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In the wake of sentiment expressed at the World Economic Forum that financial services firms (and all companies) must go greener, the U.K.'s Financial Services Authority has issued a warning about the dangers of climate change as part of its 2007 Financial Risk Outlook, while a U.S.-based consortium of institutional investors released a scathing report on how companies in the S&P 500 disclose climate-related risks to investors.

Swapstream, the London-based multilateral electronic trading platform for interest rate swaps (IRS), will expand its marketplace in mid-February with the launch of Eonia (Euro Overnight Index Average) swaps trading facility.

Aqua — a new alternative trading system (ATS) owned byeSpeed Inc. and Cantor Fitzgerald focused on offering block liquidity to institutions, hedge funds and brokers — announced the hiring of Andrew Fishkind as global head of sales.

Banc of America Investment Services (BAI), a division of Bank of America, consented, without admitting or denying guilt, to $3 million in fines from NASD for failure to gather sufficient information about customers on certain high-risk accounts, an activity required by anti-money laundering regulation.

The failures, according to NASD, occurred with 34 accounts of trust and private investment corporations in the Isle of Man, which belonged to billionaires Sam and Charles Wyly, according to the Wall Street Journal (subscription required).

Today's Wall Street Journal provides a gruesomely fascinating account of Amaranth's final days ("Amid Amaranth's Crisis, Other Players Profited"). The mental image it conjures in the reader's mind is that of a pack of wolves, one of which has injured itself and lies dying of its wounds, the rest taking the biggest, juiciest hunks out of it they can while its heart still beats.

The Amaranth fiasco continues to affect the industry. In addition to the SEC's efforts to regulate hedge funds, the SEC, the Federal Reserve Bank of New York and the Financial Services Authority in London are investigating banks' and securities firms' lending practices to hedge funds.

The top priority for many senior business and financial leaders at the World Economic Forum was, surprisingly, climate change, followed by global banking security standards.

My first visit to the World Economic Forum is now over and, after an exhausting week, I used the downtime on my flight home to contemplate some of the bigger issues that were raised during the past week.

The unbanked, or underbanked, represents a huge -- but risky -- opportunity for financial institutions. And one needs not travel to Asia or South America to find a large underbanked market: There are 50 million unbanked people right here in the world's most developed economy.

The business intelligence movement rolls on and one of its targets/benefactors is Wall Street. It's a good fit -- after all, what buy-side or sell-side executive wouldn't want the most insightful views of the right pieces of data? In my first full week at Wall Street & Technology, I was briefed on three new or recently updated data analysis tools: one for analyzing the blogosphere for stock and company tips and rumors, one for analyzing SEC Edgar data, and one for portfolio backtesting. Here's what I found interesting.

Portfolio trading seems to be gaining momentum on the buy side. This week, Instinet and FlexTrade Systems both announced portfolio-trading optimization tools that come up with best trading schedule for a portfolio of stocks.

Delegates are calling for global regulation that directly addresses climate change at the World Economic Forum in Davos. But can business, government and scientists agree on a solution that could actually have some impact on a global scale?

Microsoft is positioning itself as a MiFID solutions provider, with an announcement today of an eight-solution technology grab bag intended to meet the requirements of the European uber-regulation. The software giant is parading out its partners as "mix and match" MiFID solutions that all focus on the MS architecture commonly used in the financial services industry (and, let's be honest — the world) including Office 2007, SQL Server, SharePoint and Windows. Notably, Windows 2003 is the operating system noted in the release, most likely because all of the partners' technologies aren't yet optimized for Vista.

When Bank of America announced yesterday that it's joining Thomson TradeWeb's online Triparty Repo marketplace, which already includes Barclays Capital, Deutsche Bank, JPMorgan, Morgan Stanley and UBS and sees average daily trading volumes of $60 billion, it may have provoked a shiver of fear and dread among independent repo dealers. TradeWeb Repo is an electronic trading platform for the tri-party repurchase agreement (repo) market; participant dealers use the online platform to offer repos to their institutional clients and provide straight-through processing.

