ICE starts clearing US credit default swaps

ICE US Trust, a New York limited liability trust company owned by US futures exchange group IntercontinentalExchange (ICE), has started clearing and processing credit default swap (CDS) index transactions in the North American Markit CDX indices. It expects to start clearing liquid single-name CDS in the coming months. Market data firm Markit will produce daily settlement prices required for mark-to-market pricing, margining and clearing.

“ICE Trust has been designed to further enhance well-functioning CDS markets by reducing counterparty and systemic risks, and increasing transparency and capital efficiency in the CDS markets,” said Jeffrey C. Sprecher, chairman and CEO of ICE, in a statement. “ICE will continue to work closely with the Federal Reserve and other regulatory bodies in the US and abroad in implementing risk management solutions for the vital credit markets.”

NYSE Arca Europe, a displayed pan-European multilateral trading facility (MTF)

NYSE Arca Europe, a displayed pan-European multilateral trading facility (MTF) created by exchange group NYSE Euronext, started trading today and will offer free trading until April as part of a three-week-long launch promotion. However, unlike other pan-European MTFs, it will charge both for posting and taking liquidity.

The platform, whose launch was delayed twice last year because of a lack of client readiness, will enter a phased launch from today and will offer European stocks that are not already available on Euronext’s regulated cash markets in Portugal, Belgium, France and the Netherlands.

From today, the platform will trade stocks from Austria, Denmark, Finland, Germany, Italy, Norway, Spain, Sweden and Switzerland. A second phase, planned for early April, will include UK and Irish stocks.

Chi-X Europe names interim replacement for Randall

Chi-X Europe, a pan-European multilateral trading facility, has appointed Mark Howarth as interim CEO, replacing Peter Randall, who is stepping down for personal reasons.

Howarth is currently chief operating officer, Asia-Pacific at Chi-X Global, the holding company for all Chi-X’s trading platforms in Europe, Canada and Australia. Chi-X Global is 100%-owned by agency broker Instinet.

Before joining Chi-X, Howarth was CEO of data vendor Thomson Financial in Asia-Pacific and previously held senior institutional equities positions in Europe, Japan, and Hong Kong at Merrill Lynch, UBS and Instinet.

“Through its technology, market model and incredibly lean cost basis, Chi-X Europe has been able to not only survive amid great competition, but also thrive,” said Howarth in a statement. “I look forward to working with our team to continue to provide participants with the level of service and innovation that they have come to expect from Chi-X Europe.”

Buy-side algo use grows despite turmoil – The TRADE survey

The buy-side has expanded its use of execution algorithms for equity trades, despite difficult trading conditions and evidence of a return to high-touch trading methods, The TRADE’s 2009 algorithmic trading survey has found.

According to the survey, which will be published in full in the Q1 2009 issue of The TRADE, more than a quarter (26%) of buy-side traders now use algorithms for more than 40% of their order flow, compared with only 9% in last year’s survey.

A total of 150 senior buy-side traders based in 20 countries across the world commented on their use – and the performance – of algorithms in this year’s survey.
In December, TABB Group’s annual study of US institutional equity trading reported that sales traders had captured 44% of total buy-side flow, compared with 37% in 2007. Rather than shunning algorithms in the tough trading conditions seen at the end of 2008 and the beginning of 2009, many algorithm providers contend that the buy-side has also turned to algorithms to weather the storm.

UBS launches real-time TCA tool in Europe

UBS Investment Bank has launched a real-time transaction cost analysis (TCA) service to help European clients achieve best execution.

Available via UBS Fusion, the firm’s equity trading analytics platform, the new service provides buy-side traders with live, continuous analysis of their orders during execution.

Real-time TCA is part of UBS’s Direct Execution electronic trading suite, which also includes trading and analytical tools such as pre-trade transaction cost analysis for single stock and portfolio trading, a suite of in-market tools including trading alerts, and downloadable reports and analysis tools.

“Via Fusion, clients can see where they are getting fills across different venues and react accordingly in real time,” Mark Goodman, managing director, Direct Execution (Equities), UBS, told theTRADEnews.com. “A client might initially instruct our TAP algorithm to take good prices wherever it can find them, but then decide to take a more patient approach and reduce participation in displayed markets in favour of dark liquidity.”

New DMA service planned to Brazilian exchange

Itau Securities, the broking arm of Brazil’s Bank Itau, is to offer its global clients direct market access (DMA) to the Sao Paolo equities and futures exchange using an electronic trading platform from NYSE Technologies.

