Russia’s VTB Capital and China’s CITIC Securities sign MOU


Russia’s VTB Capital and China’s CITIC Securities sign MOU

http://www.automatedtrader.net/news/at/143878/vtb-capital-and-citic-securities-sign-mou

First Published 12th July 2013

VTB Capital of Russia struck the latest in a series of agreements with groups in other countries, this time with China’s CITIC Securities

VTB Capital said it had signed a memorandum of understanding with Chinese investment bank CITIC Securities so that the two groups can work together on cross border merger and acquisition and investment opportunities between Russia and China.

Other areas of cooperation include capital markets, asset management, private equity investments, research and FX operations to capture trade flows between the two countries, VTB Capital said in a statement.

“The Asia-Pacific market is one of the strategic regions for developing VTB Capital’s business abroad,” VTB Global Capital Chief Executive Officer Alexei Yakovitsky said. “A partnership with CITIC Securities will enable us to significantly enhance our position and provide a larger set of services for our clients with interest in the Chinese market that is currently one of the most attractive markets for investing.”

Damian Chunilal, VTB Capital’s CEO for Asia, said the MOU was another important step in the group’s strategy to expand business beyond Russia.

VTB Capital has signed a series of agreements with firms in other locations.

It signed an MOU this week with Italian investment agency Invitalia. In October 2012, VTB Capital and Evercore Partners (USA) announced a strategic co-operation partnership to focus on cross-border deals between Russia and the North American market. In June of that year it announced a strategic cooperation agreement with Brazilian investment banking group BTG Pactual.

WSEInfoEngine selects Trayport’s GlobalVision Exchange Trading System


WSEInfoEngine selects Trayport’s GlobalVision Exchange Trading System

http://www.automatedtrader.net/news/at/143745/wseinfoengine-selects-trayports-globalvision-exchange-trading–system

WSEInfoEngine – a subsidiary of the Warsaw Stock Exchange – chooses Trayport’s GlobalVision Exchange Trading System to operate their OTC commodities market

London – Trayport, the provider of energy trading solutions to traders, brokers and exchanges, has announced that WSEInfoEngine SA, a subsidiary of the Warsaw Stock Exchange, has signed an agreement to use Trayport’s Exchange Trading System (ETS) for the operation of their markets.

Trayport’s ETS is designed specifically to enable commodity exchanges to host electronic marketplaces. The system provides exchanges with a single solution for price dissemination, order and deal management and matching of any energy commodity. The agreement will see WSEInfoEngine initially use Trayport’s ETS for the OTC trading of commodities.

Grzegorz Onichimowski, President and CEO of WSEInfoEngine SA said ‘Entering into the software license agreement with Trayport is an important step for WSEInfoEngine SA towards realising the strategy of extending the market offer in terms of providing state-of-the-art trading tools for commodity market participants.’ He added ‘Trayport’s electronic trading system will be implemented to facilitate efficient and beneficial OTC trading of commodities, including those that are currently traded in Poland over the phone or by through personal relations. Our intention is to develop this technology to also enable its use by other members of the WSE corporate group.”

Elliott Piggott, CEO at Trayport said ‘We are delighted that WSEInfoEngine has joined the growing number of companies benefiting from using our platform. With this agreement we further demonstrate our commitment to the Central and Eastern European (CEE) region.’ He added ‘We are pleased that WSEInfoEngine recognised Trayport as offering the technology to underpin the drive to create liquidity and grow trading in CEE.’

Elliott Piggott, CEO, Trayport

Elliott Piggott, CEO, Trayport

“We are pleased that WSEInfoEngine recognised Trayport as offering the technology to underpin the drive to create liquidity and grow trading in CEE.”

BCS granted FCA authorisation


BCS granted FCA authorisation

http://www.automatedtrader.net/news/at/142921/bcs-granted-fca-authorisation

Roman Lokhov, CEO, Global Markets and Investment Banking, BCS Financial Group

Roman Lokhov, CEO, Global Markets and Investment Banking, BCS Financial Group

“We are delighted to have reached this important milestone in our global business development.”

