Top stories

Saxo Bank selects A10 Networks to manage trading platform throughput

May 28, 2015

A10 Networks (NYSE: ATEN), a technology leader in application networking, today announced that Saxo Bank is using A10 Thunder Application Delivery Controllers (ADC) to meet the critical transaction processing requirements for its state-of-the-art online trading platform.

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TORA moves into real-time stock borrowing

May 28, 2015

TORA, the leading provider of advanced trading technology and financial services, has announced the release of a comprehensive stock borrow management solution that is fully integrated with prime broker eLocate platforms.

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Ullink expands global reach to India, Kotak Institutional Equities selects Ullink

May 27, 2015

Ullink, a global provider of market leading electronic trading and connectivity solutions, today announced that Kotak Institutional Equities (KIE), one of India's leading institutional brokers and a division of Kotak Securities has chosen Ullink’s UL Bridge connectivity solution.

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Latest Blog Posts

With the Winds of Change Blowing, Are You Ready to Adapt to the New Research Unbundling Environment?

Sean Steinmetz, Bloomberg Tradebook

May 28, 2015
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There has been an age-old practice of allowing the cost of research to be bundled into dealing commission, thereby passing on the cost to underlying investors. This has provided start-up and developing asset managers and hedge funds with the flexibility to solicit a variety of opinions and trade ideas. This is how things have always been done, so why complicate things with change? No one likes change. Yet, that is exactly what European regulators are working on—changing this long-established practice. The final version of this potentially draconian regulation has yet to be determined, but change is coming—that’s for certain. But—maybe—it is time to move current practices progressively forward into a world with more transparency, clarity and efficiency? Maybe, just maybe, this time change will bring about good things? It’s just hard and sometimes expensive. Let’s make an analogy by looking at how change has impacted the game of Hockey.  Back in the day, enforcers used to roam the ice much more freely and frequently than they do in today’s games. The enforcer’s main purpose was to fight. According to an ESPN.com article by Katie Strang posted on December 26, 2014, the enforcer “is now practically extinct.” George Parros, who was recognized in the NHL as one such enforcer, was surprised in 2014 when no NHL team signed him for the upcoming season. The league has been heading in a different direction. Parros admits that “even if fighting comes back into vogue,” he doesn’t see the one-dimensional enforcer coming back with it. The truth is that the way the NHL hockey game is currently officiated dictates a different style of play: faster, younger and more skilled. These skills increase a team’s chance of winning, evidently much more than having musclemen skating around looking to drop the gloves. Dropping enforcers has also allowed for a smoother, cleaner and safer game—for players and fans. Simply put: the NHL has instituted rules that have led to a more attractive, safer and more profitable contest on the ice. But why? Something had to be done—of the four major sports in the U.S., hockey and the NHL found themselves at the high end of ticket prices and at the low end of franchise value, profitability and television contracts. It’s hard to argue that change was not needed. Hockey is now in the midst of a ratings upswing after declining year-over-year in the early 2000s. So, the seeds of change, however difficult to plant, do appear to have sprouted and even begun to bear fruit. The same can be said for the unbundling that is so aggressively being pursued by some regulatory agencies across Europe, even though the French or German regulators are trying to push back. Certainly the FCA and ESMA see a cleaner “game” within reach, one that not only provides transparency, but also forces the less-valuable “players” out of the game—ultimately benefiting the “league” and its “fans.” These fans are comprised of asset managers, asset owners and underlying individual investors. Unbundling the research from dealing commissions forces each and every research provider to stand with its product in hand and be chosen (or not), valued (or not) and (ultimately) judged. The best will survive, the worst won’t or will have to evolve. Research spend will go down because asset managers will count every penny when they are forced not only to write the check, but to justify it, too. Time will be needed to adjust to the new world. Many enforcers, or research providers, will find themselves on the sidelines. Their skills and product scrutinized deeply with the goal of determining if they are offering real value—value worth paying for. And, how valuable exactly? Will they be able to bide their time as the industry stabilizes under the new regulation? Or will they exit and consolidate? Let’s be perfectly clear, the creation of valuable research ideas is not going away. Rather, in this new environment, research will be properly valued and paid for. This will ultimately mean that research spend in aggregate will go down dramatically. The asset managers will either start paying for the research directly, having valued it at a level deemed commensurate, or start hiring sell-side analysts for the investment team. An additional benefit is that clients who could not afford to send their commission flow to multiple research brokers, and therefore could not receive all of those brokers’ research, should now be able to identify the exact research they need and value, and buy it on demand. Though the price will go down, availability and access should go up. The best research will survive and continue to be paid for and the buyside’s underlying investors will reap the benefits of their asset managers consuming the best research available at the best and most fair prices in the market. When we look back on these years, we will be able to point to a better product delivered to the paying fans on the ice and a better research product delivered to asset managers in the financial markets. Attendance will be higher at games and players will be safer on the ice. The integrity of dealing commission and research spend will be restored, the best research will prevail and the underlying investors will benefit from lower costs and greater transparency.  
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Engagement between the regulator and the regulated is vital in the lead up to MiFID II

