www.securitiesindustry.com
MAY 21, 2007
Trading Strengths Apparent in Thomson-Reuters Merger
NEWS DESK
Platform integration
will address multi- A Global Data, Trading and News Giant
asset-class needs
SEC Punt on Fee-Based
Accounts Leaves
A Swiss consolidation move, the
Treasury’s repo guidelines, and more.
Wall Street Scrambling
PAGE 3
Corp.’s $17.2 billion acquisition
of Reuters Group that the companies announced last Tuesday, they
said that they will create an $11.3
billion-in-revenue enterprise within a $53 billion marketplace ($20
billion of it serving the financial in- Professional Financial
Size: $33B Size: $20B
BYJOHNHINTZE
PERSPECTIVES
BYSHANEKITE
GUEST COMMENT: Former SEC
member Cynthia Glassman, now at
the Commerce Department, focus-
es on ways to measure innovation and
considers whether
regulatory costs may
be impeding it. She
In the merger plan for Thomson
Legal Scientific Healthcare Tax & Sales & Investment Enterprise Media
Accounting Training Banking,
Investment
Mgmt. &
Corporate
The Securities and Exchange
Commission asked an appeals court May 14 for a 120-day
stay of its decision to overturn the
regulator’s rule exempting broker-dealers offering fee-based
brokerage accounts from registering as advisers.
hears widespread complaints that
“CEOs are distracted [and] risk-taking is chilled” by Section 404 of
the Sarbanes-Oxley Act. PAGE 4
Leading News Provider
ORIGINAL SOURCES: In a case citing
OTC trading activity at Morgan
Stanley between 2001 and 2004,
the SEC said the investment bank,
among other things, “improperly
delayed the execution” of certain
orders that it “had an obligation to
execute without hesitation.” Morgan Stanley did not admit wrongdoing and paid $7.96 million in disgorgement and penalty. PAGE 6
dustry) for electronic information,
news and trading systems. In the
latter category are trading platforms—notably Reuters’ foreign
exchange system and Thomson’s
Trade Web for fixed-income and
derivative markets—that together
will wield significant power and influence over the evolution of electronic trading.
Thomson and Reuters say they have a combined $11.3 billion of a
$53 billion “addressable market.”
market and has been historically
strong on the fixed-income side.
Reuters and Thomson combined
would control 34 percent of the
data market, a percentage point
ahead of Bloomberg, according to
Inside Market Data.
Becoming “the number-one
provider of electronic information
services, trading systems and news
for professionals in knowledge-based
industries” is the merger partners’
stated goal. They expect to realize
Continued on page 14
Transition Management Code Moves Forward
DEPARTMENTS
TRADING: Citigroup’s IS Shadow algorithm adds a trade-completion element; ITG releases Flexible Participation with customization features.
PAGE 10
TRADING: California’s UNX opens a
New York data center, with technology enhancements. PAGE 10
CLEARING & SETTLEMENT: Creditex’s
ownership stake in Trade Settlement
puts it in a strong position to handle
growth in loan credit default swaps and
the forthcoming LCDX index.
Reuters CEO Tom Glocer, who
is in line to helm the combined
Thomson-Reuters, said that a linkage of the Reuters FX and Thomson Trade Web platforms will be
one tangible post-merger result.
That expectation has caught the
attention of analysts who say that
such a linkage or integration could
win customers by supplying them
with a unique, cross-asset-class
trading solution for the capital
markets.
Draft in final stages; release expected within six months
On the same day, the Securities Industry & Financial Markets Association (Sifma) said it
would ask the U.S. Court of Appeals for the District of Columbia Circuit for a rehearing of the
case, after it became clear that day
the SEC would not. “The SEC
helped popularize these accounts
as an important step in aligning
a broker’s and client’s interests,”
said Marc Lackritz, Sifma president and CEO. “Their decision
not to seek a rehearing leaves 1
million investors and their brokers to pick up the pieces.”
And there apparently will be
a lot of pieces to pick up. Hardy
Callcott, a San Francisco-based
partner of law firm Bingham
McCutchen, said the SEC does
not appear to have consulted
with the industry on the time period, and that it will likely be difficult for Wall Street firms offering significant numbers of
these accounts to comply.
PAGE 12
CLEARING & SETTLEMENT:
Broadridge’s Ascendis combines applications
designed to streamline self-clearing
firms’ workflows. PAGE 12
The merger may take up to a
year to garner necessary regulatory approvals. It would on paper
create the world’s largest market-data provider, ahead of rival
Bloomberg, which has long led that
BYCHRISKENTOURIS detrimental to underlying pension
Several of the world’s biggest tran- or investment fund clients. Reflect-
sition management firms are try- ing the origins of its promoters, the
ing to fast-track the T-Charter—a T-Charter draws heavily from the
code of conduct that will standard- U.K. Financial Services Authority’s
ize best practices for moving portfo- (FSA) rulebook.
lio accounts between asset managers “We are in the last stages of the
that are implementing strategy shifts. draft, which is now making its way
Representatives of about a dozen through legal and compliance de-
transition managers met April 24 at partments of the transition man-
the offices of Barclays Global In- agers,” says Rick Di Mascio, chief
vestors (BGI) in London to finalize information officer of Inalytics, a
language of the voluntary code London-based consultancy that
aimed at creating transparency and measures transition costs.
eliminating conflicts of interest Continued on page 14
Fee-based brokerage accounts
were introduced following recommendations in 1995 by the
Continued on page 16
TECHNOLOGY: A joint effort by Fujitsu
and Sun Microsystems results in a range
of computer offerings geared for quantitative, high-performance demands.
Shulman Explains SRO’s Tiered Approach;
Pitt Says Hedge Funds Face ‘Perfect Storm’
SwiftNet FIX: New
Vendor, Same Hub
BYCAROLE. CURTIS New York sponsored by the Foun-
The as-yet-unnamed self-regu- dation for Accounting Education of
latory organization (SRO) the New York State Society of Cer-
BYJOHNSANDMAN
PAGE 13
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People in the News
Company Index
People Index
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On the Web
p3 formed by combining tified Public Accountants
p18 NASD and the New (NYSSCPA)thatwhen
p18 York Stock Exchange’s
broker-dealer oversight
function will operate as a
multi-tiered system, with
a firm’s size and business
mix determining how ithe he merger closes in
June, bringing the in-
dustry under a single set
of rules, “we will tier reg-
ulation to firm size and
Douglas Shulman business model. There
will be regulated, NASD will be different tiers of
vice chairman Douglas Shulman said regulation for different firms. One-
last week. He told a conference in Continued on page 18
Thomson’s Portia linked with
Netik; S&P acquires ClariFI;
and more. See Breaking News at:
www.securitiesindustry.com.
The SwiftNet FIX service was
one of several ambitious,
turn-of-the-century initiatives designed to lead the industry out of
its paper-heavy morass and into
trade-automation nirvana once and
for all. For Swift, the La Hulpe,
Belgium-based financial industry
utility with a historically back-end
orientation, it provided an opening
into pre-trade and trade workflows.
Unlike the ill-fated Global
Continued on page 16
