Regulation | SingleDealerPlatforms.Org

ICAP results, and strategy for Electronic Markets and Post Trade Services

Posted on November 11, 2015 by Paul Blank

ICAP today released first half results, confirmed the sale of the Global Broking Business (IGBB) to Tullett Prebon, and as part of their investor presentation, provided more details on the NewCo that will comprise Electronic Broking and PostTrade Services group.

In terms of result, group revenue fell 4% to £595m, although after stripping out ICBB, would show 4% rise, whilst revenues at TriOptima the post trade division rose 35%.

ICAP reported they had invested Continue reading →

Filed under: FX, OTC, Paul Blank, Regulation | Leave a comment »

Could MiFID II be delayed by a year?

Posted on November 11, 2015 by Paul Blank

Earlier this week, Steven Maijoor, chairman of the European Securities Market Authority (ESMA), told MEPs that the timing for stakeholders and regulators alike to implement the rules and build the necessary IT systems (for MiFID II) is extremely tight.

Even more, there are a few areas where the calendar is already unfeasible. This relates to the fact that it will take some time, and well into 2016, before the text of the regulatory technical standards (RTS) will be stable and final.

According to Steven Maijoor, chairman of ESMA: Continue reading →

Filed under: Paul Blank, Regulation | Leave a comment »

Buyside to start paying for research under MiFID II

Posted on November 8, 2015 by Paul Blank

The introduction of MiFID II regulations around Transparency, BestEx and Inducements will change the relationship between buyside firms such as asset managers , and the sellside banks and brokers who service these clients (although non-financial clients such as corporates will be excluded). In particular, the regulations will lead to the ‘unbundling’ of research from execution, and the effect will fundamentally change the way in which buyside firms pay for, and consume research across all asset classes.

Traditionally, buyside firms have ‘paid’ for research through a Commission Sharing Agreement (CSA), whereby the executing broker would ‘retain’ a portion of the commission paid for the trade to use to pay for external research and other services for the client. Buyside fund managers would typically allocate commission attributable to research on the basis of ‘broker voting’. However, this was seen by the Financial Conduct Authority (FCA) (and more recently here) as an inducement to trade, as it could encourage buyside firms to over-trade in order to gain larger share of research budget, rather than considering value for money.

Under MiFID II, the rules on inducements and paying for Continue reading →

Filed under: Paul Blank, Regulation, Research, Single-Dealer Platforms | Leave a comment »

Getting to grips with MiFID II

Posted on November 2, 2015 by Paul Blank

Following the release last month of the Draft Regulatory Technical Standards (RTS) and Regulatory technical and implementing standards Annex 1 for MiFID II / MIFIR firms and their regulatory experts and consultants will by now be deep into the technical details.

Whilst some firms have voiced concern that they will struggle to implement the technology changes required, others are already looking to turn regulatory compliance into competitive advantage. The clock’s ticking towards MiFID II implementation on 3rd Jan 2017, and the FCA has indicated that new authorisation could take up to six months, so really no time to lose.

As can be seen from the impact assessment heat-map below Continue reading →

Filed under: MiFID II, OTC, Paul Blank, Regulation | 1 Comment »

ICE exchange to buy IDC for $5.2bn (regulatory play around quality reference/market data?)

Posted on October 26, 2015 by Paul Blank

Interesting to see The ICE exchange is to buy IDC for $5.2bln.

According to ICE Chairman and CEO Jeffrey Sprecher, the acquisition:

“builds on ICE’s global market data growth strategy by expanding the markets served, adding technology platforms and increasing new data and valuation services

…. with IDC as the cornerstone in the next phase of extending our services, we will build on our track record of solid execution on integration and innovation by focusing on the needs of our customers in the evolving data services marketplace.”

IDC’s clients include banks and buyside firms such as Municipal funds, asset managers, hedge funds.

ICE’s data business covers Continue reading →

Filed under: OTC, Paul Blank, Regulation | Leave a comment »

Inviting expert guest contributors to SingleDealerPlatforms blog

Posted on October 26, 2015 by Paul Blank

Dear Readers,

The SingleDealerPlatforms.org blog is nearly six years old. During that time, it has built a loyal and focused following, by providing insight into the dealer-to-client e-trading space. Exploring new trends and emerging opportunities, and looking at the business, technical and regulatory challenges facing participants.

