on the actual process that lead to Barclays getting a fine.
But 2.5 million quid is a might whack for a transgression.
And here I think about materiality, proportionality and proceeds.
First of all I wonder how many of these transaction reports are “used” as opposed to filed.
(Yes, I appreciate this would not have come to light if the reports were not used, but if the reports were being used actively, maybe some of these transgressions would have come to light earlier).
Next, what is the materiality of all these transaction reports, as highlighted by the Reuters story, where fragmentation is cited as a post MiFID issue. (also The Trade story)
Personally, I’m a great believer in transaction reports, but I don’t feel I can stand back and reconcile total transaction reports verses total trades / liquidity claimed by all the various platforms, brokers, pools etc.
Then we have issues with the cost and price of accessing this data (even with the issues of validation, enrichment and quality).
Next, we have a nice white paper by Eurex. I appreciate this is a different asset class, but how effective is the industry at capturing OTC data (obviously there are some self serving conclusions in the paper).
Now, if 2.5 million quid was going to be spent, on researching, qualifying and improving transaction reporting. OK, this is a constructive step to take, and sorry, Barclays just happened to be there on the morning they were handing out tickets.
But I don’t get that feeling. I feel that this is a mighty whack to send a signal “we bite”.
By all means Bite, but use that for the betterment of the markets you serve, not just for the sake of it.
Platforms – headlines speak for themselves.
DirectEdge stays on my radar. I wonder about the common equity investors (Citadel) in DirectEdge and Equiduct.
LSE and Millennium. I didn’t predict that.
I notice PATS in Indonesia – congratulations to them. Anyone know what happened to CapCo (they used to run the CCP there)?
Clearstream – why would you want to drag all that bad publicity back out of the closet? Stop It.
Euroclear – a big win for the users – transparency finally arrives. Imagine charging 4.3p for “netting”. Congratulations to the innovation in the industry that has encouraged some defensive pricing.
LCH deal back in the news. Something has to give.
Van der Moolen. Never nice to see the passing of a great name.
HK moves to T+2 and look at some of those Asian exchanges returns.
For those technology watchers – Photonic Chips are the way to go. (especially if we want to get to 10,000 times faster)
I highly recommend this and found this very informative.
I’ll be at Sibos next week and look forward to meeting as many as I can.
Awful how quickly the agenda fills up. How long till Speed dating is introduced?
As such, there’ll be no news from me next week.
Love old Leonardo – study without desire spoils the memory, and it retains nothing that it takes in.
(few of my teachers would like to share a tale or two with Leo)
Have a great weekend, wherever you are, and don’t forget the nippers.
(Sorry, Boks to lose to the Kiwis at home)
S
http://clearingandsettlement.blogspot.com/
Platforms
QUOTE MTF LAUNCHES INTO CROWDED MARKET
Hungary-based Quote MTF has become the latest trading platform to enter the crowded post-MiFID European securities market.
Full story: http://www.finextra.com/fullstory.asp?id=20447
BATS in its first week of inverted pricing for UK securities posted 5.9% market share in the FTSE 100, up roughly 180 basis points (bp) from its average August share of 4.11%. NASDAQ OMX, which also launched a discounted routing fee for UK securities beginning this week, reported no market share change.
Source: BMO Capital Markets Corp.
PRESS RELEASE: Kendall Law Group Announces Shareholder Investigation Into NYFIX, Inc.9/2/09DALLAS -- Kendall Law Group, led by a former federal judge and former US Attorney, announces a shareholder investigation concerning the proposed acquisition of NYFIX, Inc. (Nasdaq:NYFX) by NYSE Euronext for possible breaches of fiduciary duty by the Board of Directors.
Jobs slashed at NYSE's newest acquisition Nyfix, a maker of trading technology, just sold itself to NYSE Euronext for 95% more than its market value. The bad news is, 40% of its workers will be jobless when the deal closes in the fourth quarter.
Second MTF up for sale
Global exchange group NYSE Euronext is considering the sale of NYFIX’s Millennium and Euro Millennium dark pools
http://www.thetradenews.com/trading-venues/mtfs-ecns/3549
Direct Edge's market share hits new high
Rolet casts doubt over Baikal future amid regulatory scrutiny Baikal, the London Stock Exchange’s proposed “dark pool” venture “might not work” amid regulatory scrutiny over such platforms and the inability of most such structures in Europe to earn profit, Xavier Rolet, LSE chief executive, has said. (Financial Times)
LSE ADMITS BAIKAL MAY FAIL
London Stock Exchange CEO Xavier Rolet has admitted the bourse's new pan-European MTF and dark pool, Baikal, "might not work" in the face of growing regulatory scrutiny.
Full story: http://www.finextra.com/fullstory.asp?id=20463
Rolet speeds LSE technology revolution Xavier Rolet, chief executive of the London Stock Exchange, has set an ambitious target for scrapping the exchange’s trading system by suggesting a replacement may be confirmed as early as this month. Rolet started a review of the exchange’s technology strategy days after joining the group three months ago. Last week he said the process was nearing a conclusion.
LSE CLOSES IN ON TRADELECT REPLACEMENT
Sri Lankan vendor MillenniumIT has emerged as the surprise favourite to provide the replacement for the London Stock Exchange's TradElect platform.
Full story: http://www.finextra.com/fullstory.asp?id=20451
http://www.millenniumit.com/capital_market_solutions/index.php#
Our customers include:
American Stock Exchange
Bank of Ghana
Botswana Stock Exchange
Capital Markets Authority of Kenya
Central Depository System of Mauritius
Central Securities Depository of Kenya
Colombo Stock Exchange
Dar es Salaam Stock Exchange
ICAP Plc
London Metal Exchange
Lusaka Stock Exchange
Nairobi Stock Exchange
Perimeter Financial Corporation
Stock Exchange of Mauritius
Securities Depository Agency of Croatia
Uganda Securities Exchange
RTS AND NYSE ARCA PUSH EUROPEAN EQUITY TRADING
http://www.finextra.com/fullpr.asp?id=29449
INDONESIA COMMODITY AND DERIVATIVES EXCHANGE SELECTS PATSYSTEMS TECHNOLOGY
http://www.finextra.com/fullpr.asp?id=29427
09/09/2009 11:11:00
NYSE EURONEXT TO SELL OPTIONS MART STAKE TO DEALER CONSORTIUM
Nyse Euronext has agreed to sell a "significant" equity stake in one of the company's two US options exchanges to a consortium of market makers, including BofA Merrill Lynch, Barclays Capital, Citadel Securities, Citi, Goldman Sachs, TD Ameritrade and UBS
More on this story: http://www.finextra.com/fullstory.asp?id=20457
Chi-Tech Selects FTEN's Risk Controls for Pan-European Trading ServiceChi-Tech integrates FTEN into MarketPrizm offering to provide risk management as HFT grows ...
