Tag Archives: Thomson Reuters

High Frequency Confusion at London Stock Exchange

The London Stock Exchange is in the process of upgrading its electronic trading systems to attract more high frequency traders, and restore LSE’s digital reputation after an embarrassing technological collapse in November last year. But since the upgrade began this week there’s just been one hick-up after another. On Monday the UK exchange was forced to delay the migration of the full UK order book. On Tuesday the closing process was delayed, resulting in confused computer algorithms, wrongfully executed trades and sparking volatility. Today traders was left frustrated by incorrect pricing.

“We are confident with the systems generally and how they’ve performed, given the scale of the project.”

London Stock Exchange


Both Thomson Reuters, Selftrade and TD Waterhouse are warning their clients that they in “some scenarios” are not able to provide correct bid and ask prices, and that there’s no estimates  on when the problems will be fixed. The effect is confused computer algorithms, triggering trades at the wrong time and sparking volatility, the Financial Times reports.

“People were trading at prices they weren’t expecting to be trading at,” one trading expert at a foreign bank in London says.

Other traders, however, say they have seen little disruption: “It’s smooth sailing here,” another trader says.

And – of course – the London Stock Exchange don’t see any problems at all.

“We are confident with the systems generally and how they’ve performed, given the scale of the project,” a spokesperson says. “We have had a constant dialogue with customers and the feedback we’ve had has been very good.” Adding that LSE is looking into the matter, but are still “confident that the system will be okay today”.

Anyway – the London Stock Exchange was on Wednesday dealing with the fallout from another technology glitch as some traders expressed frustration over disruption to the bourse’s closing auction at the close of business on Tuesday, according to FT.

Execution-only brokers including Selftrade are warning that their websites are not showing correct prices.

Thomson Reuters warns clients that its bid and ask prices are, “in some scenarios, intermittently updating with zeros ahead of an updated value,” saying the problem was first identified on Tuesday morning but could not  give any estimate on when it would be fixed.

TD Waterhouse says in a statement: “Currently a technical issue between the LSE and one of our data providers is affecting stop-loss orders on UK stocks. As an interim measure we have taken the decision to manage the existing orders on our book and stop taking new orders.”

Adding: “Customer impact has been minimal as stop orders are a small fraction of our daily trading activity and we working with the LSE and the data provider to fix the problem. We hope to bring this to a speedy resolution.”

The LSE suffered a blow to the credibility of its new technology in November when a two-hour outage hit not long after it had switched to using MillenniumIT technology on its Turquoise trading platform.

Initially the LSE indicated that the problem may have been sabotage but an investigation concluded last month that it had been “human error”.

Wonder what they will come up with this time…

Blogger Templates

3 Comments

Filed under National Economic Politics, Technology

S&P 500 Drops 3.4% On Disappointing Job Report

U.S. stocks fell at the opening bell, as investors were disappointed with the government’s May report that showed fewer-than expected jobs were created and job creation mostly came from hiring for the U.S. census.

The Dow Jones industrial average fell more than 1.5 percent at the opening, ending down 3,2% at 9.931 points. The New York Stock Exchange activated Friday the so-called rule 48 due to expectations of extreme volatility.

The S&P 500 Index declined 3.4 percent to 1,064.88 points, Friday. It is the biggest drop on the day of the U.S. Labor Department’s monthly jobs report since at least 1998, according to data compiled by Bespoke Investment Group LLC. The Dow Jones Industrial Average sank 324.06 points, or 3.2 percent, to 9,931.22. All 30 of its components retreated.

Investors got an unpleasant surprise from the Labor Department‘s report that 431,000 jobs were created last month. Most of those jobs, 411,000, came from the government’s hiring of temporary census workers. Economists polled by Thomson Reuters had forecast employers would add 513,000 jobs.

Hiring by private employers was particularly weak, which is raising concerns that the economic recovery remains slow. Private employers added just 41,000 jobs in May, down from 218,000 in April and the fewest since January.

The unemployment rate fell to 9.7 percent from 9.9 percent in April. That was slightly better than the 9.8 percent unemployment rate economists had forecast. That number, however, could creep higher again as more people try to find work and census workers lose their temporary jobs.

Overall, 15 million American remain unemployed. Including workers who have given up looking for work or part-time workers who want full-time jobs, the so-called underemployment rate dipped to 16.6 percent in May from 17.1 percent a month earlier.

The monthly jobs report is one of the most important reports on the economic calendar. High unemployment remains one of the biggest obstacles to strong, sustained growth. Without people returning to the work force, consumer spending is expected to remain sluggish and limit future growth. Consumer spending accounts for the bulk of economic activity.

You’ll find the full report here.

NYSE Activate Rule 48

At the New York Stock Exchange the regulators have now invoked the so-called rule nr.48, that is a precaution rule activated when market volatility is expected to be extremely high.

“Rule 48 suspends the requirement for market makers to send pre-opening indications, or bid and ask prices developing in auctions used to determine a stock’s opening price. The regulation is used “only in those situations where the potential for extremely high market-wide volatility would likely impair floor-wide operations at the exchange,” NYSE Euronext says in an e-mail.

