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

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: Exchanges, Asia, Brazil, Risk Management, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Latin America: Investor News Letter 17 November 2012

Mexico

Slim Acquires Controlling Stake in Real Oviedo, El Pais Reports

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

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

 

Brazil

Top names drop off list of Thyssen Americas bidders

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

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

 

Latin America

Paving the Way  High-­Tech Financial Infrastructure Hits LatAm

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

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

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

Latin America: Investors Newsletter 19 August 2012

Mexico

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

Brazil

Overpriced Brazil to Be Profitable for Latam

Latin America and Asia

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

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

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

CFFEX and Deutsche Börese signe Co- Operation Agreement

Deutsche Börse and China Financial Futures Exchange (CFFEX) today signed a Memorandum of Understanding (MoU) in Beijing. The parties agreed on a co-operation and an extensive exchange of information in order to facilitate the further development of both financial markets.

In accordance with the MoU, the two exchange organizations are to start a comprehensive sharing of knowledge and information on business areas and regulatory developments. Further elements of the co-operation agreement include joint training and education initiatives, as well as an employee exchange program and regular visits from each exchange’s senior management.

“We are very pleased to have signed this agreement with CFFEX and look forward to deepening our relationship with leading institutions and authorities of China’s financial markets,” said Andreas Preuss, Deputy CEO Deutsche Börse and CEO of Eurex, the derivatives arm of Deutsche Börse.

Source: MondoVisione, 17.05.2012

Filed under: China, Exchanges, , , , ,

China Financial Futures Exchange & NYSE Euronext sign MOU

Exchanges enter agreement to develop futures and options markets in Europe, US and China

Beijing, Hong Kong, London, New York - NYSE Euronext (NYX) and the China Financial Futures Exchange (CFFEX) have signed a Memorandum of Understanding (MOU) to promote a bilateral partnership to support the development of the exchanges futures and options markets.

The agreement was designed to explore opportunities for extending the reach of both exchanges. The MOU will enable the two exchanges to explore opportunities for information sharing; exchanging and training employees; as well as business cooperation such as joint research into developing strategies for the derivatives market.

“Asia is a strategic priority for NYSE Euronext and we are delighted to partner with Mr. Yuchen and his colleagues at the China Financial Futures Exchange,” said Duncan L. Niederauer, Chief Executive Officer, NYSE Euronext. “This agreement deepens our long term commitment to the region, and by sharing best practices and working collaboratively, CFFEX and NYSE Euronext will further promote the development and advancement of both the Asian and global financial markets.”

Garry Jones, Group Executive Vice President and Head of Global Derivatives, NYSE Euronext, said: “We have customers who trade our derivatives contracts all over Asia and this MOU with the China Financial Futures Exchange – along with our physical presence in Hong Kong, Singapore and Tokyo – further illustrates our commitment to Asian markets. We look forward to unlocking efficiencies and trading opportunities in both markets by working closely and sharing expertise with the CFFEX.”

“This collaboration will further develop both exchanges derivatives markets and facilitate the experiences of our customers and NYSE Euronext’s,” said Zhu Yuchen, Chief Executive Officer , Chinese Financial Futures Exchange.

Source: Automated Trader, 16.05.2012

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

China Insight: QDII Program Overview and Technical Challenges; More Bank Reforms to come? – KapronAsia

Reform in China’s Banking Sector: More to come?

In recent years, Chinese banking sector profits have skyrocketed to new levels, in part due to the Beijing imposed ceiling on the rates banks pay depositors, providing banks with a source of cheap funds, which banks then in turn lend out at much higher rates. Net profits for commercial banks grew 36 percent last year, reaching 1 trillion Renminbi. Chinese banks are enjoying year-on-year rises of more than 30 percent in their first-half net profits. In one example, the Industrial and Commercial Bank of China’s fees and commission income for the year 2011 was close to 100 billion RMB, compared to 72 billion in 2010 and 55 billion in 2009.