Given the focus, it’s not surprising the blog is popular within banks. Actually, over Continue reading →

Filed under: Paul Blank, Regulation, Single-Dealer Platforms, Survey Results | Leave a comment »

LMAX FX report: Restoring trust in global FX markets (well worth reading)

Posted on October 20, 2015 by Paul Blank

Just finished reading a new report and survey from exchange operator LMAX, called “Restoring trust in global FX markets – Striking a balance between transparency and efficiency”.

It’s detailed, with lots of charts and tables and expert opinions, and covers much ground, including topics explored in recent posts around transparency, the FEMR report, and the issue of last look and more.

David Mercer, CEO of LMAX starts by stating:

Liquidity providers (LPs) and market makers need to be rewarded for the risks they take, and in order to enjoy the benefits of transparent price discovery and firm liquidity, customers must meet the costs of the service provided. Fair execution must come at a fair price, and transparency cannot come at the cost of destroying liquidity provision.

Customers have benefited from new technology, with spread compression and lower commissions. However, traditional LPs have had to invest heavily in technology to support globally distributed client base, whilst facing ever more sophisticated buy-side customers and smaller, more naturally agile competitors in the realm of liquidity provision (ie: non-bank market makers).

Mercer, adds that there is much that LPs can learn from these new entrants, including:

elements of exchange-style trading that create a fairer trading environment.

Proposals currently being considered to enhance transparency in the FX market risk disadvantaging Continue reading →

Filed under: FX, OTC, Paul Blank, Regulation, Single-Dealer Platforms, Survey Results | Leave a comment »

Barclays discloses ‘Last Look’ guidelines (but can’t find any from other banks)

Posted on October 12, 2015 by Paul Blank

Back in June 15, the Bank of England’s Fair and Effective Markets Review (FEMR), published its final report, setting out 21 recommendations to help restore trust in the wholesale Fixed Income, Currency and Commodity (FICC) markets. Among them was the need to ‘improve the controls and transparency’ around FX market practices, including ‘last look’,

The report stated that the new global code should address the practice of ‘last look’, which gives market makers a final opportunity to reject an order after a client commits to trade at a quoted price. As set out in Section 2.4.1, this practice developed out of the need to protect market makers against unanticipated market movements and predatory trading practices.

“the global code should also set out clearer standards on the use of last look, including whether it should remain an acceptable market practice”.

However, Continue reading →

Filed under: FX, OTC, Paul Blank, Regulation | Leave a comment »

Mapping of Bond platforms in Europe (ICMA study)

Posted on October 9, 2015 by Paul Blank

An interesting report from The international Capital Markets Association (ICMA ), has mapped the features and coverage of European Bond Trading Platforms.

According to the report, the European bond market trading has become increasingly electronic due to a natural evolution of trading, and more recently, as a by-product of regulation. Market participants have a regulatory obligation to evidence best execution and meet transparency obligations, but more importantly need to source and optimise liquidity.

The fixed income landscape is currently very fragmented. The reduction in balance sheet due to Basel III combined with investors’ reluctance to trade has led to a diffusion of liquidity across platforms. This is particularly the case in corporate bonds where it is often heard that liquidity is “a mile wide and an inch deep”.

Here is a chart from a previous post which shows the lack of inventory being held by dealers, making it harder for investors to find the liquidity they require.

Chart showing Net Bond inventory held by primary dealers (McKinsey/Greenwich)

Sourcing and aggregating liquidity is paramount for sell-side and buy-side traders. Technology is the only way to enable these participants to uncover the liquidity available. Understanding the contrasts and capabilities of new and more traditional platforms, is the first step to choosing the best execution venue or information network available in the market.

ICMA has undertaken a Continue reading →

Filed under: Best Execution, Corporate Bonds, OTC, Paul Blank, Regulation, Survey Results | Leave a comment »

SalesTrader dashboards

Posted on October 8, 2015 by Paul Blank

Sales Traders have traditionally been poorly served in terms of dedicated sales trader GUIs. This I think is related to salespeople being overly protective of their client relationships, and fearful that quoting clients electronically would in some way result in them being disintermediated by the machine.

Preferring instead to trade with clients by phone, thus ‘protecting and enhancing their personal ‘high touch’ relationship’ with the client. As a result, Sales GUIs never really received the attention they deserved, or needed.

Well, that’s going to change, for a variety of reasons, the main ones being: Continue reading →

Filed under: FX, Paul Blank, Regulation, Technology Trends | Leave a comment »

« Previous Page — Next Page »

SingleDealerPlatforms.Org

Subscribe

Log in