Did Lloyds rig Libor?

PFOF/Maker taker-regulatory harmonization-gold fix

The Securities and Exchange Commission (SEC) should act straight away to eliminate the maker-taker and payment for order flow market pricing models that create conflict of interests for brokers, according to U.S. Senator Carl Levin (D-Mich.). As quoted in Bloomberg, Levin stated that “eliminating maker-taker pricing would improve confidence in US equity markets….such action would reassure investors that they can rely on their brokers to provide best execution of their trades, without having to question whether a broker might instead be seeking to maximize its own profits at the customer’s expense.”

Nasdaq (NDAQ) is considering applying for full exchange status for NLX, its London-based derivatives platform, which is currently designated as a multilateral trading facility under UK regulation.

Bolsa Mexicana de Valores SAB de CV (BOLSAA) reported 2Q14 EPS of P$0.31 (+6% q/q, -16% y/y) in line with ERDesk estimate. Revenues were P$575m (+4% q/q, -2% y/y) and expenses were P$325m (+3% q/q, +5% y/y).

Gold fix: A statement on the overhaul of the century-old gold “fix” is expected imminently, according to a Reuters source, who also said that changes would likely include a new code of conduct for participants and the appointment of an independent chairman. The London gold fixing company would also request proposals to administer the benchmarking process.

The Securities Industry and Financial Markets Association (SIFMA) proposed changes on how rebates and other stock trading rules, CNBC reported. Among the changes proposed include reducing the current maximum fee that exchanges can charge to “remove” liquidity to no more than five cents per hundred shares, from the current fee of around 30 cents per hundred shares. SIFMA also recommended that SEC review the large number of order types, some of which may be encouraging excessive message traffic.

The Commodities Futures Trading Commission (CFTC): Commissioner Scott O’Malia advocated for US and EU to set aside their differences and harmonize international derivatives trading rules before market fragmentation and low liquidity become lasting features of the swaps and futures markets, Platts reported.

CFTC: A study sponsored by the U.S. regulator stated that HFT traders should be required to trade futures contracts in both good and bad times in order to reduce turbulence in a market crisis. The study also said that HFT traders are more likely to leave markets in volatile times as compared to manual traders.

ICAP CEO Michael Spencer stated that there are parts of the brokerage market that will continue to struggle with the worst “drought” in at least 30 years. According to Spencer, “we’re moving into a world where the level of volumes is pretty dire and likely to remain thus. It’s as bad a drought as I’ve experienced in my entire career.”

U.S. District Judge Colleen McMahon ruled there was “absolutely no dispute” that Eric Moncada, who, previously worked for trading firms BES Capital LLC and Serdika LLC in New York, was engaged in fictitious wheat sales, Reuters reported.

US and UK regulators are close to fining Lloyds over the “rigging” of LIBOR, the Independent 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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