Securities Industry News

www.securitiesindustry.com

JULY 9, 2007

NEWS DESK

A congressman’s exchange-com-petitiveness road trip; exchange-stock trendline; private equity payoffs; and more. PAGE 3

PERSPECTIVES

GUEST COMMENT: Ullink’s Laurent Useldinger clarifies its FIX-over-Swift service offering. PAGE 4

In Transatlantic Tangle, Disagreement

Resurfaces Over Cusip Fee Policy

BYCHRISKENTOURIS

Along-simmering debate over whether the Cusip Service Bureau (CSB), North America’s securities numbering agency, has the right to charge European financial institutions for international securities identification numbers (ISINs)

—Rudolf Siebel, BVI

is flaring up again.

The conflict was evident in letters submitted last month by Bun-

Source: IBM, Economist Intelligence Unit _desverband _Investment _und _Asset

Management (BVI), the German investment and asset management association, and CSB to the European Commission’s clearing and settlement advisory and monitoring expert (Cesame) group.

BVI believes that European financial institutions should not pay for the storage and redistribution recorded at the time of a trade of ISINs and reference data at- and during post-trade process-tached to the identification codes. ing, which includes their use in

CSB and the authority it reports to, securities master databases. In the American Bankers Association 2003, the Giovannini Group, a (ABA), counter that the service bu- European Commission-spon-reau has the right to be paid for its sored group led by Italian asset intellectual property. They told Ce- manager Alberto Giovannini, list-same that BVI’s arguments invite ed the use of international secu- “faulty and dangerous conclusions rities identifiers as a requirement based on a number of inaccuracies.” for reducing barriers to a unified

Securities identification numbers European clearance and settle-are critical to ensuring that the cor- ment infrastructure. rect details of a transaction are Securitiescodesare oftenre-

distributed by financial institu-

Eyeing Exchange Status, Ratterman in Charge tions internally or to external

At BATS; Cummings Returns to Tradebot ^clients. ^Numbering ^agencies—_which _are _typically _exchanges _or

BYJOHNHINTZE BATS board and serve as an adviser securities depositories—also issue

Securities market entrepreneur on market-structure issues, but with Continued on page 16 and market-center gadfly David BATS planning to become a full-Cummings will no longer be so close- fledged exchange, he would have ly identified with the BATS Trading been prohibited from holding a electronic communications network management position there while (ECN) that he founded and that has also owning broker-dealer Tradebot. had a major impact on institutional That leaves the fast-growing ECN stock trading since it in the hands of the 41- opened early last year. year-old Ratterman, one BATS at the end of of its founding employ-June announced the ees. Ratterman was VP promotion of EVP and of business development COO Joe Ratterman to at Tradebot in 2004 and replace Cummings, who 2005, chief information stepped down as CEO officer at Lab One of to return to Tradebot ^Joe ^RattermanLenexa, Kan., a health Systems, the black-box trading pow- screening and clinical diagnostic test-erhouse he formed in 1999. Cum- ing company that was acquired by mings said he will remain on the Continued on page 18

Shifts in Investable Assets

$ Trillions

“The unencumbered and
free access and use of ISINs
is essential to the proper
functioning of the
European securities
markets going forward.”

ORIGINAL SOURCES: While the Bear Stearns Asset Management hedge fund problems are still playing out, it isn’t too early to draw conclusions about “the importance of valuations to management of credit exposures” and the need for “infrastructure and personnel” to keep pace with rapid market changes, says the SEC’s Annette Nazareth. PAGE 6

DEPARTMENTS

TECHNOLOGY: Though some securities industry people are taking a wait- and-see approach to Microsoft’s Vista operating system, many of its security, compliance and maintenance features were designed for their needs. “The help function can show step-by-step how to diagnose and repair the network,” says Microsoft’s Stevan Vidich. PAGE 8

Big Firms Not Ready to Capitalize

On Globalization Trends: IBM Study

BYCAROLE. CURTIS Global Financial Markets.” It sur-

Securities firms are flush with veyed 955 business leaders, in-profits, and the future outlook cluding 848 financial executives for global financial services mar- and 107 corporate clients. One kets is trending in their favor, yet perhaps counterintuitive finding is 93 percent of senior executives re- the business model generally sponding to an IBM Corp.-spon- thought to be best suited for glob-sored survey concede that their ally integrated markets—that of companies are not organizational- the large, diversified financial com-ly prepared to capitalize on glob- pany or universal bank—may be at alization opportunities. a disadvantage against more nim-

The challenge is summed up in ble and specialized firms. the title of the study being released “Organizations are unprepared today by the IBM Institute for for globalization,” co-author Business Value in cooperation with Suzanne Dence, managing con-the Economist Intelligence Unit: sultant for the financial markets in- “Get Global. Get Specialized. Or dustry at the IBM Institute for Get Out: Unexpected Lessons in Continued on page 15

“Mr. Siebel is speaking for a
well-organized group of
financial institutions that …
would prefer to shift the
costs of maintaining the
ISIN system to other
segments of the market.”
—Letter from the American Bankers
Association and Cusip Service Bureau

COMPLIANCE: Wall Street technologists are confident that they are ready for the Reg NMS pilot phase that starts today, one of three key milestones between now and October. PAGE 10

COMPLIANCE : Broadridge and Computershare were quick to respond to an SEC rule with services supporting Internet distribution of proxy materials.

PAGE 10

Sun Microsystems Tweaks
Utility Computing Model;
Showcased With CDOs
BYJEFFREYKUTLER
Despite its embrace of grid
computing, the securities in-
dustry did not warm up quickly to
the on-demand, utility-like version
of it as championed by Sun Mi-
crosystems, among others. Pay-
_p14per-use computing, which Sun of-
p18 fers at the rate of $1 per hour of
p18 central processing unit time, or
CPU-hour, got an earlier and
more favorable response from aca-
demic and scientific communities.
But after some revamping of
Sun’s utility computing offering
this spring, including extension of
access to 23 countries outside the
U.S. and the ability to link the net-
Continued on page 17

TRADING: The Tokyo Stock Exchange takes a 5 percent stake in the Singapore Exchange; and Japan’s Financial Services Agency orders the Jasdaq market to upgrade its technology. PAGE 12

TRADING: SuperDerivatives offers new versions of its equity derivatives product and of its front-office platform for managing multiple derivative asset classes. PAGE 17