PLUS GETS £5.5M MIDDLE EAST INVESTMENT
Plus Markets says a group of investors from the Middle East has agreed to invest up to £5.5 million for a 19% stake in the UK small and mid-cap exchange.
Full story: http://www.finextra.com/fullstory.asp?id=20444
PLUS MARKETS PLANS LIQUIDITY SCHEME
http://www.finextra.com/fullpr.asp?id=29444
MEXICAN EXCHANGE IN TALKS TO SELL STAKE TO CME GROUP Bolsa Mexicana de Valores is in preliminalry talks to sell a minority stake to Chicago-based derivatives exchange operator CME Group.
Full story: http://www.finextra.com/fullstory.asp?id=20452
GOLDMAN SACHS BACKS CLS/ICAP FX JV
http://www.finextra.com/fullpr.asp?id=29483
*** Traiana & CLS
1. Catalyst: Photonic Chip - ABC TV Science
The science of photonics promises to remove bottlenecks and speed up the entire Internet by sending information with light rather than tardy little ...www.abc.net.au/catalyst/stories/2675781.htm - Cached - Similar
Clearing
Banks agree to route more derivatives through clearinghousesJPMorgan Chase, Barclays, UBS, Citigroup and several other major financial institutions agreed to accelerate their use of central clearinghouses for over-the-counter derivatives. The banks said they will start sending more credit default swaps and interest-rate derivatives through clearinghouses in October and December, respectively. The move comes as regulators in Europe and the US aim to clamp down on the $450 trillion market. Reuters (08 Sep.) , The Wall Street Journal (09 Sep.)
09/09/2009 12:00:00
EUROPEAN COURT UPHOLDS CLEARSTREAM MONOPOLY ABUSE CHARGE
Europe's second-highest court has upheld a monopoly abuse charge brought by the European Commission against Deutsche Börse's settlement arm Clearstream five years ago.
More on this story: http://www.finextra.com/fullstory.asp?id=20460
EUROCLEAR DEPUTY CEO IGNACE COMBES TO RETIRE
http://www.finextra.com/fullpr.asp?id=29400
Euroclear follows MTFs with fee cuts Euroclear, Europe’s largest settlement house, plans to cut the fees it charges for some post-trade services in the UK, in the latest fillip for the country's equity traders, who have seen their costs fall dramatically since the launch of several new trading venues.
FINACIAL NEWS: Euroclear Follows MTFs with Fee Cuts By Tom Fairless9/3/09 Euroclear, Europe’s largest settlement house, plans to cut the fees it charges for some post-trade services in the UK, in the latest fillip for the country's equity traders, who have seen their costs fall dramatically since the launch of several new trading venues.Brussels-based Euroclear said it will reduce the fees it charges investors to offset share trades executed on rival stock markets from November. The company will cut its average trade-netting fee by 58%, from 4.3p to 1.8p per transaction, with some users paying less than 1p.
*** the big win here is transparency, at long last Euroclear will start to let people know how much they actually charge for netting (as opposed to transaction reporting SDRT (stamp duty) or other.
Consortium could gain controlling stake in LCH.ClearnetLCH.Clearnet, one of the most prized post-trade businesses in the world, is in talks to buy out many of its shareholders and possibly give a controlling stake to a consortium of banks and inter-dealer broker Icap, sources said. LCH.Clearnet has been at the centre of an ownership battle for months, and the development is the first indication that a resolution might be in the making. Financial Times (tiered subscription model) (10 Sep.)
Participants
BARCLAYS FINED £2.45 MILLION FOR TRANSACTION REPORTING FAILURES The Financial Services Authority (FSA) has fined Barclays Capital Securities and Barclays Bank £2.45m for failing to provide accurate transaction reports to the watchdog and for "serious weaknesses" in systems and controls in relation to transaction reporting.
Full story: http://www.finextra.com/fullstory.asp?id=20450
Fragmentation of share-trading data remains issue in EuropeFinancial industry officials in Europe said the Markets in Financial Instruments Directive has opened up opportunities and given investors a greater number of choices, but it has also led to fragmentation of share-trading data. While some market participants said the fragmentation is a serious issue, others said it is a consequence of increased competition. In the US, regulators tackled fragmentation by requiring trading platforms to route prices through a consolidated tape. Europe has no plans for a similar solution. Reuters (08 Sep.)
Markit BOAT to cut pan-European data price
As the European Commission (EC) gathers evidence for its MiFID review, a survey by The TRADE has found that 68% of European buy-side heads consider their clients to be worse off since its implementation, while only 16% think the directive has improved their ability to attain best execution.
Eurex draws up wider plan for OTC derivatives European futures group Eurex has thrown down the gauntlet to international regulators by proposing a blueprint to overhaul the over-the-counter derivatives market.
The 48 page blue print is available here:
http://www.eurexchange.com/download/documents/publications/WPDerivativesMarketBlueprint.pdf
UBS CONNECTS TO BURGUNDY
http://www.finextra.com/fullpr.asp?id=29488
GOLDMAN SACHS BACKS CLS/ICAP FX JV
http://www.finextra.com/fullpr.asp?id=29483
MORGAN STANLEY BECOMES ELX FUTURES FOUNDING PARTNER
http://www.finextra.com/fullpr.asp?id=29475
11/09/2009 10:54:00
BARCAP TAKES MINORITY STAKE IN TRADEWEB; UNVEILS FX TRADING TOOLS
Barclays Capital has taken a minority equity stake in TradeWeb, a provider of online markets owned by Thomson Reuters and a group of dealer-brokers. The size of the stake, nor the amount paid, was disclosed.
