Wall Street Letter VOL. XLV, NO. 36 - December 2013 - Page 12

NEWS the FCM has at exchanges operated by the CME Group as well as NYSE LIFFE and the CBOE Futures Exchange, also allow the firm to have better control over its customer segregated funds, Che Chern added. Having established the business here, the firm is now getting inquiries from US clients about access back to Asia, he said. “In Asia, there are growing economies and growing futures markets. The futures market is a way for the US clients to get exposure to these Asian economies by investing in stock indices.” Che Chern noted interest from firms may be due to opportunities they see for arbitrage trading across the different Asian exchanges or to offer liquidity as market makers. TRADING FIRMS 12 MarketAxess exec: Buysiders focused on SEF issues Buyside firms are focusing on legal and compliance issues as they look to finalize decisions on which swap execution facilities they will use, according to comments from Grigorios Reppas, CDS product manager at MarketAxess. SEFs with CFTC approvals have been operating since Oct. 2, allowing all potential GRIGORIOS REPPAS participants an CDS product manopportunity to ager at MarketAxess test out the venues without requiring pre-trade credit checks or signing agreements to comply with SEF rulebooks, Reppas said. An exact date for SEF trading has not been set, but made available to trade (MAT) submissions have been sent by several SEFs to the CFTC, and Gary Gensler, CFTC chairman, FIA EXPO 2013 Sprecher highlights need for grassroots action J eff Sprecher, CEO of the Intercontinental Exchange, told participants at the Futures Industry Association’s 29th Annual Futures & Options Expo in Chicago that equities market structure changes can and should come from participant effort rather than regulatory intervention. In response to a question about the prospect for regulatory action on equity market structure during a panel discussion, Sprecher said he has noticed a mindset among participants that permission must be requested and granted to make changes that they are obliged to make. “I grew up in the civil rights era, and I grew up during the Vietnam War and we as a populous didn’t go ask the government to fix problems. We as a populous are the government, it is a government of the people, and my mindset is that we as an industry should talk openly about how to make it better and we should get on with it,” he said. He also noted the focus in equities seems to have moved away from the reason the markets exist. “In our commodities and derivatives markets, we think about risk management, and the exchange of risk, and helping people hedge and speculate by accepting other peoples’ risk, and in the equities market, people just seem to talk about trading as if that is what it is about,” he said. That focus has led to a belief that the exchanges are no more than matching engines, Sprecher said, adding that that is not the case. “I am going to become more outspoken about that, and ICE is in a good position to do that,” he added. indicated in November that a trade execution requirement in credit index and interest rate swaps could be in effect by February. Reppas noted if firms have not already selected a SEF, they will need to complete on-boarding documentations and futures commission merchants’ credit forms before the mandate, a process that can take weeks. Firms are doing due diligence on the available SEFs, some of which may be run by firms they have no prior relationship with, said Reppas, noting it’s mostly existing clients that have already signed agreements with MarketAxess. “A lot of these client are still trading over the phone,” he said, adding clients may not fully adopt electronic trading until MAT mandates are effective. Reppas said he expects delays are also due in part to the amount of time it takes to complete due diligence on the different SEFs as well as the FCMs the firm chooses to connect to and the clearinghouse of choice. TECHNOLOGY Hanweck to introduce risk offering to Europe Hanweck Associates plans to release its Volera low latency risk management offering into Europe through a partnership with NYSE Technologies, according to Gerald Hanweck, CEO and founder. The expansion into Europe is being done over the next month, according to Hanweck. He said the offering will cover the options market for Europe and eventually Asia, in addition to US listed options. “NYSE is our redistribution partner, they resell Volera as white labeled options analytics,” said