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Chile: Comder to launch Central Counterparty next year with Calypso clearing solution

A consortium of Chilean banks is forming a new central counterparty (CCP) next year for over-the-counter (OTC) derivatives. The Comder CCP has selected Calypso to provide the core clearing platform for the new launch which will enable compliance with the post-crash rules laid out at the Pittsburgh G20 mandating more transparency and effectively ‘on exchange’ clearing.

The new Comder CCP will begin clearing non-deliverable forwards (NDFs) in Q4 2014 and interest rate derivatives (IRD) in Q1 2015. The CCP will be powered by Calypso with its platform providing legal novation, affirmation, registration, limits, initial and variation risk margins, collateral management data, and default management and centralised trade repository storage and reporting.

According to Felipe Ledermann, the chief executive of Comder, Calypso was chosen for its experience in OTC derivatives central clearing. Comder will receive on-going maintenance and support from the vendor after the platform is rolled out next year.

“We see Calypso as a strategic partner for one of the most important projects in the Chilean banking industry,” continued Ledermann. “This initiative allows us to build a best-in-class CCP with the highest standards and align with BIS-IOSCO principles for market infrastructures.”

Calypso already provides OTC derivatives clearing and processing infrastructure and technology to leading clearing houses, such as the Chicago Mercantile Exchange (CME), Eurex, BM&FBovespa, the Tokyo (TSE) and Singapore exchanges (SGX) and Hong Kong Exchanges and Clearing (HKEX). The Calypso clearing solution provides full cross-asset coverage, manages each step in the clearing process and delivers visibility into risk for cash and OTC derivatives products, claims the vendor. The single platform should also be scalable if Comder attracts significant volumes.

Commenting on the deal, Kishore Bopardikar, president and chief executive of Calypso Technology, said he was excited to provide a solution that will enable the Chilean market to move towards a centrally cleared derivatives environment, adding that “we are pleased to be supporting the development of such an important platform for the country”.

Source: Bobsguide, 23.07.2013

Filed under: Chile, Latin America, Standards, , , , ,

Derivatives: Struggling Into the New Era – Outlook 2013/14

The past few years have been challenging for the global economy but it seems as though the derivatives industry sustained more than its share of insults and injuries over the past year or so. Still reeling from the trauma of MF Global in October of 2011, exchange-traded volume went into its first nosedive in decades.

Urgent regulatory requirements added intense cost and time pressures to company staffs that were already stretched. A non-clearing FCM, Peregrine Financial, collapsed in scandal. OTC derivatives struggled with complex regulatory mandates and weak volume.

Perhaps the only positive for the year was that mergers and acquisitions at both the macro and micro level imply that innovation and creativity are still powerful industry drivers. That in turn suggests that the creative dynamism that has characterized the derivatives industry for so many years still has some innings to go.

Read the detailed report about Derivatives market outlook, challenges and issue of big deals, exchange mergers and new start ups, customer protection, Regulatory,Extraterritorial and Tax problems  and more. 

Source: WEF 25.04.2013 by Nicolas Ronalds

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

ICE to acquire NYSE Euronext for 8.2 billion USD – Back Ground and Analysis

The overall mix of the $8.2 billion of merger consideration being paid by ICE is approximately 67% shares and 33% cash. The transaction value of $33.12 represents a 37.7% premium over NYSE Euronext’s closing share price on Wednesday.  The transaction is expected to close in the second half of 2013, subject to regulatory approvals.

Investors see plenty of upsides in a takeover by ICE, which would create a powerhouse in cross-asset trading and reduce Nyse Euronext’s reliance on stagnating, hyper-competitive equity markets. Nyse’s share of trading on stocks listed on the Big Board has shrunk from 82% to just 21% in a fiercely competitive market.  For ICE, a tie-up with Nyse Euronext will give the energy trading bourse a leg-up into the expanding market for over-the-counter derivatives contracts and the geographical outreach to take on the Chicago Mercantile Exchange.

The two companies have already inked an agreement for Nyse Liffe to move its clearing operations to ICE Clear Europe. The implications of the deal for Nyse Liffe’s plans to move its clearing from LCH.Clearnet to a newly-constructed inhouse CCP by June 2013 have not been spelled out.

The combined company is expected to save up to $450 million through cost synergies in the second full year post closing. ICE has successfully integrated more than a dozen acquisitions in the last decade.  An earlier bid by ICE to take over Nyse Euronext in tandem with Nasdaq OMX was nixed by the US Justice Department on anti-competitive grounds. Observers see no similar objections being raised to a straight merger, with Nasdaq OMX removed from the equation. FinExtra 20.12.2012

NYSE and ICE: Not So Nice for European Equities

Given the sweeping changes hitting exchanges on the back of growing regulation and falling equity volumes in Europe, the combined entity would increase its chance of success, dominating European energy, commodity and short-dated fixed income trading, as well as OTC credit clearing; and leap-frogging Deutsche Boerse to become the world’s third-largest exchange group, with a combined market value of $15.2 billion.

However, not all divisions would benefit. Whilst a tie up with ICE would enable London-based Liffe to compete more effectively with CME Group in both trading and clearing of OTC products, for Euronext the future looks less certain. According to NYSE’s investor presentation explaining the deal, ICE “intends to explore an IPO of Euronext if market conditions allow and if European policy makers are supportive.” See full article at TABB Forum 20.12.2012.