More on this story: http://www.finextra.com/fullstory.asp?id=20471
Van der Moolen files for bankruptcy in Amsterdam Van der Moolen Holding’s 117-year old history ended on Wednesday after the Dutch brokerage filed for bankruptcy in the Court of Amsterdam following its inability to secure a buyer. (Financial Times)
Read story
Policy
IOSCO urges enhanced regulation of securitisation, CDS marketsThe International Organisation of Securities Commissions issued a report that recommends changes to bolster transparency and oversight of the credit default swaps and securitisation markets. IOSCO's recommendations include a requirement that originators or sponsors retain long-term exposure to securitisations. "IOSCO acknowledges that financial innovation will always be a hallmark of a vibrant financial system. However, such innovation need not, and should not, occur at the cost of investor protection and market confidence," said Kathleen Casey of IOSCO. Investment Executive (Canada) (04 Sep.)
*** I agree with “eat what you kill”
OTC regulators face the 'Grand Canyon' of resource gaps US regulators looking at reforming the vast market for over-the-counter derivatives have become the latest to be told they face a funding headache in their bid to bring tougher oversight to a corner of the financial services industry.
09-168AD ASIC seeks comment on credit rating use in disclosure documents http://www.asic.gov.au/ASIC/asic.nsf/byHeadline/09-168AD%20ASIC%20seeks%20comment%20on%20credit%20rating%20use%20in%20disclosure%20documents?opendocument
Consultation Paper 117 Consent to quote credit ratings in disclosure documents and PDSs will help guide ASIC’s review of its class order relief to find an appropriate balance between:
making credit ratings available to retail investors;
promoting the accountability of credit rating agencies to investors; and
giving credit rating agencies better control of the use of their ratings.
The consultation paper seeks to obtain more information about:
how important credit ratings are to retail investors;
how common is the use of credit ratings in disclosure documents and advertising to retail investors;
how do credit rating agencies control the use of credit ratings; and
what are the practicalities and costs of requiring and giving consent to cite credit ratings in disclosure documents.
Regional
Asias Exchanges Favour Shareholders Over Members
August 30th, 2009
Comments by By Steve Edge
Recently, the premier bourses of Asia reported their financial results as is prudent for publicly listed companies. Not surprisingly they all reported a decline in revenue in “harsh conditions”. However, they were all profitable. Not only that but gross profit margins were in the mid 70% range akin to a growth company or more precisely a monopoly. What was telling about the financial results was the dividend payout ratio (the percentage of net after tax profit paid to shareholders in the form of a dividend) all stood at 90%. Asia’s exchanges clearly put their shareholders ahead of their Members.
ASX Ltd (FY08/09)Gross profit margin of 74%Net Earnings per share $1.83Dividend per share $1.65
HKEx Ltd (HY09)Gross profit margin of 77%Net Earnings per share $2.05Dividend per share $1.84
SGX Ltd (FY08/09)Gross profit margin of 77%Net Earnings per share $0.29Dividend per share $0.26(All dollar values are quoted in local currency)
http://www.asiaetrading.com/blog/asias-exchanges-favour-shareholders-over-members/
Hong Kong Exchanges and Clearing Limited (“HKEx”) unaudited consolidated results for the six months ended 30 June 2009 as follows:
Participantship Opens to Overseas Clearing Houses and Central Depositories
In order to provide an additional and lower cost option to overseas market participants who are holding Hong Kong-listed securities as custodians, and to facilitate more order flow to Hong Kong, overseas clearing houses and central depositories (collectively, “CSDs”) can now apply to become Clearing Agency Participants (“CAPs”) of Hong Kong Securities Clearing Company Limited (“HKSCC”) in respect of those Hong Kong-listed securities. CSDs will manage their accounts in the Central Clearing and Settlement System (“CCASS”) electronically through CCASS terminals installed in their jurisdictions, and they will be subject to Hong Kong laws and the participant agreement to be executed with HKSCC. For due diligence purposes, HKSCC will follow the international practice and require CSDs to submit independent legal opinion on their eligibility, under the laws of their jurisdictions, to become CAPs.
T+2 Finality for Stock Exchange Trades
Securities trades executed on the Stock Exchange are currently settled in CCASS on T+2 while the money settlement is completed in the morning of T+3. HKEx plans to implement T+2 Finality for Stock Exchange Trades to reduce the overnight counterparty risk created by the
settlement time gap. With the support of the Hong Kong Monetary Authority and Hong Kong Interbank Clearing Limited, a model has been proposed to effect money settlement at the end of T+2 so as to bring finality of securities and money settlement for Stock Exchange Trades and Settlement Instructions (“SIs”) on the same business day. HKEx is currently seeking feedback from certain banks and clearing house participants on the proposed model for market consultation around the end of third quarter this year.
http://www.hkex.com.hk/news/hkexnews/090812news.pdf
An excellent joke (apart from the potential character assassination). The American version is unsurprising, but I thought it funny the Welsh were in on the act with their “Mr Jones”.
http://www.hoax-slayer.com/cosgrove-female-interviewer.shtml
It is a portion of an ABC radio interview between a female broadcaster and General Cosgrove who was about to sponsor a Boy Scout Troop visiting his military Headquarters. FEMALE INTERVIEWER:So, General Cosgrove, what things are you going to teach these young boys when they visit your base?GENERAL COSGROVE:We're going to teach them climbing, canoeing, archery and shooting. FEMALE INTERVIEWER: Shooting! That's a bit irresponsible, isn't it?GENERAL COSGROVE:I don't see why, they'll be properly supervised on the rifle range.FEMALE INTERVIEWER:Don't you admit that this is a terribly dangerous activity to be teaching children?GENERAL COSGROVE:I don't see how. We will be teaching them proper rifle discipline before they even touch a firearm. FEMALE INTERVIEWER:But you're equipping them to become violent killers.GENERAL COSGROVE:Well, Ma'am, you're equipped to be a prostitute, but you're not one, are you?
It just all depends on how you look at some things...Judy Wallman, a professional genealogy researcher in southern California, was doing some personal work on her own family tree.
