Special Report: Anti-Money Laundering, page 13
www.securitiesindustry.com
MARCH 3, 2008
NEWS DESK
NYSE Euronext takes stake in Indian commodities exchange;
Turquoise picks BT. PAGE 3
PERSPECTIVES
GUEST COMMENT: Last year a
number of financial firms “kicked
the tires” and deployed their first
complex event processing applications, writes Coral8’s John Morrell. Now, “2008 is poised to become the year of mainstream
CEP adoption.” PAGE 4
VIEWPOINTS: In volatile global derivatives markets, “performance and
reliability are key,” says Orc Software’s Martin Koopman. “Firms
must be able to evaluate trading opportunities and execute orders with
submillisecond latency.” PAGE 6
SPECIAL REPORT
A General Accountability Office
study gives currency transaction reports a restrained vote of confidence
as lawmakers consider the Seasoned
Customer CTR Exemption Act,
which Rep. Paul Kanjorski says
“strikes an appropriate
balance between the
concerns of law enforcement and our nation’s financial institutions.” Also in this report: U.S. hedge
funds are exposed to other jurisdictions’ AML rules; FinCEN readies
a cost-benefit analysis on reporting
cross-border wire transfers to a central data warehouse. PAGE 13
Nasdaq Market Replay’s graphical interface
Nasdaq Makes Tick-Data Play
BYJOHNHINTZE division.
Literally bringing the electronic Nasdaq developed the tool with
stock market to desktop com- Adobe Systems of San Jose, Calif.
puters, Nasdaq Stock Market has in- and utilizes its Adobe AIR technol-troduced a tool that gives traders and ogy—launched on Feb. 25, the same
compliance officers nearly immedi- day as Market Replay—which de-ate access to detailed quote activity, livers rich Internet applications to
allowing them to develop trading browsers and desktops. The Nasdaq
strategies or resolve potentially application, which has a user-friend-thorny best-execution issues. ly graphical interface, allowed Adobe
Though the new product, Mar- to showcase the power of its new
ket Replay, is now available to pro- technology, said Friedman. “What
fessional traders, it will eventually better way to show its capabilities
be extended to retail investors over than through Nasdaq, which has
Web portals such as Yahoo and more data to crunch than any other
AOL, said Adena Friedman, EVP exchange?”
and head of Nasdaq’s data products
Continued on page 17
DEPARTMENTS
TRADING: SuperDerivatives clients
gain direct access to Liffe Connect to trade OTC derivatives and
Euronext.liffe contracts side by
side. PAGE 8
DATA MANAGEMENT: Reuters statistics show European trade reporting
fragmenting as Markit Boat makes
major inroads. PAGE 8
TRADING: Equity executions are increasingly taking place in dark
pools; options will soon follow, say
panelists. PAGE 9
▼
People in the News
Company Index
People Index
Saying Good-bye to Legacy Systems
Sunsetting applications can be a hard sell for IT groups
TOM GROENFELDT response—if it isn’t broke don’t fix
Ask an information technology it. At least, until a vendor announces
expert at a large investment an end to support, and even then IT
bank if he has a certain piece of soft- departments have been known to
ware or hardware and rely on eBay to find
you will likely hear parts for aging main-that the bank has at frames.
least one of every- At Northern Trust
thing. At banks that Corp. in Chicago, the
have grown through IT team has taken a
p3
p19 acquisitions, that can more aggressive
p19 easily add up to mul- stance: It devotes 10
tiple general ledger percent of its annual
systems, Swift con- Nirup Krishnamurthy budget to shutting
nections, customer re- down old technology.
lationship management (CRM) soft- With $4.1 trillion in assets under
ware and risk systems. custody and $770 billion under man-
Overlapping systems represent a agement in its wealth management
problem and an expense, but not al- arm, Northern Trust is a major glob-ways a pressing or insurmountable al player. And through its asset man-one, so procrastination is often the Continued on page 16
▲
On the Web
Omgeo to consolidate settlement
instruction databases; Oppenheimer
settles market-timing case; and more.
See Breaking News at:
www.securitiesindustry.com.
Long Wait for Official SEC Guidance
On NMS Exemptions Raises Concerns
BYJOHNHINTZE
The Securities and Exchange Commission is expected to soon consider issuing
long-awaited guidance on market structure issues related to
Regulation National Market
System (NMS) that have left
brokerages’ compliance officers
unsettled since last summer.
As Reg NMS was being
phased in last year, brokers were
raising questions about how
best to proceed with particular
transactions. Those issues were
shared with the Securities Industry & Financial Markets Association, which in turn discussed them with SEC staff. In
an August conference call, and
at subsequent conferences, SEC
officials have provided verbal
guidance and assured participants that written guidelines
were forthcoming.
Although firms reportedly
have been following the oral instructions, official guidance has
yet to arrive. That has created
a quandary for compliance officers, who are especially concerned about the so-called 20-
second agency cross look-back
exemption, which affects the
manually executed crosses that
are still common in block trading. The handful of other questions, such as trading American
depositary receipts in the context of NMS, are comparatively minor.
A bulge-bracket banker, who
said the SEC in the conference
call gave clear verbal guidance
to at least a dozen firms on the
look-back issue, among others,
said, “The industry has been
waiting months and months for
this guidance, and it’s getting to
Continued on page 19
Canada Stepping Out of U.S. Shadow
New ATSs likely to bring market fragmentation, opportunities
BYALEXAJAWORSKI parallel transparent market
Long overshadowed by that structures within one rule set,
of its southern neighbor, according to the exchange.
the Canadian securities market “Our view is that in an in-is beginning to claim a share of creasingly automated world ...
the North American limelight, no one market model can serve
according to industry analysts, all constituencies all the time,”
broker-dealers and technology says Thomas Kalafatis, VP of
providers. TSX Markets, which facilitates
Over the past 12 months, trading on TSX and venture eq-both Canadian- and U.S.-based Continued on page 18
companies have launched trading venues and technology platforms in the country, reminiscent of the proliferation of alternative trading systems (ATSs)
and electronic communications
networks in the U.S. since the
late 1990s.
TSX Group, parent of the
Toronto Stock Exchange, on
Feb. 28 disclosed plans to create an electronic platform for
high-speed traders that will operate alongside its TSX Quantum central limit order book.
The project, codenamed TSX
Photon, will make TSX the first
exchange in the world to offer
