FMX | Connect – www.fmxconnect.com - (Reported 12/17/2010)
Exchange Sector Review - Week ending December 17th, 2010
This week:
The sector was flat, underperforming global equities by 50 bps. Interdealer brokers were up 100 bps. YTD the sector is underperforming global equities by 265 bps.
The Australian Competition and Consumer Commission (ACCC) said it would not oppose SGX’s acquisition of ASX. Australian Treasurer Wayne Swan said that the ACCC’s approval of the merger “is not a factor for” convincing him that SGX’s bid for ASX is “in the national interest of Australia”. The treasurer may block the acquisition of shares in Australian companies by foreigners if this could be deemed contrary to Australia’s “national interest”. The merger will also have to be approved by the Australian Parliament who will have to amend the Corporations Act which limits ownership to 15% ownership of ASX shares. Opposition leader Tony Abbot said he had “legitimate concerns” about the merger and the opposition Treasury Spokesman Joe Hockey said he would not support the merger unless it could be shown that it was in Australia’s best interest. Mr. Hockey called the ASX a “signature monopoly” used to promote Australia as a financial centre (see pages 7-9)
CME is trading an average 14 mn futures contracts per day contracts in December (+54% Y/Y) driven by a spike in interest rate volumes (7 mn contracts per day, +80% Y/Y). Low inflation coupled with a zero rate policy rendered hedging unnecessary, but as the Fed continues to increase the monetary base and feed inflation fears (which will lead to higher interest rates) hedgers and speculators will drive IR volumes The Fed’s lax monetary policy is also boosting FX volumes (1.1 mn contracts per day MTD; +44% Y/Y) amidst increased FX volatility (see page 10).
CME received FSA approval to begin its London-based OTC derivatives clearinghouse, CME Clearing Europe, in 2011. This venture will first focus on OTC commodity products before introducing financial products.
Chi-X Europe received offers from BATS, NASDAQ OMX, and NYX before its second bidding round deadline, with the highest offer valuing the European MTF at £300 mn, according to the Financial Times.
BATS Options announced a new rebate structure for its options market, which will give a rebate of $0.50 per contract and is designed to attract HFT.
The CFTC may implement speculative trading curbs in phases and the Commission is also ”examining whether certain elements of the rule for which the commission has substantial data can proceed on a more expedited time frame, while leaving those aspects of the rule that depend upon additional data for later implementation”.
Gain Capital (GCAP), operator of Forex.com, debuted with its IPO on the NYSE and raised $81 m with 9 mn shares at $9 each. The price was 35% below GCAP’s expected range of $13-$15. Last Week, FXCM, an online provider of FX trading and related services, raised $211 mn in its IPO, selling 15.1 mn shares at $14 each, the midpoint of the offer range.
Provided By: Equity Research Desk, www.erdesk.com
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