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 11, 2012 • 10:07 am 0

Hong Kong and Singapore as Asia´s Financial Gateways

Celent predicts a paradigm shift around access to Asia. There is likely to be two gateways, providing access to different Asian regions, with Singapore emerging as the preferred gateway to Southeast Asia and Hong Kong becoming the gateway to Mainland China.

In a new report, the third of a series looking at the financial markets in Hong Kong and Singapore, Celent aims to provide a comparative analysis of Asia’s two main financial gateways, focusing particularly on derivatives. Asia’s Tale of Two Cities: Hong Kong and Singapore as Financial Gateways begins by noting that Western governments have emerged from the financial crisis in a weakened state, with economic prosperity blunted by high unemployment and an emerging debt crisis. The question is no longer when or if we need to enter the Asian markets, but how to best think about the issues of accessibility, entering the market, developing products, and forming strategic partnerships. The fundamental question that needs to be asked now is: “Where do we go from here, Hong Kong or Singapore?”

Although the HKEx and SGX may not be the biggest derivatives players in Asia-Pacific, they tend to be the most accessible for segments located outside the region. Taking advantage of their geographic location, political climate, and internal strengths, these city-states are poised to become hubs for trading of Asia’s regional products while also being easily accessed by US traders via retail trading accounts.

There are several factors that are likely to continue to drive growth in the derivatives market. These include:

• A relatively muted response to regulating over-the-counter markets as compared with the US and Europe. The type of products that led to the financial crisis in the West are not widely established throughout Asia, and as a result, the regulatory structure governing OTC markets are unlikely to change significantly.

• Continued desire to manage foreign exchange risk.

• Continued enhancement of processes of structuring derivatives risk management policies.

“We are seeing changes in relation to access to Asia. Hong Kong is no longer destined to become the sole hub to Southeast Asia,” says Alexander Camargo, Analyst and coauthor of the report. “Inherent strengths in Singapore are making it an extremely attractive financial gateway. Both English and Chinese are frequently spoken in Singapore, making it an ideal cross-roads for East and West. Furthermore, Singapore is viewed by most Asian countries as a neutral party and less politically tied to China than Hong Kong. This is likely to entice Indian investors and even Japanese and Korean investors to Singapore’s shores.”

However, this does not mean that Hong Kong will recede as a major financial center in Asia. Hong Kong residents are often fluent in both English and Chinese; contract laws are strong; and there remain strong historical ties to the West. As a Special Administrative Region of the People’s Republic of China, Hong Kong has stronger political ties to China. Hong Kong has also been busy integrating its financial markets with mainland China. These factors make it likely that Hong Kong will become a key gateway to mainland China.

This report begins with an overview of each country’s financial infrastructure and regulations, providing an introduction to the countries’ various demand market segments, followed by a look at the main exchanges, HKEx and SGX. A summary of HKEx and SGX focuses on derivatives trading, providing a brief description of products offered, market access, alliances, and clearing on the exchanges. The report then looks at each country’s fixed income markets, OTC derivatives, and FX markets. It concludes with a discussion of market supremacy and also the countries’ ongoing efforts to improve market structure and access.

Source: Bobsguide, 10.02.2012

Filed under: Asia, China, Exchanges, Hong Kong, Indonesia, Japan, Korea, Malaysia, News, Singapore, Thailand, Vietnam, , , , , , , , , , , , , ,

February 9, 2012 • 10:08 am 0

NYSE to sign contract to manage 3 Security Indices of China Security Indicies CSI

NYSE Euronext (NYX) today announced that it has agreed with China Securities Index Co., (CSI) to manage the calculation of three of CSI’s indices: Overseas China Internet Index, Overseas China Consumer Discretionary Index and Overseas China Consumer Staples Index. Leveraging NYSE Euronext’s operational and listed products expertise, this new initiative represents a significant milestone for the global index services of NYSE Euronext to further expand its index offerings in the Asian region meeting the growing demand to track the performance in Chinese companies.

CSI, the first Chinese index customer, will use the global index services of NYSE Euronext for the maintenance, calculation and distribution of its index values and data for the Overseas China Internet Index, Overseas China Consumer Discretionary Index and Overseas China Consumer Staples Index. Through these three indices market participants can track a portfolio of stocks covering varying sectors of the Chinese economy using the real-time calculation and dissemination services provided by NYSE Euronext. Furthermore, Exchange Traded Products that track these indices are anticipated to list and trade on NYSE Arca, NYSE Euronext’s all-electronic US trading platform.

“Having CSI, one of China’s leading index providers, select NYSE Euronext’s Global Index Group as their index provider of choice is a testament to the growing momentum of our value in the indexing space,” said, George Patterson, Managing Director, Global Index Group. “This new relationship further underscores NYSE Euronext’s commitment to expand our index services to Asian markets and other key regions around the globe.”

For the methodologies for calculation of the Overseas China Internet Index, Overseas China Consumer Discretionary Index and Overseas China Consumer Staples Index, as well as more information on the indices, please visit the CSI website: http://www.csindex.com.cn/sseportal_en/csiportal/zs/indexreport.do?type=1

Source:MondoVision, 08.02.2012

Filed under: China, Data Management, Exchanges, , ,

February 3, 2012 • 12:40 am 0

Mexico – Durable, Consistent and Undervalued

Since global markets unraveled back in 2008 we’ve again been reminded that even developed economies can have a tough time dealing with crisis (think TARP, bailouts, recessions and policy restructurings). In some cases, seemingly simple issues like inflation can be the main reason international investors turn away. However, in looking at mid-tier countries within emerging markets, one exception is Mexico.

The Mexican peso, for example, has appreciated by nearly 20 percent since the peak recession level of two years ago. In addition to a more predictable and forecastable currency, Mexico enjoys direct investment from both the United States and China. Many experts agree that this flow of capital helped Mexico reach a 4 percent annual gross domestic product growth rate in 2011.

The peso’s solid gains can be attributed to a variety of factors, but are directly correlated to market statements made by U.S. banking and government officials. Interest rate stability, for example, ensures the peso’s projected outlook by hedging its value with that of the dollar as well as Mexico’s import-export relationship with the U.S. Most recently, on the day the U.S. Federal Reserve announced that it would maintain its low interest rate program through 2014, the peso rose 0.6 percent, to $13.0190 per U.S. dollar. That marked a 7 percent climb for the month of January.

