Latest Blog Posts

Simplifying Complexity: Trading Complex Order Books in Options-Part 2

Ivy Schmerken, FlexTrade

Oct 20, 2015

Primary Challenges Traders seeking an edge in multi-leg options trades are relying on technology to navigate a complex market structure. One major challenge is that there is no linkage with regards to complex order books spread across seven US options exchange.  Hence, it’s very important to scan all the exchanges to see what’s out there. In addition, the complex orders just sit in the complex order book and there is no connection to the listed quotes in the regular order book.  “That was a problem, because there could be a spread that looks like it could execute but it doesn’t,” says Henry Schwartz, CEO of Trade-Alert. read more

Simplifying Complexity: Trading Complex Order Books in Options-Part 1

Ivy Schmerken, FlexTrade

Oct 15, 2015

The appetite for multi-leg options strategies is on the rise. But this also means capturing liquidity that is fragmented across multiple options exchanges. Complex orders or spread trades allow traders to simultaneously buy or sell a number of different options in what otherwise would require separate orders. “The vast majority [of complex orders] have two or three individual series that are legs of a complex order and most of those are generated by the end user,” explains Boris Ilyevsky, managing director at International Securities Exchange. read more

Determining the Optimum Tick Size for Improved Efficiency

Khalil Dayri, Bloomberg Tradebook

Oct 09, 2015

One aspect of the European Union’s MiFID II is the aim to harmonize tick values across exchanges and asset classes in the continent. The regulators see that a tick value that is too big makes crossing the spread expensive, leading to increased queue sizes, increased queuing times and hence unproductive investments in ultra-high speed machinery in order to reduce that queuing time. This discourages and frustrates investors because they constantly get beaten to the top by those with faster connectivity. read more

Multi-Asset Best Execution And MiFID II

Michael Sparkes, ITG

Oct 08, 2015

While Best Execution and Transaction Cost Analysis (TCA) are well-established in equity trading, other asset classes have been slower to adopt such techniques due to limitations in market data and market structure characteristics. In Over-thecounter (OTC) markets there has typically been no requirement for central reporting, making it difficult to demonstrate best execution in the same way as for equities. This is beginning to change due to pressure from regulators and end investors who require higher standards of information. read more

MiFID II choice cuts

Anne Plested, Business Solutions Consultant at Fidessa

Oct 08, 2015

The overhaul of transaction reporting under MiFID II continues unabated in the latest ESMA drafts, with new obligations and data changes still being introduced. Aimed at improving the quality of data for market abuse investigation, ESMA has introduced a new requirement for transaction reports to be made available to regulators in a common XML template in accordance with ISO 20022 methodology. Currently used mainly for payments and post-trade financial messages, this international standard has won ESMA’s favour for its “flexibility to accommodate future developments”. read more

Doesn’t ESMA time fly!

Anne Plested, Business Solutions Consultant at Fidessa

Oct 06, 2015

Looking at the latest changes regarding accuracy of business clocks, now reincarnated as RTS 25, I noticed a number of interesting points in the text. Most importantly, the absence of the usual clause “…applies from 3rd January 2017″, with just the generic phrase stating that the rules will “enter into force on the twentieth day following that of its publication”. Is this an accidental omission, I wonder? If not, given that the European Commission has three months to endorse the text, which could be delayed by one or two months if the European Parliament and Council oppose it, there’s a possibility we could see business clock synchronisation in force some time in Q1 2016. read more

Symphony strikes a chord

Steve Grob, Fidessa

Oct 06, 2015

I have been following the Symphony story with interest and the recent news that Google’s parent company, Alphabet, is looking to invest certainly got my attention. Is this the sound of the mighty Google taking its first lumbering steps into the world of capital markets, or just another of the many investments that Google makes? More importantly, what does this do to help Symphony? Well cash is always nice, but the real challenge for Symphony is creating the tipping point where the mass market abandons Bloomberg IM and moves to its product instead. read more

Getting to grips with complex assets

Neil Vernon, Gresham Computing

Oct 05, 2015

We’re seeing little let up in the volume of fines imposed on firms that fail to meet regulatory requirements. Earlier this month, Finra, the brokerage industry’s self-funded regulator, reported fines of $37.5 million for the first half of 2015. While this is slightly down on the same period last year, the figure remains the second-highest total since 2008. Analysis suggests the end of this year may well see an increase in activity. Trade reporting in particular is under the spotlight. Finra has issued fines worth $7. read more