The new service means Itau will become the first broker to provide customers with DMA connectivity to Brazil’s BM&F Bovespa.

Stanley Young, CEO, NYSE Technologies and co-global CIO, NYSE Euronext, said the agreement between the two firms would lead to a “new breed of direct market access solutions” in Latin America. “We are excited to work with Itau on a truly ground-breaking project that further opens the Latin American marketplaces to the global investors and puts the global markets within reach of the Brazilian investors,” he said.

“As we continue our global expansion to London, Dubai, Hong Kong and Tokyo, Itau Securities is working with NYSE Euronext to build this new platform giving us the ability to offer our customers outside Latin America a robust, innovative trading solution for trading in our markets,” said Roberto Nishikawa, CEO, Itau Securities.

Longer stay for short-sales ban in Australia

The Australian Securities and Investment Commission (ASIC), Australia’s financial regulator, has further extended its short selling ban for financial stocks due to continued volatility.

The ban, originally due to end on Friday, will now be kept in place until 31 May, although ASIC has said this would be under constant review.

“In making its judgement to again extend the ban, ASIC weighed up the continued volatility in global financial markets and potential damage from aggressive or predatory practices from short selling against the possible loss of some market efficiency or price discovery,” read a statement on ASIC’s website.

BNY ConvergEx launches algos for Latin America

BNY ConvergEx Group, an agency brokerage and software provider, has released a suite of customisable algorithms for the Brazilian and Mexican markets.

According to the firm, its new array of Latin American algorithmic strategies have performance-driven capabilities that can be customised to meet individual market requirements and different trading objectives. They have the ability to track market sensitivity and adjust dynamically as local conditions change throughout the trading day, helping to minimise market impact.

“The Brazilian Bovespa and Mexican Bolsa Mexicana de Valores are the two largest exchanges in Latin America,” said William Capuzzi, president of BNY ConvergEx Group’s G-Trade Services. “It was key that we stay ahead of these growing markets and it is critical that we continue to provide our clients access to new and unique sources of international liquidity.”

Nomura revives Lehman’s Asian trading platform

Japanese investment bank Nomura has launched a new pan-Asian electronic trading platform for equities, integrating the execution capabilities it acquired from its takeover of Lehman Brothers Asia last September. This follows the launch of Nomura's European equities platform, created from the acquisition of Lehman's European division, in January.

The new ModelEx platform, based on Lehman’s algorithmic and direct market access (DMA) suite, will run simultaneously with Experts, Nomura’s existing electronic trading offering, while the pan-Asian capabilities of ModelEx are built out. Experts currently offers DMA in Japan and Hong Kong, and algorithmic trading in Japan, while ModelEx will be connected to equity markets in Japan, Hong Kong, Singapore and Australia.

When the integration is complete, Nomura clients will be able to benefit from the combination of Lehman’s Asian quantitative analytics team, algorithmic developers, information technology and operations personnel, and Nomura’s client relationships and analytics in Japan.

Job cut fears may stall EC mandate on CCP links

While progress has been slow on achieving interoperability between Europe’s cash equity central counterparties (CCPs), it is unlikely that the European Commission (EC) will step in and mandate links between clearing houses any time soon for fear of causing more job losses across the continent.

Few links have been established between CCPs in the three years since the EC introduced its voluntary Code of Conduct for Clearing and Settlement, designed to stimulate interoperability between post-trade providers in Europe, prompting expectations of a more forceful EC directive if more CCP links were not forged quickly.

However, Phillip Silitschanu, senior analyst at research and consulting firm Aite Group, thinks regulatory intervention is now unlikely until at least 2010 or 2011.

Pipeline Trading Systems,

Pipeline Trading Systems, a US block trading venue, has unveiled PowerPlay, an equities block-trading execution system for buy-side traders who want to execute large orders in volatile and fragmented markets.

PowerPlay gives traders access to a combination of proprietary technologies, which allow them to control simultaneous execution of multiple large orders from a single window.

According to Pipeline, PowerPlay will allow traders to minimise information leakage that results from small, probing executions. The platform will use Pipeline’s new Contra Targeting encryption technology, due to be launched in March, which allows traders to find natural matches to large trades by using information from the order management systems of other buy-side traders on the platform.