The Technical Challenges for QDII Funds in 2012

Since the first QDII quota of US$500 million was allocated to the HuaAn fund in 2006, the quota allocated to security companies and fund companies has maintained steady growth. As of the end of February 2012, US$44.4 billion of investment quota was allocated to fund companies and security companies, compared to US$44.4 billion and US$40.6 billion for 2011 and 2010.

Overview of the QDII Program in China
The QDII (Qualified Domestic Institutional Investor) program was first launched in 2004 initially for insurance companies to invest their foreign exchange funds in the Chinese companies traded in overseas markets, with PingAn insurance company being the first institutional investor to receive a QDII quota of US$8.89 billion. Since then, the program has expanded and now allows institutional investors, including commercial banks, security companies, fund companies, insurance companies and trust funds to raise funds in mainland China and invest in offshore capital markets under the control of China’s foreign exchange regulator.

Disaster Recovery for Chinese Banks
In recent years, since Chinese banks have been working on data consolidation at the national level, the establishment of disaster recovery systems has become one of the key considerations for banks. Today, banks must ensure the stability and security of their national data center in the event of a disaster to ensure uninterrupted business operation through disaster recovery systems.

Source: KapronAsia, 15.05.2012

Filed under: China, Risk Management, Trading Technology, , , , , , , ,

Latin America ETF/ETP Industry at a glance on April 2012

Summary for ETFs listed in Latin America

  • At the end of April 2012, the Latin America ETF industry had 32 ETFs, with 487 listings, assets of US$11.4 Bn, from 15 providers on 4 exchanges.

Assets

  • ETF assets have increased by 3.4% from US$11.0 Bn in March 2012 to US$11.4 Bn in April 2012.
  • YTD through end of April 2012, ETF assets have increased by 9.9% from US$10.3 Bn to US$11.4 Bn.

Flows

  • In April 2012, ETFs saw net inflows of US$591.3 Mn. Equity ETFs gathered net inflows of US$566.4 Mn and fixed income ETFs gathered net inflows of US$4.7 Mn.
  • YTD through end of April 2012, ETFs saw net outflows of US$172.1 Mn. Equity ETFs have experienced US$151.4 Mn net outflows and fixed income ETFs have experienced net outflows of US$20.0 Mn.
  • YTD through end of April 2012, leveraged ETFs have gathered net inflows of US$12.3 Mn, while inverse ETFs have experienced net outflows of US$13.0 Mn.
  • iShares gathered the largest net inflows in April with US$678.6 Mn, followed by Protego with US$20.3 Mn.
  • BBVA Asset Management experienced the largest net outflows in April with US$98.7 Mn.
  • BBVA Asset Management experienced the largest net outflows YTD with US$103.5 Mn, followed by Itau Unibanco with US$64.7 Mn and iShares with US$3.3 Mn net outflows.

Source: MondoVisione, 04.05.2012 by Deborah Fuhr of EFTGI at deborah.fuhr@etfgi.com

Filed under: Latin America, News, , ,

China QFII quota increase April 2012

International asset managers are preparing to apply for the expanded quotas for China’s qualified foreign institutional investor (QFII) scheme and its renminbi-denominated equivalent (RQFII), but the opening will benefit only some.

Last week the China Securities Regulatory Commission (CSRC) said it would increase the total quota for the QFII scheme to $80 billion from $30 billion. At the same time, it released a second batch of RQFII quotas of Rmb50 billion ($7.92 billion), which will be used for A-share exchange-traded funds (ETFs) listed in Hong Kong.

“Even though the additional $50 billion QFII quota and Rmb50 billion under RQFII are not significant amounts for the A-share market, they still have a positive impact,” says Shenzhen-based Da Cheng Fund Management.

Unlike the first batch of RQFII quotas (Rmb20 billion released last December), which were shared by 21 Hong Kong subsidiaries of Chinese fund managers and securities firms, the second batch will only be granted to a few experienced managers.

“We have been preparing for this product for many months and we are confident we will be one of the managers to get the RQFII ETF quota,” says Michelle Chua, regional head of business development at Harvest Global Investors, the international arm of Beijing-based Harvest Fund Management.

