FiNETIK – Asia and Latin America – Market News Network

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

February 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 10, 2012 • 9:04 am 0

Fidessa on Latam Trading – Opportunities and Challenges

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: Low Latenency, 08.02.2012

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

February 2, 2012 • 6:06 am 0

UBS goes algo in Mexico

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

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

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

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

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

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

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

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

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

December 16, 2011 • 11:45 am 0

NYSE Technologies opens Tokyo liquidity centre

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

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

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

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

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

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

Source, Finextra, 15.12.2011

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

November 22, 2011 • 8:34 am 1

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

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

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

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

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

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

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

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

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

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

November 21, 2011 • 10:57 am 0

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

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

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

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

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

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

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

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

Source: Wallstreet&Technology, Melanie Rodier, 18.11.2011

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

November 17, 2011 • 11:42 pm 0

Shenzhen Stock Exchange revamps trading system

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

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

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

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

Source: Shenzhen Stock Exchange, 16.11.2011

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

November 16, 2011 • 1:56 am 0

Finamex launches Algorithms with US Equities in the Mexican market

Finamex, a full-service independent broker dealer from Mexico City, and leading provider of innovative trading solutions, has released four opportunistic market trending algorithms for use by Direct Market Access (DMA) clients. The main idea is to allow clients to effectively gain arbitrage profits while mitigating collocation and/or their own strategy development costs.

Finamex’s latest release of arbitrage algorithms have been designed to build opportunities on fungible domestic equities displayed in the Mexican exchange marketplace. Execution calculations work through pre-programmed algorithms built on leveraging theoretical quote pricing as the primary driver of behavior, speed and momentum.

There are a variety of features to how the Finamex arbitrage algorithms provide opportunities with US equities in the Mexican market:

1. Hunter – is an algo which seeks to take advantage of sudden inefficiencies between the equities of foreign listed symbols in Mexico versus their originating market (such as the QQQ or AAPL on the Nasdaq or NYSE markets). The Hunter algorithm computes required data-sets and adjusts itself independently within defined price spreads on the Mexican Stock Exchange (Bolsa Mexicana de Valores: BMV).

2. Ghost – has a characteristic of lying dormant until a desired buy/sell signal appears with a non-previously indicated ask/bid price then it executes contrarily. Similarly with the Finamex “Hunter” algo, Ghost receives the side, quantity and spread parameters of opposing bids/offers satisfying spread parameters of its local market yet quickly hitting IOC type status. This feature helps in the recognition of desired price opportunities without revealing trade strategy intentions by its clients.

3. Scaled – uses a two-spread metric like the Hunter algo, with a signal that triggers in a suddenly inefficient environment. The Scaled algo strategy is seen on a big spread definition, called a “base.” Scaled reacts instantaneously when a lower spread, called the “target”, is satisfied on the other side. Unlike the Finamex “Ghost” algo, the Scaled algo’s intentions are exposed but move immediately when the target spread is satisfied. The Scaled strategy allows other market participants to preview this algo’s activity, causing them to sometimes take a glance on the board, which in turn drive executions over the spreads.

4. Market-maker – a next generation algo intended to provide liquidity and act as a market maker within the local Mexican marketplace. Market-maker absorbs the last trade, adds an indicated spread and automatically places or replaces the order with an indicated quantity. In combination with pegging and short-sell models, the Marketmaker algo is highly beneficial for market making strategies and for acting on market divergences.

“We’re putting in place all of these free strategies for clients who want to access the Mexican stock market with an almost-zero setup price. Our goal is to take Mexico to a higher level in the emerging markets priority list of global investors,” states Hector Casavantes, head of Electronic Trading at Finamex. “We wanted to offer automated algo strategies in order to let investors know how active and easy this market can be to trade. All algorithms were architected with profitability in mind. They’re highly customizable, completely auditable and comprehensive, fully meeting our clients’ demands”.

