Profile of Larry TabbFounder & CEO, TABB Group
Blog Posts: 158
Larry Tabb is the founder and CEO of TABB Group, the financial markets' research and strategic advisory firm focused exclusively on capital markets. Founded in 2003 and based on the interview-based research methodology of "first-person knowledge" he developed, TABB Group analyzes and quantifies the investing value chain from the fiduciary, investment manager, broker, exchange and custodian, helping senior business leaders gain a truer understanding of financial markets issues. Larry has published industry research analyzing ECNs; fixed income, equity and foreign exchange trading systems; back-office trade processing systems; broker workstations; analytical trading tools; infrastructure development tools; and foreign and emerging market technologies. He has written extensively on the changing market structure, exchanges and regulatory issues and business continuity as well as new technology trends in cost management, risk management, order management, best execution, algorithmic trading, dark pools, multi- and cross-asset trading, liquidity management, FIX, STP, connectivity, custody and advances in emerging technologies.
Articles by Larry Tabb
Fear, regulation and tight budgets have reduced investment in IT innovation to unimaginable lows. Will technology innovation return to Wall Street?
If firms don't start to do a better job of testing software and systems, regulators may do that job for us. And then things will get really complicated.
If these rules are enacted, no one is sure that we will experience the perfect market that regulators are hoping for.
In his testimony before the US Senate on Thursday, the Advanced Trading and Wall Street & Technology columnist Larry Tabb answers the question: What, if any, policy changes should be considered by regulators or Congress in order to better protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation?
In his testimony before the US Senate today, the Advanced Trading and Wall Street & Technology columnist Larry Tabb answers the question: Do regulators have adequate tools to identify and limit manipulative or abusive strategies?
In his testimony before the US Senate today, Advanced Trading and Wall Street & Technology columnist Larry Tabb recommends changes to strengthen the markets without killing future profits.
Many market participants are saying we need to go back to simpler times, when spreads were wider, trading was slower, markets were simpler, research was more prevalent, and capital was more pervasive. But would that really fix the equity markets?
Fragmentation is wrecking one of the greatest financial markets of all time, according to Tabb Group’s Larry Tabb. In the wake of the Knight Capital fiasco, he says, the SEC should think hard about the market structure it has created, and do its utmost to rein it in.
The more-robust capturing, reporting and clearing of FX forwards, NDFs and swaps should be counted as one of the more positive aspects created by the Dodd-Frank process, says Tabb Group CEO Larry Tabb.
The recently passed Jumpstart Our Business Startups Act is about more than jobs. The new regulation is likely to drive consolidation among asset managers, and small hedge funds are in danger of being forced out of the game.
Tabb Group offers the real reasons why 33 percent of U.S. equities volume is traded off-exchange.
To restore investor faith in the futures market, the CFTC may need to do more than just update the rules that govern the investing of customer cash, says Larry Tabb, founder of Tabb Group.
Volume at the close is way up, and retail investors are nowhere to be seen. Sometimes a sick market needs strong medicine. In this case, it could be a one-hour trading day, says Tabb Group founder Larry Tabb.
Data is becoming all-encompasing on the Street -- for both compliance and trading, says Larry Tabb.
While we in the United States believe Dodd-Frank and new SEC regulations are challenging, the European sentiment on the MiFID Review makes the U.S. regulatory proposals look downright friendly.
The markets are in a state of shock. And all of the new rules coming in 2012 will only make it more difficult and more expensive for all financial markets participants.
Why is the mystique of software code more important than the surety of security?
Brokers are employing three major strategies to improve low-latency execution quality.
The investing world is bifurcating into two camps: those generating alpha and seeking uncorrelated returns, and those focusing on beta and capturing index- based returns. Which camp you are in makes all the difference in the world.
Exchanges face a stark choice: world domination or isolation. Meanwhile, local regulators must decide whether to allow their markets to play in a risky world.
As retail investors grow increasingly sophisticated, the trading tools for professionals and individuals will align.
The past decade has been tough, but we need to be optimistic and view it for the success it has brought and the opportunity it will bring.
There is only so much cost that can be taken out of the equation without some firms throwing in the towel.
What a difference a few months make. Are exchanges headed for world domination, or will governments stop their local exchanges from becoming the trinkets of a global exchange aggregation scheme?
Increasing regulation will dampen profits, drive cost cutting and push banks into shared IT environments.
The rule has an implementation period that potentially could stretch to 11 years, starting with a two-year rule-writing allowance, followed by a two-year implementation period, three one-year extensions, and
finally a four-year gradual extended transition for illiquid securities funds and/or products.
