Trading Technologies and Coinbase Partner to Provide Institutional Access to Cryptocurrency Market

Trading Technologies International, Inc. (TT), a global provider of professional trading software, and Coinbase, which owns and operates Global Digital Asset Exchange (GDAX), a digital asset exchange, announced a strategic partnership to provide professional cryptocurrency trading functionality and market access to the institutional trading world. Beginning March 2018, the partnership will allow TT customers to trade both spot and derivative markets side by side.


Euronext CEO Lee Hodgkinson Resigns

Euronext, the pan-European exchange, announced that Lee Hodgkinson, Head of Markets and Global Sales of Euronext and CEO of Euronext London Ltd, has decided to pursue a new professional project. Lee Hodgkinson, after more than 9 years at Euronext, will leave the company in early April 2018 and will serve as CEO of OSTC, a London-based proprietary trading firm which operates from 14 offices around the world. Lee Hodgkinson will actively participate in the transition process during his notice period.


Eurex to Simplify Corporate Structure

Eurex, one of the world’s leading derivatives marketplaces, is adapting its global structure to the new reality of global markets. To best serve its clients, reduce complexity and improve agility, the exchange will change its set-up in Switzerland and strengthen its offerings in Asia. Eurex has decided against filing for a separate authorization as Multilateral Trading Facility under the new Swiss Financial Market Infrastructure Act (FMIA). In agreement with the supervisory authority FINMA, Eurex Zürich AG will discontinue its operational trading activities by March 31, 2018. With the subsequent lapse of their admission to Eurex Zürich AG, trading members will be relieved from their respective statutory duties under FMIA, and fees due for the transaction reporting related to Eurex Zürich AG will no longer apply. Going forward, Eurex will serve all its European and global clients through its existing German exchange and rulebook in Frankfurt, operated according to the MiFID II regulation. This reduces legal and operational complexity as well as costs as participants no longer need memberships at two exchanges. At the same time, Eurex maintains its highest regulatory standards. To further support the market, Eurex plans to extend its trading hours to include Asian time zones. The planned extension meets the needs of clients worldwide and provides the market with additional hedging opportunities for selected benchmark products. In line with the planned extension, Eurex has decided to not further pursue the establishment of separate regulated entities in Singapore, in order to reduce complexity and effort for its members, while at the same time strengthening its business and presence in Singapore, the operational hub for Deutsche Börse Group in Asia.


Metamako Providing FPGA Platforms to Deutsche Borse

Metamako, a provider of intelligent, FPGA-enabled network platforms, is providing its technology to Deutsche Börse Group. The exchange is using the company’s network devices to increase the accuracy, speed and precision of data capture, network monitoring and timestamping of its co-location network. Every trade is now monitored by a Metamako device, making it an integral part of the Deutsche Börse infrastructure. The deployment pertains to its 2017 network upgrade of the Eurex and Xetra markets. The exchange is deploying Metamako’s K-Series network devices running MetaWatch, an ultra-precise tapping and timestamping application, which gives the exchange unprecedented insight into the customer-facing part of its network. It also gives Deutsche Börse the ability to accurately record and recreate all trading activity to ensure fairer market access for participants along with enabling real-time troubleshooting.

ESMA Consults on Spreadbetting Curbs

The European Union’s markets regulator has started a public consultation on its anticipated plans to restrict the sale of contracts for differences (CFDs) and binary options by spreadbetting companies. CFDs and binary options are financial products that give an investor exposure to price movements in securities without owning the underlying assets such as a currency, commodity or stock. The European Securities and Markets Authority (ESMA) flagged the plans last month. It said last Thursday it was now seeking evidence on the impact of its proposed measures. For CFDs, it proposes leverage limits, overall guaranteed limit on retail customer losses, a curb on the incentives to trade provider by firms that offer CFDs, and a standardized risk warning. “ESMA is also considering whether CFDs in cryptocurrencies should be addressed in the measures,” the watchdog said in a statement. For binary options, ESMA said it is considering a ban on the marketing, distribution or sale of the products to retail investors. ESMA is concerned that retail investors face potentially significant losses from the products. It would be the first time that ESMA used powers to intervene in financial products given to it under the bloc’s new MiFID II securities law that came into force this month. ESMA’s public consultation on its plans closes on Feb. 5.

