Australian Securities Exchange Goes Live with Calypso Technology

Australian Securities Exchange Goes Live with Calypso Technology

Published on Sep 17, 2013

Calypso Technology Inc. announced that the Australian Securities Exchange (ASX) has cleared its first OTC derivatives transaction on its OTC clearing service that uses the Calypso System as the core clearing platform. The ASX OTC Derivatives Clearing Service launched on July 1st, 2013, with client clearing for Australian clients expected to be commercially launched in Q2 2014.


ASX, one of the world’s top 10 listed exchange groups, uses the Calypso solution to support OTC derivatives dealer-to-dealer clearing of standardized Australian Dollar (AUD) denominated interest rate swaps. ASX offers a cross-margining service on Calypso, enabling clearing members to offset initial margin between their interest rate swaps and 24 ASX exchange-traded interest rate futures products positions, thereby reducing the overall portfolio margin requirements. The Australian dealer community has expressed support for this service, as it retains their collateral onshore and facilitates capital efficiency via the clearing of OTC and exchange-traded derivatives together. ASX plans to offer AUD interest rate client clearing by Q2 2014, and is working with foundation customers comprising major Australian asset managers and state government treasuries.


Key factors in the selection of the Calypso platform for OTC clearing were Calypso’s market leadership in OTC derivatives clearing software and experience in working with 9 global CCPs. The Calypso system provides end-to-end clearing operations, risk management and connectivity between CCPs and clearing member firms.


Peter Hiom, Deputy CEO of ASX, said “ASX chose Calypso as a provider with deep experience in OTC derivatives clearing to help deliver the best solution to meet the needs of the Australian marketplace.”


“Calypso is at the forefront of the expansion of OTC clearing platforms around the world”, says Charles Marston, Chairman and CEO, Calypso Technology. “Calypso OTC clearing is a proven, future-proof solution that enables efficient and competitive entry into new markets and clearing of new products. We look forward to continuing our partnership with ASX and delivering the next phase – client clearing in Australia.”

OptionsCity to Offer Direct Access to CME Europe

OptionsCity to Offer Direct Access to CME Europe

Published on Sep 23, 2013

OptionsCity Software, the provider of electronic trading solutions, today announced that the company has completed conformance testing with CME Europe, a new London-based derivatives exchange (subject to Financial Conduct Authority Approval) and wholly owned subsidiary of CME Group. Upon the September 29, 2013 launch date of the exchange, and pending regulatory approval, OptionsCity will provide its clients that are members of the exchange with direct access to CME Europe.

“We are pleased to offer our customers access to trading futures on CME Europe,” replied Hazem Dawani, CEO of OptionsCity Software. “Our direct connectivity will offer highly reliable access and further competitiveness for our clients, allowing them to capitalize on opportunities in new markets. This is a milestone in our expansion in Europe.”

OptionsCity customers will be able to choose between trading the initial range of FX futures on CME Globex or by submitting block or EFPS trades via CME ClearPort for clearing. Clearing services will be provided by CME Clearing Europe, the London-based clearing house regulated by the Bank of England.

Customers will access products listed for trading on CME Europe via OptionsCity’s Metro and Freeway platforms. Metro, the firm’s flagship electronic trading and market making platform fully integrates with Freeway, a multi-asset automated trading platform that gives developers and traders a comprehensive development environment to create and back-test automated trading strategies, and execute trades to the market with micro-second speed.

The Stock Exchange of Thailand (SET), together with other stock exchanges in Greater Mekong Subregion (GMS) – Cambodia, Hanoi, Hochiminh and Laos -, announced that they will collaborate to strengthen the region

The Stock Exchange of Thailand (SET), together with other stock exchanges in Greater Mekong Subregion (GMS) – Cambodia, Hanoi, Hochiminh and Laos -, announced that they will collaborate to strengthen the region

BANGKOK, 29th August The Stock Exchange of Thailand (SET), together with other stock exchanges in Greater Mekong Subregion (GMS) – Cambodia, Hanoi, Hochiminh and Laos -, announced that they will collaborate to strengthen the region’s competitiveness and raise its global profile during the first GMS exchanges CEOs meeting ‘GMS Focus’, hosted by SET, as a platform for closer collaboration among GMS exchanges.

