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Do Securities Firms Need a CGO?

Carol E. Curtis
Voices, April 7, 2010

Even as securities firms place a growing emphasis on the role of the chief compliance officer (CCO), one prominent industry executive argues that focusing on the CCO may  miss the boat about what is really needed at the C-suite level, which is to integrate compliance, risk and corporate governance.

“While some talk about compliance and some talk about risk, nobody within the organization is bringing these disciplines together and integrating them into a holistic practice,” says John Capobianco, president and CEO of  Lumigent Technologies, Inc. Lumigent is a governance, risk and compliance (GRC) business applications company in Acton, MA that pre-builds applications to map data, controls and policies to specific reporting.

As a result, he argues, “GRC means nothing to everybody or everything to nobody.”

The answer for many companies  -- including securities firms -- could be found in the new role of  corporate governance officer, or CGO, he says.

The CGO is likely to be more valuable than the CCO simply due to the relationship between compliance and governance, Capobianco said in an interview.

Operational risk identification and mitigation are the foundation of compliance, he said.


They are the basis for the controls and policies that compliance reporting executes. Specifically, compliance processes act as what could be termed a “data acquisition layer” of operations, gathering information on the testing and monitoring of controls that implement exception reporting, for example, and data such as  payroll tax withholding rates to comply with regulations such as the Sarbanes-Oxley Act or  the Investment Advisers Act.


With that foundation in place, companies can use software to interpret the compliance information and generate options for mitigating identified risks such as  potential fraud exposure.

Governance software can then be introduced to make sure complete information gets to top executives, who then evaluate the available options, determining the most appropriate course of action. The software also provides control mechanisms to make sure directions are carried out systematically and properly. 

“Once compliance and compliance reporting are under control, the company is in a position to better evaluate, understand and mitigate risks over time,” he says. “And those capabilities blend with corporate wellness or corporate governance, which is focused on making the most out of a business -- making it more valuable after taking into account all of the risks, strategies and reporting.”

These capabilities should be under the purview of a CGO, he believes. “The larger role [of CGO] combines compliance, risk and governance — in that order — to increase business value under the guidance of a governance officer.”

When it comes to IT, Capobianco says that no single technology set addresses all of the CGO’s concerns. “Contrary to what some vendors, analysts, and industry observers may advise, an IT GRC platform isn’t a silver bullet,” he says.

“An IT GRC platform is great for IT issues — general computer controls, operational controls and the like. But it completely ignores business and other procedural and even philosophical issues, all of which must be combined — along with IT issues — into one corporate strategy.”

Relative to more familiar C-level positions, the CGO is still emerging in the C-suite, he says: “Expect the CGO to follow a growth curve similar to the chief marketing officer (CMO), another relatively new member of the C suite. The CMO position relieves the chief executive officer, who is really the person in charge of corporate strategy and execution.”

The CGO function will continue to grow, he believes, as more companies take advantage of their opportunity to create and apply a unified GRC vision throughout the company and improve overall value.

“In a securities firm, you have a CCO in part because you do not have a CFO [Chief Financial Officer],” he says. “For example, you have a registered fund, but not a CFO whose job it is to validate the critical reporting strategy. Compliance reporting drives a lot of operational risk assessment. But when I think of governance, risk and compliance, I think of a hierarchy among them. The broader view is – how do I boil up the compliance and the risk to a high level to deal with it overall and have the authority to challenge the CCO or the hedge fund manager or the operational vice presidents?”

On that score, he says it is really the CGO who should oversee the corporate strategy associated with all risk that the company sees consistently and who “therefore has the ability and the authority to challenge the other C-level stakeholders to improve the overall corporate function.”

A CGO would also make sure that a company is capturing critical core data through its governance, risk and compliance system.

 “It should roll up into CGO reporting. This applies to all companies – all companies have to be responsible for risks they are taking and the strategy with which they are attacking the markets. That is what corporate governance is about,’’ Capobianco says.



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Retooling Market Surveillance

FINRA is refining and retooling its automated surveillance patterns to detect manipulation in a market where high-frequency and algorithmic trading predominate, says chief executive Richard G. Ketchum.

Cost-Basis Reporting: Know Thyself

Self assessment can be tough. Now comes cost-basis reporting. Here's how to inspect yourself.

Cost-Basis Reporting: Know Thyself

Self assessment can be tough. Now comes cost-basis reporting. Here's how to inspect yourself.

Avoiding Strike Three

Regular assets under management didn't include leverage. But regulated assets under management will.

Algo of Choice in Tough Times is the Human Equation

The simple fact is that machines cannot replace people in today’s high-speed markets, says Scott Cooper of JonesTrading International.

Taking Control of Swap Contracts

Why it would be easy for a "rogue" employee to take control of a payment for a swaps contract.

Bye, Bye Spreadsheet

The green columnar pad is next to extinct. So soon will be the stand-alone spreadsheet. Here's why.

Data is Not Costly. Bad Data is.

With rogue trading again making headlines, data quality can’t be ignored. In an investment bank or any asset management firm, your controls are only as good as your data, says Alberto Corvo at eClerx.

Registration Countdown: 10 Days to Go

It's time to notify FINRA who you will register as an ops professional.

Whipping a Frenzy

Wall Street firms are everyone’s favorite whipping posts. Just ask Occupy Wall Street, Anonymous Hackers or the New York state attorney general. But the frenzy can be tamed, in at least one case, with better numbers.

Short Sale Bans Harm Quality of Markets

There is no evidence that banning short selling of financial stocks calms markets. And it may harm them in the process, argues Alison Crosthwait of Instinet.