Robert Powell, Etrali Trading Solutions

May 27, 2015
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A number of question marks remain surrounding the detail and full impact of MiFID II. These are causing significant anxiety amongst the trading community as we edge further towards the late 2016 implementation date. The practical reality of the post-MiFID trading environment, and the expected higher trading costs associated with it, remain somewhat of a grey area. Nonetheless, with firms not expected to have implemented the new measures until late 2016, there is still time for these concerns to be addressed. Regulators are playing a fundamental role in the post-2008 crisis world. New regulations –MiFID II in particular – are designed to provide a more transparent and fairer market; a market with greater stability and without the inherent structural imbalances that can result in higher risk and volatility, or those that are susceptible to wilful abuse. These aims are intended to benefit all market participants in the long run. So where is the middle ground between the regulated and regulator? The clock is ticking for those on both sides of the impending legislation, with feedback on the likely impacts of those policy options outlined in the regulation’s discussion paper currently being collated. The way forward must centre on mutual engagement by both the regulators and those whom they regulate. It is the role of technology providers, integrators and their end users to have the right solutions in place in order to help financial institutions comply with regulation. It is the role of the regulators to ensure that the regulations - from the off - are firm, well-defined and clearly focused on the aims of stability and transparency. Crucially, the incoming regulations must be introduced with the buy-in and involvement of the whole financial markets’ community. While the regulator is responsible for the actual enforcement of the rules it lays down, it is down to all participants in the financial markets to interrogate, explore and ask tough questions of technology providers and regulators alike. This will enable intangible regulations to become practical rules, grounded in the real world, that guide the way we work and trade. Only then can we really start to create a global culture of compliance across the financial markets. In the meantime there remains a gap between knowing that MiFID II is coming, and knowing the steps that need to be taken across an enterprise in order to be compliant. This gap is evident in the tension between the rule-setters and those participants who will have to continue with ‘business as usual’ when MiFID II arrives. This can be seen at every intersection point between financial markets participants and the technology they use to achieve their business aims. Helping market participants to prepare for the post-MiFID II world, through engaging in constructive dialogue, will settle concerns and ease the implementation process. In response, firms need to be receptive, engaged and willing to be involved in those conversations. The duty of engaging in positive, constructive and frank discussions places obligations on all stakeholders in the process. We cannot afford to be sceptical or to disengage with each other; the success or failure of the post-MiFID II world will affect all of us in equal measure.
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Data integrity: in the spotlight

