MarketVoice News
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IDB Consolidation
ICAP in November entered into an £1.1 billion ($1.63 USD) agreement to sell its brokerage business to Tullett Prebon. Although ICAP will retain some ownership of the combined company, the move marks a decisive shift away from ICAP's origins as a voice broker. Going forward, the company will focus primarily on two main lines of business: post-trade services and electronic markets.
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MIFID readiness
The effective date for European Union’s new derivatives rules is more than a year away, but Orc is hard at work developing technology to help traders comply with the Markets in Financial Instruments Directive II and the new Markets in Financial Instruments Regulation.
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Cross-Border Recognition
The European Securities and Markets Authority issued a consultation on Dec. 14 proposing amendments to the European Market Infrastructure Regulation that would permit a "one-day gross" approach to calculating margin requirements for exchange-traded futures and options.
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Market Surveillance
Two technology vendors, GlobalRisk and Interactive Data, are collaborating on a project to help the Commodity Futures Trading Commission improve its ability to assess and monitor market risk exposures in real time.
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Capital Optimization
Eurex Clearing in November launched its Prisma Margin Estimator, a free service that allows clearing members and their clients to estimate initial margins for futures, options and swaps.
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Market Access
Korea Exchange is seeking to enhance its appeal to international market participants by introducing several changes to its trading rules and technological infrastructure.
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Trading technology
Bloomberg Tradebook in December announced several upgrades to its multi-broker platform for trading futures.
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Dodd-Frank Fix
On Dec. 4, President Obama signed into law a transportation bill that includes a provision removing a barrier to the sharing of data on swap trading. The provision stripped away a requirement in Dodd-Frank that U.S.-based swap data repositories obtain a written indemnification agreement from overseas regulators seeking to access their data. This indemnification provision was intended to protect the confidentiality of the data, but proponents have warned that it effectively restricted foreign regulatory access to data.
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Commodity Arbitrage
Trading Shanghai versus London in the copper market? Sucden Financial wants to help. The London-based broker has added a spread trading functionality to its Star trading platform for futures and options, which was developed in-house. The company said its dynamic spreader tool will make arbitrage in commodity futures markets easier to execute by allowing users to create and trade synthetic spreads within a single exchange or across exchanges. For example, traders can trade the premium between raw and refined sugar on Intercontinental Exchange by simultaneously buying sugar No. 11 futures and selling white sugar futures. To mitigate legging risk, the spreader releases orders in clip sizes that can be set by the trader.
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Market Innovation
Small and mid-sized banks now have an electronic marketplace to lend and borrow short-term funds. Launched in December, the American Financial Exchange will focus on serving the overnight and 30-day borrowing needs of 1,740 community and regional banks in the U.S. This represents institutions that manage between $500 million and $125 billion in assets in a total market of nearly $5 trillion.
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