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European Equity Trading 2011/2012: Looking for Allies in the Face of Adversity
December 15, 2011--Executive Summary
With shrinking liquidity in volatile markets and fewer commissions available to feed an ever demanding list of brokers, the buy side is about to face further upheaval from yet more regulation. Options within the lit market are limited, so they are turning to their brokers once more to find effective methods of trading and accessing services in challenging conditions.
Based on conversations with 60 European buy-side traders, this 5th version of an annual study covers the impact of an increasing lack ofliquidity, volatile trading, and looming regulation of MiFID II on European buy side and sell side equity trading. The buy side is wary of current European markets with fears of information leakage and mistrust in both venues and true market volumes. With less to share round, the buy-side now has to reassess their broker lists and manage relationships more effectively to maintain service levels.
The reign of incumbent algorithmic providers is under threat with participants choosing to switch who receives the majority of their order flow. No longer willing to settle for adequate performance, over half now use execution performance as a benchmark for selecting their provider. Whilst the majority will maintain the same number of providers, the readiness to review performance offers opportunity for brokers to win market share.
In comparison to developments in automated trading, one area that remains lacking is the role of the sales trader. Small and medium-sized firms say they are experiencing the greatest deterioration in service levels as their brokers concentrate their efforts on larger commission payers.
ESMA publishes an updated opinion on waivers from Pre-trade Transparency
December 15, 2011--This updated includes an opinion under article 18 (1)(A) of the MiFID.
To view the text, please click here.
November 2011 Euro area annual inflation stable at 3.0% EU stable at 3.4%
December 15, 2011--Euro area1 annual inflation was 3.0% in November 20112, unchanged compared with October. A year earlier the rate was 1.9%. Monthly inflation was 0.1% in November 2011.
EU3 annual inflation was 3.4% in November 2011, unchanged compared with October. A year earlier the rate was 2.3%. Monthly inflation was 0.2% in November 2011.
These figures come from Eurostat, the statistical office of the European Union.
Inflation in the EU Member States
In November 2011, the lowest annual rates were observed in Sweden (1.1%), Malta (1.5%) and Ireland (1.7%), and the highest in Slovakia and the United Kingdom (both 4.8%), Estonia, Lithuania and Poland (all 4.4%). Compared with October 2011, annual inflation fell in fourteen Member States, remained stable in three and rose in ten.
The lowest 12-month averages4 up to November 2011 were registered in Ireland (1.1%), Sweden (1.5%), the Czech Republic and Slovenia (both 2.1%), and the highest in Romania (6.2%), Estonia (5.2%) and the United Kingdom (4.4%).
The Spanish Stock Exchange trades 6 new ETF issued by Deutsche Bank
December 14, 2011--The Spanish Stock Exchange today started trading 6 new exchange-traded funds issued by Deutsche Bank’s asset manager, db x-trackers.
This issue brings the number of ETFs listed on the Spanish stock exchange to 70, in this way increasing the number of assets available with new European and US equities.
The trading volume on the ETF segment to November reached €3.19 bn on 40,613 trades.
The new ETFs admitted to trading are:
db x-trackers IBEX 35® INDEX ETF
db x-trackers LEVDAX® DAILY ETF
db x-trackers SHORTDAX® x2 DAILY ETF
db x-trackers S&P 500 2x INVERSE DAILY ETF
db x-trackers S&P 500 2x LEVERAGED DAILY ETF
db x-trackers EURO STOXX 50® LEVERAGED DAILY ETF
NYSE Euronext publishes monthly market quality reports for European cash markets
Market Quality figures improve transparency for issuers and investors joined in capital formation process
December 14, 2011--NYSE Euronext (NYX), today announced it will start publishing on its website monthly market quality figures for the most active European trading venues that trade NYSE Euronext listed stocks. The reports are compiled using TAG Audit data, an independent and unbiased provider of trade performance and market quality assessment for the securities industry.
The monthly market quality reports will offer insight into the expectations an investor might have with regard to comparative quality of execution across trading venues.
Market quality is a key differentiating factor for investors and brokers when selecting a trading venue. Given there are a variety of venues to execute a trade, there is an implicit search cost and explicit cost of inferior market quality of the resultant execution. The better the relative quality of a market’s metrics the lower the costs will be for the investor, assuring therefore a better quality of execution. Indicators of market quality include the venue’s presence time at European Best Bid and Offer (EBBO), quoted market depth (reflecting the market’s ability to sustain relatively large market orders without impacting the price of the security) and quoted spreads (difference between bid and ask prices).
Deutsche Börse offers 10 Gigabit/s access for co-location clients
Service available since 12 December 2011 at co-location data centre in Frankfurt
December 14, 2011--Deutsche Börse AG has been offering trading and market data via dedicated 10 Gigabit/s connections to its clients at the Equinix data centre in Frankfurt since Monday. Co-location clients of both the derivatives market Eurex and the cash market Xetra can take advantage of the new service.
Deutsche Börse’s new connection speed provides another significant reduction in latency times for customers by using wider bandwidths and the latest high-speed network technology based on the Juniper QFX 3500 series. Network latency for market data distribution via this fastest connection option has been reduced by 70 percent. The new network also offers a standardised fibre length between client installations and Deutsche Börse Group systems, giving all market participants the same low latency. More than 25 clients are already using the new service.
“Since moving our trading systems to the Equinix data centre, we have been able to further improve the service we offer our clients. The new high-speed access for our co-location service means they can take advantage of the very latest technology,” said Matthias Kluber, Executive Vice President and Head of Networks and Infrastructure at Deutsche Börse. “The lower latency will further increase liquidity in our markets and the new technology will also create capacity for further growth.”
EU probes Thomson Reuters competition commitments
December 14, 2011-- The European Commission said on Wednesday it was launching consultations to see if commitments by global news agency Thomson Reuters were enough to remedy concerns over its dominant market position.
The Commission opened an inquiry in 2009into the financial news and information giant owing to concerns that its coding system for listed companies could harm competition, denying users other sources of information.
In an initial finding, the Commission ruled that the Reuters Instrument Codes system posed significant obstacles to clients wishing to change information suppliers because their own systems were tied into RICs.
CP11/28: UK implementation of Amending Directive 2010/73/EU - Simplifying the EU Prospectus and Transparency Directives
December 13, 2011--The FSA's Consultation Paper CP11/28 is entitled 'UK implementation of Amending Directive 2010/73/EU - Simplifying the EU Prospectus and Transparency Directives'. It was published in December 2011. Comments should reach us by 13 March 2012.
Europe’s CLO market in danger of extinction
December 13, 2011--Bundles of European buy-out loans, used to underpin many private equity deals prior to the financial crisis, are in danger of dying out, removing a vital cog in the region’s credit machinery.
Bankers warn that a winding down of European collateralised loan obligations (CLOs) is expected to stymie fresh deals and to hamstring the market’s ability to refinance an estimated €250bn of European leveraged loans due to mature by 2017.
ESMA launches a consultation on possible delegated acts concerning the Prospectus Directive
December 13, 2011--The purpose of this consultation document from ESMA is to seek comments on the technical advice that ESMA proposes to give to the European Commission on a number of possible delegated acts.
ESMA welcomes comments to this consultation paper by 6 January 2012.
To view the consultation, please see the section Your input>Consultations.
