2. 2
Although markets are now less volatile than they used to be, these remain turbulent times for our industry.
Whenever I have asked customers during the past year what it was that preoccupied them the most,
by far the most common response was “Regulations!”
It’s true, we live in a highly regulated world. Regulatory
scrutiny is on the rise, almost on a daily basis. In a trading
environment of negative volume growth and a declining
number of transactions on the majority of markets, most
market players and infrastructure providers feel regulatory
scrutiny as an increased pressure.
This process is very relevant to the European region. Apart
from market fragmentation and the multiplicity of jurisdic-
tions, four sets of regulations are set to be the main drivers
of change in the European market over the next few years:
1. the EU regulation on OTC derivatives, central counterpar-
ties and trade repositories (commonly known as EMIR);
2. the US Dodd-Frank Act;
3. the European Securities and Markets Authority (ESMA)
guidelines.
4. MiFID2 and the revised Market Abuse Directive (both
have impact on High FrenquencyTraders (HFT) and
Direct Market Access (DMA))
Mitigating systemic risks, raising transparency and intro-
ducing sound pre-trade and post-trade risk controls are the
most urgent needs.
José Iao writes about execution risk in this issue of What’s
Next? It’s a very important topic, for both high-frequency
traders and alternative investors (Gildas LeTreut reports on
the recent Amsterdam Investor Forum).
Here at ABN AMRO Clearing, we believe that the industry
will benefit from a trading, clearing and settlement infrastruc-
ture that will hopefully be more robust if all the links in the
chain help to better mitigate systemic risk.These improve-
ments are not for free, though.There are costs involved in
strengthening the system and it’s logical that the smaller the
entity, the higher the relative cost will be. Inevitably, there
will be pressure to consolidate at all levels: from exchanges,
investors and trading participants to clearing houses, CCPs,
settlement agents and custodians. In this sense, regulation
is pushing the industry one step closer to concentration in
the shape of a small number of big players. Although this is a
side effect that was not necessarily intended by the authors
of the new regulations, size clearly does matter.
The execution of transactions and connectivity to trading
platforms will be key agenda items in the new economic and
regulatory environment.The question you need to answer is:
will you be able to pay for the regulatory cost and make all
the necessary changes in good time in the current economic
climate? Apart from the issue of whether or not to consoli-
date, another question for the years ahead may also be
whether it is worth remaining a member of your own
exchange or MTF, or whether you should make use of our
network and membership. In other words, ‘to have or not to
have?’. Whichever path you decide to take, we can help you
make your way.
I hope you enjoy this edition of What’s Next?Your
comments are highly appreciated. Although we are planning
to distribute another Clearing Customer Survey later on this
year, your ideas and suggestions are of course more than
welcome at any time!
Ed van der Star
Managing Director Europe
ABN AMRO Clearing
to have or not to have
3. 3What’s Next
To have or not to have 02
Fair, orderly, transparent and efficient
markets for electronic trading 04
Second Amsterdam Investor Forum held
in February 07
The forward thinking approach 09
Satisfied customers are what matters most! 10
ABN AMRO Clearing to start clearing on the
Power Exchange Central Europe 11
Quarterly update 12
Did you know that we offer market information
via i-Custody Market Profiles? 17
Event calender 18
content
4. 4
This article looks at the global, regional, and local impact of electronic trading. It also describes how
ABN AMRO Clearing is dealing with the execution risk of high-speed algorithmic electronic trading.
In recent years of global financial crisis, regulators globally
have increased focus into the functioning of the equity
markets. In particular, they focus on promoting fair
competition, stability and liquidity of market structures,
enhancing transparency, and encouraging new innovative
trading methods.
Over the past years, there has been increase in competition
in the market place for investors to achieve profitable
trading. Investors have discovered new innovative trading
technologies such as quantitative algorithmic high
frequency trading ‘HFT’ and also alternative trading venues,
such as displayed and non displayed trading venues.
Short-term trading strategies such as HFT generally refers
to traders who do not pursue traditional, research-based
fundamental strategies. The latter include quantitative
electronic or statistical arbitrage opportunities in the form
of market-making. Market-makers, also classified as ‘net
liquidity providers’, often try to capture a small proportion
of the spread. The opportunities for making a profit are
usually limited, which is why HFT traders and market-
makers often use high-speed electronic trading models to
manage and to execute a large number of short-duration
orders. They go in and out of positions many times during
a trading session. The process of placing, amending or
cancelling, and then executing orders is handled mainly by
computer software.
The dramatic shift towards electronic trading is driven by
the following factors, amongst others:
▶▶ consistency of performance;
▶▶ attractive cost reductions (such as reducing the cost
per trade);
▶▶ cuts in market-impact costs (e.g. reducing trading
errors);
▶▶ increasing competition to achieve a higher rate of
trade execution;
▶▶ globalisation;
▶▶ anonymity;
In general terms, orders are now executed faster and
faster thanks to automated strategies, which are therefore
generating a higher volume of transactions.
