Fund managers try to provide their institutional clients with best execution, but are falling short of the mark in one key area- back office settlement fees. Thanks to a technology company and broker-dealer called ESP Technologies, they don’t have to.
In the last month or two, we’ve seen stories about clouds being used as a way to consolidate audit trails; to more efficiently store and access market data; and as a way to power trading algorithms, execute automated strategies and store the results. Even the Securities and Exchange Commission is embracing the cloud.
Pretty soon the U.S government will have the equivalent of a chief data officer. This will be the person who occupies the post of director of the Office of Financial Research.
The OFR is new agency that will be for the collecting of data from financial corporations what the Internal Revenue Service is for taxes. This newly created department will be responsible for collecting whatever data is needed from financial institutions so that the industry as…
Why fully electronic exchanges can and should regulate themselves.
When you can’t find the information you actually want, virtual data may be the best answer.
It'd be very interesting to tap into Jerome Kerviel's head right now. He's the former trader who breached his limits on bets and cost Societe Generale billions. Now, his former employer has launched an enterprisewide system for assessing risk and complying with rules.
At my firm, we build safeguards into our trading processes and have human oversight of them, important steps for protecting client assets against a Flash Crash.
Wall Street is not leading the United States out of its unemployment woes.
Suppose a broker-dealer or bank could come up with a way for retail investors – Mr. and Mrs. U.S. Citizen -- to cast their votes in corporate agendas. Who will pay for it?
It's probably little comfort to those still trying to find jobs elsewhere that jobs appear to be returning to Wall Street first.
From Facebook to Twitter, companies today confront a staggering amount of content and opinions about their brands. As a result, it’s critical for companies to have the necessary tools in place to track what’s being said about them online.
You’re one of the thousands of hedge fund managers who has accumulated enough assets to be registered with the Securities and Exchange Commission based on the new financial reform legislation. Now what?
Innovation is great. But look where it got Wall Street. Here's why achieving "tried and true" technology takes priority.
The Dodd-Frank Wall Street Reform and Consumer Protection Act provides a clear blueprint for how financial markets will operate.
Not exactly.
You're a small startup hedge fund. You think you've avoided registration. Maybe with the SEC, that will be true. But not states, necessarily.
No ‘latency’ in making a trade would be impressive. Paying for the trade without any latency, much more so.
The Dodd-Frank bill gives birth to an oversight body that will collect the information it believes is needed to guard against risk in the nation’s financial system. The impacts on data systems are huge.
European regulators are putting the practices of financial firms to the test by ensuring they know how to classify and update their counterparty records.
With President Obama about to sign a financial reform bill, finally passed by Congress, the Securities and Exchange Commission, the securities industry bar, and in-house counsel must prepare for a significant expansion of whistle-blowing activity.
No one’s said anything yet about it, but a fiduciary standard will mean not just keeping an investor’s interests ahead of one’s own. It will also mean making sure that customer knows what that is costing.
You’re looking at the first day in the life of Securities Technology Monitor.
The sad history of business is that polluting pays. At least now, there are markets that will let you pollute. But others profit.
National reform initiatives are not enough to prevent future crises. We must take a broader, global view.
Chi-X Global would have you believe that it derives its name from old world and new world symbols for trading. But, given the breadth of its world view, you almost get the feeling there is a larger explanation here.
A long-awaited ruling by the Supreme Court on June 28 didn’t do away with patenting business methods. But it did little to explain just what litmus test can be used.
High-frequency trading is here to stay. But the electronic stage is now set for a resurgence of block trades. And more control moving back to the institutional trader.
There’s a lot of angst about how ‘market structure’ will change over the next year. But some fixes don’t have to be complicated.
Fund managers will have to make some massive changes in handling trades of over-the-counter derivatives even though they are not specifically mentioned in the new legislation.
The financial crisis proved the industry's data systems -- its plumbing -- is broken. Call in the CEOs.
When was the last time anyone figured out how to prevent "unintended consequences." Even Alice worried about rat-holes. Let's start dealing with consequences that can be foreseen and accept that not all can be.
Who's in best position to help governments the world over to achieve real-time surveillance of markets? Think Bloomberg. Not just the company. The man.
