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London Stock Exchange to supply technology to Argentinian CSD

The London Stock Exchange (LSE) is to become the technology provider to Caja de Valores (CVSA), the Argentinian central securities depository (CSD). The two parties signed a partnership agreement ahead of the depository’s immediate priority which is to support the country’s new Bolsa & Mercados Argentinos (BM&A) exchange.

The deal means the LSE’s trading platform will shortly be rolled out in the country. MillenniumIT, the LSE’s technology arm, is the partner who will provide the capital markets technology and expertise to CVSA, which will then use it to support the new Argentinean exchange.

B&MA is a partnership between the Buenos Aires Stock Exchange and Merval, the association of Argentine brokers responsible for market operation in Buenos Aires. The joining of the two venues has been spurred on by Argentina’s Congress who last year approved a sweeping capital markets reform package.

Commenting on the deal, Ernesto Allaria, director of B&MA, said: “Selecting MillenniumIT as our technology provider offers B&MA significant opportunities to take advantage of more globally interconnected markets. This represents an important step forward for B&MA as well as the rest of Argentina’s capital markets.”

Source: Bobsguides, 01.08.2013

Filed under: Argentina, Exchanges, Latin America, , , , , , ,

Mexico, The Emerging Latin American Powerhouse

TABB Forum:  For the past few years, coverage of Mexico in the U.S. media has largely been dominated by stories of violence stemming from the country’s drug cartels. Lately though, the media have increasingly been turning their attention to the story of Mexico’s booming economy, and new president Enrique Peña Nieto’s bold moves to radically reshape it. This robust growth in Mexico looks set to continue for some time, which has led the Financial Times to label Mexico as the “Aztec Tiger.”1

MexDer, the nation’s only futures exchange, has been taking steps to ensure that it grows apace with the nation’s economy by making substantial upgrades to its matching engine, while continuing to make it easier for foreign investors to access the market. As a result of these changes, as of yesterday, April 14, north-to-south routing to MexDer via CME Group’s Globex® platform is available on Trading Technologies. You can read the details in the news release that we published today and on  TradingTechnology website.

The Aztec Tiger 

A perfect storm of positive influences is coming together to make Mexico one of the world’s emerging economic powerhouses. Mexico has a young and growing population, low levels of government debt and low inflation. The country is developing into a leading exporter due in part to widespread implementation of new manufacturing processes, but also due to the fact that Mexico has free trade pacts with 44 countries—more than any other nation on earth.These forces have combined to make Mexico’s economy one of the few bright spots in a global economy still working off the hangover resulting from the credit bubble. Mexico’s economy grew at around four percent in 2012, quadruple the growth rate of Latin America’s largest economy, Brazil.2 The Mexican peso hit a 19-month high against the U.S. dollar in March, and has outpaced 16 other major world currencies over the last month.3

With its growth track record and favorable conditions for growth to continue, a Nomura Equity Research report in July 2012 predicted that Mexico would overtake Brazil to become the largest Latin American economy within the next decade.4 In addition, Standard & Poor’s and Fitch have indicated that in the near future, they are likely to upgrade Mexico’s debt, which is already investment grade.5

A Pact for Mexico, An Open Door for Growth

Much of the optimism for Mexico’s future can be traced back to its new president, Enrique Peña Nieto. He hails from the Institutional Revolutionary Party (PRI), which ruled Mexico uninterrupted for 71 years and was identified with corruption and inefficient bureaucracy. That being said, President Nieto is quickly making himself known as a risk taker, willing to take on fights in which none of his predecessors seemed willing to engage.

Within two days of his swearing-in last December, Nieto’s PRI signed a “Pact for Mexico”6 with the opposition National Action Party (PAN). This pact outlines 95 proposals to modernize and liberalize Mexico’s economy. Nieto began by taking on the richest man in the world, Carlos Slim, by announcing plans to foster competition in the telecommunication and television industries, which are currently dominated by monopolies. Later this year, Nieto is expected to propose his most significant change, opening up Mexico’s energy market and allowing the state-run oil concern Pemex to work with the world’s largest oil companies. It’s expected that these reforms, once enacted, will increase Mexico’s GDP growth from four percent to six percent a year.7

Making MoNeT

In parallel, MexDer and the Mexican government have done quite a bit to attract foreign investors, and to make it easy for them to access the market. Perhaps one of the most significant changes has been the development of the MoNeT matching engine, which went live on Bolsa Mexicana de Valores (BMV), the equities segment, last fall.

