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

April 25, 2013 • 12:58 am 0

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

March 14, 2013 • 2:42 am 0

EUREX Group and Bombay Stock Exchange (BSE) in Technology Alliance

Eurex Group and the Bombay Stock Exchange (BSE) announced today that they have agreed to deepen their strategic partnership through a long-term technology alliance under which BSE will join the Eurex technology roadmap and deploy Deutsche Börse Group’s trading architecture in a first step. BSE aims to replace its derivatives market platform in the course of 2013 and plans to subsequently replace also its cash market platform. This agreement is an important step in further developing the strategic partnership between Eurex and BSE.

The new partnership in the technology sphere will allow BSE to quickly achieve the highest global standards for speed, reliability and order-handling capacity. It will bring to BSE state-of-the art levels of capacity and latency, already in place at the International Securities Exchange (ISE) since summer 2011 and in roll-out at Eurex Exchange. By aligning BSE, Eurex Exchange and ISE markets on a common trading infrastructure, IT costs for shared customers will be significantly reduced. This will also reduce technology development and installation efforts for Eurex and ISE members who wish to connect to BSE and vice versa as well as strengthen the case for cross-listing.

“We expect our technology alliance with Eurex will help BSE to compete more effectively in India, to help us attract more international participants into our marketplace and improve our market share in derivatives and equity trading,” said Ashish Chauhan, MD and CEO of BSE. “It will quickly put BSE into the Premier League of exchanges in terms of the performance of our matching engine and overall technology infrastructure.”

“This technology alliance strengthens our long-term partnership with BSE, and is another milestone in our Asian strategic roadmap, in which India obviously plays an important role. This technology alliance also contributes to growing our global liquidity network, based on common market infrastructure, for the benefit of both our partners and our members,” said Andreas Preuss, CEO of Eurex and Deputy CEO of Deutsche Börse AG.

Source: MondoVision, 12.03.2013

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

September 17, 2012 • 11:59 pm 0

Mexico: BMV Mexican Stock Exchange Aims to Attract High Frequency Traders with Platform Upgrade

Mexican stock exchange operator Bolsa Mexicana de Valores detailed its investment in a new trading platform that the bourse hopes will reduce execution time for trades while also boosting trading activity.

The platform will enable the bourse to complete a trade in 90 microseconds, or to facilitate around 100,000 transactions per second, putting it on par with the Singapore Stock Exchange and besting the New York Stock Exchange’s completion rate of 150 microseconds per trade, the Mexican exchange said. The platform, which began handling stock transactions on Sept. 3 and will handle derivatives trades starting in December, cost the bourse 150 million pesos ($11.5 million.)

The Mexican exchange hopes the updated platform will attract a greater number of sophisticated international market participants who are interested in executing algorithmic trades. Currently, such high-frequency trades account for 17% of the volume operated on the bourse, versus 70% of the volume in the U.S., the exchange said. In August the exchange averaged 1.9 million stock transactions a day.

The new platform also incorporates filters to prevent erroneous trades, for example by detecting price action that is out of sync with the market or unusually high volumes. In April the local brokerage house of Bulltick Capital Markets triggered a mini “flash crash” by entering an erroneous trade, knocking Mexico’s benchmark IPC stock index down about 2 percentage points.

Source: FIF Financial Information Forum, 17.09.2012

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

July 30, 2012 • 12:42 am 0

Brazil:CMA – The Latin American Market Data and Trading Company offers Direct BM&F BOVESPA Connectivity

July 30, 2012– New York, NY (USA) and São Paulo(Brazil) – Latin American trading services provider CMA Inc. http://www.cma.net, has announced a new delivery method for direct BM&F and BOVESPA market data and trading connectivity for International firms.

CMA has been providing BM&F and BOVESPA market data for over thirty five years to the trading community of Brazil. It now has leading exchange trading software services in Spain, Mexico, Colombia, Peru, Argentina and Chile with 20,000 subscribers worldwide. Today, CMA’s platforms such as CMA Series 4 have been rolled out on an impressive network called “CMA Redes Digitais.” The Redes Digitais  infrastructure is installed and directly connected within the exchange’s datacenter for the lowest possible latency.

Today’s announcement by CMA represents the launch and deployment of a directly connected infrastructure at the BM&F BOVESPA in São Paulo, Brazil with the CMA datacenter in New York. Companies can now co-locate their routers and servers with CMA at the BM&F BOVESPA datacenter or chose to receive the raw market data over CMA’s multi-gig private lines which terminate at CMA’s datacenter in New York City. The offering was developed to help firms trading with counter parties in São Paulo or for going directly to the exchange’s trading systems in a Direct Market Access (DMA) fashion.

