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Pioneers and Leaders of Emerging Markets Trading Launches: Marco Polo New World

Marco Polo New World redefines global trading solutions through innovation and reliability

Perseus Telecom providing ultra-low latency connectivity and infrastructure to Marco Polo New World

NEW YORK – 30 September 2013 – Recently acquired Marco Polo Securities today announced that it has integrated with ‘Marco Polo New World.’ The Marco Polo New World vision encompasses new management along with next generation technology, befitting the firm’s testament to reliability and performance that have kept loyal financial services customers in place for fourteen years.

Cliff Goldman, CFO and President of Marco Polo, stated, “Launching Marco Polo New World coincides precisely with the strategic repositioning the firm has made, in the context of being a vendor of strength and reliability for the customers we serve in developed and emerging markets.”

Established in 2000, the original firm set out to overcome the barriers to investing and trading between developed and emerging markets. Today Marco Polo New World, with its new focus and technology, has in place a global electronic trading platform which currently provides connections to 70 plus countries representing more than 100 markets. This trading platform has an extensive global network of broker dealers and asset managers that enjoy neutrality and flexibility, all whom are backed by an experienced and knowledgeable service team that works around-the-clock.

Defining global trading solutions

  • Premier global electronic trading provider with experienced and professional customer support
  • Committed to continually providing new gateways to Emerging Markets
  • Strong new leadership and vision, committed to innovation and reliability

Anthony Orantes, Managing Director of Marco Polo New World, says, “Customer feedback has been phenomenal throughout the Marco Polo New World launch. We have strong support and backing by Perseus Telecom, which helps our customers take advantage of the Perseus global ultra-low latency connectivity to exchanges and trading venues. We also selected a world-class management team comprised of executives with significant experience operating in global markets, who understand market structure, advanced technology, and electronic exchange trading,” he concludes.

‘Defining global trading solutions’ is central to the Marco Polo New World value proposition. “Our New World brand name, and even our logo, is based on innovation, technology, and connectivity.  This core value reinforces what we are committed to deliver to our global customer base,” said Kamran Rafieyan, Director of Marco Polo New World. “With the new leadership in place our firm can deliver a higher level of service for our current and future customers.”

With the new management team of Dr. Jock Percy, Marco Polo New World Chairman, Cliff Goldman, CFO and President of Marco Polo Securities, Anthony Orantes, Managing Director Sales, and newly appointed Kamran Rafieyan, Director of Marco Polo New World, the company’s vision is being executed by a team of trusted, experienced, and performance-driven partners.   Under the guidance of this leadership, Marco Polo New World will work closely with its customers to help them navigate through the array of complexities in today’s global trading markets.

Perseus provides network and infrastructure to Marco Polo New World resulting in significant advantages for the firm and its customers. In addition to more efficient operations for the company, by utilizing the Perseus award winning ultra low latency network, Marco Polo New World customers will be availed to increased trading speeds.

Marco Polo New World, through its local exchange and brokerage relationships, offers intra-market connectivity and routing to brokers and exchanges in more than 100 markets. “Perseus Telecom is a global market-to-market exchange connectivity provider with the lowest latency available, and it is now supercharging the Marco Polo New World platform,” said Dr. Jock Percy, CEO of Perseus Telecom. “Perseus serves a significant number of trading firms, exchanges and technology providers with unsurpassed speed and precision,” Percy added.

Source: MarcoPolo & Perseus,30.09.2013

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Filed under: Asia, Latin America, Trading Technology, , , , , , , , , , , ,

ITG launches Posit Alert for Mexican equities

ITG, a leading independent execution and research broker, today announced the launch of Posit Alert for Mexican equities, marking the 30th global market where Posit Alert is available.

POSIT Alert is a premier platform for sourcing large blocks of liquidity, actively alerting buyside traders to liquidity that matches orders on their trade blotter. Buyside traders use POSIT Alert to prevent information leakage on large orders, maximize their chances of finding liquidity and reduce market impact by matching at the midpoint with no need for negotiation.

In Mexico, POSIT Alert allows buyside traders to anonymously cross blocks of shares on the Bolsa Mexicana de Valores (BMV). POSIT Alert Mexico provides seamless block crossing opportunities without any human intervention, minimizing information leakage.

“The Mexican market can present challenges for the buyside in terms of sourcing block liquidity, particularly in thinner names,” said Eric Blake, ITG’s Head of Latin America. “The launch of POSIT Alert offers an efficient, cost-effective solution for trading Mexican equities.”

 Also commenting on the rollout, ITG’s Head of Electronic Brokerage, Jamie Selway, said, “our Mexican launch is an important addition to POSIT Alert’s global footprint, enhancing the block liquidity value proposition we deliver to buyside traders.” POSIT Alert is already a successful tool for buyside traders across North America, Europe and the Asia Pacific region, seamlessly connecting more than 550 trade blotters. POSIT Alert currently offers 1.1 billion shares of active, global liquidity on a given day in the US, with an average trade size in 2013 of 33,000 shares, compared to approximately 300 shares on US exchanges. In Canada, POSIT Alert trades average approximately 29,000 shares, while in Europe the average trade size is $1.1 million and in Asia Pacific it is approximately $300,000.