What you can learn from the "rogue trader" incident at Societe General, while attending the Securities Industry and Financial Market Association’s technology show this week.
The SEC says it will spend $4 billion upfront and $2 million a year to create a consolidated audit trail. Is that necessary? The cost, that is.
What do traders want? It’s simple really. They want ways to show on screen all the applications that matter to them. At one time, if possible.
UCITS IV its just around the corner. Yes, this sounds like the fourth version of that scary movie, the Undertakings for Collective Investments in Transferable Securities.
Why raw text does not mean raw text. And what that says about the quantitative modeling mindset.
Whether the Securities and Exchange Commission’s proposal for a Large Trader Reporting System is truly justified is open to debate.
The Depository Trust & Clearing Corp. has set its sights on playing a role in the often neglected aspect of the OTC market – managing collateral. And it's eager to listen to your ideas.
Dear SEC: Combine the large trader proposal and the uniform audit trail proposal into one single set of rules.
Due to recent extreme stock market volatility, the spotlight is back on stock regulations. The primary points of concern involve the so-called “circuit breakers” and market participatory mandates.
R.J. O’Brien & Associates (RJO), the largest independent futures brokerage firm in the U.S. is investing in new infrastructure and office space in its Chicago headquarters to create a premier “trading floor” for its institutional division.
Buried in Wednesday’s Financial Crisis Inquiry Commission hearing was a telling vignette of just how off-kilter rating systems got at Moody’s Investors Service, one of the Big Three credit rating agencies that together control 90 percent of the market.
Mark Froeba, a lawyer and former Moody’s senior vice president for the rating of derivatives in the United States, was on the final panel of the three-panel hearing focusing on the credibility of credit ratings at Moody’s.…
North American fund managers find the most settlement failures occur in Eastern Europe. There, 23.4 percent of trades failed to settle on time. This is just one of the tidbits of information which investment managers will learn to help them avoid future settlement failures when they subscribe to a new service offered by Cutter Associates.
The market meltdown that began three years ago certainly caught most investors and market professionals by surprise. The scale of the losses incurred and subsequent corporate collapses are truly shocking. What on earth went so wrong?
Nine years after 9/11, Howard Lutnick has rebuilt his firm as BGC Partners, a voice and electronic brokerage with offices in 20 cities around the globe, operations in multiple asset classes and $1.2 billion in annual revenue. And he loves chaos.
The integration of order management (OMS) and execution management system (EMS) functionality is now the driving force in streamlining the buy-side’s desktop, according to a new study from the TABB Group.
Three words keep cropping up in the financial reform package passed by the Senate on May 20: Chief Compliance Officer.
Data management executives handle one of the most critical aspects of the financial services industry – the information used to trade and process millions if not billions of securities transactions each year. But just how qualified are they?
The SEC proposed a five-minute pause when certain stocks fall 10 percent in five minutes. But a lot of trading takes place in a single second, these days.
To help prevent net asset values in money market funds from "breaking the buck" again, fund managers are going to have to put their best brains on the technology needed to disclose data better.
Since the appointment of a new CEO last November and securing funding for growth from Goldman, Sachs & Co., Vernon & Park Capital and other investors, trading technology provider UNX has embarked on a mission to expand its technology platform for traders.
Registration of hedge fund advisers is a virtual certainty under current financial reform proposals. So key questions for fund advisers are: How much will it cost me? And what will be the impact on systems, operations and technology?
Financial firms wanting to develop a system in-house to price their book of business in over-the-counter derivatives had better think twice.
The most stunning part of the “Bungee Jump” of May 6 is that the best forensic minds and tools at the Securities and Exchange Commission and on Wall Street could not – after a week – figure out what the precipitant was.
UBS has relocated its ATS and equities electronic trading infrastructure from beneath its Stamford trading floor to Savvis' Weehawken, N.J. data center.
Our industry has been in the headlines for quite some time, and the pressure on Congress to enact financial regulatory reform is extremely high.
Until now, advisers to private equity and venture capital funds thought they were home free when it comes to registering with the Securities and Exchange Commission.
When it comes to the reporting requirements of hedge funds, standardization could easily become costly, cumbersome and ill-advised, say data management experts.