Mark Brennan, ITRS Group

May 21, 2015
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What are the markets drivers putting pressure on data integrity? Market drivers for monitoring data integrity stem from the large-scale regulatory change sweeping the industry. Back at the G20 summit in Pittsburgh in September 2009, the world’s leading countries agreed that there needed to be more transparency and risk mitigation for the global derivatives market, in the form of organized clearing, reporting and trading. These principles were later enshrined in Dodd-Frank’s Title VII, and are at varying rates of progress in the EU through EMIR and MiFID II regulatory initiatives. Each of the three prongs of derivatives reform depends on data integrity. Clearing new derivatives products is no trivial task, and involves the integration of new flows of data, including connectivity to the clearinghouse for trade acceptance, reconciliation, valuation, and movement of margin. Trade reporting, which in the EU is a big focus of ESMA, involves connectivity to one or more trade repositories; but more importantly, both buy-side and sell-side trading counterparties must capture all the correct details of their trading data for timely transmission, and the trade repositories must be able to reconcile both sides of each trade.  Finally, SEF trading in the US, or the forthcoming MTF/OTF trade mandate under MiFID II, means market participants must connect to new venues, and be able to monitor their infrastructure so they can see and action potentially disparate sources of pricing data.    What are the challenges of getting it right? Each of these initiatives demands that market participants be able to capture and understand separate streams of data. The CFTC has made it clear that it expects banks involved in the trading and clearing of swaps to have straight through processing in place (under Regulations 1.73 and 1.74) and be able to process swaps within prescribed timeframes. This implies that in addition to having the pipes in place for the flows, clearing brokers must have visibility (in the form of events and metrics) of the data. So too for trade reporting: market participants must be able to know which trades need reporting and what data to capture. Trade execution too, involves significantly more than simple SEF connectivity, as market participants will need to watch multiple price feeds and make intelligent trading choices.   What are the ramifications if it goes wrong? The need for monitoring data integrity across clearing, reporting and trading has concrete regulatory compliance ramifications. Each mandate relies implicitly on participants using correct data, and bad data potentially opens participants up to unwanted regulatory scrutiny, if not worse. But in some ways the financial risk, especially for clearing and trading, is even greater.  As an example, a trader who does not understand he has latency on a specific SEF price feed may be pricing his own swaps incorrectly, resulting in material losses.  Clearing flows incur risk for FCMs if they fail to monitor specific exposures and margin obligations.   And, most importantly, what can be done? All of the regulation-driven market changes require technology solutions. No doubt there is tremendous complexity involved in mapping out the functionality involved in complying with the clearing, reporting and trading mandates, as well as implementing technology that meets the requirements. As the industry rushes to comply however, it’s clear that many firms simply lack tools that can holistically collect, analyse and action data across their set of workflows. Thus, unfortunately, the integrity of the data across these streams is often dubious – a point highlighted by both the CFTC and ESMA regarding trade reporting. Tools that can manage and monitor large sets of data – in all of its so-called volume, variety and velocity – are essential; but equally important is the additional dimension of veracity. As the landscape changes, market participants need advanced technology to cope adequately with all four dimensions of data.  
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Interview

Avelacom's Aleksey Larichev talks to ATMonitor

May 11, 2015
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ATMonitor talks with Aleksey Larichev, Director of Business Development at Avelacom. Speaking from TradeTech Paris 2015, Aleksey discusses Avelacom's low latency solutions to markets across Europe, Asia and Russia.

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Linedata's Robin Strong discusses the regulatory issues in trading emerging markets

Apr 27, 2015
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With more buy-side firms looking at emerging markets, how can clients deal with the regulatory differences that they now must adhere to? ATMonitor talks with Linedata's Robin Strong at TradeTech Paris 2015.

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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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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

CSA & Research Usage Survey

Convergex – Westminster

May 14, 2015
CSA & Research Usage Survey

Investors report finding great value in commission sharing arrangements, with a large majority of respondents saying that CSAs provide more transparency (65%) than bundled proprietary research, and that CSAs help in achieving best execution (58%). Buyside respondents identified a variety of research types that they incorporate into their in-house process, led by independent research (90%), traditional sell-side research (85%) and industry data and access to analysts (65% each). All told, eight separate categories of research received a vote from at least forty-two (42%) of buyside survey respondents.

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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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