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Perseus Opens Throttle on Award Winning New York to Brazil Exchange Network

  • Global Telecoms Business Innovation awarded fastest network from New York to Brazil increases in speed

  • Perseus customers see ‘Evergreen’ latency enhancements with CME, NYSE, Nasdaq OMX with BM&F Bovespa connection

NEW YORK and SAO PAULO – 24 July 2013 – Perseus Telecom, a leading global provider of ultra-low latency, high capacity networks from market-to-market, today announced it has made the company’s industry leading network between Nasdaq OMX in New York and BM&F Bovespa in Sao Paulo, 2.5 milliseconds faster than the already fastest recognized connection by the Global Telecoms Business Innovation Award in 2012.

Perseus has operated the fastest market-to-market network connection between New York and Brazil from the datacenters of Nasdaq OMX and the BM&F Bovespa for almost two years while working tirelessly to enhance performance. Dozens of companies within financial markets including exchanges, banks, brokers, high frequency traders, market data and order management vendors have all found advantageous opportunities with accelerated speed over this unique Perseus network.

Customers have selected Perseus Telecom for the fastest connections from Chicago to New York, New York to Brazil, New York to London, London to Frankfurt and with other key market-to-market connections. Moreover, Perseus customers rely on best-in-class speed to market backed by a performance driven “Walk-Away” Service Level Agreement (SLA).

The Perseus SLA is a standard for all customers allowing them to enjoy the benefit of having one contract to negotiate the lowest latency routes with a given expectation that as a lower latency solution becomes available, the customer will benefit from the service enhancement at no extra charge.

Andrew Kusminsky, Chief Operating and Strategy Officer at Perseus said, “Optimizing our network to and within Brazil in an effort to keep our commitment to our customers is a part of a daily regimen for our team. We are committed to ensuring our network meets the performance requirements our customers demand.”

Brazil continues to surge in appeal for high performance trading from foreign institutions in the US, Europe and Asia participating in the markets of the BM&F Bovespa exchange. Financial markets are a major part of Brazil’s attraction for low-latency networks, but as Brazil hosts the world’s main attractions FIFA World Cup 2014 and the Rio de Janerio Olympics in 2016, there is increasing need to serve BIG data, real-time broadcast and digital media add to the driving need to have service providers meet lower and lower latency metrics.

“Perseus has taken all of the necessary steps through our operations unit in Brazil to ensure we meet the regulatory environments as a licensed facilities carrier,” Kusminsky added. “The Perseus connection from New York to Brazil is now optimized through custom built networks spanning from Fortaleza, Rio de Janeiro and on through Sao Paulo, ideal for trading, broadcasting and the movement of big data.”

 

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Filed under: BM&FBOVESPA, Brazil, 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, , , , , , , , , , , , , , , , , , ,

Brazilian Markets Still Driving Low-Latency Connectivity

The Brazilian financial markets – with the Sao Paulo-based BM&F BOVESPA securities market in particular – continue to drive activity among connectivity and infrastructure providers looking to support trading firms looking to take advantage of trading opportunities in a hot market.

Most recently, GlobeNet – which operates a submarine cable from Nasdaq’s Carteret, NJ data centre to BM&F BOVESPA with 106 milliseconds of round-trip latency – reported that is has built out its own network infrastructure within Sao Paulo, connecting in to Florencio de Abreu, 195, a connection point for the exchange.  Previously, it relied on third party telecom providers for the leg within the city.  The new link gives it more control and faster implementation of customer connections.

Meanwhile, Sidera Networks is looking to the future by purchasing bandwidth on Seabras-1, a new 32 Tb/second submarine cable, being built by Seaborn Networks, linking Miami, FL to Sao Paulo.  The network – which Seaborn execs say will be the fastest route, but they are not saying yet by how much – is expected to be operational in the fourth quarter of 2014.  Seaborn execs also say connectivity from Miami to the New York City metro area will also be announced in due course.

Also, back in April, Thomson Reuters opened an Elektron Hosting and Managed Services centre in Sao Paulo, to provide low-latency access to BM&F BOVESPA.

