www.securitiesindustry.com
OCTOBER 29, 2007
NEWS DESK
Finra phases in an online suite of
compliance applications; Vietnam,
Tokyo and Shenzhen sign MOUs;
NeoNet links to Instinet’s Chi-X
ATS. PAGE 3
PERSPECTIVES
GUEST COMMENT: Suspicious ac-
tivity reports and currency transac-
tion reports have presented difficul-
ties for financial firms and law en-
forcement agencies alike, but their
benefits in combating money-laun-
dering and terrorist financing are
manifold, says James Freis, director
of Treasury’s Financial Crimes En-
forcement Network. PAGE 4
ORIGINAL SOURCES: Investors’ concerns about mortgage-backed securities have led them to increase
“their assessment of the risks associated with a number of assets” and
reduce their “willingness to take on
risk more generally,” says Federal
Reserve Board chairman Ben
Bernanke. The long-term result? A
“healthier financial system.” PAGE 6
DEPARTMENTS
TRADING: After announcing strong third-quarter results, BondDesk
Group introduces new
CEO Peter Crosbie, who says that the
retail fixed-income platform will continue to add “liquidity and trading volumes” by “extending the reach to new
participants.” PAGE 8
CLEARING AND SETTLEMENT : The
EU’s Markets in Financial Instruments Directive is almost here, but
still to be determined is how firms
should identify exchange-traded
derivatives. PAGE 8
TECHNOLOGY: A TowerGroup survey finds growing demand for automated research technology among
buy- and sell-side firms, and a shrinking pool of sell-side analysts. PAGE 10
NYSE Partners
With Banks on
Block-Trading
ATS in Europe
BY GENE LAW
NYSE Euronext, BNP Paribas
and HSBC are teaming up
to create a multilateral trading facility (MTF) that will enable execution of block trades of European
listed stocks.
The new MTF, Project SmartPool, will have access to all European sell-side firms and will allow
investors to tap dark liquidity pools
across the continent, according to
the companies. Investors will be
able to execute large block trades
without telegraphing intent, preventing costly information leakage.
“SmartPool is dark because we
don’t expose the order before trading,” Roland Bellegarde, NYSE
Euronext’s head of European cash
markets and a member of its management committee, said in an interview. “Doing it as a joint venture with the banks is innovative—
we can access the liquidity of the
banks.”
NYSE Euronext has also signed
a memorandum of understanding
with the two banks—definitive
agreements are expected by the end
of the year—and expects to add
more bank partners, according to
Bellegarde. SmartPool transactions
will comply with the post-trade re-
TRADING: Web-based financial data
and analysis provider Capital IQ has
reconfigured its platform for handheld devices and bolstered its real-time capabilities. PAGE 10
▼
People in the News
Company Index
People Index
p3
p18
p18
▲
On the Web
A consolidated OMX bond
unit; survey says reference data
still priority; and more.
See Breaking News at:
www.securitiesindustry.com.
Mandatory Arbitration Under Fire
Sifma defends status quo against legislative action
BYCAROLE. CURTIS a provision in customer agree-
In the face of Congressional calls ments that requires investors to
for change, the Securities & Fi- submit all disputes to arbitra-nancial Markets Association (Sifma) tion rather than traditional lit-has issued a white paper igation. Mandato-strongly defending the se- ry arbitration “has
curities arbitration system, been a huge bene-particularly the use of pre- fit to investors,”
Roland Bellegarde dispute mandatory arbi- said Lackritz. “It is
tration agreements in con- fairer, faster and
porting requirements of the Euro- tracts with customers. cheaper than liti-pean Union’s Markets in Financial “We think the system Marc Lackritz gation. We are
Instruments Directive (MiFID). is a real jewel, and that is why we helping to frame the notion of
“The legal structure, regulations, put out the paper,” said Marc Lack- keeping this dispute resolution
trading technology, clearing and ritz, president and CEO of Sifma, [system] that is so effective.”
settlement model have been select- in an Oct. 24 press call to discuss The white paper was issued
ed,” said Bellegarde, but the ex- the newly released research. the day before an Oct. 25 hear-change has yet to choose a provider Under the current system, a vast ing on the Arbitration Fairness
Continued on page 16 majority of broker-dealers include Act of 2007 (HR 3010), a bill
Ofac Moves to Increase Transparency sponsored by Rep. Henry John- son, D-Ga., that would nullify
Global exchange mergers add regulatory complexity any pre-dispute arbitration
BYJOHNSANDMAN guidance on a regular basis.” Szubin agreement “if it requires arbi-
The Treasury Department’s of- conceded that the agency “can’t ad- tration of an employment, con-fice of foreign assets control dress everything, but it makes sumer or franchise dispute,” or
(Ofac) is seeking to increase the everyone’s life easier if we can an- “a dispute arising under any
transparency of its sanctions swer the question once rather than statute intended to ... regulate
process—in part as a response to have to revisit it multiple times.” contracts or transactions be-recent cross-border exchange Szubin said that guidelines will tween parties of unequal bar-mergers—and provide enhanced come in the form of a risk matrix gaining power,” such as in-risk guidelines for broker-dealers. for the securities industry, which vestors vis-à-vis securities firms.
At the Securities Industry & Fi- he said should make compliance That would include the se-nancial Markets Association’s easier. He noted that the response curities arbitration agreements
(Sifma) Ofac Compliance Sympo- to “the risk matrix for individual currently in place in most of the
sium in New York on Oct. 18, Ofac sectors” has been positive. Added nearly 112 million brokerage ac-director Adam Szubin said that he Virginia Canter, Ofac’s associate counts in the U.S., according to
wants to see “more interpretive Continued on page 14 Sifma.
The white paper argues that
Clearstream Advocates the use of arbitration agree-
European Investment Continued on page 18
Funds Automation
BYCHRISKENTOURIS
Arecent report on inefficiencies
in the processing of cross-border transactions in the European
investment funds industry has
brought increased attention to the
potential benefits of unifying participants under a single automated
system.
A study conducted by Deloitte
on behalf of Clearstream in Luxembourg contends that the international depository’s streamlined
electronic platform could cut by
EUR300 million ($430 million) the
Continued on page 15
Live From New York, It’s STAC’s New Lab
Firms choose not to test proprietary technology,
but individual components are ripe for benchmarking
BY JANICE FIORAVANTE
The Securities Technology reputation for empirical data,” says
Analysis Center STAC director Peter
(STAC) this summer Lankford. “We are
opened a testing facil- putting a focus on New
ity in New York. A York with a lab because
presence in Manhattan lots of customers are
is eminently sensible there.”
for a company that Miguel Ortega,pre-evaluates and bench- Peter Lankford viously manager of
marks technology for capital mar- market data systems with Barclays
kets trading, but it raises a ques- Capital, heads the New York lab as
tion: Why is STAC headquartered managing consultant. “We have a
in Chicago? very experienced team, all with 20
“Our lab in Chicago is lent ca- years of experience and a sense of
chet by University of Chicago’s Continued on page 17
