Chi-X Europe, a pan European multilateral trading facility (MTF) owned by agency brokerage Instinet, will start offering Portuguese stocks from 26 June.
From this date, five stocks from the PSI20 index – EDP Renovaveis, Energias de Portugal, Galp Energia, Portugal Telecom SGPS and Zon Multimedia Servicos de Telecomunicac will be made available for trading.
BATS Europe, the pan-European multilateral trading facility (MTF) backed by US exchange BATS, achieved record market shares of the total value traded on four major European indices on 2 June, the first full day of its inverted price promotion for NYSE Euronext-listed stocks.
John Cameron, architect of the CameronFIX Engine acquired by Orc Software in 2006, has left his role as the firm’s chief technology officer to establish an IT consultancy, Cameron Edge, which will specialise in services relating to electronic trading systems and the FIX messaging protocol.
LeveL ATS, a non-displayed trading venue for US equities, has launched a new order type called SmartBlock, which gives participants control over trading activity at the venue level when executing blocks of stock.
SmartBlock allows investors to control the rate of execution if a stock deviates from the expected arrival price.
John Cameron, architect of the CameronFIX Engine acquired by Orc Software in 2006, has left his role as the firm’s chief technology officer to establish an IT consultancy, Cameron Edge, which will specialise in services relating to electronic trading systems and the FIX messaging protocol.
LeveL ATS, a non-displayed trading venue for US equities, has launched a new order type called SmartBlock, which gives participants control over trading activity at the venue level when executing blocks of stock.
SmartBlock allows investors to control the rate of execution if a stock deviates from the expected arrival price.
Goldman Sachs Electronic Trading (GSET) is upgrading its SIGMA smart router to allow clients to seek the best price for dual-listed stocks across US and Canadian stock trading venues, while using real-time FX rates for single currency settlement.
"In the past two years the market structure in Canada has changed at a very rapid pace," said Todd Lopez, head of international sales for GSET North America. "With nearly 200 stocks currently inter-listed on the Toronto Stock Exchange (TSX) and US exchanges, traders need to access liquidity seamlessly in both markets while automatically hedging their currency exposure in real time."
The European Commission (EC)’s proposals for a new pan-European financial regulatory structure, based on recommendations by the de Larosière group, do not provide a sufficiently clear framework, according to some observers. The Commission has called for the creation of the European System of Financial Supervisors to provide a more centralised structure for financial regulation in the region. The body would be fully accountable to political authorities in the EU. Under its new plans, the three current EC committees charged with harmonising banking, insurance and securities.
Fifty-seven percent of buy-side traders would change their trading practices if transaction cost analysis (TCA) played a larger role in determining their compensation, according to a new survey from consulting firm Greenwich Associates.
The survey, which asked institutions in the US, Canada and Europe about the use, effectiveness and shortcomings of TCA tools, also detected a reluctance to rely heavily on TCA when determining buy-side traders’ pay as a result.
Pipeline Trading Systems, a non-displayed equities liquidity pool, has introduced enhancements to its Algorithmic Switching Engine in the US to give traders more control over how they use the system.
The upgrade includes greater flexibility on the aggression levels that traders can use to complete orders. Pipeline’s Algorithmic Switching Engine can shift orders between any of 120 premium algorithm strategies based on an analysis of client execution preferences to achieve best execution.
Hong Kong Exchanges and Clearing (HKEx) has appointed Charles Li, current chairman of J.P. Morgan China as its new chief executive.
Li will succeed outgoing CEO Paul Chow from 16 January 2010, but will join the firm on 16 October this year to ensure a smooth transition. In his current role, Li is responsible for all of J.P. Morgan’s businesses in China. He has also worked for international law firms in New York and has 20 years of investment banking experience for firms in Beijing, Hong Kong and New York, including as president of Merrill Lynch in China.
Liquidnet, a buy-side-only non-displayed multilateral trading facility (MTF), set a new record for daily principal traded in Europe on 2 June. The MTF traded £545.24 million, beating its previous one-day record of £520.80 million, set in December 2007.
