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

Latin America: Investor News Letter 17 November 2012

Mexico

Slim Acquires Controlling Stake in Real Oviedo, El Pais Reports

Billionaire Carlos Slim agreed to invest 2 million euros ($2.5 million) to acquire a controlling stake in Spain’s soccer team Real Oviedo, newspaper El Pais reported today.

Mexico lawmaker introduces bill to legalize marijuana
Sherwin-Williams to buy Mexico’s Comex for $2.34 billion
Mexico Third-Quarter GDP Rose at Slowest Pace in Over Year
Cemex Latam Falls in Bogota After $1.14 Billion Initial Sale
Mexican banks invest domestically
Mexico: Investors’ New China
TransCanada to build, operate Mexican natural gas pipeline; will invest US$1B

 

Brazil

Top names drop off list of Thyssen Americas bidders

FRANKFURT – Several top steelmakers are sitting out ThyssenKrupp’s auction of its U.S. and Brazilian mills and there appears little interest in the latter, suggesting the German firm may fall well short of its $9 billion asking price.

Eletrobras to take over bankrupt Brazil power utility
Cuba opens sugar sector to foreign management
Microsoft’s investment in Brazil to spur Rio research boom-execs
Telecom Italia looking at GVT, other opportunities
Wuhan Steel shelves plans to build Brazil mill
A new wave of Brazilian infrastructure investment
Brazil’s Itaqui port plans $3.2 billion upgrade
Rio Olympics, World Cup at risk with royalty bill, governor warns

 

Latin America

Paving the Way  High-­Tech Financial Infrastructure Hits LatAm

Foreign market leaders such as Fidessa, Direct Edge and Navatar are challenging local providers in the race to meet the booming region’s needs. The growth in size and sophistication of LatAm capital markets has both fueled and been fueled by the implementation of high-tech financial infrastructure in the region, as the hardware and software that have  been the foundation …

 Latin American yields fall further in a warning to bond investors
Impoverished Iberians, booming Latin America eye new relations
Africa and Latin America Still Fight Vulture Funds
More LatAm ETFs Your Broker Forgot to Mention
UN asks LatAm firms to grow with social responsibility
Private Equity Lures Pensioners as Bond Yields Sink
Argentina’s Debt Restructuring Argument Could Be Very Significant For The Global Economy
Argentina’s YPF 3rd-Quarter Profit Down 51% on Year at $159 Million
Bolivia Returns to the Global Bond Market
Chile pension fund-ordered estimate lowers Endesa Latam asset value
Chilean regulator to put new limits on pension fund investments
Germany’s Solarstrom enters Latin America with 2MW in Chile
Colombia opens criminal probe into Interbolsa collapse
Colombia’s Interbolsa brokerage to be liquidated
Public-Private Partnerships in Colombia: Scaling-up Results
Paraguay, Worst LatAm Economic Result of 2012
Peru May Invest About $5.2 Billion in Water, Wastewater Projects
Aeropuertos del Peru mulling over opportunities in Brazil and Chile
Overseeing Peru’s international appeal at ProInversión

Filed under: Argentina, Banking, Brazil, Chile, China, Colombia, Energy & Environment, Latin America, Mexico, Peru, Risk Management, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Latin America: Investors Newsletter 19 August 2012

Mexico

Diageo May Buy Jose Cuervo for $3 Billion, Sunday Times Reports
Mexico Ousts Brazil as Investors’ Top Choice in Latin America
Santander Bank’s Mexican unit files for U.S. IPO

Brazil

Overpriced Brazil to Be Profitable for Latam

Latin America and Asia

LatAm and Asia form bright spots for CitiIndia seeks to deepen trade ties with LatAm, Caribbean nationsChina to boost ties with Latin AmericaSpanish Companies Need Latin America For Economic ExpansionNo substitute for domestic strength in Latin AmericaIndia’s trade with Latin America may touch $50 billion by 2014

See also LIQ Latin America Infrastructure ALI Alternative Latin Investor  or MercoPress more information about Latin America.