“With the addition of these tools, we’ve further enhanced our suite of algorithmic-trading products beyond our well-known execution algos in VWAPs, TWAPs, Implementation Shortfall and POV, “Roberto Larenas, Head of Equity Markets at Finamex added. “While we are aware that these algos are more opportunistic, we are still keeping our business model as pure-agency. Buy-side firms are increasingly requesting new tools, new ideas, and new ways to exploit opportunities in emerging markets. Finamex is fully committed in addressing these demands with our best-of-the breed solutions

Source: A-Team, 14.11.2011

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

November 13, 2011 • 7:26 am 2

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, , , , , , ,

November 12, 2011 • 3:02 am 0

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: FIX Global Trading, 15.09.2011

Free Subscription of FIX Global Trading Magazin at http://fixglobal.com/subscription

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

October 19, 2011 • 9:16 am 0

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

BRIC exchanges announce alliance

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

The seven exchanges are:

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

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

BM&FBOVESPA new trading hours

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

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

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

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

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

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

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

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

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

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

> More info

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

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

> More info

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

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

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

ETF financial volume more than doubles in the past two months

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

Common Shares in Desenvix Energias Renováveis start trading on BOVESPA MAIS

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

USD11 billion in public offerings and follow-ons in 2011

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

BM&FBOVESPA on Twitter

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

2011 EVENTS

 The World Cup of ETFs and Indexing Latin America

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

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

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

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

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

2nd Brazil–China Capital Markets Forum

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

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

Volumes and trades by Direct Market Access (DMA)

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

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

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

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

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

Trading volumes per type of DMA in the BOVESPA segment:

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

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

Notes:

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

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

MARKET RESULTS

BM&F Segment September 2011

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

BOVESPA Segment September 2011

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

Source: BM&FBOVESPA, 18.10.2011

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

October 19, 2011 • 2:01 am 0

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source:FIXGloabalTrading, 15.06.2011

Free FGlobalTrading Magazin subscription at http://fixglobal.com/subscription

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

October 11, 2011 • 10:31 pm 0

Argentina: Rosario Futures Exchange (ROFEX) added to SunGard Market Data Distribution Platform

Rosario Futures Exchange (ROFEX), an Argentina-based derivatives exchange, is now available through SunGard Global Network for Securities (SGN) for global connectivity, order routing and market data. SGN will help futures and options traders around the world easily access ROFEX, facilitating electronic order routing access to their exchange. SGN will also help increase efficiencies and reduce errors for traders that trade through ROFEX by helping them trade electronically, for greater automation across the trade lifecycle.

Growth in the derivatives markets in Latin America is attracting new liquidity through improved access and collaboration between exchanges. As traders expand their derivatives trading reach to international markets they increasingly require robust trading tools and access to an extensive global network. SunGard’s Valdi and SGN offer comprehensive derivative trading solutions as well as one of the largest networks in the world. Valdi provides futures and options traders with global trading software, powerful market data, risk management solutions and low latency execution services. SGN provides trade automation and connectivity to over 120 electronic markets and more than 530 brokers worldwide, helping shorten time to market for trading new products and in new geographies.

Mr. Diego Fernandez, chief executive officer of Rosario Futures Exchange, said “SunGard is helping us expand our global reach by providing us with electronic access to new markets and participants, facilitating the growth of our business and helping make global trading easier and efficient for our clients.”

Raj Mahajan, president of SunGard’s global trading business, said, “We are pleased to provide Latin American customers with a customizable solution for multi-asset, global trading, through Valdi and SGN. It is our goal to provide customers with a simplified gateway to access all exchanges in Latin America; we already provide access to equities and derivatives exchanges in Brazil, Mexico, Chile, Colombia, Peru and now Argentina.”

Source: Bobsguide, 10.10.2011

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

September 21, 2011 • 10:36 am 0

Brazil: BM&FBOVESPA – News September 2011 – Nr.20

Launch of the first stage of the BM&FBOVESPA PUMATrading System

BM&FBOVESPA announces the conclusion of the first stage of development and integrated tests with the market of its new trading platform, named the BM&FBOVESPA PUMA Trading System. This is a multi-asset electronic trading platform that has been developed by BM&FBOVESPA and CME Group. BM&FBOVESPA PUMA Trading System will replace the Global Trading System (GTS), Mega Bolsa, BOVESPA FIX and SISBEX, integrating them into a single system with greater processing capacity, extremely low latency, and new functions. The implementation will occur in stages:

  • 1st Stage: Substitution of GTS (derivatives and spot foreign exchange);
  • 2nd Stage: Substitution of Mega Bolsa (equities and equity derivatives);
  • 3rd Stage: Substitution of BOVESPA FIX (fixed-income corporate securities) and SISBEX (government securities).

