Mostly… fixed income and cross product eTrading

February 17, 2009

What lies ahead for e-trading?

Filed under: etrading, Nuts and Bolts, STP — holky @ 7:48 pm

Well, I liked the sentiment of the headline from Icubic “talking their book” (and indeed mine too) via “Electronic Trading: Visibility and Agility in a Fragmented Market”, stating-

With liquidity continuing to decrease, as the financial crisis unfolds further in 2009, it is widely accepted that electronic trading will play a pivotal role in ensuring banks can stay abreast of market developments, capitalise on fleeting opportunities and ultimately retain an advantage in a highly competitive landscape.

…but the Aite group report“The Next Challenge in FX – Creating a New Post-Trade Paradigm in an Electronic Reality” struck a particular chord with me. Yes, this is partly because I’ve been blinkers-on in the end-to-end FX space for the past couple of months and realise how painfully manual everything still is, but it’s also because I’ve always felt the spotlight was always on the execution-related bells-and-whistles arms race, at the expense of the far more more mundane requirements of actually sorting out the operational side of the dramatically increasing levels of trading being done [because the front ends got so much better to use].

We’ve all done plenty to exploit those “fleeting” singledealer opportunities, but perhaps our opportunity now really is to build real STP; the collective, cooperative processing that will move us from the (all Aite quoted) FX ticket price for non-top-100-banks of $10-25, to something that compares far better to per-ticket costs of fixed income $12, futures $1.25, equity options $0.75, and equity $0.05 (… though a question on these; are you really only paying 5c per trade for equity processing? ..processing not including clearing?).

Electronic trading in FX has become the norm, and the emergence of high-frequency trading shops and the burgeoning retail market have driven trading volumes into uncharted territories. However, beyond the front office, where most of the innovations have taken place over the last decade, cracks are appearing that might derail the growth of the FX market in the long run. Growing trading volume has had a negative impact on the back-office, post-trade infrastructure of most active FX firms. Today, FX has one of the highest processing cost structures when compared to other popular financial instruments. Industry-wide efforts aimed at easing the post-trade challenge have been met with limited success due to the lack of both coordination and an overarching strategy.

Sure, old habits will die hard – banks still obviously seeking competitive edge will continue to focus on helping their customers trade with them rather than their competitors, full stop. But perhaps the bigger picture is to build those collaborative foundations that will help enable more of your customers to trade more, and do so more frequently, in turn gaining even more value from those wonderful tools you’re offering? .. So shouldn’t we all collectively create the wave first, then we can have the competitive surfing competition once buyside and sellside are at the beach and ready to enjoy it?

Million Dollar Traders

Filed under: etrading — holky @ 7:36 pm

I watched, heck even enjoyed the Million Dollar Traders programme on BBC. And yes, this IS a timely post, it’s lined up for the inevitable repeat 😉

Eight ordinary people are given a million dollars, a fortnight of intensive training and two months to run their own hedge fund. Can they make a killing?

….a killing, er, not in terms of the whole firm with “one m-e-e-e-l-y-o-n dollars” between eight and (apparent) constraints being small stock trades (eg 400 british gas, 100 nike?) with voice broking and a ticket stamp machine for dramatic effect. Think even while keeping setup costs to a min though they could have been given etrading and order routing via their Bloombergs though; gaining all sorts of potential for fat fingers and “click – pause – ahaaaa – wheres undo?”

February 3, 2009

Reuters/Bloomberg IM

Filed under: etrading, Nuts and Bolts — holky @ 8:46 am

Finextra tells us that Reuters have launched cross platform Instant Messaging, linking their RM community with/into the big wide world. (I should have said finally in that sentence – we were talking to them in some detail about this sort of thing over 3 years ago).

Reuters Messaging (RM) Interchange is being billed as a global instant messaging hub, connecting Thomson Reuters RM with Cisco’s Jabber XCP, IBM Lotus’ Sametime and Microsoft’s LCS/OCS. Users connected to the hub will be listed on an inter-company community directory.

Does an inter-company community directory that (somewhat) validates each user @ their particular firm is who they claim now present a credible challenge Bloomberg messaging? … and given the more open nature of this offering, should we expect quicker development of conversational e-trading functionality?

February 2, 2009

Working from home?

Filed under: Nuts and Bolts — holky @ 3:58 pm

Given the logistics problems the snow is bringing I thought I’d pose a question; how many of your traders are a) allowed to, and b) able to , work from home? Previously there have always been problems with the regulated roles doing their regulated work out of the [watchful eye of the] office, but I wondered if any firms were activly removing these hurdles in particular clever ways in order to support this. And does that give them an advantage on days like these?

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