Friday, March 11, 2011

News 110311: Predatory pricing, CXA, Merger Mania, Regulators one tool trick....t2c report.


Exchanges appear to be moving with the times...consolidation.

Liquidity also appears to be moving to the opening and closing auctions...and whola...the exchanges apply some predatory pricing.

Nice.

Time heals all wounds...and so too I think it will come to pass with merger mania.

Sovereign interest will remain an issue, but if it is not rushed and rather timed, some of these deals could get done.

One analyst this week said the SGX bid values ASX at 44 yet it is trading at 37...hence he votes with the market, no deal.

Australia also has a sensitive political balance.

The Canadian situation also appears to be politically sensitive with various provincial vetos.

TSE joins the party.

Meanwhile the NYSE appears to be making the best progress of all.

ASX lodge their Foreign Investment Review Board submission.

FEX also applies for an Aussie market license...for derivatives...not competing with the ASX.

Asking CCPs to increase capital bases smacks of sensationalism.

Why not just increase margins...or default funds...or limits...or membership criteria.

Why focus on one tool? It all ends up as a user pays model.

Another 148 pages from CPSS.

PIMCO and Icahn moves make me feel GFC still has some distance to go.

Last weekend was the Tamarama to Clovelly swim.

Nice updated piccies here:

http://www.t2cswim.com/tiki-index.php

I dunno what it is about this swim, but it always finds some way to test you.

Getting out through the break was hard work again this year. Even with a friendly rip I find it a deceptive and strong break.

When the waves break, they kinda dump and drag you with them but the water is too deep to duck dive and get a grip on anything so you just stay under as long as you can and then swim like crazy into the next break.

As ever, I tried to stay out wide of the buoys and swim in the deeper ocean waters where there is less chop. But this year there was no hiding from the choppiness. At times I felt I was getting a work over from a chiropractor. My arms would be reaching up, my torso twisted and then a surging wave would wrench your legs in some other weird direction. Real washing machine treatment.

The last part of the course is by far the best. Once you round shark point it is all over marine national park. At one stage I was over a ginormous school of fish. Hundreds and hundreds and hundreds of fish and stacked in tiers from about 6 meters down to as far as the eye could see. After 45 minutes I was in mixed feelings, I was feeling the strain, but at the same time happy to be in the water. This is one swim that must get easier.

Have a great w/end all.

S

Platforms

NYSE Stock Volume Down. So Are Nasdaq's Prospects.

http://www.securitiestechnologymonitor.com/news/nyse-nasdaq-deutsche-borse-trading-volume-27216-1.html?ET=securitiesindustry:e2342:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=STM_BNA_08302010_030511******NN

*** Nice pie chart of US Equity market shares

'Deep' probe expected for D.Boerse-NYSE merger

Derivatives competition a concern for regulators

http://www.businessspectator.com.au/bs.nsf/Article/WRAPUP-1-Deep-probe-expected-for-DBoerse-NYSE-merg-ETQBP?OpenDocument&src=eiw&ir=3

*** Positive sentiment coming out of NY.

FINANCIAL TIMES: Anger as Exchanges Raise Closing Auction Fees
By Jeremy Grant
03/03/11
Two of Europe’s largest exchanges have raised the fees they charge for traders dealing during the end-of-day auction, provoking an outcry among banks and brokers that are their biggest customers.
The moves by NYSE Euronext, which operates bourses in Amsterdam, Paris, Brussels and Lisbon, and Nasdaq OMX, which runs exchanges in Sweden, Denmark, Finland and Iceland, come as exchanges have been forced to lower fees amid stiff competition from rival platforms such as Chi-X and BATS.
These cuts have applied mostly to trading that happens between the opening and closing auctions. By contrast, at these auctions – which take place only at established exchanges and usually last five minutes – fees have risen.

REUTERS: Exchange Merger Mania Barely Stirs National Pride

"I don't see a problem," said U.S. Representative Barney Frank. "Are we supposed to be stupid that we don't know this is an international thing, that transactions are mobile and that they transcend borders?"
"Nobody is going to be able to operate the NYSE, no matter who owns it and be exempt from SEC regulations, so what's to worry about it?" the lawmaker said at the Reuters Future Face of Finance Summit this week

"I think it's kind of a natural evolution," Mary Schapiro, chairman of the U.S. Securities and Exchange Commission, said of the tie-ups. "It strikes me as a not unusual progression in the global consolidation of markets."
"The New York Stock Exchange building, that iconic symbol, will still be there," she said, adding that the SEC will focus on governance, ownership, and access to information as it reviews the NYSE plan.
http://www.reuters.com/article/2011/03/03/us-finance-summit-exchange-mergers-idUSTRE7227US20110303

LSE merger concern: Toronto exec responds

LSE shareholders will hold 55 per cent of the new company and TMX will have 45 per cent

http://www.smh.com.au/business/markets/lse-merger-concern-toronto-exec-responds-20110311-1bq8i.html

TMX Group statement tesponding to an open letter from a select group of financial institutions.

http://www.mondovisione.com/media-and-resources/news/tmx-group-statement-responding-to-open-letter-from-a-select-group-of-financial-i/

TMX deal divides Bay Street

http://www.nationalpost.com/news/features/deal+divides+Street/4413804/story.html

ALGO GROUP OFFERS LSE CONNECTIVITY AND CO-LOCATION SERVICES

http://www.finextra.com/news/announcement.aspx?pressreleaseid=38238

Platforms Asia

WALL STREET JOURNAL: Competition Won't Slash Australian Trading Costs
Traders of Australian stocks may expect their costs to plummet soon. They're wrong.
In the next 12 months, Australia will go from a monopoly for its national trading shop, ASX, to a smorgasbord of trading options.
Chi-X just last week got the OK to be officially up and running by October, and other trading venues including Kansas-based Bats say they are looking down under.

