Special Report: Enterprise Data Management, page 11
www.securitiesindustry.com
MARCH 10, 2008
NEWS DESK
Institutional demands, regulatory
changes boost options trading;
SEC data suggests naked shorting
not driving fails-to-deliver; Nyfix
names global head of transaction
services. PAGE 3
PERSPECTIVES
COMMENT: Market observers are
voicing concerns that hedge fund
problems may spill over into sovereign wealth funds, which are
seeking to juice their returns by
putting money in high-risk alternative investments. PAGE 4
SPECIAL REPORT
Data virtualization seeks to integrate technology systems and data
by decoupling information from
applications and managing it in a virtual middleware layer. This
methodology, closely
linked to service-oriented architecture, “not only eliminates the need
for cumbersome transformation-coding but makes the addition of
an application far simpler because it
requires only one integration
poin—the application to the data
service,” says Ptak Noel & Associates’ Jasmine Noel. Also in this report: A panel of experts assess the
state of the data management industry; Armanta offers a framework
for automating business processes;
and more. PAGE 11
DEPARTMENTS
DATA MANAGEMENT: Reuters’ bespoke valuation service aims to
provide credible valuation methods for complicated instruments.
“We have models and we will now
build a community,” says Reuters’
Philippe Carrel. PAGE 6
Turquoise’s Lederman: We’re Playing to Win
BY DAWN KISSI gan Stanley—the London-based
More than a year since its MTF in December added
formation, Turquoise is French banks Société Générale
gearing up to play in a European and BNP Paribas to its consor-equities landscape that is under- tium of owners. And it has been
going rapid transformation under busy signing deals with technol-the Markets in Financial Instru- ogy vendors to put the necessary
ments Directive (MiFID), which pieces in place.
went into effect late last year. “Turquoise is very much op-After technology infrastructure erating as a company,” says chief
issues delayed an anticipated No- executive Eli Lederman, who Eli Lederman
vember 2007 launch, the multi- noted that his appointment in
lateral trading facility (MTF) is October signaled a change in the get-go.”
expected to open for business in project’s direction—from a com- Turquoise will face “fierce
September. mittee-led effort to an indepen- competition” from both the in-
Originally dubbed Project dently functioning entity. “We cumbent exchanges and a host
Turquoise and backed by seven don’t call it Project Turquoise of “newly launched dark pools,
of the world’s largest banks—Cit- anymore—it’s Turquoise,” says crossing networks and MTFs”
igroup, Goldman Sachs, UBS, Lederman, noting that the venue that have been popping up as a
Credit Suisse, Deutsche Bank, is operating with the “same ob- result of MiFID’s market struc-Merrill Lynch & Co. and Mor- jective the founders had at the Continued on page 20
Nasdaq Beats
SEC to Punch
On Compression
BY JOHN HINTZE
The National Securities
Clearing Corp.’s (NSCC)
proposal to eliminate trade compression has not yet been approved by the Securities and Exchange Commission, but the
Nasdaq Stock Market is not
waiting for the regulator to take
action.
Nasdaq, perhaps with an eye
to setting up a competing settlement house, last week announced
that it will no longer compress
trades executed on the exchange
for submission to the NSCC for
Continued on page 22
DATA MANAGEMENT:
SuperDerivatives says transparency is about providing an accurate price, not publishing models. PAGE 6
U.S. Options Industry
Marching Toward
21-Character Symbols
BY CHRIS KENTOURIS
As the U.S. options industry
braces for a nomenclature
overhaul, the Options Clearing
Corp. (OCC), exchanges, member firms and service providers
are starting the laborious process
of adapting their internal applications to conform to a 21-char-
acter symbology key.
Though firms are required to
accept options data in the new
format by the end of June, they
won’t need to send it until July
31, 2009. From then until Oct.
31, actual options symbols will be
consolidated, or changed into the
new nomenclature.
“With trading volumes rising
exponentially and new products
on the horizon, the current
nomenclature, in effect for over
two decades, is no longer effective,” said OCC vice president
Mark Baumgardner at a recent
Securities Industry & Financial
Market Association (Sifma) conference on options symbology in
New York.
The systems changes required
to shift from a five-character designation is being compared by
Continued on page 8
Top Correspondent Clearers Taking On the Vendors
New technology solutions aim to service brokers’ broader needs
BY JOHN HINTZE subject to market lulls, and the
In search of added revenue, the overall number of brokers has
largest correspondent clearing barely budged in recent years.
firms are working to extend their In addition, the clearing func-technology know-how across tion has been automated to such
their clients’ broader businesses, an extent that competition has
and potentially become a con- boiled down to price. Clearers,
sulting and technology source for especially those catering to firms
non-clearing customers as well. that provide retail brokerage and Mark Healy
Correspondent clearers have advisory services, have sought to
traditionally grown by capturing bolster their pricing power by in-new broker-dealer clients and cluding ancillary services, such as
helping existing customers ramp increasingly sophisticated broker
up their business, resulting in workstations and financial prod-more trades and more clearing ucts. Even those offerings, how-fees. That model, however, is ever, are now comparable among
the largest clearing firms, requiring more creative approaches to
boosting revenues.
Thus the recent push by the
two biggest clearers servicing re-
Continued on page 9
TECHNOLOGY: Event processing vendor Aleri has partnered with consultancy Lab49 on a set of tools to help
traders consolidate, analyze and visualize market data in real time. PAGE 7
▼
Company Index
People Index
p22
p22
▲
On the Web
A trade association for
regional bond dealers; Nymex,
LCH.Clearnet form alliance.
See Breaking News at:
www.securitiesindustry.com.
When Disaster Strikes: Infrastructure Issues
Spurring New Approaches to Outsourcing
B Y MAYUR PAHILAJANI “Rising wages, lack of attractive
So far this year, a record-break- locations, a shrinking talent pool,
ing snowstorm left cost factors and glob-much of China without al financial turmoil,”
power and two severed lists Sudin Apte, a
undersea cables took Pune, India-based se-India off the Internet. nior analyst at For-Neither of these inci- rester Research.
dents made securities But Mother Nature
firms with outsourced is even more unpre-operations particularly Hans Hufschmid dictable. One day in
confident, and bad weather and in- 2005, Mumbai got 37 inches of
frastructure problems aren’t the rain—the damage was estimated
only cause for rattled nerves. Continued on page 19