After the meeting, five GMS exchanges agreed in principle to initiate GMS capital market developments in three areas: capital market education, corporate governance and market information sharing. Charamporn Jotikasthira, President of The Stock Exchange of Thailand, said: “This first GMS exchanges CEOs meeting reflected the shared vision and regional support in building a closer network for GMS capital markets cooperation. All GMS stock exchanges are confident that a closer collaboration among markets is a major step in strengthening our capital markets’ presence and enhancing our capital market quality.”

Hong Sok Hour, CEO of Cambodia Securities Exchange, said: “This meeting was very fruitful and productive, enabling us to further develop our markets and contribute to the prosperity of the GMS. During the meeting, all exchanges agreed to set up GMS information sharing mechanisms among exchanges that I am strongly confident that it will help regional development and increase visibility of GMS exchanges to regional and international investors.”

Tran Van Dzung, CEO of Hanoi Stock Exchange, said “GMS securities exchanges are playing increasingly important roles in supporting the economic development of our respective countries and the region. Our collaboration’s goal is to develop a strong and healthy GMS capital market based on good quality of corporate governance of exchanges and listed companies.” Tran Anh Dao, Deputy CEO of Hochiminh Stock Exchange, said “HOSE highly appreciate SET as the host of this GMS Exchanges Networking for enhancing relationship among exchanges in the region. We take this opportunity for deeper understanding on collaboration mechanism and future plan”

Dethphouvang Moularat, Chairman & CEO of Lao Securities Exchange, joining Thailand Focus for the third time, said: “This meeting is an important way to build strong links of friendship among GMS exchanges and show how the exchanges can work together effectively. One joint operation that was mutually agreed from the meeting is to initiate “GMS Capital Market Education Forum” that would become the key driver for strengthening the capital market education development in Mekong region. This meeting shall contribute narrowing the developing gap among GMS countries and can smoothly establish the AEC”

The CEOs exchanges also participated for the second time in Thailand Focus 2013: Connecting to New Investment Frontiers, the annual flagship investment seminar in Thailand, to present their growth potentials to foreign funds and participate in 19 one-on-one meetings in the event during August 28 and 30, 2013

Post-trade outage drives pre-trade regulation

Post-trade outage drives pre-trade regulation

For the first time in the modern era, issues related to the post-trade formation and dissemination of a consolidated quote brought trading in Nasdaq-listed stocks and equity options based on those stocks to a halt for approximately three hours on 22 August.

Unlike Nasdaq OMX’s infamous May 2012 Facebook initial public offering (IPO) failure, which involved Nasdaq OMX exchange systems and eventually cost the company US$10 million in fines from the US Securities and Exchange Commission (SEC), Thursday’s trading outage is thought to involve systems which route securities data to the exchange.

“Over the next few days, Nasdaq OMX is in the unenviable position of being seen by the public as the source of the problem, even though we do not know where the failure occurred,” explains Robert Stowsky, senior analyst with industry research firm Aite Group. “It could have been a problem at the securities information processor (SIP) or in one of the exchanges contributing data to the SIP.”

The role of SIPs in the US equities markets is to collect equity trade quotes and completed trade data for eventual distribution and publication.

In the case of Nasdaq OMX, it administers the SIP used to create the consolidated quote for Tape C securities, which consist of Nasdaq-listed equities, and is managed by the OTC/UTP operating committee, which represents the 12 US exchanges that trade Nasdaq-listed securities and the Financial Industry Regulatory Authority (FINRA) that operates the Trade Reporting Facility, which is used by alternative trading facilities (ATFs) to report their trades.

A separate industry organization, the Consolidation Tape Association, oversees the formation and dissemination of the Tape A and Tape B consolidated quotes, which consist of securities listed on the New York Stock Exchange (NYSE) and American Exchange (Amex) respectively.

“This is more a market infrastructure issue rather than a single-exchange issue,” adds Stowsky. “It just happens that Nasdaq OMX maintain the Tape-C SIP in this case.”