Source: Low-Latency, 12.06.2012 Peter Harris

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

Shanghai Stock Exchange takes on HFT speculators, amongst other global exchanges

The Shanghai Stock Exchange (SSE) has become the latest bourse to signal a crackdown on the huge number of messages high-frequency traders generate.

Having carried out research into trader speculation and its effect on the market, the Chinese exchange operator has vowed to take on the issue with “both technique and system”.The SSE will impose trading limits on accounts “with such abnormal trading behaviors as making orders in a large sum or at high prices, or conducting frequent false orders and withdrawals”.Firms that continue to break the new rules will be designated unqualified investors, facing trading restrictions for several days and referral to the China Securities Regulatory Commission.

Yesterday US operators Nasdaq OMX and Direct Edge outlined plans to fine high-frequency traders for carrying out too many cancelled orders, following a path already taken in Europe by Deutsche Börse and Borsa Italiana.

The Shanghai bourse and its rival Shenzhen Stock Exchange have also both moved to curb excessive speculation and volatility in shares in newly listed companies. New rules mean there will be a 30 minute suspension on shares that rise or fall by 10% from their opening prices on their first day of trading.

Filed under: Asia, China, Exchanges, Risk Management, , , , , , , , ,

NASDAQ OMX Corporate Solutions partners with Chinese PR NEWS

NASDAQ OMX Corporate Solutions today announced that its leading newswire, GlobeNewswire, will broaden its long-term partnership with China PRNews to bring global news distribution to Chinese companies. Through this agreement, China PRNews will offer GlobeNewswire’s robust global distribution platform to its clients in China and provide Chinese companies with greater visibility opportunities outside of their market.

The relationship between GlobeNewswire and China PRNews is longstanding — since 2006, they have collaborated on several initiatives to increase the visibility of companies from around the world within China.

GlobeNewswire is one of the world’s largest newswire distribution networks, specializing in the delivery of corporate press releases, financial disclosures and multimedia content to the media, investment community, individual investors and the general public. GlobeNewswire’s extensive distribution network currently reaches more than 4,000 media outlets and 1.5 million financial desktops globally.

China PRnews is one of the strongest news distribution and media monitoring platforms in China, serving more than 3,000 prestigious Chinese companies and organizations. Its broad coverage of Chinese local media has been highly recognized by the industry, customers and partners since its inception in 2004.

Demetrios Skalkotos, Senior Vice President, NASDAQ OMX Corporate Solutions: “NASDAQ OMX Corporate Solutions continues to look for ways to help Asian companies minimize risk, maximize efficiency and increase transparency with relevant tools and solutions for PR, IR and governance professionals. Through our daily work with the leading Chinese companies listed on our exchange, we recognized the need for greater visibility channels for Chinese companies globally. We’re excited to expand our relationship with China PRNews and offer GlobeNewswire’s far-reaching distribution platform to Chinese companies looking to target markets outside their own.”

Forrest, Xiangning Zhang, Chairman of China PRnews: “The need for Chinese companies to establish global public relations and investor relations coverage has become increasingly prominent. You can’t expect a customer to buy or an investor to invest if they know nothing about a company. The globalization process has put China into the direct trade and investment scope of the world market. Our strong partnership with GlobeNewswire under NASDAQ OMX Corporate Solutions allows China PRnews to offer easy and efficient ways to distribute Chinese companies’ news to the global community, providing the world with rich and first hand information about China. We are excited to broaden our long-term partnership with GlobeNewswire.”

In a continued effort to provide Asian companies with the localized tools necessary to help them be more efficient and transparent public companies, NASDAQ OMX Corporate Solutions also recently announced the appointment of Dan Wadsworth, Vice President of Corporate Solutions, based in Hong Kong.

Source: MondoVisione, 05.03.2012

Filed under: Asia, China, Data Vendor, Exchanges, Hong Kong, News, , , , ,

Finamex launches Algorithms with US Equities in the Mexican market

Finamex, a full-service independent broker dealer from Mexico City, and leading provider of innovative trading solutions, has released four opportunistic market trending algorithms for use by Direct Market Access (DMA) clients. The main idea is to allow clients to effectively gain arbitrage profits while mitigating collocation and/or their own strategy development costs.

