FiNETIK – Asia and Latin America – Market News Network

Asia and Latin America News Network focusing on Financial Markets, Energy, Environment, Commodity and Risk, Trading and Data Management

February 10, 2012 • 9:04 am 0

Fidessa on Latam Trading – Opportunities and Challenges

Electronic trading in Latin America continues to be a hot subject, with action moving beyond Brazil to other countries. Low-Latency.comspoke to Fidessa’s head of business development for the region, Alice Botis, to get an update, and a handle on low-latency initiatives in the marketplace.

Q: Can you start by some scene setting – where is the electronic trading action in the Latam market?

A: Electronic trading is already well established in ;Brazil, Mexico and Chile, and with the introduction of MILA, both Colombia and Peru have also adopted FIX order routing. Colombia has not yet opened their market to allow FIX connectivity to third-party network providers, but they are looking forward to making that available in 2012-2013.

In Peru, the decision to make FIX connectivity available to third-party network providers is still pending regulatory approval, but if approved, they expect implementation to move swiftly.

Buy-sides in Latin America have been slow to adopt electronic order routing, but where they have, they often still pick up the phone to have a conversation with the trader for local colour. But, by having electronic connectivity, the sell-side is able to enter the order into their OMS and send unsolicited notices of execution back to the client which minimises manual errors.

The move toward the adoption of electronic order routing in Latin America is significantly driven by the desire to attract international order flow and to make trading in Latin America as seamless as trading in other mature markets.

Q: Where does Fidessa have operations, and connectivity? What’s the latest news on that front?

A: Fidessa recently opened an office in Sao Paulo to serve our clients in Latin America, including Mexico. The office was opened to provide on-the-ground technical and production support to our local clients. Our plan is to continue building out the appropriate infrastructure to offer data centre hosting, hosted services such as a local ticker plant and a local network hub to facilitate North, South and local order routing and execution. We will also be hiring local staff to ensure support in both Spanish and Portuguese.

We currently have 21 receiving brokers in Latin America concentrated in Brazil, Mexico, Chile and Colombia, and we are in discussions with several others in the region to join the Fidessa network.

Q: What are the infrastructure challenges of working in Latam?

A: The greatest infrastructure challenges are being seen by international players looking to gain access to the local markets. There are many challenges, such as hardware and telecom acquisition, so they seek the expertise of local brokers, custodians and technology vendors to help them put the appropriate infrastructure in place to start trading.

It is important to understand the workflow the client is looking to facilitate to assure a balance of cost and speed. As demand in the region continues to increase, things will only get easier, and we can hope, with scale, less expensive.

Q: Focusing on Brazil, it looks like competition is heating up there with Bats and Direct Edge planning to take on BM&FBOVESPA. What opportunities does this open up for Fidessa?

A: With the introduction of fragmentation comes the increased responsibility for brokers to provide best execution to their clients. In some markets, the exchanges themselves will be mandated to provide aggregated quote data and routing to the best price, but even in these markets, brokers will compete for business by aggregating the data feeds and connecting directly to each market themselves to more quickly identify and access best price and volume.

Whether you are an international player who has experienced fragmentation in other markets or a local player who has never had to overcome this challenge before, there will be a significant investment in time and money to accommodate the data feed, connectivity and smart order routing requirements. Working with experienced vendors in other markets like Fidessa, who has worked with Bats and Direct Edge, can provide a time to market and cost advantage to implementing the required technology and infrastructure.

Q: Are Latam markets looking to invest in low-latency technologies and offerings in a similar way that markets in North America and Europe have? Is this ‘me too’ or are they learning from others’ experience and doing things differently?

A: Brazil, Mexico and Chile have all made significant investments in their exchange technology to provide lower latency, higher throughput execution for their participants, setting the stage for algorithmic and HFT participation in their market. Brazil is leveraging the experience and expertise of the CME by partnering with them for the implementation of their new multi asset trading engine. Chile has extended their proprietary technology along with partnerships with technology providers like IBM for their low-latency messaging, and Mexico ;is enhancing their proprietary technology to provide significant improvements to latency and throughput.

Brazil has seen the highest rate of clients seeking to set up local infrastructure to facilitate low-latency market access for algorithmic and HFT participation. But, there is a delicate balance that firms are trying to find between investment in low-latency technology and return on investment on that technology purchase. That said, the amount of high frequency trading participation in the region as a whole is still growing, so as volume continues to increase, so might the returns on those technology investments.

Q: What about regulatory oversight for all of these developments? Is there a MiFID in the works for Latam?

A: There is not currently a regional regulation such as MiFID or Regulation NMS for best execution in place because Latin America is not yet fragmented. However, each country does have its own regulatory rules in place to oversee the various different types of order flow and assure quality execution for retail transactions.

In Chile, for example, there are three exchanges that are not electronically linked. The brokers are not obligated to provide best price. As long as they demonstrate they are trading on the primary exchange, and provide the best price along with the executed price on the confirmation, they are in compliance with the local rules.