According to the limited information provided by Nasdaq OMX, which declined requests for comment, the SIP administrator began to notice a degradation in quote and trade distribution due to a connectivity issue. Nearly 75 minutes after Nasdaq OMX first identified the issue, the exchange halted trading in all Tape C securities. It then halted trading in all options trading based on those securities 12 minutes later. It was not until 51 minutes after Nasdaq OMX halted its trading of Nasdaq-listed securities that it implemented a regulatory halt in trading of all Tape-C securities.

The SIP managed to resolve the issue in 30 minutes, said Nasdaq OMX officials and began a phased re-start of trading at approximately 15:25 ET.

Although trade resumed prior to the closing bell, the industry and investors found it quite disconcerting.

“Any system that is as strategic to the operation of the US equities markets, such as a market utility like the SIP, that required 100% up-time should have had ‘hot’ failover capabilities,” said William Karsh, a special advisor at the National Stock Exchange (NSX). “Every system, which is critical to the US market system, should have this capacity.”

Karsh suggests that the SIP administrator or oversight committee put together plans or have processes in place to prevent similar events in the future. “If any participant acts in a manner that jeopardises a system’s performance and affects fellow users of the system, there should be a way to block the participant so that behavior does not cause the system to fail,” he adds.

The failure follows other serious technology problems for Goldman Sachs, which released a rogue algorithm on 20 August, which caused havoc with its options trading.

Goldmans’ algorithm sent erroneous options orders in the early minutes of the trading day and could cost the investment bank up to US$100m. Exchanges are currently in the process of identifying which order should be cancelled and the full cost may not be known for some time.

Regulatory knock-on

The trading outage comes at a time when the SEC is focused on trading systems and technology, having recently ended the comment period of its proposed Regulation Systems Compliance and Integrity (Reg SCI) on July 8.

If the regulation is implemented as written, it will replace the SEC’s voluntary compliance system for developing, testing and maintaining systems critical to the operation of the US equities market.

Aite’s Stowsky, sees the regulators sharing some culpability in the trading outage due to the SEC’s implementation of Regulation NMS, which created the current market structure.

Whenever there is an industry utility, it introduces a potential single-point of failure, he says and doubts if the distributed market structure has been tested rigorously.

“My experience in the industry is that organisations tend to squeeze the testing and quality assurance as they approach product delivery deadlines.”

Stowsky is also sure that politicians, and hence the regulators, will be following the reasons for the trade outage closely since it affects the perception of the US equities market as a fair and well run market.

“Anything that shakes that view will move to the top of their legislation or regulatory priority list.”

Nasdaq OMX’s European derivatives subsidiary eyes new products

Nasdaq OMX’s European derivatives subsidiary eyes new products

23 Aug 2013 Updated at 12:40 GMT


As Nasdaq OMX’s US securities market deals with the fallout from a three-hour outage on its platform yesterday, across the Atlantic its new European derivatives subsidiary is looking for ways to build its business, potentially through the listing of new third-party contracts.

NLX, which launched in June and offers trading in popular long and short-term interest rate derivatives, said it would be willing to consider listing instruments developed by external providers.

Charlotte Crosswell, chief executive of NLX, told Financial News earlier this week: “At NLX, we have the infrastructure, vendors and route to clearing already in place. It’s relatively easy for us to list new products quickly. This gives us the flexibility in how we approach listing new types of products. You might have a new product that works well, but then you need to have the industry backing and bring it to market at the right time – it can be challenging.”

The move comes as US-based Eris Exchange is considering ways to bring its interest rate contracts to Europe and as GMEX Group, a new derivatives venture run by former Chi-X Europe chief operating officer Hirander Misra, is looking at creating new methodologies for developing products across multiple asset classes.

The emerging regulatory environment for swaps trading is presenting opportunities for firms to develop new types of derivatives that offer alternatives to over-the-counter derivatives.

The rules will push OTC derivatives that can be standardised onto electronic trading platforms and through clearing houses. This has led some to look to products that replicate OTC exposures through an exchange-traded contract.