Filed under: Argentina, Brazil, Chile, China, Colombia, India, Japan, Latin America, Mexico, News, Peru, , , , , , , , , , , , ,

Greater China Exchanges: Hong Kong, Shanghai and Shenzhen Stock Exchanges set up joint venture

Hong Kong Exchanges and Clearing Limited (HKEx), Shanghai Stock Exchange (SHSE) and Shenzhen Stock Exchange (SZSE) signed an agreement today (Thursday) to establish a joint venture (JV) in Hong Kong with an aim to develop financial products and related services.  The three exchanges hope this new venture will help promote the development of China’s capital markets, enhance the competitiveness of these markets and promote the internationalisation of the three bourses.

 The principal business of the JV will include, but not be limited to, the development and franchising of index-linked and other equity derivatives products; the compilation of cross-border indices based on products traded on the three markets; and the development of industry classification for listed companies, information standards and information products.  They will also include market promotion, customer services, technical services and infrastructure development.

Initially, the JV will develop a series of cross-border indices on which a family of index products will be introduced.  This series of indices will include a benchmark cross-border index comprising large Mainland enterprises listed on HKEx’s wholly-owned subsidiary.  The Stock Exchange of Hong Kong Limited, SHSE and SZSE, and two indices based on this cross-border index – an index comprising A-share constituents and an index comprising Hong Kong market constituents.  The index products will include equity index futures and options based on these indices and they will be traded on HKEx’s derivatives market.

The JV’s nine-member board will be comprised of three directors nominated by each of the exchanges.  SHZE and SZSE will each nominate a Joint Chairman from their representatives on the board.  HKEx will nominate the Chief Executive from its designated directors.

The JV will have an initial paid-up capital of $300 million, with HKEx, SHSE and SZSE each contributing $100 million.  The three exchanges will have equal shareholding interest in the JV.  The exchanges aim to establish the JV within three months from the execution of the agreement.

“Building on the many well-established ties among the three exchanges, the new venture will provide a new platform for our cooperation and we hope that it will contribute to the further development of Hong Kong and the Mainland’s capital markets,” said HKEx Chief Executive Charles Li.

“As China continues to open up and the RMB gradually internationalises, it is inevitable we will have to compete in the international capital market.  Our efforts to further cooperation with HKEx and develop products for the offshore market will bring about a win-win situation for both Hong Kong and the Mainland,” said SHSE President Zhang Yujun.

“The establishment of the JV will help increase foreign investors’ exposure to the Mainland market via Hong Kong.  In addition, the JV can help raise the Mainland capital market’s influence in offshore markets and provide opportunities to explore opening up measures,” said SZSE President and CEO Song Liping.

Source: Mondovisone, 28.06.2012

Filed under: Asia, China, Exchanges, Hong Kong, , , , , , , , , , ,

Mexico:RTS Powers Bolsa Mexicana de Valores Trading Front-End for Members

Chicago/Mexico City, June 14, 2012 – RTS Realtime Systems Group, a leading global trading solutions provider, and the Mexican Stock Exchange BMV (Bolsa Mexicana de Valores) announced today the roll-out of a new front-end for the BMV equity marketplace powered by customized RTS front-end technology. This further expansion of their relationship comes after RTS has provided next generation trading technology for more than three years to MexDer, the Mexican Derivatives Exchange owned by the BMV Group.

The launch enables members of both BMV and MexDer to access the equity and derivatives markets and their market data on one, exchange-provided trading screen. It also brings members of BMV markets the ability to utilize sophisticated RTS risk management technology to control access to all available asset classes.

  • Access equity and derivatives markets on one exchange-provided trading screen
  • Trade multiple markets across asset classes with sophiticated new capabilities and speed
  • Easily combine click and algorithmic trading to automate orders
  • Trade spreads between BMV, MexDer and CME Group

Alfredo Guillen, Chief Operating Officer for the Equity Markets at BMV Group, said:  “We are pleased to offer our members the sophisticated new capabilities and speed provided by RTD Trader, RTS’ solution for click traders.  As our members are increasingly interested in trading across asset classes, this new deployment will bring them the opportunity to easily access and participate in the equity and derivatives markets alike.”