The existing A-share ETFs offered in Hong Kong are mostly synthetic (swaps-based) products, but RQFII will broaden the range of physically backed products.

The new ETFs will directly invest in A-shares, explains Chua, so that “there will be no counterparty risk, no p-note [participation note] cost and no foreign exchange difference, as the ETF currency denomination [in renminbi] is the same as [that of] the underlying investments”.

Harvest FMC and Huatai Pinebridge were the two managers that jointly launched the CSI 300 ETF, the first cross-market ETF tracking stocks listed on both the Shanghai and Shenzhen exchanges.

The CSRC will take the RQFII pilot scheme to the next level by expanding its scale, allowing more types of financial institutions to participate and more flexibility in terms of asset allocation.

For the QFII scheme, the previous ceiling was lifted from $10 billion to $30 billion in 2007 after the China-US Strategic Economic Dialogue took place. The increase of $50 billion this time is hailed by local media as “unprecedented”.

Since the QFII scheme commenced in 2003, the CSRC has granted licences to 158 foreign financial institutions from 23 countries and regions. They include 82 asset managers, 11 insurance firms, 23 commercial banks, 13 securities companies and 29 other institutions, such as sovereign wealth funds, pension funds and endowment funds.

The CSRC says 129 out of the 158 qualifiers have obtained a total of $24.5 billion in QFII quotas. As of March 23, 74.5% of the assets in the QFII accounts were invested in the domestic stock market, 13.7% in bonds and 9.6 % in bank deposits. The total holding of QFIIs counts for 1.09% of the market capitalisation of domestic A-shares.

Z-Ben Advisors views the latest changes as “unambiguous signals of China’s intent to attract more offshore investors and a sign that market investments will play a key role in the government’s plan to internationalise the Rmb”.

The Shanghai-based consultancy suggests that, in the short term, asset managers in the QFII application queue should expect accelerated approvals.

Regulators have already upped the pace of approvals since the end of last year. In March, the State Administration of Foreign Exchange granted a record $2.11 billion of quotas to 15 companies, compared with a total quota of $1.87 billion handed out during 2011.

“The QFII programme enhances our experience of monitoring cross-border securities investment and capital flows,” the CSRC says. “The QFIIs, mainly overseas long-term value investors, have diversified the domestic investor structure, upgraded the quality of listed companies and promoted the international recognition of domestic capital markets.”

Source: Asian Investor, 10.04.2012

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

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

Brazil:BM&FBOVESPA annuonces 2011 Market Performance and News

BM&FBOVESPA announced 2011 market performance.
Financial volume and number of transactions in the equity market;
  • Total number of contracts traded, DI futures contracts traded and of corn futures contracts and options on corn futures traded in the Derivatives Market;
  • Financial volume and number of equity lending transactions.

Read other highlights (update 11.01.2012):

The total financial volume and the number of trades in the equity market set a record in 2011

In 2011, the total financial volume in the Bovespa segment set a historic record of BRL1.61 trillion, surpassing the previous record of BRL1.60 trillion set in 2010. The average daily financial volume also established a new record of BRL6.49 billion, exceeding the BRL6.48 billion reached in 2010.

The total number of trades reached the milestone of 141,229,649 in 2011, surpassing last year’s record high of 106,418,437. The average daily trading volume also established a new record at 567,187, exceeding the 2010 mark of 430,844.

Historic records set in 2011:

  • Financial volume and number of transactions in the Bovespa segment;
  • Total number of contracts traded, DI futures contracts traded and of corn futures contracts and options on corn futures traded in the BM&F segment;
  • Financial volume and number of equity lending transactions.

Bovespa Segment

In 2011, the total financial volume in the Bovespa segment set a historic record of BRL1.61 trillion, surpassing the previous record of BRL1.60 trillion set in 2010. The average daily financial volume also established a new record of BRL6.49 billion, exceeding the BRL6.48 billion reached in 2010.