What We Have Here is Failure to Confirm

Exchange-traded funds were not at fault in UBS’ $2.3 billion loss from unauthorized trades. The failure to confirm that there were counterparties to the trades was.

Operations Folks Should Not Grow Up to Be Cowboys

It’s sad, but true. There ought to be a Volcker Rule between the front and back offices.

The Road From Here

A global system for identifying legal entities is on the cusp of becoming a reality. The road from here, from Tom Price of SIFMA at the SIBOS conference in Toronto.

Global Identifiers: What SIBOS2011 Revealed and Didn't

There are still a lot of unanswered questions, as the system for identifying entities worldwide moves ahead with rapidity.

Taking Data to the Bank

SWIFT tries to turn data and online identities into a new business: digital asset banks.

Global Entity Identifier: What to Ask At SIBOS 2011

SWIFT has dedicated several panels to the legal entity ID at its SIBOS conference next week. We asked a dozen data management and operations experts what they were hoping to hear.

The Business With Bigness

Size breeds complexity, making the largest financial institutions’ operations impossible to understand, much less administer, observes John Chen.

The Danger of Inconsistency

Coordination of new rules across regulators, jurisdictions and geographical borders is just not happening at the level it should, says Tim Ryan, the chief executive of the Securities Industry and Financial Markets Association.

What to Ask BNY Mellon

Here are six questions which fund managers and fund boards should be prepared to ask the world's largest custodian bank after its sudden switch in chief executives.

The Bond Store

Baby Boomers are about to go into retirement. George O’Krepkie thinks he’s riding the boom of a coming bull market in loans of all types.

Risk Measurement Gets Real. And Fast.

Measuring risk is getting serious. And happening in real time. There’s no turning back.

Brokerage CEOs in the Crosshairs

The enforcement chiefs of both the SEC and FINRA have made it clear that presidents and chief executive officers of broker-dealers are in their sights. Here are examples from securities counsels Brian L. Rubin and Yvonne M. Williams.

Answering the Call of 9/11

Ten years in, the challenge remains: never to forget. Here's a way to meet the challenge.

Is There Really a Future to Trading on Twitter?

Predicting stock market moves using Twitter alone is about as reliable as a witness in the Raj Rajaratnam insider trading trial, says Dr. John Bates of Progress Software.

Taking Action on Corporate Actions

Pulling together information on corporate actions is not easy.

Speaking Volumes

The securities industry likes volume. It dislikes volatility. Can it have one without the other?

The Flush Recession

Since 1950, the United States has never entered a recession with corporate balance sheets as flush with cash as they currently are, says Bob Doll, the chief equities strategist at BlackRock.

As the Crow Flies

The straightest path matters to Michael Persico. He brokers light.

Stop. To Think.

Where is it written in the Constitution (or securities law) that markets have to be open continuously, from 9:30 a.m. to 4 p.m.? A modest proposal, to avoid whipsaw in millisecond markets.

Fail to Settle on Time? Fine

Traders in U.S agency debt and agency mortgage-backed securities soon won't be able to get away with failing to settle their transactions on time.

S&P's Flawed Thinking

After all, S&P should have properly assessed the asset-backed housing securities that led to the Great Recession not as investment-grade but what they actually were: Junk. So posits Money Management Executive's Lee Barney.

Downgrade Fallout

Operations executives will be awash in the ripple effect of Standard & Poor's decision to drop the triple A rating of U.S. government debt a notch, to AA-plus.

Some People Actually Pay for These Opinions?

Rather than paying S&P for its opinion, all you needed to do is look at some past CBO projections and you would have arrived at the same opinion years ago.

When Large Traders Fail to Appear

Could large traders simply split up their orders, so they don’t appear to be so large? Unanswered questions about the SEC’s Large Trader Rule.

Fraud, According to FINRA

I was considered “a serious risk to the investing public” by FINRA. I am not. And here is my side of the story, says Brian Alfaro, founder of a Texas broker-dealer firm that has now closed.

Reporting Misdeeds Gets Tougher

Complying with the new FINRA benchmarks on violations of broker-dealer rules won’t be easy.

Finding Good DADs

Over-the-counter stock markets are trying to grow up. So, now the offspring of pink sheets are looking to create a slew of DADS.

The Market is Not Free

Is socialism creeping into securities markets? Here's the case from Tim Quast, managing director of Modern Networks.

Getting Tough in U.K.

The United Kingdom will soon have a tougher and bolder regulator responsible for monitoring fund managers, broker dealers and banks. Its name? The Financial Conduct Authority.

Out of the Shadows

Why is it that “high-frequency” trading jangles nerves so much?

STP – Still a Dream?

STP is not an engine oil. But straight-through-processing would make it possible for all financial edges to work smoothly with each other.

Striking Out on Values

If you don't document how you value complex securities, you will face the music now. From the SEC.

ETFs vs. Mutual Funds

Unless high-speed professional trading somehow leads to more Flash Crashes and everybody decides they need complete liquidity on all investments, how fast you can get in and out of these funds should not matter much.

Protect Files, Before They Get Away From You

The convenience and growing use of tablet PCs and smartphones exposes security gaps and new risks when customers and employees alike store sensitive data on their personal devices, says Rob Marano of InDorse Technologies.

Outsourcing Ops, Broker Style

Five ways brokers can control costs and get predictable operating procedures.

Greifeld, Back in the Driver's Seat

Let’s see how just good a driver you are, Bob Greifeld, now that you get a third chance to figure out a way to merge with the London Stock Exchange. And for both sides, not just one, come out winners.

