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Traders split on success of MiFID II

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Traders split on success of MiFID II
  • 70% of traders think MiFID II has made trading more transparent
  • But just one-in-four think dark liquidity will move to lit markets
  • 86% of traders see reporting as the biggest concern post MiFID II rollout

 Traders disagree over whether MiFID II has been successful, according to new research by SIX. A combined 70% of surveyed traders of the Swiss exchange believe that trading has become more transparent – a key goal of MiFID II.

Paradoxically, only 26% believe that dark liquidity will shift to lit markets, highlighting the failure of a key aspect of the regulation. Traders indicate that they are also divided as to where dark liquidity on capped stocks will shift instead of lit markets, with a relatively even spread between:

  • Block Trading / LIS dark pools: 31%
  • Systematic Internalisers: 23%
  • Periodic auctions: 20%

According to Tony Shaw, Director London Office, Securities & Exchanges, SIX, “This variance in responses highlights the reigning uncertainty among traders. Over time, market developments will provide more conclusive answers on the success of MiFID II.

Reporting preoccupies the vast majority of traders as 86% of the respondents cited transaction reporting (50%) and best execution reporting (36%) as causing the most concern under MiFID II.

Although MiFID II and regulation remain a concern,it is no longer the single biggest challenge facing traders, with the picture now far more mixed. Those citing regulation such as MiFID II as the biggest risk in 2018 fell to 46%, compared with 73% in 2017.

The research also revealed that an overwhelming 87% of traders believe that the increased levels of volatility we saw in Q1 2018 is a trend that will continue. Interestingly, three quarters of traders stated that ETFs have contributed to this rise in volatility.

Commenting on the findings of the survey, Shaw added: “Despite the optimism of some traders, there is no consensus on whether MiFID II can be deemed a success. Our research demonstrates a large difference of opinion among market participants.”

The survey also highlighted that traders are much more positive about growth prospects for their own industry, with nearly two-thirds (62%) expecting more growth within their companies in the future, compared to a mere 15% one year ago.

Methodology

SIX has conducted a trader survey between 12 and 30 April 2018, with 174 respondents from across Europe, of which 53% traded in shares, 19% in Fixed Income, 14% in Structured products and 13% in ETFs/ETPs or other products. Previous surveys conducted in 2017 have focused on block trading and passive investing.

SIX
SIX operates and develops infrastructure services in the areas of securities, payment transactions and financial information with the aim of raising efficiency, quality and innovative capacity across the entire value chain of the Swiss financial center. The company is owned by its users (127 banks). With a workforce of some 4,000 employees and a presence in 23 countries, it generated operating income in excess of CHF 1.9 billion and group net profit of CHF 207.2 million in 2017.
www.six-group.com

For further information or if you would like to speak to SIX please contact [email protected]

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FTSE Russell to include 11 stocks from China’s STAR Market in global benchmarks

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FTSE Russell to include 11 stocks from China's STAR Market in global benchmarks 1

SHANGHAI (Reuters) – Index provider FTSE Russell will add 11 stocks from China’s STAR Market to its global benchmarks, according to a post on its website from Friday.

The move marks the first time shares from Shanghai’s Nasdaq-style STAR Market for stocks in China have been included in a global index.

The 11 stocks include Raytron Technology Co Ltd, Zhejiang HangKe Technology Co Ltd, Montage Technology Co Ltd, Advanced Micro-Fabrication Equipment Inc China.

(Reporting by Josh Horwitz and Samuel Shen in Shanghai; Editing by William Mallard)

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UK insurers estimate to pay up to 2.5 billion pounds for coronavirus claims

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UK insurers estimate to pay up to 2.5 billion pounds for coronavirus claims 2

(Reuters) – The Association of British Insurers (ABI) said on Saturday insurers are likely to pay up to 2.5 billion pounds ($3.50 billion) for UK’s COVID-19 insurance claims incurred in 2020.

The latest estimates include 2 billion pounds for COVID-19 business interruption claims and 500 million pounds for COVID-19 related protection insurance claims, travel insurance claims and other general insurance products.

ABI’s Director General Huw Evans said in a release that the pandemic illustrated some uncomfortable gaps between what people expected to be covered for and what their policy was designed for.

“We need to learn lessons from this unprecedented event and redouble our efforts to improve consumers’ trust in insurance products,” he added.

The insurance trade body said 123,000 claims have been settled with payment so far and a further 9,000 have received partial payments as of mid-January 2021.

($1 = 0.7139 pounds)

 

(Reporting by Maria Ponnezhath in Bengaluru; Editing by Marguerita Choy)

 

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Oil extends losses as Texas prepares to ramp up output after freeze

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Oil extends losses as Texas prepares to ramp up output after freeze 3

By Devika Krishna Kumar

NEW YORK (Reuters) – Oil prices fell for a second day on Friday, retreating further from recent highs, as Texas energy companies began preparations to restart oil and gas fields shuttered by freezing weather and power outages.

Brent crude futures ended the session down $1.02, or 1.6%, at $62.91 a barrel while U.S. West Texas Intermediate (WTI) crude fell $1.28, or 2.1%, to settle at $59.24.

For the week, Brent gained about 0.5% while WTI fell about 0.7%.

This week, both benchmarks had climbed to the highest in more than a year.

“Price pullback thus far appears corrective and is slight within the context of this month’s major upside price acceleration,” said Jim Ritterbusch, president of Ritterbusch and Associates.

Unusually cold weather in Texas and the Plains states curtailed up to 4 million barrels per day (bpd) of crude production and 21 billion cubic feet of natural gas, analysts estimated.

U.S. energy firms this week cut the number of oil rigs operating for the first time since November, according to Baker Hughes data.

Texas refiners halted about a fifth of the nation’s oil processing amid power outages and severe cold.

Companies were expected to prepare for production restarts on Friday as electric power and water services slowly resume, sources said.

“While much of the selling relates to a gradual resumption of power in the Gulf coast region ahead of a significant temperature warmup, the magnitude of this week’s loss of supply may require further discounting given much uncertainty regarding the extent and possible duration of lost output,” Ritterbusch said.

Oil prices fell despite a surprise drop in U.S. crude stockpiles last week, before the big freeze hit. Inventories fell 7.3 million barrels to 461.8 million barrels, their lowest since March, the Energy Information Administration reported on Thursday. [EIA/S]

“Vaccines and the impressive rollouts we’ve seen have delivered strong gains, as have the efforts of OPEC+ – Saudi Arabia, in particular – and the big freeze in Texas, which gave oil prices one final kick this week,” Craig Erlam, senior market analyst at OANDA, said.

“With so many bullish factors now priced in, it seems we’re seeing some of these positions being unwound.”

The United States on Thursday said it was ready to talk to Iran about returning to a 2015 agreement that aimed to prevent Tehran from acquiring nuclear weapons. Still, analysts did not expect near-term reversal of sanctions on Iran that were imposed by the previous U.S. administration.

“This breakthrough increases the probability that we may see Iran returning to the oil market soon, although there is much to be discussed and a new deal will not be a carbon-copy of the 2015 nuclear deal,” said StoneX analyst Kevin Solomon.

(Additional reporting by Ahmad Ghaddar in London and Roslan Khasawneh in Singapore and Sonali Paul in Melbourne; Editing by Marguerita Choy, David Gregorio and Nick Macfie)

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