She discovered that Congressman Harry Reid's great-great uncle, Remus Reid, was hanged for horse stealing and train robbery in
Montana in 1889. Both Judy and Harry Reid share this common ancestor.The only known photograph of Remus shows him standing on the gallows in Montana territory:
On the back of the picture Judy obtained during her research is this inscription: 'Remus Reid, horse thief, sent to Montana Territorial
Prison 1885, escaped 1887, robbed the Montana Flyer six times. Caught by Pinkerton detectives, convicted and hanged in 1889.' So Judy recently e-mailed Congressman Harry Reid for information about their great-great uncle.
Believe it or not, Harry Reid's staff sent back the following biographical sketch for her genealogy research: "Remus Reid was a famous cowboy in the Montana Territory ...... His business empire grew to include acquisition of valuable
equestrian assets and intimate dealings with the Montana railroad. Beginning in 1883, he devoted several years of his life to
government service, finally taking leave to resume his dealings with the railroad. In 1887, he was a key player in a vital
investigation run by the renowned Pinkerton Detective Agency. In 1889, Remus passed away during an important civic function
held in his honor when the platform upon which he was standing collapsed."
…and oh what a pleasure to see the Wallabies rise to the occasion. I’d not predicted the win so delighted to be proven wrong. Nice way to mark Robbie Deans (Kiwi coach) 50th.
Study without desire spoils the memory, and it retains nothing that it takes in."
--Leonardo Da Vinci, scientist, inventor, author
Without labour nothing prospers."
--Sophocles, Greek playwright and philosopher
Lessons on running a smooth settlement system - Financial Times
By Jennifer Hughes
20 August 2009 - Amid the chaos caused by Lehman Brothers’ collapse last year, a single €300m ($427m) missing payment might seem small beer.
But the travails of KfW, the German bank, were the exception that proved how well the currency markets functioned throughout the market turmoil – an example market insiders feel is overlooked by the authorities as they search for solutions to settlement risk elsewhere in the markets.
KfW allowed a €300m payment for a currency swap to go out to Lehman Brothers the day the US behemoth collapsed and never got the dollars it was owed in return.
Settlement risk in the currency markets – trading across borders and round the clock – has long been a high-priority issue for regulators. It was in fact the FX issues caused by the 1974 collapse of a private German bank that gave the problem its colloquial name – Herstatt risk.
Then, Herstatt Bank was paid Deutschmarks in European time but had not paid out the dollars it owed in US trading hours before it closed its doors.
The fact that KfW was almost the only headline-worthy FX settlement issue during the financial crisis underlines the smooth-running of the market and means it has been one less headache for regulators. But as they and politicians seek solutions to some of the trading risks highlighted by the crisis for other over-the-counter markets, currency experts wonder why their model, tested on the biggest market there is, is largely being ignored.
Currency markets have always been a little bit special. Known as a distinct asset class in recent years, FX is considered by regulators to be the most systemically important market because of its central role in the global payments system and because of the staggering sums traded round the world each day.
If the FX market gummed up, the global economy would be affected instantly because without a price, banks would struggle to exchange currencies across borders for even the smallest trade flows.
The market is also the exception that proves the rule whereby all policymakers talk global but often end up acting locally.
Currencies are sovereign, but by their nature they are traded across borders, making the market impossible to oversee on a purely national basis.
The market is made more complicated still by the fact that currencies are often settled in different timezones, meaning one bank could have paid its dollars to a counterparty, but would have to wait perhaps another full day to get, say, its yen in return.
As a result, regulators have worked together and over the years increased the pressure on the industry to solve its settlement risk issues. In 2002 it launched Continuous Linked Settlement, or CLS Bank, the multilateral system owned by a group of banks whereby members settle hundreds of billions worth of transactions each day.
“Spot” FX for immediate settlement is not traded on an exchange, but over-the-counter in bilateral deals. Exchanges are being touted by politicians and regulators as the solution to settlement risk in a range of over-the-counter markets including for credit derivatives, but the spot FX world is a working example of a market that, through CLS, has largely dealt with settlement risk without using an exchange as a central counterparty.
“The fear for the market is that politicians unwittingly draw FX into their deliberations over other over-the-counter asset classes,” says one official.
CLS processes trades in real time for settlement for most of the main banks today, handling about 50 per cent of global FX trading volumes. The system matches both sides of a trade – it does not stand as a central counterparty – and then nets each member bank’s total obligation. If KfW had settled its Lehman trade through CLS, it would have got its €300m back since if CLS can not reconcile both sides of a deal, the funds are returned.
CLS was not always appreciated by the market; almost all banks saw it as a high-cost utility in its early days and had to be bullied into developing the system by central banks who oversaw the whole market. Now, these same players are enthusiastic.
“When they saw counterparties could fail and these risks were not in fact theoretical, the real value of CLS got through. Many people in the industry have now got this risk reduction religion, so to speak,” said Rob Close, chief executive of CLS.
Market insiders are now addressing the risk caused by the growing bottleneck between deal and settlement.
“We’re trading in milliseconds in the front office but we’re only settling that in the back office on a daily basis,” said Zar Amrolia, global head of FX at Deutsche Bank.
A new system due to launch later this year is designed to take care of that by aggregating each trade ticket and settling them in bunches rather than risking that a large number of trades might get delayed in a traffic jam in the back office. This could be done as often as every 30 minutes.
The new platform is a joint venture between Traiana, the ICAP-owned post-trade network operator and CLS. Gil Mandelzis, chief executive of Traiana, thinks the system can be applied to other asset classes – reducing settlement risks and in the process, increasing capacity. “I absolutely think the FX model can in part be applied to other asset classes. It hasn’t been studied enough to see what works,” he says. “We don’t have a silver bullet. We come up with new ideas all the time. But what we have done is not limited to the world of FX.”
Scott Riley
EMCF Business Development
European Multilateral Clearing Facility
8th Floor 50 Bridge Street Sydney Australia 2000
((Off)+61 (0)2 8916 9634 È(Mob): +61 (0)418 117 627
* scott.riley@au.fortis.com
Lots of platform developments this week but the Barclays Transaction Reporting issue caught my eye.