http://online.wsj.com/article/SB10001424052748704823004576191830663226382.html

ASX Limited (ASX) advises that Singapore Exchange Limited (SGX) has today lodged a formal application to the

Australian Foreign Investment Review Board (FIRB) about the proposed merger of ASX and SGX.

http://www.asxgroup.com.au/media/PDFs/110318_ASXSGX_Merger_application_Lodged_FIRB.pdf

The ACCC wants the ASX to lodge a formal undertaking to govern access to the clearing and settlement services.

http://www.theaustralian.com.au/business/opinion/asx-blocks-path-to-competition-on-australian-stockmarket/story-e6frg9io-1226015571784

ASX Halts Trading Due to Technical Glitch

London isn't alone in its technical woes as the Australian Securities Exchange (ASX) halted trading around 2:48 pm today in its equities session

http://www.asiaetrading.com/asx-halts-trading-due-to-technical-glitch/

ASIC consults on Market Integrity Rules for the Chi-X market
ASIC has today released a consultation paper proposing the application of new market integrity rules should Chi-X be granted a market licence. 11-39AD.

http://www.asic.gov.au/asic/asic.nsf/byHeadline/11-39AD%20ASIC%20consults%20on%20Market%20Integrity%20Rules%20for%20the%20Chi-X%20market?opendocument

ASX ready for market competition

http://www.asxgroup.com.au/media/PDFs/110303mrASX_Response_to_Competition_Timetable_Final.pdf

*** ASX press release.

ASIC consultation extension welcomed

With the scene set for competition in the country to take off, Rowsell believes that the only barrier to ASX’s proposed takeover by the Singapore Exchange – political intervention – will soon fall.

“Many of the concerns raised by some anti-takeover independent politicians relate to ‘national interest’, but when the ASX has to go up against an international competitor within its own borders, this argument loses some of its strength,” she says. “Australian politicians may start to find that the fear of getting left behind in a global race to attract liquidity outweighs the fear of foreign ownership of the ASX.”

http://www.thetradenews.com/regions/asia/5875

ASIC consults on FEX licence application
We have released a consultation paper to seek views on the application by the Financial and Energy Exchange Limited (FEX) for an Australian market licence. 11-40AD.

FEX proposes to operate an exchange market for energy, commodity, and environmental derivatives. FEX has applied for a domestic Australian market licence under Part 7.2 of the Corporations Act 2001.

http://www.asic.gov.au/asic/asic.nsf/byHeadline/11-40AD%20ASIC%20consults%20on%20FEX%20licence%20application?opendocument

SGX securities and derivatives activities increase in February

Securities turnover grew 32% year on year to $31.5 billion with an SDAV of $1.7 billion.

The OTC financial derivatives clearing business, which began in November, showed good traction with a notional US$24.2 billion of interest rate swaps cleared from the launch to end-February. In February alone, a notional US$10.2 billion of swaps were cleared.

http://www.sgx.com/wps/wcm/connect/cp_en/site/press_room/news_releases/sgx+securities+and+derivatives+activities+increase+in+february?presentationtemplate=design_lib/PT_Printer_Friendly

HKEx’s Extended Trading Hours to Begin 7 March

Starting on 7 March, the trading sessions of HKEx’s securities market will start earlier and will run from 9:30 am to 12:00 noon and then from 1:30 pm until 4:00 pm.

http://www.hkex.com.hk/eng/newsconsul/hkexnews/2011/110303news.htm

TOKYO AND OSAKA EXCHANGES PONDER MERGER; TMX RESPONDS TO BANK CRITICS OF LSE TIE-UP Exchange merger-mania has hit Japan, with the Tokyo and Osaka bourses set to hold talks this month about a possible tie-up.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22349

Proposed merger of Japanese exchanges fails to wow investors
Tokyo Stock Exchange Group is looking to merge with Osaka Securities Exchange, said TSE President Atsushi Saito. However, some investors are expected to see the proposed tie-up as being too local and too late. "The optimum timing for them to merge was about 20 years ago, when Tokyo was a giant," said Masahiko Ejiri, a fund manager at Mizuho Asset Management. "Also they only look at the inside of Japan. They don't care about foreign investors. If Tokyo were to merge with a stock exchange in Asia, that would be much more powerful." Bloomberg (10 Mar.)

Stock Exchange of Thailand prepares for higher algo VOLUMES

The Stock Exchange of Thailand (SET) has drawn up a shortlist of vendors to supply a new trading engine that is expected boost capacity of the exchange by 100 times when implementation is completed in two years.

http://www.thetradenews.com/asset-classes/equities/5878

Clearing

NEW YORK PORTFOLIO CLEARING ADDS DAN, PRAGER AND WIPF TO BOARD

http://www.finextra.com/news/announcement.aspx?pressreleaseid=38231

New York Portfolio Clearing: We Can Help NYSE Euronext Take on CME

Let the battle begin. That’s the motto of New York Portfolio Clearing, the NYSE Euronext’s Liffe US and the Fixed Income Clearing Corp after announcing that the Commodity Futures Trading Commission has given NYPC the green light to begin a process called one-pot margining.

http://www.securitiestechnologymonitor.com/news/-27201-1.html?ET=securitiesindustry:e2352:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=SIN_DailyClose__030911

Regulators want clearinghouses to increase financial bases
Global securities regulators are calling on clearinghouses, which are poised to play a larger role in the financial system, to bolster their bases. The move is expected to raise costs for trading equities, bonds and derivatives. "A [clearinghouse] should maintain additional financial resources, such as additional collateral or a pre-funded default arrangement to cover credit exposures from participant defaults in extreme but plausible market conditions," according to a report from the Bank for International Settlements. Reuters (10 Mar.)

