www.securitiesindustry.com
SEPTEMBER 3, 2007
NEWS DESK
Eurex extends its repo pooling; ICE
Clear US gets a COO; Portware
opens in Hong Kong. PAGE 3
PERSPECTIVES
GUEST COMMENT: Sifma CEO Marc
Lackritz urges Congress to reevaluate the fees that exchanges charge for
market data, a pricing scheme that he
says is far from “fair and reasonable.”
PAGE 4
Markets Are Cast in Problem-Solving Roles
VIEWPOINTS: Quadriserv executives
Joseph Weinhoffer and Greg DePetris say that its lending-rate data
and transaction services bring transparency to securities lending and give
short sellers another source from
which to borrow. PAGE 4
SPECIAL REPORT
Agency brokerages that have developed an international presence are
reaping the benefits of their global
reach as “nearly every investment
firm’s mix now tilts away
from the U.S. market,”
says Instinet Europe president Tony Mackay. Also
in this report: Competition heats up
between bulge firms and specialists;
Capis’ Kristi Wetherington on the advantages of independence; NeoNet’s
growing market share; and BNY Convergex’s move into options. PAGE 13
DEPARTMENTS
COMPLIANCE: Hedge fund vulnera-bilities are fueling a growth business as
law firms prepare defense and recovery strategies and investigators scrutinize funds for investors. PAGE 8
A Hollywood Stock Exchange trader’s online portfolio
Cantor Fitzgerald’s Virtual Trading Platform
Helps Film Producers Project Their Grosses
BY MAUREEN NEVIN DUFFY trading, recognized this tension
As a rule investors hate to wait. when it bought the Hollywood
The longer it takes to unwind Stock Exchange (HSX) in May
a position the more risk and related 2001. “The majority of the revenue
stress are incurred. So investors will is front-loaded,” says Alex Costakis,
always seek ways to limit that pain. managing director of HSX for Can-
TECHNOLOGY: NetManage brings
Internet-style interfaces to firms’ old
mainframe systems. PAGE 8
No one knows the pain of wait- tor Entertainment in Los Angeles.
ing to liquidate better than the Hol- “How well a film does is usually
lywood investor. The period from foretold in the first four weekends at
movie concept through optioning the U.S. box office.”
to star packaging, script acceptance, HSX, which is Web-based,
production, theatrical release, home takes bets on box-office proceeds
media, television rights and library to the tune of 26. 9 billion Holly-sales can span three years or more. wood Dollars, or 2. 7 billion shares,
Cantor Fitzgerald, better known for on an average day. Not surpris-its investment banking and bond Continued on page 25
Financial Firms See
Promise in Social
Exchange Concept
BY J.R. MAGEE
In March 2004, then United Nations Secretary General Kofi
Annan convened a meeting of the
Global Compact, a U.N. initiative
designed to encourage corporations
worldwide to adopt socially responsible policies, to explore opportunities for the world’s stock exchanges to help promote the compact and its principles. At the time,
20 financial companies—including
Banco do Brasil, Credit Suisse,
Deutsche Bank, Goldman Sachs
Group, HSBC and Morgan Stanley—supported “connecting financial markets to environmental, social and governance criteria, and
agreed to bring other actors in the
financial world into play on making
these factors standard components
in the analysis of profitability and
investment decisionmaking,” according to a statement.
A report was issued, formally titled “Who Cares Wins: Connecting Financial Markets to a Changing
World.” Annan was joined by business, labor and nongovernmental
organizations (NGOs) in launching
the initiative.
An example of mobilizing finan-
Continued on page 24
TRADING: Morgan Stanley gets behind Fidessa LatentZero’s combined
order management and execution
management system. PAGE 9
COMPLIANCE: China is awarding brokerages and fund managers with qualified domestic institutional investor
licenses as it continues to loosen constraints on a program that has met
with mixed success. PAGE 10
▼
People in the News
Company Index
People Index
▲
On the Web
NYSE gives Tokyo technology
advice; optionsXpress CEO
Kalt steps down; and more.
See Breaking News at:
www.securitiesindustry.com.
As Finra Takes Shape,
Small Broker-Dealers
Voice Concerns
BY JULIETTE FAIRLEY
When Jed Bandes started
brokerage firm Mutual
Trust Co. of America Securities in
Clearwater, Fla. 28 years ago, his
motivation was to live the entrepreneurial life of an independent
representative. “What made being
a broker-dealer so attractive to me
and other registered representatives was owning my own business,” said Bandes. “But I’m looking to get out of the industry now.”
The last straw for Bandes was the
recent merger of the member regulation functions of the New York
Continued on page 26
Retail Bond Platforms on the Offensive
With field narrowed, structured products, compliance and
analytics are added in response to adviser and client needs
Sifma Ready to
Test Pandemic
Preparedness
Trade group and Treasury lead
financial industry initiative
BY JOHN SANDMAN
The U.S. financial services
sector is preparing for a
pandemic testing exercise Sept.
17, sponsored by the Securities
Industry & Financial Markets Association (Sifma) and the Treasury Department’s office of critical infrastructure protection and
compliance policy. Also participating are the Federal Reserve
Board, Financial Services Sector
Coordinating Council and the Financial and Banking Information
Infrastructure Committee.
In addition to the securities
and banking industries, credit
unions, insurance firms and service providers will be participating
in the Web-based exercise, which
will be accessible at www.fspan
fluexercise.com. It will also include complementary or interdependent industries such as power
and telecommunications as well
as the Centers for Disease Control and Prevention (CDC). The
exercise will be comparable to one
conducted in the U.K. last fall
(Securities Industry News, Feb. 5).
A pre-exercise preparatory
phase will run from Sept. 17 to
Sept. 23. The exercise itself
will run from Sept. 24 through
Oct. 11.
Continued on page 23
B Y SHANE KI TE which enjoy close relationships with
With consumer interest in big-broker liquidity providers and
fixed-income investments have built sizable distribution net-on the rise, a trend likely to be stoked works, are intent on boosting their
by the aging of the pop- market shares after a se-
p3 ulation, electronic bond ries of consolidation
p26 trading platforms in the moves. While large bro-
p26 U.S. are scrambling to kerages are seeking wider
add products, analytics audiences for debt prod-and compliance tools for ucts that they structure
registered investment and underwrite, they are
advisers and their clients. John Holman seeking to shift more of
New offerings include structured the risk in their retail businesses onto
products and pricing filters previ- their registered representatives.
ously available only through brokers Most retail bond systems are in-or institutional firms. terdealer platforms that deal in small,