Not surprisingly, information and data security is one of the hotter topics in Davos among the attendees at the World Economic Forum. Logically, if there are regulators for the Internet, telecommunications and accounting, why don’t we have a standards in place for information and data security?

Ivy Schmerken, Wall Street & Technology

The Boston Options Exchange said it filed with the Securities and Exchange Commission (SEC) to reduce fees in preparation for the Penny Pilot Program in which options will trade in one-penny increments.

The proposed change will reduce the trading from the standard $0.20 to $0.15 per contract.

Ivy Schmerken, Wall Street & Technology

GL Trade, the Paris–based supplier of front-to back-office trading systems, is offering connectivity to Chi-X, one of the first Pan-European alternative trading systems (ATSs) to arise in response to the Markets in Financial Instruments Directive (MiFID), which goes into effect in November of 2007. Under MiFID, an ATS like Chi-X will be known as a multilateral trading facility or MTF.

After arriving in an abnormally warm Davos for the World Economic Forum, talk quickly turned to finding ways for financial services companies to become "greener," especially when it comes to using advanced technology.

By Ivy Schmerken, Wall Street & Technology

Today Liquidnet, the leading electronic marketplace for block trading, revealed plans to acquire Miletus Trading, an agency-only broker that supplies quantitative execution strategies and analytics to institutional investors.

Liquidnet signed a definitive agreement to purchase Miletus Trading, according to the release, though financial details were not disclosed. The transaction is expected to close by the end of March, subject to regulatory approvals.

Industry consortium BOAT selected trading technology provider Cinnober Financial Technology as the underpinnings of its market data platform. The consortium of global investment banks also announced that Markit Group Ltd. will partner with BOAT to manage business operations.

BOAT was launched in September 2006 to provide a reporting facility for pre- and post-trade data that will be distributed to banks in order to help meet the requirements of EU regulation MiFID. The database of trade data will be accessible by both the buy side and sell side.

SIFMA today sent over a note saying that they are urging the SEC to hold a moratorium on market data rule filings for U.S. exchanges and conduct further investigation into the conflict of interest issues that are created by for-profit exchanges.

U.S. exchanges are becoming commercial entities as a result of the electronification of the markets caused by Reg NMS, and subsequently several exchanges are planning on charging fees for distributing market data that was previously free. SIFMA points to a recent SEC filing by NYSE that proposes fees for redistributed depth of book market data that broker-dealers are legally required to provide the exchange. For more information on fee structures, see our Reg NMS-Compliant Exchange Trading Systems Directory.

By Ivy Schmerken

With buy-side firms ready to extend electronic trading in equities over to multiple asset classes, Credit Suisse AES (Advanced Execution Strategies) is expanding its algorithmic trading products into listed futures.

Trading Screen, the operator of a multi-product trading platform, announced that Credit Suisse algorithms for the listed futures markets have been integrated into TradingScreen’s full suite of trading products.

The Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Treasury, released its paper today on the value of reporting on cross-border transfer of funds in fighting money laundering and terrorist sponsorship. According the document, such reporting would hold value, but would require that FinCEN implement a data warehouse architecture to manage the information submitted under any mandated reporting requirement.

NYSE Regulation yesterday announced censures and fines for seven member specialist firms, to the tune $2.8 million total. The fines are the result of multiple trading violations that occurred between 2003 and 2006.

The firms were fined for breaking the firm quote rule, under which NYSE specialists are required to execute orders presented to them at prices that are at least as favorable as the NYSE's published bid or offer. The specialists firms also failed to honor commitments to buy or sell coming from the Intermarket Trading System. Other violations included failure to maintain written supervisory procedures, failure to display eligible limit orders and improperly executed short sales.

