New tools to help national regulator better protect investors
The Investment Industry Regulatory Organization of Canada (IIROC) and Nasdaq (Nasdaq: NDAQ) today launched IIROC’s upgraded market surveillance system using Nasdaq’s SMARTS – a leading-edge technology that significantly enhances the way IIROC oversees Canada’s capital markets and protects investors from potential market abuses.
Given the industry transformation taking place, IIROC must be adaptable and flexible in supporting increasingly fast-paced, technology-driven demands for innovation by providing efficient and up-to-the-minute market oversight. As a result, in its Strategic Plan, IIROC committed to improving its existing surveillance system and, following a robust selection process, named Nasdaq as the vendor of choice. Today’s launch is the culmination of the two organizations’ work to build and test a world-class system.
“IIROC is positioned at the forefront of market surveillance in Canada, thanks to Nasdaq’s real-time, multi-asset, state-of-the-art SMARTS technology,” says Victoria Pinnington, IIROC’s Senior Vice-President, Market Regulation. “We are setting the stage for our future with a system designed to improve how we oversee securities trading on debt and equity markets, by opening the door to use artificial intelligence that is more analytical and predictive.”
The SMARTS technology allows IIROC to better detect and respond to potential market abuses, inspiring greater confidence among all market participants that Canada’s capital markets are operating fairly and with integrity, and that investors are protected. IIROC directly manages and maintains the system, which monitors up to one billion transactions daily in real-time and supports cross-asset surveillance and investigations. IIROC’s market surveillance team will be able to more quickly detect trading anomalies across multiple products and firms, and identify and respond to emerging trends in an efficient manner. For example, new visualization tools take multiple sources of data and distil them into a single snapshot, giving IIROC an immediate and clear picture of the activity so that they can quickly assess next steps.
“IIROC has rigorously pursued staying at the global forefront of regulatory market oversight and surveillance innovation,” said Lars Ottersgård, Executive Vice President and Head of Market Technology, Nasdaq. “In our long-term relationship, we have proudly collaborated with IIROC in helping them achieve their goals in maintaining a fair, transparent and safe capital market ecosystem for Canada, as well as its market participants and investors.”
Nasdaq provides surveillance technology to more than 50 marketplaces, 18 regulators and 170+ market participants, including several buy-side institutions, across 65 countries.
IIROC is entrusted with the responsibility of monitoring all equity and debt market activity in Canada, under Recognition Orders issued by the Canadian Securities Administrators (CSA) and by agreement with the marketplaces. IIROC ensures trading is carried out in accordance with Universal Market Integrity Rules (UMIR) and other IIROC rules. IIROC oversees trading on all of Canada’s five stock exchanges and eight equity alternative trading systems and all debt trading carried out by its members. IIROC refers potentially manipulative or abusive trading activity to its Enforcement team or, where the suspected activity is outside IIROC’s jurisdiction, IIROC collaborates with the CSA for further investigation. The CSA leverages IIROC’s expertise and data collection as a part of its investigations and prosecutions.
Last month, IIROC also announced it has received approval to require the inclusion of a client identifier on each order for a listed security sent to a marketplace and on each reportable trade in a debt security – allowing for more transparency and accountability in Canada’s capital markets. This requirement will be implemented over a six-to-24-month period. Client identifiers are already required in other global jurisdictions, including Europe, and have enhanced their risk management, surveillance and investigative capabilities.
Dollar extends decline as risk appetite favors equities
By Stephen Culp
NEW YORK (Reuters) – The dollar lost ground on Friday, extending Thursday’s decline as improved risk appetite attracted buyers to equities and away from the safe-haven greenback.
The U.S. dollar has been weighed down by a string of soft labor market data, even as President Joe Biden’s proposed $1.9 trillion spending package takes shape.
“What the foreign exchange market is looking at in the short term, is the dollar is going to be weak despite progress in the economy because this country has a huge deficit problem,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. “The dollar index could easily test the lows of last September.”
Also weighing on the dollar, the real yield gap between the United States and Germany is at its tightest since March, analysts said, despite the recent rise in U.S. Treasury yields.
Bitcoin continues to hover at record highs, and the world’s largest cryptocurrency was last up 2.6% at $52,931.46, nearing $1 trillion in market capitalization.
Its smaller rival, ethereum, was last down 1.0% at $1,920.13.
The digital currencies have gained about 82% and 1,400%, respectively, year to date, leading some analysts to warn of a speculative bubble.
“There may be a place for (cryptocurrencies) somewhere down the road, but the theories that cryptos will replace paper currency are far-fetched,” Cardillo added. “It’s total speculation at this point and people are going to pay the price.”
The Australian dollar, which is closely linked to commodity prices and the outlook for global growth, was last up 1.15% at $0.7858, touching its highest since March 2018.
The New Zealand dollar also gained, closing in on a more than two-year high, and the Canadian dollar advanced as well.
Sterling rose to an almost three-year high amid Britain’s aggressive vaccination programme. It had last gained 0.34% to $1.40.
The euro showed little reaction to a slowdown in factory activity indicated by purchasing manager index data, rising 0.29% to $1.2126.