As fragmentation is undoubtedly coming to LatAm, I do believe you will see local regulators augment their current rules to protect their market participants.

Q: What do you expect to be some other specific developments in the coming year in Latam, for the markets and for Fidessa?

A: As far as market changes that might affect the region, the potential addition of Mexico to the Integrated Latin American Market (MILA) will certainly affect the development of the region. Mexico has already signed a letter of intent to join MILA, and if they do, it will further drive connectivity in the region and the need for trading systems to manage higher volumes and provide multi-regional orders and execution capabilities.

The region is very dynamic with growth, change and investment, and we are excited to be working with partners in the region who are driving the extension of our trading services to accommodate their growth and success.

Source: Low Latenency, 08.02.2012

Filed under: BM&FBOVESPA, BMV - Mexico, Brazil, Chile, Colombia, FIX Connectivity, Latin America, Mexico, Peru, Trading Technology, , , , , , , , , , , , , , , , , , , , ,

December 16, 2011 • 11:45 am 0

NYSE Technologies opens Tokyo liquidity centre

Nyse Technologies, the commercial technology division of Nyse Euronext, today announced the opening of its latest Liquidity Center installation located in Tokyo, Japan.

With growth in Asian markets outpacing many others in the world, the NYSE Technologies Tokyo Liquidity Center offers customers the ability to access these markets with unparalleled speed and reliability with minimal infrastructure costs and a dramatically decreased time to market of only a few weeks to begin trading.

As a result of several recently deployed trading platforms and enhanced data feeds, Tokyo markets have experienced increased trading activity and a consolidation of liquidity from a robust community of traders and vendors, many of which are already members of the Metabit network acquired by NYSE Technologies in September 2011. Through the Liquidity Center’s low-cost, high performance product suite, customers can access key Asian markets, market information and other essential electronic trading infrastructure services utilizing NYSE Technologies’ SFTI network and other familiar infrastructure services, including the Capital Markets Community Platform. The Tokyo Liquidity Center joins existing facilities in the U.S. and London with additional centers launching in Toronto and Brazil in the coming months.

“In working with our customers to identify their primary trading needs and opportunities, we found that Tokyo and the surrounding Asian markets were a very high priority,” said Stanley Young, CEO, NYSE Technologies. “Our Tokyo Liquidity Center addresses those needs with a powerful blend of proven, familiar NYSE Technologies services with seamless connections to all major Tokyo markets. With little to no hardware investment or complicated maintenance, we can have customers connected in just a few weeks as compared to the challenging expense and arduous process of designing, building and maintaining a similar infrastructure themselves.”

The NYSE Technologies Tokyo Liquidity Center was built to facilitate seamless access to key markets and market information in Asia, including the Tokyo Stock Exchange’s new Tdex+ system and arrowne arrownetTM network. Offering a fully managed, broker neutral trading infrastructure solution that utilizes the technology expertise and customer network recently acquired in the Metabit transaction, the liquidity centers also feature many of the same components customers already use to access NYSE Euronext’s global exchanges. Each installation will feature a turn-key portfolio of trading products that include full-featured connectivity, market data, order transmission and risk management services with world-class customer support.

About the Liquidity Center Network
The NYSE Technologies Liquidity Center Network was created to provide a base set of trading, data and connectivity applications that enable traders to quickly and easily enter key global markets that may have been prohibitively difficult or expensive to access in the past. Customers will benefit from reliable, cost effective low-latency solutions for trading and market data services. Strategically located around the world, these facilities will offer many of NYSE Technologies core services, including Metabit MLH which provides low latency, risk-managed access to markets; SuperFeed™, an industrial strength, high-performance market data ticker plant and distribution system; and Marketplace™, one of the largest and most diverse FIX-based trading communities with more than 1,200 market participants.

Source, Finextra, 15.12.2011

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

November 21, 2011 • 10:57 am 0

Mexico´s Exchanges take huge steps to boost High-Speed Trading.

The Mexican Exchange, which is the second largest exchange in Latin America, announced a number of strategic and technology initiatives designed to promote foreign investment in the Mexican financial markets and its position as a Latin American leader in high-frequency trading.

While Brazil continues to be the hottest emerging market in Latin America, the Mexican Exchange (BMV Group), is taking huge steps to boost its growth in the high-speed marketplace.

The Mexican Exchange, which is the second largest exchange in Latin America, announced a number of strategic and technology initiatives designed to promote foreign investment in the Mexican financial markets and its position as a Latin American leader in high-frequency trading.

Mexico now provides worldwide participants with seamless, high-speed and efficient access through low touch direct market access (DMA), high speed co-location services, and FIX standard protocol for order routing and market data Part of Mexico’s success is down to its determination to improve its operative rules to better comply with international market standards, as well as adopting new technology.

