Swaps: Pre-trade Transparency & Post Trade workflows

Two posts grabbed my attention today, worth reading.

Pre-trade Transparency: Kevin McPartland from Tabb Forum tackles the subtleties of mandating pre-trade transparency for the more illiquid segments of the swaps market (or any other market for that matter) – liquidity and transparency in such markets tend to be inversely related, the more transparency the less ‘real liquidity’! (full article here – it’s free, but requires registration, strongly recommend subscribing to daily email digest)

Trade Workflows post Dodd Frank: Ben Wolkowitz, and Vinod Jain from Headstrong, provide an overview (with good diagrams) of the full trade workflow for Swaps that would apply under Dodd Frank, in both cleared products on a SEF, and non-cleared products voice or SDP ( link here it’s Bob’s guide, again free, but may require registration)

How the financial sector sees technology as its saviour

Here’s a snippet from a really thought provoking article by Francesco Guerra (click here for the full article from yesterday’s FT – requires subscription or free registration) .

When, a few months ago, I asked Jes Staley, head of JPMorgan Chase’s investment bank, how his industry would survive in an era of lower returns, he answered with two words: “technology” and “revolution”.

Last week, Mr Staley put his servers where his mouth was.  Speaking to a roomful of investors, he revealed that JPMorgan was midway through a five-year plan to reduce its foreign exchange trading platforms from 10 to 2 by using more efficient IT systems.

It raises a lot of questions…..firstly – is a move like this indicative of the growing trend towards single-dealer platforms, or does it represent an opportunity for SDPs?

Good news! Beer not subject to swaps ‘margin requirements’

Garry Gensler, Chairman of the CFTC said yesterday that margin requirements for cleared swaps, would apply to transactions by ‘financial entities’ rather than those that involve ‘nonfinancial companies’.

Gary is clearly a caring man, with his heart in the right place, as he reassured markets that ‘beer’ would not be subject to margin calls!

“We’re aware and focused on the cost of a six pack because we also oversee agricultural markets,” Gensler said. “I would say our intention is not to have margin requirements applied to an end user such as MillerCoors,” he said.

more here and here

Last week’s (AFME) European Market Liquidity Conference

Last week I attended the excellent “European Market Liquidity” Conference, organised by AFME (the industry voice for FX & Fixed Income).

The theme was summed up by the oft repeated phase from various speakers that

“A tsunami of regulation is headed your way”.

A few thoughts from the conference:

Engage with regulators: Whilst many proposed rule changes still lack detail, and in some cases timescales for implementations are ‘worryingly’ short, there is no doubt that the impact of Dodd Frank, MiFID II and Basel will have an enormous impact on many existing business models. In order to minimise the ‘unintended consequences’ of poorly drafted regulations undermining the efficient functioning of the market, it’s clear that the industry, and it’s various trade bodies must continue to lobby and ‘fully’ engage with regulators, to make sure that effective legislation is created.

Here are a few examples where the proposed introduction of regulation creates more problems than it seeks to solve:

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Single Dealer Platforms: Native or Browser-based Mobile Apps?

Mobile services is one of the hottest places in the single dealer platform arena right now as tier 1 investment banks chase the retail banks and online brokerages by providing corporate and institutional mobile offerings.

JP Morgan kicked off the race early last year, launching an iPhone version of MorganDirect – an institutional foreign exchange and rate trading platform – and other banks have since released a wealth of research, analytics and portfolio management apps for both internal staff and external clients.

While sell-side traders might not be swapping Bloomberg terminals for a handheld devices any time soon, it seems inevitable that banks will invest in mobile technology to cater for buy-side ‘anytime & anywhere’ demand, to increase flow and offer value-add.

And as business pursues mobile pre-trade, execution and post-trade services, e-commerce managers face some rather tough questions:

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IE6 in slow browser shocker!

Ok, so it’s not that much of a shocker… We all know that IE6 is slow. But how slow, really, in comparison to the modern browsers?

IE6 is 2 orders of magnitude slower when comparing pure JavaScript execution speed with Google Chrome (version 9).

What’s also interesting is that IE7 is barely better than IE6 (1.4 times the speed) and IE8 doesn’t set the world on fire either (5.5 times the speed). Only the unreleased IE9 gets anywhere near the same ballpark as its rivals:

JavaScript performance (SunSpider 9 tests) - Caplin Systems Ltd.

What does this mean for trading applications? Continue reading

The ACI Square Mile Debate

On Thursday the 3rd, the ACI UK (Financial Markets Association) hosted the Square Mile Great Debate at the Old Library in the Guildhall. It was an informative evening for all, with some interesting questions and debate amongst the following panelists.

ACI Square Mile Debate Panelists

  • Alan Bozian (CEO of CLS)
  • Sharon Bowles (MEP Chairman of the European parliament’s Economic and Monteary Affairs committee)
  • Thomas Soede, global head of Fixed Income Electronic Markets at BNP Paribas
  • Gavin Wells, formerly global head of FX e-commerce at Citibank and now a financial markets consultant at LCH Clearnet

Questions stimulating debate included:

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