Latest Blog Posts

Trading safety measures pay off

Christian Voigt, Fidessa

Feb 07, 2014

The eagerly awaited final MiFID II text potentially includes regulation around circuit breakers. Yesterday Eurex saw trading in the FDAX drop by 2% within minutes of an ECB announcement, only to recover shortly after. It’s safe to assume that the circuit breaker prevented a more serious situation. Even with a reliable and secure market structure and tightly defined corridors, price swings may still occur and there is little we can do about it. While the cause of yesterday’s FDAX issue is still unclear, those responsible are almost certainly looking at considerable trading losses given Eurex’s confirmation that all trades during the period will hold. read more

The Twilight Zone

Steve Grob, Fidessa

Feb 05, 2014

I came across the term ‘Twilight Pool’ for the first time this week. The basic idea is that it is essentially a dark pool that lights up certain pieces of information, or at certain times, in order to provide users with some idea of what is or isn’t lurking there. The advantage is that it enables participants to see if the type of liquidity they’re seeking (either in terms of name or size) is likely to be in that pool. Obvious applications would be in the new-fangled SEF zone where everyone is scratching their heads wondering how and where illiquid contracts are going to trade. read more

The whole package

Mark Brennan, Fidessa

Jan 30, 2014

The CFTC continues to approve MAT self-certifications, most recently Tradeweb’s. Arguably the certified products are fairly standard, but in certifying Javelin’s MAT submission the Commission left the door open for package transactions to be caught up in the trade execution mandate. The industry (notably the Managed Funds Association in its comments to the Commission) has been arguing forcibly against this. The Commission acknowledges the need to address this issue, scheduling an open meeting of the Technology Advisory Committee for February 10th. read more

Borsa Istanbul - A Bridge Too Far?

Philippe Carré, Sungard

Jan 29, 2014

Turkey may be going through some political turmoil at the moment, but its economy and its stock market, Borsa Istanbul, have remained relatively resilient—though not immune—given the stress affecting emerging markets over the last few months. Dr. Mustafa İbrahim Turhan, chairman of the fast-growing stock exchange, is said to be destined to higher duties in Turkish official circles as he embarks on an ambitious mission to make Istanbul a “global financial center.” Similarly, Borsa Istanbul has ambitious goals of becoming the centerpiece of this global financial center, acting as a bridge between continents and the link between East and West. read more

Why is KYC so difficult?

Chris Skinner

Jan 27, 2014

I’ve always put the failure of banks to KYC (Know Your Customer) down to their reluctance to outsource such a critical activity. Specifically, banks fearing the risk of non-compliance or compromise being the reason why this had to remain as an internal process. But there is another piece that plays into this that is just as important, as it has been at the heart of what I blog and talk about all the time. Data. Back in the day, I used to tout around with data warehouses. Back in the day, we would talk about 1:1 marketing. read more

Patience is a virtue

Christian Voigt, Fidessa

Jan 24, 2014

Last week’s announcement of the political agreement on MiFID II felt like the Gordian knot had been cut. Maybe 2014 will turn out to be the year when the regulatory uncertainty that dominated 2013 gives way to thrilling new opportunities. Amid all the excitement (and relief that MiFID II will escape the feared entanglement in the upcoming European Parliament elections), it would be easy to overlook the fact that the late night meeting actually only produced a political agreement on the last unsolved and highly disputed issues. read more

The Watchman’s Rattle – financial regulation in 2014

Steve Grob, Fidessa

Jan 22, 2014

In her excellent book, ‘The Watchman’s Rattle’, Rebecca Costa explains the tendency to substitute belief for science when problems become too complicated. The first sign of this is a cognitive threshold, or gridlock, where problems are just passed down from one generation to another with an increasing emphasis on treating short-term symptoms rather than underlying root causes. Whilst the book is not aimed at the global finance industry, it certainly could be. 2014 will see no let-up in the waves of regulation that are rolling across the industry as national regulators battle the extraterritorial ambitions of their neighbours and the consequences of their own and previous incumbents’ earlier efforts. read more

MiFID II under starter’s orders

Anne Plested, Fidessa

Jan 15, 2014

So, the much-anticipated trilogue meeting finally took place yesterday. With negotiators for Parliament and the Council of Ministers under heavy pressure to resolve issues and avoid a threatened return to the drawing board, ECON’s press release, published late last night, announced that informal agreement has been reached on MiFID II/MiFIR. Hurrah! Too early for champagne corks perhaps, but a monumental milestone nonetheless. Now, finally, the industry can start to move to the next phase of drafting and agreeing the technical details. read more