I don’t want to comment on the actual process that lead to Barclays getting a fine.
But 2.5 million quid is a might whack for a transgression.
And here I think about materiality, proportionality and proceeds.
First of all I wonder how many of these transaction reports are “used” as opposed to filed.
(Yes, I appreciate this would not have come to light if the reports were not used, but if the reports were being used actively, maybe some of these transgressions would have come to light earlier).
Next, what is the materiality of all these transaction reports, as highlighted by the Reuters story, where fragmentation is cited as a post MiFID issue. (also The Trade story)
Personally, I’m a great believer in transaction reports, but I don’t feel I can stand back and reconcile total transaction reports verses total trades / liquidity claimed by all the various platforms, brokers, pools etc.
Then we have issues with the cost and price of accessing this data (even with the issues of validation, enrichment and quality).
Next, we have a nice white paper by Eurex. I appreciate this is a different asset class, but how effective is the industry at capturing OTC data (obviously there are some self serving conclusions in the paper).
Now, if 2.5 million quid was going to be spent, on researching, qualifying and improving transaction reporting. OK, this is a constructive step to take, and sorry, Barclays just happened to be there on the morning they were handing out tickets.
But I don’t get that feeling. I feel that this is a mighty whack to send a signal “we bite”.
By all means Bite, but use that for the betterment of the markets you serve, not just for the sake of it.
Platforms – headlines speak for themselves.
DirectEdge stays on my radar. I wonder about the common equity investors (Citadel) in DirectEdge and Equiduct.
LSE and Millennium. I didn’t predict that.
I notice PATS in Indonesia – congratulations to them. Anyone know what happened to CapCo (they used to run the CCP there)?
Clearstream – why would you want to drag all that bad publicity back out of the closet? Stop It.
Euroclear – a big win for the users – transparency finally arrives. Imagine charging 4.3p for “netting”. Congratulations to the innovation in the industry that has encouraged some defensive pricing.
LCH deal back in the news. Something has to give.
Van der Moolen. Never nice to see the passing of a great name.
HK moves to T+2 and look at some of those Asian exchanges returns.
For those technology watchers – Photonic Chips are the way to go. (especially if we want to get to 10,000 times faster)
I highly recommend this and found this very informative.
I’ll be at Sibos next week and look forward to meeting as many as I can.
Awful how quickly the agenda fills up. How long till Speed dating is introduced?
As such, there’ll be no news from me next week.
Love old Leonardo – study without desire spoils the memory, and it retains nothing that it takes in.
(few of my teachers would like to share a tale or two with Leo)
Have a great weekend, wherever you are, and don’t forget the nippers.
(Sorry, Boks to lose to the Kiwis at home)
S
http://clearingandsettlement.blogspot.com/
Platforms
QUOTE MTF LAUNCHES INTO CROWDED MARKET
Hungary-based Quote MTF has become the latest trading platform to enter the crowded post-MiFID European securities market.
Full story: http://www.finextra.com/fullstory.asp?id=20447
BATS in its first week of inverted pricing for UK securities posted 5.9% market share in the FTSE 100, up roughly 180 basis points (bp) from its average August share of 4.11%. NASDAQ OMX, which also launched a discounted routing fee for UK securities beginning this week, reported no market share change.
Source: BMO Capital Markets Corp.
PRESS RELEASE: Kendall Law Group Announces Shareholder Investigation Into NYFIX, Inc.9/2/09DALLAS -- Kendall Law Group, led by a former federal judge and former US Attorney, announces a shareholder investigation concerning the proposed acquisition of NYFIX, Inc. (Nasdaq:NYFX) by NYSE Euronext for possible breaches of fiduciary duty by the Board of Directors.
Jobs slashed at NYSE's newest acquisition Nyfix, a maker of trading technology, just sold itself to NYSE Euronext for 95% more than its market value. The bad news is, 40% of its workers will be jobless when the deal closes in the fourth quarter.
Second MTF up for sale
Global exchange group NYSE Euronext is considering the sale of NYFIX’s Millennium and Euro Millennium dark pools
http://www.thetradenews.com/trading-venues/mtfs-ecns/3549
Direct Edge's market share hits new high
Rolet casts doubt over Baikal future amid regulatory scrutiny Baikal, the London Stock Exchange’s proposed “dark pool” venture “might not work” amid regulatory scrutiny over such platforms and the inability of most such structures in Europe to earn profit, Xavier Rolet, LSE chief executive, has said. (Financial Times)
LSE ADMITS BAIKAL MAY FAIL
London Stock Exchange CEO Xavier Rolet has admitted the bourse's new pan-European MTF and dark pool, Baikal, "might not work" in the face of growing regulatory scrutiny.
Full story: http://www.finextra.com/fullstory.asp?id=20463
Rolet speeds LSE technology revolution Xavier Rolet, chief executive of the London Stock Exchange, has set an ambitious target for scrapping the exchange’s trading system by suggesting a replacement may be confirmed as early as this month. Rolet started a review of the exchange’s technology strategy days after joining the group three months ago. Last week he said the process was nearing a conclusion.
LSE CLOSES IN ON TRADELECT REPLACEMENT
Sri Lankan vendor MillenniumIT has emerged as the surprise favourite to provide the replacement for the London Stock Exchange's TradElect platform.
Full story: http://www.finextra.com/fullstory.asp?id=20451
http://www.millenniumit.com/capital_market_solutions/index.php#
Our customers include:
American Stock Exchange
Bank of Ghana
Botswana Stock Exchange
Capital Markets Authority of Kenya
Central Depository System of Mauritius
Central Securities Depository of Kenya
Colombo Stock Exchange
Dar es Salaam Stock Exchange
ICAP Plc
London Metal Exchange
Lusaka Stock Exchange
Nairobi Stock Exchange
Perimeter Financial Corporation
Stock Exchange of Mauritius
Securities Depository Agency of Croatia
Uganda Securities Exchange
RTS AND NYSE ARCA PUSH EUROPEAN EQUITY TRADING
http://www.finextra.com/fullpr.asp?id=29449
INDONESIA COMMODITY AND DERIVATIVES EXCHANGE SELECTS PATSYSTEMS TECHNOLOGY
http://www.finextra.com/fullpr.asp?id=29427
09/09/2009 11:11:00
NYSE EURONEXT TO SELL OPTIONS MART STAKE TO DEALER CONSORTIUM
Nyse Euronext has agreed to sell a "significant" equity stake in one of the company's two US options exchanges to a consortium of market makers, including BofA Merrill Lynch, Barclays Capital, Citadel Securities, Citi, Goldman Sachs, TD Ameritrade and UBS
More on this story: http://www.finextra.com/fullstory.asp?id=20457
Chi-Tech Selects FTEN's Risk Controls for Pan-European Trading ServiceChi-Tech integrates FTEN into MarketPrizm offering to provide risk management as HFT grows ...