ICE and NYSE Euronext Enter Clearing Services Agreement; ICE Clear Europe to Clear NYSE Liffe’s Derivatives Markets

ICE and NYSE Euronext agree that their wholly owned subsidiaries, ICE Clear Europe Limited and LIFFE Administration and Management have entered into a clearing services agreement pursuant to which ICE Clear Europe will provide clearing services to the London market of NYSE Liffe (“NYSE Liffe”). The clearing services agreement will allow NYSE Liffe to transition seamlessly from their current clearing arrangements. See full article at Bob´s Guide 20.12.2012

Inside ICE takeover of NYSE Euronext ( Tabb Forum Video Interview)

Exchange Consolidation: Getting Over Merger Mania

At this time last year, NYSE Euronext and Deutsche Bourse were more than midway through a year-long merger push that would have resulted in an exchange operator with an estimated $16 billion in combined market capital and a near monopoly on the European exchange-traded derivatives business. Consolidation, it seemed, was the key to competing in the global exchange landscape.

But dreams of consolidation, synergies and economies of scale were quickly dashed. The two biggest cross-border exchange deals — NYSE/DB merger and the proposed merger of the Singapore Exchange (SGX) and the Australian Securities Exchange (ASX) — were blocked by regulators, and the LSE’s attempt to buy the Toronto Stock Exchange (TMX), which also failed initially due to reluctant regulators, eventually lost out to a domestic bid from Maple Group Acquisition Corp. earlier this year. see full article at TABB Forum 12.12.2012.

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

London & Delhi Stock Exchanges in Trading System Deal for Equity, Derivatives and FX.

London Stock Exchange Group (‘the Group’) today announced that MillenniumIT, a wholly owned subsidiary, has signed a contract with the Delhi Stock Exchange (‘DSE’) to provide the Indian Exchange with trading technology. The deal will see MillenniumIT provide solutions for equity, derivatives and FX trading as well as clearing technology.

Millennium Exchange is an ultra low latency, highly scalable trading platform offering low-cost solutions to exchange businesses around the world.

Tony Weeresinghe, CEO of MillenniumIT and Director of Global Development at London Stock Exchange Group said:”We are delighted to have been chosen to provide trading and clearing technology solutions to the Delhi Stock Exchange. India is a dynamic and fast developing market and we look forward to working with the Delhi Stock Exchange to introduce a high-speed, low-cost trading solution to the Indian market.”  A time table for implementation will be announced in due course.

Source: MondoVision, 11.11.2011

Filed under: Exchanges, India, News, Trading Technology, , , , , , ,

Webinar: Road to Brazil – DMA to BM&FBOVESP March 23, 2011

Join us for this interactive webinar on Wednesday, March 23rd to learn more about why BM&FBovespa is to become more than simply the largest exchange in Latin America.  As Direct Market Access technology has improved, co-location facilities have been set in place. As regulations for foreign investors become more attractive and commodity prices are soaring, trading firms from the US, Europe and Asia are seeking to access and trade Brazil.

Also, hear from our speakers why Brazil has been so successful in the past and how market participants are ramping up their offering to fully profit from Direct Market Access opportunities.

Key Topics will include:

  • Why Brazil?
  • Technology: Type of Market Access, Connectivity, Co-location and Trading Systems
  • Costs of Trading: Accounts, Regulation, Taxes, Custodian, Clearing and Settlement
  • Timeline and Key Milestones

Our webinar will be moderated by Chris Hall, Editor of THE TRADE.

Panelist will include:
Lucy Pamboukdjian, International Business Development Manager, BM&FBovespa
Sergio Parodi, Market Data & DMA Team Leader,  BM&FBovespa
Evandro dos Reis, Jr., Director, Co-head Latin America, Clearing & PTG, Newedge Group
Timo Pentner, Managing Director, RTS Realtime Systems

Wednesday, March 23rd
11:00 am Chicago
12:00 am New York
1:00 pm Sao Paulo
4:00 pm London
5:00 pm Frankfurt

Filed under: BM&FBOVESPA, Brazil, Events, Exchanges, FIX Connectivity, News, Trading Technology, , , , , , , , , , , , ,

HKEx And Shanghai Stock Exchange Agree On New Cooperation Initiatives

Hong Kong Exchanges and Clearing Limited (HKEx) and Shanghai Stock Exchange (SSE) have met today to discuss the Closer Cooperation Agreement they signed in January of last year.  The agreement commits the two organisations to work together more closely towards the common goals of mutual prosperity and contributing to the greater development of China’s economy.

“Through cooperation and exchanges with our friends at SSE, we can learn more about the behaviour and needs of Mainland investors and how we can further support the QDII (Qualified Domestic Institutional Investor) scheme,” said HKEx Chairman Ronald Arculli.  “We can also learn from each other about the market dynamics created by the growth and development of SSE and HKEx, and the latest market trends in the Mainland and Hong Kong.

“According to an old Chinese saying, a single tree cannot make a forest,” Mr Arculli added.  “Jointly with our Mainland counterparts, we can accelerate China’s growth and financial development in a prudent manner.”

As a result of recent discussions, HKEx’s Listing Division and SSE’s Company Management Department will establish a mechanism for regular exchanges, in order to more effectively regulate companies and securities listed in both Shanghai and Hong Kong and better protect shareholder interests.  Views will be exchanged every two months, with the focus on operational issues, including information disclosure by listed issuers.  The two organisations will take turns organising the meetings.

HKEx and SSE also agreed to strengthen exchanges and cooperation on information technology that supports business development.  “The Shanghai and Hong Kong exchanges have their own technological advantages.  There is ample room for the technology personnel of both organisations to share expertise, and explore possible ways to develop our respective technology support infrastructure to accommodate further and broader cooperation between the two markets,” HKEx Chief Executive Charles Li said.

In addition, HKEx and SSE have agreed to seek further cooperation in product development and to hold a forum on listed structure products later this year.

