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Just prior to the credit crisis, the volume of credit derivatives shot up 32% during the first half of this year, according to a report released this week by the International Swaps and Derivatives Association. The notional amount outstanding of credit derivatives grew by 32% in the first six months of this year to $45 trillion from $34 trillion, according to ISDA's mid-year survey of privately negotiated derivatives. (The group received responses from 88 firms, including all major dealers.) The annual growth rate for credit derivatives was 75%, from $26 trillion at mid-year 2006. For this survey, credit derivatives were defined as credit default swaps referencing single names, indexes, baskets, and portfolios.

Morgan Stanley has agreed to pay $12.5 million to settle a case brought by the Financial Industry Regulatory Authority (formerly NASD) for failing to produce pre-9/11 e-mails to regulators and investor plaintiffs, while claiming that the destruction of the firm's email servers in the Sept. 11, 2001 terrorist attacks on New York's World Trade Center resulted in the loss of all pre-9/11 email.

The U.S. Securities and Exchange Commission (SEC)'s complaint in May against a Hong Kong couple for insider trading of Dow Jones stock may have come up against a brick wall.

According to a new survey, most financial services firms are not currently considering using Apple's iPhone on a corporate level – but this could change in the future.

Capital Institutional Services (CAPIS), the global agency brokerage firm based in Dallas, said it’s moving to the Fidessa trading platform as a replacement for its proprietary order management system. “Technology wise it’s probably the most important decision we made in our 30-year old firm,” says Jim Morrow, COO at CAPIS in an interview on Friday.

How quickly will capital markets firms deploy Intel's and AMD's new quad-core processors? We asked a few industry experts and got varied answers. Gartner analyst John Enck believes most firms will follow their usual server replacement schedule (typically three years after purchase). "The change in performance, even for those optimized applications, just isn't dramatic enough for them to go through the pain and the manpower it takes to swap out an existing on-the-floor server that's still under warranty," he says. "I don't expect a big burst of buying here."

At Wall Street and Technology's Executive Peer Roundtable on Security Risk this week, delegates pressed financial firms to consider the security threat posed by employees -- or potential employees -- using social networking sites, such as Facebook and MySpace.

It is critical to secure applications and data inside a company, they said. But it is equally important to keep a careful eye on communications between employees and the outside world.

Bank of America recently launched a couple of security initiatives for both its banking and brokerage clients. To us, one of them seems pretty innovative, the other a potential nuisance.

The Securities Technology Analysis Center (STAC) announced on Monday that it has formed a Benchmark Council devoted to the creation and management of benchmark standards for trading technology. Eight Wall Street firms, including Citigroup, JP Morgan Chase, and HSBC, are among the charter members.

The U.S. Securities and Exchange Commission (SEC) is scrutinizing hedge funds for signs of insider trading.

The regulator has been sending out a 27-page letter to registered advisers, asking them for information about relationships between managers, employees, family members and public companies.

As the adoption of the FIX fuels electronic trading in foreign exchange and expands into new areas such as FX options, banks are demanding integration with back office and risk management technology. Today, FX Bridge Technologies, an Atlanta-based developer of FX trading and dealing systems, announced that it’s partnering with New York-based FIX Flyer to integrate the FIX messaging standard into its solution.

A new investing/social networking website for Generation X (people who are roughly 30-40 years old) and Generation Y (19-to-30-year-olds) is going live today called Cake Financial. "The word 'cake' is slang for money and it also means 'easy,'" explains founder and CEO Steven Carpenter. The site will screen-scrape a customer's investment information from any and all of his existing brokerage accounts, provide an aggregated view of historical transactions and current holdings, and let him compare his portfolio's performance against those of friends, family and others in the Cake network.

Last week, TD Ameritrade became the latest financial firm to hit the headlines after suffering a data breach, with over 6.3m customer records stolen. Other financial institutions have also reported data breaches recently: these include JPMorgan, Fidelity Investments and Ameriprise Financial. These incidents generally stemmed from stolen laptops or careless employees (who, in the case of JPMorgan threw a bunch of clients' financial paperwork in the garbage in the street).

So, what makes TD Ameritrade’s breach so different?

The ongoing slugfest between providers of high-performance computing solutions was evident at the High Performance on Wall Street show today at the Roosevelt Hotel. All the major vendors of CPUs, GPUs, FPGAs, server grid software, data grid software and other high performance hardware and software are here, providing updates on their solutions and gently dissing the competition. As slugfests go, this is an amiable one and many of these companies are actually working together in pairs and groups (for instance, Cisco, Intel, Reuters and Wombat) to jointly solve issues of data latency and throughput. And Peter Lankford at the Securities Technology Assistance Center said today that it's created a benchmark council made up of Wall Street executives who will decide on benchmarks for all these providers to follow.

There’s no question switching from a one gigabit Ethernet network to Infiniband can dramatically improve the speed of multicasting -- sending market data from feed handlers to multiple trading desks. Several tests conducted over the past year by the Securities Technology Analysis Center have proven this. Faster multicasting leads to improved ability to conduct algorithmic trading and better compliance with Reg NMS and MiFID. The question is, how do you make existing multicast applications work with Infiniband?

