High frequency trading: A blow to investor confidence?

Exchange Shorts

InterContinental Exchange stated that the IPO of Euronext values the Exchange of up to EUR (CME:E6M14) 1.75b ($2.4b), Bloomberg reported. ICE is selling a stake of as much as 60.15% of Euronext at EUR 19 to EUR 25 per share, and based on the assumption of an exercise of an over-allotment option, the deal is expected to raise as much as EUR 1.16b, with trading expected to start on June 20.

Chicago Mercentile Exchange is considering the launch of a Western Europe wheat contract, Bloomberg reported. According to CME’s managing director of agricultural commodities and alternative investments, the exchange may start its own contract or develop a partnership with the new owners of Euronext NV after its own IPO.

A U.S. Senate
 investigative panel plans to hold a hearing on June 17 to probe the role that high-frequency trading (HFT) has in markets and whether that is hurting investor confidence. The hearing next week will also explore whether conflicts of interests between brokers that place customer orders and trading venues that pay brokers in exchange for those orders could negatively affect investors.

CME aims to launch cocoa futures to compete with NYSE Liffe. The contract will be launched earlier this year in early 2015, and will be listed on CME Europe and focus on physical cocoa movements in Europe, Bloomberg reported.

DB1: Eurex and European Energy Exchange (EEX) will concentrate their agricultural derivatives trading within EEX, of which Eurex has a 63% majority stake.

ICAP: The European Commission warned that ICAP may have broken some competition rules by facilitating “several” cartels for Yen Libor-linked interest rate derivatives. According to The Times, ICAP could be fined as much as 10% of its global annual turnover if it is found guilty of breaking EU antitrust rules.

completed its first phase of Liffe transition to the ICE platform, with the three-month Eurodollar futures, U.S. Agency DTCC GCF Repo Index futures, the U.S. mortgage-backed securities DTCC GCF Repo Index futures and the U.S. Treasury DTCC GCF Repo Index futures successful transitioned to ICE Futures Europe and ICE Clear Europe.

wholly-owned subsidiary NGX launched trading of physical power products for the Western Electricity Coordinating Council (WECC) market Mid-C, Palo Verde and Mead.

resumed stock trading after a halt that was caused by messaging problems on the exchange’s trading system, according to Bloomberg.

Bursa Malaysia
will launch its palm oil (CME:CUN14) futures contract on June 16, Reuters reported.

About the Author

Bernardo Mariano brings to ERDesk his experience structuring private deals for the acquisition of mutual exchanges. Prior to joining ERDesk Bernardo worked as a Director for Instinet and later, CEO of Reuters' Bondex. He holds an MS in Economics from University of Illinois and an MIA in Finance from Columbia University. He can be reaced at be reached at mariano@erdesk.com. 

Equity Research Desk (www.erdesk.com) provides fundamental analysis of global capital markets related entities to support the investment process of buy-side analysts at hedge funds and traditional money managers. The company focuses its coverage on securities exchanges, discount brokers, trading platforms, asset managers, financial-related technology companies and intellectual property assets in the US, Europe, Asia, and Latin America.

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