In non-displayed liquidity, traders can use non-displayed
pools to search for liquidity without their orders becoming
known to the market. The executed trades then have
immediate post-trade transparency.
Recent events such as the 2010 ‘Flash Crash’1
have led to
increased scrutiny of high-frequency electronic trading.
More specifically, regulators are seeking to establish
whether the use of HFT-related trading strategies is detri-
mental to the market structure and the interests of longer
term investors. Regulators have stepped up their efforts
to identify and eliminate market manipulation by means of
electronic trading and there has been mounting pressure
to introduce new regulation. HFT investors are perceived
as being predatory, and as seeking to disadvantage others
fair, orderly, transparent and efficient
markets for electronic trading
1) US stock market crash on 6 May 2010, when the Dow Jones Industrial
Average fell 1000 points and all indices dropped by over 9%.
5. 5What’s Next
by preying on other people’s orders. The type of strategies
that is discussed and debated by regulators around the
world is the order-anticipation strategy and the momen-
tum-ignition strategy.
An example of an order-anticipation strategy is where a
proprietary firm seeks to identify the presence of one or
more large buyers or sellers in the market and to buy or
sell ahead of large orders with the goal of capturing a price
movement in the direction of the large trading interest. A
momentum-ignition strategy is where a proprietary firm
initiates a series of orders and trades in an attempt to
ignite a rapid price move either up or down2
.
Other concerns are software breakdowns that may spark
erroneous trading algorithms. Here, we are talking about
errors that disrupt fair and orderly market or which create
an artificial price for a financial product and, or flood the
market with excessive order volumes.
At ABN AMRO Clearing, we support regulatory efforts to
reduce risks. We are aware that effective risk manage-
ment is an essential element of market integrity. We
continue to develop effective procedures and systems to
manage risk. In each region of ABN AMRO Clearing’s
operations, i.e. Asia Pacific, Europe and America, we have
established a function in our Risk Management Depart-
ment to undertake reviews and further encourage market
integrity by identifying and taking actions on possible HFT
misconduct.
We have a dedicated Market Surveillance Officers in each
region that monitor the execution risk of electronic trading
on various markets in the region. This includes cash
equities, derivatives and futures markets.
One of the tools used by the Market Surveillance Officer
is the NASDAQ OMX SMARTS post-trade monitoring
system used to detect trading conduct that poses an
actual or potential market, financial and regulatory risk
such as trading that falls outside the normal market
pattern, this includes market manipulation and trading
contrary to stock exchange rules and regulations. The
SMARTS system analyses trading information against a
set of predetermined parameters. Any exceptions are
then reported to the Market Surveillance Officer, who
undertakes a more detailed analysis by comparing each
alert with the market conditions that caused it. For
example, certain types of behaviour may be explained by
the historical (i.e. past) trading activities of the trader or
client in question. The Market Surveillance Officer also
looks for patterns of alerts that may indicate that an
attempt is being made to interfere with normal market
forces requiring further investigation.
Investigation may involve a combination of activities,
including contacts with the relevant trader, an examination
of the client’s past trading behaviour, and an analysis of
current corporate actions in the relevant financial products
or of the pattern of order placing and trading.
These investigations are made in collaboration with Rela-
tionship Managers and Compliance Department.
As a general rule, it is prohibited to place orders that are
intended or which could potentially create a false or
misleading appearance of active trading with respect to
the market for, or the price and yield of, any listed financial
products.
2) SEC Draft release on Equity Market Structure (S7-02-10).
6. 6
The following is a list of forms of electronic trading on
which we are currently focusing:
Momentum ignition – entry of high speed multiple
orders and trades with no legitimate price driving event, to
initiate trading trend to get others to follow the trend and
offer an opportunity to unwind a position.
Unusual price movements – entry of unusual orders and
execution of trades that are likely to have the effect of
creating artificial price for trading in the financial products
or maintaining at a level that is artificial.
Ping orders – entry of small orders aimed to trigger a
reaction by other participants in order to gain information
about their positions and expectations. Entry, deletion and
amendment of orders with low resting time with no
legitimate commercial reasons.
Quote stuffing – entry of variations in position in the
order book without any legitimate commercial reasons, so
to create uncertainty for other participants.
Wash trades – make a transaction or series of transac-
tions with no apparent economic justification in order to
give the impression of brisk activity or a movement in the
price, often done by buyers and sellers acting in concert.
Layering and spoofing – submitting multiple orders at
different prices on one side of the order book slightly
away from the touch, then submitting an order to the
other side of the order book and following the execution
of the latter, rapidly removing the multiple orders.