How to Catch a Thief, UK Style

Preventing money-laundering activities is one of the key regulatory responsibilities of banks and broker-dealers. They are supposed to know just who they are doing business with and where their money is coming from. Yet not all are up to snuff. Too many in the City of London just don't have sufficient operational procedures in place so they are allowing high risk customers to pass under the radar. …

Embracing Legal Entity Identification

The Legal Entity Identifier (LEI), the creation of the U.S. Treasury’s new Office of Financial Research (OFR), has now been endorsed by a SIFMA-led coalition of financial industry trade associations.

European ETFs: Pretty Unsettling

Unlike most European equities, European ETFs are listed in multiple markets -- up to five. And unlike in the U.S., where there is only one depository system – the Depository Trust Company -- there are dozens in Europe. This creates an operational nightmare for broker-dealers when settling trades.

Getting Real on Algo Testing

Even Dr. John Bates of Progress Software was consternated about the results of this survey, released at the outset of the SIFMA Tech show last week.

Finding Speed on Web

When financial markets plunged during the Flash Crash of May 6, 2010, website response time for the leading online brokerage firms went in the opposite direction, spiking to 30 seconds or more.

Making Friends, With Cost-Basis Reporting

The IRS may have just found another reason for mutual fund operations executives to reach out and make new friends. Necessity.

Trading Capacity in 'Very Good Place'

Fear not. Brokers who geared up for continued growth in share volume are still ready. Bring on the 30-billion share day.

Redefining Market Making

Ever since the Flash Crash, there's been talk of mandating some sort of responsibility to make markets in stocks on the companies that account for the lion's share of liquidity in modern electronic markets. There's another way, in electronic markets.

Stamford and the World's Largest Trading Floor

Will Stamford, Conn., lose the world's largest trading floor, if UBS leaves town? Don't bet on it.

Retail Investing, the iPhone Way

Now, you have to come up with an app that lets your customers shop at Wal-Mart or the mall -- and invest the savings with you.

Hedge Funds Facing ‘Massive Data Project’

Just how difficult will it be complete not just Form ADV, but Form PF? The operational pleasures of registering at the SEC.

Making Swaps Transparent

The more transparent a marketplace is, the more liquid it is for standardized instruments, the more competitive it is, says Gary Gensler, chairman of the Commodity Futures Trading Commission.

EC Call on ID Fees Not Good Enough, Siebel Says

Trade organizations representing European fund managers, banks and brokerage firms are concerned that a recent EC decision may not go far enough in protecting their use of international securities identification numbers. Rudolf Siebel, managing director for Bundesverband Investment und Asset Management, spoke with Securities Technology Monitor.

The Math of Philosophy

Descartes postulated, "I think therefore I am." Now, if my newly minted graduate son is any indication, the modern equivalent in philosophy has to be: I code, therefore I am.

Global Harmony: Fair But Not Easy

Figuring out the "fair value" of financial instruments will, very soon, have to meet international standards.

Riding the Herd, Before It Moves

Statisticians are trying to harness social media. The result? You can move on a stock, before the crowd does.

Opening Shanghai

Shanghai will have to become a major international financial center, as China begins to rival the U.S. as the world's greatest economic power. In the last five years: the Shanghai Stock Exchange has seen its worth grow five times, notes Professor K.C. Chan.

Transferring Transfer Agents

Migrate or move. That’s the choice facing companies which use Bank of New York Mellon to keep track of shares in registered investors’ accounts, send dividend checks, mail proxy materials and ballots and count up votes. Here is what to think about.

Robert Greifeld: Who Are You Going to Call?

Bob Greifeld, the aggressive chief executive officer of NASDAQ OMX Group, now has failed in the two biggest takeover attempts of his career: the 2005 bid for the London Stock Exchange and the 2011 bid for the New York Stock Exchange. The next call should go to Magnus Bocker of the Singapore Exchange. Unless Greifeld has a call waiting in his mailbox already, from Bocker.

Legal Entity Identifiers: Finally, It’s Time

Competing systems for identifying legal entities seriously hinders capital markets from working efficiently. That should change now, says Tim Rice of Thomson Reuters.

Keep It Simple, Issuers

Getting the data right to keep track of a financial instrument throughout its life is not easy. Don't make it harder than it has to be.

Weigh In Now. Or Keep Your Peace.

There was a lot going on at SIFMA OPS 2011. So you may have missed the invitation to send in a proposal for what a worldwide legal entity identifier system should constitute.

Life After The Flash Crash

The Flash Crash "sucked all the confidence, the money and the life out of equity markets around the world," on May 6, 2010, says Seth Merrin, founder and CEO of Liquidnet Holdings, which operates a leading block trading venue for institutions. One year later, Alison Crosthwait, director, Global Trading Research at Instinet, says limits up and down on stocks are the best response.

Five Guidelines for Measuring Counterparty Risk

How to measure counterparty risk correctly is a difficult task.

The Chicken, The Road & Rethinking Risk Management

Chief Executive Donald Donahue describes how The Depository Trust & Clearing Corporation is "completely overhauling" its approach to risk management, at the outset Monday (May 2) of the 2011 Operations Conference of the Securities Industry and Financial Management Association.

Bringing Sexy (to the) Back (Office)

It’s important to remember that low-latency, high-frequency trading represents just a sliver of capital markets technology spending and overall capital markets activity.

Mobile Compliance, On Call

To catch more instances of insider trading, the U.K.’s Financial Services Authority now wants City of London firms to record calls made on mobile phone and other “relevant devises” for at least six months as of November 14.

A Simple Standard for Derivatives

Now, "algorithmic descriptions" are coming to derivatives. But putting the terms of contracts into computer-readable form is never easy

Here's Some Advice, Advisers: Don't Wait (to Register)

July 21 may seem like over four months away. But it really isn’t for investment advisers who have to be registered by that date with the Securities and Exchange Commission.