Since signing the cooperation agreement in January last year, HKEx and SSE have also started a market data collaboration programme, shared information on the development of Exchange Traded Funds and other products, and arranged for HKEx executives to train at SSE and vice versa.

HKEx believes its cooperation with SSE strengthens the two organisations’ positions in today’s rapidly changing financial market environment.

The management of the SSE and HKEx met in Hong Kong on 21 January 2010.  The following joint statement was issued after the meeting.

1. The management of the SSE and HKEx exchanged views and discussed their experiences regarding information sharing and cooperation in regulating companies and securities listed in both markets, market infrastructure development, product development, information service development, personnel exchanges, and so forth.

2. Both sides agreed to strengthen information sharing and cooperation in regulating companies and securities listed in both markets.  With an increase in A+H share listings, as well as the development of Exchange Traded Funds (ETFs) on A shares and ETFs on Hong Kong stocks, closer ties between the Shanghai and Hong Kong markets have been fostered.  The SSE’s Company Management Department and HKEx’s Listing Division will set up a mechanism for regular exchanges, in order to more effectively regulate enterprises and securities listed in both markets and better protect shareholder interests.  An exchange of views will be held every two months, focusing on the operational issues in the regulation of securities listed in both markets and related information disclosure issues.  The two organisations will take turns organising the meeting.  The same mechanism may be extended to other departments, if proved effective.

3. Both sides agreed to strengthen exchanges and cooperation regarding technology that supports business development.  Information technology development, particularly the development of trading and information dissemination systems, is crucial to the stock exchange business.  Exchanges and cooperation on technology issues between the two organisations can deepen mutual understanding of the merits of each market’s infrastructure and help further the markets’ business development.  The Shanghai and Hong Kong exchanges have their own technological advantages.  The SSE’s new generation trading system has cutting edge technology and advanced capacity, while HKEx’s systems support trading, clearing and information dissemination for a variety of products.  There is ample room for the technology personnel of both organisations to share expertise, and explore possible ways to develop the respective technology support infrastructure to accommodate further and broader cooperation between the two markets.

4. Both sides agreed to strengthen cooperation in respect of the development of products.  ETFs have become the starting point of the two organisations’ cooperation on product development. At present, several Mainland fund management companies are actively making preparations for the issue of ETFs related to Hong Kong stocks.  It is hoped future cooperation on ETFs will be extended on a gradual basis to the development of ETFs on bonds and gold, as well as cross listings.  Besides ETFs, the two organisations may seek further cooperation in products such as securitised assets, warrants, Callable Bull/Bear Contracts and options.  The two organisations jointly participated in a forum on ETF market development last year and agreed to hold a forum in similar format on listed structured products later this year.

5. Both organisations agreed to deepen cooperation in the development of information products.  For example, cooperation in compiling an index comprising securities listed in Shanghai and Hong Kong may be explored to increase the Shanghai and Hong Kong stock exchanges’ influence in the global market.

6. Both organisations support continued exchanges and training involving their personnel.  The management of the two organisations agreed to meet twice a year to review the progress of exchanges and training, and work out plans for the next year’s exchanges and training.  The two organisations will take turns organising the meeting.  Training may take the form of meetings during which each side will be briefed on the other side’s market development, or short educational visits to each other’s offices.  Last year, the two organisations arranged for their executives to train in each other’s related departments, and agreed to continue the activities.

Source: MondoVision, 21.01.2010

Filed under: China, Data Management, Exchanges, Hong Kong, Market Data, News, Reference Data, Risk Management, , , , , , , , , , , , , , , , ,

Ten Trading Technology Trends and Tools for 2010

Despite the continued economic downturn, many buy- and sell-side firms still opened their wallets in the search for best-of-breed technology solutions. In order to decrease latency and increase speed, countless firms both big and small, bulge-bracket and boutique, have upgraded trading platforms, invested in latency management solutions, or set themselves up at co-location facilities.

But the race to have the best technology that will slice latency down to microseconds—and eventually, nanoseconds— is far from over.  In interviews with Securities Industry News, industry experts pointed at technology solutions the buy and sells sides are expected to spend their dollars in the New Year.

Networking (both intra- and inter- data center). Growing market data message rates and shrinking latency have made networks a key focus of the sell side, said Kevin McPartland, senior analyst with the Tabb Group.  “Upgrades of data center network equipment and purchases of long distance bandwidth will accelerate driven by current bandwidth requirements and future capacity planning,” explained McPartland. “And looking beyond bandwidth and transmission speed, reliability is tremendously important as downtime in today’s market is unacceptable.”  The core goal: Reduce the number of hops or other factors that introduce network inefficiencies.

Multi-asset-class platforms. Mutating asset classes is the future – different ways to trade traditional asset classes, going electronic, and new types of listed derivatives and structured products will be the norm, said Lloyd Altman, a senior executive in Accenture’s Capital Markets Industry division. “The multi-asset class problem is really affecting the buy side more than anyone else,” he said. “[There are traditional institutional asset management and hedge funds that are employing multi-asset strategies in order to generate alpha… everyone on the buy side is multi-asset class at this point. The question is will they need to replace what they have with something that’s new, or will they continue to modify what they have—it depends on the nature of how they use technology and whether they view themselves as technologists.”

Commoditizing high-frequency trading. Turnkey high-speed algorithmic trading systems will be a trend in 2010 as more players enter the high frequency trading business, explained Paul Zubulake, senior analyst with Aite Group. “We’re seeing a lot of people leaving large broker dealers and starting up their own small businesses related to trading,” he said. “If you’re a new group and want to start out on your own it’s not that easy to just dive into that business, so what’s happening is there are a few firms out there selling their technology and setting you up to trade… it’s an interesting story for next year.”

