Mostly… fixed income and cross product eTrading

May 24, 2007

is your mifid sorted yet?

Filed under: Mifid — holky @ 6:04 am

Investment banks’ compliance staff are set for a busy summer after UK regulators this week urged companies to start submitting documents to show they comply with new European trading rules within the next two months  (more here)

NYSE Bonds – update

Filed under: etrading — holky @ 6:02 am

Following on from previous NYSE Bonds post, I see it’s in the newssaying its started rollout of the first 1000 unlisted bonds of NYSE listed companies eligible to begin trading on the new platform.  Nothing in the news about how successful this platform has been though since launch? … but a daily “most active” stats on nyse site shows that for trade date 22may the most active bond traded a volume of 54.  (000?)

May 22, 2007

Broker selection

Filed under: Nuts and Bolts — holky @ 10:33 am

Research is still the second most important factor for fund managers when they choose brokers – even though unbundling means it should not exert influence on their decisions and the costs should be kept separate.

Just over half of respondents (in the EFN buyside survey) said brokers provided them with technology or systems free, raising the possibility the technology is being financed indirectly out of dealing commissions, that fund managers’ efforts to achieve best execution are being compromised and that brokers are, effectively, inducing clients to trade with them by supplying them with technology.

Asset managers are concentrating their equity trading with a limited number of brokers.  On average, 44% of order flow goes to fund managers’ top three choices – and one in three respondents said that the top group’s share had increased in the past year.

Full article here

EMS priority

Filed under: etrading, Nuts and Bolts, OMS / EMS — holky @ 10:23 am

A new execution management system was ranked as the second top priority by firms with between €20bn and €50bn under management. It was third for those managing between €50bn and €100bn, and fourth for those with €5bn to €20bn under management. Only at the largest (more than €100bn) and smallest (below €5bn) was a new execution management system not regarded as a top-five priority. (Source EFN)

Supporting another imminent leap forward within the etrading space?

Fixed Income IoIs

Filed under: etrading, Nuts and Bolts — holky @ 10:13 am

FIXCITY will pilot ioinet fixed income with a selection of brokers and buy-side firms and plans to officially launch the module as soon as it is fully endorsed.  ioinet provides a centralised repository, accessed via the ioinet web interface or a single FIX connection, for holding IOIs received from the broker community.  These are distributed using IOI targeting tools, providing an efficient way for brokers to notify target buy-side firms about their debt liquidity.

The IOIs include information on the volume available, price and how long the indication is valid for.  The buy-side can then choose to receive messages on the instruments they are most interested in and also those with similar attributes, without having to show their hand and request a quote. Dealers are able to create instrument and portfolio specific watchlists.

Will be a shame if this really is only sellside iois to buyside .. so no sign of executable bid lists

May 15, 2007

Tradeweb / RTFI

Filed under: 2015, etrading, Nuts and Bolts — holky @ 12:27 pm

The prospect of putting Tradeweb and Reuters RTFI in the mix gives an enormous opportunity to do something different

I’ve previously said that based on the level of existing integration between TW and Thomson I don’t think an all-new merged offering with RTFI will be a quick development – unless of course prioritised high enough by all involved – but regardless of the timeframe it will be a massive missed opportunity if we can’t eventually regard whatever does emerge as “the one” that fundamentally changes the etrading landscape.

But where would you start?   “Just” plumbing tw and rtfi and thomson one together; to become workstation neutral in terms of what the customers use (as long as its not Bloomberg)?     Is there really anything enormously clever in any of these existing guis in terms of client order entry that makes this much more than just deciding to use (say) the TW order routing/trade processing infrastructure then route whatever comes from any of the guis into that?    Is that the reasonably quick and painless first cut that lets you reinforce the hearts and minds commitment of your users (all roads leading to the same pool of liquidity) while you build the new offering?

While in that eventual all-new offering you’d have to be particularly brave or stupid to not ensure backwards compatibility with the existing RFQ business (unless you really have time and inclination to wean everything onto the new way of doing business), this is where you get to break the mould and challenge the status quo in terms of what can and can’t be done.

