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Fidessa's Blog

The periodic table

April 12, 2018 Comments (0)

I read with interest, and some dismay, Sam Agini’s great piece in Financial News yesterday about Marcus Ferber writing to ESMA be-moaning periodic auctions. Perhaps the most asinine comment attributed to Mr Ferber is that some such mechanisms are a “blatant attempt to undermine the Mifid II provisions aiming at having a larger share of trading in the light”. It is hard to know where to start in deconstructing this statement, but let me have a go anyway. The last part really sums up...

History of the World Part III

February 6, 2018 Comments (0)

Those of us who have been in the industry for a while will remember what became known as the “Battle of the Bund” back in the early 1990s.The quick version is that newly formed DTB (now Eurex) managed, in just a few months, to repatriate trading in the benchmark Bund futures contract from London based incumbent, LIFFE. It did this by deploying screens across the London market which meant trading was simpler and, crucially, cheaper than the manual floor based alternative offered by LIFFE....

ESMA’s first Heisenberg moment

January 10, 2018 Comments (0)

Anyone who has watched the cult TV series Breaking Bad knows that Heisenberg was the clandestine alias adopted by the show’s chief protagonist, Walt White. The ‘original’ Heisenberg was, of course, the brilliant German theoretical physicist who developed his famous Uncertainty Principle. Simply stated it says that one can know either the position of a particle or its velocity but not both. Or, put more colloquially, the harder you try and measure something the less likely you are to...

Storm in a tea cup

January 3, 2018 Comments (0)

As Storm Eleanor literally howled across the UK last night I woke up wondering if it was some portent to today – Jan 3rd – MiFID II go-live day. But here I am, sat at my desk, and everything seems pretty normal. No one seems to expect huge volumes today though, as traders gently blip the throttles of their new MiFID compliant trading machines. But, now the day has come, two things strike me – first is the enormity of the industry effort involved in getting ready and, second, the almost...

Bitcoin futures – the best idea ever?

December 5, 2017 Comments (0)

I read yesterday that Cboe is bringing forward the launch date for its Bitcoin futures contract in a bid to usurp its rivals at the CME. This set me thinking about the likely impact of these contracts on the price of Bitcoin itself. As my good friend John Lothian has always maintained, futures markets are all about risk transfer and not irresponsible gambling (as some in the mainstream press would have you believe). But, in order to transfer risk, I need to be able to form a view about the...

Loophole lunacy

November 28, 2017 Comments (0)

According to the Collins English dictionary a loophole is defined as “a small mistake which allows people to do something that would otherwise be illegal”. The same dictionary offers an alternative American definition as “a means of evading or escaping an obligation”. Both these imply that anyone benefiting from such a loophole is either explicitly breaking the law or at least the spirit of it. Funny, then, that this week’s press has been littered with stories of how ESMA is frantically...

The chlorine dipped chicken of capital markets

November 28, 2017 Comments (0)

I read Phil Stafford’s great article in the FT yesterday about the continued spat between the UK, Europe and the US over the fate of the vast Euro denominated swaps market in a post-Brexit world. The core issue here is all about where this stuff should be cleared but, yet again, common sense plays second fiddle to short-term economic self-interest and politics. Common sense should mean that clearing takes place wherever there is greatest efficiency for participants (aka offsets) and lowest...

Why you’ll never be ready for MiFID II

November 28, 2017 Comments (0)

I attended Institutional Investor’s excellent Trader Forum in Barcelona last week. Basically it brings together the senior executives from the buy-side, the sell-side, venues and technology firms to debate and make sense of our industry. Naturally much of the conversation revolved around the new conditional dark pool venues, periodic auctions and Systematic Internalisers that are emerging. A number of questions came up repeatedly, such as “How many of these things will there be? How much...

The shape of block liquidity

November 28, 2017 Comments (0)

Now we are all back from summer hols it seems like everyone is getting ready for the final push that will propel our industry into its post-MiFID II future. Much still needs to be done, not least of which by ESMA in telling us what all the rules actually mean and what game we are supposed to play as a result of them. This is particularly true in the case of block liquidity which will be very different in 2018. Amidst the Orwellian chants of “lit markets good, dark pools bad” we now have...

So that’s nice and clear…

November 28, 2017 Comments (0)

According to a few reports I read this week we should all be thankful to the European Commission for clearing up the “loophole” that existed in the current Systematic Internaliser regime. Well that’s a relief – except for two small points – first they haven’t and second they seem to have missed the whole point. A commission official has clarified that SIs will not be allowed to “regularly” engage in “pre-arranged matching of trades via de facto riskless back-to-back transactions”. So what...