Watch your semantics. When Larry Tabb says he's "for dark and for naked,'' listen first to the "perverse incentives" that regulation of, say, naked access might instigate. Then, kick back.
In the competitive trading communications space, turret providers are constantly seeking out ways to distinguish their desktop from the rest and offer traders a tool that puts everything a trader needs at his or her fingertips.
PALM DESERT, Calif. – Shortly after Nan Noonan, chief systemic risk officer of The Depository Trust and Clearing Corporation, warned attendees of the 2010 Securities industry and Financial Markets Association Operations Conference that Greece was dealing with a systemic problem that could call into question the entire viability of the Euro as a currency, the Dow Jones Industrial Average plunged almost 1,000 points.
During my flight to SIFMA’s operations conference in Palm Desert, I was thinking about proposed financial regulation, the bedlam of last couple of years, and wondering how in the world this country and this industry landed on a financial precipice.
Sophisticated hedge fund technology is moving down to a level where small- and medium-size investment advisers can use it.
The worldwide economic crisis may not be over and regulations may not be finalized on how to prevent a recurrence.
Technology has fragmented markets. Now, it is piecing them together again.
If convicted in the court of Congress or public opinion, Goldman executives would join the pantheon of market manipulators and cornering artists such as Jay Gould, Jim Fisk, Daniel Drew and Cornelius Vanderbilt.
In the race for data center space, financial services firms are being reminded that more space means more power and with that, new technology that can handle all of that power (and keep down the electric bill).
Some experts say that if Goldman had used some of the newer forms of e-communication, it might have been spared the public reading of embarrassing e-mails.
XBRL U.S., SWIFT and the DTCC say they have come up with a better game plan. They want to tag corporate actions in the eXtensible Business Reporting Language protocol. Who wouldn't want that?
When parrying a rival's statistical claims, the quandary becomes: Do so in public or private?
It seems like there isn’t a day that goes by without someone voicing displeasure over high-frequency trading.
Thomson Reuters launched an “ultra-high speed” network and hosting environment earlier this week that enables financial firms to access and share information faster.
Winners include clearing houses, and particularly ICE Trust US, the first US firm to clear derivatives, as they expand existing electronic systems to clear OTC derivatives contracts between member firms.
"Coexistence" is a catch-all phrase used by the Society for Worldwide Interbank Communications as it moves from an existing message format to a new one. But it may be a costly existence.
Malting barley. Skimmed milk powder. Whey. Distiller's dried gain. Futures and options markets go beyond oil, cattle and cotton -- and find buyers and sellers around the clock.
Meaningful change in the affirmation phase of the trade lifecycle most likely will not come about without a regulatory mandate.
The multiplicity of state and federal allegations filed against Morgan Keegan & Co. largely come down to simple risk and operational failures -- and underscore regulators’ growing scrutiny of these fundamentals.
If the U.S. securities industry thought switching to new options symbols in February would be operationally challenging and expensive – just wait until the Internal Revenue Service’s cost-basis reporting rules come into effect next year.
Activ Financial is talking with a stock exchange about putting a version of its matching engine in the same server box as its market data engine. It won't be that long before a complete exchange gets packed into one 3.5-inch thin box.
The “too big to fail” principle –- driven by the interconnectedness of financial firms -- could lead to an economy where a company could be “too small to succeed.”
Financial technology providers have been seeking ways to turn Apple’s latest gadget into a tool for traders.
The chief compliance officer is getting renewed emphasis in proposed financial regulatory reforms. But a chief governance officer may be what is really needed at securities firms.
The Treasury, operations and financial accounting departments of some of the U.S’ largest banks are going to be pretty busy for the next few days, if not weeks.
In this case, E.D. has nothing to do with any bodily function or lack thereof. Unless the body is the Securities and Exchange Commission.
In Chinese philosophy, yin and yang are polar or seemingly contrary forces that are nevertheless interconnected and interdependent. The concept might well apply to the Senate’s Democratic and Republican wings, as they consider the financial regulatory reform package that emerged from the Senate Banking Committee March 22.