TD Ameritrade Holding Corp said contact information for more than 6.3 million customers was stolen after one of its databases was hacked into.

The online broker apologized to its clients and said the breach stemmed from unauthorized code in its systems that allowed hackers to access an internal database. The discovery – and elimination of the unauthorized code – was made by the brokerage following an internal investigation of stock-related SPAM.

Massachusetts’ top securities regulator has charged Morgan Stanley and two Boston employees with illegally contacting clients by cold-calling people who posted resumes on the CareerBuilder.com Web site.

At Advanced Trading's Peer-to-Peer Multiasset Class Trading Executive Roundtable yesterday, a couple of roundtable delegates wondered where all of the order flow and liquidity has gone and pondered whether the markets will be able to withstand a truly volatile trading day with extremely high trading volumes.

As black box trading takes off, Audentes Technology LLC, a small Chicago-based proprietary trading firm, has deployed Orc Liquidator from Orc Software as its derivatives algorithmic trading platform. Audentes declined to comment, but in a statement, Libby Christy, operations manager for Audentes Technology, said the firm was impressed by Orc Liquidator's fast time-to-market, low latency, and connectivity to a large number of markets."

As it continues to encourage XBRL filing, the Securities and Exchange Commission (SEC) has announced that NYSE Euronext has become the first stock exchange to submit financial reporting information using interactive data.

BGC, a voice brokerage arm of Cantor Fitzgerald, is holding its third annual charity telethon of sorts today to commemorate September 11. Customers who call in to Cantor's downtown BGC trading floor today may get their orders placed by Yogi Berra, Whoopi Goldberg, Dr. Ruth Westheimer, Eli Wallach or any of the other celebrities visiting the trading floor. (Each celebrity was brought in by one of the 40 charities participating, which will receive the firm's trading profits for the day.) "September 11 is not a day you want to go out and go to work," Cantor Fitzgerald CEO Howard Lutnick told us. The firm, as you probably already know, lost 658 employees -- about two-thirds of its work force -- in the World Trade Center bombing. "But if you're going to go, our feeling is, get up and take care of others." He said the charity day was a way for employees to heal -- the charitable organizations were hand-picked by employees and customers. "It becomes fun -- there's a lot of energy in the room," he said, amidst the sounds of camera flashbulbs and laughter.

Four men have pleaded guilty to charges relating to a pump-and-dump market manipulation scheme that netted more than $20 million in profit. According to the U.S. Department of Justice, securities of more than 15 publicly traded companies had their prices inflated through deceptive trading practices and misinformation spread through false statements in press releases and spam e-mails sent to tens of millions of e-mail addresses.

The number of baby boomers reaching retirement is on the rise; so is the number of senior citizens being swindled.

Now, the SEC has approved a ruling by the Financial Industry Regulatory Authority (formerly NASD) to ensure that securities firms use appropriate sales practices when dealing with people nearing retirement.

The new quad-core Xeon 7300 processor Intel announced yesterday should provide twice the application performance of its dual-core server chips, according to Rick Jacobsen in Intel's financial services industry marketing group. With the use of virtualization, applications should run two-and-a-half times faster than they do today on 7300-powered servers, and the new chip offers three times the performance per watt, which should translate into data centers that are three times as efficient as they are today.

The financial services world continues to expand in Second Life.
Singapore-based financial firm First Meta has just launched Second Life’s first credit card.

A former Morgan Stanley finance vice president and her husband, an ex-hedge fund analyst at ING Investment Management, have pleaded guilty to conspiracy and insider trading.

The couple, Jennifer Wang, 31, and Ruben Chen, 34, of Englishtown, N.J., face from 30 months to 37 months in prison and fines of as much as $5 million.

The Financial Industry Regulatory Authority (formerly NASD) has fined AXA Advisors $1.2 million for failing to adequately supervise its fee-based brokerage business and distributing misleading sales literature.

Hedge funds that suffered heavy losses in debt securities tied to sub-prime mortgages, missed the fundamentals but they could also blame their credit models for not detecting the impact of late payments and delinquencies. It’s not surprising that there are shortcomings to modeling credit risk of illiquid debt instruments, according to Peter Cotton, CEO ofJulius Finance, a private research firm and development shop in New York.

Welcome back! The summer drew to a close with speculation about a possible merger between E*Trade and TD Ameritrade. While there has been a lot of talk since about the strategic ramifications for both firms, I began to wonder what the impact of a united firm would have on the customer.

The Securities and Exchange Commission (SEC) has charged the Boston Stock Exchange (BSE) and its former president James B. Crofwell for failing to enforce Exchange rules to prevent specialists from trading for their own accounts ahead of marketable customer orders.

The China Securities Regulatory Commission (CSRC) has approved NYSE Euronext, the operator of the New York Stock Exchange, to become the first foreign stock exchange to open a representative office in China.

Buy-side firms will increase their spending on internal research by 28.8% over the next few years, from $5.8 billion in 2006 to $7.4 billion in 2011, according to analysts at Integrity Research Associates in New York City, who released a forecast yesterday. The firm believes the buy side will continue hiring more equity analysts due to the decrease in sell-side research and what the analysts say is a decline in its perceived value.

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