Special Report: Instant Messaging, page 9
www.securitiesindustry.com
FEBRUARY 4, 2008
NEWS DESK
Euroclear upgrades Hong Kong
office to branch status; Fidessa
partners with Pipeline; Aite Group
names top trends for 2008; IPC
enhances IP network. PAGE 3
PERSPECTIVES
COMMENT: The automation of
corporate actions may finally be
reaching critical mass: IT spending is on the rise and Swift’s efforts to standardize corporate actions messaging on the ISO
20022 format are being embraced
by Euroclear and the Depository Trust & Clearing Corp.,
among others. PAGE 4
SPECIAL REPORT
As instant messaging becomes increasingly entrenched on Wall
Street, technology vendors are
bringing down the
barriers between IM
networks, making it
easier for traders to
send messages to
counterparties on other platforms.
But interoperability with public networks from AOL, Yahoo and Microsoft adds a number of new security threats, notes David Gurle of
Reuters, which offers the Reuters
Messaging platform. “To address
those, we have obviously put a number of safeguards into place.” Also
in this report: Collaborative tools
from Pivot; the monitoring burdens
of Web 2.0; and the call to archive
BlackBerry text messages. PAGE 9
DEPARTMENTS
STANDARS & PROTOCOLS: Swift says
its migration from the ISO 15022
payment messaging format to ISO
20022 will be complete in 2010; FIX
Protocol Ltd. is offering up a framework for developing 20022 variants.
PAGE 6
Regulators Reach Out to NYSE; Credit
Derivatives Transparency Project Possible
Participants say solution should come from private market
BY SHANE KITE Davos, Switzerland that the regula-
Concerns about pricing and pay- tors have discussed the idea with his
ment failures in the multi-tril- exchange. SEC spokesperson John
lion-dollar credit derivatives sector Heine said the agency would not
have led the Securities and Exchange comment on the matter; nor would
Commission and Treasury Depart- Treasury or the Securities Industry
ment to consider having exchanges & Financial Markets Association.
post quotes and trades of collateral- What is clear is that regulators are
ized debt obligations (CDOs) and seeking to ensure that counterparty
credit default swaps (CDS) to in- risk does not develop into a systemic
crease market transparency. problem. The level of apprehension
N YSE Euronext CEO Duncan was evident last week as leaders from
Niederauer told reporters last month the U.K., Germany, France and Italy
at the World Economic Forum in Continued on page 19
Pandemic Exercise
A Qualified Success
Study shows strains from
absenteeism, telecommuters
BY JOHN SANDMAN
The Treasury Department
has released the results of a
pandemic testing exercise for the
U.S. financial services industry.
While Treasury called the test,
which ran from Sept. 24 to Oct.
11, “both an unprecedented
event and a success on many different levels,” it painted a sobering picture regarding the depth
of response needed to cope with
such a crisis.
The results “demonstrate the
Exercise Participants
1%
2% 1%
Regulators
Industry Associations
Other Utilities
Insurance Companies
Market (Securities &
Derivatives) Organizations
Banks/Credit Unions
Broker-Dealers Facing Data Storage Dilemma
Reg NMS, MiFID best-execution requirements demand new techniques
BY TOM GROENFELDT days of trading data years.
New regulations on both sides from each month. “There is huge de-of the Atlantic are mandating Under Europe’s Mar- mand for storage be-that broker-dealers provide their kets in Financial In- cause of NMS and
clients with best execution, and have struments Directive MiFID,” says Phil En-the records to prove it. Now (MiFID),brokersmust ness, global solutions
venders of storage solutions are keep all trade data for manager for IBM
rushing to answer a pair of ques- five years and be able Larry Scott Corp. in London.
tions: How will all that data be to reconstruct the prices available “The volume of data is phenome-
stored, and how can it be retrieved across all venues at the time of ex- nal. We did a review looking at tick
easily? ecution. Reg NMS is less clear storage data for ten years, and you
The U.S. Regulation Nation- about how long data must be run into petabytes of storage.”
al Market System (NMS) requires stored, according to vendors, but Financial firms, especially in Eu-
brokers to maintain at least three the exchanges are looking at seven Continued on page 18
TRADING: Progress Software’s
Apama has upgraded its event processing platform, speeding up the
creation of algorithms while helping
to meet regulatory demands for best
execution. PAGE 6
clear need for conducting this
exercise,” said Valerie Abend,
deputy assistant secretary of the
Treasury for critical infrastructure protection and compliance
policy. “Even businesses that had
pandemic plans in place found a
global avian flu outbreak poses
complex issues and were able to
identify areas where more work
was needed.”
The report augments the initial results of the exercise—in
which more than 2,700 organizations participated—which
were released last October. The
project, which was sponsored by
the Financial Services Sector
Coordinating Council (FSSCC),
Financial and Banking Information Infrastructure Committee
and Securities Industry & Financial Markets Association, was
intended to provide a realistic
look at systemic risks and the
sector’s dependence on critical
infrastructures.
Ninety-nine percent of participants said the exercise—the
industry’s largest to date—
helped gauge their organization’s
Continued on page 16
▼
Company Index
People Index
▲
On the Web
Merged Eurex, ISE Name Their First Joint
Initiative: A New U.S. Options Platform
Due in 2011, homegrown system will replace OMX’s
BY JOHN HINTZE trading platform since it opened
The International Securities its doors.
Exchange (ISE) and Eurex, “Technology is an important dif-fresh off the December comple- ferentiator in today’s competitive
tion of their merger, said they are market environment,” said ISE
jointly developing an president and CEO
p19 options trading sys- Gary Katz in a state-
p19 tem that will bolster ment last week. “Both
ISE in an increas- ISE and Eurex have
ingly competitive been at the forefront
U.S. market. of technology devel-Until the launch opment in the indus-of the platform, an- try, and this new ini-ticipated in January Gary Katz tiative will solidify our
2011, ISE will continue to use a position as an innovative technolo-system from OMX, the Swedish gy leader.”
exchange operator that has sup- ISE, which began operations in
plied New York-based ISE with its Continued on page 17
ICE to buy OTC energy
derivatives platform;
Northern Trust partners
with youDevise; and more.
See Breaking News at
www.securitiesindustry.com.
Hedge Funds Take
On Distressed Debt,
Side Pockets Swell
BY CAROL E. CURTIS
Hedge funds are likely to play an
important part in solving the
subprime mortgage crisis, according
to Securities and Exchange Commission commissioner Paul Atkins.
And despite some well-publicized
subprime-related hedge fund collapses, the industry will “continue to
flourish,” said Atkins, a leading opponent of the failed effort to require
hedge funds to register with the SEC.
Although Atkins did not elaborate in the interview, which was
published Jan. 14 on the Web site
of French business school EDHEC,
Continued on page 17
