Burgundy.se

Handelsbanken have recently launched the new data feed Nordic Light for their retail clients. This data feed enables their clients to get a comprehensive view of the fragmented market. Retail clients can now get the same information as the professionals – this is excellent!!

So, what does this new data feed mean?
Basically, they display the best price of a share taken in from different markets! Also, they aggregate the traded volume from all markets in each share! Impletmenting other feeds as well, such about loans or credicards can also give benefit to the consumers.

We argue that Nordic banks and other financial actors and fintech services such as Handelsbanken.se, Bank.se  and their peers, are currently in the lead to support their retail users with correct data. We have not seen such solutions to retail users before among large European retail banks. Also we have noted that the Swedish business paper Dagens Industri supports their readers with consolidated data. This is awesome!

Equity trading in the Nordics has a very different fragmentation profile compared to the rest of Europe. In the Nordics, certain shares can be traded up to 100% on new venues. Looking at the traditional websites, media etc the reader will usually not see trades done outside the primary exchange!

Three years after MiFID the majority of retail clients using free available media still cannot see correct data. There are solutions to fix this! The Nordic Light data feed is a new standardization which solves these problems.

Burgundy has been busy setting up the first Nordic multiple CCP interoperable clearing service, culminating with the successful launch of our third CCP provider last week. We have also signed new trading participants, mainly from the London community, confirming the trust that we have earned from our clients during three years of operation. Looking at the stock market, the last couple of months have been characterized by low volumes and macro-related movements. My personal feeling is that there are floods of cash ready to dive into the pool, once the political situation in Europe stabilizes. We have learnt that when the markets are expected to trade sideways, the unexpected often happens. So, my tip for those of you who are thinking more about the beach rather than the VIX-level is to stay calm and enjoy the sun, but keep an ear close to the market or you may miss the next big move.

Wishing you a nice winter break from your crew here at Burgundy!

Since the month of April Burgundy have continued to quote the tightest spreads (at touch) on the OMXS-30 according to market quality research firm LiquidMetrix. It’s important to keep an eye on this kind of data analysis regularly so one can follow its best execution policy correct.

Despite a bad month for equities, we are pleased to announce that as from 28th of June 2012, Burgundy clients will benefit from having a third CCP online to trade Nordic equities. We are the first Nordic exchange to offer full interoperability with the major providers; EMCF, X-Clear and EuroCCP (28th June 2012).

Competition in all service industries are good for you as customer – offering choice and differentiation. Now, Burgundy can offer this choice for clients who wish to trade more efficiently.

After completing a network improvement last weekend we have reduced the latency on the fastest transactions here at Burgundy. We have seen improvements up to 35% faster and the 100 microseconds barrier has now been broken.

We are very pleased with the results of the upgrade and we believe that our low latency in combination with the Burgundy trading system will provide us with a competitive offer to our trading participants.

While markets have been chaotic lately, the product segment ETF’s, in particular the BULL & BEAR instruments have exploded on Burgundy. As Sweden has a very active retail community, I believe there are two reasons why these products are very popular;

– Low cost and accessibility; all banks/online brokers now offer cheap rates to trade these super-liquid products. It beats struggling with complex derivative documentation, margining etc. These products are as easy to understand and are traded like ordinary stocks.

– Dramatic increase in correlation between individual stocks. As the large-caps move more and more in synch with each other, clients who need portfolio protection or just clean exposure can get in or out with a click. Many clients seem to shun away from stock picking in these turbulent times and go for market/beta exposure instead.

Burgundy is there to provide for the needs of the Nordic investor community and we are proud to have reached a sustainable level of market share in these products!

Here at Burgundy we have made a survey of the 2010 annual reports of the large cap companies in the Nordics. This report showed out of the 136 companies, 60 percent includes information about the share turnover in the annual reports. Of these, 66 percent only includes the turnover on the listing exchange. Thus, the companies are sending out wrong signals about the liquidity in the share, i.e. how fast investors can buy and sell shares. This can lead to that investors might take the wrong decisions.

The survey showed that in Sweden, 58 percent of the companies now include information about trading on alternative venues, which is a big improvement from last year’s survey. However, in Norway, not a single company includes trading outside the listing exchange.

Having returned from an unusually cold summer holiday in the south of France, I noticed a couple of things back at work;

– For the first time since MIFID 2007, local media have since the beginning of July been reporting regularly intra-day turnover in the market comments including the total lit trading in Swedish stocks. This means that Burgundy and other marketplaces trading Swedish stocks are counted together with the Nasdaq OMX figures. At Burgundy we have been lobbying towards the financial media segment trying to get them to report the full picture and this is a major breakthrough. Congratulations to the brave reporters at Nyhetsbyrån Direkt from the crew at Burgundy!

– The retail flow at Burgundy seems to increase and on Friday 5th was another record in terms of number of trades at Burgundy. Also the platform handled more than 7 million orders without flaws helping stressed out clients to execute trades in a very volatile environment where reliability and speed of execution is the core

Burgundy’s volume has kept up with the level from March but Burgundy’s market share in Swedish listed instruments decreased from 4.6 to 2.6 – why?
Olof: Burgundy set a new turnover record in March and reached above EUR 110 million and we are happy to see that this level stayed in April. At the same time the total value of the market increased by almost 50 percent in April. These volumes have gone mainly to Markit Boat and to LSE in systematic internalizing and OTC. 

How much of the trading went to new venues?
Olof: It was a new all-time-high of 52 percent for trading in Swedish equities outside the traditional venues – please see more in April’s statistic report regarding the market places’ market shares.

Many Burgundy watchers are asking about the activity on these reporting venues?
Olof: Although data on this is sketchy, we believe this is a seasonal activity in connection with the AGM and reporting season in April and May.  

What do you think that the increased volumes outside the exchange might lead to?
Olof: That is a big question but just in brief and in near term I guess that more people will react on this change and that we should soon be able to see consolidated figures in media and at news sites etc. Today the professional players are able to see this trading but private investors are not. The turnover figures in media represents only half of the turnover – one could ask if that is considered to be news?

What does it mean to Burgundy?
Olof: Now when MTF’s are increasing their trading volumes in general and we have around 10 percent in some of the largest instruments more securities firms are getting interested to trade here and you are also getting more attention from media etc. We will keep on working to spread our message to an even broader crowd and to get more firms to connect to Burgundy.

In April, Burgundy reached close to 10% of the primary market turnover in Swedish equities – as competition proliferates in the Nordic region, more and more banks and clients are discovering how easy it is to trade on alternative marketplaces such as Burgundy.

As for the Nordic market, April was also a new record month for the industry as a whole, where over 60% of the total volume in Nordic equities was traded outside the primary exchanges. Some critics say that this is bad for the market and that this distorts overall liquidity. Well, nothing could be more wrong, and if you compare the exchange industry with other service industries such as airlines and telecom operators – I believe that few customers would stand up and say that competition is bad. Because that is why we exist, fragmentation is not a disease – it’s all about competition in a protected industry under immediate pressure to shape up and provide more efficient services to our clients. When the cost of trading falls, friction is reduced and liquidity begets liquidity. If you are a customers looking only at the primary exchanges, maybe it’s time you took a closer look and ask your broker if he is connected to the total market or just a shrinking bit.