SWIFT and Seven Central Securities Depositories to Develop Plan for Distributed Ledger Technologies

Seven central securities depositories and SWIFT, the bank-owned cooperative for secure financial messaging services, are working together to progress standards in distributed ledger technology for post-trade. The group aims to demonstrate how distributed ledger technology could be implemented in post-trade scenarios, such as corporate actions processing and voting, with existing standards. For example, they have defined the product requirements for electronic voting based on DLT that includes common standards (ISO 20022) and principles. The central securities depositories working with SWIFT are Abu Dhabi Securities Exchange, Caja de Valores, Depósito Central de Valores, Nasdaq Market Technology AB, National Settlement Depository, SIX Securities Services and Strate Ltd. Additional CSDs are expected to join in the coming weeks. The International Securities Services Association (ISSA) recently included the group as part of a new work stream to focus on the use of digital assets in post-trade and publish findings in the second quarter of this year.

MiFID II Seen Driving 20% Cut in EU Funds' Research Spending

European fund managers have cut their 2018 investment research budgets by 20 percent as they scale back the number of providers they use in response to MiFID II, according to a story in Bloomberg news. The story cites a survey of fund managers conducted by U.S. consulting firm Greenwich Associates, which assessed the shakeup to the multi billion-dollar market for research under the European Union law that started January 3. The law requires asset managers to separate payments for investment research from those for brokerage services to execute trades. The decline in spending from last year prompted by the revised Markets in Financial Instruments Directive, or MiFID II, is largely driven by more selective fund managers buying research from a smaller number of banks, according to the survey. For those who “make the cut,” there’s encouraging news: the amount budgeted for each provider will remain relatively flat.

Bermuda Stock Exchange Authorized to Issue LEIs

The Bermuda Stock Exchange (BSX) confirmed that it is authorized to issue Legal Entity Identifiers (LEI) to Bermuda domiciled companies and has been doing so for several months. The BSX, through its relationship with CUSIP Global Services, is now issuing LEIs to Bermuda domiciled companies in association with the Global LEI Foundation. A LEI is a unique 20-character alphanumeric identification code designed for regulators to globally identify all legal entities engaging in financial transactions.

ESMA Delays Trading Caps in MiFID II Implementation

The European Union’s market watchdog modified requirements last week in its efforts to relax sweeping new securities rules that have already been delayed a year. The European Securities and Markets Authority (ESMA) unexpectedly delayed until March the publication of data meant to specify which stocks will be subject to limits on trading in “dark pools”. The regulator said it was forced to delay the restrictions due to insufficient data, pushing back a core element of the new MiFID II rules that came into force on January 3.   “The current quality and completeness of the data does not allow for a sufficiently meaningful and comprehensive publication of double volume cap calculations,” ESMA said in a statement. Under the new Markets in Financial Instruments Directive II (MiFID II) regime, so-called “double volume” caps will require dark pools to suspend trading in stocks for which, on average, more than 8 percent of daily trading was transacted in the dark over the past 12 months. The aim of the caps is to push more trading onto the so-called “lit” or fully transparent exchanges where all investors can see the prices at which transactions are being made. 

ESMA Provides List of Temporarily Exempted Trading Venues

The European Securities and Markets Authority (ESMA) has published list of those trading venues for which a temporary exemption from the open access provisions under 36(5) of the Markets in Financial Instruments Regulation (MiFIR) exists. While MiFIR allows firms to freely choose where to trade and clear their products, which both CCPs and trading venues need to facilitate, trading venues and CCPs may notify ESMA and their national competent authority of their intention to temporarily opt-out from the access provisions for exchange-traded derivatives (ETDs) provided that certain conditions are met. Concerning trading venues for which the annual notional amount of ETDs traded on the venue falls below a certain threshold, the exemption must be approved by ESMA. The list published last week provides the list of trading venues which have notified such intention to ESMA. A similar provision exists for newly established CCPs that intend to temporarily opt-out from the access provisions in respect of transferable securities and money market instruments. However, at the time of publication, ESMA has not received any notifications for such temporary exemption.