London – BCS Prime Brokerage, an independent Russian financial institution, has been granted UK regulatory authorisation by the Financial Conduct Authority (FCA), to deal and advise on investments and hold client assets, this marks the official launch of its international brokerage business.

BCS Financial Group ranks first in terms of equity and derivatives and second for FX volumes traded on the Moscow Exchange. It is now building out its institutional coverage across Europe.

Operating under the trading name BCS Financial Group, BCS has been in London since 2012. BCS has made a wave of key hires to support this core business launch. Executive Directors include Rizwan Kayani and Joseph Dayan, formerly of Renaissance Capital and Unicredit respectively. They are supported by Non-Executive Director John Barker, the former CEO of Liquidnet Europe and Chief Regulatory Officer, Wendy Langridge. The management team also includes Tim Bevan and Luis Saenz, formerly of Otkritie Capital. The London business will continue to increase its headcount and market share over the next 12 to 18 months.

Joseph Dayan, Executive Director and Head of Markets commented: “BCS is committed to building a robust and transparent European business which can provide clients with both cost effective and efficient execution, as well as insightful and quantitative research. All members of the team have been hand-picked to maximize our skill set and we are confident that we can deliver a premium service to our global clients.”

Roman Lokhov, CEO, Global Markets and Investment Banking, BCS Financial Group added: “We are delighted to have reached this important milestone in our global business development. In launching our European operation, BCS Financial Group is able to expand its product offering and is well positioned to take advantage of the increased transparency and structural changes occurring in the Russian market, for the benefit of its institutional investors.”

WOOD & Company Financial Services joins SGN


WOOD & Company Financial Services joins SGN

http://www.automatedtrader.net/news/at/142805/wood–company-financial-services-joins-sgn

First Published 3rd June 2013

Prague based broker joins SunGard Global Network

WOOD & Company Financial Services, a Prague-based broker with additional offices in Warsaw, London and Bratislava, has joined the SunGard Global Network (SGN) for international trading and connectivity.

WOOD will offer SGN members access to the stock exchanges of Budapest, Bucharest, Euronext (Amsterdam, Brussels, Lisbon, and Paris), Istanbul, Ljubljana, London, NASDAQ, NYSE, Prague, Vienna, Warsaw and Zagreb through this new connection.

“A number of financial institutions around the world are looking at Central and Eastern Europe to provide new opportunities and growth. In order to consolidate our leading position in the region, WOOD has chosen to leverage the SunGard Global Network to offer our clients reliable technology, a wealth of contacts, and strong regional expertise.” – Rupert Wood, Head of Equities, WOOD

Clearstream introduces DVP settlement solution in Russia


Clearstream introduces DVP settlement solution in Russia

http://www.atmonitor.co.uk/news/newsview.aspx?title=clearstream-introduces-dvp-settlement-solution-in-russia

Published on   May 30, 2013

As momentum continues in the reform of Russia’s capital markets, Clearstream is keeping pace and is supporting the set-up of an effective settlement framework by delivering its improved settlement solution and introducing municipal bonds via its direct link to the new Russian Central Securities Depository (CSD), the National Settlement Depository (NSD).

This week, Clearstream goes live with its new delivery versus payment (DVP) settlement solution – the market’s preferred settlement choice since it is more efficient, more secure and offers more real time settlement compared to the free of payment (FOP) option. For DVP settlement, a clear link is established between a securities transfer system and a funds transfer system that ensures delivery occurs only as and when payment occurs. This move by Clearstream is helping to pioneer a shift within the market from its current system of settling in cash batches, to a system which is closer to real-time settlement. The extent to which real-time securities settlement becomes a real possibility will still depend on the decision by Russian market participants to move away from the batch system for local cash transfers.

