Special Report: Compliance Technology, page 9
www.securitiesindustry.com
FEBRUARY 18, 2008
NEWS DESK
Hedge fund administrator Fulcrum
switches to Advent’s Geneva; Investment Technology Group offers
FXall access; and more. PAGE 3
PERSPECTIVES
COMMENT: As securities firms see
their in-house risk controls compromised and banks are forced to
take multibillion-dollar write-downs,
risk management services companies such as RiskMetrics Group are
benefiting from the capital markets’
desire for security. PAGE 4
SPECIAL REPORT
As firms get up to speed on regulatory requirements for the archiv-
ing of electronic
communications,
they increasingly will
be in the market for
compliance technol-
ogy, much of it from third-party
service providers. “Outsourcing is
an insurance policy,” notes LiveOffice’s Matt Smith. Being out of
compliance “makes everybody look
bad.” Also in this report: Best-ex-ecution regulations in the U.S. and
Europe are driving broker-dealers
to adopt new technology or bolster existing systems; firms are beefing up their pre-trade compliance
software; IT investments and systems integration could cut compliance costs; and more. PAGE 9
DEPARTMENTS
TRADING: Aiming to expand its offerings and geographic reach, retail
foreign exchange brokerage FX Solutions agrees to be purchased by
City Index Group. PAGE 6
A Clearing Impediment to MiFID
Meeting cross-border goals will require structural adjustments
BYJOHNHINTZE dozen new market centers have
The Markets in Financial In- arisen—some already in opera-struments Directive (MiFID) tion and others joining them
has prompted the emergence of a later this year—that are expect-slew of alternative trading venues ed to heat up competition and
in Europe, with the expectation of drive down trading costs.
more, less-costly platforms to Similar dynamics in the U.S.
come. But current exchange struc- offer a rough blueprint for what
tures may delay the anticipated may follow on the other side of
benefits until market participants the Atlantic. Order-handling
make concessions, or the regula- rules introduced in the late 1990s
tors step in. and last year’s Regulation Na-
MiFID became effective Nov. tional Market System have led to
1, permitting securities to trade the creation of numerous alter-across multiple exchanges and natives to the existing exchanges;
other trading destinations and some displaying quotes, others
pushing investment firms to seek not. Electronic communication
the best price. As a result, a half- Continued on page 21
TRADING: The Tokyo Stock Exchange says a fault in its Fujitsu-made software led it to halt some derivatives trading. PAGE 6
Netik Accelerates Reference Data Race
Warehouse vendor switches
parents, purchases Capco unit
BYCHRISKENTOURIS
With its acquisition of the reference data business of
consultancy Capco, Netik is seeking to expand its product line at a
time when financial firms are under
increasing pressure to improve
their data quality and integration.
The deal was part of a multistep Colin Close
reorganization for the New York-and London-based data warehouse prime brokerage operations.
vendor. Netik announced on Feb. Netik founder John Wise con-
11 that it had used funding from tinues as CEO while chief infor-private equity firm Symphony mation officer Colin Close has
Technology Group (STG) to spin added the newly created title of
off from the Bank of New York president. Though industry sources
Mellon Corp., its majority-owner, say that CRDS president Predrag
and acquire Capco’s Reference Continued on page 19
Data Services (CRDS).
Financial terms of the transac- tion, completed in January, were not Thomson-Reuters Combo Heavy on E-swaps Systems
revealed but Netik officials said that BYSHANEKITE Thomson-Reuters Corp. will with the platforms’ overlapping
STG now owns a majority stake in
the company; Bank of New York The pending merger of own two platforms coverage.
Reuters and Thomson Corp. for interest-rate
Mellon, which previously held 51 will bring multiple bond-trading swaps (IRS) and other
percent, retains a minority interest. platforms under one roof. How bonds— Trade Web
The former Bank of New York these systems will be integrated and RTFI—and will
purchased its stake in Netik in May and marketed remains to be inherit Reuters’ part-
2004 and has been using Netik’s seen—neither company will com- nership with Liquid-
data hub InterView for its fund ad- ment until the deal is finalized— ityHub, which does
ministration and investmentoper- but Reuters is still signing on the same using a re- Reuters CEO
Tom Glocer said last
month that he ex-
pects regulators to
approve the merger
this quarter. On Jan.
14, the companies
Billy Hult said they expect the
ations outsourcing businesses. BNY major broker-dealers to use its q u e s t - f o r - s t r e a m transaction to close
Mellon subsidiary Pershing has also Reuters Trading for Fixed Income (RFS) format. The companies early in the second quarter.
installed InterView for its new (RTFI). have not said how they will deal Reuters told Securities Industry
News last week that RTFI is
piloting a single-dealer “click-
to-trade” capability for insti-
tutional IRS trading. The
Continued on page 22
TECHNOLOGY: The growing funds
of hedge funds sector, only now beginning to leverage technology to
manage their complex processes, offers a relatively untapped market for
vendors. PAGE 18
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On the Web
SEC says advisers should file
narrative disclosures; an open-source MDDL; and more.
See Breaking News at:
www.securitiesindustry.com.
Are the Capital Markets Finally Ready for Wireless?
Distinction between desktop, mobile continues to blur
BYJOHNHINTZE at commercial banks, and a slew of
For a decade, the wireless in- vendors have entered the market,
dustry waited for a develop- according to Jacob Jegher, senior
ment that never quite emerged: fi- analyst at Boston-based research
nancial firm executives and their firm Celent. But there’s still hesi-customers fully embracing mobile tancy in the brokerage and asset
services for their business activities. management communities. “It
Many of the companies that helped could take a little longer on the in-pioneer trading over mobile devices vestment side, because it’s more
have long ago passed into the an- transactional,” said Jegher.
nals of wireless history, victims of Computer company Apple,
post- 9-11 budget cuts and inade- renowned for innovative design, has
quate network coverage, which been widely credited with chang-often resulted in dropped connec- ing attitudes toward technology,
tions during transactions. and some observers suggest that last
Nevertheless, wireless services year’s introduction of the iPhone
have continued to mature, and may finally inspire that long-await-
some are finding growing accep- ed surge of demand in the financial Pyxis Mobile’s mPortfolio product
tance at financial firms. services sector. on RIM’s BlackBerry.
Mobile services have taken off Continued on page 20