Source: Finextra 30.07.2013

Filed under: BMV - Mexico, Exchanges, Latin America, Mexico, , , , , ,

Andean Exchange Project MILA to Proceed without Peru

Peru’s Bolsa de Valores de Lima (BVL) has suspended its participation in Mercado Integrado LatinoAmericano (MILA), a link-up between BVL, the Bolsa de Valores de Colombia (BVC) and Chile’s Bolsa de Comercio de Santiago (BCS), citing challenges arising from its domestic tax regime.

MILA was created to provide domestic brokers with access across the three participating equity markets through an automated model of intermediated order routers. Once live, the platform will allow brokers in each country to send DMA orders via the infrastructure of local brokers in the other two countries, directly to the exchanges.  The second stage of the integration – slated for completion by the end of 2011 – will seek to address differences in tax and regulation by coordinating regulatory bodies’ and exchanges’ rules across Chile, Colombia and Peru.

The Colombian and Chilean market infrastructure providers will continue working on the integration project, and are evaluating the impact the news will have on the current work schedule and the timing of the implementation.

Source: The Trader, 23.12.2010

Filed under: Chile, Colombia, Exchanges, Latin America, News, Peru, Trading Technology, , , , , , , , , , , , ,

Tapping Alpha in Chile, Columbia and Peru 

When it comes to South America, who is the next Brazil? SunGard has spent the last 11-plus years dealing in Brazil and has established a gateway to Chile with plans to do the same in Peru and Columbia. SST sits down with Laurence Latimer, senior vice president and managing director of trading and client connectivity in the Americas for SunGard to discuss the possibilities in South America.

Although the press mostly discusses Brazil, Latimer says there is a real opportunity for traders to find alpha outside of São Paulo—specifically in Chile, Columbia and Peru.

How do countries like Chile, Columbia and Peru compare to Brazil? Laurence Latimer, SunGard: If you look at the gross domestic product (GDP) in Latin America, clearly Brazil is the 800-pound gorilla. Depending on the year, Brazil represents close to 40 percent of Latin America’s GDP, followed by Mexico, which represent around 28 to 30 percent. Chile, Columbia and Peru together make up about 15 percent of GDP in Latin America. There is a reason why Brazil is top of everyone’s mind: It is simply because of its sheer size. But with markets like Columbia, Chile and Peru, people fail to recognize that these economies have been investment-grade for years now. The exchanges there, and in particular in Chile, are making significant investments and are moving toward a purely electronic marketplace or, at a minimum, have electronic markets alongside open-outcry markets that are competitive from a latency perspective.

How does the regulatory environment in those nations compare to Brazil?   Latimer: You are seeing a much better legal and regulatory environment. Fifteen years ago, if you watched the documentary “The Two Escobars,” for example, Columbia was not a fun place to be, from a business perspective, and Peru sits on the border. The rule of law was still developing, but that has greatly improved in recent years. Their regulatory frameworks are now moving toward international standards, where there is much freer in-and-out flow of capital, and firms can repatriate profits without being overly taxed, so they have made themselves very welcoming places for the types of business investment that is required to sustain growth. Why is this region enticing for traders? Latimer: While traders are still looking for more liquidity, for someone looking for alpha, these are the places where you find spreads and commissions that you just don’t find in other places, and enough depth to play in those markets.

From a technology perspective, how far behind Brazil’s largest exchange, BM&FBovespa, are these exchanges? Latimer: Santiago is making huge investments in technology. They had seconds of latency just eight months ago on their trading systems, and the amount of throughput they could handle was low. They have grown their capacity, and the internal latency of their matching engine is down from seconds to milliseconds. Similar investments are being made in Columbia and Peru. We are also seeing them work together to create scale across their exchanges so that they can compete with larger exchanges. For instance, one proposal on the table is to create a pan-Northern Latin America exchange, where if I trade in Peru, I can see the bid–offer spreads in Columbia and Chile, and trade against as if I was trading locally. If you can put together the liquidity you have in Columbia, Chile and Peru from their equity exchanges, it becomes a much more enticing play and it makes it easier for international firms to come in and want to be there. BM&FBovespa is hyper-aggressive in making sure that its fundamental infrastructure—the trading tools it uses to match and route order information and market data—is state-of-the-art. You are starting to see that kind of aggressiveness in Columbia, Chile and Peru; they are starting a little further back and they have a smaller market with which to work, but there is an increasing appetite and commitment to have world-class systems.

 Do you think a major North American exchange will make an investment in these South American exchanges, the way the Chicago Mercantile Exchange (CME) did with BM&FBovespa? Latimer: I don’t have a crystal ball. But if I were running an exchange, and given that there is certainly the trend of consolidation globally, once you get past the top 10 to 20 markets, what is next? Once you go past São Paulo, then the Santiagos, Limas and Bogotás start looking really good, especially as a regional play.