In our July 2012 newsletter, we referred to the ESMA
guidelines on the trading of financial instruments in an
automated environment. The guidelines cover aspects
such as organisational arrangements, pre-trade controls
and the overall governance framework for algorithmic
trading.
Here at ABN AMRO Clearing, we continue to explore
innovative and valuable ideas, technologies and systems.
Our aim is to work with our clients and other stakeholders
(including regulators) to ensure fair, orderly, transparent
and efficient markets at all times.
José Iao
Institutional Broker - DMA
Market Surveillance, Execution Risk, Asia Pacific
ABN AMRO Clearing jose.iao@au.abnamroclearing.com
7. 7What’s Next
ABN AMRO Clearing hosted its second Amsterdam Investor Forum event (AIF) on 13 February. The Forum
brought together 250 professionals from the alternative investment community in both the Netherlands
and other European countries, the US and Latin America.
The object of the AIF is to provide a forum for fund
managers and industry experts to debate the challenges
facing investments in alternative strategies. As a keen
backer of the alternative investment community, we
regard the AIF as a great opportunity for bringing
investors into contact with fund managers.
This year’s forum again underlined our commitment
to the alternative investment industry. Among the
big names on the rostrum were Andrew Fish,
Nassim Taleb, Graham Neilson and Richard Howard,
to name just a few of the top-class speakers attracting
a wide range of attendees, including pension funds,
private banks, fund of funds, family offices, private
investors, and various high-performing alternative
fund managers.
Working closely together with our colleagues from
ABN AMRO Private Banking, we had prepared a high-
quality, varied agenda. The day was structured around
panel debates, presentations, keynote speakers and
interactive sessions, with live voting from the audience
on key drivers in the industry.
As both a hedge-fund manager and an investor in hedge
funds, Andrew Fish of SSARIS presented a helicopter
view of the current market from a fund-of-funds view-
point. His talk was followed by a lively panel debate on
managed account platforms, their potential and pitfalls
(including fees and default management). Those on the
panel were Nathanael Benzaken of Lyxor, Joelle Verdon
of Bluecrest and Mark Geene of PGGM.
Graham Neilson of Cairn Capital talked the audience
through various strategies for investments in credit.
Thomas Deinet of HF Standard Board discussed regula-
tions, Jérôme Lussan of Laven Partners revealed a set of
best practices for spotting fraud and Richard Howard of
Hayman Capital examined the impact of central banks’
policies on macro investments.
A panel of representatives of the main CTA platforms,
Mikael Stenbom of RPM, Werner von Baum of LGT and
Julian Shaw of Permal, looked at investment in quantita-
tive strategies. The audience was then given a synthesis
of Dutch investors’ views on investments in alternative
strategies by the chairman of the day, Marc de Kloe of
ABN AMRO Private Banking, who was joined by Niels
Oostenbrug of MN Services, Michiel Meeuwissen of
Kempen and Clayton Heijman of Privium.
second Amsterdam Investor Forum
held in February
Marc de Kloe, Alternative Investments Manager ABN AMRO Private Banking
8. 8
This year’s forum also saw the launch of the ‘AIF Factor’,
in which a select number of emerging fund managers
were given an opportunity to pitch to an audience of
Dutch and international investors. Over 60 passionate and
compelling submissions were received for this part of the
programme a few weeks before the event. A panel of
independent specialists selected the following six finalists,
based on the quality of their written pitches:
1. LarrainVial-Vicam Cordillera Fund;
2. Salus Alpha Commodity Arbitrage;
3. Taler Focus Fund;
4. Foundation Capital;
5. Cube Global Opportunities;
6. Umnyah Long-Short.
Each finalist was given three minutes in which to present
its fund to the audience, who were then asked to choose
the most compelling strategy on the basis of the quality of
the pitch. Using the live voting controls, the audience
chose LarrainVial, an emerging market fund, as the first
winner of the AIF Factor.
The AIF Factor contest demonstrates our desire to
support emerging fund managers and give them a
platform for presenting themselves to potential investors.
We have a long history of nurturing start-ups and
supplying them with integrated prime clearing services
(i.e. execution, clearing, custody and finance).
The Forum also welcomed Nassim Taleb, a distinguished
professor at NY University Polytechnic and the celebrated
author of The Black Swan and Fooled by Randomness.
Nassim Taleb addressed a crowded auditorium on the
subject of fragility and un-fragility.
The day ended with a ‘Battle of Global Macro Minds’
moderated by Didier Duret, CIO of AAB Private Banking,
which provided a good opportunity to gauge audience
sentiment on a number of key current topics.
from left to right Nathanaël Benzaken (MD Managed Account Platform Lyxor
Asset Management), Joelle Verdon (Principel Investor Relations Bluecrest
Capital Management) and Mark Geene (Senior Investment Manager Hedge
Funds PGGM Investments) during the Managed Accounts Panel.