Under the Dodd-Frank Act, the obligation to clear swaps has already kicked in for most US market participants. Exchanges including Eris and CME Group have launched swap futures that mimic interest rate swap contracts in an exchange-traded environment. Mandated trading of OTC derivatives contracts on trading platforms known as swap execution facilities will start in the US from October 2.

The swap futures from Eris and CME are still gaining traction, say market participants.

Nasdaq-listed stocks were halted for almost three hours on Thursday because of a problem with the Securities Information Processor, a system that consolidates and disseminates prices to US markets, according to a statement from Nasdaq OMX.

The glitch impacted the data feed that distributes pricing information for securities listed on Nasdaq and is not believed to be linked to the exchange’s core technology. The bourse said it had resolved the issue within 30 minutes and spent the remainder of the time coordinating with other market participants and regulators to ensure the orderly resumption of trading.

NLX runs on Genium Inet technology, which incorporates the platform that Nasdaq acquired when it purchased the OMX Group of Nordic exchanges in 2007. Nasdaq’s US markets run on Inet, which it bought from agency broker Instinet in 2005.

–write to and follow on Twitter @anishpuaar

Moscow Exchange and Eurex to cooperate on FX trading

Moscow Exchange and Eurex to cooperate on FX trading

First Published 21st August 2013

Next step in partnership between Moscow Exchange and Deutsche Börse Group/Futures on EUR-RUB and USD-RUB to trade on Eurex.

Moscow Exchange and Eurex, the derivatives arm of Deutsche Börse Group, have signed a cooperation agreement for the trading of foreign exchange (FX) derivatives. Through this new element of the partnership between Deutsche Börse and Moscow Exchange, Eurex Exchange will launch Euro/Russian Rouble and U.S. Dollar/Russian Rouble FX futures on its trading system in Q4 2013.

Alexander Afanasiev, Chief Executive Officer of Moscow Exchange, and Andreas Preuss, Deputy CEO of Deutsche Börse and CEO of Eurex, signed a cooperation agreement for the new derivatives products in Frankfurt/Main today. Both partners will also jointly promote the launch of these two FX futures.

“We continue to deepen our partnership with Deutsche Börse, and are working together closely to provide our market participants with new instruments. Today we agreed to launch Rouble FX futures in Frankfurt. This opens up exciting new trading and hedging opportunities for investors. Also, this autumn, Moscow Exchange will launch futures on five German blue chip stocks. Cross-listing arrangements between Deutsche Börse Group and Moscow Exchange allow our clients to build new trading strategies and better manage their risks. We believe that our joint initiatives with Deutsche Börse will strengthen national markets and facilitate the continued development of Frankfurt and Moscow as financial centers”, said Moscow Exchange CEO Alexander Afanasiev.

“We are very pleased to have reached the next milestone of our partnership. This new cooperation fits perfectly into our goal to constantly expand our product offering as it will complement our planned FX product suite”, said Andreas Preuss, Deputy CEO, Deutsche Börse and CEO, Eurex.

Eurex will launch FX futures and options for six currency pairs on 7 October 2013. According to today’s agreement, Eurex’s product suite will be complemented with cash-settled futures for both Euro/Russian Rouble and U.S. Dollar/Russian Rouble currency pairs in Q4 2013. Upon expiry, Eurex’s Rouble futures will be settled using settlement prices provided by Moscow Exchange. This procedure is intended to reinforce the integrity of the futures contracts and provide investors with confidence that the settlement price is both fair and accurate.

In Q2 2013, the average daily volume for both products on the Moscow Exchange amounted to over 2 million contracts with a notional value of US$2.1 bn. In 2012, U.S. Dollar/Russian Rouble futures were the third most popular foreign exchange futures contract globally among traded currency futures, according to the Futures Industry Association.

Vega Chi set to widen FIXED INCOME product slate (

Vega Chi set to widen FIXED INCOME product slate (

Vega Chi set to widen product slate

Tim Cave

22 Aug 2013

Vega Chi, a three-year-old electronic bond platform operator set up by former Goldman Sachs executives, is set to expand into new fixed income products as it looks to capitalise on a regulatory environment which is promoting greater transparency around bond trading.