In 2012, the Mexican Exchange will announce the launch of a new trading engine, internally developed. This multi-market, multi-asset, flexible and scalable trading engine has throughput of more than 200,000 messages per second. The trading engine will be ultra low latency, executing trades in 100 microseconds roundtrip (improvement over 25 milliseconds on legacy trading system). Full deployment is planned for Q2 2012. Further in 2012, The Mexican Exchange will introduce several new initiatives including midpoint hidden order book trading, aimed at institutional investors looking to trade large blocks anonymously with reduced execution risk. Simpler cross order rules will also be implemented; all stocks, global market equity securities and debt instruments will be crossed within the best bid/ask spread with no intervention. And, VWAP executions for the day will be able to be entered from 8:00 AM CT to 2:40 PM CT.

Recently, the Mexican Exchange has established major alliances broadening investment opportunities in the Mexican market. The Mexican Derivatives Exchange (MexDer) and the Chicago Mercantile Exchange (CME) established phase one, “south-to-north,” of its strategic order routing agreement, giving Mexican investors access to CME Group’s benchmark derivatives contracts, including interest rates, foreign currencies, equity indexes, energy, metals and agricultural commodities.

Phase two of the partnership, “north-to-south,” now in place provides CME Group customers with access to MexDer benchmark products, including Mexican Stock Exchange Index futures, bond futures and MXN Peso / US dollar futures contracts.

Source: Wallstreet&Technology, Melanie Rodier, 18.11.2011

Filed under: BMV - Mexico, Exchanges, Latin America, Mexico, , , , , , , , , , , , , , , , , , , , , , , , , , , ,

November 16, 2011 • 1:56 am 0

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

November 12, 2011 • 3:02 am 0

Mexican Market Leaps Forward – FIX, Technology, Co-Location and Regulation

In the last 12 months dramatic changes have occurred at Mexico’s stock exchange and among its brokerage clients. Cross border partnerships, technology upgrades, new FIX infrastructure and business friendly regulatory changes have opened the Mexican market to high frequency trading (HFT).

While US regulators can be seen to scold HFT firms, the Mexican market has opened its arms. The Mexican Exchange (BMV) and its brokerage firms have upgraded their infrastructure and sought business opportunities north of the border. Earlier this year after the CME Group and the BMV signed their partnership, high frequency traders on the CME Globex trading system began to route orders to the Mexican Derivatives Exchange or MexDer. Today 90 percent of average daily volume on the MexDer comes from high frequency traders north of the border.

Mexico’s brokerage firms have completed significant infrastructure upgrades. Last spring only a few brokers in Mexico could handle a highfrequency hedge fund client and many Mexican brokers could process no more than one connection to the Bolsa Mexicana de Valores (BMV) at a time. The landscape has changed quickly and improvements in broker and exchange systems have ushered in a new capacity for speed in the transmission and execution of orders in Mexico.

Over the summer a major milestone occurred for the industry. Working with the BMV, Mexico’s brokers completed an industry-wide upgrade to FIX 4.4. The top 25 brokers are now certified with FIX 4.4 to the BMV. Leading the way, are brokerages like GBM, Interacciones, Actinver, UBS Mexico, IXE and others.

Now that Mexican brokers speak FIX 4.4, all of the order routing to the BMV can now be done through FIX allowing the BMV to retire the antiquated SETRIB protocol. The only way the BMV will allow Mexican brokers to continue to use SETRIB is by paying excessive fees, and even this will not be allowed by the end of 2011. Retiring SETRIB sets the stage for more positive changes in the industry and at the BMV.

Work is already underway to upgrade the BMV’s trade matching engine. The existing engine was built in the 1990s for a Tandem mainframe. Retiring the Tandem has many benefits. Faster order matching and processing is high on the list. In addition, more choices for application and software vendors and significant cost savings are expected. Retiring the mainframe will also eliminate the scheduling nightmares associated with the limited availability of the central mainframe for testing with the broker community. The new matching engine will be hosted on modern Unix based hardware. The release of the new matching engine and infrastructure is planned for the first quarter of 2012.

Another important milestone is the availability of a state-of-the-art co-location facility at KIO Santa Fe. The BMV infrastructure is located here and starting in October it will be easy for brokers and third party providers to collocate order routing and market data in this hosting facility leading to high throughput low latency services.

While all of the infrastructure and matching engine upgrades are momentous, they would bear no fruit without the simultaneous modernization of Mexican regulations. The initiative to modernize Mexico’s regulations, called RINO, began a year ago and phase two is due to rollout in the fall of 2011. The goal of RINO is to conform Mexican regulations to international standards. By converging with international standards, regulators hope to bring more international order flow and greater liquidity to the market, resulting in increased investment in the Mexican market.