Meanwhile, German exchange group Deutsche Börse has announced that its Xetra MidPoint non-displayed order book, launched on 24 November last year, achieved an average daily order volume of 12,000 in May, and a peak level of 28,000 orders. The highest daily turnover achieved on the book to date is $40 million. Xetra MidPoint offers automatic execution at the mid-point of the bid-offer spread.
BATS Exchange, a US equities trading venue, has launched BATS Optional Liquidity Technology (BOLT), a tool allowing members to see unfilled portions of marketable orders before the orders are either cancelled or routed elsewhere.
BOLT will be made available both for orders using the BATS Only order type and those using certain routing strategies offered by the platform. Unfilled portions
of marketable orders are displayed through BATS’ proprietary data feeds for a limited period of time, allowing the opportunity for additional executions before cancellation or onward routing.
Transatlantic exchange group NYSE Euronext has reported that average daily trading volumes across its European cash equities markets in May 2009 were 1.5 million transactions – 14.6% up on May 2008. April 2009’s ADV of 1.6 million transactions was a 15.5% increase over the previous April.Volume results at other European exchanges paint a similar picture. In the entire month of May 2009, 14.7 million transactions were executed on Xetra, the electronic trading system of German exchange group Deutsche Börse, a 2.2% increase over the 14.4 million transactions traded in May 2008. The London Stock Exchange Group (LSE) reported an average daily trading volume of 1 million in May, a 14% year-on-year increase.
Fifty-seven percent of buy-side traders would change their trading practices if transaction cost analysis (TCA) played a larger role in determining their compensation, according to a new survey from consulting firm Greenwich Associates.
The survey, which asked institutions in the US, Canada and Europe about the use, effectiveness and shortcomings of TCA tools, also detected a reluctance to rely heavily on TCA when determining buy-side traders’ pay as a result.
Pipeline Trading Systems, a non-displayed equities liquidity pool, has introduced enhancements to its Algorithmic Switching Engine in the US to give traders more control over how they use the system.
The upgrade includes greater flexibility on the aggression levels that traders can use to complete orders. Pipeline’s Algorithmic Switching Engine can shift orders between any of 120 premium algorithm strategies based on an analysis of client execution preferences to achieve best execution.
Hong Kong Exchanges and Clearing (HKEx) has appointed Charles Li, current chairman of J.P. Morgan China as its new chief executive.
Li will succeed outgoing CEO Paul Chow from 16 January 2010, but will join the firm on 16 October this year to ensure a smooth transition. In his current role, Li is responsible for all of J.P. Morgan’s businesses in China. He has also worked for international law firms in New York and has 20 years of investment banking experience for firms in Beijing, Hong Kong and New York, including as president of Merrill Lynch in China.
"With his extensive experience and expertise in financial markets and management, Paul has been instrumental in leading HKEx's executive management in carrying out the previous three-year strategic plan (2004-2006), and implementing the 2007-2009 strategic plan to address challenges in an increasingly competitive environment,” commented Ronald Arculli, chairman, HKEx. “He will leave HKEx in a strong position to build on the solid foundation established during his tenure.”
Liquidnet, a buy-side-only non-displayed multilateral trading facility (MTF), set a new record for daily principal traded in Europe on 2 June. The MTF traded £545.24 million, beating its previous one-day record of £520.80 million, set in December 2007.
Meanwhile, German exchange group Deutsche Börse has announced that its Xetra MidPoint non-displayed order book, launched on 24 November last year, achieved an average daily order volume of 12,000 in May, and a peak level of 28,000 orders. The highest daily turnover achieved on the book to date is $40 million. Xetra MidPoint offers automatic execution at the mid-point of the bid-offer spread.
Thomson Reuters, a market data and trading technology firm, has added broking house EFG-Hermes to its order routing network, expanding its exchange trading offering throughout the Middle East and North Africa (MENA) region.