Source:Waterstechnology, 28.09.2010 by Anthony Malakian

Filed under: BM&FBOVESPA, BMV - Mexico, Brazil, Chile, Colombia, Exchanges, Latin America, Mexico, News, Peru, , , , , , , , , , , , ,

HKEx Derivatives Market Transaction Survey Finds Strong Local And Overseas Investor Support For The Market

Hong Kong Exchanges and Clearing Limited’s (HKEx) Derivatives Market Transaction Survey 2008/09 (covering the period from July 2008 to June 2009) found that Exchange Participants’ (EPs) principal trading supported half of the trading in HKEx’s derivatives (futures and options) market and the other half had strong support from both local investors (primarily individuals) and overseas investors (primarily institutions).

In 2008/09, the turnover for the futures and options under study was 103 million contracts (referred to as the total market turnover in this survey), compared to 106 million contracts in 2007/08.  Stock options remained the dominant product by turnover (as measured by contract volume), albeit with a drop in their contribution to total market turnover (from 56 per cent in 2007/08 to 49 per cent in 2008/09).

Some key findings of the 2008/09 survey

 

  • EP principal trading (comprising market maker trading and EP proprietary trading) contributed 53 per cent of total market turnover (down from 61 per cent in 2007/08), 82 per cent of stock options turnover (vs 89 per cent in 2007/08) and 24 per cent of turnover in other futures and options (vs 26 per cent in 2007/08)
  • Local investors contributed 25 per cent of total market turnover (up from 21 per cent in 2007/08), and overseas investors contributed 22 per cent (up from 19 per cent in 2007/08) .
  • Retail investors contributed 23 per cent of total market turnover (up from 19 per cent in 2007/08), mostly from local retail investors (20 per cent).  Institutional investors contributed 24 per cent in 2008/09 (up from 20 per cent in 2007/08), mostly from overseas institutional investors (19 per cent) (see Figures 2 and 3).
  • Major products-  For Hang Seng Index ( HSI ) futures, overseas institutional and local retail investors were the major contributors (34 per cent and 32 per cent respectively of the product’s turnover).
    –  For Mini-HSI futures, the dominant contributors were local retail investors (58 per cent).
    –  For H-shares Index (HHI) futures, overseas investors were the major contributors (54 per cent: 49 per cent from institutions, 5 per cent from individuals).
    –  For HHI options, EP principal trading and overseas institutional investors were the major contributors (34 per cent and 28 per cent respectively).
    –  For stock options and HSI options, EP principal trading was dominant (82 per cent and 51 per cent respectively).
  • UK investors contributed the most to overseas investor trading in 2008/09 (29 per cent, compared to 32 per cent in 2007/08).  US investors came second (19 per cent in 2008/09, down from 26 per cent in 2007/08).  Australian investors ranked third (14 per cent in 2008/09, up from 11 per cent in 2007/08).  Mainland China, European (excluding the UK) and Singaporean investors were also significant contributors (10-11 per cent in 2008/09).
  • Retail online trading contributed 43 per cent of total retail investor trading (39 per cent in 2007/08) and 10 per cent to total market turnover (7 per cent in 2007/08).

The Derivatives Market Transaction Survey has been conducted annually along similar lines since 1994.  The surveys for the latest four years covered HSI futures, HSI options, Mini-HSI futures, HHI futures, HHI options and stock options.  These products together accounted for 98.9 per cent of the total turnover of the HKEx derivatives market during the study period of the 2008/09 survey.  The survey had an overall response rate of 90 per cent and the respondents contributed 99 per cent of the total turnover during the study period.

The full report on the HKEx Derivatives Market Transaction Survey 2008/09 is available on the HKEx website at: http://www.hkex.com.hk/research/dmtrsur/DMTS09.pdf.

Source:MondoVisione, 28.11.2009

Filed under: Asia, Exchanges, Hong Kong, News, , , , , , , , , , , , ,

CMA launches Latin America algo trading offering

CMA the leading Market Data, Order Management and Connectivity provider in Brazil has officially launched CMA Algoritmos onto its Trade Hub platform.

CMA can now provide algorithmic trading as a part of its portfolio of leading LatAm capital markets services and applications. CMA product offerings are currently in use throughout Latin America by over 17,000 workstations, 75 brokers with access to over 100 global exchanges.

CMA Algoritmos is a sophisticated suite of solutions particularly designed for and by the Brazilian trading market with uses throughout Latin American, Europe and North America. The user simply defines trading strategies, customizes triggers while being able to utilize many common methodologies such as SpreadMaker, VWAP, TWAP, QuickBasket, Best Offer, Volume Tracker and Financial Summary as a few examples.

CMA has enabled Algoritmos onto CMA Trade Hub, the largest network of services and applications utilizing all versions of FIX in Latin America, so that any interested trading party Buy-Side or Sell- Side in North America, Europe or beyond would have instantaneous access to broker dealers for execution.

The CMA services and applications on Trade Hub are utilized by more than 17,000 workstations from 60 brokers and many of their clients in Brazil as well as 15 other brokers and their clients throughout: Argentina, Chile, Peru, Colombia, Mexico and Spain. The addition of Algoritmos makes trading Equities, Futures, Options and Foreign eXchange in Latin American Capital Markets even more lucrative.