Policy

Principles for financial market infrastructures - consultative report

CPSS Publications No 94: March 2011

http://www.bis.org/publ/cpss94.htm

*** Nice 148 pages...comments due by 29th July

Derivatives: Unlucky for some

http://www.economist.com/node/18285615?story_id=18285615&fsrc=rss

*** A nice short piece from The Economist on Dodd Frank

European Banks Say It's Okay to Regulate Depositories

The largest trade group representing European banks has just told the European Commission that it supports its plan to require common operating standards for national European securities depositories.

http://www.securitiestechnologymonitor.com/news/european-regulation-depositories-27217-1.html?ET=securitiesindustry:e2341:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=SIN_DailyClose__030411

Sen. Stabenow says regulators need resources to oversee derivatives
Sen. Debbie Stabenow, D-Mich., said that to prevent a repeat of the credit crisis, the Securities and Exchange Commission and the Commodity Futures Trading Commission need resources to supervise the derivatives market. "I am concerned that if our agencies don't have the tools they need, we are asking for a repeat of the crisis," Stabenow said. She also warned that the regulators, which got more powers under the Dodd-Frank Act, must not overstep their authority. Bloomberg (3/3), Nasdaq.com/Dow Jones Newswires (3/3)

Dodd-Frank helps European banks, JPMorgan Cazenove says
Analysts at JPMorgan Cazenove, the UK investment banking division of JPMorgan Chase, said new U.S. financial regulations encourage major European financial institutions to go after their American rivals' business. Large European banks "could benefit from regulatory arbitrage opportunities and gain market shares" under the the Dodd-Frank Act, the analysts said in a report. NYTimes.com/DealBook blog (3/9)

Banks warn CFTC swaps plan could hinder liquidity
The Commodity Futures Trading Commission is planning rules that would require swaps traders to get quotes from five or more market participants and make their trades through "swap execution facilities." Major banks said the requirements, including the request for quote system, could stifle market liquidity. "We recommend that the determination of the number of market participants to which an RFQ should be sent be left to the discretion of market participants," said Dexter Senft, managing director at Morgan Stanley. On Tuesday, SIFMA and ISDA filed a joint comment to the CFTC on swap execution facilities. Reuters (3/8),

CFTC member says agency pushing rules too quickly
Jill Sommers, a member of the Commodity Futures Trading Commission, said the regulator is moving too quickly and going too far in its efforts to force swaps to trading platforms. Sommers said the CFTC's proposal for swaps execution facilities is not consistent with proposals made by global regulators or the Securities and Exchange Commission. "One of my primary concerns is that the CFTC is moving out of step in time, substance, or both with the SEC and the rest of the world in implementing trade execution requirements for standardized swaps," Sommers said. Reuters (3/7)

Asia: Still Tightening

We had more mixed news out of Asia yesterday. China's trade account dipped into the red in February (see separate story), Japan's economy slowed by a bit more than forecast in the second estimate of 4th quarter growth, while South Korea joined Thailand in lifting

http://www.aireview.com.au/index.php?act=view&catid=8&id=12570&setSub=1

ICMA today released the results of its 20th semi-annual survey of the European repo market, undertaken in December 2010.

http://www.icmagroup.org/ICMAGroup/files/6c/6cbe8096-9dd8-4e47-a006-801c0ca97bc2.pdf

Canada’s HFT reforms divide market

Plans by Canadian regulators to reduce high-frequency traffic have been welcomed by some equity market participants, while others fear higher costs would prompt a flight of low-latency trading volumes to the US.

http://www.thetradenews.com/regions/americas/5872

Participants

Citic deal doubts put Agricole brokerages in play

Although France's third-biggest listed bank has downplayed concerns over progress in the talks, the banking source said a deal may not happen, and that potential bidders were being lined up for Cheuvreux and Hong-Kong-based unit CLSA.

http://www.businessspectator.com.au/bs.nsf/Article/UPDATE-2-Citic-deal-doubts-put-Agricole-brokerages-ETHV6?OpenDocument&src=eiw&ir=3

Penson files figures
New York
Penson Worldwide Inc. has filed its annual report for 2010.




For the year ended December 31, 2010, the firm generated net revenues of $288.3 million.

http://www.securitieslendingtimes.com/securitieslendingnews/article.php?article_id=21712

Goldman Sachs receives regulatory approval for MTF

Bulge-bracket broker Goldman Sachs has received approval from UK regulator the Financial Services Authority to launch its dark multilateral trading facility (MTF), SIGMA X MTF

http://www.thetradenews.com/trading-venues/mtfs-ecns/5866

ING Direct Is Up For Grabs
ING Group is selling off its U.S. online bank to repay Dutch government.

http://www.banktech.com/articles/229300633?cid=nl_bnk_daily

Stuff

PIMCO pops Ben's bubble

Karen MaleyBy dropping all US government-related debt, PIMCO's Bill Gross has put action to concerns that the QE program only covered up symptoms of a sick US economy and issued a vote of no confidence in Ben Bernanke's policies

http://www.businessspectator.com.au/bs.nsf/Article/PIMCO-Bill-Gross-bonds-Ben-Bernanke-QE2-pd20110310-ESSLW?OpenDocument&src=kgb

Icahn to Return all His Clients' Money

http://www.advancedtrading.com/articles/229300544?cid=nl_at_daily

SWIFT Introduces Digital Signature System

The financial messaging provider, which serves 9,500 financial institutions and corporations in 209 countries, said its Secure Signature Key system will allow companies and their executives to digitally sign financial messages and files sent to banks.

http://www.securitiestechnologymonitor.com/news/-27254-1.html?ET=securitiesindustry:e2352:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=SIN_DailyClose__030911

Wallabies eye $3m World Cup bonus

THE Wallabies squad is expected to earn more than $3 million in bonus payments if they win this year's World Cup in New Zealand.

http://www.smh.com.au/rugby-union/union-news/wallabies-eye-3m-world-cup-bonus-20110310-1bprs.html

*** Double it.

http://en.wikipedia.org/wiki/P_versus_NP_problem

Scott Riley

Business Development

ABN AMRO 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.abnamroclearing.com

Monday, March 7, 2011

News 110304: BATS, CXE, CXG (A and J), ASIC, Dodd Frank...silver linings and Tamarama.

