Latest Blog Posts

Industry Survey on the Impact of Social Media on Financial Markets

Louis Lovas

Jul 22, 2013

Commentary on social media outlets has reached peak levels. This year marks the seventh anniversary of Twitter and tweet volume now exceeds 400 million messages per day. Social media steps over traditional outlets to offer faster news delivery sprinkled with opinions, commentary and perspectives on business activity and political events. One glaring example was the public outrage over Rolling Stone’s now infamous choice for a cover photo.  If Werner Media  the publisher of Rolling Stone magazine was a publicly traded company their stock price would have plummeted following the social media berating heaped upon them. read more

If it looks like a duck…

Christian Voigt, Fidessa

Jul 18, 2013

Dividing derivatives contracts into over-the-counter and exchange-traded would seem to be a simple task, but this is far from true. Thanks to EMIR’s definition of ‘on-exchange‘, contracts that are traded on anything other than a regulated market (RM) will be considered OTC regardless of whether they are traded on an MTF or are economically equivalent to the on-exchange contract. To highlight the issue, ESMA, in its most recent discussion paper on clearing obligations for OTC derivatives, coined the term ‘forward/swap’ for the OTC version of an on-exchange future. read more

Don’t Judge ETF Liquidity Relying Solely on the On-Screen Volume

Mike Baradas and Gary Stone, Bloomberg Tradebook

Jul 17, 2013

  Secondary market or on-exchange liquidity is not an indication of the true liquidity of an ETF. For many ETFs, the available liquidity is much higher. Although the exchange-based liquidity may make the ETF look illiquid, the ETF is very liquid when you take into account the liquidity you can get by trading the underlying basket. Traders need to operate in both liquidity pools. They should use an algorithm to trade the exchange-based liquidity and, at appropriate price levels, use Bloomberg Tradebook’s Execution Consultants to get an anonymous quote for block liquidity. read more

No one-size-fits-all approach for recs

Neil Vernon

Jul 08, 2013

We recently worked with Aite Group on a benchmark survey exploring the reconciliation challenges facing financial services firms. The benchmark threw up a number of interesting findings around issues such as an over-reliance on manual processes, delays in onboarding and issues in handling non-standard and inter-system recs. In this first of a series of blogs on the benchmark findings, I will examine how a ‘one-size-fits-all’ approach no longer fits the bill. Many banks are trying to use yesterday’s methods to solve today’s challenges. read more

The buck stops here

Matt Grinnell, Fidessa

Jul 08, 2013

Money markets were rocked in 2008 when the Reserve Primary Fund committed the unthinkable by ‘breaking the buck’ because of its links to Lehman Brothers. This served as a wake-up call and in 2010 the SEC implemented amendments to the 2a-7 regulations which safeguard these types of investments. But many in the industry said they didn’t go far enough and on June 5th 2013 the SEC outlined additional proposals for increasing the stability of money market products. These included the introduction of a floating net asset value (NAV) instead of the standard $1, the introduction of a new redemption fee or a combination of the two. read more

Getting Back to the Basics with Recording in Financial Institutions

Robert Simpson, IPC

Jul 08, 2013

In 2012, it’s no secret that many financial institutions supported a vigorous and concerted campaign against proposed regulatory changes. These organizations made it clear that the costs of implementing systems to record landline conversations and associated analytics software can far outweigh the benefits. Some financial institutions drew parallels between the implementation of the FSA mobile recording directive, which has “not achieved the levels of stability, performance and scalability that would be considered for commercial grade products and the implementation of the Dodd Frank Act” In particular, they pointed to the limitations of speech analytics software with respect to performance in a trading floor environment. read more

Transparency Drives Trust – Comments on Concept Release on Equity Market Structure

Ray Tierney & Gary Stone, Bloomberg Tradebook

Jul 02, 2013

Yesterday, we submitted a comment letter to the SEC regarding the Concept Release on Equity Market Structure, based on feedback from a workshop we held with members of equity trading desks from 37 asset managers who represent over $10.6 trillion. The comment period for the concept release is still open. We relayed to the U.S. regulator that in this workshop, buyside representatives expressed their desire and need for additional transparency on the handling of their equity orders. The buyside representatives were clear in their belief that they have an overriding obligation and fiduciary responsibility to their shareholders to monitor market structure and understand how their orders interact in the marketplace. read more

Anti-price discovery tax

Christian Voigt, Fidessa

Jun 28, 2013

This week saw the publication of the European Parliament’s amendments to the EU Financial Transaction Tax (FTT). As reported in the press, lower rates (until 2017) for sovereign debt and pension funds have found their way into the proposal. Unfortunately, some very unpleasant surprises crept in as well. According to the Parliament, firms engaging in high frequency trading have to pay FTT not only on successful execution transactions, but also on order cancellations! Regulators might argue that this is necessary to protect markets from harmful speculation, but taxing order cancellation is tantamount to an anti-price discovery tax. read more