Chinese Futures Markets: Coming off a Booming Decade

To all the superlatives that have been lavished on China one more deserves to be added: The unprecedented ascendancy of the country’s futures markets, which went from being a wild but obscure corner of the derivatives world to join the ranks of the world’s most actively traded futures. Last year the three most active agricultural futures in the world by contract volume were Chinese—the ZCE cotton and sugar contracts and SHFE rubber futures, which traded over 139 million, 128 million, and 104 million, respectively. Out of the top 10 agricultural contracts by volume, 7 were Chinese. The stock index futures contract, launched only two years ago, is second in the world by notional value after CME’s e-mini S&P 500 contract. From 2000 to 2010 contract volume on China’s three futures markets grew at slightly more than 50% annually, from 27 million in 2000 to 1,566 million in 2010. Last year saw the first decline in over a decade as a weak stock market plus measures by the authorities to discourage excessive speculation caused a painful 32.7% contraction in volume. Still, even allowing for the smaller size of Chinese contracts, the performance of China’s futures markets over the past decade has been stunning. But the story has just begun.

Interview with William J. Brodsky on G20 Summit in Mexico City

William Brodsky - CBOE.jpg

CBOE Holdings Chairman and CEO William J. Brodsky, the former chairman of WFE, was the only U.S. exchange representative invited to participate in a high-level Institute of International Finance conference preceding February’s G-20 Summit in Mexico City.

Interview with Xavier Rolet of LSEG on SMEs

Xavier Rolet, Chief Executive of London Stock Exchange Group (LSEG) talks to Focus Magazine on SMEs and steps the Group is taking to advocate on their behalf. LSEG has been operating AIM, the world’s largest market for small and medium sized investors for over 15 years and has helped thousands of companies raise financing.

Public Equity Markets and Early Stage Companies

The importance of small and medium enterprises (SMEs) to economic growth is widely acknowledged. SMEs are vital to job creation, and contribute significantly to GDP. A fundamental concern for both SME business owners and policy makers is access to growth capital. Growth capital can take many forms, from the notorious “Three F’s” (friends, families and fools), to venture capitalists, over-the-counter equity markets and banks. Another option for SMEs, and one that is gaining increasing international attention, is the SME focused stock exchange.

A Look Back at Dark-Pool Trading in 2011

The following article is an edited excerpt from the year-in-review issues of Rosenblatt Securities’ Let There Be Light reports on dark-pool volumes and trends. Rosenblatt publishes a US and European edition of LTBL each month for its clients. The reports marry often hard-to-obtain volume data for dark pools in both regions with analysis of what is driving activity in these venues.

The Changing EU Trading Landscape: EMIR and MiFID

A year and a half ago the European Commission published its proposal for the European Market Infrastructure Regulation (EMIR). In line with G20 commitments, EMIR’s objective is to force OTC-traded derivatives through a clearing house and ensure that all derivatives trades are reported to a trade repository.

Clearing at the Crossroads

Recent regulatory and market developments have thrust clearing houses into the limelight. In this brave new world, traditional clearing practice will need to change.

An Exchange as 2012 Begins

The financial services sector was tested last year: by clients looking for secure investments and efficient, effective trading solutions, by regulators scrutinizing “speculation,” short selling, and systemic risks, and by the general public protesting bailouts or financial conditions. In 2011, they came to exchanges with their questions – sometimes literally. Beyond their well-known brands, and beyond being symbols for business and wealth creation, why would an exchange be the focus of this attention? Was this a misguided or outdated concept about markets? In recent years, what was once a relatively homogenous group of market operators is now a diverse group of companies. The differences continue to expand between exchanges in key areas of business and strategy. 

An Examination of Transparency in European Bond Markets

The European Commission’s overhaul of securities markets regulation in Europe intensified with the recent publication of legislative proposals for the revised Markets in Financial Instruments Directive and Regulation (MiFID and MiFIR, respectively). The legislative package, currently under negotiation in the European Parliament, puts transparency at the forefront with ambitious proposals to shed light on trading in practically all financial instruments –— from equities to bonds, derivatives, and even emissions trading allowances.

Quick Glance at SROs in FEAS Region

An average Self-Regulatory Organization (SRO) looks like a rather unusual animal with elephant’s feet, tiger’s body, giraffe’s neck and rooster’s head. Instead of trying to identify “an average” strange creature, we should, in fact, accept the fact that SROs are so diverse that some are as big as an elephant, while others are as fierce as a tiger, or as farsighted as a giraffe and some even give wake-up calls like a rooster. To begin with, exchanges, industry associations, central clearing and settlement institutions can all be SROs or can have some sort of a self-regulatory function. Obviously, the focus of these institutions would be different from one another. Second, the level of authority, the range of activities, financial and human resources of the SROs differ quite significantly. In other words, the concept of a “Self-Regulatory Organization” is too broad to address the entire range of activities properly. Therefore, we should create a distinction between Self-Regulatory Associations (SRA) and Self-Regulatory Exchanges (SRE).