In conjunction with the unveiling of Intel Corporation’s Xeon 7500 processor yesterday, NYSE Euronext participated in a Webcast with Intel touting the benefits of the new processor for the exchange and market participants.
The Financial Services Authority apparently thinks that securities firms in the United Kingdom should do as it says and not do as it does. In managing its own house, it isn’t doing such a great job.
For participants in over-the-counter derivatives markets, the issue is pre-trade transparency, more than post-trade.
The order management system market could see some consolidation during the next few years, according to a new report from IT research and advisory firm Gartner.
News that Susan Merrill, the Financial Industry Regulatory Authority (FINRA) Enforcement Chief, was stepping down from her position, has led to immediate thoughts on who will be her successor.
Students of financial regulatory reform can be forgiven for not being totally up to speed on the bill cleared by the Senate Banking Committee March 22.
Despite increased scrutiny, an analysis of 22 U.S. hedge funds found that hedge funds aren’t prepared for electronic disasters. They also allegedly aren’t keeping customer and trading data secure.
The combination of a real-time trade guarantee and the standardizing of trade reporting is where the real-time revolution in trade clearing and settlement can begin.
In response to the financial services sector’s high demand for low latency connectivity, AboveNet has unveiled a transatlantic connection between London and New York.
At the same time that investors in hedge funds are increasingly demanding managed accounts, these “bespoke accounts” also pose operational challenges – including additional overhead and systems requirements – for hedge fund managers.
Operations staff soon will be faced with the task of quickly reporting more information about the holdings in their money market funds. And they will have to do so using the eXtensible Markup Language (XML) tagging format.
Can it be? Trading firms and marketplace operators are wasting money on the big “monolithic” data centers they’re building, as electronic networks proliferate, market data explodes and volumes surge?
The National Securities Clearing Corp. will soon launch a service called the Obligation Warehouse, which will offer its broker-dealer participants an automated way of reducing operating costs – and risk – with trades involving equities, corporate bonds, municipal bonds and unit investment trusts.
The first phase of New York Stock Exchange's next-generation trading floor went live this week, bringing the upstairs downstairs.
There's good news for hedge funds -- at least, for those able to meet the increasingly rigorous standards of institutional investors in critical areas such as risk management, transparency and operations.
The call was great: A "consolidated data pool should be surveilled by a unified single regulator,’’ the head of FINRA said in late October. “A single regulator that can bring the best technology, the best people, and a unified set of rules needs to be empowered." How's the empowering going?
Whether government regulators or market centers or other self-regulatory organizations should conduct trading surveillance of our markets may not be the ultimate question.
In this Monday's issue, S.I.N. will examine why the toughest part about data storage is not the storage-- it’s the retrieval.
A consumer financial protection agency may be important. But protection from weapons that can produce mass financial destruction -- derivatives -- is more urgent.
How are you supposed to deal with the "unprecedented stimulus" that is both strengthening the U.S. economy and making it more fragile, at the same time?
James Chanos says a company’s cash flow, the quality of its balance sheet, its potential to perform well, drive equity values. Efforts to prop up stock prices where the fundamentals will not sustain them will inevitably fail.
Connecticut is not waiting for Congress to come up with legislation requiring hedge funds to register with the Securities and Exchange Commission and open their books to inspection. The state that is the capital of the hedge fund industry wants to take fund regulation into its own hands.
As companies line up to bid for Interactive Data Corp, the firm pushes forward with new technology initiatives. Q&A With Interactive Data EVP Jeff Banker.
The Fed wants to take on the role of systematic risk overseer in the U.S. if not the globe. And it needs data to analyze to do it. How will it get it?
If you listen to Allan T. Hackney at John Hancock Financial Services, social networking is relevant “here and now.” And critical to your future.
Market data numbers are expected to continue on an upward trajectory, reaching unprecedented levels never before imagined. With this in mind, industry experts agree it’s time to start planning ahead.
Seconds count – and can be worth millions of dollars, almost instantly, in today’s fast-paced world of high-speed trading.
Since the financial crisis blew through the securities industry, the impact on IT systems has been dramatic. In one key area, pre-trade compliance technology, the crisis has spurred a transition from option to near-necessity.