 Many firms need to bring market data back to the USA and in return send trades messages to the exchange in Brazil. In both cases planning, paperwork and relationships are needed in order to complete the set-up. CMA is a certified exchange vendor able to help participants with the required documentation needed by the exchange to receive market data and to send trade messages. CMA also provides the relationships and connectivity to Brazilian brokers who can handle orders for foreign firms.

 “CMA’s market visibility as a prime vendor of the exchange and to 90% of the exchange’s broker dealers allows for our customers to be installed, up and running and trading as fast as possible,” Mario Chuman, General Manager of CMA commented. “International firms rely on us to help them with both exchange and broker connectivity, enabling market data and trading right from our switches in São Paulo which are now directly connected to our New York datacenter.“

 CMA is utilizing the fastest Trans Atlantic cable systems available, giving connectivity managers the security they require for proper networking, the lowest possible latency for competitiveness, multi-market/asset availability and an array of choices in being able to do so. Connectivity managers can now expand their market reach with CMA as they look to join both the BM&F BOVESPA Equities and Futures markets at roughly 50% lower IT and communications costs than other offerings which generally only provide one feed stream and one market at a time. CMA’s solution is the most cost effective, fastest and easiest way to implement an electronic trading solution for Brazilian securities.

Source, CMA, 30.07.2012

Filed under: Brazil, Data Vendor, Exchanges, Market Data, Trading Technology, , , , , , , , , , ,

June 14, 2012 • 11:21 pm 0

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

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

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

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

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

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

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

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

Source: RTS, 14.06.2012

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

April 13, 2012 • 10:15 am 0

Brazils BM&FBOVESPA to aid Chiles Santiago SE (BCS) with Derivatives Knowledge Transfer exchange

BM&FBOVESPA and the Santiago Stock Exchange (BCS) signed an agreement today (April 12, 2012) that sets out the implementation of the Chilean derivatives market at the Santiago Stock Exchange. The agreement provides for the transfer of derivatives market knowledge from BM&FBOVESPA to the Chilean Exchange, encompassing products such as equity, interest rate and FX options and futures.

The alliance between the two exchanges began in December 2010 and other strategic projects are in the pipeline, such as connectivity and order routing and market data distribution in particular.

Source:MondoVisione, 12.04.2012

Filed under: BM&FBOVESPA, Brazil, Chile, Exchanges, Latin America, , , , , , , , , , ,

April 11, 2012 • 10:34 pm 0

Tullett Prebon to pay out over BGC data misuse

Tullett Prebon has agreed to pay $800,000 to its US rival BGC after misuse of data by some of its brokers, closing one chapter in a long-running legal battle between the two interdealer brokers.

The settlement, which was ordered by a US arbitrator, is smaller than Tullett had expected, and far lower than the sum sought by BGC, which claimed it had suffered damages of “hundreds of millions of dollars”. The arbitrator found that BGC was not the “prevailing party”, meaning it was not entitled to reclaim legal costs from Tullett.

The dispute related to trading data provided by BGC that Tullett packaged with its own data and sold to information providers such as Reuters and Bloomberg. Under the terms of the deal between the two groups, Tullett’s brokers were not allowed to use the BGC data after January 25 last year but some continued to do so.

In Tullett’s latest full-year results statement it reported a provision of £12.4m to cover the anticipated cost of settling the data misuse case and the costs of two other cases it is pursuing against BGC. Those cases relate to BGC’s alleged “poaching” of more than 50 brokers from Tullett’s US division in late 2009. Last year BGC made an out-of-court payment to settle a similar claim relating to Tullett’s UK business.

Source: FT, 22.03.2012 by Simon Mundy

Filed under: Uncategorized, , , , , ,

March 24, 2012 • 12:20 pm 0

Argentina and Uruguay to build new Derivatives Market

Mercado a Término de Buenos Aires – MATba (Buenos Aires  Futures and Options Exchange) and Bolsa de Valores de Montevideo- BVM (Uruguay’s Stock Exchange) announced that they will create a Futures and Options Exchange in Uruguay.

The new exchange will operate under the name “MATba Rio de la Plata Bolsa de Valores S. A.” and will be the first derivatives market in Uruguay. The two exchanges are waiting for Uruguay’s Central Bank approval to start working on the first contracts, which will probably be cattle and agricultural commodities, leaving currencies and other financial products for a second stage. All contracts will be cash settled and traded electronically.

The new Exchange will be located in Uruguay. MATba will manage the electronic platform and it will provide technical assistance in registration and clearing. Both Uruguayan and Argentine members of the two markets will be able to trade in MAtba Rio de la Plata Bolsa de Valores, which will open new business opportunities for traders as well as investment and arbitrage opportunities.