While regulations in the US like Sarbanes Oxley and Dodd-Frank can be seen to drive businesses offshore, the regulatory changes in Mexico are removing handcuffs from businesses and facilitating opportunities. The first step forward occurred early this year with RINO I. RINO I allowed brokers to have multiple channels to the BMV’s electronic trading system. Previously all orders were in a single queue. Multiple access points per broker provides more flexibility in executing strategies and handling client requests, including separate BMV channels for program trading and orders called into the trading desk. RINO I also eliminated sizebased criteria from order management,  thus leveling the playing field in the processing of orders. RINO II takes effect on October 10, 2011, bringing more modernizations including pegged orders, improvements in crossing operations, average price operations, price delivery regardless of volume, and decimal bids for fixed income securities.

Crosses, in which a brokerage carries out a transaction through the stock exchange between two of its clients, were permitted previously but the rules were very arcane. Starting in October, the crossing operations will be vastly simplified allowing clients to simply choose whether to cross inside or outside the spread. With this modernization, the BMV hopes to repatriate orders that brokers would previously carry out in the US, where crossing orders was possible using ADRs in dark pools or at the NYSE.

In addition the RINO II regulations a very important new mid-point hidden book order. The orders execute at the midpoint, broker anonymity is guaranteed and the order priority is determined by volume. This is effectively a dark pool. Similar to Xetra, this new BMV order helps the market participants and simultaneously protects the BMV from  providers toying with moving into the Mexican marketplace.

As the regulations modernize and the FIX infrastructure hardens, opportunity beckons. Brokers are beginning to push for more high frequency trading algorithms, more efficient routing of international orders, and more sophisticated risk controls, all of which will attract even more international business. As the need for speed grows, co-location previously offered by the exchange may become more strategic, particularly to brokers wanting to attract high frequency traders.

All of this progress was made possible in large part because of the exchange’s demutualization and subsequent listing in 2008. The demutualization coincided with rule changes allowing Mexico’s pension funds or AFORES to invest. Before the rule changes, the AFORES were forced to invest almost entirely in short-term government paper. Today, Mexico’s pension funds are allowed to invest up to 25 percent, in individual stocks and shares and 12 percent in a hybrid of corporate debt and equity capital to allow companies to raise funds to expand businesses.

Considered together, regulatory improvements and infrastructure updates have morphed the BMV and the Mexican brokerage community into a thriving and modern marketplace. The BMV reported a 22 percent jump in earnings last year, with operating income increasing 70 percent in the last three months. A record six initial public offerings made it to market last year and overall trading volumes rose 50 percent in 2010. This year Mexico’s IPC index has tested and hovered near record highs.

In 2011 there are fewer IPOs, but trading volume remains strong. The order-routing agreement signed with Chicago’s CME Group has opened Mexico’s derivatives market to the world. Now, electronic trading infrastructure and investor friendly regulations have set the stage for act two.

Latin America has enjoyed a strong recovery for the most part it has sailed through the recession without lasting damage. Boosted by capital inflows, by record prices for commodity exports, by sound policies and by a heady expansion in domestic credit, the region saw economic growth of 6% last year and is on course to notch close to 5% this year. The region faces slower growth but not disaster. To up the pace, now is the time for reforms to boost productivity.

The main engines for growth in Latin America are China’s demand for minerals, food stuffs and raw materials – this looks set to continue – and consumption as tens of millions edge out of poverty and benefit from newly available credit.

Source: FIX Global Trading, 15.09.2011

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Filed under: BMV - Mexico, FIX Connectivity, Latin America, Market Data, Mexico, News, Risk Management, Trading Technology, , , , , , , , , , , , , , , , , , , , , , , , , ,

October 19, 2011 • 2:01 am 0

Brazil: High Frequency Trading in Brazil: Mirage or Miracle?

Christian Zimmer, Head of Quantitative Trading and Research, and Hellinton Hatsuo Takada, Quantitative Trader, of Itaú Asset Management reveal the truth about high frequency trading in Brazil.

Conference panels, discussions and articles on High Frequency Trading (HFT) generally start with its definition. The term HFT is like ‘Cleopatra’ – sexy and mysterious and everyone is keen to know more about it. But the term HFT speaks for itself, so is it wasting time to go over it again?

Probably, because the term ‘high’ only has meaning relative to an external point of reference, just like cold, hot, sweet or other adjectives. This subjectivity is all the more interesting, as it is extremely difficult to measure an investor’s  brief holding period in most financial markets and, therefore, determine if it really is ‘high’. Unlike in the US, where the exchanges do not register the origin of the trade, Brazilian regulation allows BM&FBOVESPA to identify the final client on every trade. Consequently, it is much easier to measure the holding period of an investor for each asset. Also, this rule is the means by which the exchange determines whether an investor’s trade is classified as a ‘day trade’ and is thus eligible for reduced fees.

Naturally, BM&FBOVESPA does not classify a trader opening a position in the morning and closing it at the end of the day as a high frequency trader. There should be far more trading than this to qualify as HFT.  But how much more? It depends on the exchange’s criteria and reference point for ‘high’.

