The Securities and Exchange Commission is laying down the law with dark pools--or at least starting to. The regulator put out a proposal for comment recently that makes some dark pools look more like exchanges and helps the retail investor.

In this proposal, the SEC has said actionable "indications of interest" (IOI)--or messages between dark pools showing what's in their venues--will be considered quotes unless they are trading blocks of stock worth more than $200,000. Those large orders must only be sent to "those who are reasonably believed to represent current contra-side trading interest of at least $200,000", the proposal says. So if you thought you, as a big fish, could go around hunting for smaller fish without quoting to the market--think again.

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Eleven of the 29 dark pools offer glimpses as "indications of interest," according to the SEC's research. To help meet the "reasonable" criteria regarding size, the SEC proposes a size-discovery IOI that would be allowed and only interact against another large order.

Preserving block trading through these large indications helps institutional investors working for mutual funds and 401(k)s trade without moving the market against themselves, says Al Berkeley, chairman of Pipeline Trading Systems. These investors need to be wary of not only trading commissions and exchange fees, which go up as you break a large order into smaller pieces, but also market impact and opportunity costs.

Market impact costs have to do with how much your trade will move the market against you, and opportunity costs relate to what other trades you could have made if there wasn't a delay in your trade. Sometimes, traders with large blocks will wait for another large block to trade against because they would prefer to trade the whole thing at once. Other times, it's better to break up a block and get it done faster.

Though preserving large block trading helps retail investors, some of the logistics may need tweaking, says Tony Barchetto, head of sales and strategy at Liquidnet. The $200,000 threshold would be better if it were share based instead of monetarily based for small-cap stock investors. Also, the idea of this reasonable expectation that you're trading against another block warrants clarification, Barchetto says.

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The SEC's proposal also wants to increase post-trade transparency with venues being designated on the consolidated tape. Currently, dark venues don't have their venue's name associated with their trades.

Tim Mahoney, chief executive officer of BIDS Trading (which has a partnership with NYSE Euronext ( NYX - news - people )), says there could be confusion associated with this post-trade transparency because the proposal recommends that when a trade over $200,000 is done, a venue doesn't have to report where it was done. Since most venues report their volumes monthly, there would be a discrepancy between what could be totaled up from the consolidated tape and what each venue reports.

Mahoney also encourages dark regulation across the board, including not only dark pools but also electronic communications networks and exchanges. Since the exchanges have hidden orders, he hopes future regulations will address those venues as well as fair access to dark pools.

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13 November, 2009 - 09:38 Mobile money set to take off in Europe - Frost & Sullivan The Western European mobile money market is finally set to take off and will be worth up to EUR5 billion by 2013, according to research from Frost & Sullivan.

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Frost & Sullivan says that both wireless operators and banks are turning to mobile transactions in a bid to foster loyalty and drive revenues and that customers are becoming more receptive.

So far the technology has gained most traction in the developing world as a way to provide the unbanked with financial services.

In the developed world, providers are still attempting to get users comfortable by concentrating on services such as balance checks rather than transactions.

Frost & Sullivan says SMS-based services will drive growth in the short term but that once issues surrounding hardware costs and mass market availability are overcome, NFC-based contactless payments could prove the "pot of gold at the end of the rainbow".

Sharifah Amirah, principal analyst, Frost & Sullivan, says: "Growth will be driven by high frequency and low-value transactions supported by widespread, cashless transaction systems that are cost-effective and secure."

Amirah warns that if m-payments are to take off, concerns about security, the lack of regulation on mobile transactions, quality of service, high costs and limited collaboration between different participants still need to be addressed.

However, these hurdles are being tackled and several trials and small-scale deployments are being carried out, particularity in Eastern European markets and collaboration between banks and wireless operators is improving.

Says Amirah: "Once there is trust, security and greater interoperability, only then will there be growth in proximity transactions and m-commerce."

TORONTO STOCK EXCHANGE(theTSX) is Canada's largest stock exchange, North America's second largest stock exchange, and the sixth largest in the world. The TSX incorporates a broad range of businesses from Canada, the United States, and other countries are listed on the exchange.

Methinks gold is rising because investors are anticipating a big second stimulus to counter the rising unemployment rate.

I’m a fan of gold as insurance, especially for high net worth individuals who want some of their wealth “out of the system.” It protects against violent deflationary or inflationary episodes, both of which can wipe out the value of paper wealth very quickly. That said, the premiums to buy that insurance are getting pretty expensive…

Personally, I don’t see how we escape this crisis without a dramatic decline in paper wealth. Credit can’t expand forever, much as the Fed and Treasury would like for that to happen. Eventually the cycle goes into reverse because the government no longer has the balance sheet capacity to absorb more of the private sector’s liabilities. When that happens, asset values crater. The economy is so over-levered in my estimation, its equity value is probably negative. There’s a reason the Dow declined 90% a few years into the Depression. (Stocks have some option value, so they aren’t going to zero.)

The government is aware of how violent deflation can be…ergo, the stupendous show of monetary and fiscal support over the past year. But seems to me all we’re doing is re-inflating the bubble, using the public balance sheet for financing instead of private balance sheets.

Some would argue that so long as there is an “output gap” this won’t be inflationary. I disagree. I think runaway stimulus means the U.S. will eventually face a “sudden stop” situation á la Argentina or Ireland when credit markets lose confidence in U.S. paper. They’ll see the only way they will be paid back is via direct monetization. When that happens, the bid for dollar-denominated assets could disappear more quickly than folks might be willing to admit.