Finamex’s latest release of arbitrage algorithms have been designed to build opportunities on fungible domestic equities displayed in the Mexican exchange marketplace. Execution calculations work through pre-programmed algorithms built on leveraging theoretical quote pricing as the primary driver of behavior, speed and momentum.

There are a variety of features to how the Finamex arbitrage algorithms provide opportunities with US equities in the Mexican market:

1. Hunter – is an algo which seeks to take advantage of sudden inefficiencies between the equities of foreign listed symbols in Mexico versus their originating market (such as the QQQ or AAPL on the Nasdaq or NYSE markets). The Hunter algorithm computes required data-sets and adjusts itself independently within defined price spreads on the Mexican Stock Exchange (Bolsa Mexicana de Valores: BMV).

2. Ghost – has a characteristic of lying dormant until a desired buy/sell signal appears with a non-previously indicated ask/bid price then it executes contrarily. Similarly with the Finamex “Hunter” algo, Ghost receives the side, quantity and spread parameters of opposing bids/offers satisfying spread parameters of its local market yet quickly hitting IOC type status. This feature helps in the recognition of desired price opportunities without revealing trade strategy intentions by its clients.

3. Scaled – uses a two-spread metric like the Hunter algo, with a signal that triggers in a suddenly inefficient environment. The Scaled algo strategy is seen on a big spread definition, called a “base.” Scaled reacts instantaneously when a lower spread, called the “target”, is satisfied on the other side. Unlike the Finamex “Ghost” algo, the Scaled algo’s intentions are exposed but move immediately when the target spread is satisfied. The Scaled strategy allows other market participants to preview this algo’s activity, causing them to sometimes take a glance on the board, which in turn drive executions over the spreads.

4. Market-maker – a next generation algo intended to provide liquidity and act as a market maker within the local Mexican marketplace. Market-maker absorbs the last trade, adds an indicated spread and automatically places or replaces the order with an indicated quantity. In combination with pegging and short-sell models, the Marketmaker algo is highly beneficial for market making strategies and for acting on market divergences.

“We’re putting in place all of these free strategies for clients who want to access the Mexican stock market with an almost-zero setup price. Our goal is to take Mexico to a higher level in the emerging markets priority list of global investors,” states Hector Casavantes, head of Electronic Trading at Finamex. “We wanted to offer automated algo strategies in order to let investors know how active and easy this market can be to trade. All algorithms were architected with profitability in mind. They’re highly customizable, completely auditable and comprehensive, fully meeting our clients’ demands”.

“With the addition of these tools, we’ve further enhanced our suite of algorithmic-trading products beyond our well-known execution algos in VWAPs, TWAPs, Implementation Shortfall and POV, “Roberto Larenas, Head of Equity Markets at Finamex added. “While we are aware that these algos are more opportunistic, we are still keeping our business model as pure-agency. Buy-side firms are increasingly requesting new tools, new ideas, and new ways to exploit opportunities in emerging markets. Finamex is fully committed in addressing these demands with our best-of-the breed solutions

Source: A-Team, 14.11.2011

Filed under: BMV - Mexico, FIX Connectivity, Latin America, Mexico, Trading Technology, , , , , , , , , , , , , , ,

Chile: Bolsa Electronica de Chile chooses NASDAQ OMX for New Trading System and Strategic Alliance

The NASDAQ OMX Group and Bolsa Electronica de Chile (BEC) today signed a strategic alliance which will provide BEC with the NASDAQ OMX market technology, exchange trading, and advisory services for product development and global visibility.

BEC and its members will benefit from significant enhancements in performance, latency and throughput capacity by shifting to NASDAQ OMX’s proven exchange technology. BEC members will remain connected via the FIX trading protocol for a seamless system shift. NASDAQ OMX market technology is used by over 70 exchanges in 50 countries.

Through the strategic alliance, NASDAQ OMX will advise BEC on their efforts to cross-list shares, develop new indices, improve existing indices and begin a case study to create peso-dollar futures for trading on NASDAQ OMX exchanges. Also, NASDAQ OMX will provide global visibility resources for promotion and marketing.