Figures for HFT published by BM&FBOVESPA in their April 2011report show 3.9% of the BM&F segment is high frequency and 5.9% of the BOVESPA segment. Consequently, the reduced fees are presented to the Brazilian trading community as less of an issue, as they say there is evidence of HFT taking hold. But HFT volume is not really increasing and is still far off the US figures which are often cited at around 60-70%. After carefully observing BM&FBOVESPA market prices, it is easy to conclude that it would take some time (possibly hours) to have a change in the prices sufficiently large enough to pay the transaction costs.Remember that HFT strategies are very sensitive to transaction costs.

Our suggestion is to step away from making subjective references to ‘high frequency’. Instead, one should look at the underlying trading strategies. The incentives an exchange should create to attract flow must be adjusted to the strategies that are really needed. Each strategy deserves a different set of policies and this will help the diversification of the traders’ strategies.

A trader using a market maker strategy can live with exchange fees as long as the bid-ask spread is sufficiently high. If the spread narrows, the costs become crucial and the exchange must lower the fees in order to keep this client in the market. On the other hand, a directional trader has different issues; if the fees are high, a trader must wait longer for a relevant price move so that they can capitalize on their position. Contrary to the market maker, the directional trader loves to see narrow bid-ask spreads. There would be no need to lower fees when the spread is close. The same is true for the statistical arbitrage traders.

When looking at the third party analyses of HFT in the international markets, we often see that the most common strategy is the market maker approach. This fact is strongly influenced by market fragmentation, which we do not have in Brazil. Fragmentation creates new intermarket trades, which could qualify as arbitrage trades, but not necessarily as market maker trades. Fragmentation also makes exchanges and other venues compete for the customers that provide liquidity and, as a result, give incentives to market makers. As mentioned above, Brazil does not have a fragmented market and BM&FBOVESPA does not see it necessary to ask for more liquidity. At least not as long as international capital flows are strong and increasing. Liquidity is needed in second tier shares and below.

It remains to be seen whether the inventive BM&FBOVESPA program to exempt the officially designated market makers from exchange fees will be enough to stimulate other participants to trade. At least theoretically, this provides an entry/ exit point for statistical arbitrage traders. However, as long as the allowed spreads can be as large as 1%, the strategy might not be necessarily profitable. At this moment it is worth noting that most of the Brazilian statistical arbitrage trades are longshort trades in stocks focusing on preferred-common stock relationships (in Brazil they are known as PNON, with PN standing for preferred stocks and ON for common ones).

It is also interesting to look at statistical arbitrage trades that are latency dependent, i.e. true arbitrage trades. Are these the ‘true’ high frequency traders? If there are only a few trading opportunities per day, it does not seem as if BM&FBOVESPA could classify them as high frequency. Latency sensitive traders typically use what the exchange refers to as the DMA3 (clients directly sending orders through a connection to the exchange) or DMA4 (co-location) categories. Trades through these categories can easily be measured. Unfortunately, the ability to measure the latency sensitive flow is lost because the DMA3 category is also used for any direct sponsored customer trades, so all that remains is to  measure the flow from the co-location model.

If we use the DMA4 numbers as the reference point for HFT, then we reach a HFT participation figure of 2.8% in the BM&F segment and about 2% in the BOVESPA segment (as at April 2011). The BM&FBOVESPA DMA4 measurements are significantly lower than their HFT percentages. This suggests they accounted additional strategies into this pool, such as market making strategies. Theoretically market makers could have contributed to this figure, but because of a very narrow spread in the high volume stocks and high fees, it is reasonable to assume that the market making strategy does not contribute too much to the HFT volume.

One might argue that there are still the directional trades. Yet, as this strategy needs a certain price move before it can make money and the number of trades per day is limited. On the other hand, the number of traders that might be using this strategy is not limited, as the models are nearly all different. There are only about ten Brazilian players able to successfully run intraday directional trades. Perhaps we should conclude that the international players have better models or a better understanding of the market?

Recently, BM&FBOVESPA announced a new pricing model for high-frequency traders, which uses the Average Daily Trading Value (ADTV) to calculate fees in its equity market. Fees range from 0.019% for R$20 million ADTV up to 0.01% for firms trading over R$500 million ADTV. Ironically, almost no firms were able to qualify as ‘high frequency’ players within the exchange’s cost reduction program.

Source:FIXGloabalTrading, 15.06.2011

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

September 20, 2011 • 11:48 pm 0

ITG Launches Algorithms for Mexican Equities

Investment Technology Group, Inc. (NYSE: ITG), a leading agency research broker and financial technology firm, today announced the launch of algorithms for Mexican equities, including the proprietary Active algorithm, which has been customized for the structure and spread profile of the Mexican market. The algorithms are available via ITG’s award-winning Execution Management System, Triton®, as well as other widely used trading platforms and via FIX connection.

“Regulatory and technological changes are accelerating the move towards electronic trading in Mexico, and our tailored algorithms provide a valuable new tool for institutional asset managers seeking to access that market,” said Jeff Bacidore, Managing Director and Head of Algorithms at ITG. “These algorithms are designed to reduce market impact, maximize execution quality and improve trading performance in the Mexican equity market.”