PLUS GETS £5.5M MIDDLE EAST INVESTMENT
Plus Markets says a group of investors from the Middle East has agreed to invest up to £5.5 million for a 19% stake in the UK small and mid-cap exchange.
Full story: http://www.finextra.com/fullstory.asp?id=20444
PLUS MARKETS PLANS LIQUIDITY SCHEME
http://www.finextra.com/fullpr.asp?id=29444
MEXICAN EXCHANGE IN TALKS TO SELL STAKE TO CME GROUP Bolsa Mexicana de Valores is in preliminalry talks to sell a minority stake to Chicago-based derivatives exchange operator CME Group.
Full story: http://www.finextra.com/fullstory.asp?id=20452
GOLDMAN SACHS BACKS CLS/ICAP FX JV
http://www.finextra.com/fullpr.asp?id=29483
*** Traiana & CLS
1. Catalyst: Photonic Chip - ABC TV Science
The science of photonics promises to remove bottlenecks and speed up the entire Internet by sending information with light rather than tardy little ...www.abc.net.au/catalyst/stories/2675781.htm - Cached - Similar
Clearing
Banks agree to route more derivatives through clearinghousesJPMorgan Chase, Barclays, UBS, Citigroup and several other major financial institutions agreed to accelerate their use of central clearinghouses for over-the-counter derivatives. The banks said they will start sending more credit default swaps and interest-rate derivatives through clearinghouses in October and December, respectively. The move comes as regulators in Europe and the US aim to clamp down on the $450 trillion market. Reuters (08 Sep.) , The Wall Street Journal (09 Sep.)
09/09/2009 12:00:00
EUROPEAN COURT UPHOLDS CLEARSTREAM MONOPOLY ABUSE CHARGE
Europe's second-highest court has upheld a monopoly abuse charge brought by the European Commission against Deutsche Börse's settlement arm Clearstream five years ago.
More on this story: http://www.finextra.com/fullstory.asp?id=20460
EUROCLEAR DEPUTY CEO IGNACE COMBES TO RETIRE
http://www.finextra.com/fullpr.asp?id=29400
Euroclear follows MTFs with fee cuts Euroclear, Europe’s largest settlement house, plans to cut the fees it charges for some post-trade services in the UK, in the latest fillip for the country's equity traders, who have seen their costs fall dramatically since the launch of several new trading venues.
FINACIAL NEWS: Euroclear Follows MTFs with Fee Cuts By Tom Fairless9/3/09 Euroclear, Europe’s largest settlement house, plans to cut the fees it charges for some post-trade services in the UK, in the latest fillip for the country's equity traders, who have seen their costs fall dramatically since the launch of several new trading venues.Brussels-based Euroclear said it will reduce the fees it charges investors to offset share trades executed on rival stock markets from November. The company will cut its average trade-netting fee by 58%, from 4.3p to 1.8p per transaction, with some users paying less than 1p.
*** the big win here is transparency, at long last Euroclear will start to let people know how much they actually charge for netting (as opposed to transaction reporting SDRT (stamp duty) or other.
Consortium could gain controlling stake in LCH.ClearnetLCH.Clearnet, one of the most prized post-trade businesses in the world, is in talks to buy out many of its shareholders and possibly give a controlling stake to a consortium of banks and inter-dealer broker Icap, sources said. LCH.Clearnet has been at the centre of an ownership battle for months, and the development is the first indication that a resolution might be in the making. Financial Times (tiered subscription model) (10 Sep.)
Participants
BARCLAYS FINED £2.45 MILLION FOR TRANSACTION REPORTING FAILURES The Financial Services Authority (FSA) has fined Barclays Capital Securities and Barclays Bank £2.45m for failing to provide accurate transaction reports to the watchdog and for "serious weaknesses" in systems and controls in relation to transaction reporting.
Full story: http://www.finextra.com/fullstory.asp?id=20450
Fragmentation of share-trading data remains issue in EuropeFinancial industry officials in Europe said the Markets in Financial Instruments Directive has opened up opportunities and given investors a greater number of choices, but it has also led to fragmentation of share-trading data. While some market participants said the fragmentation is a serious issue, others said it is a consequence of increased competition. In the US, regulators tackled fragmentation by requiring trading platforms to route prices through a consolidated tape. Europe has no plans for a similar solution. Reuters (08 Sep.)
Markit BOAT to cut pan-European data price
As the European Commission (EC) gathers evidence for its MiFID review, a survey by The TRADE has found that 68% of European buy-side heads consider their clients to be worse off since its implementation, while only 16% think the directive has improved their ability to attain best execution.
Eurex draws up wider plan for OTC derivatives European futures group Eurex has thrown down the gauntlet to international regulators by proposing a blueprint to overhaul the over-the-counter derivatives market.
The 48 page blue print is available here:
http://www.eurexchange.com/download/documents/publications/WPDerivativesMarketBlueprint.pdf
UBS CONNECTS TO BURGUNDY
http://www.finextra.com/fullpr.asp?id=29488
GOLDMAN SACHS BACKS CLS/ICAP FX JV
http://www.finextra.com/fullpr.asp?id=29483
MORGAN STANLEY BECOMES ELX FUTURES FOUNDING PARTNER
http://www.finextra.com/fullpr.asp?id=29475
11/09/2009 10:54:00
BARCAP TAKES MINORITY STAKE IN TRADEWEB; UNVEILS FX TRADING TOOLS
Barclays Capital has taken a minority equity stake in TradeWeb, a provider of online markets owned by Thomson Reuters and a group of dealer-brokers. The size of the stake, nor the amount paid, was disclosed.
