Australian equity markets get a whiff of competition at last? April 5, 2010
Posted by James Webster in : finance , add a commentI’ve not blogged much at all lately, and much less so about the issue of competition in Australian equity markets. However with the news that Financial Services Minister Chris Bowen has given ‘in principle’ support to Chi-X’s application for an Australian Markets License we might see some movement sooner rather than later. More from The Australian and Finextra. The AFR has a good article about this too… alas its behind a paywall.
This all first kicked off in 2007… then the GFC/credit crunch came along and adding a competition angle to markets that were in freefall was clearly off the agenda!
Now that it is ‘game on’ again, it will largely be how quickly ASIC can take on the market supervision role formerly played by the ASX that determines how soon Chi-X goes live. At least their technology is getting in place; they are adopting SMARTS‘ platform for market surveillance, a number of former colleagues of mine work there so that bit at least is in good hands!
There is also the issue of Chi-X and ASX coming to an agreement on the fee to be paid for access to ASX’s clearing & settlement network… possibly a separation of ASX Austraclear from the market side of ASX might be on the agenda in the future. Or possibly not; successive Australian governments (of both flavours) have failed to address the issue of Telstra’s conflicting roles as both wholesaler and retailer with serious break-up talk so addressing these sort of monopolistic issues is not a hot issue.
Scott Riley of the Clearing and Settlement blog also has some links on the matter.
Interestingly AXE ECN, the first proposed alternative to ASX, appears to have gone quiet.
The New Asset Class December 14, 2009
Posted by James Webster in : finance, virtualization, development , 1 comment so farI touched on this idea briefly before in Commodity Markets for the 21st Century and it looks like the idea is evolving further…
In Hedging Your Options for the Cloud Joe Weinman discusses how as cloud computing turns computing power into utility, its pricing and risk management strategies around volatility of prices will begin to reflect those of other commodity markets (electricity in particular).
As if in response to the previous article, Werner Vogels of Amazon announces ‘Spot Pricing’ for EC2; customers requiring EC2 compute time at some point in the future without hard deadlines can nominate a maximum price they are prepared to pay. When the spot price (defined in financial markets, particularly commodities and FX, as the price for immediate delivery of an asset or commodity) drops below this level the customer’s EC2 instances will spin up and start computing. When the spot price climbs above the customer’s specified level the EC2 instances will automatically shutdown. The latter will require the workloads to be resilient to abrupt termination but this should be fine for robust batch jobs.
So I wonder if futures/forwards/options markets may grow around this new commodity one day. Probably not at the moment as there is no mechanism for selling short. Also unlike deregulated and competitive electricity markets there is only one ‘generator’, Amazon. However the EC2 APIs are published and in fact the Eucalyptus project is building an open-source implementation of the EC2 APIs. Eucalyptus has already been integrated into Ubuntu and RightScale’s toolsest for virtualization. So it might seem that the barriers to entry for a potential Amazon competitor are quite low, however Amazon have already achieved significant economies of scale (which will increase further with their planned entry into the Asian market).
It would seem natural for Microsoft or Google to challenge Amazon directly by providing their own implementation of Amazon’s EC2 APIs, however their own cloud computing offerings require developers to code to more proprietary frameworks (although there are open-source efforts to implement the Google App Engine on EC2; AppScale being seemingly the most advanced) rather than EC2’s approach of just providing access to a virtual machine. Maybe they have already run the math and decided that competing directly with a low-cost provider like Amazon is like wrestling with a pig… you both get dirty and the pig likes it 
It would be great for competition and innovation if cloud computing was more transparently portable between providers, and the resulting fungibility would benefit consumers of cloud resources in being able to manage their operational expenditures.
Xignite November 12, 2009
Posted by James Webster in : finance, development , 3 commentsXignite, ‘on demand financial market data’ recently got some coverage from TechCrunch regarding their upcoming integration with StockTwits and iPhone portfolio management apps from Turing Studios.
Xignite have some great looking APIs and I understand that their business model is all about providing the data ‘on demand’, but it would be great if they could combine their use of open APIs with a basic market data streaming offering as well. They could take the ‘comet‘ approach, use a 3rd-party technology like Caplin Liberator or Lightstreamer, or perhaps the best forward thinking option, adopt HTML 5 Websockets. Since they would be delivering their stream via the Internet rather than leased line or private packet switched network there would be more latency compared to a professional solution such as Bloomberg or Reuters, so is there a market for streaming financial data at a lower SLA?
I would like to do some experimentation with these APIs, maybe amCharts’ WPF Stock Chart control will be an excellent way to visualise the data. Hopefully amCharts are working on a Silverlight version as well.