The Mexican algorithms complement ITG’s growing Latin American trading capabilities. ITG offers a full suite of algorithms for Brazilian equities, including Active, Flexible Participation, Volume Participation and the recently added Peg & Pounce algorithm. Peg & Pounce empowers traders to take liquidity opportunistically when the size is available and supply liquidity passively when liquidity is not available.

Source: Bobsguide, 20.09.2011

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

September 1, 2011 • 8:08 am 0

NYSE Euronext Completes Acquisition of Metabit

NYSE Euronext (NYX) announced September 2 the completion of its acquisition of Metabit, a leading Tokyo-based provider of high performance market access products with a trading community of more than 140 trading firms throughout Japan and Asia. As announced previously on Aug. 1, 2011, Metabit will operate as a product line within the NYSE Technologies portfolio (further enhancing service to the Asia-Pacific region). Terms of the acquisition were not disclosed.

Daniel Bürgin, formerly CEO of Metabit, will head the NYSE Technologies Asia business and report to Stanley Young, Chief Executive Officer of NYSE Technologies. Peter Tierney, Managing Director of NYSE Technologies will become the Chief Operating Officer of the combined business in Asia, and he, with Mr. Bürgin, will lead the Asian business operations.

Source: NYSE Technologies, 01.09.2011

Filed under: Asia, FIX Connectivity, Hong Kong, Japan, News, Trading Technology, , , , , , , , , , , , , , , , , ,

September 1, 2011 • 12:27 am 0

Deutsche Börse to offer 10Gbit/s trading and market data connections for the first time

Deutsche Börse is expanding its portfolio of trading and market data connections to include bandwidth of 10 Gbit/s for connectivity to the Eurex derivatives market and the Xetra cash market.

This measure is part of the continuous development of Deutsche Börse’s system landscape which is particularly focused on minimising latency for transactions and data feeds. By raising the bandwidth to 10 Gbit/s using ultra-low latency network technology, the network run-time for co-location clients will be significantly reduced and as consequence, liquidity on Eurex and Xetra should further benefit.

The 10 Gbit/s connectivity will be realised based on standardised cable lengths, guaranteeing all co-location clients the same conditions for minimal latency. Clients who apply for a 10 Gbit/s connection by 17 October 2011 will be able to use it immediately from the launch on 12 December 2011.

Source: WFE, 30.08.2011

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

August 3, 2011 • 8:46 am 0

CME and MexDer implement north-to-south order routing

CME Group, the world’s leading and most diverse derivatives marketplace, and the Mexican Derivatives Exchange (MexDer), the derivatives subsidiary of the BMV Group and second largest exchange in Latin America, today announced the successful launch of their north-to-south order routing agreement, giving customers in the U.S. access to MexDer’s benchmark derivatives contracts, including Mexican Stock Exchange Index Futures, Bond Futures and MXN Peso / US Dollar Futures Contracts.

The first phase of CME Group’s strategic partnership with MexDer went live April 4, 2011 and gave Mexican investors access to CME Group’s benchmark derivatives contracts including interest rates, foreign currencies, equity indexes, energy, metals and agricultural commodities.

“Mexico is the 13th largest economy in the world and we continue to look for opportunities to provide our customers around the world with the broadest and most diverse range of globally-relevant products to help them manage their risk,” said Phupinder Gill, CME Group President. “This next phase of the partnership demonstrates how we continue to build on our successful track record of growing our business internationally through strategic partnerships.”

“With the successful launch of South-to-North order routing in April, the second phase of the direct order routing connection now makes it possible for both of our customers to leverage access to both MexDer and CME Group, and take advantage of a modern market with a friendly regulatory framework in Mexico and a growing sophisticated local investor base,” said Luis Tellez, Chairman and CEO of BMV Group. “Our goal moving forward is to focus on increasing our volumes together and working more closely with each other to learn how we can meet the needs of our customers.”

In March 2010, the parent company of MexDer, BMV Group, and CME Group entered into a strategic partnership that includes order routing for derivatives products as well as an agreement to pursue potential joint initiatives including product development, marketing and customer education as well as clearing opportunities. CME Group is the exclusive exchange provider of derivatives order routing services to MexDer outside Latin America, and MexDer is the exclusive exchange provider of derivatives order routing services to CME Group in Mexico.

Source: BMV 01.08.2011

Filed under: BMV - Mexico, Exchanges, FIX Connectivity, Latin America, Mexico, News, Risk Management, Trading Technology, , , , , , , , , , , , , , , , ,

August 2, 2011 • 10:08 am 0

NYSE Euronext Accelerates Growth in Asia with Strategic Acquisition of Metabit, a Leading Provider of Market Access Products

– Strategically complements NYSE Technologies’ product portfolio and Asian offerings

– Addresses growing customer interest and expanding Asian financial marketplace

– In-line with NYSE Technologies’ strategy of building a global liquidity network

 New York and Tokyo – August 1, 2011 – NYSE Euronext (NYX) announced today it has entered into a definitive agreement to acquire Metabit, a leading Tokyo-based provider of high performance market access products throughout Japan and Asia. Metabit will operate as a product line within the NYSE Technologies portfolio. The transaction is expected to close in third quarter of 2011. Terms of the acquisition were not disclosed.