Latency management. The quest to squeeze more latency and provide more throughput is still creating opportunities for network, data center, and niche technology providers, said Accenture’s Altman. “It feels at times like squeezing a toothpaste tube to find one more use, and it is asymptotic on the latency front as we approach zero,” added Accenture’s Altman. “Whoever can advertise that they can get their first with the trade wins, and they can charge for that as a service. At some point it will not matter anyone, but we’re not there yet.”

Co-location. “Putting trading systems under the same roof as matching engines “is at the top of our priority list,” said Frederick Scuteri, senior vice president of prime brokerage services at institutional brokerage Cuttone & Co. “We’re seeing a lot of interest in many buy-side firms, especially the black box/high frequency trading shops looking for sponsored access to the different exchanges and alternative trading systems (ATSs). That game itself is a low-latency game, and co-location is a very big component of the success of that business. That’s something we’re full throttle on both with the NYSE and some other vendors and exchanges as well.”

Risk management for sponsored access. This ties in with the whole co-location story, said Feargal O’Sullivan, managing director of high performance messaging with NYSE Technologies, the commercial technology arm of NYSE Euronext. “Risk management for sponsored access is the idea of being able to allow buy side firms to use a broker ID and get access to markets directly without having to go through the broker systems but with the risk management that’s required before you allow them to do that,” explained O’Sullivan, noting that NYSE Technologies offers a risk management gateway.  “It’s an additional step of latency that’s required to ensure that traders are not taking unjustified risks and bring the market down.”   Added Aite’s Zubulake: “Pre-trade risk management in all asset classes will become a pre-requisite, or regulatory mandate, for trading.”

Central clearing. Over-the-counter, or OTC, products are going to central clearing, which will increase the demand for proper data management, said Zubulake.  This is a trend that is already happening, with the Chicago Mercantile Exchange having begun clearing credit default swaps through CME Clearing on Dec. 15. “You’re taking a business that was purely a voice business… and now instead of having a one-to-one trade you’re going to have the trade done on that basis but it will be cleared through the central clearer. There will be multiple counterparties.”

Data loss prevention (DLP) technology. DLP, which is made up of systems that identify, monitor and secure data whether it’s in use, is on the upswing, according to Jim Routh, KPMG’s chief information security officer. Several major vendors including Symantec and McAfee have emerged as leaders in this relatively new market and are currently selling these offering as integrated suites rather than individual products.

Data profiling. Data profiling, which examines data in an existing database, collects statistics and information about that data and determines if it can be used for other purposes, provides a deeper, broader and speedier insight to data analysis than the more traditional approaches. Garry Katz, a senior vice president and information architect at SmithBarney/Citigroup, says this technique is getting increasing play, becoming an “essential tool’’ in trading.

Virtualized solutions. JP Morgan Chase & Co. is currently deploying technologies, which create “virtual desktops” within its network – and even virtual networks within its overall network capacity. The selling points here include reduced support costs, improved security, greater agility and more streamlined application deployment. As a result of its virtualized network, JP Morgan’s data centers will evolve “from application-based silos to unified fabrics that allow for greater agility and utilization while improving the bottom line,” said Cory Shull, VP of investment architecture at JP Morgan, in a statement.

Source: Securities Industries, 17.12.2009

Filed under: Corporate Action, Data Management, Market Data, News, Risk Management, Services, Trading Technology, , , , , , , , , ,

RTS and Fortis Clearing First to Go Live with New SGXAccess API

RTS Realtime Systems Group, a leading global trading solutions provider, and Fortis Clearing announced today that they are the first trading solutions provider and clearing firm respectively to receive certification to offer clients access to the new equity trading system of the Singapore Exchange Ltd. (SGX).SGX moved its equity markets to a new, enhanced trading system, QUESTST, a Nasdaq OMX trading engine, earlier this year. Now, firms using RTS trading solutions will be the first to access SGX via the high-speed, low latency trading engine. Fortis Clearing is the first member to provide access through this interface for its customers.

SGX chose the new trading system to offer functionality to support the introduction of a wider range of products and better meet the needs of algorithmic and high-velocity traders, who are beginning to establish a strong presence in Asia.

Said Stéphane Lannoy, RTS Managing Director, Asia Pacific: “This announcement underscores our firm commitment to be the leading technology vendor globally in the low latency trading arena. Traders across the globe trust in our ability to offer them an edge. The increasing demand for our low latency solutions and our recent expansion in Asia speaks for itself.”

Andrew Bennett, Head of Market Access in Asia Pacific for Fortis Clearing, said: “This announcement confirms Fortis’ dedication in working with ISV’s and the exchanges to bring our clients the best possible solutions available in the low latency space.”

Rama Pillai, Senior Vice President and Head of Intermediaries & Market Access at SGX, said: “We are pleased to have RTS as the first solution provider to conform to SGX Access API, our latest securities market access service based on the native API of our QUEST-ST trading engine. Service providers such as RTS help expand our distribution by providing our global members and customers with efficient trading access to our securities and derivatives markets.”

Singapore serves as the RTS headquarters for the Asia Pacific region. RTS’ solutions are used by leading financial firms to trade across asset classes on more than 100 marketplaces globally, including major Asian financial exchanges. Its offering encompasses algorithmic trading solutions for ultralow latency trading and Direct Market Access (DMA) to more than 60 markets via its global data center hubs.