While the business case for cloud computing is compelling, availability is a concern, and Wall Street firms are likely to keep to private clouds for transactional infrastructure, writes Larry Tabb.
To paraphrase (poorly) Winston Churchill, our equity markets are the worst form of market structure "except all the others that have been tried.
The Justice Department and SEC's joint investigation into high-frequency trading could be just what the industry needs, writes special contributing editor Larry Tabb.
The process of becoming a public company is broken. The SEC needs to reform the rules to revive the stalled IPO market and spur growth.
Industry pressures to forgo preferencing restrictions and trade-at rules will be intense, even if the new rules are the right prescription for staving off another flash crash.
By moving OTC derivatives to exchanges or SEFs, regulators are making it easier to trade these exotic instruments.
CFTC commissioner Bart Chilton recently proposed a bold idea: Exchanges and regulators should test trading algorithms before they go to market and perhaps award them a "Good Housekeeping Seal of Approval" before launch.
The internet -- along with client-server and wireless computing -- are driving the next new technology paradigm: The Age of the iPad.
A battle of epic proportions over OTC derivatives reform will suck all of the air out of equities.
Companies that don't take advantage of the agility offered by the cloud could be left for dead.
The Dodd-Frank Wall Street reform Act created the Office of Financial Research to help the U.S. Treasury assess banks' risk. But achieving that goal may require an act of God.
How do we create a market that doesn't fold under duress?
To secure their infrastructure and processes, Wall Street firms have built up castle walls around their data for years. But electronic trading is creating cracks in those walls.
When the speed of the price provider and the price taker are not in parity, the market becomes inefficient and seemingly unfair. We can mandate slower markets, a wider quote or faster technologies, or hold market professionals accountable and let competition run its course.
The ability to deliver a robust broker-to-institutional client delivery channel has just not developed, says TABB Group’s Larry Tabb.
May 6, 2010 saw a complete meltdown of liquidity in a five-minute period of time and whether it was caused by high frequency trading or the lack thereof or it was an algos-gone-wild moment or was caused by a trader fat-fingering an order, we need to get to the bottom of this - and fast.
The leaders of the financial industry are largely to blame for accelerating the financial crisis and bringing on the regulatory changes that it now faces.
While the stocks of many investment banks tanked and a number failed, it wasn't the short sellers that created the problems.
The SEC's new rules limiting short selling do not satisfy either proponents or antagonists of short sale restrictions.
The pay czar, the banker tax, pending legislation, shareholder lawsuits and a popular revolt all are vying to change Wall Street compensation.
Wall Street and Washington are misaligned. If we want this country to continue to grow, this needs to be changed now.
Regulatory changes, electronic trading solutions and international policy will dominate 2010. How so? 'Reply hazy, try again.'
While some change may be necessary, regulators must remember that even the smallest shifts in policy can have wide-ranging and unpredictable effects on the markets.
Just because Congress mandates that OTC products trade on-exchange doesn't mean that OTC derivatives won't blow up.
The likelihood of deferred compensation may trouble Wall Street professionals. But on the bright side, it should fuel a deferred compensation-based investment boom.
If we don't do something to shine a light on market practices, such as high-frequency trading and flash orders, and prove their value, many may just get regulated out of existence.
What happens when economic market theory collides with the fractured, high-speed, low-latency, dark pool insanity that we call the U.S. equity market?
The Obama administration's new regulatory reform proposal -- which covers everything financial -- is divided into five major categories: firm supervision and regulation, financial market supervision, consumer protection, governmental crisis management tools, and increased global regulatory cooperation.
Though it may seem like a quick fix, migrating OTC products to exchanges is a process fraught with dangers and problems all its own.
Increasing capital reserve requirements for OTC self-cleared products would change the economics of the marketplace and may nudge the indusrty toward an exchange-traded model.
An uptick rule would slow trading and remove liquidity from dark pools -- but it won't curb short selling.
What does the disintermediation of professional media mean for an industry focused on high-speed, accurate and intelligent information?
Over the years, regulators and legislators have tinkered with the markets, making it virtually impossible to raise capital, says Larry Tabb.
As legislators take aim at Wall Street, the industry must seize the opportunity to work with regulators to create guidelines that will benefit everyone, says Special Contributing Editor Larry Tabb.
The Obama Administration walked into one of the most turbulent financial markets since the Great Depression. What can President Obama do to not only stop the slide, but also turn the economy around?
Should we provide a safety net for firms that jeopardize the global financial system through their stupidity?
As hedge funds move away from prime brokers and toward using traditional custodians, the prime brokerage model is becoming endangered.
