EMCF “ready to service LSE flow”

European Multilateral Clearing Facility (EMCF), the Dutch-regulated central counterparty that clears trades for three UK-regulated MTFs, has been granted recognised overseas clearing house (ROCH) status by the UK’s regulator, the Financial Services Authority. This will allow EMCF to act as a clearinghouse for regulated markets in the UK, including the London Stock Exchange (LSE), and enable it to cater for its existing MTF users should they wish to become full exchanges.

EMCF, which is regulated by the Netherlands Authority for the Financial Markets (AFM) and Dutch central bank De Nederlandsche Bank (DNB), previously cleared for multilateral trading facilities (MTF) Chi-X, BATS Europe and Nasdaq OMX Europe under foreign exempt status. There is no regulatory requirement for EMCF to have ROCH status to clear for the MTFs, but because of the alternative venues’ growing market share, the FSA had become increasingly keen for EMCF to become an ROCH, according to Jan Bart de Boer, chairman of the clearing house’s supervisory board.

In theory, EMCF could now offer clearing services to the London Stock Exchange. “From a regulatory perspective, EMCF is now ready to service LSE flow,” said de Boer. “EMCF would now be able to do a deal with LCH.Clearnet [The LSE’s clearing house] and the LSE. The question is whether LCH and the LSE are willing to do a deal.”

New Hungarian MTF will have liquidity “from day one”

This summer will see the launch of yet another pan-European multilateral trading facility, Quote MTF, a Hungarian-based platform that will offer liquidity from third-party market-makers from launch.

Quote MTF is 60% majority-owned by BRMS Holdings, which already owns stakes in Canadian alternative trading venues SwiftTrade and Omega ATS. The firm is building its own proprietary trading system from scratch and has already agreed a deal with a central counterparty, which it expects to announce within a few weeks. Quote MTF’s projected Q2 launch could take the number of pan-European blue-chip MTFs to six, pending the launch of NYSE Arca Europe by exchange group NYSE Euronext, due to start trading in Q1 2009.

“We think we will have a number of factors that will differentiate us from the rest of market,” Gabor Kutas, member of the board, Quote MTF, told theTRADEnews.com. “We will have a different pricing model to the others, which we will elaborate on in due course, and will be among the most aggressive for paying liquidity sponsors, who will be making markets from day one. Additionally, there are no banks or incumbent exchanges with stakes in the platform, so there will be no political issues.”

Neonet links to Mexican Stock Exchange

Neonet, an agency brokerage and trading technology provider, is now offering trading access to the Mexican Stock Exchange – the broker's first foray into Latin America. The Mexican Stock Exchange is the second-largest equity market in Latin America based on trading volumes in 2007.

“As the capital markets continue to globalise, you can be confident that Neonet will extend its offering of trading at the world’s most competitive and liquid marketplaces,” said Simon Nathanson, CEO and president, Neonet, in a statement.

During 2008 Neonet connected to the Australia Securities Exchange, the Eurex derivatives exchange and the new European alternative trading platforms – BATS Europe, Nasdaq OMX Europe and Turquoise. Neonet also plans to offer trading access to NYSE Euronext’s displayed mutlilateral trading facility NYSE Arca Europe, which is scheduled to launch in January.

Lee Hodgkinson to quit SIX Swiss Exchange in April

Lee Hodgkinson, CEO of UK-based exchange SWX Europe, head of the client and product management division and member of the management committee at SIX Swiss Exchange, SWX’s parent firm, is to leave the organisation at the end of April to pursue a new challenge.

Hodgkinson will remain in charge of his areas of responsibility until his final day with SIX Swiss Exchange. Hodgkinson’s departure follows SIX Swiss Exchange’s decision, announced last November, to close SWX Europe and transfer trading of Swiss blue-chip stocks from London back to Zurich. One of Hodgkinson’s roles was to head up the transfer project, which will be finalised by the end of June.

SIX launched SWX Europe, originally known as virt-x, in 2001. It wanted to trade Swiss blue-chip stocks in London because it felt Switzerland’s stamp duty rules at the time put the exchange at a competitive advantage to other European exchanges.

EU clearing mandate likely, warns Aite

European central counterparties (CCPs) must work together to make securities clearing and settlement cheaper and more efficient, or risk a European Commission (EC) mandate, according to the latest report from consultancy Aite Group.

The report, ‘EU trading, clearing and settlement: You say you want a revolution’, considers national differences between systems and management to be the key barriers to a harmonised pan-European clearing and settlement market. The report adds that regulatory variations between countries within the EU, such as tax codes, legal structures, currencies (outside the Euro currency zone) and settlement standards also prohibit interoperability between markets, clearing houses and central security depositories.

Three years after the introduction of its Code of Conduct on clearing and settlement, “many feel that the EC may be ready to issue a more forceful directive soon if participants in the market do not get the ball moving more quickly,” asserted the report.

Aite notes that the need for investors to manage a higher risk trading environment has seen exchanges and multilateral trading facilities start to open up their clearing and settlement infrastructures.

Consolidated tape stifled by incumbent exchanges

The market data policies of Europe’s incumbent exchanges “go against the spirit of MiFID provisions”, according to a letter from Equiduct Trading joint-CEO Artur Fischer sent to the Committee of European Securities Regulators (CESR).

“The current status quo does not allow for the benefits of MiFID and increased competition amongst execution venues to be enjoyed equally by all investors,” writes Fischer, who calls for more regulatory guidance to help establish a consolidated tape for aggregating price data in Europe.

CESR issued a call for evidence in November on the workings of MiFID and its impact on Europe’s market structure, in preparation for the European Commission’s upcoming evaluation of the directive’s provisions. Submissions are scheduled to be available on CESR’s website from today.

The lack of a consolidated tape has frustrated buy-side firms since European liquidity started fragmenting to new venues, following the introduction of MiFID in November 2007. Without a consolidated source of pre- and post-trade market data, it can be difficult to establish a clear and precise picture of market activity across multiple venues.

Incentives boost Euro Millennium volumes

The value of trades matched on NYFIX Euro Millennium rocketed to more than EUR 1 billion in December from around EUR 178 million in November, following a series of initiatives to boost activity in the European dark crossing network. Matched volume also rose to 251 million shares in December from 45 million the previous month.

The pool also set two one-day records on 17 December when it matched 50.7 million shares representing more than EUR 150 million of value. It has gone on to beat the value record this year, matching more than EUR 200 million on 13 January.

Euro Millennium’s performance bucked the general trend in Europe in December, where equity trading activity declined overall. According to data vendor Thomson Reuters’ monthly market share reports, the value of European equity trades fell to EUR 960.7 billion in December from EUR 982.8 billion in November. Trading volume for the same period fell to 122.6 billion shares from 148.6 billion.

“[The success in December] was a combination of education about how to use the dark pool and momentum initiatives such as fee holidays and our ‘Experience the Dark’ programme, which encouraged firms to put more liquidity in the pool,” Chris Smith, director of NYFIX International, told theTRADEnews.com.