Mostly… fixed income and cross product eTrading

January 30, 2008

Turquoise Airlines

Filed under: 2015, etrading — holky @ 4:20 pm

At Finexpo earlier today Eli Lederman, CEO of Turquoise, drew a parallel between 80s deregulation in US airline markets and what is going on in capital markets now. So where airline customers (passengers) now benefit in terms of more readily available flights that are cheaper (relative to the bad old regulated days) .. capital markets customers (buyside, who will of course pass on these benefits to the ultimate investor), should expect the new competition to bring more readily available (/accessible) liquidity, with tighter spreads, and the resulting upsurge in volumes transacted because of this reinforcing (/deepening) that liquidity.

One additional airline point jarred me.  The point about multiple airlines sharing terminals being a benefit to the passenger; who can now easily change airline etc for a connecting flight as part of a single journey. Which of course they can. So multi-airline venues rule! … Though if so, why would Virgin get any value from now claiming their entirely-separate-from-other-airlines security facilities are a differentiating and major plus point?  and who cares if silverjet have an entirely separate terminal?   Perhaps ~ 20 years on some of the multi-airline-per-venue benefits have lost their sparkle?

Persisting with the parallel but looking at FI otc markets, if we step past the current rush for multi-dealer consortia and venues, is the shape of the more distant future that singledealer venues will actually end up ruling?  Then it’s the buyside desktop that keeps the single dealer “terminals” (in airline speak) in close proximity (for easy parking and some benefits of connecting flights during an overall transaction). So that’s still an api connection per dealer (or perhaps per-aggregator) into the buyside desktop then that we should all be seeking?


October 9, 2007

Turquoise and PLUS

Filed under: 2015 — holky @ 6:51 am

Word is (also mentioned here) that Plus markets is in line for a neat reverse takeover of Turquoise – which would appear to address all of the comments and criticisms that turquoise hasnt been recruiting and actually building anything material .. I wonder how all this sits with the previously proposed launch date of April next year?

August 22, 2007

The Turquoise Board

Filed under: etrading — holky @ 6:32 pm

The people nominated for the board of Project Turquoise.  Still looking for their Chief Exec….

  • CITI – Richard Evans, global head of electronic execution
  • CITI – Pinar Thorwirth from its clearing business
  • Credit Suisse – Nichola Dobinson, managing director of equities
  • Credit Suisse – Naseer Al-Khudairi, head of its algorithmic trading service AES
  • Goldman Sachs – Phillip Hylander, joint head of global equity trading and an outspoken supporter of the project
  • Goldman Sachs – Bryan Koplin, director of electronic trading
  • Merrill Lynch – Niki Beattie, head of market activities for Europe, Middle East and Africa
  • Merrill Lynch – Brent Clapacs, head of European equities trading
  • Morgan Stanley – Simon Hogan, European chief operating officer for equities
  • Morgan Stanley – David Russell, Head of Trading
  • UBS – Nick Holtby, head of European trading
  • UBS – Duncan Higgins, director
  • Deutsche – Garth Ritchie, European head of trading within global markets,
  • Deutsche also say Stephen McGoldrick, a technology specialist, will join the board.

August 13, 2007

Boat 1, Turquoise 0

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

Will this be the final score???  At the same time Boat is claiming to be head of schedule, looks like Turquoise-rival Instinet is set to sell stakes in its new equity trading platform to its largest investment banking customers, including seven who have committed to Turquoise …. as reported here

August 6, 2007

Turquoise launch delayed

Filed under: 2015, etrading — holky @ 10:03 am

EFN has the scoop – Turquoise launch is delayed with aim now to go live before start of April next year.

June 29, 2007

Furse warns over Project Turquoise

Filed under: etrading, Mifid — holky @ 6:39 am

EFN says that Clara Furse, chief executive of the London Stock Exchange, has publicly warned that Project Turquoise and MiFID could reduce liquidity and raise costs for investors. 

She also dismissed the claims by Project Turquoise that stock exchange fees were a significant part of the overall cost of trading, and their claims that their mutually-owned structure was superior to that of the LSE;  claiming exchange fees account for just 4p out of the average £6.50 average cost of trading £1,000 worth of shares on the LSE – or about 60 basis points – compared with 85p in commissions charged by brokers and 60p in market impact, adding “Even if we offered our services for free, we would only reduce the overall cost of trading on the LSE by 4p. That is a small price to pay for the efficiency and liquidity that we provide.”

May 1, 2007

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?

January 29, 2008

2007 – year of consortia

Filed under: 2015, etrading — holky @ 12:39 pm

A consortium is an association of two or more individuals, companies, organizations or governments (or any combination of these entities) with the objective of participating in a common activity or pooling their resources for achieving a common goal.

Well 2007 was certainly the year of the consortia. Everywhere you look, banks pooling their resources for participating in a common activity or to achieve a common goal. 

And with Project Rainbow now on the horizon .. we see that 2008 is continuing the theme …
But what are the common goals that are sought?

The short term appears a defensive move in a landscape changing dramatically because of regulatory change –  the banks individually backing many/all horses in order to remain agnostic over choice of venue that business gets executed (until you start declaring you actually do have a preference), forcing exchanges/venues into lowering their costs … all of which of course appears to be working, though what cost of those venues countering with diversification into markets they previously didnt touch?

For the longer term do you have to start joining the dots between the consortia?  As and when the products cross over into another asset class, something that is typically managed in a separate silo in the sellsides, then those sellside representatives around each board table need to be there to execute their firm-wide strategy for the venue in question, rather than a product-silo specific view.  So will Tradeweb/Fusion plans to venture into Equity drive us down the road of a Fusioned MarkIT Boat Tradeweb ?  Or will MarkIT or Liquidity Hub turn Turquoise at any point?

Or is the only genuine end game for all of this wise investment just the exit strategy to sell any shareholding at a higher price than you paid?

October 30, 2007

Project “Utility”

Filed under: 2015, etrading, OMS / EMS — holky @ 10:20 pm

Another question from roving reporter John…putting me to shame in terms of the number of serious posts recently.

So, we live in a world where Investment Banks compete fiercely in most areas (a good thing) but also collaborate (ie Boat, Turquoise) when appropriate. And that’s sensible, horses for courses. At the moment the sell-sides either buy or build their connectivity infrastructure and most have a mix of Fidessa, ORC, GL Trade, Cameron, TransactTools, Javelin (NYFIX) Appia and so on. On the buy side in the last five or six years there have only really been two choices – Charles River or LatentZero. And that lack of competition is a bad thing.

So, a modest proposal. Why don’t the heads of connectivity from Morgan Stanley, Merrill Lynch, Credit Suisse, Goldman Sachs, Lehman Brothers, Bear Stearns and so on stop buying EMS vendors and actually set up a broker neutral OMS/EMS. Neutral by design and by ownership. Genuinely FIX compliant and given to any buy-side that wants it – client of the owning banks or not. Charge it out on a rental model – a modest rental per dealer per month – maybe say $1,000??

Maybe even look to Open Source it for the hedgies and the funkier chaps with more tech smarts…

Or is that what the $180million investment in Thomson Tradeweb was all about?

July 24, 2007

Project Boat Hits Big Wave?

Filed under: 2015, etrading — holky @ 6:13 am

EFN says a row has erupted between the banks involved in Project Boat over whether the proposed trade reporting system should be a for-profit commercial venture or spun off to Markit Group (a data and research group that is Project Boat’s business partner and owned by eight of the consortium), and suggests similar disagreements over Project Turquoise will follow.

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.

January 5, 2007

Exchange / OTC Markets

Filed under: etrading, Mifid — holky @ 2:32 pm

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.


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