www.securitiesindustry.com
OCTOBER 15, 2007
NEWS DESK
London stays ahead of New York
in financial center index; Russian
depository members get easier access to Euroclear; and more. PAGE 3
PERSPECTIVES
GUEST COMMENT: As algorithmic
trading grows and regulations drive increases in market data, risk management, “a once-a-day snapshot calculation of the level of market risk,” may
need to move to real-time measurement to catch up, writes Xenomorph’s
Brian Sentance. PAGE 4
Jim Toffey
cover all asset classes, providing
one-stop capital markets shopping for buy-side clients.
ORIGINAL SOURCES: Bank of America CEO Kenneth Lewis says that
investors, consumers and business-
es alike have lost faith in
complicated financial
products, which “has
created paralysis in the
markets, making even some highly
rated assets illiquid.” To restore confidence, banks and hedge funds will
have to share information about underlying assets. PAGE 6
DEPARTMENTS
TRADING: Institutional investors are
frustrated by the growing number of
liquidity venues, and are increasingly
concentrating their business with big
brokers, according to a Tabb Group
survey. PAGE 8
Credit Suisse, Deutsche Bank,
Goldman Sachs Group, JP Morgan Chase & Co., Lehman
Brothers, Merrill Lynch & Co.,
Morgan Stanley, the Royal Bank
of Scotland and UBS will for
$180 million acquire a 15 percent stake in Trade Web; another $100 million will be dedicated to asset-class expansion and
development of the platform.
COMPLIANCE: A study of NYSE Regulation and NASD enforcement cases
prior to the SRO merger shows fewer
actions and smaller fines. PAGE 8
TRADING: 3D Markets is bringing
into the options business a benchmark akin to volume-weighted average price in equities. PAGE 10
The deal reportedly values
Trade Web at $1.5 billion, treble what Thomson Corp. paid
for it in May 2004, when seven
of the banks, plus Citigroup—
RBS and UBS were not shareholders—sold the platform for
$385 million in cash, including
contingent payments of $150
million based on growth targets
over three years.
TRADING: The National Stock Exchange implements an inverted fee
schedule for exchange-traded funds,
the latest in a series of aggressive pricing moves by market centers. PAGE 10
Swift-Led Messaging Initiative Automates TradeWeb Reaches
Fund of Hedge Funds Communications Across Asset Classes
B Y CHRIS KEN TOURIS with a consortium of fund of hedge Dealer investment furthers
The fund of hedge funds com- funds administrators and custodi- Thomson platform’s aims
munity will take a major step ans to introduce messages for sub- to become one-stop shop
toward automating scriptions, redemptions BYSHANEKITE
communications be- and reconciliations of
tween custodian banks, account holdings. A $280 million investment in
Thomson Trade Web by nine
administrators and Although the group, of the world’s biggest banks will cre-transfer agents with the Sharp, or Swift Hedge ate the largest multi-asset-class trad-launch next year of a Funds Harmonization ing platform for asset managers and
new set of Swift mes- Pilot, is based in hedge funds, said the Thomson Fi-sage formats. Ian Headon Dublin, its members nancial unit last week.
Over the past year, officials from represent global institutions such Already the largest dealer-to-the Swift messaging consortium as Bank of New York Mellon Corp., buy-side bonds trading platform,
have been meeting in Dublin—one Caceis, HSBC, LaSalle Global with $250 billion executed daily in
of the largest service centers for off- Fund Services and Northern Trust products such as government and
shore hedge fund administration— Continued on page 14 agency bonds, Trade Web aims to
Prospectus Problems Upstart To Launch Portal for Illiquid Assets
Hit Bulge Bracket BYJOHNHINTZE year-end. NYSE fines firms $10.4 million F ollowing several large Wall UnifiedMarket will not provide Street firms that have intro- regulated services, so the informa-
B Y CAROL E. CUR TIS duced venues for the trading of un- tion portal will not be required to
Familiar bulge-bracket names registered securities, a closely held register in any legal jurisdiction as
such as Citigroup, Goldman independent firm is launching an a financial services provider. Con-
Sachs & Co. and UBS are among online forum that allows users to sequently, members will be able to
the 15 firms that were fined a total exchange indications of interest post IOIs for a wide range of assets
of $10.4 million by NYSE Regu- (IOIs) for illiquid securities and such as private placements of un-
lation for alleged prospectus-de- other assets and to negotiate terms registered securities, secondary
livery failures and other operational anonymously. transactions for unregistered and
and supervisory violations. New York-based UnifiedMarket registered securities, businesses and
The alleged violations, an- Worldwide last week sent a report business assets. The portal will ex-
nounced on Oct. 8 by the New to its investors informing them of tend across borders, permitting
York Stock Exchange entity that is its plans to introduce, by the end of users worldwide to post IOIs and
now a part of the Financial Indus- the month, the UnifiedMarket por- negotiate terms. Transactions can-
try Regulatory Authority, include tal to a limited group—by “invita- not be completed on the Web site.
failure to ensure delivery of tion only.” It plans to roll out the “UnifiedMarket offers a financial
Continued on page 17 service to all market participants by Continued on page 18
With the contingent payments set to expire this year,
Thomson approached Goldman
Sachs about 18 months ago to
drum up further dealer support
to boost product development.
Continued on page 15
COMPLIANCE: Without an anti-money-laundering exam manual tailored to
their needs, broker-dealers must rely
on guidance prepared for banks and
other depository institutions. PAGE 17
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On the Web
Will Financial Firms Have a Second Life?
Banks see profit in virtual worlds;
brokerages are more cautious
BY MARIA CHESNULIAVICHIUS
AND WANG FANGQING
Virtual reality platforms may still be in their
infancy, but brokerages and other finan-
p3 cial institutions are already using electronic
p18 worlds such as Second Life to hold meetings,
p18 give seminars and test marketing techniques.
Securities trading and other financial transactions may follow.
Second Life, developed by San Francisco- A Nomura outlet on Second Life’s Bizisland
based Linden Lab in 2003, has a virtual coun- Banks are often quick to try new technologies, and this holds
terpart for nearly everything you can do or buy true for virtual worlds. In March, Saxo Bank, a Copenhagen-in the real world. As of Sept. 1, over 9 million based investment bank, opened its virtual headquarters in Sec-users have made it their home away from home. ond Life. About 300 “residents” of the online community have
And its development is in some ways mirror- participated in a trading game that Saxo created to educate poing the early days of the Internet. Continued on page 16
Icap buys Traiana; Thomson
and Paladyne in market data
agreement; and more.
See Breaking News at:
www.securitiesindustry.com.