Fernando Canas, President of BEC, said: “NASDAQ OMX market technology will open the doors to achieve real interconnection for investors who wish to enter the Chilean marketplace and the advisory services will help us create new instruments for investors around the world.

“Our alliance with NASDAQ OMX will support areas of BEC strategic development like technology implementation and partnerships for new products.”

Lars Ottersgard, Senior Vice President NASDAQ OMX Market Technology, commented: “We are extremely proud of our alliance with Bolsa Electronica de Chile, who shares our vision of innovation through electronic markets.

“Together, BEC and NASDAQ OMX will build a community of participants, issuers and investors in Latin America who seek an efficient marketplace and innovative products.”

Source: A-TEAM 21.10.2011

Filed under: Chile, Exchanges, Trading Technology, , , , , ,

Asia Trader & Investor Conference, Singapore 07-08 May 2011

ATIC @Singapore 2011 will feature more than 40 seminars conducted by international and local gurus and experts.  The Asian Trader and Investment Convention – Singapore
Covering topics like:

Futures | Equities | Options | ETF | CFD | Commodities | FOREX | Warrants | Alternative Investment | Property | Insurance | Managed Funds

Event Highlights

  • First in bringing breakthrough and new methods of trading
  • Over 50 investment educational seminars
  • A Specialised Panel of top analysts who will conduct real-time analyses of the same stock
  • Special Trading Focus Workshops on Stocks, Futures, Commodities, Gold, ETFs, Options and Warrants
  • Stock Analysis on Regional Markets by International Traders
  • Investor Clinics that help them improve trading
  • Investment Network Platform with different market segment experts
  • Property Investment Showcase – with property investment education and special panel discussion on Property vs Stock Investments
  • The largest Finance and Investment Book fair

First launched in 2006, Asia Trader and Investor Convention (ATIC) event has travelled to 7 Asian Cities, i.e., Singapore, Kuala Lumpur, Bangkok, Ho Chi Minh City, Mumbai, Shenzhen and Tokyo. With participation by over 300 financial services companies, including securities exchanges, retail and consumer banks, securities brokerage firms, asset/fund management firms, listed companies and other financial services providers, ATIC events have attracted over 100,000 active traders and serious investors across Asia.

Source: The ATIC, 05.05.2011

Filed under: Asia, China, Events, Exchanges, Indonesia, Japan, Malaysia, News, Singapore, Vietnam, , , , , , , , , , , , , , , , , , , , , ,

Metabit launches simulator for new Osaka Stock Exchange

As the industry eagerly awaits the launch of the Osaka Stock Exchange on 14 February 2011, Metabit has been authorised and licensed by NASDAQ OMX to build an exchange simulator against their OMNetAPI.  Metabit has leveraged its extensive experience of exchange simulation to launch Exsim for J-GATE on the 2nd of December, enabling sell side organisations to comprehensively simulate the new exchange’s APIs, prior to the exchange going live.

Daniel Burgin, CEO of Metabit, commented:

“We are delighted to be the first software vendor to launch an exchange simulator for J-GATE.  Companies will need to thoroughly test out different transaction scenarios before J-GATE goes live and after, when Exsim becomes an integral part of a broker’s internal testing facilities.  Exsim for J-GATE will enable them to do so realistically and effectively as well as supporting the onboarding process for the broker members’ institutional buyside clients on an ongoing basis.”

Exsim for J-GATE is independent of geographical location and time zones.  Organisations using Exsim can simulate the behaviour new J-GATE API for order execution as if were up and running now.

Metabit is headquartered in Japan, with offices in Australia, Hong Kong and Mainland China.  For further information about how Exsim for J-GATE could help your organisation, please contact Kenichi Morita on +81-3-3664-4160, mail sales@meta-bit.com or see http://www.meta-bit.com.

Source: Metabit, 24.11.2010

Filed under: Exchanges, FIX Connectivity, Japan, News, Trading Technology, , , , , , , , , , , , ,

BM&FBOVESPA announces strategic and commercial partnership with the NASDAQ-OMX Group

The Brazilian Securities, Commodities and Futures Exchange announced, on 28 December 2009, that it has established a strategic and commercial partnership with the NASDAQ-OMX group. The agreement includes the development of an order routing system between participating brokers located in the U.S. and brokers located in Brazil.