The MoNeT matching engine was designed to attract high-frequency traders, mainly from the U.S. and Europe. It boasts internal latencies of 90 microseconds, which is faster than the 110 microseconds of NASDAQ or 125 microseconds at the London Stock Exchange.8 BMV volumes have increased 30 percent to 40 percent since the launch of the new matching engine.9For international traders and investors, accessing MexDer is straightforward. The north-to-south routing available via CME Globex allows any TT customer with an existing CME infrastructure to route orders to MexDer’s matching engine. MexDer is also accessible now in TT’s MultiBroker environment, which is currently available in beta. Additional information regarding how CME users can access MexDer is posted on the CME website.There are a number of other reasons why doing business in Mexico is easier than most other Latin American countries. Unlike Brazil, there is no withholding tax of any kind on foreign investment. The Mexican peso is a freely traded and easily convertible currency, and MexDer’s clearing house, Asigna, accepts U.S. dollar-denominated collateral.

La Oportunidad Está En Todas Partes

Owing to the fact that the U.S. does $1.5 billion per day in trade with Mexico,10 the Mexican markets are, predictably, highly correlated with America’s. North-to-south customers trading MexDer via Globex have access to a number of financial futures that allow for arbitrage opportunities against their American counterparts.

MexDer lists the IPC index of the BMV, which in general tracks closely to the S&P 500. The full Mexican yield curve is available on MexDer, from one-month bills to 30-year bonds, and it converges with the U.S. yield curve. Finally, MexDer lists a Mexican peso/U.S. dollar FX future, one of the 20 biggest FX futures contracts in the world by volume, which sets up arbitrage opportunities with the CME’s equally liquid peso/U.S. dollar future. In a recent MarketsWiki interview, MexDer CEO Jorge Alegria indicated that going forward, the exchange would likely look to list commodity futures linked to similar contracts listed on CME Group.

BMV IPC vs. S&P 500
Chart obtained from Yahoo! Finance

The ascent of the Aztec Tiger is no sure thing. There is always the danger of President Nieto’s PRI party losing its appetite for reform and returning to its old ways. There’s the chance that the hiccups in the U.S. economic recovery may impact Mexico, given that 30 percent of the Mexican economy is tied to U.S. exports. There may even be signs that Mexico’s economy is stalling already, which led the central bank to reduce interest rates for the first time since March 2009. Either way, TT users now have the ability to participate in one of today’s most interesting markets.

1 Thomson, Adam. “Mexico: Aztec tiger.” Financial Times. January 30, 2013.
2 Rathbone, John-Paul. “Mexico’s reform plan lifts hopes for greater prosperity.” Financial Times. March 20, 2013
3 Kwan Yuk, Pan. “Mexican peso hits 19 month high”. Financial Times. March 14, 2013.

Filed under: BMV - Mexico, Exchanges, Latin America, Mexico, News, Trading Technology, , , , , , , , , , , , , , , , , , ,

Peru: LSE signs Bolsa de Valores de Lima to MillenniumIT tech

London Stock Exchange Group today announced that it has entered into a technology partnership with Bolsa de Valores de Lima.

MillenniumIT, a wholly-owned subsidiary of London Stock Exchange Group will provide state of the art trading and Smart Order Routing technology to Peru’s markets via its ultra low latency, highly scalable trading platform, Millennium Exchange and Millennium SOR.

Tony Weeresinghe, Director of Global Development at London Stock Exchange Group and CEO of MillenniumIT, said: “This is a significant achievement for us. Peru is one of Latin America’s fastest growing economies, and there is need for efficient, reliable capital markets infrastructure as business and investment continues to develop there. We look forward to building on this partnership, and playing our part in the next stage of Bolsa de Valores de Lima’s development.”

Francis Stenning, CEO at Bolsa de Valores de Lima, said: “We are very conscious of the relevance of technology in our business. That is why we believe this upgrade in our electronic trading platform and order routing system will take us to the forefront of technology. It will allow Bolsa de Valores de Lima to keep up with the growing Peruvian economy, provide new services to the local market and increase its efficiency. This will allow us to benefit from better tools and a strategic alliance with one of the most developed stock exchanges in the world, London Stock Exchange Group, and to take advantage of more globally interconnected markets, including MILA.”

Source: Finextra, 18.01.2013

Filed under: Exchanges, Latin America, Peru, Trading Technology, , , , , ,

SGX denies LSE Merger Speculation

The Singapore Stock Exchange has denied rumours that it is engaged in merger talks with the London Stock Exchange.

Shares in the LSE shot up in late trading yesterday as rumours swirled that the London bourse was discussing a merger with SGX.

Both the LSE and SGX had to pull out of prospective mergers with the Toronto Stock Exchange and the Australian Stock Exchange respectively last year as the deals ran aground over national interest concerns.

