Exchange Sector Review - Week ending April 9, 2010
This week:
The sector was up 100 bps outperforming global equities by 100 bps. Interdealer brokers were up 300 bps. YTD the sector is underperforming global equities by 573 bps.
Chi-X received last week an “in-principle” trade license to operate in the Australian market, but will not be able to begin operation until ASIC takes over supervisory enforcement in 3Q10. ASX, who makes 10% of its revenues from equities trading, plans to launch a new, faster platform, new products (including a dark pool and a venue designed for HFTs) and reduce fees to compete with Chi-x.
NYSE Arca Options raised its rebates for posting liquidity in premium tier products by 5 cents to 30 cents. ARCA also changed the tiered customer rebates in non-premium penny pilot issues and a reduced the LMM rights fees. NYSE Amex options is introducing a reduced electronic broker dealer rate, a reduced electronic firm rate, tiered pricing for firm proprietary manual trades and the implementation of the Professional Customer designation as competition in US options is heating up and trading is shifting from quote-driven venues like CBOE and ISE to order-driven venues like ARCA and PHLX as HFTs compete against market makers with tighter spreads. NYX EVP of US options Edward Boyle said “pricing is always going to go down, not up.”
DirectEdge is planning an IPO for next year. “We're building Direct Edge to be an enduring company and that's really the strategy. An IPO can easily be a significant part of that strategy, and it remains a significant part of our strategic thinking in the intermediate term," CEO Bill O’Brien commented. The company also ceased to offer liquidity-provision rebates for stocks trading below $1 per share on its EDGX platform and the fee for removing liquidity in sub-$1 stocks will be reduced from 0.3% to 0.1%.
The SEC plans to monitor high frequency trading by assigning unique ID numbers to high frequency trading firms.
China launched a margin trading and short selling program in its two exchanges (Shanghai and Shenzhen). Six local brokers (Guosen, Citic, Haitong, Guotai Junan, GF and Everbright) will be allowed to participate in the trial program and will be required to have a net capital of at least CNY5 bn ($732 mn) over the past six months. China also plans to launch stock index futures on the China Financial Futures Exchange on April 16.
BME announced the creation of the Sistema Electrónico de Negociación de Deuda (SEND), an electronic trading platform for corporate fixed income for retail investors that will start operating on May 10th.
Provided By: Equity Research Desk www.erdesk.com