Countries & Regions Archives - Page 256 of 367

August 16, 2012

ASX revenue from high frequency trading soars

A new data center, catering for high-speed trading, is becoming a major revenue-source for the ASX. My concern is that this could change the entire focus of the ASX, outweighing revenue from traditional stock market trading. Tom Steinert-Threlkeld at the Securities Technology Monitor writes:

The Australian Securities Exchange Group said Thursday that its revenue from Technical Services in its 2012 fiscal year topped the amount of revenue it received from stock market trading……

The growth in Technical Services revenue came as the company introduced different order types and execution services, and completed a state-of-the art data center. That data center operates at high speed and handles high volumes of trading orders, from computers belonging to trading firms that are located inside its walls. ASX said it was hosting 59 clients in the new data center as of June 30.

via Stock Trading Revenue Topped by Technology at Australia Exchange.

Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.

August 16, 2012

Friedman’s Japanese lessons for the ECB « The Market Monetarist

Milton Friedman, December 1997:

Defenders of the Bank of Japan will say, “How? The bank has already cut its discount rate to 0.5 percent. What more can it do to increase the quantity of money?”

The answer is straightforward: The Bank of Japan can buy government bonds on the open market, paying for them with either currency or deposits at the Bank of Japan, what economists call high-powered money. Most of the proceeds will end up in commercial banks, adding to their reserves and enabling them to expand their liabilities by loans and open market purchases. But whether they do so or not, the money supply will increase.

There is no limit to the extent to which the Bank of Japan can increase the money supply if it wishes to do so. Higher monetary growth will have the same effect as always. After a year or so, the economy will expand more rapidly; output will grow, and after another delay, inflation will increase moderately. A return to the conditions of the late 1980s would rejuvenate Japan and help shore up the rest of Asia.

via Friedman’s Japanese lessons for the ECB « The Market Monetarist.

Friedman was suggesting that the BOJ implement QE to boost the money supply and create inflation. Inflation would rescue the banks and real-estate-owners with underwater mortgages.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

August 16, 2012

Forex: Euro, Pound Sterling, Canadian Loonie, Australian Dollar and Japanese Yen

The Euro is testing short-term support at $1.2250 on the daily chart. Recovery above $1.2400 would indicate another rally, while failure of support would test primary support at $1.2050. The primary trend is still downwards, but breach of the descending trendline means the primary down-trend is losing momentum and a bottom is forming. Failure of primary support is unlikely but would warn of another down-swing, with a target of $1.185.

Euro/USD

* Target calculation: 1.215 – ( 1.245 – 1.215 ) = 1.185

Pound Sterling found support at €1.255 against the Euro before rallying to €1.28. Narrow consolidation between €1.27 and €1.28 suggests continuation of the rally. Breach of resistance at €1.29 would signal an advance to €1.315*. Rising 63-day Twiggs Momentum reflects a strong primary up-trend.

Pound Sterling/Euro

* Target calculation: 1.285 + ( 1.285 – 1.255 ) = 1.315

Canada’s Loonie is headed for a test of resistance against the greenback at $1.02. Bullish divergence on 63-day Twiggs Momentum on the weekly chart suggests a primary up-trend; confirmed if resistance at $1.02 is broken.

Canadian Loonie/Aussie Dollar

Shallow retracement of the Aussie Dollar against the greenback suggests trend strength. Recovery above $1.06 would indicate an advance to $1.075. Breakout above $1.075/$1.08 would offer a long-term target of $1.20* but RBA intervention, to protect local industry, could be a factor.

Aussie Dollar/USD

* Target calculation: 1.045 + ( 1.045 – 1.015 ) = 1.075

The greenback found support at ¥78 against the Japanese Yen. Rising Twiggs Momentum and penetration of the descending trendline both warn that a bottom is forming. Recovery above ¥80.50 would complete a double bottom reversal, suggesting an advance to ¥84.

US Dollar/Japanese Yen

* Target calculation: 81 + ( 81 – 78 ) = 84

The Aussie Dollar broke medium-term resistance at ¥82 against the Japanese Yen, headed for a test of the upper range border at ¥88/¥90. Rising 63-Day Twiggs Momentum and recovery above zero suggest a primary up-trend as the Aussie Dollar attracts capital inflows.

Aussie Dollar/Japanese Yen

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

August 14, 2012

New Research Busts High-Frequency Trading and Dark Pool Myths — CMCRC

Press Release: Capital Markets Cooperative Research Centre

CMCRC, the Australian independent academic centre for capital market research, has found that high-frequency trading (HFT) actually benefits capital market structures and performance, while dark pools may have damaging effects.

Speaking at an event in Beijing, Professor Frino outlined his research that showed that HFT activity adds real liquidity to markets and has no impact on price volatility — surprising findings, as HFT has regularly been accused of negatively impacting these measures of market quality.

“High frequency traders now account for more than 50 percent of trading volume in some global markets, whereas seven years ago it was virtually absent from markets,” Professor Frino said. “Alongside this trend is an explosion in so-called ‘dark pools,’ in which investors are executing their trading in invisible or non-transparent markets. Dark pools are making trading on exchanges less relevant.”

via New Research Busts High-Frequency Trading and Dark Pool Myths — CMCRC – Yahoo! Finance.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

August 14, 2012

BBC News – High-frequency trading and the $440m mistake

By Tim Harford

……There are two rather more predatory strategies. One is called algo-sniffing. Here, a super-fast computer tries to find other computers going about their everyday business of buying or selling shares, and figures out what they’re going to do and when.

The algo-sniffer can then get ahead of the game and exploit the slower computer. And of course you could have algo-sniffer-sniffers and algo-sniffer-sniffer-sniffers in a high-frequency arms race. No wonder speed can be so important.