The Exchange implemented the BM&FBOVESPA PUMA Trading System in the spot foreign exchange market on August 29, 2011. The other stages will be executed in the following weeks, at dates to be announced at an opportune moment. As part of the GTS replacement effort, instruments will migratein four-stages. At each stage, orders sent to the Exchange for these contracts will be processed exclusively by the new system. The migration stages are:

  • 1st Migration: Spot foreign exchange contracts.
  • 2nd Migration: Agricultural derivatives.
  • 3rd Migration: Financial derivatives (interest rates, foreign exchange, inflation indices, gold etc.), except for derivatives based on stock indices.
  • 4th Migration: Derivatives based on stock indices.

Automated solution for market surveillance, operation and market oversight

BM&FBOVESPA and BOVESPA Market Supervision (BSM), the Brazilian self-regulatory organization in charge of inspecting and supervising transactions and trade authorizations, announced on September 15 that they will use NASDAQ OMX’s SMARTS Integrity market surveillance platform to monitor trading across their equities and commodities platforms. Using SMARTS Integrity, BM&FBOVESPA and BSM will have a comprehensive portfolio of alert scenarios for market behavior.

> More information

BM&FBOVESPA and BNDES present new portfolio for the Carbon Efficient Index

BM&FBOVESPA and BNDES announced on September 5 the composition of the theoretical portfolio of the Carbon Efficient Index, valid from September to December 2011. The ICO2 is an index composed of stocks in IBrX-50 index companies that have accepted involvement in the initiative, adopting transparent practices as regards greenhouse gas emissions (GGEs). The calculation of shares in the ICO2 index takes into consideration the greenhouse gas emissions and free float of companies.

The portfolio valid as of today can be viewed here.

New head of BM&FBOVESPA for UK

BM&FBOVESPA announces that Sergio Gullo has been hired as the new chief representative for BM&FBOVESPA in London. He will report to BM&FBOVESPA International Business Development Officer Lucy Pamboukdjian and be responsible for operations with the European, Middle Eastern and African markets. Sergio Gullo has been active in the financial market for more than 27 years. He was Business Development Manager in the United Kingdom for BGC Partners and has worked in financial institutions such as Banco Votorantim and Renaissance Capital, specializing in emerging markets and always in commercial areas with a focus on fixed income and structured products. He also held a wide range of positions at Lloyd’s TSB Bank for 19 years, in both Brazil and the UK.

New office in London

The BM&FBOVESPA office in London has moved to One New Change, 4th floor (London, EC4M, 9AF, United Kingdom). The London office may be contacted by e-mail at sgullo@bvmf.com.br and by telephone at (+44) 203 379 3978.

BM&FBOVESPA and Shenzhen Stock Exchange Sign Memorandum of Understanding

BM&FBOVESPA (BVMF) and the Shenzhen Stock Exchange (SZSE) signed on September 26 a memorandum of understanding (MOU) which includes personnel exchange, mutual training and information and experience sharing. Ms Song Liping, President of the Shenzhen Stock Exchange, and Mr. Edemir Pinto, CEO of BM&FBOVESPA, signed the MOU last month during the 5th International, Financial and Capital Market Conference in Campos do Jordão, in the state of São Paulo.

BM&FBOVESPA’s options and capital raising activity

According to the WFE (World Federation of Exchanges), BM&FBOVESPA is ranked as #1 in volume of Stock Options contracts trades and #4 in IPOs (Capital Raised). These and other regulated exchange industry numbers are available at: http://www.world-exchanges.org/statistics

Securities Lending

In August, the total number of securities lending transactions reached a record 141,721 compared to the previous record of 121,971 in May 2011 and to 114,989 in July. Financial volume was BRL 62.63 billion in August from BRL 52.16 billion the previous month.

Ibovespa and other index portfolios, valid for September-December 2011

BM&FBOVESPA has announced the Ibovespa theoretical index portfolio, which will be valid from September 5 to December 29, 2011, based on the closing of the September 2, 2011 trading session. The new portfolio now includes common shares in BR Malls and Cia Hering, which brings its total to 68 stocks in 63 companies.

> More information

BM&FBOVESPA launches app for Google Chrome web browser

BM&FBOVESPA announced on September, 16th that users of the Google Chrome web browser can download a free app that allows real time monitoring of the share prices of companies traded on BM&FBOVESPA and of the directions taken by the main capital market indexes. This tool allows users to customize their share portfolio, storing in the “Favorites” tab the companies that they wish to monitor daily. The app includes films that explain stock investment, wealth creation, and financial education. It also contains messages that are sent to the BM&FBOVESPA twitter channel @Info_BMFBOVESPA

To obtain the BM&FBOVESPA Google Chrome app, please access the Google Web Store and download the file at: https://chrome.google.com/webstore.

