As some of you have already seen, the clever chaps back at Fidessa Labs have created a live version of our award-winning Fragulator. This enables you to watch the ebb and flow of fragmentation for any European stock or index on a real-time basis (sorry, no other markets just yet). As you can see below, it was especially useful last Tuesday when Deutsche Börse had a hiccup and delayed its opening by 80 mins. The absence of trading during the outage proved, yet again, that the market is still...

Had a distinct sense of déjà vu at TradeTech in London last week. Seems like much of the debate and chatter was the same as it was last year – HFT, ill thought through regulation, etc. It struck me, though, that maybe the regulators should let the market decide what is good or bad for us rather than agonising over these issues on our behalf. Take HFT for example. Whilst different definitions abound, electronic market making has just as much right to exist as any other business model in...

Had an interesting week in the sunshine at the FIA annual conference at Boca Raton, Florida. Not surprisingly, the main topic was the move to bring the worlds of exchange traded and OTC derivatives together. This has been mandated by politicians/regulators on both sides of the Atlantic and will lead to the creation of a multitude of electronic platforms known as SEFs in the US and OTFs in Europe… or will it? Despite all the noise and hoopla, market participants seem to be huddled together at...

Just back from an interesting week in Japan where I was presenting at the annual GMAC conference, Japan International Banking & Securities Systems Forum. The impact of Japan’s alternative venues (known as PTSs) was a particular area of discussion, especially now that Chi-X has set up in Australia and with Korea looking to introduce a multi-market structure too. It’s been a hard slog for the alternative trading community in Japan, however, as they have had to battle without the assistance of...

Two stories this week demonstrated that Greece isn’t the only thing Europe has to disagree about. Together they both help highlight the problem regulators have worldwide with HFT. The first story, by the FT’s Jeremy Grant, describes how Italy’s Borsa Italiana is bowing to Consob pressure and introducing a fee structure that will charge participants more depending upon the number of orders they submit. This effectively introduces a tax on the HFT community because their...

Not much surprise at this week’s news then, but the rationale for blocking the deal seems odd. Firstly, and whatever they may claim, Brussels did take an overly Eurocentric view. Just call the CME in Chicago and ask where Liffe and Eurex appear on its list of major competitors. Secondly, the Commission claims that LIFFE and EUREX themselves compete but, in fact, they are effectively two ‘mini-monopolies’ operating at opposite ends of the yield curve with almost zero overlap in their products....

Well at least it is in France, as reports seem to confirm that its finance minister is enthusiastically pushing ahead with a unilateral Tobin-style tax on equities, bonds and derivatives trading. It’s a shame that the proponents of such a tax don’t seem to have done even a basic amount of homework. The original idea introduced by Nobel Laureate economist James Tobin was conceived as a tax on all spot conversions of one currency into another. The idea was to discourage speculators by making it...

An industry colleague pointed me towards an interesting YouTube video the other day that helps illustrate the importance of tick size in the global battle between primary and alternative trading venues. The video is from an alternative venue (or PTS) in Japan called SBI Japannext which, together with Chi-X Japan, is continuing to grow its market share of the Nikkei 225. The two combined now account for around 6% in this index. The video shows end of day trading in Mizuho stock on 26th...

Episode 5 of FragVision is now available featuring a discussion with Stephen Edge, Principal of Asia Etrading, about the key issues affecting Asian markets. As always, feel free to comment. Content on this page requires Adobe Flash Player, click here if you cannot see the video. Click here to see all FragVision episodes

Interesting to read the venerable Leo Melamed’s open letter in the FT this week on HFT and regulators. The CME’s chairman emeritus certainly makes a good point when he says that trying to stifle innovation is both wrong and inevitably doomed to failure, but I am not sure he’s completely right in a couple of areas. First, whilst it’s true that algorithmic or HFT players have indeed had the effect of narrowing spreads, this is not always the best thing for the trading community as tighter spreads...