FSA tells NYFIX to modify Euro Millennium

Euro Millennium, the pan-European dark pool for equities trading, has been asked by the UK’s financial regulator to make modifications to its functionality, according to a statement by parent company NYFIX, the US-based trading solutions vendor.

In its annual results statement, issued after trading closed in New York last night, NYFIX said that the Financial Services Authority (FSA) has “proposed an interpretation of a particular provision of MiFID that would require modifications to Euro Millennium's current functionality”.

NYFIX said that the modifications would result in additional development costs and would need to be completed “within a timeframe acceptable to the FSA”. The firm is engaged in discussions with the regulator over the new interpretation of MiFID’s rules to minimise the impact on its European dark pool. The new FSA ruling is part of a review of MiFID’s impact on Europe’s financial markets by European regulators.

Fidessa responds to growing demand for Asian trading in US

Trading systems provider Fidessa has added 13 Asia-Pacific markets to the global trading service on its US-hosted execution platform in response to increasing Asian trading volumes and US brokers’ growing desire to participate in the region.

The new overnight trading service will allow Fidessa’s US broker clients to execute orders in Hong Kong, Thailand, Korea, Indonesia, Philippines, Malaysia, China, Taiwan, India, New Zealand, Australia, Singapore and Japan during these countries’ respective trading hours. Fidessa’s global trading service already supports trading in Canada, Latin America and Europe.

According to Fidessa, the ability to provide executions and insight during market hours is a necessity for US brokers looking to expand their trading businesses.

Concept system aims to help hedge funds beat crisis

Amidst shrinking budgets and the need for better trading and risk management technology at hedge funds, US institutional broker Concept Capital has launched CONCEPTONE, a front-to-back office services platform for hedge funds.

The firm claims the new platform, which combines portfolio, order and execution management, real-time risk and profit-and-loss monitoring, and access to multiple prime brokers, will provide the services hedge funds need in today’s environment at a low cost.

According to Michael Rosen, managing director at Concept Capital, hedge funds have been hit by falling assets under management, both because of declining asset valuations in the current financial crisis and rising redemptions. This has reduced their budgets but at the same time, funds need to improve trading and risk management to attract institutional investment.

Buy-side ready for leap in the dark

The results of February’s theTRADEnews.com poll reveal that 72% of readers will make greater use of dark liquidity this year. But volatility and reduced trade sizes mean traders will have to be more wary about how they use this increasingly important liquidity source.

There is no shortage of dark trading tools in the market, with even more to launch this year. As well as the plethora of dark pools and broker-owned crossing engines, the sell-side has developed dark liquidity seeking algorithms, while exchanges and multilateral trading facilities (MTFs) are also offering or introducing non-displayed trading functionality.

The London Stock Exchange, for example, will introduce a dark limit order type on 16 March, and is preparing to launch Baikal, a dark trading venue and liquidity aggregator, in June. Turquoise, the broker-backed MTF, plans to aggregate broker dark pools from Q1 this year, to complement its integrated dark and lit book.

Goldman Sachs launches crossing network in Hong Kong

Bulge-bracket broker Goldman Sachs has expanded its global equities crossing network, SIGMA X, to trade stocks listed on the Hong Kong Stock Exchange.

SIGMA X Hong Kong is accessible through Goldman Sachs’ REDIPlus execution management system, third-party trading systems or any system supported by the FIX Protocol. Hong Kong is the second Asian market to be added to SIGMA X. The crossing network was already available in Japan.

“The growth potential of Hong Kong’s market remains significant and we think alternative pools of liquidity will play an important role in its development going forward,” said Gene Reilly, managing director and head of trading and execution for Goldman Sachs in Asia.

Nasdaq OMX and Oslo Børs ignite price war in Norway

Exchange group Nasdaq OMX has revealed plans to start trading equities listed in Norway from 23 March, pitting itself against Oslo Børs, the country’s incumbent exchange. Oslo Børs has returned fire with plans to cut trading fees.

Norway is the only Nordic country where Nasdaq OMX does not dominate equities trading. The group owns the national stock exchanges in Sweden, Denmark, Finland and Iceland.

Nasdaq OMX will start by trading the stocks of the 25 largest companies listed in Norway and add the remaining shares in later phases. The Norwegian stocks will be traded on Nasdaq OMX Stockholm, and will be subject to the same trading rules and market surveillance as other shares traded on Nasdaq OMX’s Nordic bourses.