In a statement released today, SGX says: “SGX has not engaged in talks with the LSE on a potential merger. However, we are open to collaborations and partnerships which may benefit our shareholders and the company.”

The two exchanges last week confirmed plans for the cross-listing of each others products on an international board of blue chip stocks, and are also rumoured to have discussed co-operation in the clearing of OTC swaps transactions. Earlier this year. The two also got together last year over the prospect of making a combined bid for the London Metal Exchange, which has since fallen into the hands of Hong Kong Exchange & Clearing.

Source: Finextra, 2o.07.2012

Filed under: Exchanges, News, Singapore, , , ,

LSE: London Stock Exchange was award for Financial Information Commercial Policiy

The Financial Information Services Division (FISD)’s Consumer Constituency Group (CCG) today honored the London Stock Exchange with the first-ever “Best of the Best” Award for Excellence in Financial Information Commercial Policies. The award, presented today in Paris, is given on an ad-hoc basis when a supplier demonstrates excellence in the development and roll-out of new administrative policies.

The London Stock Exchange was selected for the first-ever ‘Bobbie’ award for its dedication to responding to customer needs, development of a simple, standardized administrative process, and adherence to industry best practices.

“London Stock Exchange Group is committed to providing the highest levels of service, responding to our customer’s needs as well as following industry best practices. We are proud to have been awarded the first ever ‘Bobbie’ award and hope that it drives further innovation in commercial and administrative policies across the industry. It is particularly important to us that this award is presented from our key sell-side and buy-side firms, as an endorsement that we are truly aligned with our clients.” said Jarod Hillman, Head of Real Time Data for the London Stock Exchange Group.

The CCG was particularly impressed with the introduction of a per-user model, which allows netting across vendors. It simplifies the unit of count, which allows for the introduction of a new non-display charge, along with its new non-display policy. It is the hope of the group that the award will serve as an incentive for all suppliers to implement their policies with equal clarity and reasonableness.

“Over the last several years consumer firms have changed their consumption patterns for market data products and services and are increasingly meeting business needs through the distribution of services to computing platforms as opposed to the historically dominant use case of desktop services. Market data providers continue to adjust to these changes through new products and new commercial policies often with the consequence of increasingly complex polices, added administrative burdens to consumers, and rising costs overall,” said Steve Listhaus, Co-Chair, FISD Consumer Constituency Group.

“The London Stock Exchange invited customers, via the FISD umbrella, to review and comment on a proposed new policy for derived data and non-display usage.  Their final policy reflected the input of FISD consumer firms and demonstrated sensitivity to the issues of complexity and cost.  Therefore the CCG is pleased to recognize LSE for their collaborative approach and understanding of the key concerns of the FISD consumer constituency.”

Source: MondoVisione, 09.03.2012

Filed under: Data Vendor, Exchanges, , ,

London & Delhi Stock Exchanges in Trading System Deal for Equity, Derivatives and FX.

London Stock Exchange Group (‘the Group’) today announced that MillenniumIT, a wholly owned subsidiary, has signed a contract with the Delhi Stock Exchange (‘DSE’) to provide the Indian Exchange with trading technology. The deal will see MillenniumIT provide solutions for equity, derivatives and FX trading as well as clearing technology.

Millennium Exchange is an ultra low latency, highly scalable trading platform offering low-cost solutions to exchange businesses around the world.

Tony Weeresinghe, CEO of MillenniumIT and Director of Global Development at London Stock Exchange Group said:”We are delighted to have been chosen to provide trading and clearing technology solutions to the Delhi Stock Exchange. India is a dynamic and fast developing market and we look forward to working with the Delhi Stock Exchange to introduce a high-speed, low-cost trading solution to the Indian market.”  A time table for implementation will be announced in due course.

Source: MondoVision, 11.11.2011

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

London LSE and Chilean BCS stock exchanges are discussing process of integration

Finance Minister Felipe Larraín advanced efforts to integrate the Chilean and London stock exchanges during a recent visit to the United Kingdom. A delegation of government officials and business leaders accompanied the minister on his trip to promote foreign investment in Chile.

After a ceremony on Wednesday in which Larraín opened the London Stock Exchange (LSE) at its headquarters in Paternoster Square, Xavier Rolet, CEO of the LSE Group, spoke about Chile-London relations.

“We are delighted to welcome Felipe Larraín and the Chilean delegation to the London Stock Exchange today,” Rolet said. “We have the expertise, depth of capital and liquidity to help support the next century of Chilean growth.”

