For traders and portfolio managers who are navigating the European market structure landscape or want a refresher, big xyt is introducing a series of briefings to help you get to grips with the market mechanisms, and to help users of our analytics tools.
Following the theme of Closing Auctions and new Alternative Closing Mechanisms, we can highlight a noteworthy entry to the Closing Auction records books last Friday. In the chart today we see the 5 largest single stock closing auctions in recent (4 years) history. Notably, Linde AG has featured twice (holding the previous record of @4.3bn traded). Unilever plc/NV was the cause of the stir as it collapsed its NV holdings into the plc to consolidate its HQ in the UK whilst maintaining a quoted presence in Amsterdam….all in the interest of simplification, naturally.
Last month we touched on the growing number of Alternative Closing Mechanisms available to the equity trading community as we added the new Turquoise Plato Trading at Last to our Enterprise menu. Within a few days we saw that Deutsche Bourse were introducing Xetra Trade-at-Close, and last week we added this to the menu. With the MSCI rebalance yesterday, all eyes will have been on the closing prints..….but which Close? To sign up for a free trial of the
Picture the scene. Lap 20, Hamilton, as usual, has a 15 second lead (almost enough time for a free pit stop), and a little more unexpectedly, Bottas is running a strong second, 10 seconds ahead of the third place car. Then, shock, horror, for the first time in five years, both Mercedes have to return to the pits with a mechanical issue on the same lap. For the rest of the field, the race is on again. The rare opportunity for a podium presented on a plate. But, hold on, what is happening? One by one they all return to the pits and wait patiently until Lewis and Valtteri have their proverbial pipes cleared and are ready to rejoin. The clock counts down and the race resumes as if a virtual safety car was being controlled and temporarily parked by the pit crew of the lead team.
Our very own Mark Montgomery took part in Harrington Starr‘s second installment of The Fintech Focus TV Debate Series, alongside Steve Grob of Vision57, Mike Powell of Rapid Addition Limited, Jon Butler of Velox, and Reena Raichura of Glue42, to discuss changes in the FinTech space. “People are concerned with transference of data – at big xyt you don’t need to transfer your data to us; we can independently benchmark your trades by you interrogating the data through our API for the results that you are looking for. If you can independently source the information, and you can create your own reports, we don’t need to tell you what benchmarks to use, or what analysis to do. That’s up to you!”
If you are benchmarking against the Official Close, how are you ensuring you have an independent view of which stocks, how much, and if anything is trading at the closing price on another venue? Demand for the official close as a benchmark has led to the introduction of alternative closing mechanisms by MTFs to challenge the predominant position of Exchanges. We began examining this area in more detail last year, and as new players have come to the table, we have been enhancing the scope of our radar.
A sudden recovery in trading volumes in the energy sector is just what we would have expected from the news of the vaccine last week, and it’s in line with the broader market. The news may only be a light on the horizon, but a return to normal levels of trading activity will show that investors are returning to the stage. The bubble chart shows the relative difference between each share’s average daily volume per month versus the average daily volume for the whole period, beginning in October 2019. The size of the bubble shows the average daily volume in euros for each month. For example, a normal range for Royal Dutch Shell Plc is around 800M€ to 1050M€ per day.
This year, market sentiment has somewhat overwhelmed long-term business strategy and sound financial management, especially in the energy sector. We looked at six energy majors where prices have fallen 39% – 65% from pre-crisis levels. While grappling with the collapse in oil prices, consumer demand and addressing the climate emergency, companies have also had to find the time to reassure their investors. This year, market sentiment has somewhat overwhelmed long-term business strategy and sound financial management, especially in the energy sector. We looked at six energy majors where prices have fallen 39% – 65% from pre-crisis levels. While grappling with the collapse in oil prices, consumer demand and addressing the climate emergency, companies have also had to find the time to reassure their investors.
Market data can provide valuable context to the narrative by drawing direct, quantifiable sector and index parallels. In this example, daily trading volumes have dropped by an average of 57% since Q1, and in a tightly banded range, it shows how the whole sector has been uniformly impacted. Following the heavy rotation out of equities during the great Q1 sell-off, Q3 volumes reached unprecedentedly low levels in these big names (Equinor, Repsol, Eni, BP, Total and Royal Dutch Shell), as seen in most sectors. Reversal of this trend may be a clear signal that recovery is coming.
The markets responded with the usual enthusiasm for major news yesterday with the announcement of Jenny Chen joining our team to extend our reach in the US market. In other news, we saw a likely result in the US presidential election and word of a vaccine. As with Q1, the stories precipitated dramatic increases in traded volumes, price volatility and sector rotation. But did you allow for the same changes in market conditions when trading?
