Latest Blog Posts

Client Assets: putting the focus on banks

Daniel Holness, Capco

Aug 22, 2013
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Since the FCA’s introduction of Client Assets (CASS) rules in 2010, the industry has seen significant fines against firms and individuals. Now fresh funding has been agreed for the CASS team at the FCA with a shifting focus to banks. The financial services industry faces an unparalleled level of scrutiny as organisations will have to demonstrate proactive proof of CASS rules being adhered to, or face severe penalties. How ready is your bank for the potential implications of the proposed reforms? Although CASS compliance has improved within the industry, there is still a substantial journey ahead. read more

Why the big exchanges need to visit Amsterdam

Steve Grob, Fidessa

Aug 21, 2013

My friend Nandini Sukamar at Bloomberg broke a story yesterday that Eurex is to compete with CME Europe by offering competitive FX contracts. So it looks like we are going to see a few more spats as the big boys vie for control over the European exchange-traded derivatives market. The CME is looking to launch its own competitive products to Eurex, and NASDAQ NLX is taking on both NYSE Liffe and Eurex with its own interest rate products. These are interesting developments, as history shows that few such attempts are successful. read more

Bob Diamond launches a new stock exchange

Chris Skinner

Aug 20, 2013

I was surprised to read this morning that the former leaders of Barclays (Capital) Bank are launching a new European stock exchange. Apparently Rich Ricci and Bob Diamond – the former CEO of Barclays investment bank and Barclays Bank respectively – are the backers of Aquis, an exchange run by former Chi-X CEO Alasdair Haynes.  The other major backer is the Warsaw Stock Exchange, who own a 30 percent stake. I’m sure they know what they’re doing, but does Europe need another exchange? We have LSE, Deutsche, Euronext as the three large traditional heavyweights, and Chi-X has beaten most contenders to become the de facto algorithmic heavyweight, so why another one? According to their website, another one is needed because there are only two exchanges in each country across Europe to trade upon today: the traditional one and the BATS Chi-X platform (BATS and Chi-X, the two largest multilateral trading facilities merged at the end of November 2011). read more

The Changing Environment of Collateral on the Buy Side

Daniel McNavich, SunGard

Aug 12, 2013
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It goes without saying that global regulations have brought about increased challenges and costs associated with the use of collateral. The ability to pool collateral assets and prioritize asset utilization is an integral part of a firm’s success today and into the future, as regulators are changing the game when it comes to capital requirements. With regulations driving change, the industry is experiencing increased initial margin (IM) requirements, mandatory clearing of over-the counter (OTC) derivatives, and increased segregation of collateral assets, creating an expensive and fragmented new model. read more

The Importance of Historical Context: SROs, Immunity and Regulatory Reform

Gary Stone, Bloomberg Tradebook

Aug 09, 2013
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The extreme losses incurred in the Facebook IPO and the discussion of dark pools and high-frequency trading have ignited another debate: Should exchanges have immunity/legal protections for errors? In fact, it was this immunity that, in part, prompted the Securities and Exchange Commission (SEC) to deny the Nasdaq OMX Group’s request to offer benchmark orders—orders that would seek to achieve a specific performance result, e.g., volume-weighted average price (VWAP), time-weighted average price (TWAP) or percent of volume (POV). read more

FTTs and ET – a dangerous combination

Steve Grob, Fidessa

Aug 08, 2013

There has been a lot of talk recently about the introduction of Financial Transaction Taxes (FTTs). This has even extended to speculation here in the UK that we should tax those naughty HFT practitioners too. Seemingly everyone has a view on this and whether such taxes actually punish the banking community or the end investor. But the real point is that such taxes just won’t work, at least not in Europe anyway. Take Italy, for example, which introduced its own FTT in March of this year. The chart below shows total volume traded and reported to Borsa Italiana. read more

We’re all in this together

Anne Plested, Fidessa

Aug 07, 2013

It’s not only in the West that the endless waves of regulation coming our way are keeping CEOs awake at night! Regulatory reforms are hitting the financial industry on a global scale. A group of leading industry participants based in Asia-Pacific recently shared their candid views with some of my colleagues at a gathering in Hong Kong. You can download a copy of that discussion here. read more

On Defining an Order and Order Type

Gary Stone & Aaron Weiner, Bloomberg Tradebook

Aug 06, 2013

Market structure critics and pundits blame recent market uncertainly/volatility on the presence of hundreds, or even thousands of different order types that over-complicate and bias the trading process. In order to add some structure to this important debate, we wanted to take a step back and try to define what constitutes an order type, and then analyze how many different kinds of orders a trader can send to an exchange. If we are going to properly assess how many order types actually exist, we have to define exactly what it is that we’re trying to count. read more