Source: MondoVisione, 23.03.2012

Filed under: Argentina, Exchanges, Latin America, , , , , , , , , ,

March 24, 2012 • 11:32 am 1

Brazil: BM&F BOVESPA – March 2012 -News Nr 31

Cross-Listing of Global Benchmark Equity Index, Commodity and Energy Futures
BM&FBOVESPA (BVMF), CME Group and S&P Indices announced on March 6 a cross-listing and cross-licensing agreement involving S&P 500 Index and BOVESPA Index (IBOVESPA) futures.

BRICS Exchanges to Cross-list Benchmark Equity Index Derivatives
The five founding members of the BRICS Exchanges Alliance will begin cross-listing benchmark equity index derivatives on each other’s trading platforms on March 30.

New Market Maker for Options on the Stock of Companhia Siderúrgica Nacional (CSNA3)
BM&FBOVESPA announced on March 20 that Citadel Securities LLC is the third institution selected as market maker for options on the stock of CSNA3.

Volumes and trades by Direct Market Access (DMA)

BM&F Segment (Derivatives)
In February, the transactions carried out via Direct Market Access (DMA) in the BM&F* segment totaled 25,853,695 contracts traded in 2,616,094 trades.

BOVESPA Segment (Equities)
In February, the transactions carried out via Direct Market Access (DMA) in the BOVESPA* segment had a total financial volume of BRL104.5 billion in 14,985,594 trades

MARKET RESULTS

BM&F Segment February 2012 (derivatives)
In February, the markets in the BM&F segment had a total of 47,434,891 contracts traded with a financial volume of BRL3.11 trillion.

BOVESPA Segment February 2012 (equities)
In February, the total financial volume in the BOVESPA segment reached BRL157.36 billion, compared to a total of BRL132.26 billion in January.

Click for detailed announcement

Source: BM&FBOVESPA, 24.03.2012

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

March 16, 2012 • 10:56 am 0

Innovations in Accessing Asia: Listed Equity Derivatives and Delta One Products.

Institutional investors seeking exposure to emerging Asian equity markets face challenges in accessing many of the region’s closed markets and are turning to exchange-traded derivatives markets, as well as over-the-counter (OTC) instruments that can provide the exposure they need, says TABB Group in new research published today, “Innovations in Accessing Asia: Listed Equity Derivatives and Delta One Products.”

Investment managers are active users of OTC equity derivatives, including contracts for differences (CFDs), equity swaps, participation notes and other structured products, says Andy Nybo, a TABB principal, head of derivatives research and the report’s author. “However, global regulatory efforts to reduce concentration of counterparty risk have driven investment managers to explore alternatives for exposure, leading them to centrally-cleared, exchange-traded products that can lower overall levels of risk.”

According to TABB, as the appeal of developed markets waned in recent years, investors began examining new markets, searching for investment opportunities offering higher alpha and greater returns, especially emerging markets in Asia. Hedge funds are focusing their attention on the APAC markets, with 33% of US and European funds targeting the region for new investments. However, Nybo explains, direct investment in the emerging equity markets of Asia has been hindered by low market capitalization, restrictive regulatory environments and capital constraints that prohibit direct access to cash markets.

“Asia’s relatively stable political and regulatory environment has done well to attract investor interest,” Nybo says, “but some of the region’s regulators seem to use regulation as a policy tool in an attempt to control market fluctuations.” He adds that markets with heavy-handed regulatory authorities face a backlash from investors seeking opportunities and provide an opening for regional exchanges to launch products designed to meet investor demand for exposure to more closed markets.

“Pent-up demand from investors will contribute to innovation and new product launches by these emerging Asian exchanges to capture investment flows from both international investors and Asian-domiciled hedge funds,” he adds. “Many of the region’s regulators are very keen to promote greater participation in the financial markets. They are eager to attract strong capital flows from investors all over the world.”

The 33-page report with 24 exhibits is available for download by TABB Research Alliance Derivatives clients and pre-qualified media at
https://www.tabbgroup.com/Login.aspx
. For an executive summary or to purchase the report, visit
http://www.tabbgroup.com
 or write to info@tabbgroup.com.

Other recent TABB derivatives research includes: Accelerated Expirations: The Growing Relevance of Short-term Options; US Options Trading 2011: Finding the Other Side of the Trade; Feeding the Options Beast: Big Data in the US Options Space; EU Equity Options Market Structure: Opening The Door To High Frequency Flow; VIX Trading: The Structure of Uncertainty; and TABB Group Options LiquidityMatrix.