This service will enable order routing of American and Brazilian cash equities for execution in the respective domestic marketplaces. Due to regulatory reasons, the aforementioned system will be developed autonomously and independently by NASDAQ OMX, through a technology subsidiary, and will be launched only after any required authorizations are granted by the respective regulatory authorities of Brazil and the U.S.

In addition to the order routing system, the partnership also encompasses the global distribution of NASDAQ OMX and BM&FBOVESPA market data and the provisioning of NASDAQ OMX products and corporate services to public companies in Brazil.

Click here to read the full version of the Material Fact.

Source: BM&FBOVESPA, 06.01.2009

Filed under: BM&FBOVESPA, Brazil, Data Management, Exchanges, Latin America, Market Data, News, , , , , , , , , ,

NASDAQ OMX and BM&FBOVESPA Agree on Terms for a Commercial Partnership

The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) and BM&FBOVESPA announced today that the two companies have entered into non-binding memoranda of understanding on terms for a commercial partnership including trade order routing, distribution of products and services for public companies, and global distribution of market data. Additionally, NASDAQ OMX and BM&F BOVESPA will continue discussions around cooperation on technology opportunities.

The parties have extended their current exclusivity agreement until December 31, 2009 in order to facilitate the negotiation of definitive agreements for the partnership.

The current partnership is comprised of the following:

  • Development of an order routing system between the United States and Brazil, through which U.S. brokers connected to the system can enter orders to buy and sell stocks traded in the BM&FBOVESPA MegaBolsa system via introduction of a Brazilian broker, and for Brazilian brokers connected to the system to enter orders to buy and sell stocks traded in the NASDAQ Stock Market via introduction of a U.S. broker;
  • Development of a commercial agreement for NASDAQ OMX to perform non-exclusive, international electronic distribution of market data related to the prices of stocks and financial assets traded on BM&FBOVESPA markets, and for the latter to perform non-exclusive distribution of market data related to the prices of stocks and financial assets traded on NASDAQ OMX markets,
  • Development of a commercial agreement for BM&FBOVESPA to offer to Brazilian public companies products and services developed by NASDAQ OMX for support and facilitation of activities performed by these companies, including investor relations activities, structuring and assistance to boards of directors, communications with the market and market analysts.
  • Discussions continue regarding opportunities for cooperation in technology.
  • Source: BM&FBOVESPA, 26.10.2009

     

    Filed under: BM&FBOVESPA, Brazil, Data Management, Data Vendor, Exchanges, Latin America, Market Data, News, Trading Technology, , , , , , , , , ,

    Exchanges in a Race to Zero Latency

    Nasdaq OMX Group said earlier this month that upgrades to its technology have made it the fastest exchange in the world. That may or may not be true but regardless, the exchange operator’s announcement highlights a drive this year by market centers to reduce the latency of their systems.

    Behind the trend is the desire to appeal to such latency-sensitive traders as direct market access and algorithmic players. These folks which include high-frequency traders, bulge bracket prop desks and the electronic trading departments of large broker-dealers want their orders processed as quickly as possible.

    “If we’re not building a low latency competitive exchange, we’re just not going to be in the game,” Brian Hyndman, senior vice president for transaction services at Nasdaq, said at last week’s Aite Group conference on high-frequency trading.

    Nasdaq reported on September 9 that upgrades to its INET platform and other parts of the technology that underlie five of its trading venues have given Nasdaq an average latency of less than 250 microseconds. That’s faster than BATS Exchange, which pioneered low latency trading. BATS announced in June it executes 80 percent of its orders in under 400 microseconds.

    The upshot, according to Hyndman, is that latency has gone down, throughput has gone up and order acknowledgement times are more consistent. “We eliminated the outliers,” Hyndman said. “That’s very important to a lot of Nasdaq’s customers.”

    This means, Hyndman explains, that a trader won’t get an order acknowledgement in 250 microseconds on one trade and three milliseconds another time. “There will be no big spikes in standard deviation,” the executive said.

