Chi-X takeover will not reduce competition

If successful, the proposed takeover of Chi-X Europe, the largest European multilateral trading facility (MTF), could significantly change the continent’s trading landscape, however experience from the US suggests consolidation would not reduce competition between Europe’s trading venues.

The board of the Chi-X Europe received a bid for the MTF over the weekend from an unnamed party and speculation is rife as to who would want to own the business.

Rival MTF BATS Global Markets and exchange group Nasdaq OMX have both been suggested as possible bidders by sources.

Chi-X Europe is currently owned by a consortium of financial services firms and investment banks, in contrast to the rest of the Chi-X branded businesses which are owned by investment bank Nomura, via Instinet Holdings (Instinet owns about a third of Chi-X Europe, the biggest single stake in the firm). The timing of the bid has surprised the market as Chi-X can be expected to trade at a significant premium if the deal goes ahead.

The MTF had a market share of 17.49% of pan-European equities trading by turnover in July 2010, according to data provider Thomson Reuters’ Equity Market Share reporter. Alasdair Haynes, CEO of Chi-X Europe, also claims that it has made a modest profit in 2010.

Its rival MTFs have not seen much success. Nasdaq OMX Europe, an MTF owned by Nasdaq OMX, closed down on 1 July 2010, after it failed to consistently attract more than 1% of pan-European market share by turnover.

The London Stock Exchange Group bought a majority stake in MTF Turquoise on 18 February 2010 from its consortium of bank owners after it too had failed to attract significant volumes, trading 2.9% of pan-European equities by turnover in January 2010.

Swiss exchange SWX shut its own pan-European trading venue, SWX Europe, on 30 April 2009.

Of the existing major exchange groups, German exchange Deutsche Borse has been ruled out as the initial bidder by some sources, noting that it would require a complete change of strategy given the significant investments it has made in its Xetra trading platform, while the market share of the London Stock Exchange (LSE) is considered too large for competition authorities to permit a bid.

Buy-side firms support CESR on OTC reporting proposals

Buy-side firms have come out in support of the Committee of European Securities Regulators' (CESR) recommendation for the organisation of transaction and position reporting on OTC derivatives, under the caveat that the obligation to transaction report is attached to market makers and broker-dealers.

Firms and industry associations were responding to a consultation paper published by CESR on 19 July 2010. CESR, which is responsible for harmonising financial regulation across Europe, set out possible ways in which transaction reporting for OTC derivatives could occur and consulted on extending the scope of reporting obligations to financial instruments traded only on multilateral trading facilities (MTFs) and for OTC derivatives.

In its paper, the regulatory body asked for responses on three issues. Firstly it asked respondents for their preference of two proposed solutions to the organisation of transaction and position reporting. Buy-side response was overwhelmingly in favour of the second of the two, which was recommended by CESR.

Under this approach a new position reporting regime would be established, and transaction reporting would be run either through trade repositories (TRs) or directly to relevant authorities. UK industry body the Investment Management Association, noted that, “We see no need to restrict how firms are able to report, as long as they do report.”

The Alternative Investment Management Association which represents hedge fund interests disagreed stating that, “It is unclear how firms that choose to report directly to the competent authority (as currently required by MiFID) will get the information to the trade repository, which is intended to be a source for all national regulators, competent authorities and other relevant bodies. Duplicative reporting to competent authorities and the trade repositories is inefficient and should be avoided.” The industry body instead supported the option to establish a single regime for transaction and position reporting through trade repositories.

Asked on the second issue, whether they had “any other views on the possible ways to organise transaction and position reporting on OTC derivatives?” respondents agreed that, in the words of the European Fund and Asset Management Association, “The obligation to transaction report, either under MiFID or to the trade repository, should attach to the market maker or broker-dealer; it should only attach to the end user if there is no market maker or broker-dealer involved.”

Kristen Stewart Is Envious of Ashley Greene!

What are they doing actually? Sometimes Ashley feels jealous of Kristen reported earlier in 2009 and now Kristen is jealous of Ashley Green. They both were becoming so famous for the magnificent role of “Twilight” sequel. But according to the news of Showbiz Spy, Kristen is little bit afraid about Ashley’s ongoing popularity as Ashley has got so much positive praise during her promotional tours. “Ashley has turned out to be the real favorite with Twilight fans,” said one insider. “Kristen always gets a much harder time. It’s hurt her feelings. Ashley even won the Scene Stealer award at the Teen Choice Awards.” Whatever they are doing is like all-clear to everyone, Ash kisses Joe Jonas and Kristen kisses her costar Robert Pattinson. Seem’s like their love flick is going so good. But don’t be jealous of each other!!