Skilled with in-depth experience and understanding of financial markets in Asia, Metabit specializes in streamlined, low-latency technology solutions that enable industry-leading access to financial markets across Asia. Metabit’s products connect buy-side order flow with sell-side exchange participants and are designed exclusively for low latency direct market access (DMA) and exchange connectivity to markets through-out Asia. The company is headquartered in Tokyo, with offices in Australia and Hong Kong. Metabit has built a trading community of more than 140 trading firms in Asia.

“Metabit’s products are built in Asia for Asia, and this combination fits our strategy, our connectivity business and our customer interests,” said Stanley Young, CEO of NYSE Technologies. “Metabit has a highly experienced and respected management team, and we recognize and value the success Metabit has had in Asia, especially in Japan. We will continue the further development of this local focus while also maximizing the value of the NYSE Euronext brand and relationships.”

Mr. Young continued: “Furthermore, Japan and Asia are priorities for NYSE Euronext and we believe this is absolutely the right time to further invest in the region. We fully expect this transaction to accelerate our efforts as a leading technology provider across the Asia-Pacific region. We look forward to welcoming Metabit and its customers to NYSE Euronext, and to delivering the benefits of Metabit to our customer community.”

Daniel Burgin, CEO of Metabit, said: “Our combination with NYSE Technologies will be highly beneficial to delivering innovative solutions to our customers and to accelerate achieving our long-term business goals. We remain committed to our local business focus and service quality in Japan and throughout Asia, whilst being strengthened by NYSE Technologies’ product suite that is highly synergetic to our local solutions. The people and products of our combined companies will provide significant expertise and scale to NYSE Technologies’ business in the region. Joining forces represents a truly exceptional opportunity to build on our local success in order to increase our value proposition to our Japan and Asia customer base. We now have the opportunity to leverage our assets with NYSE Technologies and move to the next level. For the benefit of Asia-based customers, we will now expand our reach and capabilities globally.”

 Metabit’s Asia franchise has seen excellent growth as a result of a persistent product and client strategy and investments into Asia. Today, Metabit covers all DMA sectors outside Japan, ranging from China (“B” shares), India, Hong Kong, Korea, Singapore, Taiwan, Thailand, Philippines, Malaysia, Indonesia, Pakistan, Australia and New Zealand. Metabit’s products, being built in Asia for Asia, focus to connect the local broker community in each country, in combination with the traditional group of global trading firms. Metabit will continue to resell and provide support to users of CameronFIX as they have since 2002.

 Upon closing, Mr. Burgin will head the NYSE Technologies Asia business and report to Mr. Young. Peter Tierney, Managing Director of NYSE Technologies will become the Chief Operating Officer of the combined business in Asia, and together they will lead the business operations.

Source; NYSE Tech, 01.08.2011

Filed under: Asia, Australia, China, FIX Connectivity, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, News, Trading Technology, , , , , , , , , , , , , , , , , , , , , , , , , , , ,

April 9, 2011 • 12:55 am 0

Fidessa Launches Sell-Side Trading Solution for Mexico

April 7, 2011,  TheTrade Fidessa launched a new platform for brokers tailored specifically for trading in Mexico, following the introduction of new market regulations in September 2010.

Fidessa clients will have functionality for trading across asset classes that is compliant with new routing and order prioritization rules introduced by domestic exchange Bolsa Mexicana de Valores (BMV) in conjunction with trade body the Mexican Securities Industry Association and Mexican regulator, the Comisión Nacional Bancaria y de Valores. Specific to Mexico, the platform allows brokers to establish multiple channels to the exchange using separate FIX connections and supports all the new order types made available by the changes to regulation.

According to the BMV, “Average daily orders in the Mexican cash market have increased threefold over the past year, and as global investors look to Mexican markets for new opportunities, we remain focused on improving functionality and trading rules. By working with a company such as Fidessa, which has developed solutions to address regulatory changes like MiFID in Europe and RegNMS in the US, we are taking another big step towards increasing foreign interest and investment in Mexico.”

Source, Fidessa 07.04.2011

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

March 30, 2011 • 9:45 pm 0

Metabit Expands Asian Trade Connectivity

Tokyo/Hong Kong, 29 March 2011: In the past year, Tokyo-based Metabit has concentrated on building its connectivity across Asia.  The company aims to be the local face of execution destinations in Asia and over the past eight months, it has added an extra 13 domestic DMA destinations, expanding domestic and cross-border access to Asian markets.