Liquidity Hub is bringing RFS (Request for Stream) into the fixed income world. Why not expand that concept to allow the buyside user to request a stream for all instruments that match particular attributes rather than for a specific instrument (as here)?  

Why not open the pipes so suitably-permissioned buyside can send through executable bid lists to their chosen dealers? 

And why not sort out a client request for access and onboarding process that doesn’t involve someone reading and email or a spreadsheet or retyping the request?  

While you’re at it, integrate your etrading functionality into the Reuters Instant Messaging so anyone who’d like to use IM as their gui (such as the South Koreans apparently) can get involved. 

And above all, ensure everything really has cross asset etrading functionality truly built in (my understanding is that Reuters talk the talk already on this in terms of their “shared architecture” across etrading platforms, but the reality of actually putting this into practice may still very much be a ‘todo’).

Like I said… if this isn’t opportunity that’s come a-knocking, what is?

May 11, 2007

Trading challenge

Filed under: etrading — holky @ 3:45 pm

Something for the weekend???  How about the ETF trading challenge at

The aim of the game is simple. Make as much profit as possible on your £10m starting balance by trading and diversifying your portfolio. The winner will be the person who, at the end of the game, is top of the league table.

You will be given £10m in VIRTUAL money to invest in any of the iShares funds listed on the London Stock Exchange. How you use the money is up to you ….


Filed under: Nuts and Bolts — holky @ 6:41 am

A survey (Financialnews and RD/IR) from March regarding buyside policy on the use of derivatives shows that nearly a third of buyside do not use derivatives now, and the majority of the non-users have no intention to start.

  • 23% – Do not use and no intention to do so
  • 7% – Do not use now, but do intend to use in the future
  • 23% – Occasionally allow fund managers to use
  • 25% – Often allow fund managers to use
  • 22% – Allow all fund managers to use

With reference to Sean’s post about financial derivatives how much of that “no – never!”  is down to not actually understanding the product sufficiently to utilise derivatives as part of an investment (or indeed ‘insurance’) strategy to actually achieve what they genuinely need? 

May 10, 2007

And Now .. Project Alpha

Filed under: 2015, etrading — holky @ 10:59 am

Seven Canadian investment firms have clubbed together to launch an alternative trading system to rival the Toronto Stock Exchange, the latest in a string of new platforms challenging the traditional exchanges. The new trading system is to be called Project Alphain EFN here – a continuous electronic order platform with trades being made on a price-time basis.

Tradeweb convertibles

Filed under: etrading — holky @ 9:26 am

Thomson TradeWeb has announced it has gone live with dealer-to-customer trading of dollar-denominated convertibles bonds, its 17th online fixed-income marketplace also the first that reaches into or at least more towards the equities space. Initial liquidity-providing dealers are Citigroup, Lehman Brothers, Merrill Lynch and UBS.

Securities Industry News comments this could ratchet up the competition with New York-based MarketAxess, which has a smaller product set that doesn’t include convertibles but does a bigger business than TradeWeb in overall corporate credit trading. Here TradeWeb is seeking to fill what it sees as a gap in multidealer-to-institutional-client e-trading. There have been relatively few options over the years for commingled dealer pricing of convertibles, which are corporate debt securities that come with an option to be converted into company stock or cash. Screen-based convertibles trading has been offered primarily on dealers’ proprietary platforms. As in bond sectors overall, phone-based transactions still dominate.

May 9, 2007

The True Aim Of Bank Consortium?

Filed under: etrading — holky @ 1:33 pm

FT  today makes a point ive coveyed before (about liquidity hub being the first major and coordinated challenge to current model [in FI]).  The FT comment is about Project Turquoise. It could of course apply to any bank consortium challenging the status quo.

Whether it succeeds or not is much less important than that it establishes that the European stock trading market is contestable; that there is viable competition to the exchanges lurking in the wings. One of the great contributions of industrial economics in the 1980s was to demonstrate that it is potential rather than actual competition that disciplines the pricing of incumbents.