Six Chilean companies are currently listed on the LSE, representing over US$30 billion. Two of the companies, Banco de Chile and Antofagasta PLC (both of the Luksic Group), are listed on the Main Market.

Four other Chilean companies—Herencia Resources, Mariana Resources, Geopark Holdings and Metminco—are listed on the Alternative Investment Market (AIM), which is the LSE’s market for smaller, growing companies.

The LSE represents 60% of European transactions and about 30% of European stocks. According to Rolet, the plan to integrate LSE with Chile’s stock exchange (IPSA) is a long-term project, as it requires technical and regulatory changes.

If the LSE and IPSA merge, Chile could become a gateway for Peru and Colombia to trade on the London market through the Latin American Integrated Market (MILA).

MILA was formed on May 30 when Chile, Peru and Colombia combined their stock markets to compete with larger Latin markets like Mexico and Brazil.

Source: Santiago  Times, 02.7.2011

Note by FiNETIK

Chilean Stock Exchange Bolsa de Comercio de Santiago (BCS) where as IPSA referese to BCS top 40 index Índice de Precios Selectivo de Acciones (IPSA)

Filed under: Brazil, Chile, Colombia, Exchanges, Latin America, Mexico, News, Peru, , , , , , , , , , , , , , ,

Dark Pools in Danger ?

Increasing regulatory supervision and calls for transparency on one side and  the threaten proliferation of “unregulated and opaque”  Dark Pool and crossing networks by large institutions, have increased the calls by exchanges and exchange federations to review regulation and even ban them.

While the global debate is in full swing, China has clearly distance it self from any alternative trading venues in the country and prohibited the access to any “non-transparent” trading venues like dark pools for it’s QDII (Qualified Domestic Institutional Investors).

Below Article highlight the current trends and voices

SEC to extend probe into dark pools 09.10.2009

The Securities and Exchange Commission is to extend its regulatory probing of dark pools to include issues surrounding high frequency trading, direct market access and co-location.

What’s the Matter with Dark Pools, 02.10.2009

Dark pools are on the regulatory front burner. They’re seen as competing with the displayed markets, even as they’ve captured a segment of trading from the desks of broker-dealers’ upstairs.

The Securities and Exchange Commission is now bearing down on issues related to trading in dark pools and how much flow can execute in individual pools without triggering obligations to the rest of the marketplace. To provide some perspective on this broader discussion….

LSE and Turquoise an Item: Official, 01.10.2009

When we suggested here a few weeks back that the London Stock Exchange take a look at on-the-block Turquoise as a possible solution to its ‘TradElect problem’ it was slightly tongue in cheek. After all, we knew the LSE was in talks with MillenniumIT and it looked on paper as if an approach to Turquoise would amount to the exchange losing face to an upstart rival.

Dark Pools 2009: Not So Dark Anymore AITE Group, 30.09.2009

Only two things about dark pools are clear at this time: their overall market share continues to grow, and regulatory intervention appears inevitable.

London Stock Exchange to leave FESE  30.09.2009

But the move is a sign that a recent criticism by some of the world’s largest exchanges of the large banks’ off-exchange activities is not shared by some exchanges, which see their interests increasingly aligned with those same banks.

n a letter to Eddy Wymeersch, chairman of the Committee of European Securities Regulators, Ms Hardt said FESE believed the banks’ dark pools were “unregulated venues” operating with “full opacity”. The European equities market was “becoming a dealer market”.

Chi-X Global alleges ‘fear card’ move by ASX 30.09.2009

The head of Chi-X Global, the equities trading platform, on Wednesday accused the Australian Securities Ex­change of playing the “fear card” after the exchange’s chairman spoke of the dangers of allowing multiple share trading venues.

New ideas fail to lift mood over dark pools 24.09.2009

Yet even as dark pools continue to generate eye-catching ideas, controversy is raging over their very existence. In Europe, the issue is pitting exchanges against big banks in a new battle over control of billions of dollars in share trading orders.

Exchanges call on G20 to tackle dark pools 23.09.2009

The World Federation of Exchanges (WFE) has urged G20 leaders to press for market reform to tackle the uneven playing field and eroded price discovery it claims has been caused by the emergence of alternative trading platforms such as dark pools.

In a letter sent to Mario Draghi, head of the financial stability board at the Bank for International Settlements ahead of the G20 summit in Pittsburgh, the WFE calls for more uniform rules between exchange-traded and “less-regulated” markets.

The WFE warns: “The heightened opacity of certain market operations in many countries inhibits price discovery and may lead to negative outcomes, such as increased volatility.”

“Taken together, the combination of the absence of a level playing field between execution venues and decreased market transparency is an unsettling development,” says the letter, signed by William Brodsky, chairman of the WFE.