2011 EVENTS

Family Office Summit – Latin America

BM&FBOVESPA is currently sending invitations for this event promoted by the World Research Group and which will be held in São Paulo September 26-28. A BM&FBOVESPA representative is scheduled to talk about alternative investments. The summit will present current trends for optimizing effective strategies and alternative methods to produce investments for single and multi family offices in the Brazilian capital market. There will be a special networking session bringing together managers, single and multi family offices, advisors and consultants.

Location: Intercontinental São Paulo – Alameda Santos, 1123, São Paulo , SP.
Date: September 26-28, 2011.

> Full Agenda and Registration

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

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

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

> Full Agenda

BM&FBOVESPA at Chicago’s FIA EXPO

BM&FBOVESPA will exhibit at FIA EXPO 2011. The event attracts approximately 5,000 people from more than 30 countries, from senior staff at brokerage firms and exchanges to floor traders, pension fund managers, corporate treasurers, CTAs and CPOs, and individual investors. BM&FBOVESPA staff will present the Exchange’s products, connectivity, DMA access via Globlex, co-location and others.

Location: Hilton Chicago, USA
Date: October 10-12, 2011

> More info

The World Cup of ETFs and Indexing Latin America

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

Location: São Paulo (TBC)
Date: October 17-18, 2011.

> Full Agenda and Registration

Volumes and trades by Direct Market Access (DMA)

BM&F Segment
In August, BM&F* market segment transactions carried out through order routing via Direct Market Access (DMA) registered 41,417,494 contracts traded and 4,431,750 trades. In July, the volume reached 20,009,841 contracts traded and 2,417,398 trades.

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

  • Traditional DMA – 17,540,231 contracts traded, in 1,306,241 trades, in comparison to 7,440,774 contracts and 797,002 trades in July;
  • Via DMA provider (including orders routed via the Globex System) – 14,088,756 contracts traded, in 435,281 trades, compared to 7,040,432 contracts and 258,881 trades in July;
  • DMA via direct connection – 4,210 contracts traded in 830 trades, against 3,691 contracts and 977 trades in July;
  • DMA via co-location – 9,784,297 contracts traded, in 2,689,398 trades, compared to 5,524,944 contracts and 1,360,538 trades in July.

In August, transactions carried out by foreign investors presented by CME to BVMF (who use the Globex-GTS order routing system or access BVMF markets via co-location) totaled 5,308,308 contracts traded, in 1,235,349 trades, compared to 2,897,744 contracts and 688,862 trades in July.

BOVESPA Segment
In August, order routing via DMA in the BOVESPA* segment totaled BRL 138,522,096,000.00 and 17,021,408 trades, from BRL 95,030,778,000.00 and 11,225,193 trades the previous month.

Trading volumes per type of DMA in the BOVESPA segment:

  • Traditional DMA – Volume of BRL 120,451,427,000.00 and 14,098,638 trades from BRL 87,674,861,000.00 and 10,091,956 in July;
  • DMA via co-location – Volume of BRL 16,691,370,000.00 and 2,755,498 trades from BRL 6,381,361,000.00 and 1,007,081 in July;
  • DMA via provider – Volume of BRL 1,379,299,000.00 and 167,272 trades from BRL 974,556,000.00 and 126,156 in July.

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

Notes:

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

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

MARKET RESULTS

BM&F Segment August 2011

Derivatives markets in the BM&F segment (including financial and commodities derivatives) totaled 78,606,873 contracts and BRL 5.23 trillion in volume in August, compared to 44,199,125 contracts and BRL 3.35 trillion in July. The daily average of contracts traded in the derivatives markets in August was 3,417,690, in contrast to 2,104,720 in July. Open interest contracts ended the last trading day of August with 37,821,302 positions, compared to 30,716,596 in July.

BOVESPA Segment August 2011

In August 2011, the equity markets (BOVESPA segment) financial volume totaled a record BRL 177.906 billion, in a record 16,234,673 trades, with daily averages of BRL 7.73 billion and a record 705,855 trades. This was in comparison to the prior total volume record of BRL 155.55 billion in October 2010, the prior total trades record of 11,172,707 in May 2011 and the prior daily average trades record of 544,88 in February 2011.

Source:BM&FBOVESPA, 20.09.2011

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

September 20, 2011 • 11:48 pm 0

ITG Launches Algorithms for Mexican Equities

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

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

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

Source: Bobsguide, 20.09.2011

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

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