Wall Street & Technology: Blog

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By Tim Clark, Wall Street & Technology

Agency brokerage and investment technology solutions provider ConvergEx Group recently announced the launch of SHAREx, its solution for commission sharing arrangements for the investment management community. SHAREx is one of the key offerings of BNY, ConvergEx Group's commission management model, enabling clients to manage commissions more efficiently by consolidating broker research payments with execution expertise.

Ivy Schmerken, Wall Street & Technology

Lek Securities is taking the National Association of Securities Dealers (NASD) to court to counter charges that the broker-dealer did not submit trade information required for compliance with the Order Audit Trail System (OATS). The trial was scheduled to begin today.

Lek is challenging the NASD charges on the basis that OATS is illegal and improperly structured, according to a release issued by the institutional direct-access broker-dealer.

Interactive Brokers, the online broker located in Greenwich, Conn., began offering penny pricing in options today. IB cut the minimum price difference for U.S. listed options from a nickel to a penny.

The broker is jumping the gun ahead of the rest of the U.S. options industry, but not for long. The Securities and Exchange Commission (SEC) mandated a penny pilot program beginning on Jan. 27, 2007, the release noted. The six U.S.-based options exchanges will have to reduce the minimum price change from five cents to one cent for options listed on 13 underlying stocks.

Cory Levine, Wall Street & Technology

RSA, the security company acquired earlier this year by mega-vendor EMC, announced yesterday its Adaptive Authentication for Phone service, which provides automated, risk-based caller authentication for telephone banking services. In addition to developing a risk score for phone-based transactions and taking appropriate authentication measures, the service features what RSA is touting as the financial services industry's first voice biometric solution suitable to meet the FFIEC standards on risk-based authentication.

By Tim Clark, Wall Street & Technology

On the heels of a research project involving 60 industry representatives, The EDM Council has identified, categorized and analyzed the Enterprise Data Management (EDM) issues of most concern to its members.

By Tim Clark, Wall Street & Technology

In an effort to better manage its front-, middle- and back-office banking functions, The National Bank of Slovakia (NBS) recently selected the Treasury TremaSuite 6.5 from Wall Street Systems.

Ivy Schmerken, Wall Street & Technology

Instinet and Credit Suisse’s Advanced Execution Services (AES) unit have agreed to provide their clients with access to each other’s dark liquidity pools, according to today’s announcement. The partnership between the two brokers involves Credit Suisse’s CrossFinder and Instinet’s CBX and is intended to increase institutions’ chances of executing large trades with minimal market impact.

By Tim Clark, Wall Street & Technology

Eagle Investment Systems, a Mellon Financial Company, recently announced that U.S. Bancorp Fund Services (USBFS), a subsidiary of U.S. Bancorp, the 6th largest financial holding company in the United States, has selected Eagle STAR to support its mutual fund accounting and reporting needs.

Ivy Schmerken, Wall Street & Technology

Aleri Labs., a provider of event stream processing technology for the financial services industry, claims it has broken the sub-millisecond latency barrier for event stream data processing.

The new performance standard is available through Aleri Streaming Platform, a high-performance application development platform that financial firms can use to analyze market data, process trades, monitor compliance and manage risk in real time.

Cory Levine, Wall Street & Technology

The securities industry underwent a simulated business continuity planning (BCP) test last Saturday, October 14 conducted by the Securities Industry Association, the Bond Market Association, the Futures Industry Association and the Financial Information Forum. The test was similar to a BCP test held a year ago, but industry participation was up, with over 250 securities firms, exchanges, markets, service bureaus and industry utilities testing the functionality of backup data centers, work centers and communication links.

By Tim Clark, Wall Street & Technology

Xcitek, a provider of market data, corporate actions software and consulting services, recently announced the deployment of a new Web platform for its Cost Basis Service.

Ivy Schmerken, Wall Street & Technology

New York City Mayor Michael Bloomberg has been approached by potential buyers of Bloomberg L.P., the multibillion-dollar financial information, market data, analytics and media company he created, but he has decided not to sell the company at this time, according to a release.

Cory Levine, Wall Street & Technology

Swiss banks have been accused of breaking their country’s laws on data privacy, a charge that stems from their involvement in the SWIFT data-sharing debacle that was first exposed in June. According to a Finextra report, Switzerland’s federal data protection commissioner, Hanspeter Thür, claimed Swiss banks broke national data protection laws by not informing customers of that transaction information would be shared via the SWIFT network.