Timo Pentner, RTS Managing Director, Americas, said:  “We’re very proud to expand on the important relationship we have established with the BMV Group and its markets. For algorithmic trading, members can easily transition to our RTD Tango Trader solution which combines click and algorithmic trading. With this we support sophisticated order execution capabilities including the ability to automate all types of orders.”

Jorge Alegria, Head of Market Operations at BMV Group, said:  “This is a great example of successful collaboration between a technology vendor and exchange staff to introduce the seamless integration of multiple trading platforms onto one screen.  Thanks to a terrific, dedicated effort in recent months – and groundwork laid in 2009 by MexDer and RTS – when we complete the final phase of adding cash bond markets execution capabilities, BMV Group will be one of the first exchanges to list all asset classes on one, exchange-provided front-end.”

Pentner said that RTD Tango Trader can enable members of BMV and MexDer to trade spreads not only between those two markets but also the markets of CME Group, as part of the South to North order routing agreement established between BMV Group and CME Group.  He said adding access to other international markets would also be an easy upgrade as RTS offers connectivity via RTD Trader to more than 135 marketplaces globally.

Source: RTS, 14.06.2012

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

Emerging Markets: Energy or Enigma? Mexico, Brazil & China – Dan Watkins

Emerging market trading strategies should remain closely aligned with inter-country trade relations, or so one would think.

A professional stock investor’s interest in a company, after all, coincides with that company’s vision and operational policies. Would such a metric be appropriate in trading an entire economy? Interestingly, popular opinion leans toward headlines rather than fundamentals as being the key determining factor.

That raises a question: Can a market investor be expected to trade a country’s equity, commodity or currency without being able to derive its true value on a balance sheet?

One would gather from the latest international finance journals that China and its markets dominate the emerging markets dialogue. Sure, China and the U.S. have strong trade programs in place but there are issues such as currency valuation headaches that must be considered.

The BRIC (Brazil, Russia, India and China) countries all have exponential growth potential both short-term and long-term and can be considered underdeveloped vs. their population participation. Capital market returns usually delineate the leader of the pack so among the “fantastic-four” BRIC countries, Brazil reigns supreme.

Brazil has had unrelenting stamina in moving high-energy, high-value energy companies’ stocks higher over the last half decade. One reason for Brazil’s success is its massive capital markets restructuring in policy, participation and innovation. Of course the first thing Brazil had to do was stabilize its currency from its inflation plague so that the Real could sustain itself against economic and political monetary fatigue.

Brazil is on top of asset manager and retirement account lists in equity, equity options, futures contracts and fixed income because of the basis of its economic stability and strong natural resources. So while Brazil has brought equilibrium to its markets, Russia, India and China deal with inflation. But trading Brazil can also be worrisome due to inter-country trade relations with the U.S. being less-than-favorable.

Those issues raise an interesting question: What market doesn’t make the news but is hot, has been hot and continues to sizzle like fajitas-picante?   MEXICO

News stories on Mexico cover drug war violence, immigration and tourism, but is that the end of the story? Washington – and therefore public discourse – has focused on the $100 billion in trade to China over the last year. What most don’t hear is that the U.S. has exported nearly $400 billion to Mexico during the same time period. Compare all BRIC countries with Mexico and Mexico tops them all collectively.

Mexico reached 4 percent annual GDP growth rate last year, helped by direct investments from the U.S. and China. On the day the U.S. Federal Reserve announced that it would maintain its low interest rate policy through 2014, the Mexican peso rose 0.6 percent, marking a 7 percent climb for the month of January. How many other markets can be traded as strongly in response to a U.S. Treasury policy announcement?

If Mexico were to equitize or make public its oil production industry as Brazil has, by publicly trading leading oil company Petroleos Mexicanos, also known as Pemex, for example, a major trade explosion in Mexico’s capital markets would quickly follow. Pemex is a Mexican state-owned company worth over $415 billion – that’s $100 billion in assets more than Brazil’s giant Petrobras.