The exchanges call on G20 leaders to agree on ways to avoid “regulatory arbitrage” to ensure market participants do not just go to countries with weak rules.

Source: Finetik, 01.10.2009

Filed under: Australia, Exchanges, FiNETIK Articles, Japan, News, Risk Management, Trading Technology, , , , , , , , , , , , , , , ,

London Stock Exchange to leave FESE. Dark Pool disputes?

The London Stock Exchange plans to withdraw from the Federation of European Exchanges (FESE), dealing a blow to the trade association for the region’s established bourses as its steps up its lobbying efforts on issues such as “dark pools”.

John Wallace, LSE spokesman, told FT Trading Room: “We are reviewing a number of our memberships across the organisation. We have decided to leave FESE and will seek to work more directly with regulators, legislators and the markets we serve across Europe.”

Mr Rolet sent a letter to FESE secretary general Judith Hardt with the LSE’s decision on Tuesday. Ms Hardt said: “It came as a surprise. There was no reason given and we would of course want to talk before taking any steps. We will definitely try and see what we can do to keep them on board.”

The LSE declined to say why it had decided to leave the organisation, which was founded in 1974 and has over 43 members, including Deutsche Börse, Euronext and the London Metal Exchange.

But the move is a sign that a recent criticism by some of the world’s largest exchanges of the large banks’ off-exchange activities is not shared by some exchanges, which see their interests increasingly aligned with those same banks.

It is also a sign that medium-sized exchanges like the LSE can not afford to antagonise their biggest customers – the banks – at a time when they need their co-operation on key new initiatives, such as clearing.

Xavier Rolet, a former Lehman Brothers and Goldman Sachs trading expert, has spent time since he took over in May repairing damaged relations with the LSE’s 15 biggest customers, mostly banks.

He has redesigned the LSE’s dark pool, Baikal, as a joint venture with the banks. Under his predecessor, Dame Clara Furse, the project was designed as a way of accessing directly the asset and investment manager clients of the banks, bypassing the banks.

Last week, FESE launched an attack  on the proliferation in Europe of dark pools run by banks. FESE did not name any banks but such facilities are operated by most big banks, including Goldman Sachs, Credit Suisse and JPMorgan.

It said such venues, also known as “crossing networks” are not properly registered under rules laid out by the Markets in Financial Instruments Directive (Mifid). Mifid launched competition in European share trading in 2007, leading to an explosion of new type of trading venues.

In a letter to Eddy Wymeersch, chairman of the Committee of European Securities Regulators, Ms Hardt said FESE believed the banks’ dark pools were “unregulated venues” operating with “full opacity”. The European equities market was “becoming a dealer market”.

The LSE is engaged in a cost-cutting drive. Annual membership of FESE costs €180,000. The UK exchange remains a member of the World Federation of Exchanges.

Source: FT, 30.09.2009

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

Nasdaq OMX ‘closes’ India liaison office

Nasdaq OMX, the transatlantic exchange, has closed its liaison office in India, people familiar with the matter have said. The move comes after failing to list any Indian company on its New York-based exchange since it set up a presence in Bangalore, the country’s information technology hub, in 2001.

One of India’s most senior IT executives, who asked not to be named, said: “Nasdaq has done a lot in terms of educating companies in India but it has been very difficult for them to list companies on their US exchange and therefore it made no sense to keep an office open here”.

Indian IT companies, which contribute to about 25 per cent of the country’s total exports, generating $46.3bn (€32.7bn £27.7bn) in revenues last year, have boomed in the last 10 years providing vital software and back-office services to US and European multinationals.

Nasdaq has been competing aggressively for global listings. However, Kiran Karnik, former president of Nasscom, the Indian software trade body, said the global financial crisis and high regulatory costs in the US had been strong deterrents for Indian groups looking at the US.

He said: “The regulatory environment in the US was perceived [by Indians] as being very high in terms of compliance costs,”.

“I know some companies – that I wouldn’t want to name – who were looking at US alternatives but then decided to list on the London Stock Exchange.”

Ghanshyam Dass, who was appointed Nasdaq OMX’s director for South Asia in 2001, based at the Bangalore liaison office, said he resigned in March this year. He was not replaced locally.

Richard Dour, Nasdaq’s general manager for south Asia, is based outside India. The US exchange group has denied closing its liaison office in Bangalore.

Nasdaq OMX officials in New York, said last week: “Nasdaq OMX has not closed its representative office in India. In fact, Nasdaq OMX’s presence in India is increasing, with multiple representatives serving the region.”

The official added later: “We do not have, nor have we ever had, a physical office in Bangalore – it has always been individual representatives.”