The total number of trades reached the milestone of 141,229,649 in 2011, surpassing last year’s record high of 106,418,437. The average daily trading volume also established a new record at 567,187, exceeding the 2010 mark of 430,844.

In December, the financial volume in the Bovespa segment was BRL130.68 billion, compared to the BRL118.72 billion registered in November. The daily average financial volume was BRL6.22 billion in December, compared to BRL5.93 billion in the previous month. There were a total of 12,746,660 transactions carried out in December compared to 12,284,986 in November, and the average daily trading volume was 606,984, compared to 614,249 in November.

Equities

In 2011, the most traded stocks were: Vale PNA, with BRL174.33 billion; Petrobras PN, with BRL125.81 billion; OGX Petróleo ON, with BRL73.22 billion; Itauunibanco PN, with BRL67.73 billion; and Vale ON, with BRL45.05 billion.

In December, the most traded stocks were: Vale PNA, with BRL11.30 billion; Petrobras PN, with BRL8.75 billion; Itauunibanco PN, with BRL5.59 billion; OGX Petróleo ON, with BRL4.33 billion; and Bradesco PN, with BRL3.66 billion

Ibovespa

The Ibovespa closed out 2011 at 56,754 points, down 18.11% for the year.

In 2011, the best performing stocks were: TIM PART S/A ON (+72.58%); CIELO ON (+53.32%); REDECARD ON (+49.20%); KLABIN S/A PN (+42.53%); and ELETROPAULO PN (+41.13%). In 2011, the worst performing stocks were: B2W VAREJO ON (-71.07%); GAFISA ON (-64.95%); HYPERMARCAS ON (-62.06%); GOL PN (-50.00%); and V-AGRO ON (-48.39%).

In December, the Ibovespa declined 0.21%.

The best performing stocks on the Ibovespa, in December, were: TRAN PAULIST PN (+16.03%); ELETROBRAS PNB (+14.06%); CPFL ENERGIA ON (+13.62%); ELETROPAULO PN (+12.97%); and LLX LOG ON (+12.33%). In December, the worst performing stocks were: V-AGRO ON (-39.62%); GAFISA ON (-23.28%); ROSSI RESID ON (-19.76%); BROOKFIELD ON (-16.67%); and CIA HERING ON (-15.02%).

All other indexes

All of the other indexes calculated by the Exchange performed as follows:

IBrX-50 (-14.06% with 8,279 points at the end of 2011; up 0.99% in December);

IBrX-100 (-11.39% with 19,706 points at the end of 2011; up 1.52% in December);

ISE (-3.28 with 2,018 points at the end of 2011; up 3.65% in December);

ITEL (+15.59% with 1,670 points at the end of 2011; up 5.11% in December);

IEE (+19.72% with 32,613 points at the end of 2011; up 9.47% in December);

INDX (-12.12% with 9,618 points at the end of 2011; up 2.31% in December);

IVBX-2 (-4.71% with 5,756 points at the end of 2011; up 0.86% in December);

IGC (-12.45% with 6,679 points at the end of 2011; up 1.76% in December);

ITAG (-11.54% with 8,708 points at the end of 2011; up 2.88% in December);

SMLL (-16.63% a 1,200 points at the end of 2011; up 0.79% in December);

MLCX (-10.39% with 877 points at the end of 2011; up 1.77% in December);

ICON (+0.55% with 1,693 points at the end of 2011; up 3.03% in December);

IMOB (-27.71% with 749 points at the end of 2011; down 5.47% in December);

IFNC (-7.40% with 3.468 points at the end of 2011; up 4.13% in December);

ICO2 (-7.37% with 1,025 points at the end of 2011; up 3.18% in December);

IBRA (-10.84% with 1,810 points at the end of 2011; up 1.68% up);

IDIV (+13.99% with 2,926 points at the end of 2011; up 5.56% in December);

IGCT (-12.36% with 1,877 points at the end of 2011; up 2% in December);

IMAT (-28.51% with 1,592 points at the end of 2011; up 0.90% in December);

UTIL (+22.61% with 2,939 points at the end of 2011; up 9.74% in December).

