Are data centers utilities?

Another good post from Mechanical Markets. This time the question is raised if data centers are utilities or not. Given the latency driven compitition, being in the same DC as the exchange can be very profitable. However, it comes at a cost. And one can question to what extend exchanges and data centers are willing and able to provide space to all participants.

And this is exactly what happened in the Nordics between Verizon, Burgundy and Nasdaq OMX. The exchange abused its position in the market and forced Verizon to deny Burgundy acces to the DC in which Nasdaq OMX was providing co-lo services and hosting its matching engines. 

All in all, there are very good and compelling arguments to start seeing DC as utilities! 

You can read the blog here.

LME looking to improve liquidity

Interested in trading metals? The LME launched a month-long consultation on proposals designed to broaden access to its electronic trading platform. 

According to LME the proposals are crucial to  maximize liquidity and participation. CEO Garry Jones believes that opening up access to trading on LMEselect is beneficial to everyone  active on all LME's venues. 

More flexible application criteria for LME membership may lead to some prospective members benefiting from exemptions from the UK Financial Conduct Authority (FCA).

The effort is an important step in  LME’s liquidity roadmap.

NYSE to launch bitcoin index

The NYSE today announced the NYSE Bitcoin Index (NYXBT), the first exchange-calculated and disseminated bitcoin index. 

NYXBT will utilize a unique methodology relying on rules-based logic to analyze a dataset of matched transactions and verify the integrity of the data to produce an objective and fair daily value for one bitcoin in USD.

The NYSE Bitcoin Index will initially feature data from transactions from Coinbase Exchange, the leading U.S.-based bitcoin exchange in which the NYSE has a minority investment.

Read the full press release here.

Putting the Flash Crash in perspective

Mechanical Markets often hits the nail on the head when writing about the trading industry. In his most recent blog he put the flash crash in perspective as well as underlining the fact that exchanges do require additional safety checks. 

You can find the blog here. Check out the other topics as well. It's well worth the read!

Exchanges crack down on market manipulation

Regardless of the true effect that Sarao had on the 2010 flash crash, one thing seems to be certain. He was manipulating the market and the CME was widely critizized for letting him get away with it for so long.

So, not hard to imagine that in different board rooms at exchanges and regulators, market supervision was a hot topic. The outcome is predictable as well. Read the full article here

Tradetech Paris

Last week the wise men of the financial world gathered in Paris to discuss the future of the equity markets in the Tradetech conference. A very good blog was written by Tim Cave summarizing the key takeways from the conference. So, for all that were not there, catch up by reading this article.

Euronext to launch dairy derivatives

Euronext is set to expand their commodities offering by launching dairy derivatives in milk, butter and whey. As of 31 March, the milk quotas are no longer in force in the EU and the exchange expects demand from users to hedge their risks and anticipate price movements. The dairy complex (futures only) is set to go live on 13 April 2015. No word yet on when options will be launched. The new contract on skimmed powdered milk replaces the old contract that failed to take off.  The new dairy complex competes with the offering by competitor Eurex that offers futures on whey, butter and powdered skimmed milk.

 Euronext instituted fee waivers for all three contracts untill 30 June 2015. 

The full Euronext commodities offering can be found here. 

A new exchange is trying to change the world of derivatives trading in the US

trueEX Group LLC, a fairly new exchange in the US, gained considerable market share in Interest Rate Swaps without support of the big US investment banking community.

Read the full story here.