Mexico worth more than Brazil and China long term? Mexico reaches higher ground four times that in trade over the entire BRIC countries. One of Mexico’s oil companies is four times the size in assets over Brazil’s all-star Petrobras. What’s more, Mexico’s inflation is under 5 percent while Brazil, Russia, India and China all have inflation rates closer to 7 percent.

A reflection of U.S. involvement and stabilizing influence in Mexico can be seen in the Mexican stock market with more than 1,000 symbols, many of which are high value and liquid ADRs from the New York Stock Exchange and Nasdaq OMX.

Why not follow the money? Taking a look at the presence of Wall Street on La Reforma in Mexico City, where the Bolsa Mexicana de Valores (the Mexican Stock Exchange) is, you’ll find BMV members such a Citigroup, JPMC, Credit Suisse, Barclays, Deutsche Bank, Merrill Lynch, HSBC, Scotia, ING and UBS. No small potatoes there.

The top players and astute institutional investors are solidly positioned in Mexico. They monitor and believe they can best forecast movement in the market by keeping an eye on U.S. and Chinese import/exports with Mexico. A closer eye is kept on the cash equity ADRs and the Mexican bond markets. Many investors tend to believe that Mexico is just undervalued and other emerging markets are overvalued. But one more thing to remember, the U.S./Mexico trade policy should provide Mexico with lots of energy to outlast the steam of the emerging markets chatter.

Perhaps we should start thinking about MBRICs?

By Dan  Watkins, CC-Speed (dwatkins@cc-speed.com)

Sourc: TABB Forum, 07.03.2012

Filed under: BM&FBOVESPA, BMV - Mexico, Brazil, China, Exchanges, Mexico, , , , , , , , , , , , , , , , , , ,

UBS goes algo in Mexico

UBS today announced the launch of algorithmic trading for international clients trading equities on Bolsa Mexicana de Valores in Mexico.

The addition of algorithmic trading strategies enhances clients’ ability to access this major Latin American market center, and complements UBS’s existing Direct Market Access (DMA) offering in the country.

UBS is launching this offering in Mexico with a full suite of liquidity seeking, volume and price-sensitive strategies, including the award-winning UBS Tap. UBS clients can use these algorithmic trading strategies to efficiently interact with liquidity on Bolsa Mexicana, sending electronic orders directly to the exchange without passing through an intermediary.

In November 2010, UBS was the first international broker to launch DMA in Mexico, allowing clients to trade electronically directly on the exchange. UBS clients can now send both front-to-back DMA and algorithmic trading orders using most major execution management systems or order management systems, as well as the firm’s own UBS Pinpoint.

“Our experience offering DMA in this market has enabled us to tailor our trading strategies specifically to the market structure of Bolsa Mexicana, which means our international clients should have a seamless experience as they trade into Mexico” said Owain Self, Global Head of Algorithmic Trading at UBS.

“Offering an entire suite of algorithmic trading strategies for Mexico is another example of our commitment to a uniquely optimized Latin American offering,” said Damian Fraser, Head of Equities for Latin America. “Our clients have expressed great enthusiasm for even more sophisticated tools to access this growing, dynamic marketplace, and we are delighted to be able to meet those needs.”

UBS also provides DMA and algorithmic trading for international clients trading into Brazil, across the global emerging markets of Europe, Middle East, Africa and Asia, and over 90 markets and trading venues worldwide.

UBS Direct Execution is the firm’s global institutional electronic trading business. Direct Execution offers ultra-low latency Direct Market Access (DMA), a suite of award-winning advanced Algorithmic Trading strategies, a state-of-the-art analytics platform – offering Real-Time TCA – called UBS Fusion, and a multi-asset international execution management system called UBS Pinpoint.

Filed under: Brazil, Latin America, Mexico, Trading Technology, , , , , , ,

Alternative Latin Investor: Latam Fund & Investment Trends- December 2011 Issue Nr 12

Latin America fund assets to exceed $3 trillion by 2020
-Driven by appetite for Asia – U.S. and European asset managers benefit most

While still smaller than other global regions in terms of aggregate assets – around US$1.4 trillion in mutual fund assets and about $710 billion in pension assets – fast growth in Latin America as a region is capturing the imagination of investors, distributors and asset managers alike, with tactical and strategic opportunities prompting resource allocations and investments.