Source: RTS, 02.12.2009

Filed under: Asia, Exchanges, FIX Connectivity, News, Singapore, Trading Technology, , , , , , , , , , , ,

CMA releases new ON-NET connectivity pricing model to access Latin American Exchanges and trading institutions

CMA the Market Data, Order Management and Connectivity provider of Latin America are now offering firms across North America and Europe the ability to join an ON-NET LatAm capital markets community of participating exchange trading institutions. CMA Trade HUB ON-NET access allows for Southbound and Northbound order flow for Remote Access, Direct Market Access (DMA), Algorithmic Trading and Clearing.

The costs of connectivity have been a major deterrent for many firms looking to trade LatAm capital markets over the last few years. Due to the high costs associated with connectivity of market data and trading access, CMA says that it intends to help bridge this gap by announcing a new cost effective total end-to-end connectivity solution.

“Having a partnership for connectivity with CMA is an invaluable way for our clients to get access to our trading strategies with the local Mexican Equities and Derivatives markets” states Mr. Carlos Ramirez, Head of Electronic Trading Services of IXE Casa de Bolsa. “CMA has an in-depth understanding of how our markets work and can help new entrants with the necessary services to execute,” Mr. Ramirez adds.

Source: Automated Trader, 30.11.2009

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SSE Shanghai Stock Exchange new trading system NGTS to go live on Nov 23th

After years of elaborate preparations and several tests on the whole market, the New Generation Trading System (NGTS) of the Shanghai Stock Exchange (SSE) will be put into operation on November 23, 2009 upon approval by the China Securities Regulatory Commission. Systems directly connected to the SSE such as that of the securities companies will be simultaneously switched at that time.

Putting the new trading system into use is a systematic project covering wide areas and involving complicated technologies. The SSE has made careful and ample preparations to ensure the smooth operation of trading.

What’s more, the bourse has formulated relevant contingency plans for possible risks. In case of any abnormal trading resulting from malfunction of the system, the bourse will take necessary measures in time according to the “Detailed Implementation Rules on Handling Abnormal Trading of the SSE (Trial)”. If the trading can not be carried out in a normal way due to the system’s malfunction, the bourse will close the market. And if the trading can not be resumed on the day when the system goes wrong and on the following day, the bourse will switch back to the existing system for trading.

Q&A by SSE on Switch, launch of New Trading System (NGTS)

Q: Would you please introduce to us the construction of the SSE new trading system and the significance of its launch?

A: Thanks to the rapid development of China’s capital market in the last few years, the SSE’s stock trading volume grew by leaps and bounds from the daily average of RMB7.156 billion in 2002 to RMB138.8 billion in 2009. As links at China’s securities market, including issuance, listing, trading and communication, heavily depend on technology, the market keeps propelling us for technical innovations. From the perspective of the global market, the upgrading of trading system is inevitable for market development.

Since November 2004, the bourse has been well on the way to the development of the new trading system. By October 2007, the overall design and software development of the system had been completed, with about 160 key documents under 53 subclasses of 13 categories compiled and approximately 1 million lines of codes for pure source program delivered. The model of the online version, finalized in April 2009, has been at the stage of synchronous operation and maintenance since late June. At present, the last-minute preparations for the switch are under way orderly.

The SSE’s new trading system, inheriting the advantages of the current system, learning from the characteristics and merits of overseas stock trading systems and meeting the long-term development needs of China’s capital market, is a fruit of technical integration and re-innovation.

The smooth launch of the new system, a booster of the bourse’s core competitiveness, is of great importance to the construction of the SSE into a world-class exchange in terms of technical security. First, the SSE provides a powerful guarantee for future market development through improvement in processing and safety capability of its trading system. The new system boasts a peak order processing rate of about 80,000 orders per second, with an average order delay 30% shorter than the current one. The system’s daily bilateral volume of not less than 120 million orders is equivalent to the daily volume of RMB1.2 trillion on a single market and quadruples the maximum peak value ever recorded in the bourse, with a capability of parallel expansion. Moreover, the system, technically more reliable, is capable of ensuring the steady operation under the circumstance of peak data flow. Second, a solid foundation is laid for the SSE’s exploration into international business by ensuring easier access to the technical interfaces for all participants at home and aboard. Third, the SSE’s role in leading industry technical advancement is given full play by tapping up the new channel to future upgrading of technical systems of its members and other market participants. Fourth, an ideal platform is established to support the SSE’s simulated transaction business, custody business, multi-variety-and-platform business in the future.

Q: What are the arrangements for the switch of the old trading system to the new one and the launch of the new system?

A: The launch of the new trading system is scheduled for November 23 (Monday). The switch and launch falls into three stages: 1. Launch preparation period: all pre-launch preparations will be rounded off before 24:00 on November 20 (Friday). 2. Switch period: the switch from the current system to the new one will be wound up between 00:00 on November 21 (Saturday) and 24:00 on November 22 (Sunday). 3. Trial run period: focus will be put on the operation of the new system to eliminate possible risks from November 23 to December 4. After the end of the trial run, the current system will be shut down. During the trial run period, in case of failure in normal transactions due to technical drawback of the trading system, the SSE will announce market closure. If the trading on the very day and the following day can’t be resumed due to melt-down of the new trading system, the SSE will fall back on the current system for trading resumption.

Q: What preparations has the SSE made for the launch of the new system?

A: The SSE, in the principles of active preparation, steady promotion and step-by-step implementation, has devoted countless hours to the careful preparations for the launch of the new system. So far, preparations for the new system in terms of system, market and bourse have all been in place.

First, the system is ready to go. Since June 2009, the SSE has organized several rounds and batches of all-around tests, special pressure tests and special destructive tests participated in by market participants with a view to verifying the system’s functionality in usability, robustness, high capacity, anti-destructive attack, network monitoring and system monitoring as well as the operating team’s response competence.