Market participants who use the Reuters Trading for Exchanges order routing platform, both inside and outside the MENA region, can now send orders to EFG-Hermes for execution. The deal takes the number of regional brokers on the Reuters network to 37 and allows clients to access a variety of markets in the region via EFG-Hermes. These include The Egyptian Exchange, The Saudi Stock Exchange (Tadawul), Kuwait Stock Exchange, Dubai Financial Market, Abu Dhabi Securities Exchange, Nasdaq Dubai and the Muscat Securities Market.
The European Commission has proposed a more centralised European financial regulatory structure to strengthen cross-border supervision and risk controls and prevent future financial crises.
A consultation period ending 15 July will be followed by legislation in the autumn, with a new framework expected to be up and running during 2010.
The proposals, which closely follow the recommendations published by the de Larosière group on financial supervision on 25 February, will create two new pan-European supervisory entities. The 22-strong European Systemic Risk Council (ESRC) will monitor and assess risks to the stability of the financial system as a whole, while the European System of Financial Supervisors (ESFS) will focus on the supervision of individual financial institutionsInvestment bank Credit Suisse has hired former UBS executive Matt Pecot to lead its Asia-Pacific prime services business, based in Hong Kong.
In his new role, Pecot will be responsible for spearheading Credit Suisse’s efforts to become a leading prime services provider in the Asia-Pacific region. He will report to Osama Abbasi, head of Asia-Pacific equities, and Philip Vasan, global head of prime services and capital services.
Pecot was head of Asia-Pacific prime services and prime brokerage services at UBS between 2004 and 2007, and subsequently became head of prime brokerage services for the Americas at the bank.
The European Commission has proposed a more centralised European financial regulatory structure to strengthen cross-border supervision and risk controls and prevent future financial crises.
A consultation period ending 15 July will be followed by legislation in the autumn, with a new framework expected to be up and running during 2010.
The proposals, which closely follow the recommendations published by the de Larosière group on financial supervision on 25 February, will create two new pan-European supervisory entities. The 22-strong European Systemic Risk Council (ESRC) will monitor and assess risks to the stability of the financial system as a whole, while the European System of Financial Supervisors (ESFS) will focus on the supervision of individual financial institutionsInvestment bank Credit Suisse has hired former UBS executive Matt Pecot to lead its Asia-Pacific prime services business, based in Hong Kong.
In his new role, Pecot will be responsible for spearheading Credit Suisse’s efforts to become a leading prime services provider in the Asia-Pacific region. He will report to Osama Abbasi, head of Asia-Pacific equities, and Philip Vasan, global head of prime services and capital services.
Pecot was head of Asia-Pacific prime services and prime brokerage services at UBS between 2004 and 2007, and subsequently became head of prime brokerage services for the Americas at the bank.
US equities trading platform Direct Edge has introduced a new order type called Hide Not Slide, which allows traders to hide orders that were originally submitted as display-eligible and adjust their price while keeping their place in the order book queue.
Direct Edge said the new order type gives customers an additional choice in fast-moving markets and also respects the needs of the platform’s depth-of-book market data feed subscribers to minimise the dissemination of orders that appear to ‘lock’ the national market – i.e. those where the bid is the same as the ask price.
Brokers are undergoing a “Darwinian evolution” as a result of demands from their buy-side clients and their own internal challenges stemming from the global financial crisis, according to a new report from Celent, a research and advisory firm.
The report, ‘Capital Markets 2.0: The Future of Institutional Brokerage and Market Making Operations’, found that broker-dealer revenues fell 39% in 2008 compared with 2007, and that bets in the sub-prime and fixed income, currencies and commodities markets accounted for 20% of the overall decline.
At the same time, the buy-side has become more demanding. The report notes that unprecedented levels of volatility have challenged many buy-side models and choice of algorithmic trading tools. As a result, buy-side traders are now requesting more customised, easily integrated and flexible tools to navigate the changing environment.