However, in 2001, Nasdaq said in a statement on the company’s website that it had opened an office in Bangalore to service Indian companies. S.M. Krishna, Indian foreign minister and former chief minister of Karnataka, the south Indian state where Bangalore is situated, inaugurated Nasdaq’s liaison office in 2001.

In the eight years Nasdaq was present on the ground, no Indian company was listed on its stock exchange, according to Dealogic and the Nasdaq’s website.

Exchange experts said that there were very few incentives and many regulatory bottle necks for Indian companies to list in the US.

“Indian companies have found cheaper options in raising debt [through] instruments like foreign currency convertible bonds,” said an executive from a local Mumbai-based exchange.

Source: FT, 02.08.2009 by By James Fontanella-Khan and Varun Sood in Mumbai

Filed under: Asia, Exchanges, India, News, , , , , , , , ,

Tokyo takes time for Aim presence

Tokyo Aim, Japan’s newest exchange, is not escaping the scepticism that enveloped its London equivalent when that junior market was established nearly 15 years ago. The new bourse is a joint venture between the Tokyo and London stock exchanges and based on the LSE’s own Aim market.

The TSE hopes that it will build up a new set of companies that can eventually grow into some of Japan’s leading names, encourage more risk capital and make the Tokyo a more global financial centre through foreign company listings.

Atsushi Saito, TSE chief executive, has said the names of Japan’s top 100 companies have not changed much over the past half century, unlike in the US or Europe, and that Japan needs this “energy” to stay relevant. The LSE’s ambitions are about being part of the growth story in Asia and expanding its brand.

Sceptics question whether or not Japan needs another start-up market when it already has seven and also whether it can lure overseas companies to list on it.

“It is difficult to see what yet another market will bring to Japan if it is just another start-up exchange,” said Neil Katkov, head of Asia research at Celent, the finance research and consulting firm. “However, if they are looking for a niche to differentiate themselves, then it could be a different story.”

Tetsutaro Muraki, Tokyo Aim’s bilingual chief executive, is confident about that differentiation. He says the market is also targeting the subsidiaries of large-cap companies, overseas companies, fundraising for project finance and large unlisted companies that want to raise funds through preference shares.

It has received more than 100 inquiries, ranging from an e-mail to more serious communication, from companies both domestically and overseas.

He sees clean energy, technology and biotechnology as among the mainstays of the market.

Mr Muraki is in no rush, expecting about five listings in the first year, and he does not expect to break even for the first four or five years.

“I’d rather build a reputable exchange that grows over time, versus bringing a less qualified company to the exchange in the current market,” he said.

Tokyo Aim is restricted to professionals and overseas investors, unlike the main start-up markets, which Mr Muraki says are dominated by retail investors who can often be speculative by nature.

“The real issue is if Tokyo Aim can bring the companies that are interesting enough to investors for a long period of time,” Mr Muraki said. “It’s not a short-term type of trading that you often see on the Japanese growth markets.”

There is also a question mark over Tokyo’s presence as a global financial centre, in spite it having the second-largest stock market in the world.

Listings of foreign companies on the TSE have dwindled to a mere 15 from a peak of 127 in 1991. Now the question is how Tokyo Aim will lure in overseas companies.

It will face regional competition from the Growth Enterprise Board of Shenzhen, China, which is expected to be launched in the coming months, and other Asian bourses are unlikely to sit back and watch.

FiNETIK recommends

SZSE Chinese bourse set to lure domestic flotations,Financial Times, 23.06.2009

To be globally competitive, disclosure on Tokyo Aim can be made in English and it also allows the use of International Financial Reporting Standards to encourage overseas companies to list on the market.

It is likely to attract those companies with business operations or customers in Japan as well as being attracted by the large pool of capital in Japan, Mr Muraki said.

David Shrimpton, chairman of Tokyo Aim and from the LSE side of the link-up, says: “There is a huge amount of capital in Tokyo and that creates a really powerful listing story for Asian regional companies, which we wouldn’t be able to provide on our own.

“My personal view is that we wouldn’t have been able to start this venture on our own and I don’t think TSE would have been able to either, which is why this is a joint venture.”

James Halstead, a partner at Morrison & Foerster in London, during a visit to Tokyo meeting Japanese nominated advisors said: “People were initially sceptical about London Aim, and it will probably be a similar process for Tokyo. The correct measure of its success, however, will be where the market is in five or ten years time not five or ten months.”

Source: Financial Times,30.06.2009 by Lindsay Whipp

Filed under: Asia, Exchanges, Japan, News, , , , , , , , ,

SZSE Chinese bourse set to lure domestic flotations

With the market for initial public offerings opening up again, the scramble among bourses has started for the hundreds of Chinese companies planning to list to raise capital.