“Metabit is at the heart of  connectivity in Asia” comments Daniel Burgin, CEO of Metabit, “not just for providing access to Asia for global players, but also in particular for the local and domestic  industry in this region.”

“For example, in India we have 20 execution destinations of which 10 are domestic Indian brokers.  We are similarly successful with increased connectivity in other countries such as Korea and Taiwan.”

Overall, Metabit’s trading access has been extended to many markets ranging from Indonesia to Pakistan and Mainland China to Australia.  The company now has access to over 250 execution destinations, across all active DMA markets in Asia, including Japan.

“We want to maximise connectivity to and within Asia for our client base, who can directly access all execution destinations across the major and emerging markets in Asia either through Metabit’s intuitive XiliX trading platform, or through our MLH via a single FIX connection.”

Burgin adds a final comment, “Situated where we are in Tokyo, with offices in Hong Kong, Dalian and Sydney, we understand the needs of Asia market players, whether they want to trade globally or locally. You could say the mindset of Asia is in our blood – we think Asia, so our clients can trade Asia.”

About Metabit

Uniquely placed in Asia, with global experience and a real knowledge of Asian markets, Metabit provides the technology and support to help clients trade and connect effortlessly and efficiently.  The company delivers an intuitive trading platform that encompasses a well-established trading community and unrivalled exchange connectivity solutions.

Metabit provides ultra low latency DMA trading solutions for Asian markets, serving buy side and sell side clients.  It specialises in comprehensive compliance controls, whilst reducing transaction times and facilitating trading opportunities across all major markets across 14 Asian countries, including Japan.

Metabit’s flagship solutions are XiliX intuitive buy side trading platform and MLH a vendor neutral Market Liquidity Hub.  Alpha provides ultra-low latency exchange connectivity and Exsim simulates Asian and Japanese exchanges.  All Metabit’s products are powered by the CameronFIX engine.

Source: Metabit, 29.03.2011

Filed under: Asia, Australia, China, FIX Connectivity, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, News, Singapore, Thailand, Trading Technology, , , , , , , , , , , , , , , , , , , , , , , , , , , ,

January 5, 2011 • 11:38 pm 0

Itaú Unibanco Asset Management Live on the Charles River FIX Network

Direct access to Brazilian brokers and international liquidity venues; automates trade execution.

January 5, 2011 – Charles River Development (Charles River), a front- and middle-office investment software solutions provider, today announced that Itaú Unibanco Asset Management (Itaú), the largest privately-owned asset manager in Brazil with more than US$ 128 billion of assets under management, is live on the broker-neutral Charles River Network for real-time, electronic trading via FIX (Financial Information eXchange). Itaú leverages Charles River’s low-cost, internet based Virtual Private Network solution for instant access to local sell-side brokers and global liquidity venues. Itaú is one of the first Brazilian buy-side firms to use the FIX protocol for accessing algorithmic trading strategies and handling block trades.

Itaú has been conducting a multi-phased roll-out of the Charles River Investment Management System (Charles River IMS) since 2008. This project, delivered on time, is part of Itaú’s initiative to eliminate manual trading processes and have a single, consolidated platform for order management and electronic trading. Itaú plans to connect its multi-market desks across Latin America to the Charles River Network, allowing traders in Santiago, for example, to execute trades in São Paulo via FIX.

Before Charles River IMS, Equity traders had to manually input trades in spreadsheets and send the orders to brokers, following-up with them over the telephone. Now, they can execute equity instruments in real-time directly from the Charles River Trader Blotter, sending a high volume of orders to local brokers and international liquidity providers, and automatically receiving execution details. The traders no longer rely on spreadsheets and instead of receiving a telephone call, all transaction details – prices, time stamps, fills and more – are instantly recorded in Charles River IMS.

Support for algorithmic trading was critical to the project. Itaú’s traders can directly access local and regional algorithmic strategies, assign algorithms to block trades, and route high-volume block orders to sell-side brokers. In addition, Itaú’s Quantitative traders can leverage proprietary algorithms and high frequency trading ideas for local executions directly from the Trader Blotter.

“Sell-side firms in Brazil are paying closer attention to domestic order flow – offering the buy-side more sophisticated algorithms and execution tools,” said Spiros Giannaros, Vice President-Americas, Charles River Development. “As electronic trading continues to evolve in Brazil, early adoption of the FIX protocol and implementation of Charles River’s integrated trading solution give Itaú a competitive edge. Charles River IMS allows Itaú to meet growing customer demands by increasing investment management capabilities, streamlining processes and reducing operational risk across the board.”

Charles River serves over 300 diverse investment management clients worldwide, including over a dozen firms across Brazil, Chile, Mexico and Panama. These include three of Brazil’s top 10 asset managers and the country’s leading fund administrator, as well as global investment firms establishing their footprint in the region.

Source: Charles River Development, 05.01.2011

Filed under: Brazil, FIX Connectivity, Latin America, Trading Technology, , , , , , , ,

November 24, 2010 • 9:59 pm 1

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

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