The yen, gained ground against the dollar and was last at 105.495, creeping above its 200-day moving average for the first time in three days.
(Reporting by Stephen Culp, additonal reporting by Tommy Wilkes; editing by Emelia Sithole-Matarise)
Bitcoin hits $1 trillion market cap, soars to another record high
By Gertrude Chavez-Dreyfuss and Tom Wilson
NEW YORK/LONDON (Reuters) – Bitcoin touched a market capitalization of $1 trillion as it hit yet another record high on Friday, countering analyst warnings that it is an “economic side show” and a poor hedge against a fall in stock prices.
The world’s most popular cryptocurrency jumped to an all-time high above $54,000, setting it on course for a weekly jump of more than 11%. It has surged roughly 64% so far this month and was last up 5.5% at $54,405.
Bitcoin’s gains have been fueled by signs it is gaining acceptance among mainstream investors and companies, from Tesla and Mastercard to BNY Mellon.
All digital coins combined have a market cap of around $1.7 trillion.
“If you really believe there’s a store of value in bitcoin, then there’s still a lot of upside,” said John Wu, president of AVA Labs, an open-source platform for creating financial applications using blockchain technology.
“If you look at gold, it has a market cap $9 or $10 trillion. Even if bitcoin gets to half of gold’s market cap, that still growth of 4X, or $200,000. So I don’t know when it stops rising,” he added.
Still, many analysts and investors remain skeptical of the patchily regulated and highly volatile digital asset, which is little used for commerce.
Analysts at JP Morgan said bitcoin’s current prices were well above estimates of fair value. Mainstream adoption increases bitcoin’s correlation with cyclical assets, which rise and fall with economic changes, in turn reducing benefits of diversifying into crypto, the investment bank said in a memo.
“Crypto assets continue to rank as the poorest hedge for major drawdowns in equities, with questionable diversification benefits at prices so far above production costs, while correlations with cyclical assets are rising as crypto ownership is mainstreamed,” JP Morgan said.
Bitcoin is an “economic side show,” it added, calling innovation in financial technology and the growth of digital platforms into credit and payments “the real financial transformational story of the COVID-19 era.”
Other investors this week said bitcoin’s volatility presents a hurdle for it to become a widespread means of payment.
On Thursday, Tesla boss Elon Musk – whose tweets have fueled bitcoin’s rally – said owning the digital coin was only a little better than holding cash. He also defended Tesla’s recent purchase of $1.5 billion of bitcoin, which ignited mainstream interest in the digital currency.
Bitcoin proponents argue the cryptocurrency is “digital gold” that can hedge against the risk of inflation sparked by massive central bank and government stimulus packages designed to counter COVID-19.
Yet bitcoin would need to rise to $146,000 in the long-term for its market cap to equal the total private-sector investment in gold via exchange-traded funds or bars and coins, according to JP Morgan.
Rival cryptocurrency ether traded down 0.3%, at $1,934.67, still near a record of $1,951 reached earlier on Friday. It has been lifted by growing institutional interest, after its futures were launched on the Chicago Mercantile Exchange.
(Reporting by Gertrude Chavez-Dreyfuss in New York and Tom Wilson in London; Editing by Dan Grebler)
UK retail sales drop, NatWest loss dampen FTSE 100 mood
By Shivani Kumaresan and Amal S
(Reuters) – The FTSE 100 was muted on Friday as a bigger-than-expected drop in January retail sales underscored the business damage from a prolonged nationwide lockdown, while NatWest group fell after swinging to an annual loss.
The commodity-heavy FTSE 100 was flat as gains in miners Anglo American, Rio Tinto and BHP Group capped losses.
Oil producers BP and Royal Dutch Shell fell 1.2% and 0.5%, respectively as crude prices slid.
Data on Friday showed British retail sales tumbled much more than expected in January as non-essential shops went back into coronavirus lockdowns. Flash readings of business activity data, due at 0930 GMT, are likely to show the services sector struggling to return to growth in February.
“The 8.2% fall was considerably higher than we’d expected (around 4%), and provides clear evidence the hit to consumer spending is noticeably larger than it was during the November restrictions,” said James Smith, market economist at ING.
He added focus will now be on UK’s COVID-19 vaccination program and easing of restrictions, to drive economic recovery.
The FTSE 100 has recovered nearly 35% from its March 2020 lows but has been largely range-bound since the beginning of this year as a nationwide lockdown hurt business activity, undermining hopes of economic growth in the second half of the year.
The domestically-focused mid-cap FTSE 250 index rose 0.2%, with consumer and industrials stocks leading gains.
NatWest fell 0.6% after the financial services provider swung to a full-year loss for 2020 after COVID-19 lockdowns crunched household spending.
Segro Plc rose 1.7% after the real estate investment trust reported a near 11% jump in annual profit for 2020.
Banking group TBC Bank fell 2.3% after a slump in annual underlying profit due to lower interest rates and limited lending growth in the fourth quarter from the COVID-19 pandemic.
(Reporting by Shivani Kumaresan and Amal S in Bengaluru; Editing by Vinay Dwivedi and Krishna Chandra Eluri)
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