Innovations in Accessing Asia:Listed Equity Derivatives and Delta One Products – Executive Summary

Source: MondoVisione, Tabb Group, 15.03.2012

Filed under: Asia, News, Trading Technology, , , , , , , , , , , , , , , ,

March 16, 2012 • 10:47 am 0

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Perhaps we should start thinking about MBRICs?

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

Sourc: TABB Forum, 07.03.2012

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

March 13, 2012 • 11:48 am 0

Brazil – The Challenges of DMA and Risk Management

As the Brazilian economic freight train gathers momentum, Timo Pentner – Managing Director Americas, at RTS Realtime Systems, explains why the market’s demand for ultra-low latency DMA access and the regulators requirements for rigorous risk control don’t have to be mutually exclusive.

With US and European economies still wrestling with deeply entrenched structural economic problems resulting in largely stagnant economies, investors have been looking further afield for investment returns. One of the markets that has attracted significant foreign investment is Brazil, and it’s not too hard to see why. Brazil is rich in mineral and energy reserves with oil, gas, hydro-electricity, bioethanol and uranium; agriculture is booming with Brazil now boasting the world’s largest cattle herds, and as well as the exports of commodities long associated with the country such as coffee and cocoa, Brazil now produces the majority of the world’s exotic fruit. On the back of these strong fundamentals, Brazil has experienced rapid growth in its middle class amongst the growing population of 200 million. Economic output has now overtaken that of the UK and its broad IBRX market index, despite strong volatility, has grown by over 60% since the financial crisis erupted back in 2007.

With this foundation in place and strong inward investment, it’s easy to see why Brazil has attracted such considerable interest from the global trading community. We noted with some interest some of the statistics about Latin American growth from Automated Trader’s recent algorithmic trading survey; the key point being that within three years the number of buy side firms accessing LatAm markets is expected to quadruple, with Brazil being probably the best placed to capitalize on that interest. A significant factor behind this growth is the innovation now being demonstrated by Brazilian markets.

The Brazilian exchange BM&F Bovespa illustrate this point well, with recent innovations including single stock options, interest rate derivatives, clearing house cross margining, and a new low latency multi-asset-class matching engine with co-location options, called Puma. Now a cross-listing and cross-licensing deal with CME Group and S&P Indices has been launched meaning that Bovespa index products will be available in Chicago for dollar clearing, while S&P 500 futures, CBOT Mini-sized soybean futures and NYMEX listed light sweet crude (WTI) futures will all be traded in São Paulo with settlement in Brazilian Real. Little wonder then that traders are rushing to get past capital controls or that regulators mindful of earlier Latin American misfortunes, are keeping a close, prudential eye on market risks.

With the objective of addressing these issues, RTS Realtime Systems have been working hard to deliver ultra low-latency connectivity and risk solutions to trading firms looking to access Brazilian markets. High frequency traders will now be able to trade Brazilian markets with fully compliant pre-trade risk checks. US based traders will be able to co-locate in the exchange’s DMA facility for sub millisecond access, slashing latencies available to US based order routing networks and substantially outperforming current third party colocation options in Brazil. The mandatory risk checks can be independently monitored and controlled in real time both by the executing local broker in Brazil and for example by the trader’s own US based clearing broker, while ensuring a dependable, pass-through latency in tens of microseconds. When combined with a growing number of long-haul optical fibre networks, cross-market and cross-region arbitrage strategies become real opportunities.

Both the clearing broker and the executing broker will specify their own risk checks and each will be able to modify their limits or other parameters independently in real time. Meanwhile RTS will ensure risk checks comply with the exchange’s own rules and provide verifiable and consistent trade data to all concerned. As a result, costly reconciliation and remote monitoring can thus be avoided. This reduces risks for the whole supply chain. Remote US traders have had to put up with the uncertainties of long haul networks and considerable jitter depending on overall trading volumes. Since initial margin rules are tough with daily adjustments, traders are keen to keep tight control on their positions. The RTS direct market access (DMA) option reduces these exposures of remote trading, allowing strategies to be more adventurous and demanding.

The RTS Brazilian solution effectively opens a new generation of multi-institutional workflow for integrated collaboration in the capital markets. By packaging all the risk checks in a single software application supporting both FIX and the local exchange application programming interfaces (API), we have responded to the messy realities of cross-jurisdictional trading and longer supply chains, and we’ve taken a lot of cost out of the equation as well. RTS is already working with a number of local and international brokers including Ativa, SLW, Alpes and ICAP Brazil to leverage the new technology for international trading firms.