Giving a Single Name a Single Identity

If you’re going to have reliable trading in a stock or any other financial instruments worldwide, at any time, without fail, it’s got to have clear identification.

Re-Mapping the Cloud

The challenge is finding ways to bring on enough computing capacity, on-demand, while controlling costs, say Dr. William L. Bain and David Worthington of ScaleOut Software.

When Licensing and Outsourcing Collide

Brokers will have to license their senior operations executives. How many of them will not actually be their employees?

NYSE Shareholders Take Meetings

So the short and skinny is this: Duncan Niederauer will meet with NYSE Euronext shareholders to discuss the Deutsche Borse and Nasdaq OMX bids for their firm. He won’t meet with Robert Greifeld or Jeffrey Sprecher. But his shareholders will.

Trust What Works

In applying a universal fiduciary standard to brokers, don't break what already works.

Ticked Over Tick Fees

Have NYSE Arca and Nasdaq OMX finally won a five-year battle with a group of Internet companies and SIFMA over how much they can charge for proprietary market data?

Who Wins? NYSE ... and BATS

Nasdaq OMX and Deutsche Borse will have to slug it out for NYSE Euronext. In meantime, they lose ground.

Nasdaq: We'll Lead With Speed

Nasdaq OMX will keep operating all NYSE Euronext exchanges, but on its own INET technology, Executive Vice President Eric Noll told customers this morning in this letter to customers.

Settling on Settlement Instructions

Failures in standing settlement instructions are the most avoidable triggers of failed trades, say investment operations experts.

Sidestepping ‘Systemic Risk’

PALM DESERT, Calif. -- The sidestepping of what systemic risk constitutes is making it hard to know what fund companies and asset managers are supposed to do about the bill, which is not directed immediately at them, members of an Investment Company Institute panel said.

Check This Mating: SGX, Nasdaq

There are many moves on the chess board left to play. But if the Singapore Exchange's bid for the Australian Exchange falls apart and the Nasdaq OMX bid for NYSE Euronext doesn't take off ...

A Global Store for Stocks (Without Mergers)

It would be absurd to think that the buyer for vegetables for a supermarket chain would go to the corner grocery to stock their shelves, yet this is what we are asking of every institution when it buys in volume using existing trading venues.

Verifying the Verifier

Investment managers live and die by how well the funds they manage are performing. But who can check on whether they are providing investors with the right calculations?

Just Don't Call It a "Cloud"

The average cost of a data breach is now $7.2 million. So you can't afford to keep customer data in the cloud? Not so. It's already happening.

Time to Transform Fund Accounting

With fast-moving, high-volume electronic markets, there’s a clear need to bring together fund accounting and transaction processing applications into one system.

Greifeld Plays Hold 'Em

Is Robert Greifeld bluffing about stepping in, breaking up the NYSE Euronext-Deutsche Borse marriage and putting Nasdaq OMX Group in the German exchange operator's place? Probably not. But, if he plays his cards, what does his $10 billion (or bigger) bet get him?

ID Codes: ANNA Suits Up

The Association of National Numbering Agencies has thrown its hat in the ring to set a standard for identifying financial entities, to help guard against systemic risk. But ANNA is vying for anointment by the Office of Financial Research in apparent competition with one of its own members, CUSIP Global Services.

Fees Will Pay for SEC Budget Hike

It is important to note that the SEC's funding request for 2012 request of $1.407 billion – an increase of $264 million over the agency’s current FY 2011 spending authority -- will be fully offset by matching collections of fees on securities transactions, chairman Mary L. Schapiro told a House panel this week.

Business Conduct, Swaps & You

Swap dealers and major swap market participants could soon have greater operational and legal issues to worry about than whether or not they clear their transactions through a centralized clearinghouse.

Tick Talk: Watching What You’re Saying

You always watched what you said to other trading desks. Now, those trading desks will not just be watching what you say. They’ll be transcribing it.

Brave New World for Trading

What comes after prop trading. Sybase's Neil McGovern says one consequence of the Dodd-Frank Wall Street Reform Act could be ... more aggressive trading strategies.

FIXing Trade Execution Reports

A committee of buy-side firms released a set of recommendations on what information and data formats broker-dealers should include when sending reports on executed orders to fund managers.

Nasdaq's Natural Alternative

Think about a rollup of all-electronic trading venues, in equities (for starters) worldwide

Faceoff in Canada: Six Hurdles to LSE-TMX Merger

Instinet director of global trading research Alison Crosthwait reviews the factors in the Investment Canada Act that could block the merger of the operators of the London, Milan, Toronto and Montreal exchanges.

What Brokers Don’t Know About Muni Bonds

When it comes to municipal bonds, broker-dealers face an unusual challenge that is beyond their control.

BATS/Chi-X: Lean, Mean, & Global

With its purchase of Chi-X Europe, BATS Global Markets may not have achieved the size of the NYSE Euronext-Deutsche Borse combination. But BATS and Chi-X have never let scale stand in their way, ITG analysts say.

DTCC and SWIFT: Code Collaborators

Until recently, the two were competitors when it came to creating identification codes for business entities. What changed?

Clearing Up a Backdoor Takeover

All the attention about the Deutsche Borse takeover of NYSE Euronext has focused on the exchange operations -- and the symbolism of a major American capital-raising firm being under German control. But what if the deal was mostly about the backshop?

Let the Next Game Begin

The last time a German corporate giant merged with an American flagship company the "merger of equals" did not work out that well. But this time, the game is not about dominance in America or Europe. It's about creating a global always-on exchange.