Congratulations to Chi-X Australia!

This week sees ASIC publishing their timetable / roadmap for competing markets in Australia. Target Oct / Nov 2011.

Meanwhile focus continues on the ASX / SGX merger.

As with all the exchange mergers it will be sovereignty / national interest issues that will come to the fore.

Commercially, opinions appear to be softening in Australia....however politics and national interest remains the wild card with a coalition government.

The TSE comments on a ‘full price’ carry weight given their 4.99% stake in SGX (though for some reason I couldn’t see this in the SGX annual report).

I like the transparency (and subsequent analysis) of the Canadian national interest tests...somewhat more precise than the Aussie ones.

A further flurry of other Chi-X information.

On the Chi-X Global side Chi-X Japan (and SBI) figures are out.

FT speculates on Colt interest in MarketPrizm.

Chi-X Europe sale is confirmed, subject to conditions with BATS.

We see some indications from BATS in terms of listings, derivatives and new markets such as Brazil.

LSE and Borsa Italia both have trading woes this week...as does the ASX.

Congratulations TOM. NYSE Liffe trying to preclude TOM as a member is just as honourable as their behaviour on tick sizes. Regrettable.

Following the look at the G20 bit more on Dodd Frank.

Looks like Gensler is pushing for inclusion of FX; and

Industry starts to give recognition to HFTs.

And other news....

...Between Long Reef Surf Club and Dee Why Point there are regularly eight strong rips. The rips and their feeder currents usually detach the single sand bar from the beach. This can form a continuous trough of variable width and depth, but with all currents heading for one of the rips. So be careful!

Well, how could I not do this swim, I was enticed to explore those rips!

As it was, on the day, it was cold and wet with light rain falling just before the start. However once we were off, the water felt warmer that milling about in the rain, the rips pretty much left the sand bar intact, the surf was excellent for body surfing (I caught a nice wave home...and after the swim went out for some more) and the fish were out to play in force. A grand tour...and there was even a glimpse of the sun by the end of the ‘race’ (?) / tour.

Results here (2km): Quite a nice user friendly database....although I only came 172/374 somehow I came 18th in my age group.

http://www.longreef.com/

Another report here:

http://www.oceanswims.com/default2.asp?active_page_id=281

This weekend sees the Tamarama to Clovelly Cliffside Odyssey. Last year this was the most brutal swim of the season. I saw some swimmers repeatedly repulsed by the surf and eventually give up. As it was I was in the last wave that was released into the water. With big seas and 2 confirmed shark sightings (you need 2 ‘different’ sightings to call a race off) only those that were already in the water could continue. Believe it or not, some people actually complained about not getting a start!

Web site here: (with some snaps of the 2010 conditions)

http://www.t2cswim.com/tiki-index.php

* If you were registered in a starting wave in the 2010 swim and didn't get to swim then you are eligible for the 'concession' entry fee of $20. This is made up of a half-price swim entry of $15 and a donation to the Black Dog Institute of $5. Discount available only by registering in advance, no discount on late entries.

Entry conditions:

I hereby waiver, release and discharge all and every claim, right or cause of action for which I might have or arising out of my death, injury, damage or loss of any description whatsoever which I may suffer or sustain as the result of my participation in the event.

Rugby:

6 Nations: Congratulations England. I’d called France. Ireland and Wales...you gave me a fright. England now to win the tournament.

Super-Rugby: ....Ummm, come on the Reds (v Brumbies).

Cricket:

Bangalore, March 3 (AFP): Ireland's dramatic World Cup win over England

....on the one hand I want to laugh....but then how long till Ireland beat Aust at the test level? (I still hurt from the Ashes).

From the RBA....

The main thing we know about the current episode is that it looks very large. It is being driven by a big increase in demand for key Australian export commodities. Global consumption of coal has increased by about 50 per cent over the past decade; consumption of iron ore has increased by 80 per cent since 2003. Back then, Australia shipped around half a million tonnes of iron ore each day; now it is over a million tonnes a day. Coal shipments have been running at a rate of around 300 million tonnes a year, at least until the recent floods. Australian capacity to export LNG is now around 20 million tonnes a year, up from around half that in 2004. This looks like it will increase to over 50 million tonnes within five years

http://www.rba.gov.au/speeches/2011/sp-gov-230211.html

And for relative context...

Canary Wharf Tower weighs about 1,000 tonnes. We’re shipping out at least 2 myn tonnes of raw materials a day or 2,000 Canary Wharf Towers a day......I’m guessing we have some rather large holes in the ground.

http://www.aviewoncities.com/buildings/london/canarywharftower.htm

Gotta go....

Another week, oops fortnight...flies bye.

Have a great week-end all,

S

http://clearingandsettlement.blogspot.com/

Platforms

BATS AGREES CHI-X EUROPE ACQUISITION

The rush by exchange operators to consolidate continues apace, with Bats Global Markets inking a definitive agreement to buy Chi-X Europe.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22288

COLT TO BUY MARKETPRIZM - FT

Telecoms firm Colt is on the verge of buying trading technology outfit MarketPrizm from Chi-x Global, according to the Financial Times.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22293

BATS and Chi-X Europe consider competitive moves
BATS Global Markets CEO Joe Ratterman said BATS Europe and Chi-X Europe could follow up their proposed merger by seeking exchange status and launching a listings business in London. The combined company would be put on "regulatory par with those that we feel are our primary competitors" by becoming a recognised investment exchange under Britain's securities law, Ratterman said. The Wall Street Journal/Dow Jones Newswires (22 Feb.)

