Sunday 23rd November 2014
NEWS TICKER – FRIDAY NOVEMBER 21ST 2014: The director of the National Security Agency, Navy Admiral Michael Rogers, says he expects to see adversaries launch a cyber-attack in the next few years aimed at severely damaging America's critical infrastructure. "I fully expect that during my time as commander, we're going to be tasked to help defend critical infrastructure within the United States because it is under attack by some foreign nation or some individual or group," Rogers told the House Select Committee on Intelligence this morning (EST). Rogers, who also serves as commander of the US Cyber Command, says the government is better prepared to defend against those attacks than it was two years ago.On November 24th, the Federal Reserve will conduct a fixed-rate offering of term deposits through its Term Deposit Facility (TDF) that will incorporate an early withdrawal feature. This feature will allow depository institutions to obtain a return of funds prior to the maturity date subject to an early withdrawal penalty. The Federal Reserve will offer eight-day term deposits with an interest rate of 0.29000% and a maximum tender amount of $20,000,000,000. The penalty for early withdrawal is 0.75%, the minimum tender per institution is $20,000,000,000 - The Straits Times Index (STI) ended +29.72 points higher or +0.90% to 3345.32, taking the year-to-date performance to +5.70%. The FTSE ST Mid Cap Index gained +0.64% while the FTSE ST Small Cap Index gained +0.83%. The top active stocks were SingTel (+0.51%), UOB (+1.37%), DBS (+1.64%), Keppel Corp (+0.22%) and OCBC Bank (+1.16%). The outperforming sectors today were represented by the FTSE ST Basic Materials Index (+1.70%). The two biggest stocks of the FTSE ST Basic Materials Index are Midas Holdings (+1.72%) and Geo Energy Resources (+3.02%). The underperforming sector was the FTSE ST Technology Index, which gained +0.16% with Silverlake Axis’s share price gaining 0.41% and STATS ChipPAC’s share price unchanged. The three most active Exchange Traded Funds (ETFs) by value were the IS MSCI India (+1.70%), SPDR Gold Shares (+0.34%), DBXT MSCI Singapore IM ETF (unchanged). The most active Real Estate Investment Trusts (REITs) by value were Suntec REIT (unchanged), Ascendas REIT (unchanged), CapitaCom Trust (+0.89%) - In an interview with US online service Careers Info-Security News Greg Shannon, chief scientist at the CERT Division of Carnegie Mellon University's Software Engineering Institute says that to defeat cyber-adversaries, cybersecurity professionals should adopt a contrarian attitude, says. "Having that contrarian point of view allows you to get into the mindset of the adversary," Shannon says in an interview with Information Security Media Group. "How would this technology work if it did something the designer of it didn't think of?" he asks. "Certainly, that's the way the adversary is thinking, coming up with new attacks, new threats. They're looking at an app, a piece of software or some websites, [and they think] 'What can I do here that the designer didn't think of? Is there a way to get information through channels, through tricks that weren't anticipated? Is there some frailty of humans that I can exploit to get information out of them that they wouldn't normally give me?'" – Raiffeisen Bank International warned in an analyst conference call yesterday that profits in its Russian business would be challenged in Q4 versus Q3. The bank’s Chief Financial Officer Martin Gruell said higher risk provisioning and increased operating expenses could cut profits in its single most profitable market. "I would expect the fourth quarter to be a bit lower than the third quarter," he said. He believes the worst of the rouble's devaluation is over, but explained that the impact on the group’s capital from the dip in the ruble, could push RBI's core capital below 10% of risk-weighted assets by the end of this year - The performance of the Dutch residential mortgage-backed securities (RMBS) market remained stable during the three-month period ended September 2014, according to the latest indices published by Moody's Investors Service. The 60+ day delinquencies of Dutch RMBS, including Dutch mortgage loans benefitting from a Nationale Hypotheek Garantie, decreased to 0.95% in September 2014 from 0.98% in June 2014. At the same time, the 90+ day delinquencies decreased to 0.72% during the three-month period compared with 0.75% in June 2014. Cumulative defaults continued to increase to 0.54% of the original balance, plus additions (in the case of Master Issuers) and replenishments in September 2014, compared with 0.47% in June 2014, says the ratings agency. Cumulative losses slightly increased to 0.11% in September 2014 from 0.10% in June 2014 – According to a Clearstream client bulletin on November 18th, the US Internal Revenue Service and the US Treasury published an amendment to the current temporary regulations (TD9657) regarding FATCA. The amendment impacts Foreign Financial Institutions (FFIs) who have entered into an agreement with the IRS to become a participating FFI. It amends the determination date and timing for reporting with respect to the 2014 calendar year.