Lost Shareholders & Hot Water

Broker-dealers will be surprised, if they think that meeting potential requirements set by the Securities and Exchange Commission tracking down lost shareholders won’t be that difficult. If they don’t cross-their T’s and dot their I’s in how they communicate to the holders of unclaimed securities accounts they could find themselves in hot water with a state agency. …

Nasdaq’s Hack: Nothing to be Worried About. For Now.

Yes, it was “only” board of director information that was on a “web facing” application. But that’s sensitive enough. And it’s just the start.

What Happened with AXA Will Happen With HFT Firms

So much for quant trading being an innocent form of programming that can never do any harm.

Dodd-Frank Tax Battle Coming

It doesn’t take a rocket scientist to figure this out: Without a new tax on the securities industry, there won’t be reform of same.

Brokers, Find Your 'Lost' Shareholders

The SEC on Jan. 27 said broker-dealers have to track down “lost” shareholders. It’s an outgrowth of the Dodd-Frank Wall Street Reform Act which puts them on a level playing field with transfer agents.

Ordering Up An Order System

The best order management system handles the most assets, in the most markets, without a hitch, in the fastest possible time.

The Merits of Mexico’s New Settlement System

Indeval chief risk officer Jaime Villasenor discusses the central securities depository's new Model III settlement system and how it works.

Consolidated Fee Trail

The SEC is about to lay out its proposal for establishing a new standard of fiduciary care for investors to be given by brokers. Why not solve this the capitalist, interactive and quantifiable way, with a consolidated fee trail?

Keeping Broker Records In The Cloud

Broker-dealers caught unaware have paid millions in fines for failure to comply with the Securities and Exchange Commission’s requirements to preserve books and records. But guidance is clear, when putting records in the cloud.

Volatility as an Asset

Volatility used to land you in jail. But that's what happens in the street, rather than on The Street.

Managing the Risks of Mobile Money Management

Almost universally, vendors are claiming their applications are “secure” but supporting claims are at best scarce.

Tech Spending: Buy Side's Biggest Bets

Fund managers are also realizing they can’t avoid automating procedures -- or continuing to rely on what their trading counterparts and third-party service providers are telling them.

Getting Real (Or Near-Real) in Mexico

With the help of IBM, Mexico has just laid claim to creating the world’s most efficient securities depository. How is that?

11 Market Structure Trends to Watch in 2011

Predictions, in no particular order, for what a pioneer in electronic trading believes will be the most important market structure trends in 2011.

Top Priorities for Tech Spending in 2011

Here are the top five priorities for spending in the coming year, based on interviews conducted with about a dozen operations and technology executives, as well as software vendors who serve them.

Better Than Facebook?

Next holiday season, Goldman Sachs just might wish it had invested in a market data company, instead of Facebook.

11 (Sets of) Predictions for 2011

There will not be a consolidated audit trail set up in the next 12 months and other predictions for the New Year.

Top 5 Nightmares in 2011

As 2010 draws to a close, operations executives are trying to wrap up their reports to senior management of just what went wrong and why. And here's what worries them about 2011.

Picking Up the Tab for the C.A.T.

Maybe the SEC should pick up the tab for this breakfast. Because it may have saved the country billions in building the consolidated audit trail (C.A.T.) for stock transactions.

Top Ten Operational Risks to Avoid

When glitches happen in the processing of trades on Wall Street, those in charge are sitting in "middle" and "back" offices. Here are the risks they (and you) face, front and center.

The Practical Impact of Dodd-Frank

Investment advisors and broker-dealers will have to walk more than a mile in the other’s shoes, as a result of the oversight rules that will be promulgated as a result of the passage of the Dodd-Frank Wall Street Reform Act.

Bloomberg’s Openness on Symbology

Just because Bloomberg is giving away its method for identifying securities does not mean it will become a standard.

Defending Against Sledgehammer and Scalpel

In Iran and in the WikiLeaks retaliations, organizations have experienced the sledgehammer and the scalpel in terms of cyber assaults. Both are difficult if not impossible to defend against.

The Other Half

SEC chairman Mary Schapiro now believes creating a system for capturing all stock market data in close to real time is only half of the original projection of $4 billion. True. But she's probably forgetting the other half of the cost that really matters.

Mortgage-Backed Securities, Fail No More

The Federal Reserve Bank of New York estimates that from October 28 through November 24, 2010 about $3.1 trillion worth of mortgage-backed securities were not delivered on time. A fix is in the works.

When The Ground Shifts

In theory, software can or should be able to “predict” returns on mutual funds, exchange-traded funds or single stocks. But figuring out when the ground shifts is not machine work.

Open Source, Hidden Exposure

The risk of using open source software. Learning from the Goldman Sachs code case.

In the Clean Up Spot: Data Management

Financial firms still have a long way to go to ensure the accuracy and consistency of the data they store about the transactions they execute and the customers and trading parties they deal with.

Happy Thanksgiving, 2010

We’re going to be off on Thursday, Nov. 25, and Friday, Nov. 26. Here’s what we and all of Wall Street should be saying thanks for.

It's the System's Fault? Not.

Why cutting corners won't cut it with regulators, for back-office executives.

Women of the House of Madoff

When Anne Bongiorno needed to change trades listed on a customer’s account statement, she simply asked that the old one be sent back. When Joann Crupi needed to find a new custodian for assets purportedly held by Bernard Madoff Investment Securities, she simply picked a phony one.

Identifying Securities: At What Cost?

Are complaints about CUSIP fees being sent up the wrong tree? The SEC is not a utility commission. It does not regulate rates or fees or prices.

