www.securitiesindustry.com
SEPTEMBER 24, 2007
NEWS DESK
Flex Trade gives the buy side access
to Bids; BOX adopts a maker-taker
fee structure; RiskMetrics reorganizes; and more. PAGE 3
PERSPECTIVES
GUEST COMMENT: : Effective procurement processes can be a competitive differentiator, writes CityIQ’s
Graham Cooper. PAGE 4
Post-Retirement Expenditures
ORIGINAL SOURCES: The SEC’s Paul
Atkins says that all too often his
agency fails to take an economic view
of rulemaking, an approach that has
led to Regulation NMS, “a massive
intrusion into our secondary trading
markets that was completely unwarranted” and a “carte blanche” for regulatory meddling. PAGE 6
DEPARTMENTS
COMPLIANCE: Hedge funds may be
growing faster than their ability to
understand the risk exposure in their
portfolios and put in
place compliance procedures to prevent insider
trading and market manipulation. Many fund managers are
in danger of “losing control of their
investments if the economic tide
starts to go out,” says First Capital’s
Mark Sunshine. PAGE 8
Matthew Andresen
Source: Celent
Wall Street Ready to Distribute
Focus shifts from accumulation to retirement-income services
BY JOHN HINTZE come plans. FundQuest of Boston,
Wall Street may look back a provider of managed-account ser-on 2007 as the year of vices to more than 110 financial-volatility, but it also has been the services firms, released its retire-year that financial services firms ment-income platform in July.
began dealing operationally with Meanwhile, Wayne, Pa.-based
the fact that managing the assets SunGard Data Systems has beefed
of retired customers will soon be up its At Retirement collection of
just as important—and potentially software modules, which have
lucrative—as helping them save for been available since the late 1990s
their golden years. and help advisers manage clients’
DATA MANAGEMENT: A partnership
with OneMarketData adds tick capture and analysis tools to Wombat Financial Software’s algorithmic trading system. PAGE 8
TECHNOLOGY: A hosting solution
from Savvis lets brokerage firms and
hedge funds place their trading systems at a low-latency data center with
direct connectivity to exchanges.
PAGE 10
Fidelity Investments on Sept. 5 post-retirement income distribu-announced the launch of Fidelity tion. In pilot testing since March,
Retirement Income Evaluator, a the software’s new Retirement In-Web-based tool that enables the come Simulation Expert (Rise)
135,000 advisers supported by the tool lets advisers calculate the
Boston-based firm to create and likelihood of customers having
manage customers’ retirement-in- Continued on page 18
Citadel and CBOE
Weigh In On Penny
Pilot Composition
BY JOHN HINTZE
As the U.S. options markets
move toward expanding the
number of products in the pilot test
of penny price increments, a major
market participant and the largest
U.S. options exchange are calling
for the Securities and Exchange
Commission to rethink the types
of classes included, and how they
are selected.
Citadel Investment Group, a
leading options market maker and
order router, on Sept. 12 filed a letter with the six U.S. options exchanges that recommends that the
SEC reconsider the composition
of the penny-pricing pilot. Each of
the exchanges submitted similar
proposals following the completion on July 26 of the first segment
of the trial. Those proposals are
based on an SEC blueprint that includes plans to extend penny-increment pricing for the 13 options
classes in the pilot’s initial phase
through Sept. 28, when 22 classes
will be added.
In its letter, Citadel expresses
concerns about the methodology
used to select the new options
Asia Trades Online
Rates rise in China, peak in Japan
BY WANG FANGQING
As Asian countries roll out high-speed Internet services, online
trading rates are climbing. But adoption by retail investors has been anything but uniform throughout the
region. While Japan has the highest online trading rates in the world,
China and India are just getting into
the game. Rapidly accelerating
p22 growth in those markets, however,
p22 indicates their potential to become
the new leaders of Internet trading.
Out of China’s 114 million
shareholders, the number using online trading services is relatively
small. Twenty percent, or 32 million, of its 162 million Internet
users do some trading or banking
online, according to a July report
Continued on page 15
TECHNOLOGY : Advanced Micro Devices and Intel Corp. debut competing
quad core chips that both say will improve energy efficiency and heighten
virtualization capabilities. PAGE 10
classes. “Instead of focusing the
pilot to include the 50 most actively traded classes, the commission should study pilot market data to identify the types of
data likely to benefit most from
penny quoting,” writes John
Nagel, associate general counsel at Citadel.
The Chicago Board Options
Exchange (CBOE) is expected
to file a letter shortly that agrees
with Citadel’s contention that
penny quoting makes more
sense for some options classes
than for others. “Moreover,
CBOE fully supports removing
from the penny pilot any options classes that, after analysis
and review, are found not to be
good choices for quoting in
penny increments and replacing them with other classes that
are suitable for penny quoting,”
a CBOE spokesperson quotes
from the letter.
The penny pilot, which
began Jan. 27, instituted pric-
Continued on page 19
COMPLIANCE: New regulations make
it easier for Chinese companies to
issue corporate bonds. PAGE 12
▼
Company Index
People Index
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On the Web
Venture capital firm takes
TradingScreen stake; Fidessa
launches MiFID products; and
more. See Breaking News at:
www.securitiesindustry.com.
Social Investing Picks Up Steam
BY TOM GROENFELDT tutional investors and state funds
In recent meetings with asset such as employee pensions are ap-managers, Northern Trust Co.’s plying socially responsible guide-
Ray Carney found that the hottest lines to their investment programs.”
topic of conversation was socially State Street Corp.’s investment
responsible investing (SRI), a management service group has
method that combines the need for seen a similar trend. “Clients are
financial profit with environmen- coming to us and asking how we
tal, social and governance consid- can help them analyze their in-erations. Carney, EVP vestments,” says Patrick
of the bank’s Innovation Centanni, SVP of prod-Center, says asset man- uct and technology so-agers are concerned lutions at State Street.
about maintaining high “They are asking us to
returns on investments provide them with tools
while abiding by SRI and basic information
restrictions. Ray Carney about their investments
“We have a lot of foundation as well as compliance and risk in-clients and religious organizations formation so that they have a bet-who have long aligned their invest- ter understanding of their portfo-ment policy with their organizational lios and how and what their man-mission,” says Carney. “Now, insti- Continued on page 13
