Markets lost track says ICE CEO

Exchange Shorts

U.S. Securities and Exchange Commission’s (SEC) proposed plan to reduce conflicts of interests by reining in high frequency trading and making dark pools disclose more about how they work received support from exchanges such as ICE, as well as institutional investors like Citadel and Invesco, Bloomberg reported.

DB1: Eurex published a white paper stating that central clearing significantly reduces systematic risk and their effect on financial markets, as reported in Hedgeweek. As written in the white paper, “CCPs demonstrated their resilience and benefits during the recent crisis. As the new regulatory regime takes shape, the positive features of cleared markets will be further strengthened. Of great importance are the recovery and resolution frameworks which ensure that systematic events can be managed appropriately.

InterContinental Exchange (ICE) (NYSE:ICE) CEO Jeffery Sprecher urged for an overhaul of trading rules which have led to the need for speed in trading, the FT reported. According to Sprecher, “the markets are too complex...they’ve lost track of trying to get the best price for a company trying to raise money.” He also stated that U.S. markets are now “lightning fast, fragmented and deeply interconnected...this complexity has added many more friction points where mistakes can occur.”

Financial Conduct Authority (FCA) launched a competition review into institutional banking, aimed at checking if the wholesale financial markets operate effectively to help the economy and give their institutional corporate and government customers a good deal.

London Stock Exchange (LSE): the Qatar Investment Authority (QIA) will sell a third of its stake in LSE, before the exchange’s $1.6b rights issue to help purchase Frank Russell, the US index supplier, FT reported. The QIA instructed its banks to sell close to 5% stake in an accelerated bookbuild, and the fund is expected to keep a 10% stake in LSE.

Chicago Mercentile Exchange (NASDAQ:CME) and Thomson Reuters are expected to be appointed as the new operators of the London silver (COMEX:SIN14) fix this week, according to the WSJ. According to the report, CME and Thomson Reuters will have around a month to get their electronic system ready before the existing fix is set for a final time on August 14.

London Metal Exchange (LME) would be interested in administering an alternative electronic platform to replace the London gold (COMEX:GCN14) fix if it wins the mandate to operate a similar benchmark for silver, the Telegraph reported. According to the report, LME had recently took part in the World Gold Council’s closed-door forum on reviewing the existing method of setting benchmark prices for gold.

FCA started a review on HFT trading and other practices in the wholesale and institutional banking markets, according to the Telegraph. FCA is asking for comments on competition issues by October 9, and said that it would be holding round tables with industry participants over the next few months.

Federal Reserve Bank of Chicago advocated for curbs on HFT trading and called for incentives to bring more buying and selling into public view. The Fed’s John McPartland suggested curbing dark pools by mandating that hidden orders stay at the back of the queue, executed only after public trades at the same price are filled.

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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