BATS EUROPE LAUNCHES REAL-TIME LATENCY MONITORING SERVICE

http://www.finextra.com/news/announcement.aspx?pressreleaseid=38138

Exchanges battle for a larger piece of the derivatives pie
Regulatory efforts to reduce risk in derivatives trading have prompted exchanges to seek a portion of the market. However, the market has not taken off as some expected. At a recent industry summit, participants discussed their efforts to emerge as derivatives giants on par with CME Group, NYSE Euronext's Liffe or Deutsche Boerse's Eurex. "We are certainly going to move into the derivatives space. We have a derivatives strategy," said Alasdair Haynes, CEO of Chi-X Europe. "The important thing in these markets is not about first-mover advantage." Reuters (3/2)

LSE or Data Vendors: Whose Fault for Technical Glitch?

Just one week after the LSE migrated its stock market from the TradElect trading platform to a new faster system from Millennium IT, it remains unclear whether it's the London Stock Exchange or certain of its market data vendors who are to blame for live prices not displaying correctly on trading screens.

Also unclear is just how widespread the problem is, when it will be corrected, exactly how many of the LSE’s market data vendors were affected or whether any traders suffered financially as a result of the errors. The LSE says it sends its market data feed to about 40 vendors.

http://www.securitiestechnologymonitor.com/news/lse-technical-glitch-data-displays-27114-1.html?pg=1

BORSA ITALIA GLITCHES HIT TRADING

Following a volatile day of trading yesterday thanks to the turmoil in Libya, Borsa Italia has been hit by technical problems this morning, leaving it unable to open as normal.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22292

CEOs of TMX and LSE urge Canadian officials to approve merger
London Stock Exchange CEO Xavier Rolet and TMX Group CEO Tom Kloet are encouraging officials in Canada to approve the exchanges' proposed merger. Canadian provinces are at odds over the deal, with Ontario the most sceptical. The federal government and a number of provinces are required to prove the deal would provide a "net benefit" to Canada. Financial Times (tiered subscription model) (23 Feb.)

REGULATOR TO ASK IF TMX DEAL IN PUBLIC INTEREST

one of the issues to be considered was share ownership. The deal would give a single shareholder - Borse Dubai Ltd - more than 10 percent ownership in the combined company.

"OSC's approval is required for any party to acquire more than 10 percent ownership of the voting shares of the TMX Group,"

http://www.advancedtrading.com/articles/229219093?cid=nl_at_daily

LSE-TMX MERGER LIKELY TO HIT REGULATORY ROADBLOCKS

Instinet does not believe that the proposed merger, as currently constituted, will make it through the Canadian regulatory process.

In an attempt to handicap the review process, we discuss below the six factors under Section 20 of the Investment Canada Act that will be considered by Industry Minister Tony Clement:

http://www.advancedtrading.com/articles/229219103?cid=nl_at_daily

*** Nice reasoned argument.

London Stock Exchange Group Monthly Market Report - February 2011

http://www.londonstockexchange.com/about-the-exchange/media-relations/recent-market-reports/report.htm

TMX Group – Consolidated Trading Statistics - February 2011

http://www.tmx.com/en/pdf/MonthlyTradingSummary.pdf

Mongolia eyes mining

Days after Rio Tinto's Stern Hu was arrested in Shanghai the company's chief executive was driven through drizzling rain to Mongolia's annual Naadam festival.

http://www.smh.com.au/business/mongolia-and-miners-get-the-taste-for-a-rich-relationship-20110220-1b102.html

NASDAQ OMX SAID TO PONDER NYSE EURONEXT BID AS ROLET PREDICTS MORE MERGERS

Speculation is mounting that Nasdaq OMX could move to hijack Deutsche Bourse's bid for Nyse Euronext as exchange operators scramble for tie-ups in what LSE chief Xavier Rolet predicts is just the start of a round of consolidation that could leave as few as three super groups standing in five years.

More on this story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22298

NASDAQ OMX AND ICE IN TALKS - REPORT

Merger-mania in the exchange trading space continues apace, with Nasdaq OMX and IntercontinentalExchange reaching a critical stage in tie-up talks, according to Fox Business Network.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22281

Nasdaq OMX considers a competing bid for NYSE, sources say
Nasdaq OMX Group is considering whether it can compete with Deutsche Boerse's bid for NYSE Euronext, as it scrambles to team up with a partner to survive in an increasingly competitive exchange landscape, sources said. Deutsche Boerse and NYSE announced plan to merge in a $10 billion deal. If Nasdaq, led by CEO Robert Greifeld, decides a competing bid is not possible, it will seek another exchange partner, sources said. The Wall Street Journal (23 Feb.), Reuters (22 Feb.)

NASDAQ OMX NORDIC LAUNCHES ORDER ROUTING SERVICE

http://www.finextra.com/news/announcement.aspx?pressreleaseid=37950

§ NYSE expects lengthy EU review of merger with Deutsche Boerse
NYSE Euronext Deputy CEO Dominique Cerutti said an antitrust investigation by the EU into a proposed merger of NYSE and Deutsche Boerse likely will include a Phase II review, meaning a longer inquiry. Cerutti reiterated his assertion that Europe will be a larger regulatory hurdle than the US. He said NYSE is seeking regulatory approval for the merger by the end of the year. The Wall Street Journal (23 Feb.), Financial Times (tiered subscription model) (22 Feb.)

NYSE EURONEXT COMPLETES APX DEAL

http://www.finextra.com/news/announcement.aspx?pressreleaseid=37977

COURT RULES IN FAVOUR OF TOM SMART EXECUTION

http://www.finextra.com/news/announcement.aspx?pressreleaseid=37964

*** Congratulations TOM. NYSE Liffe trying to preclude TOM as a member is just as honourable as their behaviour on tick sizes. Regrettable.

