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WFE Focus January 2011
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Bucharest Stock Exchange adopts Bloomberg identifiers

The Bucharest Stock Exchange implemented Bloomberg's Global Identifiers (BBGID) as the financial instrument identifier associated with all securities listed on the Exchange. Financial instrument identifiers are critical to researching and trading securities, assessing risk, managing portfolios, and managing settlement and clearing. They also are key for a wide array of essential functions for financial market players and institutions, both in the front and back offices.

CBOE applies VIX methodology to individual equity options

On 7 January 2011, the Chicago Board Options Exchange started to apply for the first time its Volatility Index (VIX) methodology to options on individual stocks. In a first stage, only five most heavily traded stock options are concerned (Apple, Amazon, IBM, Google, and Goldman Sachs). The new benchmarks are designed to measure the expected volatility of the respective individual equities. CBOE may expand the list of individual equities on which volatility values would be calculated in the future, depending on demand.

Eurex introduces new pricing model

Effective 1 February 2011, Eurex will introduce a new pricing model. The goal is to further increase the attractiveness of the Eurex marketplace by offering incentives for market quality and volume contribution as well as fee reductions in a number of key products. The enhancement of order book trading shall support market transparency and price discovery.

Istanbul Stock Exchange launched new markets and arrangements in bond market and in foreign securities market

On 17 December 2010, the Istanbul Stock Exchange has launched new sub-markets and a series of new arrangements for the ISE Bonds and Bills Market as well as for the ISE Foreign Securities Market. Within this framework, a new repo market called “Repo Market for Specified Securities” opened, in addition to the Repo/Reverse Repo Market that has been in operation for several years. Along with government debt securities, ISE-listed private sector borrowing instruments are now subject to repo transactions on the Repo Market for Specified Securities. The risk management system that has so far been used in the ISE Bonds and Bills Market sub-markets based on fixed rate collateralization is converted into a dynamic risk management system based on daily evaluation. The above arrangements are aimed at operating the ISE Bonds and Bills Market more efficiently and at lower costs. In addition, the exchange launched the Eurobond Negotiated (Neg) Deals Platform in the ISE Foreign Securities Market. As a result of the amendments on the ISE Eurobonds Markets settlement and custody principles, the settlement period is changed to T+1, and the settlement of the trades realized on the ISE will be done by Euroclear Bank through the ISE Settlement and Custody Bank (Takasbank).

Istanbul Stock Exchange sets up automatic circuit breakers system

In order to enhance its market surveillance strategy, the Istanbul Stock Exchange introduced on 10 January 2011 the “ISE Automatic Circuit Breaker System”, enabling the fully automated suspension on a stock basis. In a first stage, in case of an abnormal price or quantity movement in a certain stock, the system will automatically suspend the trading of that specific stock for 15 minutes. In a second stage, in the case the first circuit breaker remains ineffective, the system will automatically apply a circuit breaker which will be effective until the end of the day, and as a new precaution, the relevant stock will be subject to gross settlement on the following trading day.

Istanbul Stock Exchange reduces initial listing fees

The Istanbul Stock Exchange has decided to apply a discount on its listing fee tariff in order to accelerate the efforts within the framework of its initial public offering campaign to encourage public offerings to reach the European Union’s minimum free float rate of 25%, and to facilitate reaching the target of allowing companies to go public and increasing the free float rate of traded companies. As a result, a discount of 25% will be applied on the initial listing fees for the companies applying for initial listing/trading on the ISE National Market or the Second National Market, and whose free float rate is minimum 25% or whose market capitalization is at least TRL 100 m. Such discount will be valid until the end of 2011 and shall not hold for annual listing fees.

NASDAQ OMX Baltic Exchanges introduce trading and settlement in euro

As of 3 January 2011, trading and settlement on NASDAQ OMX Tallinn and NASDAQ OMX Vilnius stock markets is available in euro. This move will greatly improve the efficiency of the Baltic market and is intended to capture larger flows of portfolio investments to the region. Furthermore, the common currency reduces transaction costs, allow for smoother management of cross-border portfolios, as well as diminish trading-related risk.

NYSE Euronext joins Correlix RaceTeam latency transparency solution

NYSE Euronext is joining the Correlix RaceTeam latency measurement service, which is used for monitoring, measuring and analyzing order and market data flows in real time. This service will be rolled out starting early this year in NYSE Euronext’s new Liquidity Center in Mahwah, New Jersey to provide additional latency performance insight into all US-based markets, including NYSE Classic, NYSE Arca Equities, NYSE Arca Options and NYSE Amex Options. It will enable NYSE Euronext and its customers to monitor and manage their low latency trading infrastructures for order execution and market data.

RTS Standard Market modifies its trading fees

On 11 January 2011, fees on trades executed in the trading mode with settlements on T+4 on the RTS Standard market have been decreased by the amount of the fee on clearing services which is to be introduced simultaneously.

Scoach launches trading with secured certificates from Switzerland

Collateral secured certificates from Switzerland are now also tradable on Scoach, the joint venture of SIX Group and Deutsche Börse for structured products. The collateral deposited for these collateral secured instruments (COSI) minimizes counterparty risk for structured products.

Singapore Exchange proposes admission of remote trading members

The Singapore Exchange proposes to expand membership on its securities market to foreign brokers based abroad. These brokers, regarded as remote trading members, will observe their home rules and deal only for foreign investors. The proposal will expand the pool of international participation.

Stock Exchange of Thailand allows short selling on SET100 index stocks

From 1 January 2011 onwards, the Stock Exchange of Thailand allowed securities in the SET100 index to be sold short. This should provide investors with a better tool to manage their risks from stock price movement. Previously, short-selling could be done only with the securities in the SET50 Index.

Stock Exchange of Thailand’s Settrade service allows derivatives trading via iPhone

Thai investors can now trade Thai derivatives through iPhones, using the Settrade Streaming application of the Stock Exchange of Thailand’s subsidiary Settrade.com. This will offer investors more convenience to trade equities and derivatives in Thai markets and promote market liquidity. Internet trading has been growing steadily, especially in derivatives during the past 11 months.

Tokyo Stock Exchange begins calculating and publishing indicative net asset value for ETFs

To increase ETF liquidity as part of its efforts, the Tokyo Stock Exchange will begin calculating and publishing real time net asset value per share for ETFs from March 2011. It is an indicator of the fair value of ETF assets in the same way as the constant value of investment trust funds. Investors will be able to compare ETF market prices with indicative net asset value during auction trading hours.

Warsaw Stock Exchange unveils changes in trading sessions timetable and trading statistics presentation

As of the beginning of 2011, trading in the continuous trading system at the Warsaw Stock Exchange will start at 8:00 with the pre-opening session, open at 9:00 and end at 17:35 with the post-auction trading session. The main change is the extension of the continuous trading phase which ends at 17:20, 70 minutes after the previous end time. The procedure of calculation and publication of the value of trading in financial instruments listed on WSE will also change. According to the new rules, this value will be presented as the value to one party of a transaction (i.e. the transaction value) whereas the values of the buy and the sell transaction are now added up.

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