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Regulatory pressure on the credit derivatives dealers is prompting the buy side to automate its own processing. Firms are spending money on OMSs but looking to free tools such as DTCC's DerivSERV for confirmation matching.

The SEC's pilot on penny options pricing is scheduled to begin on Jan. 27. 2007. Steve Sanders, managing director, Interactive Brokers, say the move from nickel to option penny pricing is inevitable and if exchanges can't handle the volume, then the business to switch to competitors.

Investment managers are considering the use of commission sharing arrangements (CSAs) to generate trading commissions for executions with one broker that are then used to pay for research at another broker. CSAs are catching on but the SEC is expected to clarify disclosure and transparency rules in 2007.

Ivy Schmerken, Wall Street & Technology

Creditex Group is spinning off a new electronic platform, Q-WIXX Inc., for trading large credit derivatives portfolio. The automated execution service conducted its first beta trade for a portfolio valued at $1 billion (500 million euros) consisting of 131 North American and European credit derivatives names.

CapGemini predicts there's an increasing move toward service-oriented platforms in 2007. Whether CIOs re choosing an enterprise system, a trading system or an FX system, they will need flexible components to deliver technology to their client base.

The world's stock exchanges are undergoing a transformation as a result of going public. In order to stay relevant as a liquidity hub, exchanges need to diversify into more complex instruments, such as OTC derivatives and debt.

Instinet partnered with Northfield Solution Services to develop Wizard Arrival Price Algorithm. The complex model factors in price history and volatility to create a trading strategy for thousands of stocks to reduce market impact.

Ivy Schmerken, Wall Street & Technology

Automation of the OTC derivatives market continues to be a priority for the industry.
The Depository Trust & Clearing Corp. (DTCC) announced its selection of CLS Bank International (CLS) to provide central settlement of payments for over-the-counter (OTC) derivatives contracts housed in DTCC’s DerivSERV Trade Information Warehouse.

Ivy Schmerken, Wall Street & Technology

Reuters announced two products this week that allow customers to incorporate news into automated trading strategies. Both products fall under Reuters complete suite of offerings for automated trading and form part of its Core Plus strategy.

Ivy Schmerken, Wall Street & Technology

NYSE Group signed a definitive agreement to acquire TransactTools Inc., a leader in providing enterprise-messaging solutions for the securities trading industry. The transaction is expected to close in early January 2007, though financial terms were not disclosed.

Cory Levine, Wall Street & Technology

In just a few short weeks, stronger user authentication should be in place for the online financial services industry, or so the Federal Financial Institutions Examination Council (FFIEC) is hoping. According to research from Aite Group, the retail brokerage community should be ready for the FFIEC's end-of-year deadline, but there's nothing like a little last-minute advice. Authentication solution provider Cogneto offers some things to think about before leaving for your holiday vacation.

Mutual fund giant Vanguard has implemented the Knowledge Based Authentication (KBA) platform from Verid to reduce fraud risk. The firm will use KBA as part of the account opening process in the online and phone channels with certain types of accounts.

Ivy Schmerken, Wall Street & Technology

In case you had any doubt that stock exchanges would get their electronic trading systems up and running in time for the Regulation NMS deadline, this week three U.S. equity exchanges — Boston, Chicago and NYSE — made significant progress toward reaching that goal.

Ivy Schmerken, Wall Street & Technology

Intercontinental Exchange, the Atlanta-based electronic energy marketplace, has licensed office space in lower Manhattan’s World Financial Center, signaling a desire to expand its presence in the same complex where its main rival, The New York Mercantile Exchange (NYMEX), is located. The new offices will serve as a state-of-the-art electronic trading center providing access to ICE’s electronic markets as well as host training and marketing activities.

Ken Barnes, Wombat Financial Software

Perhaps you’re a member of a high frequency equities trading operation looking to fuel your strategy formulation and execution applications with the highest quality data available. To this end you may have spent considerable time sourcing and cleaning historical databases, eliminating the noise of bad prints and anomalies in the tails.

Cory Levine, Wall Street & Technology

A report from U.K. newspaper The Guardian reveals that financial institutions in the country are purposefully choosing not to report instances of online fraud and financial crime because they don't want to risk public exposure by law enforcement bodies that can do little or nothing about the crime — this from the mouth of a Metropolitan Police Detective Russell Day!

Ivy Schmerken, Wall Street & Technology

Ramping up its efforts to develop alternative execution venues outside the United States, Instinet plans to launch an alternative trading system (ATS) in Canada, called ICX (Instinet Canada Cross).

The ATS will operate as a continuous, electronic auction market for trading Canadian exchange-listed securities, according to the release. ICX is expected to launch in 2007 and will be operated by Instinet I-X Limited, a soon-to-be registered Canadian investment dealer, pending regulatory approval.

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