Subscribe to the free issue of  at http://www.alternativelatininvestor.com/index.html.

Source: Alternative Latin Investor, 06.12.2011

Filed under: Argentina, Brazil, Chile, Colombia, Latin America, Mexico, News, Peru, , , , , , , , , , , , , , , , , , , , , , , , , ,

Brazil: Direct Edge intents to launch new Exchange in Rio de Janeiro … challenge for BOVESPA or marketing for Rio?

Direct Edge, a leading stock exchange in the United States, today announced its intention to launch Direct Edge Brazil, an all-electronic platform for the trading of Brazilian equities.  The exchange will be headquartered in Rio de Janeiro with a tentative launch date of the fourth quarter of 2012, pending regulatory approval from the Comissão de Valores Mobiliários.

Direct Edge looking for clearing options in Brazil (Security Technology Monitor)
UPDATE 2-Direct Edge to take on Brazil’s BM&FBovespa (Reuters)
BM&FBovespa Drops Most in Two Months as Direct Edge Plans Brazil Platform (Bloomberg)

“The Brazilian economy is among the fastest growing in the world and we believe that a second stock exchange in the country will spur even greater investor participation through competition that drives innovation and price improvement,” said William O’Brien, Chief Executive Officer of Direct Edge.  “The exchange will leverage proven Direct Edge technology and architecture that will be customized to the unique needs of the Brazilian market.”

Direct Edge Brazil will operate as an independent, local company majority owned by Direct Edge.  A Brazil-based CEO will be appointed to lead a team in Rio de Janeiro to develop Direct Edge Brazil and maintain close working relationships with the Brazilian financial community as well as with local officials and vendors. Direct Edge Brazil, if approved, will be the first stock exchange headquartered in Rio de Janeiro since 2002.

“The arrival of Direct Edge is further proof of the importance of Rio to the global financial markets,” said Eduardo Paes, Mayor of city of Rio de Janeiro.  “Having one of the largest stock exchanges in the United States operating here will provide added incentive for other global financial market participants and will likely attract broker services and financial technology firms.”

“Rio has been a global financial hub for years; the financial markets in Brazil started here” said Eduarda La Rocque, Municipal Secretary of Finance, City of Rio de Janeiro.  “The decision by Direct Edge to establish its headquarters in Rio reinforces the relevance of the local economy and highlights how the global financial markets realize the plentiful growth opportunities that exist in our city.  The pending arrival of a world class stock exchange can create opportunities for Rio’s young professionals, and will boost efforts to revitalize the financial sector in our city.”

Rio Negócios, the investment promotion agency of Rio de Janeiro, worked closely with Direct Edge in supporting the project.  “This is a great day for Rio,” said Marcelo Haddad, Executive Director of Rio Negócios.  “Direct Edge Brazil will serve as the inspiration to recreate a new and modern financial center in the city.”

Source: Directe Edge, 21.11.2011 For more information on Direct Edge Brazil and to sign up for updates, please go to: www.directedge.com.br

Filed under: BM&FBOVESPA, Brazil, Exchanges, , , , , , , , , , ,

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

Latin America Fund and Investment News Aug-Oct 2011 – Alternative Latin Investor

American Business Practices in Brazil: A Contrarian’s View

Premium Article OCT, 2011 U.S. companies have been investing heavily in Brazilian private equity in recent years, capitalizing on the across-the-board growth in the country’s small, mid and large cap companies. But according to Malcolm McLelland, an American-born, Brazil-based consultant and…Read Full Article

Latin American Hedge Funds

Premium Article OCT, 2011 Hedge funds have become one of the most vital asset classes in LatAm in recent years, and LatAm hedge funds some of the most successful in the global industry, as local investors aim to diversify their strategies and exposure in the region while foreign investors vie for b…Read Full Article