From an investment, trading and trade relations perspective, Mexico boasts free-trade agreements in which tariffs are lower than many countries. So low, in fact, that nearly 90 percent of all its exports are essentially duty free. For example, Mexican goods are exported duty-free to the U.S., Canada, Europe, Latin America and Japan. This past week, Mexico announced a preliminary trade surplus of $7.7 million for December 2011. Most other countries, on the other hand, trade with a much smaller surplus if not deficit. Investors keen on taking advantage of this advantage can use the iShares MSCI Mexico Index.

In fixed income, Mexican notes return more than the average of other emerging market debt. What’s more, Mexico correlates better with the U.S. than other high profile emerging markets like Brazil, China or Russia.

Mexico has proven that it is able to withstand both global and internal drags on its economy while still holding its position among the advanced emerging markets community such as Brazil, Czech Republic, Hungary, Malaysia, Poland, South Africa, Taiwan and Turkey.

Taking a closer look at the value to an individual or institutional investor, Latin America generally – and Mexico specifically – continues to hold and return value better than other emerging markets. Debt and inflation from Europe more closely impact Russia, India and China, for example, whereas Mexico and LatAm are more closely tied to the U.S., where the economy is slowly rebounding

Mexico vs. other LatAm hotspots  ….read full article at   Tabb Forum

Source: Tabb Froum, Dan Watskin, 02.02.2012

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

January 11, 2012 • 8:59 am 1

Webinar: Top-10 China Financial Technology Trends for 2012 – January 18,2012

While the rest of the world struggles with a lingering financial crisis, Chinese Financial institutions will continue investing in financial technology innovation in 2012. New technologies such as EMV and mobile near-field payments will drive significant investment as financial institutions continue to modernize and expand both the breadth and depth of their product offerings.

This webinar from Kapronasia will look at some of the key insights from Kapronasia’s “China Financial Technology 2012 – Top 10 Trends Shaping the Industry” report, a comprehensive look at the key issues and challenges and how banks are overcoming them.

 Title: A look at the Top-10 China Financial Technology Trends for 2012
Date: Wednesday, January 18, 2012
Time: 5:00 PM -6:00 PM CST

After registering you will receive a confirmation email containing information about joining the Webinar

Space is limited

Reserve your Webinar seat at   https://www3.gotomeeting.com/register/840131302

Source: KapronAsia, 09.01.2012

Filed under: Asia, China, Events, Exchanges, News, , , ,

December 9, 2011 • 8:10 am 0

The Global Crisis Reaches China: Unrest Spreads as Growth Stalls

China’s leaders are currently contending with declining demand, rising debt and a real estate bubble. Some factories are laying off workers, suffering financial losses or even closing as orders from crisis-plagued Europe dry up. The economic strains are frustrating workers and consumers in the country, threatening the political establishment and Beijing’s economic miracle.

This October was the third straight month Chinese exports decreased. Along with it, the hopes of German manufacturers that Asia’s growth market might help lift them out of the global crisis as it did in 2008 are also evaporating. This time China faces enormous challenges of its own — a real estate market bubble and local government debt — that could even pose a risk to the global economy.

Related article: Every Chinese Province bankrupt like Greece –  Chinese Regime nearly bankrupt  – 17.11.2011

A police special forces unit appears suddenly. One moment, a worker named Liu* is marching back and forth in front of city hall in Dongguan, China, with about 300 colleagues from the bankrupt factory Bill Electronic. “Give us back the money from our blood and sweat!” they chant.

The next moment, their shouts turn to screams as a few hundred uniformed police with helmets, shields and batons, along with numerous plainclothes security forces, leap out of olive green police vans. The demonstration leaders, including Liu, are rounded up on the side of the street by police dogs. Within just a few minutes’ time, the communist authorities have successfully suffocated the protest.

The men and women, most of them young adults, are packed into yellow buses and hauled back to their factory, where the government exerts massive pressure: By afternoon, they must consent to make do with 60 percent of the wages they are owed by the employment office. Anyone who refuses, officials warn, will receive nothing at all.

The new global crisis has reached China. Debt problems in Europe, the country’s most important trading partner, are starting to dim prospects here in the nation that has effectively become the world’s factory, as well. The unstable United States economy and threat of a trade war between the two superpowers make the situation even more uncertain. As the US presidential election campaign starts too heat up, American politicians are vying to outdo one another in protectionist declarations directed toward their communist rival.

Disillusioned Workers

For Liu, the factory worker, his country’s economic miracle is certainly over for now. Until recently, he worked 12 hours a day assembling accessories for DVD players. But then there was less and less work to do, he says, and a while back, the boss informed workers that fewer orders were coming in from Europe.

After the police break up the demonstration, Liu, now daunted, wanders through his city’s dusty streets, passing row upon row of factories and residential buildings. “We just wanted our full wages, but they set the police on us,” he says. He’s lost his faith in the party and the government.

Especially here in the export region of Guangdong, an experimental laboratory of Chinese capitalism, hardly a day goes by without new bankruptcies or protests. The Yue Chen shoe factory in Dongguan, which produces athletic shoes for a parent company in Taiwan that supplies brands such as New Balance, is in a state of emergency. With orders dropping off, the manufacturer has fired 18 managers. Workers have seen overtime pay eliminated, and normal wages are barely enough to live on. Frustration is so high that some shoe factory workers also went to protest in front of city hall. About 10 of them were injured in the clash with police, some young women from the factory report.

The situation outside the gray factory complex is tense. Thugs in plainclothes guard the entrance, photographing and intimidating anyone who talks to the workers. Inside the factory, the showdown between bosses and employees goes on. Workers sit inactive in cheerless factory rooms. The management has switched off the power in some of the halls where workers normally sew and glue together shoes.

In the rest of China as well, more and more assembly lines are grinding to a halt. In Wenzhou in eastern China, a city known for making cheap lighters, shoes and clothes, a large number of business owners are on the run from their creditors, the private shadow banks that last lent them money. Some of these businesspeople even secretly removed machinery from their factories before taking off.

Demand Drop in Europe and China

China’s showcase industries are also feeling the crunch of the drop in European demand. Suntech Power Holdings, for example, which manufactures solar panels in Wuxi, near Shanghai, reported third-quarter losses of $116 million (€87 million). During the same quarter of the previous year, the company generated $33 million in profits.