Clearstream this week also introduces Russian municipal and regional bonds for settlement via the NSD and extends settlement deadlines for its free of payment (FOP) settlement service by several hours (from 13:55 to 17:20 CET summer time). These steps reflect good pace in Clearstream’s – and the wider market’s – settlement and custody services development since the establishment of the NSD as CSD for Russia at the end of last year. As a next milestone, Clearstream plans to introduce settlement for Russian corporate bonds and to enhance its access model for Russian equities as soon as local legislation allows for this.

Jeffrey Tessler, Chief Executive Officer of Clearstream, said: “I am delighted we keep developing and enhancing our settlement and custody services in the Russian market. Our new delivery versus payment settlement solution is an exciting milestone as it helps pave the way for the Russian market to move more towards a real time settlement environment, keeping up with other capital markets around the world as part of Russia’s capital market reform.”

Eddie Astanin, Chairman of the Executive Board, National Settlement Depository, commented: “Switching to delivery versus payment (DVP) using the link between the National Settlement Depository and Clearstream will create additional opportunities for foreign investors who conduct transactions with Russian fixed income instruments. We are happy to see a high rate of technological development of Clearstream’s link, which in turn is contributing to the development of the national infrastructure and, as a consequence, makes the Russian financial market more attractive and competitive.”

Clearstream’s services in Russia

Clearstream offers a comprehensive service taking full advantage of the new Russian securities law and market infrastructures refocus, including custody and settlement for the following instruments:

Equities – held in omnibus form via Clearstream’s local agent bank Deutsche Bank Moscow’s link with the NSD and deliverable free of payment (FOP) in the local market;

OFZ bonds and municipal bonds – held in omnibus form via Clearstream’s own direct link with the NSD;

Delivery versus payment (DVP) multicurrency settlement against all Clearstream Banking Luxembourg and Clearstream Banking Frankfurt international central securities depository customers;

Delivery versus payment (DVP) settlement against all NSD counterparties in Russian rubles for OFZ bonds and municipal bonds.

OtkritieSecurities Ltd. successfully launches FIX2LSE solution from ARQA Technologies


OtkritieSecurities Ltd. successfully launches FIX2LSE solution from ARQA Technologies

Published on   May 30, 2013

http://www.atmonitor.co.uk/news/newsview.aspx?title=otkritiesecurities-ltd-successfully-launches-fix2lse-solution-from-arqa-technologies
logo
TheFIX2LSE product developed by ARQA Technologies has gone live after it was implemented and successfully launched by Otkritie Securities Limited(OSL).

The solution was developed on the basis of the London Stock Exchange’s Native Trading Gateway. It was certified by the exchange at the end of last year. The FIX2LSE solution is currently the fastest in the developer’s range of similar products(FIX2Markets). Along with all of the products in the range,FIX2LSE may be used for direct sponsored access of external software suites to exchange trading platforms. Another attractive feature of this solution is that itemploys fast pre-trade checksdeveloped inQUIK(for application of real-time pre-trade checks QUIK software is employedasa risk server.)Using this feature allows traders to save up to 50 ?son pre-trade checkspreserving access to all of the prime-brokerage services provided by Otkritie Securities Limited.

This solution is especially important for OSL as a UK broker regulated by the FCA. The European Securities and Markets Authority (ESMA) puts a lot of regulatory pressure on DMA brokers all over the EEA. Mandatory pre-trade checks are one of their requirements. FIX2LSE is a good solution that isboth fast and ESMA compliant.

Sergey Sinkevich, Head of DMA at Otkritie Capital, said: “We are delighted to have implemented such an innovative producton our trading floor. The unique features of this solution will ensure that OSL continues to lead the market”.

Vladimir Kurlyandchik, Director of Business Development of ARQA Technologies, said: “We are pleased to see our efforts bringing value to our clients. Rapid solutions backed up by sound risk control provide a shortcut to successful trading”.

What the ICE/NYSE Merger Means for the Industry courtesy of the TABB Group


With each passing day, the acquisition of NYSE Euronext by ICE seems more likely to receive final approval. Here are 5 ways the deal will impact the capital markets.