The 3 all-around online tests organized by the bourse since October this year have achieved expected results, indicating that the new system is qualified for its launch.

Second, the market is fully prepared. With the completion of prophase laboratory test, on-the-spot access test and overall market training, the SSE officially kicked off the preparations for the launch of the new system by market participants in May 2009. In July and August this year, all market participants including securities companies and fund companies were grouped into 6 batches and underwent 7 all-around tests. According to the inspection results of examination and acceptance, all market participants have completed their preparations for technology and business. The subsequent 3 all-around online tests further proved that all member units and other market participants have got everything ready for the launch.

Third, the bourse itself is ready. After elaborate preparations, the business operation platform of the trading system, the internal business process, the trading hall, the business operation team, the contingency treatment mechanism related to the new trading system as well as the service integration with the back-end depository and clearing system are ready. All this ensures the smooth operation of the new trading system upon its adoption.

Q: What measures have the SSE formulated to ensure the launch of the new trading system?

A: To ensure the smooth and safe launch of the new trading system, the SSE has established a command center for overall direction and coordination during the switch stage. The command center is divided into five working groups of technology switch, technology operation, business operation, relevant systems and comprehensive affairs. In the “special guarantee” month for the adoption of the new trading system since November 2, the SSE will take guarantee measures at the highest level according to the system switch progress.

Besides, the SSE has also made thorough arrangements on the following issues. To begin with, it has strengthened the risk prevention capabilities of member units, keeping close watch on those large in scale with complex technical system, those under reorganization currently, those adjusting the technical systems before and after the launch of the new trading systems, and those lagging behind in technical strength. The SSE has set up a technical service group to provide technical support for members at any time. Meanwhile, a service hotline for the launch of the new system is open to keep in touch with the market.

Next, the internal risk prevention of the bourse has been intensified. In line with the principle of “prevention first, quick response, timely disposal and less impact”, the SSE has kept improving its ability of quick response, recognition and disposal towards all kinds of risks and relevant technical failures based on the previously formulated contingency schemes.

Lastly, the implementation of businesses spanning over one day will be suspended. The SSE will suspend the implementation of businesses spanning over one day related to the product issuance such as the IPO of new products (A shares, B shares, bonds, funds and warrants) and additional issuance from three working days before the adoption of the new system to five working days after the successful switch (from November 18 to 30).

Q: How will the adoption of the new trading system affect the securities companies and other market participants? What are the SSE requirements upon them?

A: While the new trading system is put into operation, systems of the securities companies and other market participants that are directly connected to the SSE will be simultaneously switched to the new system. Market participants shall, in accordance with the general planning of the SSE on the adoption of the new system, make relevant technical and business preparations to ensure the safe and smooth launch of the systems directly connected to the SSE.

In its “Notice of Making Preparations for Launch of New Trading System” in May 2009, the SSE required that the securities companies, fund companies and relevant market participants form the special working groups led by their senior management members. In the recent mobilization meeting of the whole market, the SSE asked all units to, in the light of its organizational mechanism and safeguarding measures, pay much attention to and spare no effort in the implementation of various work as required. The SSE also specified in a notice the following requirements: firstly, market participants shall carefully study relevant documents on system switch and do a good job in publicity and mobilization. Secondly, they shall form the working groups for the switch and designate personnel in charge. Thirdly, apart from keeping the communications smooth and efficient, they shall give the feedback in time if any problem should crop up. Fourthly, they shall work out the operational schemes and contingency plans for the system switch on the member’s side. Related personnel shall be know how to carry out relevant processes and plans to avoid manual operating errors.

Q: How will the adoption of the new trading system affect the investors?

A: The previous trading methods of investors who are directly using the business systems of various securities companies will not be affected by the adoption of the new system. Undoubtedly, the shift of the new system into use is a systematic project covering wide areas and involving complicated technologies. The SSE has made corresponding contingency plans for possible risks to minimize the influence on the investors’ trading.

The new system, yet to-be-launched, with improved match efficiency and ability, safeness and reliability, will allow the investors to trade in a safer, easier, more fair and efficient way.

Q: What contingency measures have the SSE adopted against the emergencies that may crop up in the launch of the new trading system?

A: To ensure a safe system launch, the SSE will promptly deal with the abnormal conditions during the launch according to the issued “Detailed Implementation Rules on Handling Abnormal Trading of the SSE (Trial)”. Firstly, it perfected its contingency plan regarding all possible risks during the system launch and perfected the specific measure for each risk and breakdown situation. Secondly, it established the joint contingency mechanism with China Securities Depository and Clearing Corporation Limited to deal with all kinds of risks involving the registration and settlement during the new system launch. Thirdly, it issued the “Guidance on Contingency Treatment for Market Participants’ Trading of the SSE” to urge the market participants to form the working groups of trading contingency treatment during the trial run period. The working group shall work out the contingency plans and direct the contingency treatment. In addition, the SSE also tried to maintain the market stability through sufficient communication with the investors.

Source: SSE, 17.11.2009

Filed under: Asia, China, Exchanges, News, Risk Management, Trading Technology, , , , , , ,

KRX Wins Stock Market System Development Project In Vietnam Stock Exchanges HOSE – HaSTC

Korea Exchange was finally selected as a priority negotiator in the international bidding for the construction of the Vietnamese stock market next-generation system announced on March 7, 2008 by the Vietnam Ho Chi Minh stock exchange(HOSE). Since KRX started global marketing in 2005 for the stock market IT solution export, this is one of the most successful results covering overseas projects.