May 8, 2007

Bloomberg and Reuters

Filed under: etrading, Nuts and Bolts — holky @ 2:12 pm

In the latest insidemarketdata awards –

  • Bloomberg; best data provider for equities, best data provider for fixed income
  • Reuters; best data provider for foreign exchange, best research provider
  • Dow Jones Newswires; best news provider
  • Bloomberg also scooped best data provider (vendor) , though Reuters won best low latency data vendor

of course the answer always depends on who you ask and what the question is.  While I’m making the assumption that their etrading offerings [will] capitalise on their position in terms of market data, with Bloomberg and Reuters between them appearing to dominate fixed income, equity, forex – and now having liquidity hub dealers’ commitment for IRS and US Treasury and then Euro govy and whatever comes next… do we see a clear indication of Bloomberg+Reuters being the two key participants in terms of secondary markets landscape over the next (say) couple of years?  

Whether the Thomson/Reuters discussion does put Tradeweb somewhere into the picture above or not, what does this all mean for Marketaxess?


Filed under: 2015, Algos, etrading — holky @ 12:35 pm

The machines are taking over the world!

Bloomberg article on “machine outwitting humans” and AI in the algo space says Language represents one of the biggest gulfs between human and computer intelligence, Dhar says. Closing that divide would mean big money for Wall Street, he says. Unlike computers, human traders and money managers can glimpse a CEO on television or glance at news reports and sense whether news is good or bad for a stock. In conversation, a person’s vocal tone or inflection can alter — or even reverse — the meaning of words. Let’s say you ask a trader if he thinks U.S. stocks are cheap and he responds, “Yeah, right.” Does he mean stocks are inexpensive or, sarcastically, just the opposite? What matters is not just what people say, but how they say it. Traders also have a feel for what other investors are thinking, so they can make educated guesses about how people will react.

So there you have it – the human value-add comes down to making “educated guesses”.

What if the other end of the conversation (/information flow) is a machine, and there is no vocal tone to interpret?  Are we expecting machines to also utilise sarcasm in their responses?

Liquidity Hub – news

Filed under: 2015, etrading — holky @ 8:40 am

Liquidity Hub warming up in the wings…. press release in WSJ “Bankers Plan Bond-Quote System” (though only WSJ Europe?) says a group of the world’s largest investment banks is seeking to wrest back control over the electronic trading they do with customers by launching a system that will distribute bond and derivatives prices to clients…

A group of at least 12 investment banks will announce this week that they plan to launch a system, called LiquidityHub, in July, that will distribute bond and derivatives prices to clients. The consortium plans to begin with prices on euro and US-dollar swaps and US Treasurys and later expand to European government bonds and possibly mortgage-backed securities, according to some of the banks involved.

The banks include Bank of America, Barclays Capital, BNP Paribas, Citigroup, Deutsche Bank, Goldman Sachs, JP Morgan Chase, Lehman Brothers, Merrill Lynch, Morgan Stanley, Royal Bank of Scotland Group and UBS. ABN Amro also will announce this week it is joining LiquidityHub, according to a person familiar with the matter.

While LiquidityHub intends to use existing trading platforms and possibly exchanges for its own feed, it will be a single source for prices from the banks involved.

So …  next step letting the world know the details re how, where, why etc ..

What’s that algo doing?

Filed under: Algos, etrading — holky @ 5:19 am

Link to the FT mandate panel discussion about the uptake of algorithmic trading, and the lack of education holding back implementation of algos.

  • General agreement that at present algos are tactical – to build and trade out of a position over a day or so, rather than algos to make long term asset allocation and run stock positions.  – Is the next wave to be more about long term decision making?
  • Cliff Warner (London & Capital) says the job of the buy-side desk is to maintain the beta, to mitigate the risk and therefore to get me the best price on the market, whereas the alpha is generated from his fund managers. – thus algorithms are perceived a risk to buyside execution desk
  • Mention of using FIX for algo’s. – still work to do

May 4, 2007

Tradeweb and Reuters – together at last!

Filed under: 2015, etrading — holky @ 2:31 pm

Reuters confirmed they’ve been approached by a mystery suitor – and the rumor and speculation is that the bidder is Thomson Corporation… (a bit more meat in EFN ..).     Just a rumor so who knows eh… but interesting to think it through as one of those 2015 moments….