Broker-dealer Credit Suisse has made a version of its Pathfinder smart order router (SOR) available to clients trading in the Japanese market following a period of internal testing.
“We have basically taken the same SOR technology we use in other markets, such as Europe, and adapted it to the Japanese market,” Olivier Thiriet, head of Asian alternative execution at Credit Suisse, told theTRADEnews.com.
While off-exchange executions accounts for a small percentage of overall trading in Japan, there are now several venues trading Tokyo Stock Exchange (TSE)-listed shares. These include the Osaka Stock Exchange, Kabu.com, SBI Japannext, Liquidnet, Instinet’s CBX and JapanCrossing platforms and several broker internal crossing engines. “Without SOR, you cannot possibly leverage the advantages these venues offer,” said Thiriet.
UK exchange group PLUS Markets has resolved its long-standing legal battle with the London Stock Exchange (LSE), allowing PLUS to trade all the stocks listed on the LSE’s AIM small- and mid-cap segment.
The dispute centred on an LSE rule on AIM trading, which required trades in AIM stocks conducted away from the LSE to be reported to the LSE. PLUS argued that this rule effectively prevented the trading of the roughly 1,600 AIM securities on PLUS, save the 90 AIM companies that had elected to be dual-traded on AIM and PLUS. On 19 September last year, PLUS filed an action in the UK High Court challenging the rule.
Under the resolution, PLUS will provide real-time trading data to the LSE to support the exchange’s role in regulating AIM companies and ensuring their compliance with its rules. In turn, market-makers will be able to quote and trade-report in all AIM securities on PLUS’s markets without any additional trade reporting requirements to the LSE.
The adoption of uniform tick sizes by trading venues across Europe would help multilateral trading facilities to compete more effectively, according to BATS Europe, a pan-European multilateral trading facility. The firm argues that uniform tick sizes, along with clearing interoperability and common stock symbology, will ease smart order routers’ search for the best price and liquidity.
“The three frictional structural costs for a smart order router (SOR) are tick sizes, symbology and clearing,” Paul O’Donnell, COO, BATS Europe, told theTRADEnews.com. “An SOR needs to identify the different symbols for each venue, which tick band and the smarter routers try to figure out the impact of clearing costs on overall execution. Standards in these three areas will mean SORs will route depending on who has the best price and most liquidity.”
Financial data provider Thomson Reuters has launched a new direct data feed designed to help market participants handle increased data volumes, market volatility and requirements for low latency.
Thomson Reuters said its Data Feed Direct (RDF-Direct) will deliver consistent performance during peak and forecasted market data volumes for trading venue feed connectivity. The upgraded architecture utilises technologies including multi-core processing to decrease latency and improve system performance. In testing, the solution demonstrated an eight-fold improvement in throughput and a four-fold improvement in latency, Thomson Reuters said. Users will also be ale to access Thomson Reuters proximity hosting services.
Electronic trading revenues are anticipated to fall in the Asia-Pacific region, while the development of dark pools is expected to stall, according to new research from consultancy TABB Group.
In ‘Asian Equity Trading 2009’, TABB predicts that income from electronic trading will slip 16.9% to $815 million this year, from $981 million in 2008. This follows a similar decrease of 17.7% in institutional value traded in the previous 12 months, a drop that affected overall trading strategies in Asia, according to TABB.
“In the second half of 2008, there was a significant pullback leading into the first quarter of 2009,” said Matt Simon, TABB Group analyst and author of the report. “Traders saw liquidity sink.”
Institutional trading volumes in the public markets may still be languishing, but new figures from independent block crossing network Liquidnet suggest buy-side investors are regaining confidence.
In recent weeks, Liquidnet has seen daily order flow in Europe reach $20 billion, having dropped to $12-14bn in the first quarter. At the same period in 2008, daily volumes were at $30bn. Liquidnet specialises in executing equity orders in large size and its volumes can serve as a proxy for the trading activity of big investment groups that typically buy and sell stock in large blocks.