Source: FINEXTRA, 23.11.2009

Filed under: Argentina, BM&FBOVESPA, BMV - Mexico, Brazil, Chile, Colombia, Exchanges, FIX Connectivity, Latin America, Mexico, News, Peru, Trading Technology, , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Industry Briefing & Survey: Harnessing Data for Better Valuations – November 2009 A-TEAM

A new industry briefing and survey report from A-Team Group and GoldenSource

A-Team Group, a publishing and research company specialising in financial information technology, was commissioned by enterprise data management specialist GoldenSource to conduct research into the challenges of managing pricing and valuations data.

Throughout the course of October 2009, A-Team Group researchers interviewed senior-level specialists closely aligned to market data or valuations. Several spanned multiple responsibilities including oversight of client data, product information, and trading risk.

The interview sample was spread across asset managers (52%), Tier-1 and Tier-2 banks (32%), broker/dealers (11%) and custodians (5%).

Geographically, participants were dispersed across the United Kingdom (47%), Europe (21%), and the United States ((32%). Over half of the respondents had global responsibility within their organizations.

Source: A-TEAM, 19.11.2009

Filed under: Data Management, Data Vendor, Library, Market Data, News, Reference Data, Risk Management, , , , , , , , , , ,

UBS launches international algo trading in Brazil

The global Equities business of UBS (NYSE: UBS) today announced the launch of algorithmic trading for international clients trading equities on the Bovespa stock exchange in Brazil.

UBS is among the first broker-dealers to offer non-Brazilian clients algorithmic trading in this major market.

UBS is launching this offering for international clients who trade Brazilian securities with three popular algorithms: Volume Weighted Average Price (VWAP); Time Weighted Average Price (TWAP); and Volume Inline, a strategy that enables an investor to execute an order correlated to available liquidity. Execution algorithms are complex quantitative electronic trading formulae that clients can use to manage and tailor their equities orders. UBS clients can use these algorithmic trading strategies to quickly and efficiently send their electronic orders directly to the Bovespa, without passing them through an intermediary.

In July 2008, UBS was among the first international brokers to launch Direct Market Access (DMA) in Brazil whereby non-Brazilian investors can trade electronically directly on the exchange. UBS clients can send front-to-back algorithmic trading orders directly from their desktop execution management system or order management system, including UBS’s own “Pinpoint.”

“We gained a tremendous amount of experience over the last year with our Direct Market Access offering in Brazil, and our intention has always been to add algorithmic trading,” said Owain Self, Head of Algorithmic Trading for EMEA and the Americas at UBS Investment Bank. “Our successful DMA platform provided the ideal knowledge base to build algorithmic strategies for the Bovespa in a truly custom way – specifically geared to the unique attributes of this market. This development is particularly exciting as our clients who trade stocks in Latin America have had an extremely positive response.”

Raul Esquivel, the Head of the UBS Investment Bank for Latin America, said, “The launch of algorithmic trading into Brazil is a perfect example of our ongoing commitment to the region. We are pleased to offer these sophisticated strategies to our international clients who wish to efficiently tap the abundant investment opportunities in this dynamic marketplace.”

Source: Finextra, 12.11.2009

Filed under: BM&FBOVESPA, Brazil, Exchanges, Latin America, Trading Technology, , , , , , , ,

Schwab’s Commission-Free ETFs: A Watershed Event

On November 3, 2009, marked a watershed event for the ETF landscape. It’s the day that Schwab (SCHW), absent from the ETF industry for past 16 years, upped the ante for any company thinking about getting into the business. Charles Schwab Investment Management, Inc. launched its first four ETFs.

At first glance, the new Schwab ETFs are nothing special – just four broad based core holdings, just like dozens already available from other fund companies. But look closer, and you will see they are also the lowest fee funds within each of their respective asset classes.

Look yet again, and see that these ETFs are also commission-free for Schwab brokerage customers. This is historic. Just as no-load no-transaction fee mutual funds changed the mutual fund landscape, commission-free ETFs will forever alter the way that ETFs are perceived. With this one change, nearly every argument in favor of mutual funds instead of ETFs goes away. Dollar cost averaging? No longer costly with commission-free ETFs. Small account size? Not a problem anymore.

Schwab has arrived, and they didn’t do it quietly. Now all eyes will turn to the competition to see how they react. Will other brokerage firms roll out their own ETF brands? Will iShares and SPDRs get into the discount brokerage business? “Strategic alliances” will be discussed, but in all likelihood are not feasible since there are not enough fees to share. Schwab has erected a significant barrier to entry and is now well positioned to go after the lucrative 401k market.

The four new ETFs launched by Schwab:

  • Schwab U.S. Broad Market ETF (SCHB) (SCHB overview) will track the Dow Jones U.S. Broad Stock Market Index with a 0.08% expense ratio. The underlying index represents the largest 2,500 U.S. equities and is float-adjusted market cap weighted.
  • Schwab U.S. Large-Cap ETF (SCHX) (SCHX overview) will track the Dow Jones U.S. Large-Cap Total Stock Market Index with a 0.08% expense ratio. The underlying index represents the largest 750 U.S. equities and is float-adjusted market cap weighted.
  • Schwab U.S. Small-Cap ETF (SCHA) (SCHA overview) will track the Dow Jones U.S. Small-Cap Total Stock Market Index with a 0.15% expense ratio. The underlying index represents the stocks ranked 751–2,500 of the largest 2,500 U.S. equities and is float-adjusted market cap weighted.
  • Schwab International Equity ETF (SCHF) (SCHF overview) will track the FTSE Developed ex-US Index with a 0.15% expense ratio. The underlying index covers1,400 large cap and mid cap stocks from more than 20 developed international markets.