KRX will provide total solution for the development of 13 stock market-related systems and the delivery of all related equipment in 2 exchanges, i.e. Ho Chi Minh and Hanoi including the Vietnam Securities depository covering trading, market surveillance, disclosure, sharing of information, clearing and settlement to upgrade the Vietnam’s stock market infrastructure. The construction project covering Vietnam’s stock market infrastructure next-generation system directly managed by the Vietnamese government is the largest scale project for a single order since KRX started overseas projects.

Recently, KRX has successfully completed the development of bond trading system, market maker monitoring system and Islam product trading system at Bursa Malaysia. With the winning of this project aimed at improving the IT infrastructure at the stock market of Vietnam, Korea’ technical capability in the stock market IT solutions has been recognized worldwide.

Development Projects

Completed the 1st(March 2008) and 2nd(January 2009) development of the bond trading system for Bursa Malaysia.

Completed development of the market maker monitoring system (MMM) (April 2009) for Bursa Malaysia.

Completed development of the Islam product trading (BCH) system (August 2009) for Bursa Malaysia.

Source: MondoVisione,08.10.2009

Filed under: Asia, Exchanges, Korea, News, Trading Technology, Vietnam, , , , , , , ,

SWIFTNet goes live in Hong Kong for high-value payments

SWIFTNet went live on 25 May as Hong Kong’s financial messaging platform for Clearing House Automated Transfer System (CHATS) payments as the Hong Kong Monetary Authority (HKMA) switched from its proprietary network to SWIFT. The HKMA and Hong Kong Interbank Clearing Limited (HKICL) decided in 2006 that they would implement the new open platform and replace their proprietary platform.

“This is a classic example of why a market infrastructure moves from a proprietary platform to SWIFT,” said Esmond Lee, Executive Director of the HKMA’s Financial Infrastructure Department. “The benefits of moving to a platform already used by most of the banks were clear.” Most of the real-time gross settlement (RTGS) participating banks have been using SWIFT for international payments for many years.

The HKMA added that interoperability is another key benefit of SWIFTNet. For example, incoming domestic messages received by the banks in Hong Kong can now be automatically converted into the RTGS message, just as these firms were already doing for international transactions. According to John Laurens, Head of Global Payments and Cash Management, HSBC Asia Pacific, “HSBC sees strong value in having the Hong Kong RTGS infrastructure adopt SWIFT as its connectivity platform.

Not only does it allow banks to streamline their back office environment, but it also provides Hong Kong with a future-proof infrastructure. It also allows for the seamless end-to-end transmission of information, thereby strengthening the value proposition for our customers.” Michael Cheung, head of North Asia, SWIFT, who started the SWIFT project back in 2006, added, “The implementation further establishes Hong Kong’s position as a major financial centre in Asia, and provides a platform for future growth for Hong Kong-based institutions as well as institutions from across Asia to use Hong Kong’s platform to grow their cross-border activity.

Besides HK dollars, HK RTGS participants can use their SWIFT connection to clear US dollars, euro and renminbi through Hong Kong for more efficient linking with their foreign counterparties, who are also using SWIFT.”

“The platform also provides significant opportunity for increased certainty, efficiency and cost reductions for SWIFT customers and firms because they are all using the same standards and platform for both their domestic and international transactions,” said Mr. Cheung. “Standardisation leads to major improvements in interoperability, also as demonstrated by TARGET2 in Europe.”

By mid-2010, SWIFTNet InterAct and Browse functions will be added to the platform. Customers will be able to use these two additional features to benefit from the interactive and query services available from SWIFT. Average daily traffic expected from the SWIFTNet platform is around 100,000 messages, mainly generated from the 30,000 payment transactions that have moved to SWIFT from the former proprietary platform.

Source: SWIFT 31.07.2009

Filed under: Asia, Hong Kong, News, Services, , , ,

SMX announces clearing and settlement mandate

Standard Chartered will be the first bank to provide electronic funds transfer and settlement processing to the Singapore Mercantile Exchange’s members. Standard Chartered Bank will provide clearing and settlement to the new Singapore Mercantile Exchange (SMX) when it goes live in the fourth quarter.

The bank will be the first bank to provide electronic funds transfer and settlement processing to the exchange’s members. It will also provide banking services to SMX employees.

All settlement will be in US dollars, but additional currencies will be added based on member demand.

“This appointment as clearing bank for Singapore Mercantile Exchange reflects our position as a leading clearing bank for exchanges in Singapore,” says Jiten Arora, South Asia regional head of transaction banking at Standard Chartered Bank. “We have developed special capabilities to provide extended processing hours and timely reporting to the Singapore Mercantile Exchange and their clearing members.”

The bank has worked with SMX since its February inception helping to map out its clearing and settlement infrastructure. Standard Chartered will extend its hours from 9am to 3am Singapore-time in order to cover Asia-Pacific and the US. In addition, the bank has acted as a consultant on commodities trading.

Negotiations for the mandate were conducted from April to July, with SMX officially appointing Standard Chartered its first banking partner last week. According to sources, the three month negotiation period is an “internal record” for the bank.

SMX is a new commodities derivatives exchange aimed at filling the gap in Asia between equity and single-product commodity exchanges. It is owned by India-based Financial Technologies, a financial services group that also owns the Dubai Gold and Commodities Exchange and various Indian markets including the Mumbai Commodities Exchange.

Currently in the testing and regulatory approval phase, SMX hopes to begin trading sometime after October 15. Once operational, products on the exchange will include agricultural stuffs, energy and base and precious metals.

Traders in Singapore are wary of the exchange’s ambitious opening timeline with many taking a wait-and-see attitude to the post-October 15 start date.