Gildas Le Treut, Head of Product and Network Management
ABN AMRO Clearing
9. 9What’s Next
The success of this second AIF was highlighted by the
many positive comments we received from participants,
praising the quality of the speakers, the variety of the
subjects addressed, the interactivity and the networking
opportunities offered to investors and fund managers.
Such industry events demonstrate our commitment to
positioning ourselves as a leading provider of prime clearing
services to major actors in the alternative investment
industry. Combined with our sound risk management, client
asset protection and solid balance sheet, our suite of
integrated prime clearing services make us a natural partner
for both institutional investors and fund managers.
We hope that the AIF will continue to be the leading
alternative investment event in the Netherlands in the
future, so do make sure you join us (again) in 2014!
www.abnamroclearing.com/aif
Gildas LeTreut
Head of Product and Network Management
gildas.letreut@fr.abnamroclearing.com
Stay informed: Link to LinkedIN page AIF
Find here the link to the AIF Program Booklet/Magazine
Similar to the exchanges and vendors mentioned in this1
article, we are faced with the challenge of who to partner
with every day. As more exchanges come to market,
such as the Miami Options Exchange (MIAX) and the
International Securities Exchange (ISE) second options
platform, deciding who to connect with can be a
complex opportunity.
In order to fully understand our partners, and embrace
the potential a new venue presents, ABN AMRO Clearing
Chicago is taking a forward-thinking approach and has
plans to host webinars with our clients, the exchanges,
and ISVs to determine the best way forward. If you are a
client, and are interested in more information, or would
like to submit a request, please contact Brenna Hardman
at Brenna.Hardman@us.abnamroclearing.com.
The forward thinking
approach
1) FOW 12 february 2013
10. 10
The previous edition of What’s Next? contained an article on our Customer Experience Week (CEW).
All ABN AMRO Clearing staff were actively encouraged to take part in the CEW programme, which was
staged in all 12 offices over a period of four consecutive days. The aim of the CEW was to take customer
satisfaction to a higher level by sharing customer experiences among our staff.
Apart from holding a CEW, which it has now been decided
will be an annual event, we also need to obtain informa-
tion from our clients about how they rate us as a
service-provider. It was for this reason that we conducted
a global customer satisfaction survey at the end of last
year. This was the fourth customer satisfaction survey
since 2006, and it has now been decided that this, too,
will be an annual fixture.
The aim of the survey is threefold:
▶▶ to measure customer perception of our performance;
▶▶ to gain a better understanding of how our products and
services are rated in the market;
▶▶ to better align our strategy with our customers’ needs
and expectations.
We received over 100 more responses to this year’s
survey than in the preceding years. The average score
awarded when customers were asked to give their
‘overall opinion of our services’ was 5.5 (on a scale of 1-7),
which means that our customers rate our overall standard
of service as either good or very good.
The following new categories were added to the survey
this year:
▶▶ securities borrowing lending services;
▶▶ FX trading clearing services;
▶▶ account management;
▶▶ futures execution;
▶▶ competition;
▶▶ reputation.
Apart from a number of critical remarks about the
standard of service in certain specific areas, each service
category was rated at least ‘good’ on average. Only two
out of 65 questions (i.e. pricing of SBL services, and tax
recovery services) received an average score of between
4 and 4.5 (satisfactory). Below follow a number of quotes
from clients who completed the survey:
▶▶ ‘The people in your risk department understand our
market and work well with clients.’
▶▶ ‘The margin financing day-to-day process is easier
compared with other FCMs.’
▶▶ ‘Everything is close to excellent (also compared with
other broker/clearers).’
▶▶ ‘Operations staff does a terrific job. They are on the ball
and pro-active. They make our job so much easier.’
▶▶ ‘Relationship Management is of the highest quality.’
▶▶ ABN AMRO Clearing has a tremendous reputation and
I consider you have the best multi-asset clearing firm
out there.’
We can only say that we are very proud to have such an
enthusiastic customer base. We would like to thank
everyone who took the time to complete the question-
naire. Your comments are not only highly appreciated,
they are also absolutely vital if we are to take our
customer experience to a higher level and achieve our
ambition of becoming a ‘dominant Global Prime Clearer’!
Laura de Haan
Sales Support
laura.de.haan@nl.abnamro.com
satisfied customers
are what matters most!
11. 11What’s Next
ABN AMRO Clearing will be joining Power Exchange Central Europe (PXE) as a General Clearing Member
(GCM) at the end of the second quarter, which means that we will then be able to offer clearing services
to PXE’s trading members.