If a Thomson and Reuters marriage of sorts did turn out to be the end result – essentially throwing Tradeweb and RTFI into the blender –  this is unlikely to parent any form of mutant child in terms of new FI etrading product particularly quickly; after all, Tradeweb isn’t even truly encapsulated in the overall Thomson offering as yet anyway, and in the big scheme of things I dare say the enormous organisational change and high level effort to ensure positive overall impact in terms of terminal licensing in Thomson and Reuters core markets is way above that in the todo list. 

But whatever plan is voiced to combine the existing dealers-pay-per-trade (TW) and free-to-provide-liquidity (RTFI) models into a single offering [at point X in the future], in the context of the other venues’ and the wannabes’ strategy to compete with all of that, could certainly easily present massive sentiment shift that gives rise to alliances (Liquidity Hub or something else in LH stylee) that very quickly change where liquidity is found within the fixed income etrading landscape.

May 3, 2007

NYSE trading floor to stay!

Filed under: etrading — holky @ 9:48 am

Famous last words? efn saysJohn Thain, the chief executive of NYSE Euronext, has pledged not to reduce the New York exchange’s trading floor despite an expected shift of orders to screens as regulations take effect in July.  Thain told a conference yesterday: “Are we big enough to afford to maintain the cost of the floor in an environment that’s becoming increasingly electronic? The answer is yes. But we’ll see how the market evolves.” …. ah, a disclaimer at the end then.

May 2, 2007

Reg NMS Should Be Scrapped!!

Filed under: Mifid — holky @ 4:06 pm

So (according to securities news) says outspoken Securities and Exchange Commission member Paul Atkins, who is extending his critique of recent reform initiatives to one of the industry’s most significant current compliance concerns: Regulation National Market System (NMS).

Atkins faults the commission on both procedural grounds and for going too far in micromanaging some aspects of market operations. Reg NMS “represents a massive regulatory intrusion into our security trading markets that was completely unwarranted, given the lack of evidence of market failure and the availability of substantially less intrusive means to achieve the regulatory goals,” Atkins said in a speech to the SIFMA annual operations conference.

Are the powers-that-be for mifid learning from the experiences of Reg NMS?

May 1, 2007

Post-mifid trade idea?

Filed under: Mifid — holky @ 12:54 pm

As in EFN…. The European Commission has started legal proceedings against the 24 EU countries (all except UK and Romania) that have not yet fully implemented new rules on securities trading into national law – warning that delays beyond the 1-Nov deadline could put European banks and companies at a “serious competitive disadvantage” .. and have a “significant effect on EU financial markets, as investment firms could have difficulties providing services in other member states and could be uncertain as to which legal regime is applicable” – potentially leaving countries open to legal action from private parties claiming damages for losses incurred because of late implementation of national legislation.

I wonder who is going to be first mini-me dr evil to execute something in one of the “rogue states” then sue them for not being mifid-compliant?

Turquoise wall of silence?

Filed under: 2015, etrading — holky @ 9:37 am

Buyside chief attacks banks over Turquoise ‘wall of silence’ – so says efinancialnews

A large asset management company has joined the controversy surrounding Project Turquoise, for the first time, with one of its traders attacking the investment banks behind the proposed European equities trading platform.  Speaking at a trading conference last week, Tony Whalley head of dealing at SWIP, said: “The sellside needs to interact better with the buyside. We should be getting answers, as we’re presumably expected to provide the liquidity but so far it has been a complete wall of silence. If these answers are not forthcoming, there may be less enthusiasm to support it.”

However, Glenn Poulter, head of cash equities at Citigroup, one of the consortium of seven banks, defended the project. He said: “Turquoise is not a secret. We could have come out with a great plan but we’d have looked stupid if we’d slipped. We’re not trying to alienate the buyside and the picture will become clearer by the time Mifid is introduced.”

While not exactly parallel to this, but equally quiet in terms of fanfare and broadly published detailed plans perhaps…  what does buyside think of liquidity hub?

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