You think you have just achieved the American dream by producing a piece of software that the securities industry needs, wants and has to use. Nothing can go wrong, right? Not exactly. You have to protect your dream first.
The right way to spur electronic delivery of annual reports and other documents to shareholders is ... to create better, slimmer print documents, prove their value to readers and then let them opt to get the "excruciating detail" online.
Despite the early warnings and increased focus on risk management, the events of the current crisis exposed the interconnectedness of all market participants.
Thomson Reuters' recent acquisition of Aegisoft “rounds out our whole proposition for the desktop across the entire transaction workflow for exchange-traded markets.”
Regulatory and licensing issues are delaying adoption of cloud computing and online, on-demand computing, known as Software as a Service (SaaS), by securities firms. Nevertheless, as rules are worked out, these technologies should take hold over time.
There are only three days left until ticker symbols for U.S. options expand from five characters to as many as 21. Are you ready?
Companies on Wall Street and off have long been required and gotten used to the requirement that their financial condition be audited every quarter and every year by independent, professional eyes. Don't be surprised, however, if annual reports and filings with the SEC in the not-too-distant future include a second opinion.
If there's one thing the recent financial crisis taught us, it's that the status quo is clearly not good enough. Not for our markets. Not for investors. And, not for our economy.
It’s widely recognized that politics – particularly as practiced by Congress --plays a central role in the outcome of financial regulatory reform. But in a January report from Boston-based research firm Aite Group titled “Smart Regulation,” author and senior Aite analyst Paul Zubulake goes a step further.
Leaving politics aside, he writes, “The key component of all the discussion is how regulators can use technology to prevent another crisis.” …
Operations executives, data analysts, valuation experts and IT staff will need to brace themselves to do even more work to do when it comes to valuing their securities correctly this year. Simply striking a correct price on assets held by a fund manager, bank or brokerage firm won’t be enough.
Your securities firm operates in 30 countries. That means the email you exchange with customers, business partners and service suppliers has to abide by the storage, retrieval and compliance laws of 30 nations. Right? Wrong.
Market data appliance company Exegy is working with Essex Radez to relaunch a Web site that tracks real-time market data rates every second.
It’s not only the courts and the Securities and Exchange Commission that are looking over brokers’ shoulders when they communicate electronically. FINRA has now weighed in with guidance to member firms on how they use social networking sites – including Facebook, Twitter, LinkedIn and blogs – in communicating with the public.
Last year, Bloomberg became the first data vendor to provide its unique, proprietary identification codes for stocks, bonds, options contracts and other financial instruments for free on a new website. But that doesn’t mean that Bloomberg wants to give everything away for free.
Wall Street should always be about finding the systems and means to fund the formation of new firms and the growth of existing ones. Or make yourself and your customers wealthier. So they’re ready to put more of their money into the strategies and companies you’re trading in. This is why speed matters.
The securities transaction tax is one initiative that threatens to throw sand directly into the gears of the marketplace.
Next Monday’s issue of S.I.N. will include two features about the use of middleware— the plumbing that helps software applications communicate over a network.
The Securities Industry and Financial Markets Association (SIFMA) is wasting no time getting back on its feet after a dust-up with the American Securitization Forum (ASF) that led to the termination of their eight-year-old affiliation earlier this month.
U.S. financial firms aren’t the only ones who need to worry about how to shore up their data management skills to comply with potential legislation for monitoring enterprisewide risk.
Want some sobering numbers on just how intransigent this non-Depression economy has become? Want to argue about whether we are going to face a “lost decade” like Japan? Maybe it’s already been lost.
Data centers are the new keystone for U.S. equity trading, said Tabb Group senior analyst and report author Kevin McPartland in a study released this month, “U.S. Equity Technology 2010: The Sell Side Perspective.”
Let it be noted at the outset that Goldman Sachs chief executive Lloyd Blankfein did not use the term "Act ..." or "Acts of God" in describing the events that led to the financial crisis of 2008 to the present. But he still has said bankers are doing ... God's work.
Step aside, Securities and Exchange Commission. The Managed Funds Association – the main hedge fund trade association – is launching an ambitious data collection initiative aimed at finally getting its arms around the true size and nature of the industry.
