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Credit Suisse Goes Live Globally on FXSpotStream as the 10th Liquidity Provider and Commences Client Trading

Apr 23, 2015

FXSpotStream LLC, a wholly owned subsidiary of LiquidityMatch LLC, today announced that Credit Suisse is now live as a liquidity providing bank to FXSpotStream’s price aggregation service from FXSpotStream’s sites in New York, London and Tokyo. Client trading with Credit Suisse via the service has commenced.

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Study shows that almost half of Capital Markets professionals believe delays in connectivity lead to missed trading opportunities

Apr 22, 2015

A study commissioned by Colt shows that almost half (49%) of buy-side and sell-side traders in Europe, US and Asia believe that delays in connecting to new markets result in missed trading opportunities, and a similar number (47%) believe that it impacts client relationships and causes loss of clients. The survey reveals that resulting losses at investment banks can be as high as $5 million in trading revenues per trading desk each year.

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FCA fines Merrill Lynch International £13.2 million for transaction reporting failures

Apr 22, 2015

Merrill Lynch International (MLI) has been fined £13,285,900 by the Financial Conduct Authority (FCA) for incorrectly reporting 35,034,810 transactions and failing to report another 121,387 transactions between November 2007 and November 2014.

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Latest Blog Posts

Keeping up with the exchanges – the ETD challenge

Bill Blythe, Gresham

Apr 22, 2015
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Trading volumes in exchange-traded derivatives (ETDs) continue to rise (up 30% from pre-crash volumes). During a recent pilot study at a large securities clearing house Gresham CTC was tasked with processing 20 million trades in 14 minutes as a minimum requirement for processing ETD transactions.  I’m pleased to say that we passed with flying colours, but it does highlight the increasing volumes. But at the same time many firms have failed to make a corresponding investment in their post-trade processing systems, attempting to stretch their legacy technology to accommodate ever more complex instruments. More often than not this is a false economy. These exchange-traded contracts are often complex and time-consuming to onboard, requiring firms to go through a shoe horning exercise using expensive extract and transform data technologies to get the data into a format that can be reconciled. Some vendor firms have tried to make this easier by supplying ‘exchange templates’, but these are not easy to use, and can be very costly to maintain through increased software license and maintenance costs.   I’ve come across trading organisations using legacy reconciliation technology that take an average of 220 hours every time a change is mandated by a single exchange. If a bank has partnerships with 40 different exchanges and each of these exchange issues a new set of file formats every six months, then that’s a whopping 8,800 hours of activity. To try and keep up, firms have been throwing sheer manpower at the problem as well as inventing complex workarounds. But as well as introducing the very operational risk that the reconciliation was meant to remove, the approach is simply not viable or cost effective in the long term. Regulations such as Dodd-Frank and EMIR have been pushing firms away from OTC derivatives towards centrally cleared ETDs that are more transparent and carry less risk.Data files coming from exchanges like the DTCC, CME or Eurex can include hundreds (500+) of attributes. More often than not, legacy reconciliation systems are unable to accommodate such wide data files. In order to adapt these incumbent systems, which are largely based on fixed data models, you often have to make compromises with the data along the way. Instead firms need flexible, adaptable and robust controls that allow them to easily and quickly on-board new asset classes, regardless of their complexity. Firms need to prove the integrity of their operational functions (hence operational risk departments expanding), whilst also improving clarity and governance across the post-trade environment. Real-time consolidated views (total equity reconciliation) of cash, positions, trades, portfolios, margin and collateral are all required in today’s derivatives environment. Some firms have been tempted to use spreadsheets as a workaround or add-on to their legacy solutions. But with regulators cracking down on such practises, ultimately there can be no shortcut to putting in place the robust controls that come with the next generation of reconciliation technology including integrity, clarity, flexibility, adaptability, and scalability.    I’m seeing more and more firms finally accept that a ‘one-size-fits-all’ approach to their own reconciliation utility doesn’t work in most cases. A solution that remains suitable for Nostro/Depot processing for example, might not be the best for handling derivatives or T+0 matching. The smart thinking involves using a combination of complementary technologies, all deployed within the internal reconciliation utility. This includes continuing to use legacy technologies for commoditised processes (Nostro/Depot) to make best use of existing investments, but also deploying new, flexible, and adaptable technologies to meet the tough new regulatory landscape and controls needed in the ETD world. 
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FX Trading – Seven Trends the Buy-Side Needs to Consider