Just recently, Asia’s champion exporter was the object of admiration from foreign executives and politicians, a victor in the global financial crisis. Some even believed they’d found a superior alternative to crisis-ridden Western-style market economies in Beijing’s authoritarian-style capitalism.

German carmakers, in particular, let themselves be carried away by China’s growth and made enormous investments. China is Volkswagen’s most important market, and the company hopes to sell 2 million cars there by the end of this year.

But the car boom is slowing. “We haven’t received a single new order in nine days,” admits a smartly dressed salesman at Dongguan’s Porsche dealership. “We’ve never experienced that before.” Many business owners are short on cash, he adds. “They used to mostly pay cash, but now they prefer to buy on credit.”

Cheap Chinese brands such as BYD (“Build Your Dreams”) are also having a harder time selling their cars. Important governmental tax incentives for buying cars ran out last year, and major cities such as Beijing are attempting to ease their congested streets by restricting the number of new automobiles. In October, people in China bought roughly 7 percent fewer cars than in the previous month.

Economic Missteps?

At first, it seemed as if Beijing’s state capitalists had found the magic recipe for endless growth. In 2009, they pumped 4 trillion yuan (the equivalent of €430 billion) — China’s largest stimulus package in history — into building ever more modern highways, train stations and airports. Tax incentives led millions of farmers to purchase refrigerators and computers for the first time.

More or less on the party’s orders, banks threw their money at the people’s feet, and local governments were particularly free about getting themselves into debt. By the end of 2010, outstanding debt stood at 10.7 trillion yuan — nearly a quarter of China’s entire economic output.

Much of these funds went, directly or indirectly, into real estate construction. Local governments discovered that selling land for building made for a lucrative source of revenue — and of collateral, so banks would continue to issue new loans. Thousands of farmers were driven off their fields so that villas and apartment buildings could be built.

Many of those development projects, often megalomaniac undertakings from the start, are now ghost towns. In China’s 15 largest cities in October, the number of newly auctioned building plots decreased by 39 percent compared to October 2010.

While many in the West hold out hope that China can solve the euro and dollar debt crisis with its foreign currency holdings, the rift between rich and poor within the country is growing. The “harmonious society” promised by Hu Jintao, head of the government and of the Communist Party, is at risk.

The country’s central bank has increased interest rates five times since mid-2010 to get inflation under control, while at the same time forcing banks to hold larger reserve funds. Beijing hopes this method will allow it to orchestrate a “soft landing” from its own economic boom. But the maneuver entails risks. Along with the construction industry, the motor driving China’s economy up until now, other sectors such as cement production, steelmaking and furniture construction stand to lose vitality as well.

Part 2: Will Rising Middle Class Turn against Government?

If the real estate bubble bursts, it is sure to turn China’s rising middle class against the government. Until now, the nouveau riche has viewed the Communist Party as a guarantee of their own prosperity. Recently, however, outraged apartment owners organized a demonstration in downtown Shanghai, protesting the decline in the value of their property.

Wang Jiang, 28, points to a nearly complete apartment block in Anting, one of the city’s suburbs. The software company manager bought an apartment on the 16th floor of the building for €138,000 in early September. It was a steep price for 82 square meters (883 square feet), especially since the building is located in an industrial area, hemmed in by factories and highways. But Wang was determined to get in on the boom. He didn’t even take the time to view the housing complex before he bought the apartment. Where else, after all, should he have invested his assets, if not in real estate?

Now China’s state-run banks are paying their customers negative interest and Shanghai’s stock market is considered a high-risk casino, where a few major governmental investors are believed to manipulate exchange rates at will.

Wang’s apartment isn’t even finished yet, but he no longer feels any joy about moving in — not now that the real estate company is offering similar apartments in the same complex for about 20 percent less.

Wang feels he was deceived about his apartment’s resale value. “What are they thinking?” he demands. “Surely they can’t just erase a portion of my assets?”

But they can.

Wang and many other furious apartment owners went to the real estate company’s salesroom to protest the drop in value. Suddenly, Wang relates, someone started smashing the miniature models of apartments. After that, in the blink of an eye, the company’s guards grabbed him and hauled the protesters to the police in minibuses. “We were interrogated until 2 a.m. in the morning,” Wang says. Some of the protesters, he adds, are still in prison and authorities won’t tell their families anything.

A Political Quandary

Whether in Dongguan or Shanghai, cracks seem to be forming everywhere in Chinese society. As long as the one-party dictatorship kept growth in the double digits, most people accepted their lack of freedom. Now, though, Beijing is facing a dilemma. Tough police crackdowns will hardly get the consequences of the stagnating economy under control in the long term. But nor are government subsidies enough to stimulate the economy. It seems neither money nor force will help.

Chinese Premier Wen Jiabao recently announced a “fine-tuning” of his economic policy: Banks should grant more generous loans, especially to small and medium-sized export companies, he said.

The economic situation now is far more complicated than it was after the 2008 global financial crisis, says economist Lin Jiang. In 2008, Chinese exports collapsed and roughly 25 million migrant workers had to return from factories to their home provinces.

Back in Dongguan, authorities have no cause at the moment to fear any further protest from Liu, the factory worker. He’s too busy looking for a new place to stay. When he lost his job, he also lost his spot in one of the electronics factory’s residences.

* Liu’s name has been changed by the editors in order to protect his identity.

Source: Spiegl Online, 08.12.2011 By Wieland Wagner

Filed under: China, Countries, News, Risk Management, , , , , , , , , , , , , ,

November 29, 2011 • 1:00 am 0

China:Exchanges and Trading Houses Face Overhaul by Government

Electronic trading houses, which conduct transactions in commodities, artifacts and precious metals, have seen their numbers grow in the past five years from a few dozen to more than 300.

But the boom could come to an abrupt end as the government pursues a drive against risky practices in the industry.  This week, the State Council determined that these legal and illegal trading houses are too risky to be left unregulated. The council called on the China Securities Regulatory Commission (CSRC) to “clear them up”.

Rules bar the trading houses from making markets and adopting centralized pricing and say that no more than 200 investors may hold stakes in any single traded asset. Investors are also banned from reselling an asset within five days. Although the government said that some of the trading houses’ activities are illegal, it didn’t specify which transactions are involved.