Online trades of Schwab ETFs are commission-free at Schwab, while trades of third-party ETFs are still subject to commissions.

Unfortunately, the first day of trading had some glitches. SCHA traded at the wrong price for the about the first ten minutes with those who bought early receiving about a 10% discount from NAV, unless those trades get busted. SCHX appeared to have a similar problem but fewer shares were involved. Market makers had trouble maintaining the appropriate depth on SCHB, and it appears some larger orders created price spikes. SCHF had the most orderly first day of the bunch.

Schwab expects to offer four additional ETFs in December: Schwab U.S. Large-Cap Growth ETF (SCHG), Schwab U.S. Large-Cap Value ETF (SCHV), Schwab International Small-Cap Equity ETF (SCHC), and Schwab Emerging Markets Equity ETF (SCHE).

Source: Seeking Alpha, 04.11.2009

Filed under: News, Services, , , , , , ,

Fidessa expands connectivity network with nine new Latin American brokers in Mexico and Brazil

Fidessa group plc, provider of award-winning trading solutions for the buy-side and sell-side, today announced the addition of nine brokerage firms, with operations in Brazil and Mexico, to its global connectivity network. This extends the range of order execution opportunities for firms looking to access the Latin America (LATAM) markets.

BES Securities, Credit Suisse Hedging-Griffo, Fator Securities, Grupo Bursatil Mexicano, ICAP Brazil CTVM, Interacciones Casa de Bolsa, Itau Securities, IXE Casa de Bolsa and XP Investimentos are now all available on Fidessa’s network, and join previously announced LATAM firms including Planner Corretora De Valores and Casa de Bolsa Finamex.

Access to these brokers’ services is available via direct FIX connection or fully integrated into Fidessa’s own products – including the Minerva OEMS and EMS Workstation for the buy-side, and its sell-side trading platform solutions.

Martin Hakker, EVP marketing at Fidessa comments: “We’re committed to expanding our global network to provide the broadest possible range of execution services on a global basis. We’re seeing increased demand in the LATAM region from both buy-side and sell-side firms as institutions in the region continue to embrace electronic trading technologies and international firms look to the region to expand the trading and execution services they can offer their clients.”

Hakker adds: “Having joined Fidessa’s network, these brokerage firms are now able to offer their market-leading DMA, care, and algorithmic trading solutions to both the buy-side and sell-side via one of the largest trading networks in the industry.”

Fidessa’s connectivity network links over 2,300 buy-side institutions to more than 400 brokers and 120 markets around the world, providing a “one-stop-shop” for best execution services. Fidessa group serves around 24,000 users across more than 730 clients around the world and are used by more than 85 per cent of tier-one financial institutions.

Source: Fidessa, 03.11.2009

Filed under: Brazil, Exchanges, FIX Connectivity, Latin America, Mexico, News, Trading Technology, , , , , , , , , , , , , , , , , , , , , , ,

China: SZSE – ChiNext Creates 13 Billionaires on Paper on First Trading Day

China’s GEM market has given birth to more than a dozen billionaires due to extraordinary enthusiasm of investors.

Strong gains on the opening day of China’s Growth Enterprise Market, the Nasdaq-style board for high-tech startups, have created 13 paper billionaires, Caijing reported, citing calculations based on their declared holdings in the IPO companies.

The biggest individual shareholder in Lepu Medical Technology (Beijing) Co Ltd. (SZSE 300003), general manager Pu Zhongjie, saw the value of his 14.9 percent stake soar to 3.8 billion yuan (US$556 million). The stock rose nearly 119 percent to 63.4 yuan.

The surge in stocks also saw the value of 116 investors’ holdings rise to more than 100 million yuan, Caijing has calculated. The total includes the 13 billionaires.

The other big gainers on the first day included Wang Zhongjun, chairman of Huayi Brothers Media Corp. (SZSE 300027), whose holding of 26.1 percent was estimated to be worth 3.1 billion yuan at the close of trading. The stock rose nearly 148 percent to 70.8 yuan.

Chairman Wang Ning and general manager Li Li of Beijing Ultrapower Software Co Ltd. (SZSE 300002) saw the value of their holdings rise to 1.8 billion yuan each after the company’s stock rose 77.4 percent to 102.9 yuan. Wang and Li each own 13.9 percent of the company.

The so-called “ChiNext” market, the brand GEM is marketed under, began trading at 9:30 am on Friday. Gains by the first 28 companies to list ranged from 76 to 210 percent at the close of the first day.

However, due to China’s volatile stock market and a lock-up period ranging from one year to three years, the wealth of today’s millionaires could shrink substantially. It is very hard to predict how many of them still possess seven-digit wealth in a few years.