Corporate credit embraces electronic trading

Wednesday, 25 July 2012
Corporate credit embraces electronic trading Recent years have witnessed unprecedented growth in the electronic trading of European credit instruments. Designed to improve transparency and minimise counterparty risk in the derivatives markets, the direction of new regulation is an important factor behind e-trading of European credit. The rules that will govern trade execution, clearing and reporting have yet to be finalised, but it is clear that reform is likely to push trading further towards electronic markets, where there is enhanced price transparency, workflow efficiency and regulatory oversight. Rupert Warmington, director of European credit markets at Tradeweb, discusses why he expects this trend will continue. http://www.ftseglobalmarkets.com/

Recent years have witnessed unprecedented growth in the electronic trading of European credit instruments. Designed to improve transparency and minimise counterparty risk in the derivatives markets, the direction of new regulation is an important factor behind e-trading of European credit. The rules that will govern trade execution, clearing and reporting have yet to be finalised, but it is clear that reform is likely to push trading further towards electronic markets, where there is enhanced price transparency, workflow efficiency and regulatory oversight. Rupert Warmington, director of European credit markets at Tradeweb, discusses why he expects this trend will continue.

To improve portfolio yields in a climate where other fixed income instruments are showing historically low yields, many investors have turned to European corporate bond markets in recent years. Meanwhile, corporate issuers in Europe are increasingly looking to access capital markets as a result of balance sheet constraints in the bank loan market, which they have traditionally relied upon for a large part of their financing needs. Upcoming regulatory changes and a desire for greater operational ­efficiencies within asset managers have combined to form an ongoing and significant increase in the electronic trading of European credit instruments.

The shift towards e-trading in European credit bonds corresponds with widespread change in the investment patterns and workflows of “real-money” institutions. European dealers are increasingly looking to electronic platforms to service clients’ flow business in vanilla products—precisely where there is greatest liquidity. Growth in electronic trading of investors’ flow business has boosted e-trading volumes overall—estimated now to represent well over 35% of the European credit market, up from less than 20% just a couple of years ago.



Access to liquidity lies at the heart of successful e-trading platforms. There has been a sizeable increase in the number of market makers providing prices in European credit over electronic marketplaces such as Tradeweb. Sell-side participants’ desire to win volume through e-platforms has led to significant improvements in the quality of electronic liquidity compared to that offered by phone. This is especially evident in recent months, and has not necessarily reflected conditions in the market overall. There is indeed an increasing buy-side perception that a growing proportion of overall sell-side liquidity is now being offered electronically as opposed to voice trading.

Yet, for institutional investors, operational efficiency is almost as important as liquidity. Throughout the entire trading cycle of price discovery, ­execution and post-trade processing, electronic trading platforms provide ready access to trade information, analytics, and price transparency. And both buy- and sell-side institutions can fully integrate electronic trading platforms into their existing workflow systems.

This automation must not come at the cost of flexibility. Buy-side traders can tailor tickets to their precise requirements on electronic platforms and request prices from specific dealers (the “request-for-quote” or RFQ model). This auction-like process gives buy-side traders fast and trans­parent price discovery, simultaneously putting dealers into competition. Increased competition optimises pricing efficiency and helps the buy-side demonstrate best execution.

More sophisticated electronic trading platforms are also flexible enough to allow buy-side investors to execute multiple trades concurrently from a single list of orders across multiple asset classes. The time saved allows asset managers to invest resources more efficiently to boost overall productivity and performance.

The need for flexibility in trading these instruments has become increasingly important as both regulatory and macroeconomic factors coalesce, reducing overall market liquidity. This has led various market participants recently to explore new price discovery and execution models which, if successful, could increasingly challenge the way business is done and even the current market structure.

However, the common thread running through the fundamental changes underway in the marketplace is the greater use of electronic trading. Whilst the main driver stimulating the willingness to look at new ways to execute trades may be regulatory and macroeconomic change, the need for more efficient and cost-effective trade execution is also at the core of these moves. In other words, the evolution happening today is underpinned by some of the same drivers that have been central toward the increased use of electronic trading across fixed income markets for more than ten years.

It is clear that the fixed income markets are becoming an increasingly dynamic and exciting place in which to operate, especially in the burgeoning electronic marketplace for European credit. This presents us with challenges, but also many opportunities to contri­bute to the accelerating evolution of the market. As electronic trading continues to meet the needs of financial institutions seeking better liquidity, increased efficiency and improved performance, marketplaces like Tradeweb will continue to partner with the buy- and sell-side to drive innovation in the new regulatory and economic environment.

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