John Barker, managing director, Liquidnet Europe, acknowledges that, in line with other venues, Liquidnet felt the impact of lower trading volumes across Q4 2008-Q1 2009. But he asserts that there are strong signs that institutions are coming back to the market.
Taking liquidity away from the public order book poses a threat to the buy-side’s ability to discover prices, say top investment managers at the TradeTech securities industry conference held in Paris this week.
While brokers are keen to extol the virtues of their internal crossing engines, arguing they provide both price improvement and reduced market impact, some buy-side CEOs are concerned that the proliferation of off-exchange trading will diminish the ability to value assets effectively.
“The existence of places where you can trade without disclosing the quantity, involvement etc. is not a benefit to anyone on the buy-side and puts end-investors in jeopardy,” said Francois Bonnin, CEO of John Locke Investments, during a panel discussion on how the buy-side is adapting to the changing investment environment.
SIX Swiss Exchange has migrated the majority of its participants to its new trading platform, SWXess. The platform, which was launched on 16 February, handles the trading of all securities listed on the exchange, including shares, bonds, exchange-traded funds and securitised derivatives, and offers lower latency and higher capacity than the previous system.
According to SIX Swiss Exchange, SWXess’s “massively increased capacity” allows it to meet the needs of algorithmic traders and requirements for direct market access. The new platform also features standardised interfaces and a choice of connectivity options, allowing participants to tailor their trading links to the exchange.
The core technology for the new platform is fellow exchange group Nasdaq OMX’s X-stream multi-asset-class trading system. It will also use the Exchange Data Publisher solution from NYSE Technologies, the technology division of NYSE Euronext, for real-time market data delivery.
SIX Swiss Exchange has migrated the majority of its participants to its new trading platform, SWXess. The platform, which was launched on 16 February, handles the trading of all securities listed on the exchange, including shares, bonds, exchange-traded funds and securitised derivatives, and offers lower latency and higher capacity than the previous system.
According to SIX Swiss Exchange, SWXess’s “massively increased capacity” allows it to meet the needs of algorithmic traders and requirements for direct market access. The new platform also features standardised interfaces and a choice of connectivity options, allowing participants to tailor their trading links to the exchange.
The core technology for the new platform is fellow exchange group Nasdaq OMX’s X-stream multi-asset-class trading system. It will also use the Exchange Data Publisher solution from NYSE Technologies, the technology division of NYSE Euronext, for real-time market data delivery.
“The death of the high-touch has been greatly exaggerated,” said Andrew Sharpe, partner, sales trading at UK stockbroker Redburn Partners. “Today’s sales trader is connected to the product, the analysts, the decision makers all the way through the chain, but is also technologically savvy and able to navigate through all the different pools of liquidity.”
“In times of high volatility, clients are looking for guidance on where the markets are headed. They don’t want to look foolish 30 minutes after a trade, so are increasingly using participatory algorithms. But clients still value the input of the sales brokers. Voice brokers won’t go away; the ones that remain will be the best of the best,” said Bill Cronin, managing director, US broker Knight Equity Markets.
Russian securities firm Maxwell Capital has implemented market connectivity and trade execution solutions from trading technology provider Orc Software.
Maxwell Capital will use Orc Trader, the firm’s front-end trading application, to link to Russia’s domestic markets, RTS, FORTS and MICEX, as well as international markets.
In addition, Maxwell Capital plans to use Orc solutions to offer DMA trading to its private and institutional clients and for establishing FIX connectivity to international markets.
“Our traders have very positive experiences from previously using Orc and their views added to our conclusion that Orc provides the best available electronic trading and connectivity solution for our needs,” said Alexander Svintsov, managing director, Maxwell Capital Investment Company, in a statement.
ULLINK, a global connectivity provider, has reported that its UL BRIDGE V3 direct market access (DMA) platform has reached a top speed of 45 microseconds per order.
