Gold bricks and ETFs, brokers working for sick children, transaction taxes, erroneous trades, dark pools, equity in vogue, governance reforms, five-character symbols on NYSE, OTC clearing vs. trading, business journalism more than a century ago, new IPOs, bringing back the dividend table -- whew, I think that's it -- oh wait... and Snoop Dogg at NYSE!
“This is an example of NYSE Euronext and the industry working together to develop a positive solution to address the lack of understanding regarding the extent and nature of ‘dark pool’ trading, which has been a concern for regulators and legislators.” -- Joseph Mecane, NYSE Euronext’s Executive Vice President and Chief Administrative Officer for U.S. Markets
"A good day...for the hatmakers," I overheard Art Cashin quip on the NYSE trading floor at the close on Wednesday, when the Dow again closed above 10,000.
Starting today, I'm trying something new: NYX Aggregator, a weekly summary of news from or about NYSE Euronext and its various markets, products, and services. Items from here, there and everywhere, filtered through the glass onion of yours truly, and I think that's enough Beatles references for one sentence. But hey, cut me some slack -- today is John Lennon's birthday.
"In June, the Obama Administration proposed a new regulatory framework for financial markets that should have kicked off a vigorous debate over the future of financial regulation. Yet, until the President's recent Wall Street speech, the sense of urgency to pursue reform seemed to be abating. Now is the time to take action."
"...[W]e believe it represents the best balance between restrictions and operability, and would therefore promote public confidence without unduly inhibiting legitimate short-selling."
To know whether we should pursue moving this beyond the beta, I really need your input. Do you read this blog via a mobile device? Would you find a friendlier mobile interface useful?
Today – over two centuries after the first loan in 1782 – the Netherlands remains one of the biggest foreign investors in the U.S.
"However, with new and diverse products coming onto regulated markets and clearinghouses, this moment—defined by the recent crisis—provides us an opportunity to construct a better and more coordinated approach to regulation. The U.S. deserves a 21st century regulatory system to match its world-class capital and risk markets. As these markets innovate and become increasingly intertwined, the need for enhanced collaboration and cooperation between the SEC and CFTC becomes increasingly evident. There are several steps that can help in coordinating the missions of these important agencies."
I'll put up a separate post with Larry Leibowitz's testimony as soon as his panel begins, later this morning.
In fact, I can't think of a better time to be reminded of the importance of financial markets in the growth and prosperity of nations. Maybe I'll see you there!
Live via Webcast this Wednesday -- leaders in business, politics and higher education discuss: "Where Do We Go From Here?"
“Movers & Changers” calls on 16-28 year old college students, individually or in teams of up to three people, to develop and produce a compelling business proposal to revolutionize the future of the world’s social market. Ideas must be creative, original, and scalable to large corporations, in addition to illustrating determination and persistent optimism.
Larry Leibowitz, our group executive VP in charge of U.S. Markets and Global Technology, spoke with CNBC earlier today to clarify the issues and our position concerning "flash" orders, high-frequency trading and co-location of servers.
Memo to a colleague:
I think it's great that you've got us signed on as the exclusive sponsor among equities and derivatives exchanges for the 2010 Shanghai World Expo. Just wanted to express my congratulations, and best wishes for a successful program.
Oh, and wanted to humbly offer my help, too. May I suggest that the Exclusive Exchange Sponsor could use an Official Exclusive Blogger? Reading the press release gave me a number of ideas to maximize the effectiveness of our participation. To cite just a few possibilities: . . .
We've had only 14 IPOs to date this year, but a healthy 134 secondary offerings. Duncan says those IPOs that have come to market have "set up well, their books have come together well, they've priced well and traded well."
One factor that is causing non-U.S. companies to wait on the sidelines: they're looking to see what comes of the U.S. regulatory reforms, their CEOs tell Duncan.
"A lot of the markets that got us in to trouble in the crisis were not regulated, they were not transparent there was really no accountability.
"Markets like ours are stable, reliable, transparent and highly regulated. We realize that we are going to enter a period of re-regulation that is necessary.
"And we find ourselves in a unique position to be part of the solution."
Expected to be operational in 2010, the new data centers will provide much greater network scale and efficiency, with plans to utilize Juniper’s Data Center Infrastructure Solutions and advanced data center fabric technology to support an unprecedented internal latency of 50 microseconds roundtrip.
"Getting our regulatory house in order requires constructing a new foundation, rather than taping broken windows and patching cracked walls." Duncan writes.
Plus: How can we increase financial literacy in minority communities?
"The U.S. capital market is still the most mature in the world, has the deepest pool of liquidity and has the broadest shareholder base," said Scott Cutler, the head of listings at New York Stock Exchange parent NYSE Euronext.
As our letter says, NASDAQ and BATS are seeking "to:modify their respective routing strategies to provide preferential treatment for their own market participants before routing orders to away markets" and "provide non-public order information to a select class of market participants at the expense of a free and open market system."