This isn’t the first time that the government has found fault with the trading houses. In 2009, the State Administration for Industry and Commerce “banned” the establishment of new trading houses, and last year, the Ministry of Commerce and five other ministries issued regulations on securitized trade houses.

But this latest move is a more serious threat to the trading houses. First, it is being initiated at a higher level, by the State Council. Second, the government is using the phrase “clear up and reorganize”, not “regulate” – meaning that some trading houses might have to close.

Hantang Artworks Exchange was one of the first trading houses to react. In a statement on Tuesday, the exchange said it will stop using centralized pricing and limit participants’ trading frequency.

Fei Jian, chairman of Shanghai Agricultural Products E-Business Co Ltd, a trading platform for agricultural products, said his business is in full compliance with the rules and welcomes the cleanup.  “We made changes early in 2009 to comply with the regulations. Having the sector regulated is good for everyone,” he said.

The scale of the trading houses’ business isn’t known. The houses aren’t required to disclose transaction data. Additionally, their fast growth and the fact that some of their activities are illegal make it difficult to calculate the industry’s size.

The trading houses pose risks, with an absence of clearinghouses, ever-changing trading rules and price manipulation.

But investors’ collective intelligence is unlikely to have ignored or missed these risks. Thus, some experts said, if regulators really want to establish financial stability, they need to figure out what needs the exchanges fulfill.

Hu Yuyue, head of Beijing Technology and Business University’s securities and futures research center, said the answer can be summed up in one word: demand.

Hu said many trading houses have sprung up because investors need more financial tools than are being provided by the major, approved futures exchanges, such as the Shanghai Futures Exchange, Zhengzhou Commodity Exchange and China Financial Futures Exchange.

“The futures exchanges in China are well-regulated but relatively underdeveloped. So they lack new products and systems to satisfy investor demand,” he said. “That has resulted in the boom of unregulated trading houses.”  In the first 10 months of this year alone, 58 trading houses were established.

Three bourses were set up in the city of Wuhan in just a week: the Wuhan Shipping Exchange, the Wuhan Financial Assets Exchange and the Wuhan Agricultural and Livestock Products Exchange.

One factor driving the formation of the new trading venues is the surge in liquidity caused by the 4 trillion yuan ($631 billion) stimulus package enacted in 2008 amid the global downturn.

The private-sector credit crunch has also driven capital into the trading houses, as some entrepreneurs abandon their businesses for the financial market.  Fei said that the trading houses do face a shake-up, but strong investor demand will keep the sector developing.

Source: China Daily, 25.11.2011

Filed under: Asia, China, Exchanges, Risk Management, , , , , ,

November 25, 2011 • 1:28 am 0

China and Mexico: Strategic Partners or Competitors? 中国与墨西哥: 战略伙伴关系还是竞争对手?.

China and Mexico’s bilateral relationship is the subject of an ongoing debate, characterized, in general, by strongly conflicting views. On one hand, there are the ones that quite often quote unfair trade practices from China, or Chinese companies who have suffered losses of time, energy and money when entering the Mexican market.

It is quite common to listen at business meetings that after months of negotiations, companies found out that their potential local partner was not the most adequate. Sadly, cross-cultural misunderstandings often contributed to break the potential association, since the local partner didn’t have the financial strengths nor was knowledgeable enough of the local market, etc. On the other hand, bad experiences are not a must. It is also possible to identify success stories from companies establishing in China, and vice-versa, doing business profitably. The examples include small and medium size companies on trading, sourcing, and exporting to and from China; but also large corporations with standalone investments or join ventures with local players.

At Mexican malls you can buy electronic products with a Chinese brand manufactured in Mexico; in China, flour made “tacos” have paved their way to gain preferences in the Chinese middle class.

Even tough for many specialists the investment and trade flow between China and Mexico is not significant in terms of value and diversity of industries; there are some figures that are worth keeping in mind. Based on official statistics in 1990, Mexico exported nine million USD and imported around fifteen million USD from China. For 2010, the bilateral trade reached almost fifty billion USD, while the bilateral trade between India and China reached about sixty billion USD in that same year. This is an impressive amount if we consider Mexico does not share borders with India, and Mexican population is around ten times smaller than the Indian.

On December 11, 2011; the agreed program between Mexico and China on compensatory import duties will come to an end. It is expected for this to reinvigorate the debate on trade and business practices. Nevertheless, it would be worth it to keep in mind that in a twenty years period, Mexico’s exports to China had a compound annual growth rate of over 36 per cent (CAGR), while imports from China to Mexico registered a CAGR of 49 percent. Moreover, although exports from China are generally associated to end products, during the last decade, imports such as intermediate products have increased significantly.

Therefore, if you are doing business between both countries, it would be relevant to review if your company is growing two digits too. Although there is no “fail-safe” recipe for doing business between China and Mexico, the more informed the company is, the greater its chances are of succeeding. On this issue, you can review complimentary articles on innovation, resource allocation, and metrics, among many other factors to be considered in a successful market expansion strategy.

At Deloitte, from Tijuana to Shenzhen and from Hong Kong to Monterrey, we have highly experienced professionals ready to help you succeed in China and Mexico. For more information on our services email us at: deloitte_contacto@deloittemx.com

Source: Deloitte Mexico, 25.11.2011 -  José Luis Enciso deloitte_contacto@deloittemx.com

Filed under: Asia, China, Latin America, Mexico, News, , , , , , , , ,

November 17, 2011 • 11:42 pm 0

Shenzhen Stock Exchange revamps trading system

SZSE held the celebration for 10-year anniversary of the 4th version of trading system, also for launching the construction of the 5th version of trading system.

The 4th version of trading system, officially launched on November 12, 2001, was independently researched and developed by SZSE, which, adhering to the fundamental principal of “secure, efficient and self-controllable”, constantly expands and improves the function and performance of the system in light of the needs for constructing China’s multi-layer capital market. In the past 10 years, the 4th version of trading system has witnessed the establishment of split share structure reform, SME Board, ChiNext, and Zhongguancun Park Enterprises Stock Quotation System, and other major business innovation including ETFs, LOFs, margin trading securities lending in the process of rapid development of Shenzhen securities. It plays a significant role as technology support to guarantee the safe and stable market operation and push forward the construction of multi-layer capital market. By far, the 4th version of trading system has provided trading services for as many as 1800 securities, 4700 sales networks and 100 million investors, with the actual peak amount of daily entrusted deals handled as high as 22.47 million, and a 10-year record for continuously safe operation.

