Wall Street & Technology: Blog

« February 2007 | Main | April 2007 »

During the brutal market decline of Feb. 27 and the volatility that continued for the next four trading days, hedge funds relied on technology from their brokers, exchanges and service providers to execute orders. To what extent was their trading interrupted and how well did their service providers do?

“I think it was a wake up call for everybody, not only for the hedge funds, but for service providers,” says Steven Harrison, president and COO at Imagine Software, a leading provider of a hosted real-time trading and risk-management service to about 150 hedge funds. “What do you think Dow Jones is doing right now and the New York Stock Exchange and Reuters and Bloomberg?” asks Harrison, who believes that all data providers are taking a closer look at the infrastructure and what capacity they can support.

In a showcase today, Accenture Technology Labs showed off some of its latest projects. One, a newly developed “intelligent selling” application called Real Time Sales and Service Empowerment, could be used by wealth and asset managers, particularly in departments suffering “brain drain” – where knowledgeable managers are leaving or retiring and younger workers lack experience but are eager to learn. The Accenture application, which it developed with a French bank, is a basic customer relationship management system combined with a cognitive rules engine that acts as training wheels for the new investment manager.

Tien Tzuo, chief strategy officer, and Renny Monaghan, senior director of product management at salesforce.com, dropped in this morning to update us on their hosted solution for customer relationship management (CRM) and related applications. “We’re seeing a lot of interest on Wall Street,” Tzuo said. “Commissions have dropped, to zero in some cases, so many firms are shifting from a transaction focus to a relationship focus.” Tzuo says the first wave of CRM implementations on Wall Street failed because the software was either too expensive and complex, like Siebel, or took the form of simple applications like ACT that were popular with individual relationship managers but offered too little in terms of security, backup and corporate control and support. Having salesforce.com run the application, including security and support, and deliver it to users’ desktops (for $500 per person per month), provides a middle ground that he says Wall Street firms are gravitating toward.

Merrill Lynch, Dresdner Kleinwort, Fidelity, and Pioneer Investments are all embracing Web 2.0 – in other words, advanced Web technologies -- according to a recent Tower Group report, “Web 2.0 May Be the Future of the Internet, but What Does It Mean to Securities Firms?”

On the heels of breaking off an agreement last November to merge with Chicago-based market data vendor HyperFeed Technologies, Exegy Inc., a St. Louis-based technology provider is launching a new ticker-plant service initially to 21 Wall Street customers. But when Wall Street firms consider Exegy’s new ticker plant, should they care that Exegy jilted HyperFeed at the altar? And should they be concerned about a lawsuit pending in Illinois?

Crackberry addicts who can’t put their PDAs down can now buy assurance that they’ll never have to -- for technical reasons, anyway. Neverfail, Austin, TX, today announced the first-ever failover solution for Blackberry email and mobile data system applications (called Neverfail for Blackberry Enterprise Server). Why didn’t such Blackberry backup exist before? “Making applications cluster-aware isn’t a simple task,” says John Posavatz, vice president, product management at Neverfail Group, Austin, TX. The company partnered with RIM to develop replication and failover for Blackberry applications on a secondary server, and it already offered continuous protection for the Microsoft Exchange and Lotus Domino servers that often serve Blackberrys. The solution also monitors the servers for clues to potential problems in an effort to fix problems before having to fail over.

NASD announced today that it has updated and redesigned its BrokerCheck service -- a public, online service for reporting on the background of NASD member-firms. The update, says the regulator, should provide much-needed improvement in the usability and effectiveness of the service. Speaking from experience, the previous version of the BrokerCheck system, while loaded with potential was severely undermined by its own inefficiencies.

If Barney Frank’s recently reported statements are accurate, banks and financial institutions may have a surprisingly friendly advocate on Capitol Hill. Frank, who also happens to be the influential chairman of the House Financial Services Committee, contends that banks should be exempted from SOX 404 compliance because they are already subject to similar provisions in an earlier law.

SEC Chairman Christopher Cox didn't mince words last week when addressing criticisms of the Sarbanes-Oxley (SOX) albatross. After this week's Chamber of Commerce suggestion that SOX be reeled in, Cox was definitive in his speech that alterations to the Act were unnecessary.

After we wrote about Saxo Bank’s opening an office in the virtual world Second Life, 24-year-old Australian entrepreneur Luke Connell contacted us to tell us about the securities exchange he opened recently in Second Life called World Stock Exchange. This simulated stock exchange opened on March 5 and trading volume has exceeded $23 million in virtual dollars (approximately $90,000 U.S. dollars). Connell, whose Second Life alter ego is called LukeConnell Vandeverre, explained how and why his investment firm, Hope Capital, and others are doing business on the computer animated Second Life site, and how people can make or lose real money by investing in a simulated stock exchange.

This past weekend, we passed a milestone -- 100 days since the enacting of the new Federal Rules of Civil Procedure as they relate to eDiscovery. In summary, those Rules attempt to give courts guidance for how to treat digital data and information, in whatever form and context it is in.