Small and medium-sized companies in China have in recent years opted to list on global exchanges. But now the fightback has started among Asian countries to grab a slice of the action – not least from China itself.

China appears ready to establish an equity market on its Shenzhen stock exchange for small and medium-sized companies, along the lines of London’s Alternative Investment Market (Aim).

Listing rules for the new market, called the Growth Enterprise Board, will take effect on July 1 but people close to the situation do not expect trading on the new board to begin for many weeks and possibly not before the national holiday on October 1.

Many Asian companies have opted to list in Europe or the US because of a perception there was greater liquidity in those markets.

However, many of the companies that listed on London’s Aim or Singapore’s junior bourse experienced poor analyst coverage and low trading volumes, which depressed the stocks.

The trend has now reversed amid a growing belief among Asian executives that they no longer need to list so far away from home to access capital.

Peter Alexander, of Z-Ben Advisors, an investment consultancy in Shanghai, says it is “just a matter of when the trigger is pulled” for the new Chinese market to be established.

Others caution that the plans are still dependent on investor reception of the resumption of IPOs on China’s main exchanges.

There are no official data detailing how many companies have plans to list in the new market but CY Huang, president of greater China investment banking for Taiwan’s Polaris Securities, estimates that there are at least 300 companies queuing up to be among the first to list on the new market.

Analysts say the new board should help plug a gap that exists in China’s capital market.

“For small and medium-cap companies, the only option now [for venture capital companies to exit an investment] is a trade sale . . . but it’s a long process,” says Cathy Yen, general manager of AsiaVest Partners, referring to the practice of selling shares/assets of a company privately to a strategic investor.

The new board will provide an IPO platform for technology and other small and medium-sized enterprises – Beijing policymakers put high priority on encouraging innovative companies.

China’s new market comes as the financial crisis is presenting a unique opportunity for other exchanges to challenge Nasdaq in the US as the destination of choice for start-ups, particularly among technology companies.

“Nasdaq has always been the first choice but that is starting not to be the case . . . now people are naturally forced to think about other boards,” says Tina Ju, managing partner of the Chinese arm of Kleiner Perkins Caufield & Byers, the US venture capital fund.

That is largely because of the difficulties of pulling off a successful public offering in current market conditions. There have only been two listings in Nasdaq so far this year compared with 11 over the same period last year, according to data from Thomson Reuters.

China’s new market comes as other exchanges in the region eye up similar opportunities.

Japan now has its own Aim market. A joint venture by the Tokyo and London stock exchanges, it received its licence this month and is targeting about five listings in its first year although the initial focus appears to be on Japanese companies.

The Taiwan stock exchange, recently revitalised by the island’s warming of relations with China, is also aggressively pursuing listings by Taiwanese companies that had moved to mainland China.

Chi Schive, Taiwan stock exchange chairman, says that, while “Shanghai and Shenzhen are respectable rivals . . . for the time being I don’t think that threat is very strong [in attracting Taiwanese companies]”.

While Japan and Taiwan are only now gearing up their efforts, other markets in Asia have made similar attempts before – with little success.

Singapore’s Aim-style exchange, known as Catalist, has failed to gain much traction since it was set up in December 2007 to replace Sesdaq, the city state’s secondary board.

Catalist has attracted few new listings since its launch, which Singapore Exchange officials blame on the global financial turmoil.

Similarly, Hong Kong’s Growth Enterprise Market (GEM) attracted some initial attention but trading volume has since fallen drastically.

For China’s new board, there is concern over how many of the companies lined up for funds “are genuine, viable long-term businesses” says Fraser Howie, China stock market expert and author of Privatising China: Inside China’s Stock Markets. “Is the competition driving standards lower?”

For many, China remains “a gamble market”. While some companies can fetch very high valuations, “the question would be how sustainable this would be and right now we just don’t know”, says Ms Yen.

Mr Huang says the biggest concern for prospective listings is that “China is the one stock market where you cannot control your [listing] time-frame” because of the government influence over market operations. “In China, the biggest risk is policy,” he adds.

Source: Financial Times, 23.06.2009 by Robin Kwong Additional Reporting by Patti Waldmeir in Shanghai, Lindsay Whipp in Tokyo, John Burton in Singapore and Sundeep Tucker and Xi Chen in Hong Kong

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Filed under: Asia, China, Exchanges, Hong Kong, Japan, News, Singapore, , , , , , , , , , , , , ,

Exchanges Rally To 2009 High On Hopes Of Increased Regulation – FTSE Mondo Visione Exchanges Index Up By 27 Per Cent In May 2009

The value of listed exchanges rose by 27 per cent in May 2009, building on the previous two months’ rallies and again demonstrating further evidence of confidence returning to the industry.