Vega Chi set to widen product slate

The London-based platform is “consistently examining various segments of the fixed income market…for potentially launching additional products and platforms”, according to its chief executive Constantinos Antoniades.

Vega Chi, which currently operates platforms for high-yield and convertible bonds in Europe and the US, is set to launch a new platform next year, according to Antoniades, though he would not provide details on the nature of the products to be traded.

Antoniades was previously head of European convertible bond trading at Goldman Sachs, and set up Vega Chi in 2009 along with former colleagues from the US bank. Venture capital firm Octopus Investments acquired a stake in February 2011, but Antoniades remains Vega Chi’s majority owner.

The firm launched a multi-lateral trading facility for European convertible bonds in February 2010, enabling institutional investors to trade directly with each other without having to go via brokers. It added European high-yield and subordinated bank debt to that platform in February 2012 and in October last year launched a new US high-yield bond venue.


Vega Chi only accounts for a small proportion of bond trading: the wide variety of bonds available make them ill-suited to electronic trading, while dealers are reluctant to give up profitable, voice-driven bond desks. However, G20-led reforms being enacted in Europe via the European Market Infrastructure Regulation and a revised version of the Market in Financial Instruments Directive — as well as tougher capital requirements — are conspiring to move fixed income trading away from OTC markets and onto electronic platforms.

The new rules have already led to a liquidity slump as dealers increasingly wind down their inventories — the stockpile of securities they hold in order to make markets. In the US, corporate-bond inventory held by banks had fallen from $218 million at the end of 2007 to $57.5 million at the end of 2012, according to data from the Federal Reserve Bank of New York.

Antoniades said: “We believe that the market place has come a long way in the last 12 months in terms of engaging in electronic trading platforms. In the last six months especially, we have seen strong interest in all our platforms from clients that traditionally have been on the sidelines as they seek the maximize their access to liquidity.”

The structural shift over the past year has seen a crop of new bond trading platforms, including BlackRock’s Aladdin platform, and revamped single dealer offerings such as Goldman’s GSessions and Morgan Stanley’s Bond Pool.

 Antoniades said he expects “sell-side firms to play a very big role” on Vega Chi platforms going forward.

–write to and follow on Twitter @TimCaveFN


Can Ibex and MIB maintain momentum?

Can Ibex and MIB maintain momentum?

The stock markets of Italy and Spain have enjoyed a spectacular summer rally, rising by a massive 15 per cent in a few weeks. While the rises have been meteoric, both indexes are now approaching areas where they have failed in the recent past. The question is whether this time will be different.

While traditional indicators, such as the relative strength index (RSI) and Slow Stochastic, have both markets firmly in overbought territory, on the Kase peak Oscillator, neither has yet reached that point. Although they are approaching such a scenario if the rally continues.

The below chart shows the daily Ibex cash and MIB futures. In order to become overbought the green oscillator must move beyond the red line.

Daily Ibex cash and MIB futures


With the Slow Stochastic at such high levels it will take little in way of a down day to create a crossover back down. This will encourage top pickers, especially if traditional divergence patterns or Doji‘s appear. Experience tells us that these indicators of a top are usually premature and need to be confirmed by more robust methods, such as the breaching of support points. The respective fair value charts clearly show where these breakdown points are located. Currently price is above the long term fair value point of the downtrend that began in 2010. This lies at 8,517, which coincides with the point of most time in the current upper portion of the uptrend that began a few weeks ago.

Price must close below this point to indicate that the trend has switched back down, and thus would create a target of at least 8,265. While a normal bar or candlestick chart points to a bullish breakout, a major resistance lies just above at 8,920. With price approaching overbought, any break above this level in the near future must be treated with caution.

120-minute Ibex fair value


The MIB Future is currently approaching an area of huge resistance that was created by the slump which began in 2007. New highs above 17,900 need to be treated with caution as a bull trap lurks just above 18.090, especially with the market approaching overbought.