The Securities and Exchange Commission this morning (Wednesday, January 13, 2010) moved to ban "naked access" to electronic markets, saying it will require some kind of pre-trade risk controls on all orders. Here's why slowing down real-time trading makes sense.
Proxy reform. It’s on the Securities and Exchange Commission’s list of initiatives this year but just what it should spell will likely continue to be one of the most heated topics to cross the regulator’s desk.
On New Year's Eve, Securities Industry News quietly introduced the FIN50 Index, to capture by the second just how Wall Street itself is faring. Its 50 component stocks are all publicly traded companies who make Wall Street tick.
It’s that time where forecasts abound. Wall Street is breathing easier, after its brush with death in 2008. But the Dow Jones Industrial Average has hardly changed since first crossing 10,000 on March 19, 1999. Let’s see what you forecast for the next 10 years. Then go back 10 years to see where things were a decade ago.
The race has begun. Algorithmic trading and other types of electronic trading with a wider range of liquidity providers will mean a lot more ticks flowing through applications, at record speeds. But can you afford all the data about markets you want, to support the trading?
Effective data management will become critical in 2010, as regulators on both sides of the Atlantic scrutinize, identify and try to limit systemic risk. This means firms will have to keep a closer tab on risk within their own shops.
Some times, it’s better not to know what you don’t know about financial markets. Then, you might just do things right.
For journalists covering the traditionally secretive hedge fund industry, opportunities to meet with leading hedge fund executives are few and far between. An exception: The Managed Fund Association’s annual networking conference, which features a large exhibit hall, first-rate speakers, and plenty of opportunities to talk with some of the industry’s best-known names. Until this year.
As financial firms consider just how to keep their budgets lean and mean in 2010, they will be facing pretty tough challenges in complying with the requirements of the so-called financial reform.
Particularly when it comes to managing the data involved.
When you break it down, what high-frequency trading is breaking down each trading day into the equivalent of a year of trading (or, you could contend, multiple years). And, you cash out, at the end of each year, er, each day.
As the gathering storm over financial regulatory reform approaches, this poem is dedicated to folks who fear Lieberman may provide a storm all his own.
Canadian trading venues are establishing connectivity partnerships and seeking to cut latency, providing investors with even more options in terms of market models and lower trading costs.
States are increasingly trying to pull a fast one on investors. In fact, you could say those investors could soon feel cheated on escheatment.
On the ground floor of the building in which this is being typed, Oliver Stone has set up shop. Barely a stone’s throw from the New York Stock Exchange and in direct eyeshot of the Statue of Liberty, the movie producer is at it again. He’s shooting Wall Street 2. But he may be looking for "villainy" in the wrong place.
When industry lobbyists target a Congressional proposal for defeat, the roar can be deafening.
If there’s one piece of new regulation you can probably expect to see come out of the Securities and Exchange Commission early next year, it will be a set of rules on how “sponsored access” has to be controlled. It’s not too late to determine who controls the controls.
The European Commission seems to think that identification codes for financial instruments should be obtained for free.
In the $330 billion auction rate securities (ARS) scandal, when the market froze up after customers were told the risky securities were as safe as cash, state regulators took the initiative in winning money back for ordinary investors, and holding the wrongdoers accountable.
The European Commission’s investigation into the licensing of identification codes for financial instruments by Standard and Poor’s CUSIP Global Services and Thomson Reuters has aptly generated several basic and underlying questions that have been long overdue.
This is the first post of Trading Spaces, a weekly commentary that will provide you with fresh analysis of industry trends -- and an opportunity to engage in thought-provoking conversation about the state of trading technology.
If the securities industry is determined enough, it could easily include algorithms that track every use, every transfer of an investor’s dollars between accounts at an investment firm and how those dollars were used. And block Ponzi schemes like Bernie Madoff's or even Tom Petters' from getting off the ground.
No matter what happens with the rest of this Greatest Recession Since the Depression let’s stop trying to blame it on runaway quantum finance. Math is not the problem. It gives answers. It provides precision (sometimes illusory). And, translated into computer coding, it runs endlessly and tirelessly. But somebody had to make it up in the first place. And maintain it. And manage it.
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