EUREX TO TAKE MAJORITY STAKE IN EUROPEAN ENERGY EXCHANGE

http://www.finextra.com/news/announcement.aspx?pressreleaseid=38024

Platforms Asia

AUSTRALIA PREPARES FOR CHI-X LAUNCH

Chi-X Global could launch its Australian platform as early as October under a timetable set out by the country's securities regulator, ending the ASX's long-held monopoly.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22326

ASIC SEES CHI-X AUSTRALIA START BY LATE 2011

The Australian government welcomed the timetable, saying competition was essential to develop Australia into a financial services hub.
"Competition is good for the equities market, good for Australian and overseas-based listed companies and good for our financial services sector," Minister for Financial Services and Superannuation Bill Shorten said.

http://www.businessspectator.com.au/bs.nsf/Article/ASIC-sees-Chi-X-start-by-late-2010-pd20110303-EL3Q7?OpenDocument&src=eiw&ir=4

11-38MR ASIC announces timetable for the introduction of market competition

http://www.asic.gov.au/asic/asic.nsf/byHeadline/11-38MR%20ASIC%20announces%20timetable%20for%20the%20introduction%20of%20market%20competition?opendocument

FINANCIAL TIMES: ASX Faces Rival as Sydney’s Markets Open
By Jeremy Grant
03/03/11
Chi-X Global, operator of share trading platforms in Canada and Japan, could start operating in Australia by October under a timetable for allowing competition in the country’s equities markets unveiled by the securities regulator.
It also makes Australia the latest market to open up to a wave of competition that has swept Europe, Japan and Latin America as new types of trading platforms emerge to challenge national bourses. Last week BATS Global Markets, a Chi-X Global rival, said it was exploring ways to enter the Brazilian market, dominated the BM&FBovespa exchange.

ASX HALF YEAR RESULTS

http://www.asxgroup.com.au/asx-financial-results.htm

SGX to Offer Continuous Trading by 2nd Quarter of 2011

Singapore Exchange (SGX) said February 18 it is seeking regulatory approval to offer non-stop trading from 9.00am to 5.00pm for its securities market by the second quarter

http://www.asiaetrading.com/sgx-to-offer-continuous-trading-by-2nd-quarter-of-2011/

SINGAPORE EXCHANGE AND NASDAQ OMX TEAM UP

http://www.finextra.com/news/announcement.aspx?pressreleaseid=37965

SGX MODIFIES CLEARING COLLATERAL RULES

http://www.finextra.com/news/announcement.aspx?pressreleaseid=38007

Addison views on the National Interest Test for Australia.

http://www.addisonslawyers.com.au/documents/doc-148-firb.pdf

SGX says has other opportunities if ASX deal fails

Analysts said SGX may have to give greater equity share to ASX shareholders to win the deal. Under the current proposal, ASX shareholders will own about 36 of the combined company whereas SGX shareholders will own the majority 64 percent

http://uk.reuters.com/article/2011/02/18/uk-sgx-idUKTRE71H1IE20110218

SGX’s bid price is unusually high,” Saito told reporters at a briefing in Tokyo today. “The current level of premium is a little bit too much. If SGX pays more than the current level, as the current shareholder, TSE can’t support it.” TSE holds a 4.99 percent stake in the Singapore bourse operator, according to data compiled by Bloomberg.

http://www.temasekreview.com/2011/02/24/tse-head-singapore-exchange%E2%80%99s-asx-bid-%E2%80%98unusually-high/

SGX TWENTY LARGEST SHAREHOLDERS (SGX Annual Report 2010)

No. Name No. of shares %*

1 SEL Holdings Pte Ltd 1 249,991,184 23.45

2 Citibank Nominees Singapore Pte Ltd 168,534,164 15.81

3 DBS Nominees Pte Ltd 83,684,747 7.85

4 DBSN Services Pte Ltd 63,893,067 5.99

5 HSBC (Singapore) Nominees Pte Ltd 53,923,195 5.06

6 Nomura Singapore Limited 53,141,000 4.99

7 United Overseas Bank Nominees Pte Ltd 29,369,115 2.76

8 Raffl es Nominees (Pte) Ltd 28,260,514 2.65

9 Phillip Securities Pte Ltd 10,377,615 0.97

10 BNP Paribas Securities Services Singapore 8,207,549 0.77

11 UOB Kay Hian Pte Ltd 6,549,452 0.61

12 DB Nominees (S) Pte Ltd 4,162,894 0.39

13 Leong Khuen Nyean 3,700,000 0.35

14 BNP Paribas Nominees Singapore Pte Ltd 3,673,929 0.34

15 DBS Vickers Securities (S) Pte Ltd 3,288,878 0.31

16 OCBC Nominees Singapore Pte Ltd 3,078,082 0.29

17 OCBC Securities Private Ltd 2,800,000 0.26

18 Wong Kong Choo 2,620,000 0.25

19 Morgan Stanley Asia (Singapore) Securities Pte Ltd 2,505,286 0.24

20 Lee Shiu 2,148,000 0.20

Total 783,908,671 73.54

http://www.sgx.com/wps/wcm/connect/8c817a0043f8323f8980fd035112e76d/SGX+Annual+Report+2010.pdf?MOD=AJPERES&CACHEID=8c817a0043f8323f8980fd035112e76d?presentationtemplate=design_lib/PT_Printer_Friendly

ACQUISITION BY TSE OF SGX SHARES

15th June 2007

http://www.tse.or.jp/english/news/200706/070615_a.html

J-GATE

Osaka Securities Exchange Co., Ltd. (OSE) has successfully launched its new derivatives trading system, "J-GATE", compliant with international standards and equipped with new trading functions and the world's highest order processing capacity. The system is powered by NASDAQ OMX trading technology.

http://www.ose.or.jp/e/news/19381

SBI Japannext Announces Management Change

We would also like to take this opportunity to give you a quick update on recent business performance:
• Volume: We have hit the record trading value of over ¥20bn on 11th January with a corresponding monthly volume of ¥253bn.