But these dynamics could literally take years to play out. We still print the currency in which our debt is payable. Some consider this a huge advantage. To me, we just have more rope to hang ourselves with.

And I’m not saying this is going to happen. It’s entirely possible we get our act together and let the economy deflate gradually, using stimulus to support a gradual de-levering of the economy. But politically that may not be possible, and so the correction may be forced on us. To hedge that risk, it’s not a bad idea to diversify out of paper wealth into tangible wealth.

BTW, I don’t think you make money on gold in the long run. I think, at best, you protect the purchasing power of the dollars you already have.

From Marketwatch:

Gold futures rose to a new record high of $1,100 an ounce Friday after data showed the U.S. unemployment rate topped 10% in October, raising the metal’s appeal as a safe asset. Gold for November delivery gained 1% to $1,100 an ounce on the Comex division of the New York Mercantile Exchange, the highest level for a front-month contract. The more actively traded December contract rose to $1,101.90 an ounce.

China's automobile market continued its robust growth in October, with passenger vehicle sales clocking a year-on-year growth of 79.6 percent, and provided enough indications that the country is well on its way to occupy the top perch in the global automobile market.

Sales of cars, sports-utility vehicles, minivans and multi-purpose vehicles touched 923,154 units last month, said Rao Da, secretary-general of China Passenger Car Association on Friday in Shanghai.

During the first 10 months, passenger vehicle sales surged nearly 52.4 percent over the same period last year to 8.08 million units.

"The government's favorable tax policy and the eight-day National Day holidays spurred sales in October. The robust trend was also aided as vehicle manufacturers produced more popular models during the period and reduced the delivery time," said Rao.

"We are optimistic that the November figures would surpass that of October as sales normally peak toward the end of the year," he said.

China's automobile industry has been growing robustly since the end of last year and is now the most dynamic and promising market in the world.

"More importantly, by the end of November, total vehicles sales in China will surpass the 12-million-unit target, set by the government under its automobile industry restructuring plan of last year, some 25 months in advance," said Rao.

"We expect full-year automobile sales to touch 13.5 million with a year-on-year growth rate of 44 percent. That in turn, would make China the world's largest automobile market for the whole year."

Rao said if the government can continue its stimulus package for the automobile industry, the growth rate for the 2010 could reach 25 percent.

On Thursday, Zhu Hongren, spokesman of the Ministry of Industry and Information Technology, said the government is considering extending the favorable tax policies and the subsidy for automobile purchases in rural regions to next year also. The policies were scheduled to end this year.

Patsystems Announces Connectivity to Taiwan Futures Exchange

Singapore - 3 November 2009

Patsystems is pleased to announce that it has further extended its global reach by providing connectivity to the Taiwan Futures Exchange, TAIFEX.

Customers of Patsystems will be able to utilise the new low-latency TAIFEX gateway for direct access to TAIFEX products such as the MSCI Taiwan Index & TAIEX Futures, Spreads and Options. These products will be available on Patsystems’ industry-leading trading platforms, J-Trader and Pro-Mark. Customers who utilise Patsystems’ proprietary and FIX API will also have direct access to the TAIFEX market.

Barry White, Regional Director of Asia Pacific, Patsystems, said:
“With the Taiwan Futures Exchange (TAIFEX) being one of fastest growing markets in the world, customers of Patsystems want direct, low-latency connectivity to this market. As we strive to become the leading derivatives technology provider in Asia Pacific, offering connectivity to TAIFEX will further strengthen our exchange footprint in the region.”

At the conclusion of a very busy period of negotiations with a large number of jurisdictions, Gibraltar's government yesterday signed a further three Tax Information Exchange Agreements ('TIEA') with the Faroe Islands, Greenland and Finland.  This brings the total number of TIEAs signed by the Gibraltar government to thirteen, one more than the magic number twelve, as a result of which, Gibraltar has now been moved on to the so-called 'White List' of jurisdictions that have substantially implemented the internationally agreed standard (see below progress report updated 20 October 2009).

The process of signing these agreements auspiciously began on 31 March 2009 with the signing of a TIEA with the United States of America on the eve of the G20 summit, during which summit the role of offshore jurisdictions in the practical quasi-collapse of the global financial system was put under the microscope.  At the signing ceremony, the Chief Minister Mr Peter Caruana sat along the table from the US Treasury Secretary, Mr Timothy Geithner and entered into the process of moving Gibraltar from the 'grey list' firmly on to the white list.  The international pressure for the achievement of a level playing field has been growing inexorably as a result of the world's many, varied and potentially catastrophic financial woes.  This level playing field, although not yet a reality, is now a distant form on the horizon which the international economic community will now focus on as it ramps up efforts to ensure that the TIEAs signed, not just by Gibraltar but by all other participating jurisdictions, are actually enforced through a monitoring process.

The significance of this achievement cannot be overstated.  For Gibraltar this development is a crucial element of its reinvention as a specialist finance centre in Europe, capable of offering world-standard solutions in a dynamic, responsive, fully-compliant yet sensible environment of regulation which meets with all the requirements, not just of the EU, but now also those of the OECD. 

With the implementation of a 10% flat rate of corporate tax already in progress, the development of a funds industry set, potentially, to act as the European solution to the challenges of the proposed Alternative Investment Fund Directive, the success of Gibraltar's Finance Centre industry is assured. Throw in the attractive personal tax regimes and the benefits of its reputation, location, climate and lifestyle, Gibraltar's stock is surely on the up.

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