Market Value

The market value (market capitalization) of the 373 companies listed at BM&FBOVESPA at the end of 2011 totaled BRL2.29 trillion. In 2010, the market value was BRL2.56 trillion for the 381 companies that were listed at that time.

Special Corporate Governance Levels

At the end of 2011, the 182 companies that were part of the BM&FBOVESPA Special Corporate Governance Levels represented 64.87% of the market capitalization, 78.68% of the financial volume, and 82.72% of the trades on the cash market. At the end of 2010, there were 167 companies, representing 65.65% of the market capitalization, 75.14% of the financial volume, and 78.77% of the cash market trades.

In December, the 182 companies that were part of the BM&FBOVESPA Special Corporate Governance Levels represented 64.87% of the market capitalization, 75.82% of the financial volume, and 84.90% of the trades on the cash market. At the end of November, there were also 182 companies, representing 64.55% of the market capitalization, 82.40% of the financial volume, and 85.89% of the cash market trades.

Market Participation

The cash market (round lot) accounted for 93.9% of the total financial volume in 2011, followed by the options market with 4.3%, and by the forward market with 1.8%. The after-market traded BRL11.37 billion in 724,314 trades.

In December, the cash market (round lot) accounted for 94.6% of the total financial volume, followed by the options market with 4%, and by the forward market with 1.4%. The after-market traded BRL887.60 million with 48,002 trades, compared to BRL1.02 billion with 52,952 trades during the previous month.

Investor Participation

In 2011, foreign investors led trading in the Bovespa segment accounting for 34.74% of total contracts traded, compared to 29.57% in 2010. They were followed by institutional investors with 33.34%, compared to 33.29% in 2010, and individual investors with 21.44%, compared to 26.41% during the previous year. Financial institutions accounted for 8.65%, up from 8.35% in 2010, and companies accounted for 1.74% compared to 2.31% the previous year. The group Others accounted for 0.08% compared to 0.06% in 2010.

In December, foreign investors were also the leaders in the Bovespa segment, accounting for 39.07% of total contracts traded, compared to 32.98% in November. They were followed by institutional investors with 32.20% in December, compared to 34.29% in the previous month, and individual investors with 17.99% in December, compared to 20.46% in November. Financial institutions accounted for 8.81% in December, down from 9.33% in the previous month, and companies accounted for 1.92% in December, compared to 2.87% in the previous month. The group Others accounted for 0.01% in December, compared to 0.07% in November.

Foreign Investment

In 2011, the net flow of foreign investment into the Brazilian stock market, up to December, reached BRL8.23 billion, which is the result of BRL9.58 billion in acquisitions carried out by foreign investors in stock offerings (including BRL8.0 billion registered in Brazil) and the negative balance of BRL1.35 billion on the BM&FBOVESPA secondary market.

In December, the balance of transactions carried out by foreign investors at BM&FBOVESPA was a negative BRL2.42 billion, which was the net balance between stock sales of BRL52.08 billion and stock purchases of BRL49.66 billion.

Foreign investor participation in stock offerings, including IPOs, represented 55.3% of the total BRL17.33 billion in transactions related to the publication of the closing announcement dates ending on January 3, 2012, pursuant to information available on the Exchange’s website, under the media section.

Check the data for public offerings and IPOs

Investment Clubs

At the end of 2011, the number of investment clubs stood at 2,852, with 10 new clubs opening in December. In November, total liquid assets were BRL8.97 billion and the number of investment club participants was 117,078, according to the latest data available.

Individual Investors

At the end of 2011, the number of individual investor accounts in the equities market stood at 583,202. At the end of 2010, that number was 610,915.