However, in order for the market to actually turn bearish, it needs to break back down below 16,350. The conclusion for both markets is that there is still room for some hard fought gains, but investors who are long need to be lightening exposure. Failures at resistances at the bull traps remain the best policy for those wishing to get short as the breakdown points remain distant.

MIB Future 180-minute fair value


Shaun Downey is technical analyst-in-residence at Global Macro Trader.

OSC Staff Notice and Request for Comment on Proposed Trading Structure

OSC Staff Notice and Request for Comment on Proposed Trading Structure

On August 13, 2013, the Ontario Securities Commission Staff (OSC) published, for a 45 days public comment period, a description of the trading features that are part of the trading ecosystem that we propose to implement as part of our mission to build a new exchange in Canada. The comment period will end on Friday September 27th 2013. We commend the OSC for this initiative as it complements our approach of dialogue with industry stakeholders.

The trading features identified by the OSC Staff, while a subset of the proposition that we intend to bring to the marketplace, are an intrinsic part of our integrated trading solutions seeking to restrict predatory trading and promote liquidity through committed and sustainable market making.

OSC Staff Notice and Request for Comment can be found here.

A short description of Aequitas’ point of view can be found here.

Taking Actions

Our initiative is a unique opportunity for all stakeholders in the industry to participate in building our marketplace of tomorrow. For us, it is all about re-establishing a fair balance among the various stakeholders and promoting quality markets.

Making your voice heard is important. You can do this in multiple ways:

Send in your own comment letter to the OSC;
Provide responses to our multiple choice questionnaire and send it to the OSC;
Sign the Aequitas Letter of Support, which we will send to the OSC with all of the signatories identified.

Singapore exchange to trade RMB shares

Singapore exchange to trade RMB shares

The Singapore Exchange will begin trading its first renminbi-denominated shares next month, in a boon for the Asian exchange which is looking to become an offshore hub for the Chinese currency.

Singapore exchange to trade RMB shares

The exchange said today that Yangzijiang Shipbuilding, China’s second-largest shipbuilder, will begin trading its shares in renminbi on August 5 on SGX‘s dual currency platform. Investors will continue to be able to trade Yangzijiang Shipbuilding, which listed on SGX’s main board in 2007, in Singapore dollars.

In a statement issued Thursday morning, Magnus Böcker, chief executive of SGX, said: “This is an exciting and positive development for Singapore as an offshore RMB centre. It also demonstrates how SGX is contributing to the infrastructure and capabilities required for issuers and investors to tap on opportunities offered by China.”

In the same statement, Ren Yuanlin, executive chairman of Yangzijiang, whose operations are largely based in China, said: “We always want our existing and potential investors to have more freedom and flexibility to buy our shares and with this dual currency trading, SGX has given the necessary platform needed for that.”

The SGX dual currency platform allows a listed security to be traded in two different currencies and for the shares to be consolidated within one settlement depository. The service, launched in March 2012, makes it more efficient for foreign investors wishing to trade a Singapore-listed stock by allowing them to do so in their local currency. SGX offers dual currency trading in Singapore dollars, US dollars, Hong Kong dollars, Australian dollars and renminbi for company listings and exchange-traded funds.


Yangzijiang Shipbuilding is the second company to begin trading on SGX in two currencies after container port business Hutchison Port Holdings Trust added Singapore dollars to its existing US dollar-denominated listing in March last year. Seven exchange-traded funds also trade on SGX in two currencies.

Today’s development is a boost for SGX which has aspirations to become an offshore hub for the renminbi after its attempt to merge with the Australian Securities Exchange was blocked by the Australian government in 2011. The bourse already offers investors access to China’s A-share market through index futures and began offering depository services for renminbi-denominated bonds in May.

SGX is the 10th largest of the 17 Asia-Pacific exchanges tracked by the World Federation of Exchanges when measured by domestic market capitalisation, at the end of June.

On Tuesday, the exchange reported a 43% rise in fourth-quarter net profit due to strong revenue growth in all its key businesses ̶ its best results since 2008.

 –write to and follow on Twitter @michelleprice36
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