February 15, 2013, marked the end of the Hart-Scott-Rodino Act waiting period in the acquisition of NYSE Euronext by IntercontinentalExchange(ICE). With each passing day, the acquisition seems more likely to receive final approval. As we await the next phase of regulatory approval from the SEC, we wanted to share a few thoughts on how we believe the acquisition will impact current clearing, reporting and trading operations, as well as how the two exchanges can benefit from the merger.

1. Need for Physical Trading Floor

The future format of the NYSE trading floor seems to be on the minds of everyone. There are analyst speculations that ICE’s CEO, Jeffrey Sprecher, will close the trading floor, as was done to the New York Board of Trade in 2012 four years after it was acquired by ICE. However, according to interviews, Sprecher has expressed intentions to keep the physical trading floor intact.

[Related: “It May Be ‘Bye-Bye to the Big Board,’ But the NY Times Should Get Its Story Right”]

Both companies have robust electronic trading, and Sprecher has acknowledged the value of NYSE’s legacy in voice brokering. As technology continues to dominate the exchange space, there has been recognition of the value of voice brokering (by which the NYSE is defined). The market has ironically become too complex to rely only on computer-to-computer trading, showing the physical trading floor still provides an intrinsic value in keeping an orderly marketplace.

2. Impact on Clearing

US-based firms that are major players in the derivative space will benefit by having a local trading and clearing venue, through reductions in clearing costs and operational risks. Typically, coordinating multiple back-office processes and reconciliations between the US and UK calls for duplicate efforts, resulting in back-to-back bookings to flatten balance sheets and delays in handling breaks; having the ability to manage these operational processes will make for a more efficient process.

Title VII of the Dodd Frank Act, which requires central clearing for certain derivatives contracts, has limited NYSE’s presence in the US-based interest rate swaps clearing business. Currently, the NYSE has a small presence in the US-based interest rate swap clearing business, due to a lack of access to a central clearinghouse, now mandated by the Dodd-Frank Act. Through the acquisition, NYSE will be able to benefit from ICE’s presence in European fixed income derivative trading and clearing.

3. Impact on Market Participants

Reductions in clearing costs can translate into cost savings for market participants. Just last year, ICE had to increase its trading and clearing fee due to “regulatory burdens,” and with the merger of NYSE Euronext, ICE will also have to compete with other exchanges on transaction costs. Even if fees increase after the merger, market participants would still fare better than if the two companies operated independently. This newly merged exchange will be able to offer a larger array of products and services, so that market participants can look to fewer companies for trading execution and clearing services, thereby decreasing expenses associated with initial client on-boarding.

4. Impact on Reporting

NYSE’s core data products make U.S. market data free and available, using consolidated tapes, giving transparency to last-sales price and quotes. It also sells its non-core data products to analytics traders, researchers and academics. ICE will be able to leverage NYSE’s experience in data reporting, as it looks to setup its own swap data repository (SDR), in order to meet CFTC mandates for real time swap reporting.

[Related: “Commissioner O’Malia Talks Derivatives Reform: Assessing and Improving the Change”]

ICE has already set up a registered SDR — and the ICE Trade Vault, which will offer both recordkeeping and reporting services for credit default swaps. However, as reporting requirements go live for additional asset classes, it will be necessary to offer data recordkeeping and reporting services to these as well. This is where NYSE’s existing core data products can benefit ICE.

5. Benefits in Merging of Exchanges

Although ICE and NYSE’s product offerings differ vastly, the functions of trading, clearing and settlement demands often overlap, and both are registered with the CFTC as designated contract markets. Efficiencies can be gained when these two exchanges tackle the requirements in swaps reporting and recordkeeping, external business conduct rules and documentation standards in this era of heightened standards for SIFI. As regulatory mandates increase the operating costs for exchanges, it is becoming prudent to explore additional mergers.

List of TMX ATRIUM TRADING VENUES


TMX Atrium has a wide range of customers including venues, buy side, brokers, clearers, ISVs, market data vendors.

TMX Atrium covers a wide range of the financial community.