Ivy Schmerken, FlexTrade

Apr 21, 2015
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It’s hard to escape the headlines about FX trading lately. Words such as rigging, currency manipulation, chat rooms and billion dollar fines are grabbing attention and alarming many buy-side customers. It’s an environment that could give pause to investors, so it’s interesting to note that, in spite of these transgressions, the $5.3 trillion foreign exchange market is growing, driven by new market participants, beyond dealers. According to the latest Bank for International Settlements Triennial Survey of Central Banks, small banks accounted for 24 % of the turnover, followed by institutional investors such as pension funds and insurance companies at 11%, and hedge funds and proprietary trading firms another 11%. As such, following are seven trends in currency trading that buy-side firms need to be aware of: 1. FX ECNs and Dark Pools Kevin McPartland, Greenwich Associates The last 20 years has seen the rise of electronic trading in FX venues, including specialized FX ECNs and dark pools.  Venues such as Thomson Reuter’s FXall and State Street’s FX Connect are popular with the buy-side. This gives the buy-side more direct access to electronic trading venues.  In 2014, 75 % of client FX trading was done electronically, slightly up from 74% the prior year, according to Greenwich Associates.  Kevin McPartland, Head of Market Structure Research, says FX is the most electronic market that the firm tracks from a percentage of dollar volume perspective. 2. Exchanges Exchanges are also jumping into foreign exchange trading, and more could follow. The acquisition of Hotspot by BATS Global Markets for $365 million from KCG is a sign that exchanges are tapping into the demand for more transparency. Other e-FX venues are also attracting new backers. In 2013, BNY Mellon invested in FastMatch ECN, joining Credit Suisse Group and FXCM as partners, suggesting that banks are helping clients capture alternative sources of FX liquidity. 3. Algorithms As FX trading becomes more electronic, buy side firms are turning to algorithms to execute more sophisticated strategies. The trend is toward more sophisticated trading platforms and trading tools, including algorithms — whether they are supplied by brokers or EMS providers. What’s more, currency-focused hedge funds that use algorithms scored some of the highest gains recently.  Barclay Hedge Ltd reports that hedge funds using computer algorithms to identify market trends earned the highest profits in January. 4. FX Hedging Buy-side firms are engaging in currency trades to hedge their foreign equities exposures, while others are trading FX as an asset class. A February 2015 Greenwich Associates report shows that 68 percent of equity, fixed-income and FX traders operate in multiple asset classes.  Institutions are also trading in multiple asset classes to generate alpha on their portfolios. 5. Volatility Volatility has also returned to currencies with the U.S. dollar strengthening against the euro. Since the financial crisis, currency markets have been calm, as central banks moved in a similar direction, making it hard for macro-managers that bet on broad economic movements. But, with the Federal Reserve signaling it plans to raise interest rates, the dollar has jumped against the euro, while the euro has plunged against the dollar due to the ECB’s stimulus program to weaken the currency.  Now that there is a divergence in monetary policies, hedge funds that rely on complex- automated trading strategies are scoring profits. A common strategy is for funds to short the euro against the dollar, though this could backfire if the Fed decides not to raise rates. 6. FX TCA Lawsuits filed in 2010 by leading public pensions systems, charging custodian banks with providing unfair prices, have ledge to the development of transaction cost analysis (TCA) platforms in FX.  There are many different TCA offerings in the market, including those offered by single dealer platforms, multi-dealer platforms, and third parties. 7. FX EMSs As FX markets become more fragmented, buy side firms are considering execution management systems or EMSs to source liquidity and manage risk across platforms. Multi-asset, broker- neutral platforms offer connectivity to single dealer and multi-dealer trading platforms. How FlexTrade Can Help At FlexTrade we offer buy-side firms award-winning FX execution management via our FlexFX solution, which combines cross asset trading with streaming and RFQ prices from more than 50 liquidity providers.  Also, with such an array of liquidity providers, our FlexTCA solution provides the ideal transaction cost analysis for traders seeking greater market transparency and the ability to better gauge the performance of the their FX trading. For a complete review of your firm’s FX trading requirements and a demonstration of FlexFX and FlexTCA, please contact us at sales@flextrade.com
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OneTickCLOUD, Managed Services across Global Markets

