PrefBlog

It had to come. Credit Suisse is starting a new Exchange targetting clients who are little girls:

The venue, Light Pool, will be the first U.S. electronic communications network to be started in five years. The ECN is aimed at institutional investors such as mutual funds, hedge funds, pensions and endowments. Unlike existing exchanges, Light Pool will employ a system to classify users by how they trade as a way to set prices and keep out unwanted speculators.
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Development of Light Pool began a year ago as a hedge against potential regulatory restrictions on dark pools. The chief executive officers of exchange operators such as New York- based NYSE Euronext and Nasdaq OMX Group Inc. have urged the SEC to impose more requirements on dark pools, which grew to more than 12 percent of equities trading in November, from less than 9 percent two years earlier, data from Rosenblatt show.

As its regulatory concerns diminished in 2010, Credit Suisse switched its focus to creating a public displayed market for institutional investors worried they weren’t getting optimal executions on exchanges that cater to high-frequency firms.
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The broker’s clients and firms accessing Light Pool directly will be automatically classified based on an initial period of trading behavior and placed in one of three categories: contributors, neutral users and opportunistic traders. The criteria for defining a firm will be automated and objective, “with no human intermediation,” as is required for public markets, Galinov said. The aim is to determine whether firms are systematically profiting from their trading activity in ways that could hurt institutional clients, he said.

Opportunistic firms, which Galinov says include some high- frequency trading companies, will be kicked off the platform and prevented from providing orders or executing against bids and offers directly through Light Pool. They’ll instead have to go through the Jersey City, New Jersey-based National Stock Exchange, where Light Pool will also publish its quotes.

Meanwhile, the UK is showing the world how to compete:

Chancellor of the Exchequer George Osborne said he’ll push Britain’s biggest banks to follow state- controlled Royal Bank of Scotland Group Plc in awarding lower bonuses in 2011 and left open the possibility of further action.
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Prime Minister David Cameron’s coalition faces the same problem as the previous Labour administration after its 2008 rescue of the banks. The government needs lenders it has stakes in — such as RBS — to succeed, which means paying competitive salaries, while it can’t directly control the compensation paid by other banks — such as Barclays.

If you can’t beat ’em – legislate ’em!

Volume picked up to above average on a good day for the Canadian preferred share market. PerpetualDiscounts were up 18bp, while FixedResets gained 8bp. There was, again, only a lone entry in the Performance Table – and that’s the same issue as yesterday, reversing itself.

This entry was posted on Tuesday, January 11th, 2011 at 10:36 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.