EU agree new trading reforms, introduce OTFs & curbs on HFT

* Establishment of Organised Trading Facilities (OTF) – restricted to non-equities, such as interests in bonds, structured finance products, emission allowances or derivatives.

* Limits on Commodities trading net positions – limit the size of a net position which a person may hold in commodity derivatives

* Curbs on High-frequency algorithmic trading: would have to have effective systems and controls in place, such as “circuit breakers” that stop the trading process if price volatility gets too high.

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Agency broking – BNP ‘Smart Dealing Service’

Interesting to see BNP launching a Broker neutral cross asset agency execution service for buyside firms.

The outsourced dealing solution is designed to meet an industry trend towards outsourcing from asset managers and owners, as they seek cost efficiencies in the face of heightened regulatory demands and increasing technology expenditure.

Carl James, managing director of BNP Paribas Dealing Services UK, says:

“The raft of regulatory requirements has, and will have a dramatic impact on markets, market infrastructure and their participants. We continue to see the search for liquidity get ever harder as markets fragment and banks withdraw further from putting balance sheets at risk.”

I am sure we will see this trend continuing.

Story here and here

AFME: European Market Liquidity conference

The Association for Financial Markets in Europe (AFME) are holding their 8th annual European Market Liquidity Conference in London this Wednesday.

It’s an excellent networking event with great speakers and topics (see here for our comments on last year’s conference) ,which this year include:

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Trends in e-Commerce and Electronic Trading 2012 – GreySpark Report (plus my thoughts)

GreySpark has just released the results of their Annual e-Commerce Report: ” Trends in e-Commerce and Electronic Trading 2012″.

GreySpark outlines that propositions must now evolve, or sellside franchises will decline. The new regulations have a significant impact on the growth of e-commerce and electronic trading. Continue reading

Mifid could be modified to include Systematic Internalisers & thus Single Dealer Platforms

Risk.Net has an interesting article today (extract below), quoting MEP Kay Swinburne, talking about modifying Mifid to accommodate systematic internaliser (SI), which has implications for Single Dealer Platforms.

“We think we can make the systematic internaliser (SI) category work for single-dealer platforms,” she says.

“We thought this was the better way – rather than amend the multilateral element of OTFs, we will try to adapt the SIs.”

SIs allow trades to be executed against the owner’s proprietary capital, and are not required to involve multiple market-makers – but they are not recognised by Mifid as a platform on which standardised OTC derivatives can be executed. Swinburne hopes to change that.

Full article here, (or use this link for google reach, and select first article) and our previous comments on this topic here

Single Dealer Platforms in a ‘confusing (regulatory) world’

A recent Caplin white paper, Single-Dealer Platforms in a Cleared World, and here we examined how SDPs were evolving to meet the new regulatory requirements for OTC markets.

The conclusion of the paper, being that SDPs would continue to thrive, providing clients with access to liquidity, both on a bi-lateral basis, as well as providing some form of SEF/OTF liquidity aggregation, and smart order routing through to mandated execution venues, as required for cleared products.

In recent weeks, some concerns have been raised (misplaced in my opinion) that Continue reading

StateStreet eExchange business launches SwapEx (SEF)

StateStreet Corporation, owners of Currenex, FXConnect and GovEx, which they manage under the umbrella of the StateStreet Global Markets eExchange Suite of trading solutions has today announced the launch of their SwapEx (SEF platform).

The platform which will leverage the existing technology platforms in their portfolio, will include: Continue reading