Some Brokers Gain Big as ChiNext Issues Soar
Several brokerage firms appear to have made substantial profits from investments in companies listed on ChiNext, the new growth enterprise board that opened last Friday.
According to the ChiNext companies’ shareholders list, some brokerages invested in the firms before the initial public offerings. The China Securities Regulatory Commission approved applications by 15 brokers to invest directly in the companies ahead of the IPOs. On Friday, the companies saw their shares skyrocket, with the 28 stocks registering gains of 75.84 to 209.73 percent.

Click here for pre-trading news.

Source:Caijing.com.cn, 02.11.2009 by Shen Hu


Filed under: Asia, China, Exchanges, News, , , , , , , , , ,

SMX Singapore Mercantile Exchange successfully completes Go-Live testing

Taking the next big step towards its launch, the Singapore Mercantile Exchange (“SMX” or the “Exchange”) has successfully completed the testing of its electronic trading platform, risk management and clearing & settlement systems. The Exchange received overwhelming support from the industry which included participation from clearing members, broking houses, high frequency traders, and independent software vendors. The Go-Live testing was conducted over four days from October 20 to October 23, 2009.

The Go-Live testing was conducted in an environment which mirrored the actual trading environment. Such testing enables market particpants to trade on the Exchange platform, get a feel of the Exchange systems and sort out any connectivity related issues, if any, which may crop up in a real life scenario. This Go-live test scenario also provides an opportunity to the Exchange to test and fine tune its own systems, where all the entities from the eco-system participated.

Thomas McMahon, CEO of SMX, said “We are very happy to announce that the Golive testing went off without a hitch and all systems and processes performed to our satisfaction. I would like to thank the participants for their over whelming support and for taking time off during their busy trading day, to punch orders and help us in testing the Exchange systems. This provides me with a lot of encouragment that the industry is eagerly awaiting the launch of the new Exchange.”

The total of 44 traders particpated in the testing which included representatives from 16 companies. A number of remote users accessed the Exchange platform from Indonesia, Japan, India and Australia, and were able to successfully place and execute orders on SMX.

The feedback received from the market participants has been very positive and encouraging. Traders are very enthused by the functionality offered by the Exchange platform for trade execution and the in-built real time risk management features of the system.

Barry White from Patsystems, one of the ISVs connected to the Exchange platform, said: “The Exchange platform provided by SMX has proven in these Go-live tests, its ability to offer users with an uncomplicated yet sophisticated solution for trading commodity derivatives. A number of our existing and potential customers who participated in the trading were very pleased with the performance of the system and Pro-Mark functionality in these tests.”

Mike Donahue, Managing Director, TransMarket Group Pte Ltd said “We are very enthusiastic about the imminent opening of SMX and are looking forward to increased access to the regional and global commodities markets during the Asian time zone.”

Over the last few months, SMX has been actively promoting its membership programmes. The Exchange has received keen interest from leading international and local insitutions based in Singapore and from market participants based in Indonesia, Hong Kong, Taiwan, Malaysia, Japan, Australia, India and Middle East.

“Our multi-product commodity derivatives exchange platform has successfully attracted a broad spectrum of leading international commodity players, as well as top financial and banking insitutions, traders and brokers from around the world. We are encouraged by the response from the global market players and are confident of building on this to create an attractive and vibrant pan-Asian exchange,” Mr McMahon added.

With the succesful completion of Go-live testing, SMX has moved one more step closer to its impending launch.

Source: SMX, 29.10.2009

Filed under: Asia, Energy & Environment, Exchanges, News, Singapore, , , , , , , ,

ASEAN markets cross trading links in demand – TABB Group

In new equity markets research published today, TABB Group says US and European demand for electronic linkage to Association of Southeast Asian Nations (ASEAN) exchanges is strong and primed to expand, as seamless access will attract brokers already trading in other parts of Asia. However, there is a wide range of needs across the different market segment, including direct market access (DMA), low-cost versus real-time market data, advanced order types, and reliable trading platforms.

TABB’s senior analyst Kevin McPartland, who authored the ASEAN Equity Markets Pinpoint report, an industry update on equity trading in the ASEAN region covering the Indonesia, Philippines, Thailand, Vietnam, Malaysia and Singapore exchanges, says the global financial crisis had little impact on growing buy-side demand for trading in ASEAN markets.

“More seamless access will drive brokers already operating in other parts of Asia to begin trading in the ASEAN markets,” he says, with the sell side set to benefit most from that seamless access. Explaining that the availability of real-time market data is crucial for all trading in the ASEAN markets, and that real time data is a requirement for the sell side even when trade volumes are low or non-existent, he adds, “High costs and time zones do tend to limit buy-side market data usage outside of the region.”

Addressing the relationship between the buy side and sell side, McPartland says that although no single broker currently dominates across all Asian markets, over 90% of buy-side firms are unwilling to give brokers full discretion over their orders. However, while the buy side does look to their brokers for market access, they agree that more seamless access would lower costs for execution and market data. There is also significant support for the idea of central ASEAN execution venue, McPartland adds.