http://www.asiaetrading.com/sbi-japannext-announces-management-change/

Note: Chi-X Japan. Jan Volume 212bn

http://www.chi-x.asia/resources/jp/Chi-X%20Japan%20Posts%20Another%20Record%20Month20110201_Eng.pdf

BLOOMBERG RELEASES ISLAMIC FINANCE PLATFORM

http://www.finextra.com/news/announcement.aspx?pressreleaseid=37963

TSE TO LAUNCH HIGH-SPEED INDEX SERVICE

http://www.finextra.com/news/announcement.aspx?pressreleaseid=37979

Tokyo exchange and NYSE Euronext discuss linking networks
The Tokyo Stock Exchange is in discussions with NYSE Euronext to link networks to allow one another's customers to trade on either. However, insiders said regulatory obstacles make it difficult to link networks. "We have tried unsuccessfully for many years to get approval for mutual recognition, meaning that a US-based company can become a stock exchange member on Xetra and the other way around," said Jochen Thiel, executive director of Deutsche Boerse. However, "with all these proposed cross-border mergers, I would expect that on the regulatory side maybe we are getting a more open environment to enable globalized trading". Bloomberg (3/2)

Clearing

Clearstream Expands into Asia, Starting in Singapore

Clearstream said that it began to move its operations into Asia, agreeing to route, settle and maintain custody for orders placed by Singaporean investment funds.

The move into Asia follows by less than a week the announcement by Deutsche Borse that it agreed to acquire NYSE Euronext, which operates exchanges in Europe and the United States.

NYSE Euronext has announced plans to open its own clearing facilities in Europe. The acquisition, though, could lead to Clearstream setting up shop in the Americas, as well, to handle NYSE Euronext business, as well as that of external customers.

http://www.securitiestechnologymonitor.com/news/clearstream-expands-into-asia-27112-1.html?ET=securitiesindustry:e2309:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=STM_BNA_08302010_022111

LCH.CLEARNET'S SWAPCLEAR FCM SET FOR LIVE LAUNCH

http://www.finextra.com/news/announcement.aspx?pressreleaseid=37989

Picking Central Clearer No Easy Task

What's at stake for fund managers as centralized clearing of swaps and other derivatives arrives.

http://www.securitiestechnologymonitor.com/news/central-clearing-risks-27129-1.html?ET=securitiesindustry:e2319:171544a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=SIN_DailyClose__022311

Policy

IOSCO SUPPORTIVE OF SWITCH FROM OTC TO EXCHANGE-BASED TRADING Moves to force trading in derivatives away from over-the-counter markets to exchange and electronic platforms will be broadly beneficial in increasing competition, transparency and risk oversight, according to a report prepared by international regulatory overview body Iosco Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22284

Report (54 pages) available here:

http://www.iosco.org/library/pubdocs/pdf/IOSCOPD345.pdf

**** 7 recommendations are summarised on page 48/49

Dodd-Frank Wall Street Reform and Consumer Protection Act

Public Law 111-203: 21st July 2010

http://www.gpo.gov/fdsys/pkg/PLAW-111publ203/pdf/PLAW-111publ203.pdf

Full copy of Act (849 pages).

And more at...

http://banking.senate.gov

CFTC's Gensler seeks more competition in derivatives market
Gary Gensler, chairman of the Commodity Futures Trading Commission, said the agency is trying to bolster competition in the derivatives market. However, Gensler acknowledged that it will take some time to implement the Dodd-Frank Act. "I think Congress' intent was to open it up. We'll see how successful. You'll get to judge that in a few years," Gensler said. ForexYard/Reuters (3/2)

HM TREASURY CONSULTS ON UK REGULATORY REFORM

A new approach to financial regulation: building a stronger system
http://www.finextra.com/news/announcement.aspx?pressreleaseid=37949

Report (138 pages) available here:

http://www.hm-treasury.gov.uk/d/consult_newfinancial_regulation170211.pdf

Launch date: 17/02/11 Closing date: 14/04/11

http://www.hm-treasury.gov.uk/consult_finreg_strong.htm

UK regulator is nominated to lead EU financial watchdog
Verena Ross, a director at Britain's Financial Services Authority, has been nominated to head the European Securities and Markets Authority. The watchdog will oversee securities and financial markets. Ross' nomination is expected to relieve concerns in London about the Continent's increasing influence over the City's trading activities. Financial Times (tiered subscription model) (22 Feb.), The Wall Street Journal/Dow Jones Newswires (22 Feb.)

GETTING A GRIP ON HFT LIQUIDITY

The new version of MiFID will constrain the way high-frequency traders are able to interact with the market, but the proposals could have the opposite effect of regulatory intentions.

Which of the two options would be more onerous?

It is most likely to be the minimum resting period. If high-frequency traders have to maintain a quote for a specific period of time, there is a risk of an adverse price movement during this period, which would lead to losses. Furthermore, the quoted spread is in danger of becoming stale, which could reduce the quality of price formation and potentially lead to more off-exchange trading.

With an order-to-cancel ratio limit, HFT firms could simply respond by reducing the amount they trade, which would make their strategies less profitable, but incur less risk.

Are there any other ways of constraining HFT activity?

In Canada, national regulator the Investment Industry Regulatory Organization of Canada (IIROC) is considering whether to introduce a fee model that would charge market participants per message, rather than per order.