Systemic Risk Supervision: Recognizing The Next Bubble

My question is simple: Are we sending the Office of Financial Research on a fool’s mission?

Speed Proof

Analyzing market data and news is done in real time. Next up: The speed of trading venues and networks. Gentlemen and women, rev your algorithms – and smart order routers.

Who Really Benefits from Proxy Reform?

As is always the case with regulatory reform, there are winners and losers. In reforming the distribution of proxy materials, however, the identification part gets hard.

Gone in Two Seconds

At least when Nicolas Cage tried to save his brother's life, the 50 cars he stole one night did not disrupt the auto market. But when an algo goes wild, the disruption, in two seconds, is huge, says SEC chairman Mary L. Schapiro.

FINRA & Fiduciary Standards: Are Advisers Next?

The Financial Industry Regulatory Authority already is coming up with some nitty gritty disclosure requirements on fiduciary care for broker-dealers. Watch out, investment advisers.

Taking Orders, Exchanging Risk

The SEC Wednesday likely will vote to ban naked access. But is putting the onus on brokers to develop software the right way to get pre-trade controls in place?

E-Minis and Aunt Minnie

May 6 led Aunt Minnie of Kansas City to pull her money out of mutual funds. Does she need to co-locate a server four millimeters from an exchange server, to feel she is going to get a fair shake in today's capital markets?

Hung Jury on Proxy Reform?

The SEC is not likely to force significant change in the proxy distribution process, in the estimation of an Avondale Partners analyst.

A License to Deal, for Algos

Hold algorithms accountable for how they are used in the systems that matter. It's not just a start towards restoring confidence in flash crashed markets. It's pretty much inevitable.

Tower of Babel, in Messaging Standards

Six trade associations have come up with their own investment roadmap for securities messages with a slight twist – All existing types will live on.

Too Many Exchanges? Not Yet

Since the May 6 Flash Crash uncovered the seeming fragility of this nation's stock markets, the prevailing wisdom seems to be that there are too many exchanges. Not.

Will You Have A Sibos Story?

You're the experts. You'll be on site Tell us about it.

A Taxing System for Foreign Accounts

Financial firms were hoping the IRS would make it easy for them to withhold tax on U.S. customers buying foreign securities. They didn't get their wish.

A Taxing System for Foreign Accounts

Financial firms were hoping the IRS would make it easy for them to withhold tax on U.S. customers buying foreign securities. They didn't get their wish.

For Safety’s Sake

I hadn’t been at the luncheon more than 20 minutes. And my tablemate – the chief regulatory officer for a stock exchange -- might as well have just said, “put a fork in it.”

Market Data’s Carte Blanche

Has the Dodd-Frank Wall Street Reform Act given U.S. exchanges carte blanche to charge whatever they want for distributing market data to their members?

In Greed We Trust

Pssst … is anyone out there? Trading has been quiet. Gordon Gekko is even saying time is more important than money. But don’t worry. Greed still works.

The Cost of Settlement: 20 Eurocents and Counting

What will it really cost to settle transactions through Target2Securities, Europe's aborning "single platform" for settlement?

Off in the Clouds, Legally Speaking

You can put compliance into your computing cloud. But the cloud can't do the compliance for you.

Lots of Data, No Standards Equals Little Value

Financial firms are centralizing management of their data and paying extra to make sure it is accurate. But its value is being lost, by lack of standards.

Talent Worth Scouting

Wall Street is getting like the National Basketball Association. It’s sending its scouts the world over to scour its nooks and crannies for hidden talent.

Clearing Up Securities Lending

If equity exchanges and fixed income deals are cleared through central clearinghouses, so should securities lending transaction

Every Day Good Value: Electronic Exchange Exports

One thing America is still good at exporting are the technologies and infrastructure, as well as conceptual strategies behind, instantaneous trading of any financial instrument of any type anywhere at any time. Let's not mess this up.

Same-Day Affirmation … or Same-Day Matching?

Fund managers need to reduce the number of trades which don’t settle on time or are settled erroneously.

Weighing The Risks of Cloud Computing

As we head into the fall, Wall Street is buzzing about cloud computing.

Fund Managers: Expand Best Execution to the Back-Office

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.

The SEC Puts Its Head in the Clouds, And That’s a Good Thing

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.

Wanted: Chief Data Officer. Data Skills Not Necessary.

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…

Want Efficient Markets? Let SEC Phase Itself Out

Why fully electronic exchanges can and should regulate themselves.

Get Real Data. Go Virtual.

When you can’t find the information you actually want, virtual data may be the best answer.

Jerome Kerviel, Will This Compute?

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.

Lightweight and Simple Solutions

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.

Who Will Pay for Client-Directed Voting?

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?

Wall Street Not A Leading Job Indicator

Wall Street is not leading the United States out of its unemployment woes.

No New Jobs? Wall Street Hiring

It's probably little comfort to those still trying to find jobs elsewhere that jobs appear to be returning to Wall Street first.

Track Your Brand. Get Social.

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.

Hedge Fund Managers: It’s Show Time

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?

Tried and True

Innovation is great. But look where it got Wall Street. Here's why achieving "tried and true" technology takes priority.

A System for Resolving Conflicts of Interest

The Dodd-Frank Wall Street Reform and Consumer Protection Act provides a clear blueprint for how financial markets will operate. Not exactly.

Stating Their Cases For Hedge Fund Registration

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.

The Microsecond Payment Model

No ‘latency’ in making a trade would be impressive. Paying for the trade without any latency, much more so.

Rethinking Data Infrastructure

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.