The report’s in-depth coverage includes 24 charts:

  • Support for a central ASEAN venue
  • Improving ASEAN trading
  • Sell-side interest in ASEAN linkage
  • % of bulge-bracket participants trading in each market
  • Impact of the financial crisis on ASEAN interest
  • Roadblocks to sell-side trading in ASEAN markets
  • Buy-side broker usage – all Asia ·
  • Buy-side broker usage – ASEAN markets
  • Top brokers by country (by # of mentions)
  • Bulge-bracket participants trading in each market
  • Mid-tier participants trading in each market
  • Buy-side interest in a seamless ASEAN linkage
  • Roadblocks to buy-side access of ASEAN markets
  • Average number of buy-side orders per week
  • Average blended commission rates (bps)
  • % for which counterparty risk is an issue
  • Importance of each component when trading in ASEAN markets
  • Markets providing real-time market data to sell side
  • Market data sources for sell side
  • Markets providing real-time market data to buy side
  • Reasons for buy side’s lack of market data
  • How the buy side trades ASEAN markets
  • % of buy side using multiple data providers ·
  • Sell-side and buy-side market data providers

TABB Group collected data through interviews with heads of electronic trading from 12 top global broker-dealers, 9 hedge funds and 14 institutional asset managers. On the buy side, participants had combined global assets under management (AuM) of approximately $6 trillion and are currently trading in Asia from slightly under $10 million to over $5 billion monthly.

Source: MondoVisione, 23.10.2009

Filed under: Asia, Data Management, Exchanges, Indonesia, Malaysia, Market Data, News, Singapore, Thailand, Trading Technology, Vietnam, , , , , , , , , , , , , , , , , , , , , ,

Tullett Prebon in first LatAm move with Brazil purchase plan of Convenção Corretora de Valores e Câmbio

Tullett Prebon on Tuesday became the latest British inter-dealer broker to highlight growing interest in the Brazilian capital markets by saying it would buy Convenção Corretora de Valores e Câmbio, a leading Brazilian inter-dealer broker, for an initial cash payment of R$20m (£7.3m).

The increasing significance of Brazil for international investors has acted as a magnet on the world’s inter-dealer brokers – brokerages that specialise in trades between big market dealers rather than individuals, typically operating with large volumes at low margins.

Tullett’s move also will give it a physical presence in Latin America for the first time.

It comes four months after rival BGC Partners completed the purchase of Liquidez, another Brazilian inter-dealer broker. In November last year, Icap bought Arkhe, an independent Brazilian broker it had dealt with for several years.

Convenção was founded in 1973 by Eduardo da Rocha Azevedo, a former president of the Bovespa stock exchange, now part of BM&F Bovespa, the Brazilian stock and derivatives exchange.

The Brazilian firm is being sold by Mr Azevedo, Eduardo Nogueira da Rocha Azevedo, and Marcelo Taiar Arbex. The senior management of Convenção will remain with the company after the acquisition is completed, Tullett Prebon said.

In addition to the initial purchase price, Tullett Prebon has also agreed to pay “deferred consideration” of up to a maximum of R$30.3m (£11m), payable in cash “subject to achievement of future revenue and profit targets”.

For the year to December last year, Convenção reported revenues of R$21.9m (£8m).

Tullett Prebon said it planned to establish a presence “in key countries throughout the Latin American region commensurate with its position as one of the world’s leading inter-dealer brokers”.

The acquisition was conditional on approval from the Brazilian authorities, including the central bank, and was expected to complete in the second quarter of 2010.

Terry Smith, chief executive of Tullett Prebon, told the FT recently that the inter-dealer broking business had been “going onshore” in recent years, to places like Brazil, rather than automatically being done in the biggest financial centres in the northern hemisphere.

”If you’d gone back five years you would have found that the vast majority of [Brazil-related] business was conducted via New York. Increasingly it’s being done by brokers operating out of São Paulo. Some of those brokers have developed in to very credible operations; it’s by no means the wild west there.”

Source: FT, 13.10.2009

FT.com

Filed under: Brazil, Latin America, News, , , , ,

TABB Group insight into High-Frequency Trading

TABB Group outlines a few principles to which it adheres when discussing the controversial subject of high-frequency trading.

The current discourse on high-frequency trading is often challenged by a distortion of definitions. Journalists, politicians and industry analysts bend or stretch definitions to meet their various (and often conflicting) objectives. For example, flash orders and high-frequency trading have been improperly used as equivalent terms. Front-running has been invoked when “liquidity detection” would be more accurate. While there is room for a legitimate debate over the scope, size and impact of high-frequency trading, the industry must first agree to terms. Below, TABB Group outlines a few principles to which it adheres when discussing this controversial subject:

HFT refers to fully automated trading strategies (in equities, derivatives or currencies) that seek to benefit from market liquidity imbalances or other short-term pricing inefficiencies. These opportunities could last from milliseconds to minutes and possibly hours. While these strategies can be employed overnight, the majority of HFT strategies attempt to be market-neutral or closed out by the end of each day.

The kinds of strategies that fall under HFT include electronic market making, liquidity detection, cross-asset arbitrage, short-term statistical arbitrage and volatility arbitrage. The most prevalent equity HFT strategy is electronic market making, in which firms attempt to profit from intraday imbalances in the supply and demand for liquidity. Not all market making is high-frequency (though almost all of it is), and not all high-frequency trading is market making, but market-making strategies profit by intelligently managing the risk caused by inconsistencies between buyers and sellers.