IIROC’s says this will help to align the fees they charge with the order surveillance costs they incur. The proposal will be decided on by Q2 this year and would likely reduce the profitability of HFT strategies, with some observers noting that high-frequency traders could reduce their market participation by 20%.

http://www.thetradenews.com/trading-execution/regulation/5790

Banks warn regulators about curbing high-frequency trading
Regulators are planning regulations to restrict high-frequency trading strategies to prevent a repeat of the May 6, 2010, "flash crash." Securities and Exchange Commission Chairman Mary Schapiro said the commission is considering fees for traders who place and immediately cancel orders. Leading banks, however, are warning that high-frequency traders are important to efficient markets. "If they are somehow going to outlaw or make it disadvantageous to be a market-maker, they are going to take liquidity out of the market," said Jack Vensel, global head of wholesale services at Citigroup. Reuters (3/2),

FREQUENTLY ASKED QUESTIONS ABOUT ESMA

Annex 1 lists all standing committees and groups etc of ESMA.

http://www.esma.europa.eu/popup2.php?id=7366

Specific work of each of the “nine” standing committees is available here (menu tab on left):

http://www.esma.europa.eu/index.php?page=&mac=0&id=21

SECURITIES LAW DIRECTIVE (SLD).

The scope of the proposed legislation can be roughly divided in three parts.

The first deals with the purchasing, holding and selling of securities and the creation of a harmonised legal framework that reflects the cross-border and electronic nature of trading.

The second part of the SLD offers insolvency protection to investors in the event of the insolvency of the party that provides the securities account, typically a bank

Thirdly, the directive covers the duties of intermediaries to pass information back and forth between the issuer and the end-investor that is required for the investor to make use of rights that flow from securities in the context of a corporate action event.

http://www.thetradenews.com/node/5718

*** I’m a big fan of Werner and his work.

FLASH CRASH PANEL CALLS FOR HFT CURBS

High-frequency traders could be charged fees for the disproportionate amount of orders they send under recommendations from a panel set up in the wake of last May's flash crash.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22287

SIFMA, ISDA say CFTC's proposed standards would hinder swaps
SIFMA and the International Swaps and Derivatives Association say the Commodity Futures Trading Commission's proposed standards for business conduct could discourage dealers from doing business with municipal issuers and pension plans. Swap dealers "may avoid transacting with municipalities because compliance with the proposed rules would likely cause [a swap dealer] to be deemed a 'municipal adviser' under Dodd-Frank and, as a result, become subject to a fiduciary duty," according to the comment letter filed by the groups. Read the SIFMA news release. The Bond Buyer (free content) (2/18

Participants

JPMorgan to cut costs and jobs by ditching trading platforms

the bank expects to make savings of $300 million a year by reducing the number of platforms from 10 to two, the lower costs and improved efficiency could actually reap benefits of $1 billion.

The project has already cut the cost of a foreign exchange trade from 75 cents to 10 cents and this will fall to five upon completion

http://www.finextra.com/news/fullstory.aspx?newsitemid=22274

I wonder if this was a breach of the UBS dress code?

http://www.theaustralian.com.au/business/city-beat/george-kanaan-mark-fitzgerald-in-trading-floor-fight/story-fn4xq4zx-1226010859761

Stuff

UK DEBT FACTS AND FIGURES

http://www.moneydebtandcredit.com/debt-information/debt-problem-2010Q4-98.aspx

*** I actually didn’t find this too alarming. (Assuming personal debt includes mortgages).

BANK OF AMERICA IS THE BANK OF SATAN

Bank of America has fallen foul of a wicked browser re-direct wheeze, with its home page now appearing as the go-to site for Lucifer himself.

Full story: http://www.finextra.com/news/fullstory.aspx?newsitemid=22289

**** Sorry, I laughed (and I’m a shareholder) typing bankofsatan.com

O'Neill deal means Deans set to stay for 2015 cup

ROBBIE DEANS is expected to be reappointed Wallabies coach before the World Cup in September.

http://www.smh.com.au/rugby-union/union-news/oneill-deal-means-deans-set-to-stay-for-2015-cup-20110221-1b2jm.html

*** excellent news!

Silver Lining?

Around B.C. 200 the king of the Sicilian seaport city Syracuse posed a puzzle for the Greek mathematician Archimedes. The king had been given a crown that was supposed to be pure gold, but he suspected that the goldsmith had added some silver. Archimedes was to determine, without melting down the crown, whether the king's suspicions were well founded.

Archimedes first studied the problem diligently, testing numerous hypotheses, but could not solve it. So he decided to take a break, asking his servant to draw a bath. As he settled into the tub, the water level rose. Archimedes then realized that the same effect could be used to determine the volume of the crown. He leapt up and ran out into the street naked. "Eureka!" he shouted. He had recognized that equivalent weights of different substances, such as silver and gold, occupy different volumes. By observing the volume of water the crown displaced—perhaps as compared with a gold reference sample of the same weight—he could thus determine whether it also contained a less dense metal such as silver. As it turned out, the king was right to be doubtful: Archimedes' test revealed that silver was present.

http://www.scientificamerican.com/slideshow.cfm?id=achievements-of-wandering-minds&photo_id=33AAB76A-B3DA-803C-3E98026FC92386C0

Australian Share Price Movements

http://www.bakeryoung.com.au/library/share_price_movements.pdf

At the Sydney opera house....

http://www.timeoutsydney.com.au/theatre/event/21217/in-the-next-room-or-the-vibrator-play.aspx

The Obama administration issued the first permit to restart DEEPWATER DRILLING in the Gulf of Mexico since the lifting in October of a moratorium that was imposed after the BP oil-spill disaster. With the oil price so high, the government has come under pressure to allow more offshore drilling.

Ahhh, nice to have that out of the way.

A ruling by the European Court of Justice that INSURANCE COMPANIES could no longer use sex as a factor in setting insurance rates was widely criticised. Female drivers may now have to pay more for their car insurance, despite being a lower risk behind the wheel. In Britain, men, who have a shorter life expectancy, will no longer be entitled to higher annuities than women. - See article http://news.economist.com/cgi-bin1/DM/t/eCXRi0dHglU0Mo0SXep0EX

A vision without resources is a hallucination.

General Jones, Supreme Allied Commander Europe (SACEUR)

Do all the good you can, and make as little fuss about it as possible."

--Charles Dickens, English novelist

Scott Riley

Business Development

ABN AMRO 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.abnamroclearing.com