As multi-layer capital market continuously develop healthily in China, SZSE, on the basis of ongoing plan, now officially implement constructing new version of transaction system, namely the 5th version of transaction system, so as to support the future business development, provide better market transaction services, and reinforce market competitiveness. The prospective 5th version of trading system aims at, on the one hand, building a scientific and sound structure with higher efficiency, larger capacity, better security, more expansibility and more flexible business adaptation, on the other hand constructing an integrated transaction platform capable of supporting multi-layer, multi-variety, multi-market. It is expected to be launched in 2015, by the time of which the new system’s speed of handling orders will reach more than 200 thousand deals per second.

Chen Dongzheng, Chairman of SZSE Council, and concurrently Secretary of SZSE Party Committee attended the ceremony and announced the official launch of the research and development for the 5th trading system.

Source: Shenzhen Stock Exchange, 16.11.2011

Filed under: China, Exchanges, Trading Technology, Uncategorized, , , , , , , , , , , ,

November 17, 2011 • 12:10 am 2

Every Chinese Province bankrupt like Greece – Host Says Chinese Regime nearly bankrupt

China’s economy has a reputation for being strong and prosperous, but according to a well-known Chinese television personality the country’s Gross Domestic Product is going in reverse.

Larry Lang, chair professor of Finance at the Chinese University of Hong Kong, said in a lecture that he didn’t think was being recorded that the Chinese regime is in a serious economic crisis—on the brink of bankruptcy. In his memorable formulation: every province in China is Greece.

Related Article:

Bobsguide - China reduces lenders’ ratio requirements (02.12.2011)
EpochTimes – China’s Economy on the Brink of Collaps (Nov.2011)
The Guardian – IMF sounds warning  on Chinese Banking System (Nov.2011)
 
The restrictions Lang placed on the Oct. 22 speech in Shenyang City, in northern China’s Liaoning Province, included no audio or video recording, and no media. He can be heard saying that people should not post his speech online, or “everyone will look bad,” in the audio that is now on Youtube. 

In the unusual, closed-door lecture, Lang gave a frank analysis of the Chinese economy and the censorship that is placed on intellectuals and public figures. “What I’m about to say is all true. But under this system, we are not allowed to speak the truth,” he said.

Despite Lang’s polished appearance on his high-profile TV shows, he said: “Don’t think that we are living in a peaceful time now. Actually the media cannot report anything at all. Those of us who do TV shows are so miserable and frustrated, because we cannot do any programs. As long as something is related to the government, we cannot report about it.”

He said that the regime doesn’t listen to experts, and that Party officials are insufferably arrogant. “If you don’t agree with him, he thinks you are against him,” he said.

Lang’s assessment that the regime is bankrupt was based on five conjectures.

Firstly, that the regime’s debt sits at about 36 trillion yuan (US$5.68 trillion). This calculation is arrived at by adding up Chinese local government debt (between 16 trillion and 19.5 trillion yuan, or US$2.5 trillion and US$3 trillion), and the debt owed by state-owned enterprises (another 16 trillion, he said). But with interest of two trillion per year, he thinks things will unravel quickly.

Secondly, that the regime’s officially published inflation rate of 6.2 percent is fabricated. The real inflation rate is 16 percent, according to Lang.

Thirdly, that there is serious excess capacity in the economy, and that private consumption is only 30 percent of economic activity. Lang said that beginning this July, the Purchasing Managers Index, a measure of the manufacturing industry, plunged to a new low of 50.7. This is an indication, in his view, that China’s economy is in recession.

Fourthly, that the regime’s officially published GDP of 9 percent is also fabricated. According to Lang’s data, China’s GDP has decreased 10 percent. He said that the bloated figures come from the dramatic increase in infrastructure construction, including real estate development, railways, and highways each year (accounting for up to 70 percent of GDP in 2010).

Fifthly, that taxes are too high. Last year, the taxes on Chinese businesses (including direct and indirect taxes) were at 70 percent of earnings. The individual tax rate sits at 81.6 percent, Lang said.

Once the “economic tsunami” starts, the regime will lose credibility and China will become the poorest country in the world, Lang said.

Several commentators have expressed broad agreement with Lang’s analysis.

Professor Frank Xie at the University of South Carolina, Aiken, said that the idea of China going bankrupt isn’t far fetched. Major construction projects have helped inflate the GDP, he says. “On the surface, it is a big number, but inflation is even higher. So in reality, China’s economy is in recession.”

Further, Xie said that official figures shouldn’t be relied on. The regime’s vice premier, Li Keqiang for example, admitted to a U.S. diplomat that he doesn’t believe the statistics produced by lower-level officials, and when he was the governor of Liaoning Province “had to personally see the hard data.”

Cheng Xiaonong, an economist and former aide to ousted Party leader Zhao Ziyang, said that high praise of the “China model” is often made on the basis of the high-visibility construction projects, a big GDP, and much money in foreign reserves. “They pay little attention to things such as whether people’s basic rights are guaranteed, or their living standard has improved or not,” he said.

Behind the fiat control of the economy, which can have the appearance of being efficient, there is enormous waste and corruption, Cheng said. It means that little spending is done on education, welfare, the health system, etc.

Cheng says that for the last decade the Chinese regime has accumulated its wealth primarily by promoting real estate development, buying urban and suburban residential properties at low prices (or simply taking them), and selling them to developers at high prices.

According to Cheng, the goals of regime officials (to enrich themselves and increase their power) are in direct conflict with those of the people–so social injustice expands, and economic propaganda meant to portray the situation as otherwise prevails.

Few scholars inside the country dare to speak as Lang has, Cheng said. And that’s probably because he has a professorship in Hong Kong.

Source: TheEpochTimes, 15.11.2011

Filed under: Asia, Banking, China, News, Risk Management, , , , , , , , , , , ,

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

November 12, 2011 • 1:59 am 0

Chinese Markets STEP Forward with China FIX

Dr. Bai Shuo of the Shanghai Stock Exchange (SSE) explains the importance of the STEP Protocol and its development in China.

Dr. Bai Shuo, Shanghai Stock ExchangeHow did the STEP Protocol begin and which organisations originally developed it?