    (One millisecond equals one thousandth of a second. One microsecond equals one millionth of a second.)

    Besides the changes to INET, whose main feature is the order-matching engine, Nasdaq also upgraded its network to 40 gigabits per second from a 10-gigabit connection; upgraded its hardware; and made a variety of other changes.

    Nasdaq’s announcement was just the latest. Ever since June, all five of the major U.S. trading venues as well as one in Canada have put out notices describing the steps they have taken to cut their processing times.

    On the same day Nasdaq made its announcement, Chi-X Canada ATS, owned by Instinet, claimed it was the fastest market center in Canada.

    The ECN said it boosted its capacity to be able to handle 175,000 messages per second, a 500 percent increase from previous capacity of 30,000 messages per second. Chi-X Canada has benchmarked its average response time for marketable immediate-or-cancel orders at about 350 microseconds. That’s at least 10 times faster than any other major Canadian market center, it contends. Previously, Chi-X Canada’s internal latency was pegged at 890 milliseconds.

    “We need to keep up with our customers,” Tal Cohen, Chi-X Canada’s chief executive, said. “The drive for latency is not slowing down anytime soon.”

    Chi-X Canada, based on the same technology as Chi-X Europe, launched in February 2008. Cohen said part of Chi-X’s strategy to drive latency lower is to run the system on “commodity” hardware. That way, the ATS can simply plug in the newer and faster boxes once they become available.

    Both BATS and NYSE Arca also announced latency reductions this summer. BATS cut its average latency, or the amount of time it takes to execute an order, by 50 microseconds to 395 milliseconds. It also announced that it can now convert an order into a quote for transmission on its market data feed in 631 microseconds.

    NYSE Arca, a unit of NYSE Euronext, announced that its order acknowledgement time, the time it takes to confirm receipt of an order, had been reduced to under one millisecond for Tape A and Tape B names and under 650 microseconds for Tape C issues.

    Perhaps the summer’s most symbolic announcement came from NYSE Arca’s sister exchange. The New York Stock Exchange said in July it scrapped its 33-year-old SuperDOT platform order delivery and processing system, as well as an internal routing system called Post Support System. In its place, the NYSE installed its Super Display Book system, technology based on NYSE Arca’s trading engine.

    The move cut the time it takes to execute an order from 105 milliseconds to five milliseconds, according to the exchange. That’s down from 350 milliseconds in 2007. NYSE customers now get order and cancellation acknowledgements in two milliseconds, the NYSE added.

    Five milliseconds is a far cry from Nasdaq’s 250 microseconds, and NYSE executives acknowledge they still have work to do. Still, the rollout this summer of the Super Display Book system was the culmination of an 18-month project that saw the Big Board completely reengineer its underlying hardware and software architecture using technology it acquired with the purchases of Euronext, Wombat Financial Software and Archipelago. The NYSE completely replaced its order entry, order database and routing systems, market data systems and pieces of its post-trade system.

    The move to revamp its dated infrastructure potentially opens doors that were previously shut to the NYSE. At least one bulge shop refused to send any of its algorithmic flow to the NYSE because it was too slow, an NYSE exec told Traders Magazine.

    On the other side of the Hudson River in Jersey City, N.J., technicians at DirectEdge ECN have also been ripping out old and installing new technology.

    DirectEdge has seen its share of trading volume shoot from about 5 percent a year ago to about 12 percent today. To deal with the increase in messages flowing through its systems and prepare for the future, the ECN chose to replace its messaging middleware, TIBCO. It chose faster technology from 29West, a relative newcomer to the business. DirectEdge says installation of 29West’s technology has produced a “dramatic reduction in overall system latency” and increased its throughput.

    “It allows us to use persistent messaging without the penalty,” said Steve Bonanno, DirectEdge’s chief technology officer. Persistent messaging is typically slower than non-persistent messaging, but offers guaranteed delivery. No messages are lost as they can be with non-persistent messaging. 29West’s technology eliminates that latency “penalty,” Bonanno explained.

