SVP, Northern Trust Securities
Founder and CEO, Celent
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Terrence Ransford, SVP, Northern Trust Securities |
Octavio Marenzi, Founder and CEO, Celent |
| Question #1: |
| Now that Reg NMS has been delayed, will capital markets firms be shifting their focus to any other pressing data management projects in the near term. If so, what types of projects are firms considering? |
| Terrence J. Ransford, Northern Trust Securities: Yes, we will be shifting our focus. We will expand our focus on supporting new derivative securities such as CDOs and our ongoing CRM initiatives. |
| Octavio Marenzi, Celent: I don't think most firms are really changing anything about market data management. Certainly, the exchanges are, to a certain extent, making changes in terms of how market data revenues are shared. But more fundamentally than that, most people will see very little change or no change at all. They still get the same market data feeds, they're still handled in the same way, they're still posting the data in the same way. |
| Question #2: |
| When the Reg NMS guidelines are eventually put into place in late 2007, will there be any change in the way firms manage market data? If so, what will change? |
| Ransford, Northern Trust Securities: We'll manage our order management systems for trade execution by enhancing smart routing capabilities. We are also prepared to store more market data for quantification of execution quality. |
| Marenzi, Celent: Things will not change. What will change is how the market data revenues are divided up between the market data networks, the so-called SIPS and the exchanges. But that's something between the two of them and that's just a question of how do the revenues get allocated as opposed to a fundamental change in market data. The channels through which market data flows, the ways to deliver, etc., all remains unchanged. I think there's more continuity there than real change. |
| Question #3: |
| The MiFID deadlines are also approaching. What do U.S. firms that do business in Europe need to do now to prepare for the new MiFID rules? |
| Ransford, Northern Trust Securities: We are trying to understand the cross border issues as well as how the off-exchange market data works in Europe. Europe it seems is two years away from being able to comply with the more than 70 new rules contemplated by MiFID covering bonds and equities. I think the best preparation for a U.S. firm is to understand how our European counterparts will implement and address these issues. Once we have a good idea of that, we can more-intelligently formulate our approach. |
| Marenzi, Celent: U.S. firms need to do an awful lot. There's an awful lot of preparation they need to do for MiFID. There are changes in the way market data are going to be delivered. There are going to be changes in the way that things will get traded, and there will be changes in what investment firms have to do in terms of publishing data. There are new opportunities out there in various different markets in the European Union, from market making to internalization to selling market data. There are all sorts of new things there. There are also new things in terms of customer hacking rules and order hacking rules. Firms with subsidiaries in Europe are fully exposed to this. U.S. firms without subsidiaries in Europe but that just do business in Europe are going to find that they'll have to comply. |
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