Perhaps the most controversial and least understood aspect of high-frequency trading falls under the category of liquidity detection. While classic market makers attempt to capture spread by aggressively quoting at the bid and the ask of a number of stocks, a liquidity detector uses techniques to sniff out large orders of blocks being sliced and diced (usually by an algorithm) that a high-frequency trader believes it can outsmart.

Who Does It?

Although HFT makes up a large portion of total trading activity, a relatively small number of firms are responsible for its volume. Three types of firms build their strategies around HFT: proprietary trading firms (virtual market makers), the largest hedge funds and investment banks’ proprietary trading desks. While each of these institutions has a unique position in the industry, their common ground is their mandate to achieve uncorrelated and high returns.

Approximately one-half of liquidity provisioning these days comes from traditional market makers or large broker-dealers. The remainder originates from low-profile (though this is now changing) high-frequency trading firms — the proprietary (prop) trading shops — that few other than the industry intimates have ever heard of. Prop shops have been around for many years, earning their profits by risking their own capital. They originated either from groups formerly within broker-dealers or independent firms that have the knowledge, skills and technology to fully automate the trading process; or from screen-based day-trading shops that began automating their strategies in the late 1990s/early 2000s. These prop shops virtually automated the market-making function by leveraging inexpensive computing cycles, low-latency infrastructures and fully automated trading strategies.

Asset Classes Traded by HFT Proprietary Shops

Most HFT prop shops choose to keep their identities and intentions secretive, operating under the radar in the hope of improving their chance to profit. Through a thorough examination of Web sites and other public information, TABB Group has found that while the vast majority of these firms trade U.S. equities, the firms are quick to apply their strategies to the entire array of asset classes (see chart).

Investment banks have always traded for their own accounts. Their prop desks typically operate from a distinct legal entity — separate from the entity that handles customer orders — within the investment bank; the bank risks its own capital by deploying trading strategies designed to maximize profit. Two divisions within investment banks that deploy HFT are automated market making and proprietary desks. Market makers are registered with the SEC, using traditional trading strategies to facilitate liquidity in the market. Prop desks implement a variety of arbitrage strategies, some of which are high-frequency (though certainly not exclusively high-frequency).

For the most part, high-frequency hedge funds engage in short-term trading opportunities rather than bona fide liquidity-based strategies. While the umbrella term statistical arbitrage is frequently applied to strategies with extremely high volumes, there is plenty of ambiguity in this term. It is also true that the majority of funds engaged in statistical arbitrage are not high-frequency by today’s standards. However, over the past 18 months the line between high-turnover strategies and HFT has blurred as hedge funds shorten their time horizons in the face of unexpected market events.

As a result, transaction costs are becoming even more paramount to this sophisticated community. The rationale is that as time horizons shorten, capacity constraints increase and transaction costs become a bigger piece of the pie. High-frequency hedge funds may be layering these liquidity strategies on top of their other strategies so that transaction costs are additive rather than negative.

How Big Is It?

The only art more forgivable than economic forecasting is estimating the market size of an industry that will never reveal its true number. Nonetheless, TABB Group estimates that high-frequency trading accounts for 61 percent of U.S. equity share volume (remember to double-count average daily shares!) and generates $8 billion per year in trading profits.

The methodology begins with an analysis of institutional equity trading volume that we have been collecting since 2006 from 115 U.S.-based equity head traders, including equity assets under management, average daily volume and the percentage of shares executed in blocks. We extrapolate that data to the broader institutional landscape. Retail trade numbers and data from the government are used to determine retail flow. Data from NYSE and Nasdaq and historical market making volumes enhances our picture of current electronic market-making volumes. Last but not least, we discussed our methodology and trading profit calculations (.0024/share) with several HFT hedge funds, independent high-frequency traders and registered market makers.

Is It Good for the Market?

This is the wrong question. The right questions are whether the current market structure can be improved, and what the role of HFT should be in any revised market structure. But that is a scary question because outside of consulting (ahem), IT and perhaps the end investors, there is little for the industry to gain out of major changes to market structure.

The market structure changes and technological advances over the last decade that have made it possible for virtual market makers to supplant the traditional players are viewed as primarily positive for the market. Very few participants or observers suggest that we should roll back the clock on decimalization and exchange competition. Participants feel today’s market structure is orderly despite its complexity, and that it does a very good job of encouraging price discovery (see chart).

How Well Does Market Structure Support the Following Characteristics?

High-frequency equity trading is the lovechild between 12 years of SEC rulemaking and advances in trading technology. The combination of these two trends has been necessary and sufficient to unleash an array of new trading strategies. The continued success of these strategies has exchanges and ECNs, brokers and clearinghouses, and market data providers and technology vendors launching new business models and offerings to support high-frequency traders or to help others adapt to this new environment. Imagining a U.S. equity market structure without high-frequency traders is like trying to remove the c from E=mc2.

Adam Sussman is director of research for TABB Group. Previously he served as a senior product manager at Ameritrade, where he was responsible for order management systems, routing and next-generation trading tools focused on the equities and options markets.

Source: Advance Trading, 07.10.2009

Filed under: Exchanges, News, Trading Technology, , , , , , , , , , , , , ,