The U.S. Treasury used its authority to gain access to data traveling over the SWIFT network in order to monitor terrorist financing. SWIFT has defended its own compliance standards, asserting that as a multinational organization, its subjection to the U.S. government was unavoidable.

The Belgian Data Privacy Commission, however, has declared that SWIFT broke Belgian and EU data protection laws.

Ivy Schmerken, Wall Street & Technology

The Chicago Exchange Mercantile and Chicago Board of Trade have signed a definitive agreement to merge the two exchanges, creating a powerhouse in global derivatives trading that rivals the size of its nearest competitors.

Chicago Mercantile Exchange Holdings plans to purchase CBOT Holdings Inc., operator of its cross-town rival, the Chicago Board of Trade, for $8 billion.

By Tim Clark, Wall Street & Technology

CitiStreet recently deployed host intrusion defense system from Third Brigade, a security software company.

Ivy Schmerken, Wall Street & Technology

NYSE Group has entered into discussions with the NASD to create a trade reporting facility (TRF), serving customers reporting off-exchange trades in all listed NMS (National Market System) stocks.

Ivy Schmerken, Wall Street & Technology

BATS Trading, operator of BATS (Better Alternative Trading System) ECN, warned participants that receive the BATS PITCH market data that it expects message activity levels to increase — partly due to systems changes related to Reg NMS — and customers may want to increase their bandwidth.

By Tim Clark, Wall Street & Technology

Denver Investment Advisors, an independent investment advisory firm, has deployed IMpower, SunGard’s application service provider (ASP) portfolio management solution, to support its global investment operations.

Cory Levine, Wall Street & Technology

E-mail communications on Wall Street are under considerably more scrutiny than those traveling through the London financial industry, according to new survey results from e-mail compliance vendor Orchestria.

The survey conducted earlier this month questioned 300 people working on Wall Street in New York and in the City area of London. Sixty percent of workers in New York believed that their employers were in the right by monitoring their e-mail. In London, only 38 percent of respondents believed that that their firm was within its rights to do so.

Cory Levine, Wall Street & Technology

NYSE Regulation today released its monthly roundup of disciplinary actions. Some notable firms made the hit list this month as a result of technology failures, and one can only wonder how these violations got past the firms’ various regulatory checks. All totaled six firms and nine individuals were fined. Here are the highlights, or should we say lowlights:

By Tim Clark, Wall Street & Technology

Northern Trust has been selected to provide global custody, investment mandate compliance monitoring and performance measurement services to China’s multibillion dollar National Social Security Fund (NSSF) — the first institutional retirement fund in China to invest overseas.

Ivy Schmerken, Wall Street & Technology

Gearing up for the evolving equity market structure, The Boston Equities Exchange (BeX) — an electronic stock market owned by the Boston Stock Exchange and five securities firms — announced that C. Thomas Richardson was named its new president, assuming the role as of Nov.6

Richardson joins BeX, a joint venture, electronic equity exchange owned by the Boston Stock Exchange and five equity partners — Citigroup, Credit Suisse, Fidelity Brokerage Company, Lehman Brothers and Merrill Lynch.

Ivy Schmerken, Wall Street & Technology

In a move to offer FX trading on its multi-asset, global trading platform, TradingScreen has hired Jonathan Cooper, former head of FX sales and liquidity at Bloomberg. Cooper is now global head of FX Sales at TradingScreen, which also launched secondary FX trading functionality.

Ivy Schmerken, Wall Street and Technology

NYSE Group announced that Mike Cormack, who joined NYSE Group following the acquisition of Archipelago in January of this year, is stepping down from his current position and will become a senior consultant to the company in early 2007.

Ivy Schmerken, Wall Street & Technology

In the fast and furious race to roll out innovative algorithms, Instinet, the global agency broker, launched Wizard, a new twist on the arrival price algorithm.

The system was configured to create a trading schedule for each stock in a portfolio by factoring in the historical volatility of stock and options prices. Arrival price — the price at the time an order arrives in the market — becomes the benchmark for the trader.

What makes the model powerful is that it’s based on actual trading history — prices and volatility — and the average daily volumes, says Mike Plunkett, president, North America, Instinet.

Instinet developed Wizard, which was released to buy-side clients on Monday, over a 14-month period in partnership with Northfield Information Services, the Boston-based developer of analytical risk models for investment professionals.

