FMX | Connect – www.fmxconnect.com - (Reported 8/16/2010)
Exchange Sector Review - Week ending August 13, 2010
This week:
The sector was down 500 bps, underperforming global equities by 100 bps. Interdealer brokers were down 500 bps. YTD the sector is underperforming global equities by 630 bps.
SEC and CFTC representatives said that the new rules stemming from the Dodd-Frank Act will be published between November and December. The new rules will permit cross-margining of futures and swaps, and require the segregation of client assets in swap accounts (CME launched “customer sequestered” accounts this week anticipating the new rules). The forceful clearing and exchange trading of swaps will probably encourage standardization and could turn swaps into futures look-alike products (as was the case in the OTC energy market). The newly launched Eris exchange anticipated this trend and launched last month an electronic exchange for cleared swap look-alike futures contracts. The forceful clearing and standardization of contracts (which will probably increase once the exchanges are barred from self-certifying swaps and the contracts will require CFTC approval) coupled with cross-margining capabilities across asset classes will foster consolidation in the exchange space (see page 7).
HKEx CEO Charles Li said the exchange will ask Chinese regulators to ease restrictions on the use of the yuan to allow the listing of yuan-denominated products in Hong Kong. HKEx will also align trading hours with exchanges in mainland China.
SMX received approval from the Monetary Authority of Singapore (MAS) to operate a regulated and licensed exchange. SMX will be the first pan-Asian multi-product commodity and currency derivatives exchange.
Chile’s Finance Minister Felipe Larrain will propose a new derivatives bill to Congress this month to promote the development of the capital markets in the country and encourage companies to hedge FX and interest rate risk. The bill aims to wipe out uncertainty about whether derivative transactions with foreign counterparts are subject to an extra 35% income tax.
The following companies reported quarterly earnings:
-BVMF3 R$0.16 +65% Y/Y
-CETIP R$0.13 +6% Q/Q
-HKEx HKD1.05 -17% Y/Y
Next week:
The following companies will report quarterly earnings:
-Tuesday, August 17: PSE, NZX
-Thursday, August 19: ASX
-Friday, August 20: IMAREX
Source: ERDESK
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