European Commodity Clearing (ECC) is likely to start
offering its services as a central counterparty on the
Prague-based PXE as from the end of Q2 2013. PXE was
formed in 2007 and currently has around 45 trading
members. The total traded volume is 20-30 TWh. ECC will
be clearing and settling Czech, Slovak and Hungarian
power futures listed on PXE and will also be offering an
OTC clearing service for these products.
All contracts are offered with financial and physical settle-
ment:
▶▶ Month Futures: 3-6 consecutive months
Quarter Futures: 3-4 consecutive quarters
Year Futures: 1-3 consecutive years
Please contact your Relationship Manager at ABN AMRO
Clearing if you would like to start trading on PXE and make
use of our clearing services.
ABN AMRO Clearing offers clearing services on the
following energy commodities exchanges worldwide:
Click here for further information.
Emile Goulmy
Energy Commodities Product Manager
ABN AMRO Clearing
emile.goulmy@nl.abnamro.com
ABNAMROClearingtostartclearing
on the Power Exchange Central Europe
Asia Pacific
Australian Stock Exchange (ASX/
SFE)
Dubai Mercantile Exchange (DME)
Singapore Exchange Limited (SGX)
Taiwan Stock Exchange (TSEC)
Tokyo Commodity Exchange
(TOCOM)
Europe
APX – ENDEX
Austrian Central Gas Hub (CEGH)
EPEX Spot SE
Eurex (Euro-denominated Futures
Options)
Euronext LIFFE (UK/FR/PT/BE/NL)
European Energy Exchange (EEX)
Hungarian Power Exchange (HUPX)
ICE Futures Europe
Intercontinental Exchange (ICE OTC
Cleared)
London Metal Exchange (LME)
Nasdaq OMX OSLO ASA
Powernext SA
Power Exchange Europe (PXE)
US
Chicago Climate Futures Exchange
(CCFE)
CME Group (CME/CBOT/COMEX/
NYMEX)
ICE Futures Canada (formerly WCE)
ICE Futures US (NYBOT)
Kansas City Board of Trade (KCBT)
Minneapolis Grain Exchange (MGEX)
New York Stock Exchange (NYSE)
NYSE Euronext
NYSE LIFFE US
12. 12
NewsfromthelocalandEuropeansecuritiesindustry.
European Central Bank
▶▶ TARGET2 Securities (T2S)
T2S project update
Status of T2S project
Despite the fact that the migration schedule approved by
the Governing Council in November 2012 has not been
adjusted yet, a new schedule of migration waves was
presented to the Advisory Group on 28 February. This
needs to be approved by the Governing Council at its
meeting on 20-21 March:
▶▶ Wave 1: 22 June 2015, 16% market share
▶▶ Wave 2: 28 March 2016, 28% market share
▶▶ Wave 3: 12 September 2016, 43% market share
▶▶ Wave 4: 6 February 2017, 13% market share
Wave 1
22 June 2015
(no change)
Monte Titoli, SIXSIS, Bank of
Greece and Dep. Central
SA Romania
Wave 2
28 March 2016
(previously 4 July 2016)
NBB-SSS, Euroclear ESES
and Interbolsa
Wave 3
12 September 2016
(previously 28 November
2016)
Clearstream Banking, Lux
CSD, OeKB, VP securities
and VP Lux
Wave 4
6 February 2017
(new)
Iberclear, Euroclear Finland,
CDCP, Estonia, Lithuania,
Slovenia and Keler
Upcoming T2S Advisory Group meetings
▶▶ 11-12 June 2013
▶▶ 16-17 October 2013
Website T2S:
http://www.ecb.int/paym/t2s/html/index.en.html
Regulated exchanges
NYSE Euronext (NYX)
Intercontinental Exchange-NYSE Euronext merger
On 20 December 2012, Intercontinental Exchange (ICE)
announced a definitive agreement to acquire NYSE
Euronext in a stock-and-cash transaction. Both boards
approved the proposal. The transaction is expected to be
completed in the second half of 2013. It will first need the
approval of US, French, Dutch and Belgian securities
regulators and anti-trust authorities in the UK, Portugal
and Spain.
Derivatives and cash clearing
Having delayed building its own clearing house in Europe,
NYSE was left without a partner and with a stalled
process when the union with Deutsche Börse ended. For
this reason, ICE and NYSE Euronext entered into a
clearing service agreement under which ICE Clear Europe
will provide clearing services to the London market of
NYSE Liffe. The transition of the London NYSE Liffe
market is planned for the summer of this year. There are
currently no transition plans for the European continental
market. As regards cash equity clearing, NYSE Euronext
and LCH.Clearnet SA agreed on the main terms of a
six-year clearing contract, commencing on 1 January 2013
and ending on 31 December 2018.