By Tim Clark, Wall Street & Technology

Archive Systems, a provider of on-demand document management services, and Global Realty Outsourcing (GRO), a business process outsourcing (BPO) provider, have formed a strategic alliance to leverage their respective onshore and offshore capabilities.

By Tim Clark, Wall Street & Technology

Message Automation recently announced the availability of its Derivatives STP solution, which enables the straight-through processing (STP) of Over-the-Counter (OTC) derivatives using FpML-based technology. It helps financial firms overcome issues such as a lack of bilateral communications, low levels of data accuracy, high levels of manual processing, large processing costs and lengthy time to bring new instruments to market.

By Tim Clark, Wall Street & Technology

In an effort to boost straight-through processing (STP) efforts, Jupiter Asset Management has successfully implemented the CheckFree TradeFlow solution as a centralized STP hub. The new platform will help Jupiter improve operational efficiency, manage increased trade volumes and enable business expansion without adding significantly to investment administration costs.

By Greg MacSweeney, Wall Street & Technology

Although securities messaging traffic has grown to 45 percent of overall SWIFT message traffic and has an average annual growth of more than 30 percent per year during the past 10 years, said Leonard Schrank, CEO, SWIFT, at the Sibos 2006 conference in Sydney, SWIFT is still having a difficult time attracting asset managers to the SWIFT community. By comparison, payments has grown 13 percent annually during the same time period.

By Tim Clark and Ivy Schmerken, Wall Street & Technology

In the October issue of Wall Street & Technology, we explored the practice of commission recapture in the article “A Hard Act to Follow.” The catalyst for that story was derived from an insightful roundtable discussion that BNY Securities Group subsidiary Lynch, Jones & Ryan hosted with a handful of other commission recapture players. The general consensus from that meeting and in follow-up discussions indicated that commission recapture, while still a viable means to generate returns, would one day become obsolete, especially since players such as UBS and Goldman Sachs shuttered their commission recapture operations, deeming it an industry in decline.

Ivy Schmerken, Wall Street & Technology

U.S. hedge fund HG Trading has implemented the Progress Apama Algorithmic Trading Platform for equity trading from Progress Software Corp. The boutique trading firm located in Heartland, Wisc., which specializes in high-velocity, low-risk strategies, plans to extend its uses into other asset classes, including futures and options, according to the release.

Ivy Schmerken, Wall Street & Technology

NYFIX signed an agreement with Paladyne Systems LLC. to provide FISX connectivity to the hedge fund industry through its “Powered by NYFIX” hosted solutions platform. Paladyne provides a hosted front-to-back-office technology suite to the hedge fund industry.

By Tim Clark, Wall Street & Technology

Thomson Financial has partnered with enterprise feedback management provider Allegiance to supply ethics reporting and whistle blower technology to Thomson Financial’s corporate clients through the Thomson’s Corporate Governance Reporting Solution.

By Tim Clark, Wall Street & Technology

Dow Jones & Company recently launched "Dow Jones Wealth Manager Web Services," a solution that matches stories, articles and features from sources such as Dow Jones Newswires and The Wall Street Journal to client-specific interests and holdings.

By Ivy Schmerken, Wall Street & Technology

On Saturday, the New York Stock Exchange (NYSE) conducted a market-wide training exercise involving floor brokers, specialists and other market participants to prepare for the Phase II launch of the NYSE Hybrid Market.

On Oct. 6, Phase III full Hybrid Market trading will begin with two NYSE-listed securities, followed by a gradual roll out of all NYSE-listed securities through December 2006, the NYSE release said.
The simulated Hybrid Market trading session in NYSE-listed stocks produced valuable information and experience for exchange, its members and member firms prior to the Phase III launch, the release said.

By Ivy Schmerken, Wall Street & Technology

CME will begin offering collocation services for customers' firms that execute electronic trades on CME Globex in the fourth quarter of 2006.

For the first time, CME will offer customers the opportunity to connect their collocated trading servers to the CME over high-speed fiber optic connections. These redundant server connections are expected to decrease network latency times for order entry to CME Globex to less than one millisecond. The new network connection option is called CME Local Network (CME LNET).

The CME selected Equinix Inc., a leading provider of network-neutral data centers and Internet exchange services, and Digital Realty Trust Inc., a leading owner and manager of corporate data centers and Internet gateways, to enable customers to connect to CME Globex through high-speed, high-availability fiber links.

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