Our market structure has gone astray, Larry Leibowitz told an industry market-structure conference this week; time for everyone to step up and engage in the dialogue about solutions before the opportunity passes.
MARIA BARTIROMO: The proposals coming out of the Obama Administration are the talk of the business world, particularly the tax on international profits. What are you hearing about this new proposal to tax profits differently?
DUNCAN L. NIEDERAUER: I was in Texas and California in recent weeks and probably met with 100 company executives. The reactions among many could be summarized in the following two observations. No. 1: Doesn’t the Obama Administration recognize that most [big] U.S. companies are multinationals that happen to be headquartered in the U.S.? No. 2: Doesn’t the Obama Administration appreciate that a multinational headquartered in the U.S. doing business overseas does not mean the company is evading taxes? If somebody who’s operating in the U.S. has an overseas business with a mailbox in a tax haven then obviously that is bad behavior and should be dealt with. Companies that have overseas businesses in legitimate tax jurisdictions, who pay taxes in those jurisdictions on the business they do there, that is not in the same category. And what I’m hearing from executives is that this proposal suggests we’re all behaving badly, when, in fact, I would imagine very few of us are.
Our co-CIO Steve Rubinow will talk about our open-source strategy and delivering optimal system performance in a mission-critical, high-demand environment.
The dollar sizes are modest and there aren’t many of them, but initial public offerings and secondary stock offerings are showing a surprising bit of life. “I call it a streak in the first inning,” says Scott R. Cutler, an executive vice president at NYSE Euronext who runs the exchange company’s listing for the Americas.
If you use floor brokers to help you execute your trading strategies (or are considering doing so), you might want to speak with a broker about how their algorithmic capabilities can help them best represent your orders.
In addition to concerns about price discovery and accurate trade reporting, Brigagliano targeted indications of interest sent between dark pools as another potential concern for regulators.
And Americans aren't good at being patient, NYSE Euronext CEO Duncan Niederauer said at a Financial Executives Institute summit last week, as he called for the nation to give the administration's plan some time to work.
Four bits of news today from these parts.
Duncan: "If the question is, 'Would people think it's a fairer game if we had an uptick rule?' the answer is 'Yes.'"
"It would decimate liquidity in the market in an unprecedented way," my boss said.
My colleague Marisa Ricciardi submits:
Whatever the economic climate, the world looks to NYSE Euronext for leadership and perspective from the center of global financial markets. These times of crisis set the stage for unprecedented opportunities for market participants to communicate, collaborate, network and exchange ideas that will lead to solutions to move us forward. The responsibility is ours to foster this exchange.
But what Mr. Ratterman doesn't say is that he's making an apples-and-oranges comparison. BATS trades NYSE-, NYSE Amex- and Nasdaq-listed issues, while NYSE trades only NYSE-listed issues. Let's look at the real, apples-to-apples comparison.
To me, all of these changes -- ranging from lower latency for low-touch trading to enhanced capabilities for high-touch trading -- demonstrate that NYSE Euronext is continually looking to hone our diverse platforms to serve our diverse customer base. The global marketplace is becoming ever more competitive, and NYSE Euronext is becoming more competitive right along with it.
Plus: Knight Equity Trading on the balance between high-touch and low-touch trading.
Today we find a marketplace awash in alternative trading system (ATS) business models competing on the basis of liquidity, speed and rates rather than dark-order innovation and quality of execution.
Our European markets are introducing a single order book to make cross-border trading simpler and easier, and centralize liquidity.
Plus: NYSE to send sub-penny reports; paying tribute to a pioneer/linebacker/publisher/poet; the language of markets keeps growing; and Mr. Hamilton issues the first U.S. debt, the start of something big (for New York, the U.S., and for the national debt itself, of course).
Plus: reviewing studies about short-selling; the Super Bowl indicator; the start of the New York gold market; and: "Finger length provides rule of thumb on traders' profitability."
Plus, results for December 2008.
Full-year 2008 brought just six IPO exits, the fewest annual venture-backed offerings since 1977, when there were also six IPO exits. Preliminary full-year M&A figures show 260 transactions in 2008, the first year since 2003 when there were less than 300 venture-backed acquisitions.
Duncan's speech took place on the heels of 30 days that transformed the financial world, not to mention, he adds, that the Dow dropped 800 points the day before the event, to fall back below the benchmark 10,000 level.
In view of all that, Duncan uses his remarks to outline a "new reality."
One of his key points: Using transparent, regulated markets to bring more sunlight and liquidity to opaque, less regulated securities would be preferable to writing reams of new regulations.
Plus, remembering an un-memorable New Year's Eve: Y2K.
NYSE Euronext registered increased trading activity on U.S. cash equities and options exchanges in November and strong year-to-date volume gains across all its global multi-asset platforms.
Plus: One very dark day in rock-music history.