Website: www.Euronext.com
quarterly update
13. 13What’s Next
Deutsche Börse (DB)
On 25 February, Deutsche Börse announced that it was
not in merger negotiations with the CME Group. Deutsche
Börse said that its primary strategic focus was organic
growth and that this would mainly involve expanding its
business into growth regions in Asia, extending its
services for unsecured and unregulated markets, and
expanding its combined market data and IT business.
Website: http://deutsche-boerse.com/dbag/dispatch/en/kir/
gdb_navigation/home
Bats Chi-X Europe
On 4 January, BATS Chi-X Europe reported an average
24.6% share of the pan-European equity market in 2012.
This means that it maintained its position as the largest
equity market operator in Europe.
Website: http://www.batstrading.co.uk/
London Stock Exchange Group (LSEG)
On 1 March, LSEG announced that the longstop date for
its recommended cash offer for a majority stake in LCH.
Clearnet Group Ltd had been extended to 7 March. On 7
March, LSEG then revised its offer for a majority stake in
LCH.Clearnet.
Website: http://www.londonstockexchangegroup.com/
NASDAQ OMX Nordics (NON)
In February, NON launched a clearing service for SEK-de-
nominated interest rate swaps for end-client trades in the
Nordic market.
Website: http://nordic.nasdaqomxtrader.com/
MiFID database
This database contains information on stocks admitted to
trading on EU-regulated markets, as well as on systematic
internalisers, multilateral trading facilities, regulated
markets and central counterparties, as required under the
MiFID directive
Website : http://mifiddatabase.esma.europa.eu/Index.
aspx?sectionlinks_id=4language=0pageName=Home
Central counterparties (CCPs)
LChClearnet Group
On 1 March, LSEG announced that the longstop date for
its recommended cash offer for a majority stake in LCH.
Clearnet Group Ltd had been extended to 7 March. On 7
March, LSEG then revised its offer for a majority stake in
LCH.Clearnet.
Website: http://www.lchclearnet.com/default.asp?no-
flash=false
Eurex Clearing AG
In February, two of the largest European investment
managers successfully launched a client-clearing service
for interest-rate swaps (IRS) for EurexOTC Clear. These
clients are the first movers to prepare for the future
clearing obligation in Europe.
Website: http://www.Eurexclearing.com/clearing-en/
European Multilateral Clearing Facility (EMCF)
EMCF and EuroCCP announced 14 March to combine
strengths to create new competitive force in pan-euro-
pean cash equities clearing.
Website: http://www.emcf.com
14. 14
European Central Counterparty Limited (EuroCCP)
EMCF and EuroCCP announced 14 March to combine
strengths to create new competitive force in pan-euro-
pean cash equities clearing.
Website: http://www.euroccp.co.uk/
Central Securities Depositories(CSDs)
Euroclear CSDs
Euroclear 2012 operating results for the ESES CSDs
Euroclear France
The value of securities held for clients was €5.3 trillion at
the end of 2012 (compared with €5.0 trillion in 2011).
Turnover was €71.8 trillion in 2012 (€81.9 trillion in 2011).
There were 20.5 million netted transactions in 2012 (23.7
million in 2011).
Euroclear Nederland
The value of securities held for clients was €873 billion at
the end of 2012 (compared with €865 billion in 2011).
Turnover was €4.5 trillion in 2012 (€4.7 trillion in 2011).
There were 5.0 million netted transactions in 2012 (5.2
million in 2011)
Euroclear Belgium
The value of securities held for clients was €157 billion at
the end of 2012 (compared with €130 billion in 2011).
Turnover was €564 billion in 2012 (€588 billion in 2011).
The number of transactions settled in 2012 was roughly
the same as in 2011, at 1.9 million.
Website: www.Euroclear.com
European Commission
DG Internal Market and Services
Financial services policy and financial markets
▶▶ Unit G2 Financial Markets Infrastructure
Website: http://ec.europa.eu/internal_market/financial-mar-
kets/index.htm
EuropeanMarketInfrastructuresRegulation(EMIR)
Status
On 19 December 2012, the European Commission
adopted without modification the regulatory and imple-
menting technical standards proposed by the European
Securities and Markets Authority (ESMA). The Council and
the European Parliament have no objection to the regula-
tory technical standards.
The EMIR regulatory technical standards were published
in the Official Journal of the EU on 23 February. The
provisional timeline for the implementation of EMIR by
financial counterparties is as follows:
March 2013: Confirm transactions; confirm compliance
schedule and the relevant counterparty; daily valuation of
outstanding contracts (mark-to-market or mark-to-model).
Q3 2013: Report to trade repositories (TR) for interest-rate
and credit derivatives (provided that TR for derivatives
class is registered by 1 April 2013; if not, report by no later
than 90 days after TR’s registration).
