CFTC Finds One Area for Improvement
A rule enforcement review of the New York Mercantile Exchange (Nymex) and the Commodity Exchange (Comex) by the CFTC’s Division of Market Oversight has yielded a recommendation that both exchanges institute a better way to monitor position limit exemptions.
Market participants can exceed position limits as long as they apply for exemptions.
The two venues should “consider implementing a formal review process by which they can verify that a market participant who has a position larger than a position limit is, in fact, making use of an exemption, consistent with the strategy described in their exemption application,” according to the CFTC.
Aside from monitoring position limit exemptions, the regulator overall found that Nymex and Comex officials have “adequate market surveillance programs,” officials say.
The Division review, which covered a one-year target period, “evaluated the exchanges’ market surveillance programs and their compliance with elements of Designated Contract Market Core Principles 2 (Compliance with Rules), 4 (Prevention of Market Disruption), and 5 (Position Limitations or Accountability),” CFTC officials say. “The review did not evaluate the exchanges’ procedures for monitoring Exchange for Related Position transactions, which procedures are currently under evaluation by the Division in a separate rule enforcement review.”
The Division “found that Nymex and Comex maintain sufficient market surveillance staff for the program areas under review,” officials say.” It also found that the exchanges’ surveillance tools were adequate for detecting rule violations. The review also found that the exchanges’ investigative work in the cases reviewed was thorough and complete, and that matters were closed in a timely manner. The exchanges also have adequate rules to obtain information from market participants.” The full report is available on the CFTC’s website.
Nymex and Comex are wholly owned subsidiaries of CME Group, Inc.
DongXing Securities Picks Horizon for Option Trading
Chinese broker, DongXing Securities (DongXing), has chosen Horizon Software for its equity trading, market making and algorithmic trading, according to Horizon Software officials. Horizon is a technology provider for electronic trading and investment management.
The deal is a major extension of Horizon’s use by DongXing Investment, a subsidiary of DongXing Securities, officials say.
The firm’s “derivatives and prop trading teams trade a broad wide range of products, including securities, futures, options and other financial instruments,” says Tang Jianbiao, head of derivatives trading at DongXing, in a statement.
“We looked at a number of platforms and Horizon was a good fit, not least because it is able to support the asset classes in which we’re interested and the system can be easily extended,” Jianbiao adds. “The system’s flexibility allows us to quickly create multiple strategies.”
In China, it’s common for proprietary trading to be “mostly handled manually,” says Dr. Dengli Wang, head of proprietary trading at DongXing, says in a statement. “However, with the increasing popularity of futures and SSE 50 ETF Options, and the forthcoming launch of new derivative products on the Shenzhen Stock Exchange and CFFEX, proprietary trading firms in China, especially quantitative trading, are concerned about how to implement complex trading in a limited time frame.”
The firm’s quant team needs “to control their risk exposure, and Horizon will help us to significantly reduce the time between calculating risk exposure to sending an order,” Wang says.
GreenKey to Offer Mobile Turret App for Traders and Brokers
GreenKey, a vendor of a voice workspace platform for global financial market participants, is launching next month a mobile application for Apple iOS and Google Android devices, officials say.
“The new app will offer full integration with GreenKey’s patented software and Voice over Internet Protocol (VoIP) network along with existing turrets (lines and hardware),” according to GreenKey. The app offers turret functions, “including intercom connections with push-to-talk functionality. In addition the app will include the ability to place outbound or accept incoming calls with full recording capability and transcription.”
The app, targeting brokers and traders will let them “leverage our collaboration tools … while remaining compliant with full recording and transcription capability,” says GreenKey Chief Product Officer Anthony Tassone in a statement.
The app will integrate with existing legacy hard turrets through the use of the GreenKey Voice Gateway, officials say. This gateway allows users to get ‘On-Net’ with those contacts still using legacy hardware and lines. In addition, the new app “uses Cordova, a popular framework used in iPhones, and takes up a tiny amount of space on the phone. Users can download the app on iTunes and Google Play.”