ETFs

In 2011, the 10 ETFs available for trade at BM&FBOVESPA (BRAX11, CSMO11, MOBI11, BOVA11, SMAL11, MILA11, PIBB11, IT NOW IFNC 11, IT NOW ISUS 11, and IT NOW GOVE 11) reached a total financial volume of BRL12.11 billion with 577,723 transactions carried out. In 2010, there were seven ETFs (BRAX11, CSMO11, MOBI11, BOVA11, SMAL11, MILA11, PIBB11), which together accounted for a total financial volume of BRL6.99 billion, and 196,567 transactions.

In December, 74,438 transactions were carried out with the 10 ETFs available for trade at the Exchange. In November, that number was 86,037. The total financial volume in December was BRL1.21 billion, compared to BRL1.45 billion in November. In December, the ETF BOVA11 registered the largest financial volume with BRL1.15 billion, compared to the BRL1.37 billion it registered in November.

Securities lending

In 2011, securities lending transactions at BM&FBOVESPA reached a new milestone with a financial volume of BRL732.75 billion and 1,417,787 trades, surpassing 2010’s financial volume of BRL465.6 billion and 971,558 trades.

In December, the financial volume for securities lending transactions also set a new record with BRL84.76 billion, exceeding the mark of BRL67.30 billion set in November. The number of transactions in December was 121,897, compared to 122,983 in November.

Real Estate Investment Funds

In 2011, Real Estate Investment Funds (FIIs) accounted for a financial volume of BRL912.46 million and 77,075 transactions. During the previous year, they accounted for a financial volume of BRL379.09 million and 24,983 transactions. At the end of 2011, there were 66 Real Estate Investment Funds registered and authorized for trade on the BM&FBOVESPA markets and on its OTC market.

In December, Real Estate Investment Funds (FIIs) accounted for a financial volume of BRL144.16 million and 7,617 transactions. During the previous year, they accounted for a financial volume of BRL78.54 million and 7,812 transactions.

Fixed Income

In 2011, the financial volume for the fixed income secondary market, counting both the Bovespa Fix and the Soma Fix, totaled BRL268.14 million, compared to BRL416.20 million in 2010. Of this total, debentures accounted for BRL142.78 million, Receivables Investment Funds (FIDC) accounted for BRL25.17 million, and Mortgage Backed Securities (CRI) accounted for BRL100.19 million.

In December, the financial volume for the fixed income market, counting both the Bovespa Fix and the Soma Fix, totaled BRL14.4 million, compared to BRL9.5 million in November. Of this total, debentures accounted for BRL11.76 million, and Mortgage Backed Securities (CRI) accounted for BRL2.38 million.

BM&F Segment

Em 2011, the BM&F segment set a new record for contracts traded with 671,979,899, surpassing the previous 2010 record of 618,634,157. The financial volume in 2011 totaled BRL46.50 trillion, compared to a total of BRL42.51 trillion in 2010, and the average daily trading volume in 2011 was 2,687,920, compared to 2,494,493 in 2010.

In December, the markets in the BM&F segment accounted for a total of 43,358,744 contracts traded and a financial volume of BRL3.10 trillion, compared to 54,301,136 contracts and BRL3.87 trillion in November. The average daily trading volume in December was 2,064,702, compared to 2,715,057 in November. Open interest contracts ended the last trading day of December with 38,230,036 positions, compared to 37,001,711 in November.

Check the data for General Volume

Financial Derivatives

In 2011, the interest rate futures (DI) traded a record 320,821,062 contracts, compared to the previous record of 293,065,417 set in 2010. The US dollar futures ended the year with 86,167,955 contracts traded, compared to 82,453,621 in 2010. The Ibovespa futures traded 21,650,138 contracts in 2011, compared to 18,039,345 during the previous year, and in 2011 the Euro futures (EUR) traded 552,481 contracts up from 390,295 in 2010.

In December, the interest rate futures (DI) accounted for 21,511,662 contracts, compared to 28,561,969 in November. The US dollar futures ended December with 6,239,499 contracts traded, compared to 7,189,024 in November. The Ibovespa futures traded 1,618,153 contracts compared to 1,774,340 during the previous month, and, in December, the Euro futures (EUR) traded 34.546 contracts down from 62.901 in November.