Mid-Sept 2013: Processes for regular portfolio reconcilia-
tion with counterparties and portfolio compression oppor-
tunities; procedures for identification, recording, moni-
toring and dispute resolution.
Q4 2013: Authorisation of first central counterparties
(CCPs); start of clearing member obligations and front-loading.
1 Jan 2014: Report to trade repositories (TR) for other
asset classes.
Summer 2014: Clearing obligations.
15. 15What’s Next
EC website:
http://ec.europa.eu/internal_market/financial-markets/
derivatives/index_en.htm#consultations
EC website with FAQs:
http://ec.europa.eu/internal_market/financial-markets/docs/
derivatives/doc_121114_emirfaqs_en.pdf
Website: http://ec.europa.eu/internal_market/financial-mar-
kets/securities-law/index_en.htm
Central Securities Depositories (CSDs) and certain
aspects of securities settlement ( CSD Regulation)
On 4 February, the ECON members voted unanimously to
mandate the Rapporteur and the Shadow Rapporteurs to
open the ‘trilogue’ negotiations with the Council and the
Commission, with a view to adopting the text at a first
reading.
The text adopted by the ECON members will form the
ECON’s negotiating position in the trilogue discussions.
The outcome of the trilogue process will then be put to a
vote in a plenary session of the European Parliament. The
indicative date for a plenary first or single reading is 11 June.
Website: http://ec.europa.eu/internal_market/consulta-
tions/2011/csd_en.htm
Unit G3 Securities Markets
Website: http://ec.europa.eu/internal_market/securities/
index_en.htm
Reviews of the Markets in Financial Instruments
Directive/Regulation (MiFID/MiFIR) and Market Abuse
Directive (MAD)
MiFID/MiFIR II
In October 2012, the European Parliament adopted
amendments to the proposal for MiFID II by 495 votes to
15, with 19 abstentions. The matter was referred back to
the European Commission for reconsideration and the
vote was postponed until a subsequent plenary session
(indicative date: 8 October 2013).
The amended MiFID and MiFIR drafts contain numerous
provisions authorising the European Commission and also
the European Securities and Markets Authority (ESMA) to
produce more detailed technical rules. Not until these are
published will the full impact of the MiFID review become
clear. The proposals now pass to the European Parliament
and the Council (i.e. the member states) for the negotia-
tion of agreed versions via the intricate trilogue process.
It is currently anticipated that the amended MiFID direc-
tive and MiFIR will be implemented throughout the EU
simultaneously on or after 1 January 2015. The final
implementation date will depend on the progress of
negotiations between the European institutions and the
pace at which the technical standards are drafted.
MAD II
Implementation of MAD II is not expected until at least
2015.
Website: http://ec.europa.eu/internal_market/securities/
abuse/index_en.htm
Website: http://ec.europa.eu/internal_market/securities/
isd/mifid_en.htm
Local (Dutch) regulation, legislation and market practices
New market practice
Securities transfer service (overboekservice effecten)
A new harmonised process for the transfer of securities in
the Dutch market (‘overboekservice effecten’) was
adopted on 1 March. The process was developed under
the aegis of the Dutch Advisory Committee Securities
Industry (DACSI) and will be used by the following DACSI
16. 16
members: ABN AMRO Bank, ING Bank, Rabobank, Binck
Bank, van Lanschot, Kas Bank and Kempen.
The new service includes portfolio transfers of both retail
and individual private clients’ securities positions, with a
guarantee that the transfer of eligible securities will be
completed within 10 business days. A customer who
wishes to become a new client of one of the above banks
will need to register with the new bank. Once the new
bank has accepted the client, the new bank sends the
relevant documents electronically to the client’s former
bank. Once the old bank has accepted the transfer
request, it transfers the securities to the new bank. The
new bank is the customer’s single contact point for all
questions regarding the transfer of his or her portfolio.
Legislation
Identification of shareholders
A new Corporate Governance Act was published in the
Dutch Official Journal on 28 December 2012. The new
Act is due to enter into force on 1 July of this year and
contains the following changes to the rules on corporate
governance:
▶▶ The ownership threshold above which shareholders of
both listed and unlisted public limited-liability compa-
nies (‘NVs’) are entitled to table agenda items for a
general meeting of shareholders has been raised: in
future, only shareholders who own at least 3% of the
company’s share capital will be entitled to do so. The
current ownership threshold is 1%.
▶▶ In future, an investor in a listed company will be required
to disclose not only his or her capital interests and/or
voting rights, but also his or her gross short positions.
▶▶ One or more shareholders holding, either alone or
together, a capital interest of at least 10% will now be
entitled to request the company to institute an identifi-
cation procedure.