Back in 2003, at the same time when the SSE began to prepare the Next Generation Trading System (NGTS) project, which would later go live on Nov 23, 2009, the SSE decided to introduce a message-based protocol between the exchange and brokers, which is widely accepted to be FIX. The pioneering work was encouraged by the China Securities Regulatory Commission (CSRC).

Under the framework of national standardization, this protocol became one of the eight standards in the securities industry. The WG01 group was responsible for the drafting of the protocol under the direction of the CSRC. The membership of the WG01 group includes: SSE, Shenzhen Stock Exchange (SZSE), Shanghai Futures Exchange (SHFE), Guoxin Security Co. and some other securities companies. The protocol, which is informally called Chinese FIX, or CFIX, is named STEP (Securities Trading Exchange Protocol), as it is regarded as the initial ‘step’ towards a first-class stock market. STEP 1.0 was written in 2004 and issued in 2005. STEP was revised as version 1.1 in 2006.

How does STEP fit into China’s overall usage of standards in the financial world?

While FIX is a global standard in the securities industry, STEP is more suitable for the Chinese market, since STEP introduced many native business and local definitions. The CSRC is responsible for the STEP standard. The SSE has agreed to use STEP and is eager to promote STEP, so as to encourage brokers to follow STEP. In China, investor accounts that should be supervised are designed to be contained in Parties component block. Tags in range 8500 to 8540 are allocated for Chinese market usage, such as market data delivery and business for funds, warrants and voting. Quite a few tags are enhanced for local businesses, such as tag 40 (OrdType), tag 103 (OrdRejReason), tag 269 (MDEntryType), tag 326 (SecurityTradingStatus).

What is the scope of STEP’s usage? What parts of the trading cycle was it intended to cover and what asset classes is it used for?

STEP covers the pre-trade and trade parts of trading cycle, as well as some specific registering instructions. STEP is used for stocks, funds, bonds, warrants, ETFs, and lots of featured non-trading businesses, such as IPOs, right issuances, fund creation and redemptions, warrant executions, bond deposit and withdrawals, voting, etc.

Who were the early adopters of STEP? Who currently uses STEP and for what?

The SSE uses STEP for level2 market data service. Information vendors have taken STEP for level2 service in the meantime. Creative businesses like this are suitable to take the new protocol standard in order to have the ability to easily maintain and extend, without a burden to support a legacy interface.

What is the next stage in the development of STEP? Where is adoption of STEP going to grow most significantly in the near future? Are there new goals or applications for STEP?

STEP is under revision as many new businesses were introduced during the last five years. STEP is considered easier to be adopted in market data and other creative businesses. Also, STEP over FAST will be used for SSE level 1 market data delivery. Block trading, quote repo, agreed repo and margin financing on the Alternative Trading Platform (ATP) of the SSE will take STEP as the format for business records. Traditional trading business will gradually be enhanced to support STEP in near future as we get more confidence through the experience on creative business.

Source: FIXGlobalTrading, 15.09.2011
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Filed under: Asia, China, Exchanges, FIX Connectivity, Market Data, Trading Technology, , , , , , , , , , , , , , , , ,

November 1, 2011 • 9:01 am 2

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

October 19, 2011 • 9:16 am 0

Brazil: BM&FBOVESPA – News October 2011 – Nr.21

BRIC exchanges announce alliance

The exchanges of the BRIC emerging markets bloc announced a joint initiative on October 12, during the 51st AGM of the World Federation of Exchanges (WFE) in Johannesburg, to offer investors access to their dynamic economies. Initially the exchanges – which accounted for over 18% of all exchange-listed derivative contracts traded by volume worldwide as of June this year – will cross-list benchmark equity index derivatives on the boards of other alliance members. Following this, the alliance will develop innovative products to track the BRIC exchanges.

The seven exchanges are:

  • BM&FBOVESPA – Brazil
  • MICEX – Russia
  • RTS – Russia
  • Hong Kong Exchanges and Clearing Limited (HKEx) – China
  • Johannesburg Stock Exchange (JSE) – South Africa
  • The National Stock Exchange of India (NSE) – India
  • BSE Ltd (formerly known as Bombay Stock Exchange) – India

These seven exchanges represent a combined listed market capitalization of USD9.02 trillion, equitymarket trading value/month of USD422 billion and 9,481 companies listed.

BM&FBOVESPA new trading hours

In view of the start of daylight saving time on October 16, 2011, since October 17, 2011, the new trading hours (Brasília Time) for the BM&FBOVESPA markets – BOVESPA and BM&F segments – will be as follows:

Regular session: 11:00 a.m. – 6:00 p.m.

- After-Market: 6:30 p.m. – 7:30 p.m. (pre-opening phase to trading phase);

- Blocking / Exercise on the stock options market
Days prior to expiration: 11:00 a.m. – 5:00 p.m. (exercise of holder position).
Expiration date: 11:00a.m. – 12:30 p.m. – trading of the expired series to the offset of the position, that is, the sale for the holder of the position and purchase for blocking for the writer of the position / 12:30 p.m. – 2:00 p.m.: exercise of the holder position;

- Blocking / Exercise on the Index Options Market:
Days prior to expiration: 11:00 a.m. – 2:00 p.m. (exercise of holder position).
Expiration date: 11:00 a.m. – 2:00 p.m. – trading of the expired series to the offset of the position, that is sale for the holder of the position and purchase for blocking for the writer of the position / After 6:00 p.m. – automatic exercise of the expired series which fit the following situations: call option (settlement index higher than the exercise price; and put option (settlement index lower than the exercise price).

- Over-the-Counter Market: 11:00 a.m. – 6:00 p.m.

> Complete information of the new trading hours (Circular Letters 009-2011-DO-Ofício Circular)

The trading hours for the BOVESPA and BM&F segments are available at this link

Market Makers for Options on the Stock of Banco Bradesco, Gerdau and Banco do Brasil

BM&FBOVESPA announced on August 3rd the start of the bidding process to select up to three market makers for options on stock of Banco Bradesco S.A. (BBDC4), Gerdau S.A. (GGBR4) and Banco do Brasil S.A. (BBAS3). This is the third stage of the Competitive Bidding Process to select market makers in equity options and BOVESPA Index (Ibovespa) options, developed by BM&FBOVESPA. The institutions (including nonresident) that wish to participate have until November 29, 2011 to deliver proposals and the winners will be announced on December 14, 2011.