Brazil

Premium Article OCT, 2011 Given its robust growth in recent years and massive wealth compared to its neighbors, Brazil has attracted the lion’s share of global investment in LatAm, with foreign investors allocating especially aggressively to equity and government bonds. Brazilian investors, …Read Full Article

MILA Integrated Latin American Market

OCT, 2011 On May 30 of this year, the Integrated Latin American Market (Mercado Integrado Latinoamericano, or MILA) was launched, combining the stock markets of Colombia, Chile and Peru into a single cross-trading platform. A key component of a regional trend toward integration, MILA has been wide…Read Full Article

Brazilian Pension Funds

Premium Article OCT, 2011 Alternative asset managers around the globe are vying for the attention of Brazil’s swelling pension funds. As of early 2011, these funds had a total of $342 billion under management and had grown an average of 14% per year for the last five years, one of the highest…Read Full Article

Meta-Trends in LatAm Investment

Premium Article OCT, 2011 The progress of alternative asset investment in LatAm is following two basic meta-trends, that is, large-scale and long-term patterns that transcend specific products, firms or opportunities. These meta-trends are, first, the increasing interpenetration of managers from th…Read Full Article

High Net Worth Individuals in LatAm

Premium Article AUGUST, 2011 The wealth and quantity of high net worth individuals (HNWI) in LatAm has grown in recent years. According to the Capgemini/Merrill Lynch World Wealth Report 2011, the number of LatAm HNWI grew by 6.2% in 2010, and its total HNWI wealth by 9.2%. There are about a half…Read Full Article

Quant Funds

Premium Article AUGUST, 2011 After taking a battering during the 2008 credit crunch and struggling in the early stages of recovery, quantitative (or ‘quant’) funds are trying to reassert themselves in the industry. And a small, but growing, number are looking to start afresh in the …Read Full Article

LatAm Funds

Premium Article AUGUST, 2011 U.S. Institutional investors looking to increase their exposure to emerging markets have been turning increasingly to a handful of LATAM countries, where they see a swelling pool of experienced fund managers working within a context of political stability and economic g…Read Full Article

Institutional Investing in LatAm

Premium Article AUGUST, 2011 For most institutional investors, there is an uncertainty about LatAm´s quality and future – and a certainty about its checkered past – that gives them pause as they investigate young managers in the region. Most of these investors want to see a stron…Read Full Article

Source:Alternative Latin Investor, October 2011

 

Filed under: Brazil, Chile, Colombia, Exchanges, Latin America, Library, Mexico, News, Peru, Risk Management, Services, Wealth Management, , , , , , , , , , , , , , , , ,

China & Brazil: Shanghai Stock Exchange and BMF&BOVESPA launch all-round cooperation

The 2nd China-Brazil Capital Markets Forum, jointly sponsored by the Shanghai Stock Exchange (SSE) and BM&F BOVESPA, was held on 27 October in Shanghai. SSE President Zhang Yujun said that the SSE would cement all-round cooperation in the capital markets of both sides with BM&F BOVESPA.

Marcos Caramuru, Ambassador of the Consulate General of Brazil in Shanghai, and Edemir Pinto, CEO of BM&F BOVESPA attended the forum presided over by Zhou Qinye, SSE Chief Accountant.

This February, Zhang Yujun, SSE Vice President Xu Ming and their entourage participated in the 1st China-Brazil Capital Markets Forum held in Brazil and signed a memorandum on closer cooperation with BM&F BOVESPA. Both sides fixed upon negotiation to hold the 2nd China-Brazil Capital Markets Forum in China in late October, 2011.

At the forum held in Shanghai, both sides compared notes on the intensification of cooperation and exchanges in China-Brazil Capital Markets and the in-depth development of the exchanges in the two countries under the new backdrop. Besides, special sub-forums were held to respectively discuss the opportunities for and internationalization of enterprises in emerging markets, the challenges and opportunities of emerging markets for investment in multinational capital markets and the practices and experience in the investor education and protection.

