APRIL 23, 2007

NEWS DESK

Credit derivatives double in 2006; the SEC’s IT needs repairs; and more. PAGE 3

PERSPECTIVES

GUEST COMMENT: A vast transformation of the capital markets is un-derway due to globalization, but what we’ve seen so far is only the first wave, says Infosys Technologies’ Michael Ricci. Within a few years, retail investors around the world will gain direct access to securities markets, and this will foster the development of new classes of instruments and new ways of doing business, with Web-based technologies being a key enabler. PAGE 4

GUEST COMMENT: Corporate Insight’s Michael Ellison says that while online investing has grown rapidly in its first decade, its next spurt will be led by firms that master services such as Web-site navigation, planning tools and site customization. PAGE 4

DEPARTMENTS

TRADING: Auerbach Grayson spin-off Axes aims for the middle tier of direct-market access in 100 countries.

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STANDARDS & PROTOCOLS: The Shanghai Stock Exchange will adopt a Chinese version of the FIX protocol in its new trading system.

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TECHNOLOGY: SunGard Data Systems splits its financial services business in two. PAGE 8

How Dow Jones Now Plays in the Algo Trading League

Data, wealth management among priorities of Hart’s enterprise media group

Suppliers of data and technology to the securities industry are scrambling to meet customer demands for more information ever faster. Dow Jones & Co. is in both those categories, and if Clare

Hart has any say in the matter, its technology prowess will be more evident as the company’s information offerings cater increasingly to the institutional marketplace’s need for speed.

A year ago tomorrow, Dow Jones Newswires, one of the business units now reporting to Hart in her position as president of the New York-based financial data giant’s enterprise media group, introduced Dow Jones News and Archives for Algorithmic Applications. It signaled the company’s intention to harness its news database—from the wires, Wall Street Journal and Barron’s—for the mil-lisecond-level modeling and trading requirements of algorithmic and quantitative traders and analysts. Further along those lines, the company last month unveiled the Dow Jones Elementized News

TECHNOLOGY: Instant messaging vendor Pivot Solutions taps Louis Eccleston to be its CEO. PAGE 8

CLEARING & SETTLEMENT: Clearstream will phase in the launch of its Central Facility for Funds in Luxembourg. PAGE 12

DATA MANAGEMENT: Cusip Service Bureau offers a free lookup service for 3. 6 million securities. PAGE 12

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Competitiveness Move: Japan Looks to Merge TSE, 3 Other Markets

BY MARIA TROMBLY

Members of Japan’s Council on Economic and Fiscal Policy, the country’s top economic policy body headed by Prime Minister Shinzo Abe, met last _p3 week to discuss combining four _p18 exchanges to make the country’s p18 markets more competitive internationally.

The officials presented a plan to merge the Tokyo Commodity Exchange, Tokyo Financial Exchange and the Tokyo Grain Exchange into Asia’s biggest financial marketplace, the Tokyo Stock Exchange (TSE), in a holding

Continued on page 16

On the Web

NYSEBonds goes live; eSpeed rejects Tullett’s buyout offer; and more. See Breaking News at: www.securitiesindustry.com.

www.securitiesindustry.com

Clare Hart

Feed, which at ultra-low-latency speeds allows trading models and programs to interpret and act upon breaking news. The product includes an archive dating back more than three years for back-testing and statistical analyses.

Dow Jones is obviously not alone in trying to serve this burgeoning trading and analytics market. Reuters Group, for one, has made a major release of what it terms machine-readable news. But Hart, who is an EVP of Dow Jones & Co. as well as head of the $657 million-in-revenues enterprise media group for the last 13 months, believes it offers an unmatched “spectrum of news and information services” of which the low-latency elementized feeds are only a part.

Her portfolio of offerings extends to licensing of content to financial Web sites, the Dow Jones Indexes and the widely used elec-

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Accommodating Algorithms, Dark Books

Diversify Buy-Side Execution Choices

B Y JOHN HIN TZE awaits a natural match on the al-
Seeking to allow institutional in- ternative platform.
vestors to take advantage of a At the forefront of what ap-
broader variety of order flow, Pipeline pears to be a rapidly developing
Trading Systems is offering the abil- trend, New York-based Pipeline
ity to execute portions of large block is providing what it calls a
trades in the broader market using al- switching engine that chooses
gorithms while the bulk of an order the optimal algorithm to address
current market conditions and
the type of order seeking exe-
cution from among numerous
styles. Jeromee Johnson, a se-
nior analyst at Westborough,
Mass. research firm Tabb
Group, noted that leading Wall
Street firms such as Goldman
Sachs & Co. have offered “al-
gorithms of algorithms” for a
couple of years. “For the pri-
mary block alternative trading
systems [ATSs] to be able to
offer an algorithm extension is
a very logical and competitive
step,” Johnson said.
Buy-side ATS Liquidnet of
New York is also working on an
algorithmic supplement to its
traditional block-trading pool.
So is BNY ConvergEx Group,
an agency brokerage spun off by
Bank of New York Co. last year
that launched a second dark
book last week to provide yet
another option for block traders
to whittle down their orders.
Pipeline said it intends to
launch its switching engine by
the end of May. The engine “is
fed with enough shares to opti-
Continued on page 18

Turquoise Taps DTCC And Citigroup Unit for Processing Services

BY CHRIS KENTOURIS

Turquoise, a group of seven financial institutions developing a pan-European alternative trading system (ATS), has tapped EuroCCP, a subsidiary of the U.S. Depository Trust & Clearing Corp. (DTCC), to provide clearing services. In turn, Citigroup Global Transaction Services will be EuroCCP’s settlement agent.

The designation of EuroCCP, with which DTCC established a European foothold earlier in the decade but that had been sitting dormant since mid-2003, followed a competitive, request-for-proposal process as Turquoise mounts an attempt to capitalize on opportunities opened up by the European Commission’s

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Royalblue-LatentZero Deal Speeds OMS

Consolidation and Integration With EMS

BY CHRIS KENTOURIS

Royalblue’s acquisition of La- OMS Clients, 2006 tentZero, announced last week, will be the latest consolidation step in order management and 220 trade execution systems while blurring the historic demarcation between the two. It comes in the wake of New York-based Investment Technology Group’s (ITG) 2005 purchase of order management system (OMS) vendor Macgregor and the October 2006 creation of BNY ConvergEx, an agency brokerage, research and technology spin-off from Bank of New York Co. that includes the OMS of Boston’s Eze Castle Software.

The royalblue deal—valued at

Bloomberg 275 Charles River

Eze Castle 285 LatentZero 75

^Linedata 110

^{ITG Macgregor} 125

Source:TowerGroup

up to GBP63 million ($126 million), with the first GBP38 million to be paid up front—also allows royalblue to merge the functionality of buy- and sell-side order management execution systems: the well-known Fidessa, which also will

Continued on page 17