Mini Contracts

In 2011, derivatives mini contracts traded 28,517,331 contracts compared to 18,700,470 in 2010. The Ibovespa futures traded 26,234,515 mini contracts in 2011, up from 16,705,118 in 2010, and the US dollar futures accounted for 1,710,007 mini contracts traded compared to 1,969,427 in 2010.

In December, derivatives mini contracts traded 2,338,964 contracts compared to 2,663,926 in November. The Ibovespa futures market traded 2,172,318 mini contracts, compared to 2,473,109 the previous month. The US dollar futures market traded 164,136 mini contracts down from 186,664 in November, and the open interest on mini contract futures ended December with 14.852 positions compared to 43,983 in November.

Commodity derivatives

In 2011, a total of 2,389,454 futures and options commodity contracts were traded, down from 2,702,705 in 2010.

A total of 558,311 Corn futures and options contracts were traded in 2011, surpassing the previous record of 490,265 in 2010. Live cattle futures and option contracts totaled 1,170,100 in 2011, down from 1,352,469 in 2010. Arabica coffee ended 2011 with 463,121 contracts traded compared to 694,348 in 2010, while the Ethanol futures market traded 94,726 contracts in 2011, up from 22,615 in 2010 and the Soybean market traded 70,639 contracts.

In December, a total of 160,585 futures and options commodity contracts were traded, down from 245,561 in November. When trading closed in December there were 129,006 open interest contracts, compared 133,410 at the end of the previous month.

Live cattle futures and options contracts totaled 82,627, in December, compared to 160,824 in November. Corn closed out the period with a total of 44,768 futures and options contracts traded, up from 42,279 in November. Arabica coffee ended December with 23,106 contracts traded, down from the 28,791 contracts traded in November. The Soybean market registered 3,310 contracts in December compared to 6,622 during the previous month, and the Ethanol futures market accounted for 6,774 contracts traded, compared to the 7,045 contracts traded in November.

Click here for the monthly commodities report

Agribusiness Securities

After adding up all of the transactions carried out in the SRTA registration system, the agribusiness securities registered at BM&FBOVESPA totaled BRL8.68 billion in 2011, compared to BRL1.24 billion in 2010. In 2011, a total of 46,690 records were also checked for agribusiness securities, and together they represented the cumulative financial volume of BRL29.43 billion, up from the 15,270 records with a trading volume of BRL10.05 billion in 2010. The stock of LCAs (Agribusiness Credit Bills) registered in the stock market in 2011 totaled BRL7.46 billion, compared to the BRL297 million registered during the previous year.

After adding up all of the transactions carried out in the SRTA registration system, the stock of agribusiness securities registered at BM&FBOVESPA totaled BRL8.68 billion in December, compared to BRL8.02 billion in November. The stock of LCAs totaled BRL7.46 billion in December, compared to BRL6.77 billion in November.

Spot Gold

In 2011, the spot gold market (250 grams) traded 23,579 contracts, compared to 9,567 in 2010. The financial volume for the spot gold market totaled BRL509.80 million, compared to BRL179.02 million the year before.

In December, the spot gold market (250 grams) traded 749 contracts, down from 2,240 in November. The total financial volume in December was BRL18.03 million, compared to BRL55.44 million in the month before.

Spot Dollar

In 2011, the spot US dollar totaled 12,859 transactions with a financial volume of US$32.89 billion, compared to 14,339 transactions and a financial volume of US$31.41 billion in 2010. The financial volume of U.S. dollars traded on the Brazilian interbank settlement market and registered in the BM&FBOVESPA FX Clearinghouse was US$588.83 billion, with 31,462 trades, down from US$718.31 billion and 36,428 trades in 2010.

In December, the spot dollar totaled 1,547 transactions with a financial volume of US$2.07 billion. In November, 1,999 transactions were registered with a financial volume of US$2.17 billion. In December, the financial volume of U.S. dollars traded on the Brazilian interbank settlement market and registered in the BM&FBOVESPA FX Clearinghouse was US$40.62 billion with 2,711 transactions, compared to US$37.65 billion and 2,475 transactions in November.