    DirectEdge is now able to guarantee its customers an order response time of 300 to 500 microseconds. That’s measured from the time the order enters DirectEdge’s gateway to the time the acknowledgment hits the gateway. Previously, response times of DirectEdge’s three trading platforms were in the 1.2- to 1.5-millisecond range.
    Although DirectEdge needed the changeover to 29West primarily for throughput, it couldn’t ignore latency. “Speed is the toll you have to pay to be in this business,” Bonanno said. “Being fast is a given. That has to be there.”

    All things are relative, of course, and speed is no different. Market centers are forever engaged in a ferocious battle with each other to win market share. In their desire to impress traders, they will often put out overly rosy latency numbers, critics charge. “There is a lot of confusion, and, in some cases, obfuscation about the actual latency at the venues,” said Donal Byrne, chief executive of Corvil, a Dublin, Ireland-based maker of latency monitoring and management tools. “It is impossible to make apples-to-apples comparisons.”

    That applies to both the speed at which the venues disseminate market data as well as the speed at which they convert orders into trades, Byrne added. The problem is that the venues typically offer up an average number, which may be of little use. “If you measure it at one time, you get one number,” Byrne said. “If you measure it a few seconds later, you get another.” He believes trading venues should publish a schedule of numbers for all times during the trading day.

    Doug Kittelsen, chief technology officer of execution management vendor FTEN, is also concerned. He believes exchanges should quote their latency data in the 95th percentile, or at the slow end of the spectrum, rather than the median or average, which is standard. “You want to see what the curve is like all the way through to the end,” Kittelsen said, “not just the middle.”

    Source: Traders Magazin: 25.09.2009

    Filed under: Data Management, Exchanges, Market Data, News, Trading Technology, , , , , , , , , ,

    BM&FBOVESPA and NASDAQ-OMX on Connectivity Talks

    BM&FBOVESPA S.A., subject to the provisions of paragraph 4 of article 157 of Law number
    6404/1976 and of CVM Instruction 358/2002, hereby inform that:

    (i) BM&FBOVESPA and NASDAQ OMX Group will initiate discussions, on an exclusive basis, with the
    purpose of establishing a possible strategic, commercial and technological partnership.
    (ii) The exclusivity shall be in effect through the next sixty (60) day period, during which BM&FBOVESPA
    shall not enter into similar negotiations with any other stock exchange located in the US, and NASDAQ
    OMX shall not enter into similar negotiations with any other exchange located in South or Central
    America.
    (iii) The possible partnership may comprise the following services/products:
    a. The development of an order routing system between the exchanges in order to allow
    international investors connected to NASDAQ OMX trading platform to send buy and sell orders
    for stocks traded in the BM&FBOVESPA system (MegaBolsa), and Brazilian investors connected to
    BM&FBOVESPA trading platform to send buy and sell orders for stocks traded in NASDAQ OMX
    system in US;
    b. The development of a commercial agreement providing for BM&FBOVESPA to offer, to publicly
    traded Brazilian companies, products and services developed by NASDAQ OMX, which are
    designed to support and facilitate the activities of publicly traded companies, such as those
    related to investors relations (IR), structuring and management of board of directors, issuance of
    press-releases and communications to the market and analysts, among others;
    c. The development of a commercial agreement providing for NASDAQ OMX to distribute
    internationally, on a non exclusive basis, the prices of the securities (market data) traded in
    BM&FBOVESPA, and for BM&FBOVESPA to distribute, on a non exclusive basis, the prices of the
    securities traded in NASDAQ OMX; and
    d. The evaluation of technology cooperation opportunities for the two exchanges.
    (iv) There is no guarantee that any agreement shall be reached from these discussions. Furthermore,
    neither the confi guration of any joint initiative, nor the regulatory and economic and fi nancial base
    of the possible partnership have yet been established;
    (v) Given the preliminary stage of the discussions, the two companies have decided to present any further
    information about the negotiation only after the end of the sixty (60) day period counting from
    the date of this notice, except for the occurrence of any facts or resolutions that could constitute a
    material fact.

    Source: BM&FBOVESPA São Paulo, August 26, 2009

    Filed under: BM&FBOVESPA, Brazil, Exchanges, News, Trading Technology, , , , , , , ,

    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, , , , , , , , ,

    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, , , , , , , , , , , , , ,