As debate over the $700 billion bailout continues, Larry Tabb, CEO of TABB Group, comments on the need for "bipartisan, unambiguous and morally steadfast leadership ... not a group of folks fiddling around while Rome burns"
Assessing the fallout as well as the future of the banking industry can help us return to a healthier place.
Downturns happen -- the industry will survive. But firms need to adjust to changing market dynamics.
From ownership structures to price formulation to liquidity access, all dark pools are somewhat different, and firms need to understand the unique benefits, challenges and opportunities of trading in each venue.
In addition to the excitement in the U.S., the real focus is occurring in Europe, where the EC is trying to get the fragmented clearing and settlement infrastructure players to play nicely in the sandbox.
Beleaguered firms will shift IT focus to enterprisewide risk assessment and management, and core deliverables, as well as electronic trading and latency reduction.
As fixed-income markets falter and write-downs proliferate, investment banks need to discover new opportunities and new ways to manage risk.
In some regards, nothing has changed in the fixed-income trading space to warrant electronic trading. On the other hand, however, everything has changed, signaling that the time may be right for e-trading.
A shaky economy and the defibrillation of many fixed-income products provide fertile ground for automated trading, fixed-income ECNs and exchanges -- as well as opportunities for those willing to take some calculated risk.
NYSE TransactTools, a FIX-engine provider, could be the ticket to the NYSE's survival.
The need for increasingly intelligent smart routing is being driven by a more complex execution environment as smart routers of the future will need to be increasingly flexible and multifunctional.
Société Générale rogue trader Jerome Kerviel wasn't a tech genius; but poor risk controls allowed him to cover up his fraudulent trades.
Most think of price when thinking of liquidity. But price can be subjective. How long it takes to execute, how definitive the execution is and the probability that the price will change before execution also are key factors.
The modern data center must be crafted with regard to resource consumption so financial firms can obtain enough power to efficiently manage data, analyze the markets and route orders.
The NYSE specialist may soon be eliminated and replaced with designated market makers. But whether these new market intermediaries are effective and profitable is questionable.
As buy side brokers decrease the number of brokers they use, sell siders are placing new demands on the buy side. One is send more of your flow to us or risk losing our top tier services.
Be careful what you wish for. A transparent over-the-counter (OTC) market could cause liquidity to dry up.
Larry Tabb of TABB Group discusses the trends that, although not new, will gain significance in the coming year.
It's just the eye of the storm for the subprime market mess. Count on the crisis impacting many other areas of the market.
The Boston Equities Exchange (BEX) became the first regional exchange to throw in the towel, but the Boston Stock Exchange (BSX) isn't down for the count, says Special Contributing Editor Larry Tabb.
Until high-speed, low-latency technology becomes easier to acquire, install and integrate, there are going to be many disappointed vendors.
Customers seem to want open execution platforms, but multibroker execution platforms still fail to attain widespread adoption. Fortunately, we are starting to see the multibroker platform pushing forward.
Unless details are settled quickly, the integration could put new and renewal agreements on hold, as clients do not often transition to a platform scheduled for sunset or put their faith in a team that may not be there next month.
The financial markets industry is so IT-dedicated these days that organizations cannot function without a strong, scalable and flexible technology infrastructure.
The financial markets want exchange reliability, but cost pressues, volume and speed expectations make 99 percent reliability almost impossible.
Multi-asset trading shouldn't be written off so quickly. More products are electronically traded, and investors are changing the investment dynamic.
Finding another large acquisition target may be difficult for Nasdaq as the pickings are slim, but there are some interesting options the exchange could consider other than the LSE.
Global is where it's at. The balance of trade, interest rates, economic growth and global expansion all are sending payments from high-wage Western countries to lower-wage emerging markets and Eastern countries.
Does the apparent death of the Nasdaq-LSE deal spell doom for the transatlantic duo? Are Nasdaq and the London Stock Exchange shark bait, or is this one more step in a chess match being staged on a global scale?
New technology, combined with cost cutting and a large market share, has allowed the NYSE to become more profitable and successful.
Getting regulation right is like balancing on a knife's edge - tilt too far one way and the industry is hamstrung; tilt too far the other way and reduce the trust that is required for a functioning capital market.
The SEC's vote to reduce the impact of Sarbanes-Oxley by reducing audit and sign-off requirements on firms' financial controls is a positive step, but will it bring back growth to the U.S.'s financial markets?
While the easing of Sarbanes-Oxley is something to celebrate, it won't bring the traditionally New York-based investment banking business back home tomorrow.