Public Fixed Income

In 2011, the financial volume for the public fixed income secondary market, counting all the transactions carried out on Sisbex, totaled BRL257.58 billion, compared to BRL116.89 billion in 2010. Of this total, BRL5.1 billion was related to final transactions and BRL251.1 billion was related to repo transactions. The financial volume for public securities lending transactions totaled BRL1.36 billion in 2011.

In December, the financial volume for the public fixed income secondary market, counting all the transactions carried out on Sisbex, was BRL18.6 billion, up from BRL6.9 billion in November. Of this total, BRL32.10 million was related to final transactions and BRL18.57 billion was related to repo transactions.

Investor Participation

In 2011, financial institutions led trading in the markets of the BM&F segment accounting for 36.41% of total contracts traded, compared to 42.40% in 2010. They were followed by institutional investors with 31.27% in 2011, compared to 29.61% in 2010, and foreign investors with 25.86% compared to 22.40% during the previous year. Individual investors ended the year with 5.22%, up from 3.88% in 2010, and companies accounted for 1.24%, compared to 1.71% the previous year.

In December, financial institutions led trading in the markets of the BM&F segment accounting for 38.08% of total contracts traded, compared to 35.75% in November. They were followed by institutional investors with 32.53%, down from 34.49% the previous month. During this same period foreign investors accounted for 23.04%, compared to 23.18%. Individual investors ended the year with 4.48% in December compared to 5.19% in November; and companies accounted for 1.83%, up from 1.34% the month before.

Individual investors

At the end of 2011, there were 135,256 individual investors with at least one active account registered at the Derivatives Clearinghouse, compared to 137,820 at the end of the previous year.

DMA

BM&F Segment

In December, the transactions carried out via Direct Market Access (DMA) in the BM&F* segment totaled 25,617,886 contracts traded in 2,483,514 trades. During the previous month, 31,537,229 contracts were traded in 2,887,206 trades.

The volumes registered by each DMA model in the BM&F segment were as follows:

Traditional DMA – 12,266,856 contracts traded in 879,061 trades in December, compared to 15,783,631 contracts traded in 1,219,049 trades in November;

Via DMA provider (including orders routed via the Globex System) – 8,225,628 contracts traded in 234,539 trades in December, compared to 10,736,890 contracts traded in 252,343 trades the month before;

DMA via direct connection – 1,255 contracts traded in 303 trades in December, up from 1,034 contracts traded in 289 trades during the previous month; and

DMA via co-location – 5,124,147 contracts traded in 1,369,611 trades in December, compared to 5,015,674 contracts traded in 1,415,525 trades in November.

In December, the transactions carried out by foreign investors who were presented to BM&FBOVESPA by CME (which either use the order routing system or access the BM&FBOVESPA markets via co-location) totaled 2,240,922 contracts traded in 537,582 trades. In November, those totals were 2,297,168 and 554,624 respectively.

BOVESPA Segment

In December, the transactions carried out via Direct Market Access (DMA) in the BOVESPA*segment had a total financial volume of BRL86.68 billion in 12,297,326 trades. During the month of November, those numbers were BRL92.18 billion and 11,690,154 respectively.

The volumes registered by each DMA model in the BOVESPA segment were as follows:

Traditional DMA – BRL71.67 billion in 9,727,649 trades in December, compared to BRL76.89 billion in 9,411,041 trades in November;

Via DMA provider – BRL1.04 billion in 188,596 trades in December, compared to BRL981.77 million in 119,734 trades in November; and

DMA via co-location – BRL13.87 billion in 2,369,659 trades in December, compared to BRL14.21 billion in 2,150,118 trades in November.

* 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 trading system 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 or DMA via direct connection, the client connects to the system through a direct connection.

In model 4 or DMA 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.

Source: BM&FBOVESPA, 10.01.2012

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: FIX Global Trading, 15.09.2011

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

Chinese Markets STEP Forward with China FIX

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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