The Rules try to contain the ever escalating costs that plaintiffs and defendants. So spreadsheets, letters, contracts, e-mails and all of those files that are stored on disk and on tape, on and off the network can, should, and must be “discoverable” to all of the parties engaged in litigation.

Brokers are upgrading their technology in response to Regulation NMS, which requires more-complex order routing technology, faster execution speeds and bulging storage capacity, according a The TABB Group research note, “Reg NMS: Launching The Next Arms Race,” released today.

As an example of the arms race, on Monday Rosenblatt Securities, an agency-only execution boutique, said it had migrated over to Lava Trading’s Color Palette as its sell-side trading and order management system. Rosenblatt chose Lava after a lengthy evaluation of several OMS providers, the release said. The firm finished the migration in February.

As the battle between U.S. stock exchanges heats up, this week the Nasdaq Stock Market said that a company could retain its stock symbol if it moved over to Nasdaq from another exchange trading venue.

On Monday, Nasdaq announced that Delta Financial Corp.Corp. (DFC) will keep its three character ticker symbol “DFC” when it moves to Nasdaq from the American Stock Exchange on March 22nd.

Though trading systems have recognized OTC stocks as having four-character symbols, Nasdaq said it will now offer one-, two- and three- character symbols to companies that switch their listings as well as those going public for the first time and to existing Nasdaq issuers.

The Copenhagen-based online investment bank Saxo announced yesterday that it has set up an office in Second Life, the web-based virtual world developed by Linden Lab, San Francisco, in which users (called residents) live out their fantasy lives online and interact with each other through avatars -- animated graphics that users design to represent themselves. Saxo plans to offer residents the ability to manage real-life portfolios from within the virtual world, and the bank may eventually create a market to trade virtual Linden dollars against real world currencies. So far, Saxo’s virtual office has a meeting space with links to the bank’s website, a live trading game for visitors and an auditorium that will be used for symposia and training modules.

A study published today on the trade processing practices of 32 private banks in the U.S., Switzerland, and the U.K. has found that nearly 30% of private banks lack back-office automation. The study, conducted by wealth management consultancy Scorpio Partnership and commissioned by post trade management services vendor Omgeo, found that many private banks still telephone orders to a third-party broker and handle the confirmation and affirmation processes via email or fax, leading to delays of up to two days. U.S. private banks were found to be more automated -- seven of the nine U.S. survey respondents had electronic connections with their brokers. It was the Swiss banks – eight of the 12 surveyed – who were mostly handling trades manually.

Yesterday, Schwab unveiled the results of the facelift it’s given to its streetsmart.com site for active-trader customers -- those who trade at least nine times per quarter. The upgrades were based on client research and reviews of competing sites, which led the brokerage to one conclusion – it needed simplicity and ease of use. “Over the years, we’ve seen in the active trading category the advent of many new tools, with professional trading tools brought down to the consumer level,” says Rich Levine, Active Trading Client Experience vice president for Charles Schwab. “But as a result, the complexity and number of available tools has mushroomed. With this release, we’ve tried to make the trading experience as simple and easy as possible for the mass affluent trader, on whom we focus at Schwab.”

Julio Gomez has joined the independent research and advisory firm Financial Insights as VP of Capital Markets, Risk Management and Financial Markets Investor Research, according to today’s announcement. Gomez will takeover the role of global head of capital markets and risk management research with responsibility for Europe and Asia Pacific as well as North America.

Pipeline Trading Systems LLC is cutting off access to third-party broker algorithms that are sending orders into the electronic block trading system it operates, according to an e-mail sent to clients this morning. The change in policy is effective next weekend, says the e-mail, which was sent to both buy- and sell-side clients.

In an interview on Monday with Wall Street & Technology, Fred Federspiel, president of Pipeline, says the brokers had problems with the large trade size that Pipeline insists upon, and second, they took issue with the prices that Pipeline charges for executing trades.

Pedestrians walking past the Vanderbilt Avenue and 42nd Street entrance to New York City’s Grand Central Station passed an unusual sight this afternoon – a huge truck draped in a black plastic tarp boasting Sun Microsystems’ logo, housing a 20-foot-long container full of server racks.

Many firms were affected by the market downturn on Tuesday, Feb. 27 — some negatively and some positively. Symons Capital Management was able to turn the chaos into an opportunity by dipping into its cash reserves and getting good prices as the market was going down.

May 2008 Sun Mon Tue Wed Thu Fri Sat         1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Weblogs of Interest Dark Reading: Firewalled Chief Risk Officer: New Era of Risk Management InformationWeek's Blog Digest Parry Aftab, the Privacy Lawyer

Categories Asset Management Wealth Management Authors Cory Levine Greg MacSweeney Ivy Schmerken Melanie Rodier Penny Crosman Compliance Data Latency News Analysis OTC Derivatives Operations Security Podcasts Risk Management SIFMA TMC Trading Archives May 2008 April 2008 March 2008 February 2008 January 2008 December 2007 November 2007 October 2007 September 2007 August 2007 July 2007 June 2007 May 2007 April 2007 March 2007 February 2007 January 2007 December 2006 November 2006 October 2006 September 2006 August 2006 July 2006 June 2006 May 2006 April 2006 February 2006 January 2006