eTrading is transformational (doesn’t matter which segment)

eTrading is transformational, and it’s insightful to see how key metrics can radically change once a firm embraces electronic trading and starts to migrate from a high touch (voice/branch) model to a low touch electronic trading paradigm. Today’s report on Paddy Power in the  Daily Telegraph is an interesting case in point.

They may not be at the sophisticated (or glamorous) end of the spectrum, nevertheless Paddy Power – the bookie, has embraced online mobile trading (betting) in a big way, and the metrics are really impressive.

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FINRA issue guidelines for use of social media networking sites

FINRA has just released an updated set of guidelines covering the use of Social Media Websites, Blogs and Networking sites by FINRA registered firms, and their employees.

Today’s release follows the initial FINRA publication Social Media Web Sites in January 2010, which focused on: Record keeping, Determination of ‘recommendations’ based on client suitability criteria, and what types of social media (ie blogs/twitter etc) constitute an “interactive electronic forum”.

As we have covered in previous posts, financial firms are eager to embrace the use of social networks, and these guidelines will help those firms to ensure that investors are protected from false or misleading claims and representations, and that firms are able to effectively and appropriately supervise the use of such new media by their employees. FSA guidelines on social media covered here.

StreamBase Survey: FX Trading and Technology Trends in 2011

Great survey from Streambase, showing how buy and sell firms are using CEP technology within their FX business.

As expected, for buyside firms the key is to generate Alpha seeking strategies (looking for trading opportunities), whilst for sell side firms, it’s all about managing the resulting risk, through smart order routing.

It’s also interesting to see that in terms of execution, 55% of respondents executed their trades through Single Dealer Platforms, compared to 44% who used multi-Dealer Platforms.

full report here (you may be required to register with Streambase)

“Time to go easy on banks” – a sign of the times

A couple of months ago I suggested that the wind had changed, with the primary focus of politicians and regulators shifting to the elusive revival of economic growth, and away from potentially counter-productive bank regulation such as Dodd Frank.

So interesting to see Reuters Breakingviews publishing an opinion piece entitled “Time to go easy on banks”, in which assistant editor Chris Hughes argues that “a little slack from regulators now might encourage [banks] to lend again”.

It’s beginning to look as if heavy-handed banking regulation of all kinds might be going out of fashion, as the risk of renewed financial-sector misbehaviour recedes and macroeconomic woes dominate policy-making.

Swaps volumes on the increase……

Interesting update from Kevin McPartland at Tabb Group.

He reports that IRS & CDS number of trades and volume traded on both Bloomberg & Tradeweb have drastically improved. See the attached chart from his report.

My conclusion? The fundamental benefits of electronic trading in pre-trade, execution and post-trade will drive these markets. This growth is NOT due to the regulatory changes. I look forward to the ways the regulators will ensure efficient pre-trade price discovery by making the SEFs interact with each other!

Kevin’s article is here (login required). The Bloomberg press release is here and Tradeweb here.

More from Streetwise Prof on Dodd Frank (but, do read it)

Another classic from the Streetwise Professor, taking aim at his favourite target; Dodd-Frank.

 In recent days there have been numerous articles about myriad issues in clearing–collateral, margining, capital requirements, and on and on–all of which are (a) unresolved, and (b) of first order systemic importance.  All the important details were left to the end–most likely because those that demanded the system remade it, and wrote legislation demanding its remaking didn’t even know what the relevant details are.

An entire system that evolved organically with all of the complexity and interconnectedness that implies is being re-engineered on the fly.  Anyone even marginally cognizant of the complexity of the system would have been too humble to even contemplate remaking it root and branch.

But unfortunately, the marginally cognizant weren’t in charge.  The imperious, overconfident, ignorant, and foolish were–some were all of the above.

It’s more than a little worrying to know these lunatics are actually in charge of the Dodd Frank Asylum.

Read on……