In Classifying Clients, Keep Track of the Data

European regulators are putting the practices of financial firms to the test by ensuring they know how to classify and update their counterparty records.

Bracing for a Boom in Whistle-Blowing

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.

Disclosing the Costs of the Fiduciary Standard

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.

Monitoring the Effective Operation of Markets

You’re looking at the first day in the life of Securities Technology Monitor.

Next Frontier: Global Supervisory Cooperation

National reform initiatives are not enough to prevent future crises. We must take a broader, global view.

The ICE Age in Climate Control

The sad history of business is that polluting pays. At least now, there are markets that will let you pollute. But others profit.

The Chi of Chi-X

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.

Supremes Rule: Back to Square One on Business Patents

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.

Back to Block Prints

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.

Don't Break a Sweat

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.

Reform Should Not Panic Fund Managers

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.

Alice's Doctrine of 'Unintended Consequences'

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.

CEOs: Fix the Plumbing

The financial crisis proved the industry's data systems -- its plumbing -- is broken. Call in the CEOs.

Bloomberg for SEC Chairman. Or More.

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.

Don’t Let Your Operations Team Grow Up to be Traders

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.

Auditing the Audit Trail

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.

Trading Without Limits

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.

Undertakings IV: The Scary Movie Trailer

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.

Text, in the Raw, Quant Style

Why raw text does not mean raw text. And what that says about the quantitative modeling mindset.

What You Don’t Know About Large Trader Reporting WILL Hurt You

Whether the Securities and Exchange Commission’s proposal for a Large Trader Reporting System is truly justified is open to debate.

The DTCC, Efficiency and OTC Collateral Management

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.

Joining the Hit Parade

Dear SEC: Combine the large trader proposal and the uniform audit trail proposal into one single set of rules.

New Stock Regulations: Market Killer or Savior?

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 Invests in New Chicago Trading Floor

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.

A Case Study in Manipulating the System

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.…

Measuring Up: Do You Fail As Often As Your Peers?

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.

Don’t Blame Risk Numbers for Market Crash

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?

Never Forget 9/11. But Bring on the Chaos.

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.

Joining Forces on the Desktop: The "OEMS"

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.

All Eyes on the Chief Compliance Officer

Three words keep cropping up in the financial reform package passed by the Senate on May 20: Chief Compliance Officer.

When Certifying Data is Accurate, Certify the Professionals

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?

Five-Minute Pause? How About Five Seconds?

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.

Brains, Technology and the Broken Buck

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.

A Trip Through the Portal With UNX's Thomas Kim

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.

Hedge Fund Registration: Drilling Down to the Cost

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?

Think, Before Building Pricing Platform From Scratch

Financial firms wanting to develop a system in-house to price their book of business in over-the-counter derivatives had better think twice.

Swimming With Sharks

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 Relocates ATS and Trading Infrastructure

UBS has relocated its ATS and equities electronic trading infrastructure from beneath its Stamford trading floor to Savvis' Weehawken, N.J. data center.

From Crisis to Opportunity

Our industry has been in the headlines for quite some time, and the pressure on Congress to enact financial regulatory reform is extremely high.

Next Up To Register: Advisers to Private Equity, Venture Capital Funds

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.

Standardization: Not As Easy As It Sounds

When it comes to the reporting requirements of hedge funds, standardization could easily become costly, cumbersome and ill-advised, say data management experts.

Getting Naked, Kicking Back, After SIFMA OPS

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.

Turret Talk

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.

Who Will Douse The Fire?

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.

Mitigating the Risk of Reform. Scotch, Please.

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.

Hedge Fund Expertise Moves Down Market

Sophisticated hedge fund technology is moving down to a level where small- and medium-size investment advisers can use it.

More Regs on the Way: Get Ready for A Lot More Ops and IT Headaches (And Pull Out Those Wallets)

The worldwide economic crisis may not be over and regulations may not be finalized on how to prevent a recurrence.

Back Together Again

Technology has fragmented markets. Now, it is piecing them together again.

Gambling With the Lives of Millions

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.

Power Density: Getting to the Core of the Issue

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).

Archiving Obligations Extend Beyond Email

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.

Going to the Source for Corporate Actions

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?

Arista v. Cisco: No Comment

When parrying a rival's statistical claims, the quandary becomes: Do so in public or private?

Fast Ball: Fertilize the Playing Field

It seems like there isn’t a day that goes by without someone voicing displeasure over high-frequency trading.

Trading on the Fast Track

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 and Losers in the Derivatives Clearing Debate

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? Not as Great as it Sounds

"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.

The Whey of the World

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.

Two Steps Forward, One Step Back

Meaningful change in the affirmation phase of the trade lifecycle most likely will not come about without a regulatory mandate.

Scrutiny of Operational Fundamentals Growing

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.

Difficulty, Dread & Cost-Basis Reporting

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.

Packing a Stock Exchange into a Box

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.

Reform vs. Innovation: Opening the Right Doors

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.”

Seeking Opportunity in the iPad

Financial technology providers have been seeking ways to turn Apple’s latest gadget into a tool for traders.

SEC to Bank CFOs: Do You Know Where Your Repos Are?

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.

E.D. and the SEC

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.

The Yin and Yang of Financial Regulatory Reform

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.

NYSE Tips Hat to Intel for Performance Boost

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.

Code Enforcement: Who Regulates the Regulator?

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.

Post-Trade Transparency? How About Pre-Trade?

For participants in over-the-counter derivatives markets, the issue is pre-trade transparency, more than post-trade.

Consolidation Pressures in the OMS Space

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.

Time to Revamp FINRA

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.

Questions of Independence for Proposed Risk Agency

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.

