Latest Blog Posts

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%. read more

Why Horizontal Thinking Is Required When Flipping from ETFs into Stock

 Dr. Yurij Baransky & Gary Stone

Apr 14, 2015
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Most trades are vertical (Figure 1)—i.e., alpha is generated by prices going up (long) or down (short). ETFs are adding a new dimension to traditional institutional equity trading by forcing traders to think and execute horizontally. Rather than focusing on price direction (up/down), the focus shifts to a relative relationship—a horizontal relationship where the alpha is judged by the price of one asset relative to the price of another asset. This type of thinking and trading are common with long/short hedge funds, with derivatives, and in fixed income markets where assets are commonly compared with or benchmarked to an underlying asset. read more

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. read more

How Can Buy-Side Institutions Measure Their Relative Trading Performance?

Kapil Phadnis

Apr 10, 2015
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“Best execution” is a term that can have different meanings depending upon your perspective. For example, sell-side participants may define it in the context of Regulation NMS’s Rule 611—the order protection rule—as best price. As we noted in our September 2014 seminar at Institutional Investor’s International Trader Forum in Berlin, the U.K.’s FCA noted in their July 2014 “Thematic Review, Best Execution and Payment for Order Flow” that, “Best execution is broader than ‘best price’ and this is a major difference between Europe and other jurisdictions such as the U. read more

Backdoor Unbundling

Steve Grob, Fidessa

Apr 09, 2015
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I was relaxing on my way home on the 7.02 from Waterloo last night when I came across Nick Goodway’s excellent article in the London Evening Standard on the impact of unbundling and research procurement. As everyone knows, ESMA wants to make sure that transparency rules the day when it comes to how investment managers use client money, especially when it comes to paying for research via trading commissions. A noble motive indeed but one that, as Nick points out, is fraught with unintended consequences. read more

Bringing Transparency to Equity Research Costs

David Masullo & Sean Steinmetz

Apr 02, 2015
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In December 2014, the European Securities and Markets Authority provided draft guidance to asset managers about how they should pay for equity research used by clients. At the heart of widespread industry debate is ESMA’s recommendation that asset managers pay for research from a separate research payment account and that research charges be agreed upon in advance. ESMA also recommended that asset managers avoid using the research budget to pay for internal research, not link research charges to the volume or value of trades a client executes, and regularly assess the quality of their third-party research. read more

ESMA stops short of a no-action letter

Anne Plested, Fidessa

Mar 30, 2015
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Having taken several years to get through the review of MiFID, it was interesting to hear from ESMA chair Steven Maijoor last week that there is an appetite to “explore the mechanisms to address regulatory adjustments in a flexible and agile manner”. Neither national authorities nor ESMA have any tool like the ‘no-action letter’ employed in the US. Given that the rules may not be completely finalised until a year (possibly less) before the MiFID II January 2017 go-live date there will be huge implementation challenges. read more

Left in the dark

Christian Voigt, Fidessa

Mar 26, 2015
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Currently, it doesn’t really matter whether dark trades are executed under the reference price waiver (RP), large in scale waiver (LIS) or a negotiated trade waiver (NT). However, under MiFID II, the waiver flavour will make a significant difference. Whilst RP and parts of NT will become subject to the clunky double volume cap, LIS will not, so we may expect to see an increase in block trading. But how does an exchange flag a trade that matches a LIS order with an RP order? Coming up with an appropriate approach is now a pressing issue. read more