ULLINK’s tests incorporated full decoding, normalising, routing and encoding of FIX messages and attained average speeds of 113 microseconds per order.
"We are further optimising our processes to reach ULLINK's target performance of sub-100 microsecond average speeds before mid-2009." said George Gomes, CTO of ULLINK, in a statement.
Two US trading venues, equities platform Direct Edge and options exchange International Securities Exchange (ISE) – which owns 31.54% of Direct Edge – will introduce new fee schedules on 1 May that offer more attractive pricing.
Direct Edge will increase the rebate for posting liquidity on its EDGX trading platform for “Super Tier” customers to $0.003 from $0.0029 while leaving the change for taking liquidity unchanged at 0.0026.
Users qualify for Direct Edge’s Super Tier if on a daily basis they either: add 40 million shares to either of the EDGX or EDGA trading platforms or both combined; add 20 million shares to either or both platforms and route 20 million shares or more through EDGA; or add 10 million shares or more to EDGX, as long as added liquidity on the platform is at least 5 million shares greater than the previous calendar month.
Trading software and analytics provider Tethys Technology has added a new module for options auto-quoting and centralised, risk-managed trading to its Execta execution management system (EMS).
According to Tethys, the module allows users to take advantage of market opportunities instantaneously in an automated fashion and manage risk on large portfolios of options.
“Increasing market data rates and fast-moving, fragmented markets have made managing options orders and hedges a significant challenge. Execta options spread trading and auto-quote strategies allow managers and traders to automate this process to improve execution performance and lower risk”, said Nitin Gambhir, CEO of Tethys in a statement. “In addition, our options portfolio module provides the ability to monitor all the greeks and trade vega and delta exposures in a unique manner that enhances execution efficiency and reduces risk.”
International exchange group Deutsche Börse has opened a representative office in Tokyo to provide a local hub for Eurex, its derivatives exchange, and its Market Data & Analytics unit.
“The new presence in Japan will significantly improve our local customer service and foster our direct relations with Japanese market participants,” said Michael Peters, responsible for the Asian business expansion of Deutsche Börse and member of the Eurex Executive Board. “It is also a sign of our strong commitment to the most important financial centre in Asia, in which close relationships with key institutions have already been established.”
Agency brokerage and trading technology provider ITG has appointed John Carillo as its new head of US portfolio trading. Carillo, who was previously a senior sales trader at J.P. Morgan Securities in charge of marketing and trading global portfolios for institutional equity clients, will be responsible for all aspects of ITG’s portfolio trading services, including executing portfolios on behalf of all US clients and offering strategic counsel and expertise for complex portfolio transactions.
Before joining J.P. Morgan Securities in 2002, Carillo also held a senior sales trader position at Merrill Lynch, where he provided institutional clients with agency and risk-based portfolio execution and analysis.
“With the addition of John’s experience and vision to ITG’s agency offering, we can offer an enhanced high-touch portfolio trading service that will be extremely beneficial to our clients,” said Chris Heckman, managing director at ITG, in a statement.
European equity trading activity showed signs of stabilising in March, with turnover increasing by 11% from February to just over €1.1 trillion, according to the latest market share report from Thomson Reuters, which includes delayed trades for the first time.
Volume also increased 20% month-on-month to just over 190 million shares. However, turnover for March represents a 39.5% year-on-year decline, suggesting there is still a long way to go before a significant recovery is realised.
The market share of multilateral trading facilities (MTF) also fell, accounting for 7.73% of total European trading in March compared with 8.1% in February. The decline may in part be due to the expiration of the market-making agreements between Turquoise and its shareholder banks on 13 March.
Revenues from the firm’s equities division declined 37.3% in Q1 to €28.7 million, and share volume traded slumped to 27.12 billion shares, a 17.6% decline compared with Q1 2008.
Quarter-by-quarter revenues were also down 38% for clearing and settlement services to €12.5 million and 11.8% for derivatives to €6.5 million, despite a 39.9% increase in volume in futures and options contracts.