Preventing Disasters at Hedge Funds

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.

Let the Real-Time Revolution Begin

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.

Connecting Continents

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.

The Operational Challenges of 'Bespoke' Accounts

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.

Money Market Funds Must Now Play Tag

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.

“Superspend” on Data Centers “Dysfunctional”

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?

Getting a Grip on Bilaterally Cleared Trade

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.

NYSE Wraps Up First Phase of Floor Renovation

The first phase of New York Stock Exchange's next-generation trading floor went live this week, bringing the upstairs downstairs.

To Attract Institutional Capital, Hedge Funds Need IT Edge

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.

Calling for Action

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?

The Will and Way to Surveill

Whether government regulators or market centers or other self-regulatory organizations should conduct trading surveillance of our markets may not be the ultimate question.

Overcoming the Hurdles of Data Retrieval

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.

Consumer Agency Wrangling Obscures Derivatives Reform

A consumer financial protection agency may be important. But protection from weapons that can produce mass financial destruction -- derivatives -- is more urgent.

Color the Numbers: BlackRock vs. Black Swan

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?

Government Putting Its Thumb On Stock Prices

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.

Home State Moves to Regulate Hedge Funds

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.

Interacting with Jeff Banker

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.

Creating A Global Data Repository: Who Will Blink First?

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?

Facing Up to Social Networking

If you listen to Allan T. Hackney at John Hancock Financial Services, social networking is relevant “here and now.” And critical to your future.

Dealing With the Data Deluge

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.

When Seconds Count, Mobility Matters

Seconds count – and can be worth millions of dollars, almost instantly, in today’s fast-paced world of high-speed trading.

Pre-Trade Compliance Technology is No Longer an Option

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.

Developing Software? Be Forewarned and Forearmed

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 Social Networking of Electronic Delivery

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.

Surveilling the Real Risks

Despite the early warnings and increased focus on risk management, the events of the current crisis exposed the interconnectedness of all market participants.

Rounding Out the Trading Desktop

Thomson Reuters' recent acquisition of Aegisoft “rounds out our whole proposition for the desktop across the entire transaction workflow for exchange-traded markets.”

Regulations Haven’t Caught Up with the Cloud

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.

Final Countdown to New Options Symbols: Get Ready (or Else)

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?

The New Audit: Security

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.

High Performance Databases: A Tool for Quant Traders

As firms continue to add new trading areas and struggle to meet regulatory requirements, high performance databases are becoming increasingly vital.

Embracing the Change

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.

Technology -- And Preventing Another Crisis

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.” …

The Season for Fairer Value in Annual Reports

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.

Emailing It In: No Simple Matter

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.

Tracking Market Data Rates

Market data appliance company Exegy is working with Essex Radez to relaunch a Web site that tracks real-time market data rates every second.

Mind your E-Manners (sort of)

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.

Bloomberg: It Can’t All Be Free

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.

The Function of Fast

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.

Don’t Tax the Recovery

The securities transaction tax is one initiative that threatens to throw sand directly into the gears of the marketplace.

Middleware Matters

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.

He Said, She Said in Securitization Split

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.

Dear CEOs: Get More Data for Risk Analysis

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.

Dow 48,000

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 as Important As Trading Floor

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.”

An Act of Blankfein: Was That a Mea Culpa?

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.

Slowing Down Real-Time Trading

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.

Finally, the Truth about Hedge Funds

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.

Who Pays for Proxy Reform?

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.

FIN50: A Wall Street Meter

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.

'10 Plus 10

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.

Do You Really Need the Market Data You Want?

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?

Data Management 2010: The Ins and Outs

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.

The Accidental Advantage of Naivete

Some times, itís better not to know what you donít know about financial markets. Then, you might just do things right.

Hedge Fund Transparency Won’t Extend to Media

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 Associationís annual networking conference, which features a large exhibit hall, first-rate speakers, and plenty of opportunities to talk with some of the industryís best-known names. Until this year.

Data Tsunami About to Hit Shore

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.

A Year of Trading, Every Day

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.

A Wall Street Christmas Poem (Lieberman edition)

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 Connections

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.

Transfer Agents and Investors Beware: When it Comes to Unclaimed Accounts, State Laws End Up Hurting Everyone (Except the State)

States are increasingly trying to pull a fast one on investors. In fact, you could say those investors could soon feel cheated on escheatment.

Wall Street 2(009)

On the ground floor of the building in which this is being typed, Oliver Stone has set up shop. Barely a stoneís throw from the New York Stock Exchange and in direct eyeshot of the Statue of Liberty, the movie producer is at it again. Heís shooting Wall Street 2. But he may be looking for "villainy" in the wrong place.

Rolling Thunder

When industry lobbyists target a Congressional proposal for defeat, the roar can be deafening.

A DTCC For Trading Issues?

If thereís 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 ďsponsored accessĒ has to be controlled. Itís not too late to determine who controls the controls.

Next Up for Investigation: ID Codes for Counterparties?

The European Commission seems to think that identification codes for financial instruments should be obtained for free.

Will Free be a Four-Letter Word in ‘Licensing’ ID Codes?

The European Commissionís investigation into the licensing of identification codes for financial instruments by Standard and Poorís CUSIP Global Services and Thomson Reuters has aptly generated several basic and underlying questions that have been long overdue.

States Step in Where Feds Fear to Tread

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.

Trading Ideas on Trading Technology

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.

Twilight Saga for Ponzi Schemes

If the securities industry is determined enough, it could easily include algorithms that track every use, every transfer of an investorís 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.

Mind Over Model

No matter what happens with the rest of this Greatest Recession Since the Depression letís 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.