Exchange Sector Review - Week ending July 23rd, 2010
FMX | Connect – www.fmxconnect.com - (Reported 7/23/2010)
This week:
The sector was up 300 bps, outperforming global equities by 100 bps. Interdealer brokers were flat. YTD the sector is underperforming global equities by 531 bps.
President Obama signed into law the Dodd-Frank act last Wednesday.
Competition in the options market making business continues to erode revenues as high frequency traders in order driven markets compete for order flow with market makers in quote driven markets. HFTs are tightening spreads, which in turn reduce market makers’ revenues. LaBranche significantly reduced its balance sheet financial instruments and plans to make “significant adjustments” to its market making business. IBKR is also suffering the effects of competition, with declining gains per trade in spite of increased volatility (see page 7).
EU Member of Parliament Kay Swinburne disclosed a draft report that says "the European Parliament insists that post the 'flash crash', all trading platforms stress-test their technology and surveillance systems to ensure they could successfully deal with the activity associated with HFT and algorithmic trading in extreme circumstances." The report calls for the implementation of circuit breakers, scrutinizing MTFs and crossing networks and ruling out flash orders. It also mentions limiting market data fees charged by exchanges.
A consortium of dealers is preparing to launch Javelin, an electronic swap execution facility which already cleared its first swap with IDCG last Friday.
The Dubai International Financial Centre Authority plans to launch a second tier market for growth companies similar to LSE’s AIM.
CME and BVMF3 are in talks to cross list Bovespa and S&P index futures.
The following companies reported quarterly earnings:
-BMV MXN0.25 +5% Y/Y (see page 8)
-IBKR $0.09 -6% Y/Y
-LAB -$0.33 2Q09: $0.24
-TROW $0.59 +55% Y/Y
-JNS $0.17 +70% Y/Y
-TRAD $0.09 -18% Y/Y
-AMTD $0.27 +17% Y/Y
-ETFC $0.12 2Q09: -$2.20
Next week:
The following companies will report quarterly earnings:
-Tuesday, July 27: DB1, OSE, OXPS
-Wednesday, July 28: TMX, EXAE, WDR, V
-Thursday, July 29: CME, BEN
Source: ERDESK
-----
About FMX: FMX Connect is an information, data, and analytics portal for Commodities. The portal provides an all-in-one package including essential market data, independent third party research, industry news, and commodity trading tools. FMX Connect provides efficient, effective, and thorough data that bridges all aspects of commodities onto one screen. The Result; A user friendly application for hedge fund traders, OTC brokers, individual investors, and industry participants
-----
Note: The information presented, while from sources generally believed to be reliable, is not guaranteed and may not be complete. FMX | Connect makes no representations or warranties regarding the correctness of any opinions or information. Past results are not necessarily indicative of future results. Nothing in this report should be construed as a representation to buy or sell shares, futures or options, which contain considerable risks. For internal client distribution only. Any reproduction, re-transmission, or distribution of this report without permission is prohibited. Media correspondents or reporters may not quote any one page or section in its entirety and must attribute all quotes, ideas or concepts herein. Copyright FMX | Connect, ©2009-2010. All rights reserved.