*

Reblog this post [with Zemanta]

2 Comments

Filed under International Econnomic Politics, National Economic Politics

ETF Investors Increase 1673%

The number of investors holding EFT’s has increased by 1673% over the last 11 years, a newly published suvey shows. The compounded annual growth rate (CAGR) is about 30% during the periode. According to the survey, conducted by Barclays Global Investors, the financial crisis has made the Exchange Traded Funds extremly attractive. New regulations and demand for more transparent assets will make the EFTs even more popular in the years to come, Barclays concludes.

“During the market turmoil of 2008 investors became even more concerned about counterparty risk, transparency, liquidity and the use of derivatives and structured products. As a result, the use of ETFs to implement exposure to cash, fixed income, commodities and equity indices became more popular.”

Deborah Fuhr

(Article in Norwegian, link to original report in English)

sector-etf-model-portfolios.jpg

I løpet av de siste 11 årene har tallet på investorer i indeksfond (ETF) økt med 1673 prosent – en sammensatt årlig vekst på 30 prosent. Indeksfond brukes til å spekulere i bestemte markeder, knyttet til en bestemt indeks. ETF-ene er blitt finanskrisens mest populære investeringsobjekt.

Jo mer det svinger, jo større er muligheten for å tjene penger.

Og med en volatilitetsindeks (VIX) som har dinglet mellom 15 og 80 poeng i perioden 2002 til 2008 har det gitt store rom for å hente gevinster på kortsiktig handel.

eft_report.jpgFlest ETF-investorer finner vi i USA, England, Spania og Sveits. I sistnevnte nasjon opplyser 83 prosent av de institusjonelle investorene at de har investeringer i indeksfond, skriver Barclays Global Investors i en fersk analyse.

Barclays har studert utviklingen i ETF-investeringer i 42 land i perioden 1997 til 2008 og dokumenterer i rapporten “ETF Landscape – Annual Review Of Institutional Users Of ETFs In 2008″ en enorm vekst i bruken av disse investeringsinstrumentene.

Årlig vekst: 42%

Forvaltningsselskapene (investeringsrådgivere) er de største aktørene og utgjør 74 prosent av de institusjonelle EFT-investeringene.

Den sammensatte årlige veksten (CAGR) for gruppen i den aktuelle perioden har vært 31,1 prosent.

Deretter kommer hedgefondene som nå representerer 15 prosent av ETF-andelene. Men i denne gruppen ligger CAGR (Compound Annual Growth Rate) på 42,4 prosent.

howtomakemoney_eft.jpg

I løpet av 2008 økte tallet på institusjoners som investerer i indeksfond (Exchange Traded Fund) med 12 prosent på verdensbasis, til 2926.

Å kjøpe ETF er nesten som å kjøpe en aksje. Du kjøper en andel i et fond som investerer innen en bestemt sektor eller et bestemt marked.
Et fond kan investere i råvarekontrakter, et annet i gull, et i aksjene i Standard & Poor’s 500 indeksen og et i oljeservicesektoren på på Oslo Børs, for eksempel.

Fondsandelene er notert og omsettes på de offentlige børsene på linje med andre fondsandeler.

Fondene gir investorer muligheten til å satse på bestemte sektorer eller investeringsklasser, og de forvaltes på en måte som gjør det mulig å tjene penger både på oppgang og nedgang.

Populært kriseredskap

 

etf.jpgMuligheten til å kunne satse på en generell oppgang eller nedgang i bestemte markeder har gjort ETF-ene til et av de mest populære verdipapirene som omsettes på børsene for tiden.

Deborah Fuhr, som er leder for ETF Research & Implementation Strategy hos Barclays Global Investors, skriver i rapporten:

“During the market turmoil of 2008 investors became even more concerned about counterparty risk, transparency, liquidity and the use of derivatives and structured products. As a result, the use of ETFs to implement exposure to cash, fixed income, commodities and equity indices became more popular.”

 

Liten oversikt

Det finnes ingen fullstendig oversikt over hvor mange slike fond som finnes, eller hvor mye som er investert i dem.

about_trading_system.jpgÅrsaken er ulike regnskapsregler i de forskjellige land, og i noen land kommer ETF-er inn under reglene for “off-balance-financing” og trenger dermed ikke å føres i regnskapene.

The Thomson Reuters shareholding database inneholder den beste oversikten og viser at 37 441 institusjoner hadde ETF-investeringer for 16 474 milliarder dollar ved utgangen av 2008.

Tall fra USA tyder på at ETF-investeringene kan være tre ganger så store.

Rapporterte ETTF-investeringer i amerikanske virksomheter tilsvarte ved utgangen av 2008 274 milliarder dollar, mens det akkumulerte beløpet av alle ETF-investeringer i USA er 710 milliarder.

Barclays Global Investors skriver i sin rapport at investorenes ønske om bedre innsyn, og myndighetenes ønske om bedre kontroll, trolig vil gjøre EFT-ene enda mer populære i årene som kommer.

Her er den fullstendige rapporten – “ETF Landscape” – fra Barclays Global Investors.

(Only for professional non-american investors)

  

Comments Off on ETF Investors Increase 1673%

Filed under International Econnomic Politics