And finally, a particular sub-category of the algo-sniffer is the spoofer, which deliberately makes fake offers designed to lure other computers to show their hands, then cancels the offers. Spoofing might be illegal, or at least against the rules of stock exchanges, but it’s hard to prove that it’s going on.

Andrew Haldane, executive director for financial stability at the Bank of England:

“What we have out there now is this complex array of multiple mutating interacting machines, algorithms. It’s constantly developing and travelling at ever higher velocities. And it’s just difficult to know what will pop out next. And that’s not an accident waiting to happen, that’s an accident that has been happening with increasing frequency over the last few years.”

via BBC News – High-frequency trading and the $440m mistake.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

August 14, 2012

Plans for curbs on high-speed share trading | The Australian

ASIC deputy chairman Belinda Gibson says automated trading needs robust controls. The corporate watchdog has blamed high-frequency trading for a big jump in the number of issues referred for investigation in the June half-year.

“This type of trading, and algorithms generally, continue to be of concern,” Ms Gibson said. “The measures we are proposing will strengthen our protection against the type of disruption we have recently seen in other markets.”

via Plans for curbs on high-speed share trading | The Australian.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

August 14, 2012

French High Frequency Trading Tax Enters Into Force

By Ulrika Lomas, Tax-News.com, Brussels
14 August 2012

France has enacted a tax on high frequency trading, at a flat rate of 0.01%. This move coincides with a similar draft law under consideration in Germany……Market makers are expressly exempt.

via French High Frequency Trading Tax Enters Into Force.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

August 14, 2012

How High Frequency Trading Robots Are Creating a Bumpy Ride for Main Street – NASDAQ.com

By Barbara Cohen

While HFTs may argue that they bring liquidity to the Market, they cannot dispel the concerns that liquidity comes at a very high price to investors – increased volatility. In a report issued in September 2011, associate professor Frank Zhang of Yale University stated that once an instrument’s share volume exceeds 50%, trading becomes basically a “hot potato,” as HFTs trade the same positions, passing them back and forth amongst themselves. Inter-firm trading all but eliminates “Price Discovery,” determining share price by normal supply and demand factors, such as news events or positive/negative earnings releases.

Inter-firm high frequency trading also wreaks havoc for Main Street investors because of “cross spreading.” So many liquid stocks, such as BAC and MSFT, now execute in milliseconds, resulting in extreme “competition” for Main street investors. Queues to enter and exit are significantly longer, with hundreds of shares waiting to execute. Long queues force Main Street investors into the vulnerable position of having to buy at the offer or sell at the bid, a trading method known as “crossing the spread.”

via How High Frequency Trading Robots Are Creating a Bumpy Ride for Main Street – NASDAQ.com.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

August 14, 2012

Asia: India recovers but China & Japan bearish

India’s Sensex broke resistance at 17500, signaling a primary up-trend. Expect an advance to 18500*. Rising 13-week Twiggs Money Flow — above zero — indicates strong buying pressure.

Sensex Index

* Target calculation: 17.5 + ( 17.5 – 16.5 ) = 18.5

NSE Nifty is testing resistance at 5350. Breakout would confirm the Sensex primary up-trend. Rising 63-Day Twiggs Momentum is promising but we need a trough above zero to signal a strong up-trend. Target for the breakout would be 5650*.

NSE Nifty Index

* Target calculation: 5350 + ( 5350 – 5050 ) = 5650

Understanding Momentum

Momentum is an oscillator, so you would expect equal peaks if the trend is constant. If oscillating above zero, it would be a constant up-trend; below zero, a constant down-trend; with zero at the mid-point, a ranging market. Divergence should ideally show a clear transition from one to the other or at least a sharp difference in the height of peaks or troughs. A trendline drawn under rising momentum will indicate that momentum is accelerating; a trendline break would indicate slowing acceleration — not necessarily a reversal.

Japan’s Nikkei 225 index is testing resistance at 9000 but 13-week Twiggs Money Flow continues to warn of strong selling pressure, with a peak below zero. Breakout above 9000 is unlikely, but would signal an advance to 10000. Failure of support at 8200 would indicate another test of the 2008/2009 lows at 7000*.

Nikkei 225 Index

* Target calculation: 8000 – ( 9000 – 8000 ) = 7000

China’s Shanghai Composite Index retreated below support at 2150; follow-through below 2100 would indicate a decline to 2000*. Declining 63-day Twiggs Momentum continues to signal a primary down-trend.

Shanghai Composite Index

* Target calculation: 2250 – ( 2500 – 2250 ) = 2000

Hong Kong’s Hang Seng Index is more bullish, consolidating above resistance at 20000. Follow-through would indicate an advance to 22000*. Recovery of 63-Day Twiggs Momentum above zero would suggest a primary up-trend.

Hang Seng Index

* Target calculation: 20 + ( 20 – 18 ) = 22

Singapore’s Straits Times Index is similarly consolidating above former resistance at 3040. Rising 63-day Twiggs Momentum — above zero — indicates the primary up-trend is intact. Calculated target is 3300* but the trend channel suggests resistance at 3200.

Singapore Straits Times Index

* Target calculation: 3000 + ( 3000 – 2700 ) = 3300

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

August 13, 2012

Slower Growth in Asia Brings Down Stocks – NYTimes.com

By THE ASSOCIATED PRESS

Published: August 13, 2012

Stocks fell Monday as evidence piled up that the global economic slowdown was hurting Asia.

Japan’s economy grew in the second quarter at a 1.4 percent annual rate, slower than many analysts had expected. Last week, China released dismal figures on retail sales and exports in July. Traders were disappointed that Beijing failed to introduce stimulus measures over the weekend……

via Slower Growth in Asia Brings Down Stocks – NYTimes.com.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.