▶▶ An arrangement has been introduced enabling listed
companies to trace the identity of their ‘ultimate inves-
tors’. In addition to information on the investors’
identity, the company will also be able to obtain infor-
mation on their individual positions. To safeguard the
privacy of small investors, the company’s right to
access information will be restricted to shareholders
with an interest of at least 0.5%.
The Act contains a complex arrangement enabling listed
companies to trace the identity of their ‘ultimate inves-
tors’. This will apply to Dutch listed companies and foreign
companies with a listing on a Dutch stock market or
multilateral trading facility.
Briefly, the procedure works as follows. The company (or
its mandated agent) must submit a request by no later
than 60 days before the date of an annual or extraordinary
meeting. As the first step, Euroclear Nederland receives
the identification request and is required to supply the
information requested within three working days. As a
second step, based on the information received from
Euroclear Nederland, the company must send the
admitted institutions an identification request and they
must provide the information requested, again within
three working days. The company has to trace each link in
the entire custody chain until the final link, i.e. the ultimate
investor, is identified.
If no reply is forthcoming, the company may apply to a
district court for a compliance order.
The company is obliged treat any information it obtains
with strict confidentiality and due care. The information
must be recorded in such a way that it is protected from
loss and unlawful processing.
17. 17What’s Next
Did you know that we offer market information via
i-Custody Market Profiles?
i-Custody Market Profiles gives you access to detailed
information on markets in which ABN AMRO Clearing
provides custody services.
You can also run user-defined
reports and download these reports in various formats.
Some examples of information reports which can be
found on i-Custody Market profiles are:
▶▶ settlement details and deadlines
▶▶ market entry requirements
▶▶ bank holidays
▶▶ plus all the latest Newsflashes
You only need a User ID and a password to
access this free information! Please contact
your relationship manager for more information.
!
18. 18
Below an overview of events in each region in where ABN AMRO Clearing will participate
or have representatives attending.
Asia Pacific
20 – 21 March
Derivatives World Asia
Location: Hong Kong
AAC will sponsor this event and the following AAC repre-
sentatives will be attend: Paul Pealling, Kaz Kempers and
Chris Lee
21 March
ABBL EMIR Conference
Location: Luxembourg
AAC Representatives: Geert Vanderbeke
Europe
16 – 18 April
TradeTech Europe
Location: London
AAC Representatives: Gary John-Baptiste, Martin Frewer,
Jonathan Bradshaw, Oliver Klopsch, Geert Vanderbeke
and Neil Singleton
25 April
Conference Towards an EU-Securities Market: Challenges
for Banks
Location: Brussels
AAC Representatives: Geert Vanderbeke will participate in
the Clearing Panel
21 Mei
OTC Cash and Derivatives Market
ABN AMRO Clearing and Markit organise this event
Location: ABN AMRO Headquarters, Amsterdam
AAC Representatives: Alexander Jacobs will participate in
one of the panels
28 – 29 May
Derivatives Trading Central Clearing for Financials (event
will be held in Dutch
Location: Amersfoort
AAC Representatives: Alexander Jacobs will participate in
one of the panels
10 – 12 June
Collateral and CCP Risk Management
Location: Amsterdam
AAC Representatives: Alexander Jacobs will participate in
one of the panels
18 – 20 Juni
NeMa 2013 – Network Management Conference
Location: Warsaw
AAC Representatives: Geert Vanderbeke, George Timmer,
Monique Verhoef and Reinier van Dam. Gildas Le Treut
will participate in one of the panels
24 – 26 June
IDX International Derivatives Expo
Location: London
AAC Representatives: Martin Frewer, Gary John-Baptiste
event calender
19. 19What’s Next
US
24 – 26 April
Options Industry Conference
Location: Las Vegas
AAC Representatives: Tom Chlada, Steven Doran, Ron
Breault,Tom Anderson, Lana Keenan and Brenna Hardman
19 – 21 June
Global Grain Chicago
ABN AMRO Clearing in cooperation with ABN AMRO
(Energy, Commodities Transportation) will sponsor the
Global Grain Conference
Location: Chicago
AAC Representatives: Vicky Sins, Craig Matthews and
Robert Jones / ABN AMRO Representatives: Rick Torken
en Suzanne Larsson
20. What’s Next?
Is a quartely publication of Commercial Merchant Banking.
Editors
Jan Bart de Boer
Lammert Bos
Emile Goulmy
Laura de Haan
Geert Vanderbeke
Henk van Vliet
Ed van der Star
José Iao
Gildas Le Treut
Brenna Hardman
Disclaimer
The information contained in this newsletter has been screened
and is assumed to be correct. No liability is accepted for errors
or omissions or for loss or damage incurred as a result thereof.
If you want to subscribe or unsubscribe to our mailing list, send
an e-mail to laura.de.haan@nl.abnamro.com
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