Venue City Country
Alpha Trading Toronto Canada
BATS Europe London UK
BATS US Weehwken USA
BME Madrid Spain
BOX Secaucus USA
CBOE Secaucus. USA
CNSX Toronto Canada
Borse de Luxembourg Luxembourg Luxembourg
Burgundy. Stockholm Sweden
CHI-X Canada Toronto Canada
CHI-X Europe Slough UK
CME Chicago USA
Deutsche Boerse Frankfurt Germany
Direct Edge Secaucus USA
Equiduct London UK
FX All Weehwken USA
FXCM Bergen USA
HotSpot Jersey City USA
International Sec Exchange New York USA
LMAX London UK
London Metal Exchange London UK
Match Now Toronto Canada
Montreal Exchange Toronto Canada
Moscow Exchange Moscow Russia
NASDAQ OMX (Nordic) Stockholm Sweden
NASDAQ OMX (US) Carteret USA
Oslo Bors London UK
Nordic Growth Markets Stockholm Sweden
NYSE Euronext (Europe) Basildon UK
NYSE Euronext (US) Mahwah USA
Omega ATS Toronto Canada
Pure Trading Toronto Canada
Sigma-X London UK
TOM Stockholm Sweden
TRAD-X London UK
TSX Toronto Canada
Warsaw Stock Exchange Warsaw Poland

Futurised Swaps – Video of the CME and LCH Point of View at the CFTC Roundtable


Futurised Swaps – Video of the CME and LCH Point of View at the CFTC Roundtable
The CFTC had a large meeting to discuss futurised OTC products, below is a 15 minute extract of the full 6 hours where Kim Taylor (President of their Clearing Business) and Dan Maguire (President of Yorkshire, and a Senior in SwapClear US), speak about the topic.

Key points from Kim

Capital was insufficient to cover market losses in the crisis, leading to a spiral of margin calls and a bail out, Dodd Frank is the US approach to solving this problem
The DFA is one solution, to redesign the OTC market, and enhanced use of Futures is also a legitimate approach to the same goals
There are 40-50 ‘line items’ for Deliverable Swap Futures, meaning 40-50 distinct products
There were 60,000 ‘line items’ for Lehman in SwapClear. BH: I don’t count each slight permutation of an IRS as a distinct “product”, so an IRS based on ACT/360 isn’t so different from a swap based on ACT/365, in my opinion
The diverse set of line items in the OTC market prevents liquidity formation. BH: I disagree, true liquidity can be measured from market activity by looking inside MarkitWire / SwapClear, and then into the CME Deliverable Swap Future stats.
Compare turnover of trades to open positions, in futures the market rotates 25 times per year, in OTCs about 2.5 times (no background data provided)
There are an estimated 5m participants in the futures market, compared to 30,000 in the OTC market.
BH comments:
But do those 5m all trade deliverable swap futures? And would they step up to take the other side of a DSF when CME were trying to sell off a defaulters portfolio?
The SwapClear model mandates that surviving members must participate in the auction process, of which there are now around 70 corporate groups representing a large proportion of the whole swap market.
Are traders in DSFs obliged to participate in a liquidation situation?
The reduced number of line items means trade netting is an order of magnitude better in futures than OTC
BH: Both CME and SwapClear provide trade netting of OTC IRS in their CCPs, it’s relatively easy, although not intrinsic to the IRS product the way a future contract is
Methods of liquidation in Deliverable Swap Futures
Open market sale
Private negotiated sale
Competitive auction
For an OTC default CME only use a competitive auction, due to the different profile of an IRS portfolio
An FCM must post the minimum CCP margin, but can collect more if they wish
Key points from Dan