> More info

Market Makers for Options on Ibovespa and on Stocks of BM&FBOVESPA and Usiminas

BM&FBOVESPA announced on October 11 the winning institutions in the second selection process for market makers for options on stocks and on the BOVESPA Index (Ibovespa). The market maker obligation shall last twelve (12) months as of December 12, 2011. Banco Citigroup Global Markets Limited, Banco Itaú BBA S.A. and Timber Hill LLC shall be market makers for options on the BOVESPA Index (IBOV), complying with a maximum volatility spread of half a percentage point (0.5%). The institutions selected for options on stocks in BM&FBOVESPA S.A. (BVMF3) were Citadel Securities LLC, Citigroup Global Markets Limited and Morgan Stanley Uruguay Ltda, which shall be market makers complying with a maximum volatility spread of four percent (4%). Meanwhile, the institutions selected for options on stocks in Usinas Siderúrgicas de Minas Gerais S.A. (USIM5) were Banco BTG Pactual S.A. and Morgan Stanley Uruguay Ltda, which shall be market makers complying with a maximum volatility spread of twenty percent (20%).

> More info

Options on OGX Petróleo and Itaú Unibanco rise with Market Maker activity

The trading volume for options on the stocks of OGX Petróleo and Itaú Unibanco rose significantly in September, strongly influenced by the fact that they have had Market Makers since September 9. The Exchange launched the Market Maker program for stocks this year in order to encourage trading in options and increase their liquidity, as well as to stimulate longer expiries on these contracts. Options on the stocks of OGX Petróleo and Itaú Unibanco now have three Market Makers.

Comparing the average daily volume in September to that of January to August, there were the following increases: OGX Petróleo ON 51.9% (BRL 13.7 million against BRL 20.8 million) and Itaú Unibanco PN 205.6% (BRL 1.7 million against BRL 5.1 million).

ETF financial volume more than doubles in the past two months

BM&FBOVESPA Exchange Traded Funds (ETFs) reached BRL 1.4 billion financial volume in August and September, at 78,809 and 75,740 trades respectively. This is more than double the BRL 668 million financial volume and 31,997 trades in July.

Common Shares in Desenvix Energias Renováveis start trading on BOVESPA MAIS

The shares of electricity company Desenvix Energias Renováveis S.A. begin to be traded on October 3 on the BOVESPA MAIS segment of the BM&FBOVESPA Organized OTC Market, under the DVIX3M ticker symbol.

USD11 billion in public offerings and follow-ons in 2011

In the year to October, 15, BM&FBOVESPA registered USD11 billion in public offerings and follow-ons. There were eleven Initial Public Offerings (IPOs) in 2011: AREZZO&CO (ARZZ3), SIERRA BRASIL (SSBR3), AUTOMETAL (AUTM3), QGEP PART (QGEP3), IMC HOLDING (IMCH3), TIME FOR FUN (SHOW3), MAGAZINE LUIZA (MGLU3), BR PHARMA (BPHA3), QUALICORP (QUAL3), TECHNOS (TECN3) and ABRIL EDUCAÇÃO (ABRE11).

BM&FBOVESPA on Twitter

BM&FBOVESPA launched its Twitter account in English last week. Please access this link

2011 EVENTS

 The World Cup of ETFs and Indexing Latin America

BM&FBOVESPA is lending its support to the World Research Group’s “World Cup of ETFs and Indexing Latin America.” The event aims at providing attendees with the best practices for ETF use, as well as a comprehensive analysis of market structure, regulations and current and future opportunities. The expected audience includes pension funds, hedge fund managers and investors, investment advisors, financial consultants, and other market participants. A BM&FBOVESPA representative will talk about the Exchange’s ETF products.

Location: São Paulo (TBC)
Date: October 17-18, 2011.
> Full Agenda and Registration

2nd FX Growth Markets Series: Brazil – Profit & Loss

BM&FBOVESPA will join the Profit & Loss FX Growth Markets conference on October 20, 2011 at the Tivoli Hotel in São Paulo. Profit & Loss has been operating its highly successful series of Forex Network and FX Growth Markets conferences for more than 10 years, with regular annual events held in London, New York, Chicago, Singapore, Brazil, Mexico, Colombia, Chile, Shanghai and Toronto, and comes to Brazil for the second time. A BM&FBOVESPA representative will talk at the event.

Location: Tivoli Hotel São Paulo, São Paulo, Brazil
Date: October 20, 2011.
> Full Agenda

2nd Brazil–China Capital Markets Forum

BM&FBOVESPA and the Shanghai Stock Exchange are coordinating the Second Brazil–China Capital Markets Forum. This event follows the First Brazil–China Capital Markets Forum, which occurred in February in São Paulo, Brazil. At the event, the Shanghai Stock Exchange shall bring 300 to 500 Chinese asset and insurance managers and representatives of listed companies.

Location: Xijiao State Guest House Shanghai, China
Date: October 27, 2011.

Volumes and trades by Direct Market Access (DMA)

BM&F Segment
In September, BM&F* market segment transactions carried out through order routing via Direct Market Access (DMA) registered 35,144,357 contracts traded and 4,311,865 trades. In August, the volume reached 41,417,494 contracts traded and 4,431,750 trades.

The volumes registered by each access modality in the BM&F segment were as follows:

  • Traditional DMA – 12,583,334 contracts traded, in 1,366,264 trades, in comparison to 17,540,231 contracts and 1,306,241 trades in August;
  • Via DMA provider (including orders routed via the Globex System) – 13,976,949 contracts traded, in 374,992 trades, compared to 14,088,756 contracts and 435,281 trades in August;
  • DMA via direct connection – 2,636 contracts traded in 447 trades, against 4,210 contracts and 830 trades in August;
  • DMA via co-location – 8,581,438 contracts traded, in 2,570,162 trades, compared to 9,784,297 contracts and 2,689,398 trades in August.

In September, transactions carried out by foreign investors presented by CME to BVMF (who use the Globex-GTS order routing system or access BVMF markets via co-location) totaled 4,685,186 contracts traded, in 1,164,510 trades, compared to 5,308,308 contracts and 1,235,349 trades in August.

BOVESPA Segment
In September, order routing via DMA in the BOVESPA* segment totaled BRL 111.41 billion and 14,298,483 trades, from BRL 138.52 billion and 17,021,408 trades the previous month.