“A lot of benchmarks are unaddressed in Asia,” says Thomas McMahon, chief executive of SMX. “If you look at metals markets, the majority of production is here but prices are disconnected from market exchange. We see an opportunity here.”

McMahon explains that by using the term “mercantile” the exchange sees itself as a market for a broad-base of products. This differs from the Malaysia bourse and the agricultural futures exchange of Thailand that specialise in palm oil and rice respectively. By creating such a broad based exchange, SMX hopes to increase trading transparency and risk mitigation for commodities derivatives products in Asia.

A potential competitor is the Dubai Mercantile Exchange but McMahon dismisses it as energy focused.

When selecting Standard Chartered as its first clearing and settlement bank, McMahon cites its “seamless” reach across borders in Asia. This correlates well with SMX’s plans to become a pan-Asia exchange.

“For example, Standard Chartered’s India, Singapore and Hong Kong product offerings are very similar,” he says. “We [also] aim to be borderless.”

Sumit Aggarwal, Standard Chartered’s head of transaction banking in Singapore, reiterates the bank’s strong regional proposition, saying: “In Asia, our nearest foreign bank competitor has only half as many branches as we do. [SMX] is tapping the breadth of our presence and capability to provide specialised solutions.”

But the bank will not remain SMX’s only clearing and settlement partner.

“Standard Chartered is just one of a number of banks we will eventually have on board,” says McMahon. “As we reach into different regional markets, we’re going to look for entities with good, strong local connectivity.”

The exchange is currently in talks with three additional banks to provide clearing and settlement services. SMX declined to name the institutions but says it plans to bring on a mix of local and global banking players.

Clearing and settlement provided will be conducted through Standard Chartered’s Straight2Bank wholesale e-banking platform. The system will work with SMX’s straight-through processing (STP) solution from India’s Financial Technologies.

The exchange plans to achieve STP from day one though McMahon admits that “all exchanges are STP+1″ for settlement.

“Customers will know where they are in their positions at the end of each day,” he says.

Standard Chartered is not new to servicing stock exchanges. The bank has been providing clearing and settlement services for various exchanges since the late 1990s starting with the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE). Today, in addition to the BSE and NSE, it has mandates with the Jakarta Stock Exchange through its Permata Bank subsidiary, Nasdaq Dubai and Singapore’s other two exchanges — the Singapore Exchange and the Singapore Commodity Exchange.

When SMX does launch, whether in the fourth quarter or later, it aims to have at least 29 clearing and trading members. It is currently in talks with these entities.

Source: AsianInvestor.com, 29.07.2009

Filed under: Asia, Exchanges, India, News, Singapore, , , , , , , , , , ,

SWIFT appoints Michael Cheung as Head of North Asia

Hong Kong, July 14 2009 – SWIFT, the financial communications and messaging platform provider, has appointed Michael Cheung as its new Head of North Asia, responsible for  all commercial activities in North Asia, covering Greater China, North and South Korea, Vietnam, and The Philippines .

Michael retains his responsibilities as Head of China at SWIFT in Beijing, where he was tasked with expanding the influence and impact of SWIFT on the financial industry in China across the banking and securities sectors. He will share his time between Beijing and Hong Kong and reports to Ian Johnston, Chief Executive for SWIFT Asia Pacific.

With more 20 years’ experience in the financial industry, Michael became SWIFT’s Head of China in 2007. He first joined SWIFT in Hong Kong in 1992 with responsibility for sales in Asia Pacific. In 1998, he set up SWIFT’s Beijing office and has been the Chief Representative since then. In 2003 he returned to SWIFT Hong Kong to head the commercial team and work on the Hong Kong RTGS and various payment systems projects in the region.

Before moving to SWIFT, Michael worked for several multinational IT companies in Hong Kong, where he held sales and marketing positions focused on the financial services industry. He holds an Honours degree in Electrical and Electronics Engineering from the University of Bath in the UK, as well as an MBA and Masters degree in China Business Studies.

Michael replaces Neil Stevens, who has been head of North Asia at SWIFT since August 2006 and now returns to a senior management role at SWIFT’s headquarters in Belgium.

Source: SWIFT, 10.07.2009

Filed under: Asia, China, News, , ,

New Views on the Hedge Fund Industry – State Street Study June 2009

The global financial crisis is bringing about an evolution in hedge funds that will render  significant changes to the industry. Record investment losses and investor withdrawals  have cut assets under management by more than one-quarter, consolidation is under  way, and both investors and regulators are calling for greater transparency.

Download: Hedge Fund Study – State Street -June 2009

Two major trends that will have far-reaching impacts are emerging: a migration among the maturing hedge fund industry to third-party administration, custody and specialized services, and the most comprehensive reconsideration of financial regulations in a generation.

According to State Street’s annual hedge fund study conducted in October 2008, 84 percent of institutional investors surveyed expect more frequent disclosure of  hedge fund positions, while 49 percent anticipate more frequent reporting.
Before the dust from the crisis settles, it will be important for all of the stakeholders in this market to understand the ramifications of these trends and to participate in shaping the new structure of this changing industry.
Though forever altered by current market conditions, hedge funds will retain their critical and proven role in institutional investors’ financial portfolios.

FiNETIK Recommends:

London Mayor: Hedge Fund might leave London for Singapore, SGP Hedge Fund, 09,07,2009

London Mayor Boris Johnson attacks EU’s plans to regulate hedge funds, FT 08.07.2009

Source: State Street, June 2009

Filed under: Asia, Library, News, Risk Management, Services, Wealth Management, , , , , , , , ,

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