www.securitiesindustry.com
JANUARY 28, 2008
NEWS DESK
BT Radianz signs ISE, Reuters
rolls out Fast-enabled Opra
feed. PAGE 3
Collateral In Use
($U. S. billions)
PERSPECTIVES
GUEST COMMENT: Lori Richards,
director of the SEC’s office of
compliance inspections and ex-
aminations, offers an overview of
the agency’s plans for exams in
2008. PAGE 4
VIEWPOINTS: As the registered investment adviser market expands
rapidly, Mark Tibergien, CEO of
Pershing Advisor Solutions, wants
to “help RIA firms to develop
their people, integrate their technology” and become “better business people.” PAGE 6
DEPARTMENTS
TRADING: The New Zealand Ex-
change is bolstering its
technology infrastructure
in anticipation of the
launch of the AXE ECN,
which NZX’s Stephen Turner says will
inject needed competition into the
Australian market and “provide brokers with enhanced capabilities and
better pricing.” PAGE 12
Newly Rebranded
ValuBond Is More
Open, Says Knight
BYSHANEKITE
Signaling the completion of
a series of technology upgrades, product enhancements
and staffing increases, Knight
Capital Group has given its
ValuBond retail fixed-income
trading platform a new look.
Atlanta-based ValuBond,
which Knight acquired in October 2006 for $18.2 million
in cash, is now known as
Knight BondPoint.
Knight’s plans for the rebranded platform, which has
been fully integrated with the
trading behemoth’s direct-mar-ket access (DMA) and trade execution services, include upgrading its structured-products
Continued on page 17
COMPLIANCE: An SEC-commis-sioned study shows that, although
retail investors are generally
pleased with their financial services
providers, they are confused about
the differences between advisers
and brokers. PAGE 7
TRADING : Online brokerage OptionsXpress has introduced a fully integrated futures platform. PAGE 11
TECHNOLOGY: The New York-based
president of Karvy’s outsourcing
unit is seeking to offer holistic services to the firm’s North American
clients. PAGE 12
COMPLIANCE : The subprime crisis
and market volatility have sparked an
increase in securities fraud class-action lawsuits. PAGE 14
CBOE, Regulators 1,329 1,335
1,209
Ready to Expand
1,017
Portfolio Margining 922 924 854
Exchange gauging impact of 719 707
Reported
wider use of margin accounts
Estimated BYJOHNHINTZE 437 491
Portfolio margin accounts, 289
which have seen increasing de- 200 250
mand from sophisticated investors 138 145
since their introduction in April,
will soon include fixed-income- 2000 2001 2002 2003 2004 2005 2006 2007
Source: International Swaps & Derivatives Association
based products. And one exchange
is gauging the effects of extending the accounts to less sophisticated Collateral Management in the Limelight
options investors pursuing hedged BYCHRISKENTOURIS ed trades to see the effect of the
transactions. trades on its collateral position with The Chicago Board Options International depository Eu- roclear Bank in November all counterparties,” explains Jean-
Exchange (CBOE), which along launched a service that provides Robert Wilken, director of product
with the New York Stock Exchange trade matching and daily port- management for Clearstream’s glob-received regulatory approval to folio reconciliations between al securities financing unit. “It in-offer portfolio margining in De- counterparties, helping its cus- cludes pending deliveries and pur-cember 2006, recently sent a letter tomers to manage their expo- chases from main trading accounts
seeking input from broker-dealers sures and collateral in the over- Continued on page 14
currently offering the higher-lever- the-counter derivatives market.
age accounts to retail investors Eight of the world’s largest in-about how broadening their use vestment banks are using the
would affect business. The letter DerivManager service.
asks them to assess the number of This month, Clearstream in
customers that would be affected Luxembourg countered with a
if those approved to conduct op- trade simulation service called
tion “spread” transactions could CmaXDirect that allows collater-use portfolio margining. al givers—typically broker-deal-
Currently, portfolio margining, ers and banks—a better under-which applies a flexible, risk-based standing of their collateral remodel to determine collateral re- quirements. Seven broker-dealers
quirements instead of the static are participating in a pilot phase;
strategies under the Federal Re- it will be widely available in April.
serve’s Regulation T margin rules, “The service summarizes the
can only be used by options traders available collateral position for
approved to execute uncovered, or each counterparty and allows a
Continued on page 18 collateral giver to enter simulat-
Growing Pains for Nascent Carbon Market
Fragmentation, regulatory differences among challenges
in determining the winners
among the dealers, exchanges and
clearinghouses competing for a
share of the burgeoning market’s
trading and data revenues. Nearly three-fourths of global carbon
trades are over the counter, according to Celent. The World
Bank estimates that off-exchange
trading accounts for half of Europe’s carbon market. Futures and
forwards represent 90 percent of
carbon trading; the remainder is
Continued on page 15
BYSHANEKITE
As the carbon transaction initiatives pile up—the latest
comes from Euroclear, which
plans to settle trades on the yet-to-launch Climate Spot Exchange
(CSX)—fragmentation is emerging as an obstacle to development
of the emerging emissions market, but hardly the only one. Differing technology and regulatory
standards also need to be resolved,
say experts.
Clearing could play a big part
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A Collaborative Approach to MiFID Development
U.K. think tank’s technology group aims to keep costs down, manage transition
B Y TOM GROENFELD T rective and help craft solutions. The special interest group,
London-based think tank JWG-IT has brought to- which encourages collaboration and seeks members who
gether a group of technology vendors can offer both business and technical exper-and consultants to analyze the new de- tise, is chaired by Nigel Woodward, Intel
mands the industry faces under the Euro- Corp.’s financial services director for the U.K.
pean Union’s Markets in Financial Instru- MiFID, which went into effect Nov. 1,
ments Directive (MiFID) and develop a covers 31 jurisdictions and more than 7,000
common operating model to help firms financial institutions. JWG-IT, a for-prof-manage the transition. it venture that spun out of the MiFID joint
JWG-IT, whose chief executive, P.J. Di working group in March 2006, hopes that
Giammarino, has been active in promoting P.J. Di Giammarino TechSIG will save companies the cost of
MiFID awareness for several years, established TechSIG developing their own customized solutions.
in April to research the challenges presented by the di- Continued on page 17