Closing at 22187.70 on 29 May 2009, the Mondo Visione Exchanges Index, which aims to reflect market sentiment and is a key indicator of exchanges performance, has climbed back to a level not seen since early October 2008. Year to date, the index has increased by 40.6 per cent.

Last month, 17 of the 18 listed exchanges on the Mondo Visione Exchanges Index saw their values raised.

Herbie Skeete, Managing Director, Mondo Visione and also Co-founder of the Index said:

“Shares of listed exchanges are up across the board from their lows of 2008. Derivatives markets are leading the pack, in-part on hopes that the US and European regulators plan to regulate over-the-counter derivatives, which could help exchanges and hurt the dealers who have fought hard to keep their opaque market private.

These changes in regulation should help fuel growth for exchange operators, particularly those who have the capacity to provide clearing services.

But there is one potential problem looming for the integrated exchanges and the derivative exchanges in particular, and this is the threat by regulators to force separation of clearing from trading. At the moment the threat is a small cloud on the horizon – it may blow away or it may turn into a serious storm.”

The FTSE Mondo Visione Exchanges Index best performer by capital returns in US dollars was CME Group with a 45.3 per cent increase in share price from 30 April 2009 to 29 May 2009.

The FTSE Mondo Visione Exchanges Index worst performer by capital returns in US dollars was Johannesburg Stock Exchange a 0.2 per cent decrease in share price from 30 April 2009 to 29 May 2009.

Download: May 2009 – FTSE Mondo Visione Exchanges Index Report

Source: MondoVisione, 15.06.2009

Filed under: Australia, BM&FBOVESPA, BMV - Mexico, Brazil, Exchanges, Hong Kong, Japan, Mexico, News, Singapore, , , , , , , , , , , , , , , , ,

Reference Data Review Special Report: Impact of Derivatives on Reference Data Management

They may be complex and burdened with a bad reputation at the moment, but derivatives are here to stay. Although Bank for International Settlements figures indicate that derivatives trading is down for the first time in 10 years, the asset class has been strongly defended by the banking and brokerage community over the last few months.

The industry is, however, on course for a significant overhaul of the regulatory regime governing the OTC derivatives market, both in Europe and the US. This, of course, means that the post-trade processing of these instruments is set for big changes. Credit default swaps (CDSs) are the first of the credit derivatives to be ushered onto clearing counterparties in a bid to reduce counterparty risk, but they will likely not be the last.

Moreover, the market is also awaiting the introduction of an alternative standard to the current five character Options Price Reporting Authority (Opra) codes next year. Earlier this year, the Options Clearing Corporation (OCC) was named as the operator of the new options symbology system, which has been estimated to cost the industry around US$250 million to introduce.

All of these changes are likely to have a significant impact on the data management systems for these complex instruments, requiring the introduction of new processes and procedures. A challenge indeed for the vendor community.

Download: Referene Data Impact of Derivatives RDR Special Report June 2009

Source: A-Team, 09.06.2009

Filed under: Data Management, Exchanges, Library, News, Reference Data, Risk Management, Standards, , , , , , , , , , , , , , ,

BACK TO THE FUTURE: Historical Data in High-Frequency Trading – Paper June 2009

Download new 12-page white paper from the London Stock Exchange and A-Team Group

The adoption of algorithmic trading by the mainstream has created a requirement for high-quality historical data for development, testing and maintenance of trading strategies.

Until recently the exclusive remit of Tier 1 investment banks, algorithmic trading is becoming democratized as smaller brokerages and boutiques implement increasingly affordable high-performance trading platforms. This gives them the opportunity to differentiate their offerings to buy-side clients.

Key to success here is the quality of data. Nowhere is the adage ‘bad data in, bad data out’ more true than in the area of algorithmic and quantitative trading, where the use of highly granular tick and order book data is crucial to producing trading strategies that perform.

Furthermore, increased regulatory scrutiny means firms need to recreate market conditions current during their trading activities, so as to demonstrate due process in meeting their best execution obligations. This all points to the need for a considered approach to sourcing and managing historical data in support of high-performance trading activities.

Source: A-TEAM, 11.06.2009 Sponsorship LSE London Stock Exchange

Download:Historica Data in High-Frequency Trading Paper June 2009

Filed under: Data Management, Data Vendor, Exchanges, Market Data, News, Reference Data, Risk Management, Trading Technology, , , , , , ,