Special Report: FIX Protocol, page 11
www.securitiesindustry.com
NOVEMBER 19, 2007
NEWS DESK
SuperDerivatives upgrades interest
rate platform; Markit acquires cred-
it derivative indexes; NeoNet enters
Poland. PAGE 3
PERSPECTIVES
GUEST COMMENT: The systems
many firms use to value collateral-
ized debt obligations are not unlike
“sticking one’s finger in the air and
measuring wind speed and direction,
and then making an ‘eyeball’ evalu-
ation,” says Kestrel Technologies’
Ed Bishop. PAGE 4
130-30 Fund Assets Under Management
$ Billions
ORIGINAL SOURCES: “The elasticity of principles-based rules is attractive to both the regulator … and
those who are regulated,” says Mary
Schapiro, CEO of Finra, which is
in the process of integrating the
rulebooks of its predecessors.
PAGE 6
SPECIAL REPORT
The Fast protocol for high-speed delivery of market data is finding in-
creased usage among securities exchange, and may
soon reach critical mass
with data distributors.
“There are technical benefits from a market data standard based
on FIX and Fast,” says CME’s Matt
Simpson. “We are seeing lower latency and lower bandwidth.” Also in this
report: FIX 5.0 adoption; and net-work-access strategies. PAGE 11
DEPARTMENTS
TRADING: The London Stock Ex-
change has rolled out an upgrade of
its electronic trading platform, though
not without controversy. PAGE 8
TECHNOLOGY: While Wall Street firms
are quick to praise Intel’s new hafnium-based processors, they may not be as
quick to adopt them. PAGE 8
Source: Pensions and Investments Magazine, Vodia Group
Bank of New York Mellon Servicing 130-30s;
Pershing Subsidiary Reenters Prime Brokerage
BYCHRISKENTOURIS Steve Deutsch, director at fund
Anew service from Bank of research firm Morningstar, said
New York Mellon Corp. and that most of the 130-30 vehicles
Pershing Prime Services, a recent- have been created since 2006 and
ly created division of the bank’s this year “it has really started to
clearing subsidiary, will allow 130- Continued on page 19
30 funds—and those with similar
strategies—to use Pershing for
prime brokerage and Bank of New
York Mellon for custody, collateral management, administration and
accounting services. It’s an approach that closes the historic divide between the two types of service providers.
The 130-30 market could reach
$1 trillion in the next five years, according to industry estimates. Pension funds, who see 130-30 funds
as a way to obtain higher returns
while avoiding the fees and risks
associated with hedge funds, are
the biggest customers of the strategies, accounting for a majority of
the $75 billion market.
Feeding the Machine (News)
Dow Jones Elementized News Feed adds company data
BY JANICE FIORAVANTE rely on automation—do they go to
Arecent enhancement of the lunch and just let the computers
public company data available keep running, choosing stocks to
on the Dow Jones Elementized buy and sell?—and they replied, ‘No
News Feed has furthered a grow- way,’” said Robert Prinsky, execu-ing trend: Computers are reading tive director and senior editor of in-press releases, news and govern- stitutional product development for
ment reports, highlighting what’s Dow Jones’ enterprise media group.
important, and passing it on to al- “The algorithms or computers could
gorithmic trading models. blow up. It’s a balancing act and re-
That’s not to say that the au- quires automation coupled with
tomation of the trading function is human interaction. Besides, humans
making humans obsolete. “During are involved because we can’t ele-development of the new Dow Jones mentize everything.”
feed, I asked traders how much they Continued on page 21
Easier Access, New Products Spur Derivatives Growth in Asia
B Y LI BIN Futures, Options Volumes on Hong Kong Exchange
The International Swaps & Derivatives Association’s (ISDA) announcement last month that it Billions of contracts
was opening a regional headquarters in Hong Kong
underscored how Asia’s booming derivatives markets
have been attracting increasing attention from inter-
p22 national financial institutions.
p22 An easing of regulations governing foreign access, 42.9
a wide range of products, and adoption of new tech-
nologies have made derivatives a source of growing
demand in Asia, both domestically and from overseas.
In recent years, the region’s share of global financial de-
rivatives transactions has risen substantially.
“ISDA’s decision to strengthen its Asia-Pacific pres-
ence reflects the growing importance of China, India
and neighboring countries to the world’s financial mar-
kets, as well as the dramatic growth of privately negoti-
TRADING : IPC Systems will install
4,000 trading turrets on Merrill Lynch
& Co. trading floors in London and
New York. PAGE 9
Market Data Deals Expand Pyxis Reach
Adds SunGard, Thomson access, offers customization
BYMELANIEWOLD ceive updates when traveling. Now
While the use of mobile so- the firm has over 90 clients—and
lutions in financial ser- 27 of the top 50 global asset man-vices is still relatively new, a pair of agers, including Deutsche Asset
partnerships an- Management, Ever-nounced by Pyxis green Funds and Put-Mobile are indicative nam Investments—
of how handheld de- many of whom use its
vices have moved be- products for real-time
yond e-mail to delve portfolio manage-intoinvestmentman- ment on the road.
agement functions. And some are even
Two years ago, Todd Christy using it for trading
Waltham, Mass.-based Pyxis, a while out of the office.
provider of wireless software for Earlier in the decade, the bat-the financial services industry, was tle was over which device would
trying to convince portfolio man- win out in the financial services
agers and advisers to use its mo- world—Research in Motion’s
bile customer relationship man- (RIM) BlackBerry, Palm, Nokia
agement (CRM) software to re- Continued on page 22
Unlikely Proponent of
Fund Regulation Wants
Mandatory Inspections
BYCAROLE. CURTIS
When the U.S. Court of
Appeals for the District
of Columbia Circuit last year
struck down a rule requiring
hedge fund registration with the
Securities and Exchange Commission, the hedge fund industry
celebrated. But with the turmoil
in the credit markets causing
funds to collapse—including the
widely publicized implosion of
two funds operated by bulge-bracket firm Bear Stearns—a shift
may be underway.
Continued on page 20
TRADING : GFI Group attributes its
record third-quarter results to the subprime debt crisis. PAGE 18
▼
Company Index
People Index
▲
2002
2003
2004
2005
2006
2007
11
14. 5
19. 6
25.5
On the Web
Nyfix taps Shadow for new
ATS; DIFC buys SmartStream
Technologies; and more.
See Breaking News at:
www.securitiesindustry.com.
72.5
Source: Hong Kong Exchanges & Clearing
ated derivatives business in the region,” said ISDA executive director and CEO Robert Pickel.
“Equity derivatives have witnessed the most rapid
growth” on Asian exchanges, said analyst Andreas Jobst
in a report released in January by the International Mon-
Continued on page 20