Louis Lovas

Apr 13, 2015
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The seduction of low-cost yet massive compute power creates overwhelming interest in cloud technology. Momentum is building fast within the trading and investment business to benefit from the $18B cloud computing industry.  In a survey conducted by OneMarketData respondents overwhelmingly look to avail themselves of all that cloud offers.  Over 77 percent expect to jump headlong into cloud platforms. The allure of cloud computing is lower technology costs and improved profitability that comes from the enhanced capabilities enabled by greater compute power and access to a store house of deep market history. Quant research for alpha discovery, algo development and back-testing are all augmented by what the cloud can immediately dish up. A key characteristic of the cloud is rapid elasticity which offers scalable compute power and voluminous storage providing immediate access to deep market history. Such pay-as-you-go scalability defines a new archetype for the front-office trade lifecycle chain. OneMarketData has recognized this technological shift to embrace cloud computing. For that, the launch of the new OneTickCLOUD™ is now on-line. OneTickCLOUD is a securely-hosted managed data and analytics service supporting global equities and futures tick history, reference data, and adjustment factors. It offers a suite of pre-defined analytics and tooling for your own custom personalized analytics.  Web access is on-demand for flexible and convenient access when you want it. OneTickCLOUD enables users to focus exclusively on their analytics and eliminate the challenges associated with data collection, alignment and extraction.  No local hardware, software or data licenses are necessary. You have immediate access to 5 years of tick history, 20 years of end-of-day along with real time collection from US Equities and Futures markets. Outside the US over 10 years of tick data is available from over 120 global markets, including market depth. Knowing a one-size does not fit all, OneTickCLOUD offers personalized access to suite your requirements for content and analytics. The tree-tiered offering is outlined in this Product Matrix. A move towards cloud signals a fundamental shift in how we handle information. Financial firms will move first with data-heavy decision-support functions – model back-testing, quantitative research and transaction cost analysis. The days of cloud-as-a-fad are over. It’s a game-changer promising a major paradigm shift in business initiatives with its vast computational power, storage and a wide variety of application solutions at a lower cost structure.  OneTickCLOUD delivers on that promise.  
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Interview

Linedata's Robin Strong discusses MiFID II's impact on the unbundling of commissions

Apr 23, 2015
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ATMonitor speaks with Linedata's Robin Strong at TradeTech Paris 2015. Robin discusses how MiFID II is affecting trading activity, in terms of the unbundling of commissions and what impact this is having on the buy-side.

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Linedata's Robin Strong discusses the challenges of outsourcing

Apr 21, 2015
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With an increasing move for firms to outsource their back office, Linedata's Robin Strong, discusses the impact this is having on the trading desk and the challenges clients face in order to achieve best execution.

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Theo Hildyard discusses current developments within Market Surveillance

Apr 20, 2015
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Theo Hildyard talks to ATMonitor at TradeTech Paris 2015. Theo discusses what developments the market is seeing around Market Surveillance right now and how APAMA is addressing the current challenges.

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Survey

The 2015 Algorithmic Trading Survey

Trading Survey THE TRADE invites you to participate in The Algorithmic Survey for 2015, now in its 8th year running. If you are trading electronically, we would appreciate your input on the use of algorithmic trading services. To express our thanks, all participants are eligible for a free one-month online subscription to thetradenews.com. Please rate your algos by completing the online questionnaire available here..

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Research

Shifting sands – the harsh realities of executing in today’s markets

Fidessa

Mar 09, 2015
Shifting sands – the harsh realities of executing in today’s markets

Fidessa has released a new paper entitled Shifting sands – the harsh realities of executing in today’s markets. Authored by Will Winzor-Saile, Electronic Execution Product Specialist at Fidessa, the paper explores how the electronic execution landscape has evolved over the last 10 years and reveals the challenges that now exist for brokers wanting to trade across global markets. Winzor-Saile comments: "Execution infrastructure is increasingly seen as a commodity, but as market complexity and regulation continue to impose themselves, many firms are finding it harder to maintain their competitive differential across the patchwork of electronic trading infrastructures that they've previously relied upon."

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Video showcase

Corvil working with RSJ

Corvil Watch Michal Sanak, CIO, RSJ Algorithmic Trading discuss working with Corvil. read more

Corvil working with Tradition

Corvil Watch Yann L'Huillier, CIO, Tradition and Alex Krovina, CTO, Tradition discuss working with Corvil. read more

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