From Tales from a Trading Desk: Single Bank Platform: HTML5 and Actors

OTC Derivatives Regulation, and ‘What is a Swap Execution Facility’

In my efforts to understand the new legislation covering OTC Derivatives, I came across an excellent blog called ‘Streetwise Professor’ written as you would expect, by a streetwise US Professor of Finance and Energy Markets.

In a recent post called What is a Swap Execution Facility , the ‘prof’ looks at the new ‘Dodd-Frank’ regulations for OTC derivatives. He concludes that in their rush to promote ‘transparency’,  congress (and regulators) have created a very narrow ‘one size fits all’ definition of a Swaps Execution Facility.

This he argues is not in the interests of market participants and in his view will result in the creation of alternative execution mechanisms (similar to how equities markets evolved to create ‘dark pools’ of liquidity) that accommodate the diversity of requirements of market participants.

Here is the narrow definition of a Swaps Execution Facility:

The Dodd Frank legislation defines a SEF as a “Facility, trading system or platform in which multiple participants have the ability to execute or trade Swaps by accepting bids and offers made by other participants that are open to multiple participants in the facility or system, through any means of interstate commerce”

More on this in coming blogs.

“Different users, one framework”

A few years ago now, when we first started working with banks on their SDP projects, our involvement was largely confined to providing the internet distribution rather than the GUI design or implementation. Sometimes we would only get to see the ‘front-end’ when the system entered UAT and it was deemed good enough for people to look at and critique.

It seemed as obvious to us then as it is now that the success of an SDP project is highly dependent on how useful the service is to the user and how much they like using it. And so it became frustrating sometimes that whilst we were assisting the project with providing messaging workflow expertise, we were often at the mercy, in terms of overall project success, of the GUI design and how good that was.

We would try and gauge how successful the external roll-out might be based on the internal take-up in the bank, “how many people are using it internally?” we would ask, not particularly appreciating then the different user roles that existed. Continue reading

Money Mavericks and Single Dealer Platforms

Coding the Markets comments on Lars Kroijer‘s excellent Money Mavericks and single-dealer platforms.

Global FX daily turnover reaches $4trillion up 20% according to BIS Triennial Survey

The Bank of International Settlements (BIS), has just released the latest 2010 Triennial Survey survey of global FX market volumes (the most authoritative survey of global FX market activity)

Headline items from the survey are: (full  report available here)

  • Global FX turnover was 20% higher in April 2010 than in April 2007, with average daily turnover of $4.0 trillion compared to $3.3 trillion
  • Surge in Spot Activity: The increase was driven by the 48% growth in turnover of spot transactions, which represent 37% of foreign exchange market turnover. Spot turnover rose to $1.5 trillion in April 2010 from $1.0 trillion in April 2007
  • Bank to client volumes exceeded Bank to Bank volumes For the first time: Activity of reporting dealers with other financial institutions surpassed inter-dealer transactions (ie transactions between reporting dealers). Other Financial Institutions, a category that includes non-reporting banks, hedge funds, pension funds, mutual funds, insurance companies and central banks, grew by 42%

Continue reading