Latest Blog Posts

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

Shaking up the onboarding status quo

Neil Vernon

Aug 05, 2013

Ask most financial institutions about onboarding new reconciliations and the response you’ll get is one big manual headache. Luckily the status quo with lengthy delays and manual processing issues is undergoing a shakeup. A recent benchmark survey   with Aite Group reviews the existing onboarding challenges and highlights room for improvement. Onboarding a new reconciliation has a complex lifecycle. Typically, it will include defining business needs and technical requirements, design, configuration and development before even building the new reconciliation. read more

Regulatory front-running

Christian Voigt, Fidessa

Aug 01, 2013

Front-running is regarded as a form of market abuse and is banned accordingly. Although it is widely accepted that MiFID II will implement new regulation on algorithmic and high-frequency trading, that doesn’t seem to have stopped the law makers indulging in a little ‘front-running’ of their own. First, Germany passed its HFT Act ahead of schedule and now France seems to be jumping the gun too with this week’s updates to the French banking law. A lot of details are still uncertain but it appears that firms using “traitement automatisé” (automated processing) are now required by that law to register with the French regulator. read more

Keeping key-person risk at bay and removing manual processes

Neil Vernon

Jul 30, 2013

The reliance on staff to deal with manual reconciliations and multiple systems is about to reach its tipping point. With headcount reduction and cost cutting, firms are under increasing pressure to automate their reconciliation processes. This combined with key-person risk where recs processes are known to an individual or a small contingent leads to a significant source of operational risk.  In the second part of the series from the Aite Group benchmark survey, these challenges are put under the spotlight. read more