More on this story: http://www.finextra.com/fullstory.asp?id=20471
Van der Moolen files for bankruptcy in Amsterdam Van der Moolen Holding’s 117-year old history ended on Wednesday after the Dutch brokerage filed for bankruptcy in the Court of Amsterdam following its inability to secure a buyer. (Financial Times)
Read story
Policy
IOSCO urges enhanced regulation of securitisation, CDS marketsThe International Organisation of Securities Commissions issued a report that recommends changes to bolster transparency and oversight of the credit default swaps and securitisation markets. IOSCO's recommendations include a requirement that originators or sponsors retain long-term exposure to securitisations. "IOSCO acknowledges that financial innovation will always be a hallmark of a vibrant financial system. However, such innovation need not, and should not, occur at the cost of investor protection and market confidence," said Kathleen Casey of IOSCO. Investment Executive (Canada) (04 Sep.)
*** I agree with “eat what you kill”
OTC regulators face the 'Grand Canyon' of resource gaps US regulators looking at reforming the vast market for over-the-counter derivatives have become the latest to be told they face a funding headache in their bid to bring tougher oversight to a corner of the financial services industry.
09-168AD ASIC seeks comment on credit rating use in disclosure documents http://www.asic.gov.au/ASIC/asic.nsf/byHeadline/09-168AD%20ASIC%20seeks%20comment%20on%20credit%20rating%20use%20in%20disclosure%20documents?opendocument
Consultation Paper 117 Consent to quote credit ratings in disclosure documents and PDSs will help guide ASIC’s review of its class order relief to find an appropriate balance between:
making credit ratings available to retail investors;
promoting the accountability of credit rating agencies to investors; and
giving credit rating agencies better control of the use of their ratings.
The consultation paper seeks to obtain more information about:
how important credit ratings are to retail investors;
how common is the use of credit ratings in disclosure documents and advertising to retail investors;
how do credit rating agencies control the use of credit ratings; and
what are the practicalities and costs of requiring and giving consent to cite credit ratings in disclosure documents.
Regional
Asias Exchanges Favour Shareholders Over Members
August 30th, 2009
Comments by By Steve Edge
Recently, the premier bourses of Asia reported their financial results as is prudent for publicly listed companies. Not surprisingly they all reported a decline in revenue in “harsh conditions”. However, they were all profitable. Not only that but gross profit margins were in the mid 70% range akin to a growth company or more precisely a monopoly. What was telling about the financial results was the dividend payout ratio (the percentage of net after tax profit paid to shareholders in the form of a dividend) all stood at 90%. Asia’s exchanges clearly put their shareholders ahead of their Members.
ASX Ltd (FY08/09)Gross profit margin of 74%Net Earnings per share $1.83Dividend per share $1.65
HKEx Ltd (HY09)Gross profit margin of 77%Net Earnings per share $2.05Dividend per share $1.84
SGX Ltd (FY08/09)Gross profit margin of 77%Net Earnings per share $0.29Dividend per share $0.26(All dollar values are quoted in local currency)
http://www.asiaetrading.com/blog/asias-exchanges-favour-shareholders-over-members/
Hong Kong Exchanges and Clearing Limited (“HKEx”) unaudited consolidated results for the six months ended 30 June 2009 as follows:
Participantship Opens to Overseas Clearing Houses and Central Depositories
In order to provide an additional and lower cost option to overseas market participants who are holding Hong Kong-listed securities as custodians, and to facilitate more order flow to Hong Kong, overseas clearing houses and central depositories (collectively, “CSDs”) can now apply to become Clearing Agency Participants (“CAPs”) of Hong Kong Securities Clearing Company Limited (“HKSCC”) in respect of those Hong Kong-listed securities. CSDs will manage their accounts in the Central Clearing and Settlement System (“CCASS”) electronically through CCASS terminals installed in their jurisdictions, and they will be subject to Hong Kong laws and the participant agreement to be executed with HKSCC. For due diligence purposes, HKSCC will follow the international practice and require CSDs to submit independent legal opinion on their eligibility, under the laws of their jurisdictions, to become CAPs.
T+2 Finality for Stock Exchange Trades
Securities trades executed on the Stock Exchange are currently settled in CCASS on T+2 while the money settlement is completed in the morning of T+3. HKEx plans to implement T+2 Finality for Stock Exchange Trades to reduce the overnight counterparty risk created by the
settlement time gap. With the support of the Hong Kong Monetary Authority and Hong Kong Interbank Clearing Limited, a model has been proposed to effect money settlement at the end of T+2 so as to bring finality of securities and money settlement for Stock Exchange Trades and Settlement Instructions (“SIs”) on the same business day. HKEx is currently seeking feedback from certain banks and clearing house participants on the proposed model for market consultation around the end of third quarter this year.
http://www.hkex.com.hk/news/hkexnews/090812news.pdf
An excellent joke (apart from the potential character assassination). The American version is unsurprising, but I thought it funny the Welsh were in on the act with their “Mr Jones”.
http://www.hoax-slayer.com/cosgrove-female-interviewer.shtml
It is a portion of an ABC radio interview between a female broadcaster and General Cosgrove who was about to sponsor a Boy Scout Troop visiting his military Headquarters. FEMALE INTERVIEWER:So, General Cosgrove, what things are you going to teach these young boys when they visit your base?GENERAL COSGROVE:We're going to teach them climbing, canoeing, archery and shooting. FEMALE INTERVIEWER: Shooting! That's a bit irresponsible, isn't it?GENERAL COSGROVE:I don't see why, they'll be properly supervised on the rifle range.FEMALE INTERVIEWER:Don't you admit that this is a terribly dangerous activity to be teaching children?GENERAL COSGROVE:I don't see how. We will be teaching them proper rifle discipline before they even touch a firearm. FEMALE INTERVIEWER:But you're equipping them to become violent killers.GENERAL COSGROVE:Well, Ma'am, you're equipped to be a prostitute, but you're not one, are you?
