magmasystems looked at the demise of Dresdner’s Digital Markets and asked “what will happen to the dream of cross-asset class trading?”, specifically posing the question “In these times where everyone is predicting the reduction of traders due to automation, will cross-asset trading be the last field of battle as the silos struggle to maintain their autonomy?”
Last year Citigroup, Goldmans, Merrills and others combined separate Fixed Income, Currencies, Commodities groups into single units. As each of these asset classes already has significant ‘e’ presence, the previously silo’d ‘e’ guys working in them are having to quickly evolve to understand and cover more asset classes. So it looks like we can right now just rely on evolution, rather than Revolution, for the guys at the coal face to identify ‘e’ synergies and – given the support of these new broader business groups – for fab new cross-asset class etrading “opportunities” to be developed and exposed to customers imminently.
Joining the dots with asset-classes outside of the FI/FX/commods space at this point, we do of course still need a Revolutionary element 🙂
Even with the exact detail of the regulatory best execution burden for each kind of OTC market participant still being defined and agreed , there are a growing number of news items about systems claiming to offer assistance regarding meeting your new mifid-led requirements – for example the first to help you demonstrate you’ve fulfilled your best execution obligations, and the second to catch you when you have not, and now some Microsoft tools helping you with client classification, best execution, market connectivity, reporting and systematic internalisation.
SIA launch a software tool for verifying and assessing ‘best execution’ requirements in securities transactions, in line with forthcoming compliance requirements under the MiFID. SIA says its ‘Execution Policy Monitoring for MiFID’ module, will be made available over the SIA-Eagle market abuse and exeuction surveillance platform .. where users will be able to automatically analyse all the transactions carried out across the European financial markets and provide a full audit for customer evidence. The system will also verify compliance with contractual terms agreed with buy-side clients ex-post, as to the implicit and explicit costs for achieving best price in consideration of market impact and opportunity costs – SIA site
FSA to build Mifid detection system – The Financial Services Authority, the UK markets watchdog, is to introduce a new system to ensure City firms are complying with the markets in financial instruments directive, the European trading rules that come into force in November – efinancialnews here
Microsoft launches MiFiD package – here
Volumes on MTS markets up 13.5% through 2006 – attributed to transparent pricing structure in which trading fees fell to the lowest fees of any European fixed-income market (customers paying ave 11% less in 2006 than in 2005 for every million euros traded).
BondVision also claims another record year – with total volume rising 24% year-over-year to €571 billion. Covered bonds and agencies experienced the greatest growth in volume, 30% and 60% respectively, compared to 2005. The addition of more central banks and global asset managers in 2006 brought the number of participating clients to over 300 while the dealer pool remained the largest in Europe.
Following the implementation of FIX connectivity and an exclusive API solution in 2006, BondVision launched new partnerships to increase efficiency and reduce costs in the execution management process. BondVision has targeted similar partnerships with global providers of multi-asset class, e-trading solutions as well as with Portfolio and Order Management System providers in 2007.
MTS repo nominal volume up by 19% to almost €16 trillion through 2006.
Full article here
Does a best execution obligation arise for a dealer when a client requests a quote from that dealer for a specific OTC instrument and with specific settlement details – then making their decision whether to trade once they see the response?
Does it make any difference if the client has asked more than one dealer to quote for the above, putting the dealers in competition with each other – then making their decision based on the responses received which (if any) one dealer they will trade with?
If that “in competition” thing did make a difference, does the dealer need to be told they are in competition?
Should the obligation be materrially different when a client says they have a block of security to buy/sell and asks the dealer to work the order for them, using their knowledge of what specifically is important from the clients perspective (best average price, quickest route to fill, utilising particular settlement routes, ..whatever..) to get the best execution result that they can?
Are the answers as obvious as they seem?
WSJ says “The New York Stock Exchange plans a pilot program later this year that could bring real-time stock-price data to millions of Internet users.”If the SEC approves the NYSE plan it will allow web sites to publish trade prices with nearly no delay in return for payments of $100,000 a month. The test program could be available as early as March, depending on the SEC’s response, the paper said. Google Inc. and business news television station CNBC have said they would offer data for free to their users, the paper said.
NYSE is keeping some data close to the vest, including the size of trades, and the quotes at which investors are willing to buy and sell shares. That information is available on the floor and to Wall Street firms and institutional investors for a charge, and is made available to customers of some brokerage firms, which usually wrap in the costs as part of investors’ commission payments. The consolidated plan, available through brokerage-firm sites, includes prices, quotes and the size of trades on all U.S. exchanges, whereas the free information that Google, CNBC and possibly others will feature will show only the last trade price. But CNBC officials say the data will also be used to feature charts and updated information about market movements.
How long before we see generic OMS / EMS functionality available through a Google spreadsheet? With the setup of your trading access giving you the rest of the data that isn’t free?
“Stuck on a train, bored in a meeting, can’t get to your PC?” – actually text from William Hill Mobile Sportsbook site, but works equally well for those wishing to etrade FX direct from their mobile phone (with ACM). While it’s not the most functionally rich distribution channel, and there are still some technical constraints in terms of getting streaming prices at the moment, it is undeniably portable.
Wall St Tech says Thomson have launched a new OMS TradeCentral – article here – billing it as an end-to-end multi-asset class solution with out of the box connectivity into Tradeweb for fixed income, as well as supporting equity markets and venues for options and other derivaties.
With many new trading venues coming thanks to MiFID – such as Project Turquoise (bank-led consortium), Chi-X (from instinet), Equiduct (was Easdaq), and many dark pools of liquidity that have been in the news through second half of 06, doesn’t this fragmentation of liquidity take an exchange market participant’s architecture closer to what we already see in OTC markets? — where the direct participants need access to as many liquidity pools as possible in order to get a chance of doing the trade they want to do?
With an argument of using electronic access to markets to more easily aggregate a view of fragmented liquidity within the decision-making process, and automated ability to route orders to the right place at the right time to get the best result, how many bright minds are working out cross-asset (or perhaps “asset-neutral”) etrading initiatives to capitalise on this?
P.S. interesting that at this point the exchanges (Eurex, OMX, NSX, Euronext, Direct Edge, BATS – not an exhaustive list just what came to mind) have been in the news regarding reduction of their fees, but the OTC platforms/venues aren’t [at least publicly] doing the same.