SwapClear contains 60-70% of the global OTC IR swap market
SwapClear has cleared $19trn of the $20trn buy-side Swaps anywhere in the world (i.e. other CCPs have only captured $1trn of buy-side business)
SwapClear clears $2trn notional per day, higher than implied by Kim perhaps
Also torn up $170trn of IRS (I assume he means in partnership with TriOptima / TriReduce)
Workflow for OTC is now more standardised, the flow from execution to clearing is much smoother
OTC products hedge non-standard risks – the raison d’être of the market
The portfolio at SwapClear when Lehman defaulted was 66,000 IRS in 5 currencies, $9trn of notional, maximum maturity of 30 years
30% to 40% of Lehman’s IM was used during the Default Management Process, the remainder returned to the estate of Lehman / their administrators
No-one in SwapClear lost a penny as a result (is that a US cent or an English 1p?)
Rate risk can be transferred and transformed, but doesn’t “disappear” so transmuting OTC Swaps into Futures will just move the problem, not solve it
Why would a $10m DV01 in exposure attract a 2 day VaR holding period on an Exchange, and the same risk as an OTC cleared product attract a 5 day holding period?
The key is: do you have access to liquidity in a default?
Shouldn’t the holding period in any market be derived from the liquidity [and other key issues in a default], rather than by top down regulatory mandate?
I cut Dan off slighty short on the video, sorry Dan.

My key points

You can download a spreadsheet of volumes of DSFs here: http://www.cmegroup.com/trading/interest-rates/dsf-volume-and-oi-tracker.html
More work needs to be done to relate the holding period on a VaR calculation back to the participants in the market, and conditions in a default.
Likewise the legal basis which obliges (or doesn’t) oblige folks to take a defaulters positions need examination
The point about DV01 above is worth more examination
Source videos, 6 hours long: http://www.cftc.gov/PressRoom/Events/opaevent_cftcstaff013113

TESS Connect & Go overview including Customers list


http://www.cinnober.com/tess-connect-go

TESS™ Connect & Go is a fully managed, multi-asset marketplace service for trading intensive banks and brokers that will give instant access to proven cutting-edge exchange technology. The service enables banks and brokers to set up a regulatory compliant market within weeks. TESS is a Software-as-a-Service (SaaS) solution, suitable for building and provisioning trading venues such as OTFs, SIs, SEFs and dark pools.

A full-service concept

TESS Connect & Go gives banks and brokers a unique opportunity to access state-of-the-art marketplace technology in a full-service concept. For the TESS customer this means a low-risk investment, superior total cost of ownership and ability to focus fully on core business.

TESS is configured and ready for production within weeks from order. There is no startup cost and the monthly subscription fee covers software, hardware, maintenance, hosting, operations, infrastructure and support. The service is provided from fully redundant ISO-certified data centers globally with 24/7 support and dedicated account management.

Rich and proven marketplace functionality

The core of TESS Connect & Go is the sophisticated multi-asset matching engine used in demanding equities, commodities and derivatives markets with proven speed, performance and robustness.

It can be applied to manage multiple trading models in parallel for liquid as well as illiquid markets including auctions, continuous trading, request for quote (RFQ), dark pool functionality, midpoint matching and OTC trade reporting.

The service can be extended to also include the full-fledged market surveillance system Scila Surveillance. 

Solutions for trading and clearing venues

Product-based solutions that change the world of finance

All Cinnober solutions are based on our TRADExpress™ Platform, built to cater the needs of high-transaction marketplaces and clearing houses with extreme demands on speed, performance and reliability.

TRADExpress Platform

Includes all the infrastructural components needed for true mission-critical transaction solutions

Versatility by default

All Cinnober solutions are based on our TRADExpress™ Platform, built to cater the needs of high-transaction

Managed services

In the financial sector, a strong IT partner needs to deliver more than just robust technology. It should help ensure a smooth launch, implementation and operation – as well as provide a flexible path for post-launch developments, since the market never stops changing.

While some customers might have firmly established system operations, their IT departments might already be fully burdened and unable to take on new projects. New marketplaces may start out without an IT department at all, and with very few resources in place. Cinnober therefore offers complete system hosting and operational services, from system dimensioning, through installation, to ongoing operation.

All Cinnober systems can be ordered as fully managed solutions including hosting in ISO-certified data centers, management of infrastructure and hardware, system operations including monitoring, surveillance, backup, system reports and issue management. All clients are backed up by a dedicated Technical Account Manager and the Cinnober Service Desk

Customers

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