It just all depends on how you look at some things...Judy Wallman, a professional genealogy researcher in southern California, was doing some personal work on her own family tree.
She discovered that Congressman Harry Reid's great-great uncle, Remus Reid, was hanged for horse stealing and train robbery in
Montana in 1889. Both Judy and Harry Reid share this common ancestor.The only known photograph of Remus shows him standing on the gallows in Montana territory:
On the back of the picture Judy obtained during her research is this inscription: 'Remus Reid, horse thief, sent to Montana Territorial
Prison 1885, escaped 1887, robbed the Montana Flyer six times. Caught by Pinkerton detectives, convicted and hanged in 1889.' So Judy recently e-mailed Congressman Harry Reid for information about their great-great uncle.
Believe it or not, Harry Reid's staff sent back the following biographical sketch for her genealogy research: "Remus Reid was a famous cowboy in the Montana Territory ...... His business empire grew to include acquisition of valuable
equestrian assets and intimate dealings with the Montana railroad. Beginning in 1883, he devoted several years of his life to
government service, finally taking leave to resume his dealings with the railroad. In 1887, he was a key player in a vital
investigation run by the renowned Pinkerton Detective Agency. In 1889, Remus passed away during an important civic function
held in his honor when the platform upon which he was standing collapsed."
…and oh what a pleasure to see the Wallabies rise to the occasion. I’d not predicted the win so delighted to be proven wrong. Nice way to mark Robbie Deans (Kiwi coach) 50th.
Study without desire spoils the memory, and it retains nothing that it takes in."
--Leonardo Da Vinci, scientist, inventor, author
Without labour nothing prospers."
--Sophocles, Greek playwright and philosopher
Lessons on running a smooth settlement system - Financial Times
By Jennifer Hughes
20 August 2009 - Amid the chaos caused by Lehman Brothers’ collapse last year, a single €300m ($427m) missing payment might seem small beer.
But the travails of KfW, the German bank, were the exception that proved how well the currency markets functioned throughout the market turmoil – an example market insiders feel is overlooked by the authorities as they search for solutions to settlement risk elsewhere in the markets.
KfW allowed a €300m payment for a currency swap to go out to Lehman Brothers the day the US behemoth collapsed and never got the dollars it was owed in return.
Settlement risk in the currency markets – trading across borders and round the clock – has long been a high-priority issue for regulators. It was in fact the FX issues caused by the 1974 collapse of a private German bank that gave the problem its colloquial name – Herstatt risk.
Then, Herstatt Bank was paid Deutschmarks in European time but had not paid out the dollars it owed in US trading hours before it closed its doors.
The fact that KfW was almost the only headline-worthy FX settlement issue during the financial crisis underlines the smooth-running of the market and means it has been one less headache for regulators. But as they and politicians seek solutions to some of the trading risks highlighted by the crisis for other over-the-counter markets, currency experts wonder why their model, tested on the biggest market there is, is largely being ignored.
Currency markets have always been a little bit special. Known as a distinct asset class in recent years, FX is considered by regulators to be the most systemically important market because of its central role in the global payments system and because of the staggering sums traded round the world each day.
If the FX market gummed up, the global economy would be affected instantly because without a price, banks would struggle to exchange currencies across borders for even the smallest trade flows.
The market is also the exception that proves the rule whereby all policymakers talk global but often end up acting locally.
Currencies are sovereign, but by their nature they are traded across borders, making the market impossible to oversee on a purely national basis.
The market is made more complicated still by the fact that currencies are often settled in different timezones, meaning one bank could have paid its dollars to a counterparty, but would have to wait perhaps another full day to get, say, its yen in return.
As a result, regulators have worked together and over the years increased the pressure on the industry to solve its settlement risk issues. In 2002 it launched Continuous Linked Settlement, or CLS Bank, the multilateral system owned by a group of banks whereby members settle hundreds of billions worth of transactions each day.
“Spot” FX for immediate settlement is not traded on an exchange, but over-the-counter in bilateral deals. Exchanges are being touted by politicians and regulators as the solution to settlement risk in a range of over-the-counter markets including for credit derivatives, but the spot FX world is a working example of a market that, through CLS, has largely dealt with settlement risk without using an exchange as a central counterparty.
“The fear for the market is that politicians unwittingly draw FX into their deliberations over other over-the-counter asset classes,” says one official.
CLS processes trades in real time for settlement for most of the main banks today, handling about 50 per cent of global FX trading volumes. The system matches both sides of a trade – it does not stand as a central counterparty – and then nets each member bank’s total obligation. If KfW had settled its Lehman trade through CLS, it would have got its €300m back since if CLS can not reconcile both sides of a deal, the funds are returned.
CLS was not always appreciated by the market; almost all banks saw it as a high-cost utility in its early days and had to be bullied into developing the system by central banks who oversaw the whole market. Now, these same players are enthusiastic.
“When they saw counterparties could fail and these risks were not in fact theoretical, the real value of CLS got through. Many people in the industry have now got this risk reduction religion, so to speak,” said Rob Close, chief executive of CLS.
Market insiders are now addressing the risk caused by the growing bottleneck between deal and settlement.
“We’re trading in milliseconds in the front office but we’re only settling that in the back office on a daily basis,” said Zar Amrolia, global head of FX at Deutsche Bank.
A new system due to launch later this year is designed to take care of that by aggregating each trade ticket and settling them in bunches rather than risking that a large number of trades might get delayed in a traffic jam in the back office. This could be done as often as every 30 minutes.
The new platform is a joint venture between Traiana, the ICAP-owned post-trade network operator and CLS. Gil Mandelzis, chief executive of Traiana, thinks the system can be applied to other asset classes – reducing settlement risks and in the process, increasing capacity. “I absolutely think the FX model can in part be applied to other asset classes. It hasn’t been studied enough to see what works,” he says. “We don’t have a silver bullet. We come up with new ideas all the time. But what we have done is not limited to the world of FX.”
Scott Riley
EMCF Business Development
European Multilateral Clearing Facility
8th Floor 50 Bridge Street Sydney Australia 2000
((Off)+61 (0)2 8916 9634 È(Mob): +61 (0)418 117 627
* scott.riley@au.fortis.com
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