According to the cooperation memorandum signed previously, both sides reached an intent of cooperating in information, exchange, product development, trading platform construction, mutual personnel dispatch. Besides, both sides had common views on the periodical visit mechanism of senior managers as well as the exchanges in bond, fund, information, technology, investor education, academic science and personnel dispatch.

Zhang Yujun said at the forum that with the rapid growth of Chinese economy in recent years, the two countries had seen a good trend of economic cooperation. In the South America, China had become the biggest source of capital flowed as FDI into Brazil. All this would require the domestic financial industry, especially all the participants in the capital market, to provide better financial services and supporting services for further opening-up of the Chinese economy. The cooperation between the SSE and BM&F BOVESPA should be cemented in response to the new trends of the economic growth and capital market development in the two countries.

Finally, Zhang said that after the 1st China-Brazil Capital Markets Forum, more and more exchanges in the domestic capital market strengthened the cooperation with all the participants in the Brazilian capital market. For instance, a participant in the Brazilian capital market directly invested in the IPO of CITIC Securities in Hongkong. In the future, more domestic securities companies and fund management companies will provide financial services for Chinese enterprises’ investment in foreign capital markets.

Source: MondoVision, 31.10.2011

Filed under: Brazil, China, Data Management, Exchanges, News, Trading Technology, , , , , , , , , , , , , , , , , ,

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

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, , , , , , , , , ,

10 Trading Trends in Latin America : SunGard

Raj Mahajan, president of SunGard’s global trading business, said: “The economy in Latin America continues to grow at an exceptional pace. Led by Brazil, which has achieved an annual average growth of 3.7% over the last ten years, (nearly twice that of the US), the boom includes Mexico, Chile, Columbia and Peru. SunGard is helping Latin American trading firms capitalize on the change and growth in that region, by providing low latency execution to help them compete in the global race for liquidity with greater transparency, efficiency and access to network connectivity.”

The ten trends SunGard has identified as shaping Latin American trading are:

1. Mexico, Chile, Columbia and Peru are quickly gaining recognition as key markets in Latin America, as their combined trading volumes edge closer to Brazilian levels.

2. Brazil’s markets are going completely electronic, increasing firms’ ability to more efficiently and more quickly access liquidity. As a result volumes have skyrocketed; a 400% increase in activity in the last decade.

3. Demand for international order flow is high as volumes are rising in emerging markets: Brazil is ranked the fourth largest emerging market according to a recent article.

4. The sell-side in Latin America is consolidating; large international players are buying local brokers to quickly increase their presence and credibility.

5. FIX connectivity is increasing: As firms receive and execute more order flow internationally, the adoption of FIX has taken hold in Latin America, helping to efficiently connect buy- and sell-side firms.

6. Trading volumes are increasing across the region and firms need real-time data and analytical tools for greater transparency into market movements. It is predicted that Brazil will see a 4.9% increase in equity market performance in 2011, according to a recent report. From 2006-2010, fund flows into Brazil have totaled $10 billion.

7. As more international investors want exposure to LatAm markets, the networks into and out of these markets becomes more important. Local firms and international players are investing in telecommunications infrastructure to ensure bandwidth and reliability for their trading networks.

8. With major exchanges allowing third party software firms direct access to exchanges, traders have more network connectivity options and can now take advantage of independent software vendors to provide their technology platforms.

9. As LatAm trading volumes skyrocket, the demand for financial information within the region is growing. In terms of financial market data and news, Latin America is second only to the Asian nations in allocating more budget for this resource.

10. LatAm trading firms are investing in low latency execution and stable customizable trading solutions, leaving legacy technologies behind for greater operating efficiency.

Danielle Tierney, junior analyst at Aite, said, “Networks are the key to sustaining growth in Latin America. Approximately 25 percent of the volume traded in Latin America is international, driving the search for new sources of liquidity and establishing connections to powerful global networks.”

Sourc: SunGard, 12.09.2011

Filed under: Argentina, Brazil, Chile, Colombia, Data Vendor, Exchanges, FIX Connectivity, Latin America, Market Data, Mexico, Peru, Trading Technology, , , , , , , , , , , , , , , , , , , , ,

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