Exchange Sector Review - Week ending April 16th, 2010
This week:
The sector was up 100 bps underperforming global equities by 50 bps. Interdealer brokers were up 300 bps. YTD the sector is underperforming global equities by 733 bps.
The SEC plans to prohibit options exchanges from unfairly impeding access to displayed quotations and to cap access fees at $0.30 per contract to promote intermarket access. The proposal would benefit quote-driven markets like ISE and CBOE which have been losing market share to order-driven venues like PHLX, BOX and Arca (see page 7).
The SEC also voted unanimously to propose the creation of a large trader reporting system to identify large market participants, collect trade information and analyze their trading activity. Participants trading more than $20 mn during any calendar day, or 20 mn shares or $200 mn during any calendar month will be required to identify themselves to the Commission, which will assign each trader a unique identification number. The threshold for options will be calculated based on the value of the underlying asset. CME will require clearing members to implement the Globex Credit Control tool for HFT beginning June 25.
NASDAQ modified trading fees for sub-dollar stocks, effective April 15, following a recent move by Direct Edge. Firms will receive a rebate of 10 bps of the total dollar volume of the transaction when adding both displayed and non-displayed liquidity to NASDAQ and be charged 20 bps when removing liquidity. The maker/taker rates for sub-dollar stocks at NASDAQ BX will be 5bps/15bps.
SEC Chairman Mary Schapiro plans to review leveraged ETFs. "It's appropriate to engage in a more thorough review of the use of derivatives by ETFs and mutual funds given the questions surrounding the risks associated with the derivative instruments underlying many funds.“
CESR released a consultation paper on reforming MiFID outlining a range of potential changes for the regulation of dark pools. Proposed reforms include a redefinition of the large-in-scale thresholds to take account of dwindling average order sizes. FESE called for allowing non-displayed liquidity only for large orders.
Turquoise and NYSE Arca Europe will begin offering dollar-denominated S&P 100 shares during European market hours. Euro CCP will provide the CCP clearing services.
The following companies reported quarterly earnings:
-SGX FY3Q10 SGD0.07 +35% Y/Y
-SCHW 1Q10 $0.10 -47% Y/Y
-EEX FY09 EUR7.2 mn -67% Y/Y
Next week:
The following companies will report quarterly earnings
-Tuesday, April 20th: BMV, Bursa Malaysia
-Wednesday, April 21st: IBKR, TRAD, ETFC
-Thursday, April 22nd: JNS, FII
-Friday, April 23rd: TROW
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Provided By: Equity Research Desk www.erdesk.com