Ivy Schmerken, Wall Street & Technology

With over-the-counter products showing faster growth than exchange-listed instruments, Paris-based GL Trade is acquiring FX Solutions, a provider of front-to-back-office products used by capital markets firms and hedge funds to manage and process OTC products. The deal will be closed in February of 2007, according to Monday’s release. FNX will enhance TRADIX, GL Trade’s existing capital markets offering, which generates sales of a little over 4.5 million euros. FNX expects revenues of 11 million euros in 2006, most of which is recurrent, and expects revenue growth of 25 percent over the next two years, said the release.

Ivy Schmerken, Wall Street & Technology

James Leman, an industry veteran who brings 20-plus years of expertise in electronic trading as well as middle and back-office technology strategies, has joined Westwater Corp. as managing director and head of its Capital Markets Practice.

Ivy Schmerken, Wall Street & Technology

Expanding its global reach to Asia, yesterday, NYSE Group announced that it has agreed to acquire a five percent stake in the Mumbai-based National Stock Exchange of India Limited (NSE). The parent of the New York Stock Exchange will pay $115 million in cash for the shares being purchased from a consortium of selling shareholders.

Cory Levine, Wall Street & Technology

The cat-and-mouse continues, as researchers yesterday uncovered a new phishing technique being shared in the fraud community, which will enable criminals to bypass multi-factor authentication technologies. Analysts in the 24x7 Anti-Fraud Command Center operated by RSA discovered what they are calling the Universal Man-in-the-Middle Phishing Kit being sold in online forums. After analyzing a demo version of the kit, RSA concluded that this new user-friendly flavor of phishing could become big in the next 12 to 18 months.

Ivy Schmerken, Wall Street & Technology

OptionsHouse, a new discount brokerage firm launched its online Web site on Monday offering stock and options trading at a simple, flat-fee rate to retail investors and institutions.

Targeting savvy traders, the start-up is a spin-off of PEAK6 Investments LP, a Chicago-based equity option market maker based which leased space on the Chicago Board of Trade’s original 1930 trading floor.

Cory Levine, Wall Street & Technology

The New York Stock Exchange yesterday filed a letter with the SEC requesting an extension to the deadline of the Reg NMS trading phase. The current target date is February 5, and the Exchange is looking for an extra four weeks to roll out Phase IV of its Hybrid Market.

Europe's MiFID legislation is expected to transform Pan European trading landscape, letting new competitors called multi-lateral trading systems to list the same securities already traded on the continent's 40 cash exchanges. HSBC implemented a global trading system, which can access vast amounts of data to evidence best execution under MiFID's post-trade transparency rules.

Cory Levine, Wall Street & Technology

Electronic communication compliance vendor Orchestria announced that it has reached the 100-user mark for financial institutions signing on for the company’s integrated Bloomberg Professional messaging compliance solution. The two companies first partnered on October 2004. While 100 institutional users is a nice feather in Orchestria’s, cap, I’m left wondering just what exactly the rest of the many thousands of Bloomberg Professional users are doing to ensure compliance over their messaging.

Orchestria’s solution is hosted in the Bloomberg data centers and monitors messages in real time. This enables firms to proactively approach the application of regulatory guidelines and company-specific policy to messages, and prevent non-compliant messages from being sent.

Does Bloomberg support other messaging compliance vendors, and does it go so far as to host Orchestria’s competition on its servers as well? I will update as soon as Bloomberg returns my call.

Cory Levine, Wall Street & Technology

Boutique agency brokerage Miletus Trading, has integrated its algorithms, known as Strategy Engines and its Trade Impact Estimator into the Charles River Development Investment Management System (IMS). The move will allow Miletus to offer the buy side its algorithms through one of the industry’s most visible front-end platforms.

“Traders can now access Miletus pre-trade analytics and algorithmic trading strategies directly from the Charles River blotter,” explained Stephen Engdahl, director of product management for Charles River Development. “This relationship with Miletus expands the number of trading strategies, execution venues and supporting tools which Charles River brings together, enabling traders to effectively make decisions and implement trades.”

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