JUNE 4, 2007
NEWS DESK
Interactive Brokers’ bottom line;
Citi and BATS; BEA and CEP.
PAGE 3
PERSPECTIVES
GUEST COMMENTS: Pyxis Mobile’s
T.L. Neff says that the next generation of remote computing for portfolio managers has arrived; Advanced
Micro Devices’ Earl Stahl adds up the
benefits of multicore processing.
PAGE 4
SPECIAL REPORT
Valuation of portfolio holdings is increasingly scrutinized as a factor in
evaluating hedge funds. The result-
ing judgments touch
on firms’ operational
quality and risk management as well as on
the bottom-line mat-
ters of investment returns and reporting. “Valuation numbers drive
nearly every financial decision,” says
risk expert and Pension Governance
CEO Susan Mangiero. “The last
thing [institutional investors] want
is a blowup that could have been
prevented with a thorough vetting”
of the valuation process. Also in this
report: a global regulatory roundup;
hedge funds’ slow move to self-clearing; and further valuation views from
Amber Partners’ Reiko Nahum.
PAGE 11
DEPARTMENTS
TRADING: Credit Suisse links its popular algorithmic trading platform as
well as the CrossFinder dark pool with
Townsend Analytics’ Real Tick execution management system. PAGE 6
Emerging Forces in the Capital Markets DTCC Data Service For New Muni Issues
Set for September
Nasdaq Stock Market
BY CHRIS KENTOURIS
As part of a four-year, multiphase reengineering of its
underwriting and corporate actions infrastructure, Depository
Trust & Clearing Corp. (DTCC)
is developing a centralized automated system that will gather
data from underwriters on new
Manoel Felix Cintra Neto, right, chairman of the Brazilian Mercantile & bond issues and distribute it elec-
Futures Exchange (BM&F), at the Nasdaq market site with BM&F vice tronically in real time to market
chairman Renato Diniz Junqueira.
participants.
“The industrializing world is The New Issue Information
creating its own momentum and Dissemination Service (NIIDS)
opportunity,” said Yiping Zhou, will go live for municipal bonds
director of the special unit for first—in September. It will help
South-South cooperation at the dealers comply with the Munici-
United Nations Development pal Securities Rulemaking Board
Program (UNDP). “Emerging (MSRB) requirement, effective
markets are doing so well, and it’s Jan.1, 2008, that muni bond trans-
still early in the game. There are actions be reported to the MSRB
some policy adjustments which within 15 minutes of a trade. The
need to be made.” current deadline for new munic-
As these countries and societies ipal issues is three hours.
open up to the global economy, The shorter reporting win-
Zhou added, “they need to reform dow, which is intended to im-
old ways, both inward and out- prove transparency, wasoriginally
ward. When emerging markets are slated to take effect Jan. 31, 2006,
taken seriously as business part- but was extended by the Securi-
ners, and not just an opportunity ties and Exchange Commission
for exports, this is when they are in December 2005 at the request
successful. The infrastructure must of the MSRB and the Bond Mar-
be there for mature, industrialized ket Association (BMA)—now
nations to invest in and work with part of the Securities Industry &
Continued on page 21 Financial Markets Association—
to give DTCC and its partici-
pants sufficient time to develop,
implement and test NIIDS.
Continued on page 24
New market centers
share aspirations—
and mutual support
BY J.R. MAGEE
Globalization is an undeniable
force in the capital markets,
as it is in the world economy.
Brazil, China and Dubai are just a
few examples of less-mature markets that are literally emerging into
the global investment spotlight—
in each of those cases, with securities markets that have rapidly taken
on characteristics capable of attracting funds from established institutional investors.
But even in the lower tiers of
economic development, building
blocks of financial infrastructure
are clearly evident, ranging from
microfinance programs that bring
bank services to the poor, to South-South cooperation, a growing
movement whereby emerging
markets provide assistance to each
other, with encouragement from
higher authorities.
TRADING: Caplin Systems launches
Caplin Trader, anticipating demand from
banks upgrading or building foreign exchange and fixed-income portals.
PAGE 6
Citi, FTSE Bring Indexing to Vietnam
B Y MARIA TROMBLY Citigroup Global Markets Asia, told
Not every security in Vietnam is Securities Industry News. One reason
open to foreign investors, but for the attraction: Vietnam’s gross
there are enough to make for an domestic product grew 8 percent
index. Citigroup and FTSE Group last year, the fastest among coun-teamed up to launch the country’s tries in the Association of Southeast
first equity index for foreign insti- Asian Nations (Asean).
tutional investors on May 22. Kennedy said that “there has
Known as the FTSE Vietnam been huge interest” in the index,
Accessible Index, it is a response to and it’s coming increasingly from
growing demand for access to Viet- investors “seeking to broaden their
nam’s restricted stock market, Justin market exposure”—just the kind of
Kennedy, managing director of Continued on page 26
DATA MANAGEMENT: NYSE’s market
intelligence offering for listed-company
executives is fully automated, in contrast
to the Nasdaq Stock Market version.
PAGE 8
Expected Change in Hedging Ratios
TRADING: IPC Systems completes acquisition of WestCom. PAGE 24
▼
People in the News
Company Index
People Index
▲
On the Web
Energy Trading’s Integration Makeover
Commodities are increasingly
linked to capital markets
BY MICHAEL SISK
Militants in the Niger River Delta kidnap foreign oil workers; an accident at a natural gas
facility shutters production; a tropical depression forms
in the mid-Atlantic; a cold snap seizes the Northeast-
p3 p26 ern U.S. Any one of these scenarios could—indeed,
p26 all did—play havoc with the energy trading markets.
Forces such as the weather, geopolitics and failing
infrastructure create a level of volatility unique to the
energy trading sector. Yet these are just some of the
factors that energy traders must keep in mind as they
rely on multiple systems to track an array of inputs:
financials, risks, energy exchanges, Excel spreadsheets,
credit, transportation and scheduling logistics, electronic data interchange and communications, to name
a few. Often these systems are homegrown and/or
More corporations are increasing than decreasing their
active hedging of energy positions, according to
Greenwich Associate’s 2007 energy trading survey.
Swift’s results; Swaps Wire in
Korea; the eSpeed-BGC
merger. See Breaking News at:
www.securitiesindustry.com.
cobbled together, and rarely do they communicate or
interface well with one another.
The fundamental, if obvious, difference between
energy trading—whether by physical or financial play-