Currently virtually all trading is concentrated on the primary exchange in Brazil although several automated trading platforms like Direct Edge and BATS Global Markets have expressed interest and are in discussions with the regulators. The Intercontinental Exchange (ICE) has however launched its own electric power market and Chi-X Global has partnered with BM&F Bovespa to offer multicurrency trading in Brazilian securities, so change is coming. Additional competition will inevitably grow the Latin American markets and encourage high frequency trading to align price discovery. Liquidity, after all, follows liquidity.

Source: Automated Trader, 16.03.2012

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

February 16, 2012 • 10:13 am 0

Brazil: BM&FBOVESPA Financial Report: IT Business-CoLo-HFT-ETF’s and Sharebuyback

BM&FBOVESPA S.A. (BVMF3) today reported fourthquarter  earnings  ending  December  30,  2011.  New  strategic  areas  such  as  Securities Lending, Tesouro Direto, ETFs and High Frequency Trading (HFT) performed well in the quarter. Successful implementation of the derivatives and spot FX modules of the PUMA Trading System and forward momentum on the multi-asset integrated clearing system further boosted the Company’s technological edge.

BM&FBOVESPA announced an adjusted expense1 budget range of R$580 million to R$590 million and a capital expenditure budget range of R$230 million to R$260 million for 2012. The adjusted Opex range equals the range for 2011 as a result of the Company’s cost- cutting improvements.

“We remain focused on capturing the growth opportunities offered by the Brazilian market,” said BM&FBOVESPA Chief Executive Officer Edemir Pinto. “The execution of our investment   program   to   strengthen   our   IT   infrastructure   and   the   launching   and development of products and markets, such as ETFs, HFTs and options on single stocks, are aligned with this goal. We are also taking actions to strengthen market supervision, which will help make the Brazilian market more attractive to investors. Mr. Pinto added,“We highly welcome the government’s decision to remove an IOF tax on equity investments by non-residents.”

During 4Q11, net revenues were almost flat year-over-year. This reflected a decline in trading volumes which was offset by a 39.5% increase in other revenues. Expenses were higher as a result of a one-time extraordinary transfer of restricted funds to strengthen the BM&FBOVESPA Market Supervision (BSM) while adjusted expenses were well in line with the Company’s announced budget range. Adjusted EBITDA2margin was relatively stable at65.2% compared to 66.5% in 4Q10. Adjusted net income3 per share declined by 1.0% year-over-year.

 

Source: MondoVisione, 15.02.2012

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

February 15, 2012 • 5:38 pm 0

LatAm Traders reach home base – Brazil/Mexico

Latin America continues ease market access for foreign capital, and in the process, garners home bias from local participants.

Throughout the 1980s, U.S. capital flow to foreign markets averaged roughly U.S. $50 billion per year. Such levels have risen greatly to pre-financial crisis times; outflows to foreign capital markets increased to reportedly $2.1 trillion in 2007. While net inflows dipped by approximately 75% during the financial crisis, the emerging markets today have bounced back at a healthier rate than the sluggish developed economies of the U.S and Europe.

Due to its macroeconomic and private-sector growth, as well as its ease of market access, U.S. investors and traders have come to favor Latin America. Currently, a reported $57 billion of U.S. dollar is being poured into Brazil—often seen as the region´s  most developed nation.

Mexico comes in second with approximately $20 billion coming in from the U.S. last year. Local entities have poured interest in Mexico as well, as Mexican pensions, which aggregate $150 billion, have a primarily domestic mandate. Carlos Slim, the world’s richest investor, also recently announced plans to surge a $10 billion peso investment in Mexico’s telecom industry.

As a result of budding local and foreign interest, LatAm’s sell side has gone to work in building a “best-of-breed” suite of products to help provide access to Mexico. The Bolsa Mexicana de Valores, the country’s equity exchange and its derivatives exchange, MexDer are channeling efforts to better technology and infrastructure to attract liquidity providers. Yet, just how effective is the push to be better?

In 2011, MexDer experienced a 30% increase of trades to roughly 43,000 a day. Mexican brokerage assets were $21.4 million in 2005, to $2 billion in 2011–a clear reap of rewards from the sell side’s efforts to host opportunities for market participants.

While high frequency traders increased their activity in Mexico by 105% in 2011, buy-side views on trading via local resources have been mixed.

“Local knowledge on the part of on-the-ground brokers and exchanges is useful, but, it’s not essential to have a well developed sell side,” said Nick Robinson, director of the $250 million dollar Aberdeen Latin American Equity Fund. “As long as the market works and you can use the market without counter party risk then that should give (participants) enough comfort.”

MarketMedia, 15.02.2012

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

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

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