Trading volumes per type of DMA in the BOVESPA segment:

  • Traditional DMA – Volume of BRL 95.77 billion and 11,763,618 trades from BRL 120.45 billion and 14,098,638 in August;
  • DMA via co-location – Volume of BRL 14.29 billion and 2,357,270 trades from BRL 16.69 billion and 2,755,498 in August;
  • DMA via provider – Volume of BRL 1.34 billion and 177,044 trades from BRL 1.37 billion and 167,272 in August.

* Direct access to the BM&FBOVESPA market segments is carried out through DMA models 1, 2, 3 and 4. In model 1 or traditional DMA, the client accesses the GTS or Mega Bolsa through technological intermediation of a brokerage house. In model 2 or via DMA provider, the client does not use the technological intermediation of a brokerage house, but rather connects to the system through an authorized access provider. DMA via order routing with CME Globex is also a form of DMA model 2. In model 3, the client connects to the system through a direct connection. In model 4 or via co-location, the client installs its own computer within the Exchange’s facilities.

Notes:

The volumes registered by access modality include both buy and sell sides of a trade.

The volumes by access modality for both the BM&F and the BOVESPA market segments have been reported in a consolidated manner in the BM&FBOVESPA statements since May 2009.

MARKET RESULTS

BM&F Segment September 2011

Derivatives markets in the BM&F segment (including financial and commodities derivatives) totaled 59,365,524 contracts and BRL 4.35 trillion in volume in September, compared to 78,606,873 contracts and BRL 5.23 trillion in August. The daily average of contracts traded in the derivatives markets in September was 2,826,930, in contrast to 3,417,690 in August. Open interest contracts ended the last trading day of September with 36,620,797 positions, compared to 37,821,302 in August.

BOVESPA Segment September 2011

In September 2011, the equity markets (BOVESPA segment) financial volume totaled BRL 131.437 billion, in 13,551,487 trades, with daily averages of BRL 6.25 billion and 645,309 trades. In August, financial volume totaled BRL 177.906 billion, the total number of trades 16,234,673, and the daily averages BRL 7.73 billion and 705,855 trades respectively.

Source: BM&FBOVESPA, 18.10.2011

Filed under: BM&FBOVESPA, Brazil, China, Events, Exchanges, Hong Kong, India, Risk Management, , , , , , , , , , , , , , , , , , , , , , , , , ,

October 15, 2011 • 11:03 pm 0

Brazil: BRIC exchanges form alliance

The exchanges of the Brics emerging markets bloc have announced plans to form an alliance in cross-listing and to expose foreign investors to their dynamic economies and to increase the liquidity of their trading venues (Brazil, Russia, India, Hong Kong (China), South Africa)

This initiative was announced at the 51st AGM of the World Federation of Exchanges (WFE) in Johannesburg.

The initiative brings together BM&FBOVESPA from Brazil, MICEX from Russia (currently merging with RTS Stock Exchange), Hong Kong Exchanges and Clearing Limited (HKEx, China) and Johannesburg Stock Exchange (JSE) from South Africa. The National Stock Exchange of India (NSE) and the BSE Ltd (India) have signed letters of support and will join the alliance after finalizing outstanding requirements.

At the first stage of this project the exchanges will begin cross-listing of financial derivatives on their benchmark equity indices. It is planned to launch cross-listed products by June 2012.

“Global investors are increasingly seeking exposure to leading developing markets,” says Ronald Arculli, chairman of HKEx and of the WFE. “Thanks to this alliance, investors will gain easier access to major equity index derivatives of the BRICS markets which will now be offered in local currency on the alliance exchanges”.

This is an important milestone in the history of developing countries, continues Mr Arculli. “The alliance enables more investors to gain exposure to the emerging economies of the BRICS group whose economic power is on the rise. From a global perspective this alliance highlights the growing significance of the BRICS economies and financial markets for the coming decade, and further underlines the importance of enhancing cooperation between the BRICS members”.

At the second stage of the project members of the alliance plan to jointly develop new products for cross-listing on their exchanges. “In addition to measuring market performance, equity indices may be used as underlying assets to create new products, which can be the next step in the alliance development”, says Russell Loubser, CEO of the JSE.

“The products designed at the second stage would then be cross listed and traded in local currencies,” says Edemir Pinto, CEO of BM&F BOVESPA. “They will also ensure easy access for investors to other emerging markets through locally listed products.”

The third stage may include further cooperation in joint products design and new services development.

“Apart from cross-listing products, there are other opportunities for growth and development within this alliance. For example, creation of joint products combining various underliers which will facilitate liquidity growth in the BRICS markets and improve the understanding of other developing markets by local investors,” says Ruben Aganbegyan, President of MICEX.

All the partnering exchanges estimate the potential for cooperation created by this alliance very positively.

“The BRICS exchanges alliance has a great potential as it will create avenues for Indian investors to diversify their portfolios and expand into other emerging markets. It will also provide unique opportunities to investors in other BRICS nations to participate and contribute in India’s growth. BSE will actively work towards bringing world-class products to India as well as developing new products for other BRICS markets.” says Madhu Kannan, CEO of BSE Ltd.

Interest towards the BRICS markets is supported by the above-average growth forecast for these regions, as well as the rising consumer power generated by growing middle classes in each of the participating economies” says Ravi Narain, MD of the National Stock Exchange of India.

According to the WFE these six exchanges represent a combined market capitalization of USD 9.02 trillion, the number of their ussuer companies totals 9.5 thousand.

As per the research by the Futures Industry Association these six exchanges accounted for 18% of the global turnover in financial derivatives in H1 of 2011.

Source: BM&FBOVESPA, FinExtra, 12.10.2011

Filed under: BM&FBOVESPA, Brazil, China, Exchanges, Hong Kong, India, News, , , , , , , , , , , , , , ,

September 20, 2011 • 10:59 pm 1

China: Shanghai Stock Exchange: SSE 380 Style Indices, SSE Health Care Index, SSE Agriculture Index to be launched

To further enhance the SSE and CSI index family as well as to provide new analysis tool and underlying instrument for investors, SSE 380 Style Indices 、SSE Health Care Theme Index and SSE Agriculture Theme Index and are to be launched on October 18th，2011 by SSE and CSI.

See the SSE 380 Style Indices Methodology

Source; Mondo-visione, 20.09.2011

Filed under: China, Exchanges, News, , , , , , ,

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