www.securitiesindustry.com
APRIL 7, 2008
NEWS DESK
Complications arise in the poten-
tial merger of Jasdaq and the Osaka
exchange; Credit Suisse invests in
Australian ECN. PAGE 3
PERSPECTIVES
GUEST COMMENT: Worried about
the money laundering risks, many
banks have severed their ties to
money services businesses. But
MSBs need banking relationships,
say KPMG’s Antonio Pereira and
Sven Stumbauer, and there are several ways that they can demonstrate
that they have strong AML policies.
PAGE 4
ORIGINALSOURCES: Treasury’s blueprint for overhauling the U.S. regulatory structure is generating
much debate as industry officials voice their
initial opinions. “The
proposed consolidation of responsibility
for investor protection and the regulation of financial products deserves serious consideration as a way
to better address the realities of
today’s markets,” says SEC chairman Christopher Cox. PAGE 6
VIEWPOINTS: CantorCO2e is gearing up for “explosive” growth in the
emissions market, says chief executive Josh Margolis. PAGE 8
Exchanges Squaring
Off Over Symbology
NYSE, Nasdaq push plans
for ticker symbol rules
BYCHRISKENTOURIS
The Nasdaq Stock Market has
canceled plans to allocate special-character nomenclature to subordinate securities—preferred stock
and warrants. The move, announced March 27, raises new questions about when, or even whether,
U.S. equities and options exchanges
will adopt a unified method for designating ticker symbols.
Battle lines have been drawn for
p3 the National Market System (NMS)
p19 symbology reservation plan, which
p19 first surfaced three years ago and is
being reviewed by the Securities and
Exchange Commission. The goal of
the initiative is for the exchanges to
establish solid policies for deter-
mining how symbols are assigned
each time a new company lists.
On one side of the debate are
Continued on page 18
DEPARTMENTS
TRADING : T-Zero introduces a ser-
vice to fully automate novations pro-
cessing for credit derivatives. PAGE 10
TRADING : Omgeo’s trade confirmation service now supports the processing of repurchase agreements and
reverse repos. PAGE 10
TECHNOLOGY: IPC Systems’ new
Ethernet connection service is designed specifically for electronic
trading. PAGE 11
Gettyimages.com
Treasury’s Regulatory Revamp Plan
Includes OTC Settlement Oversight
BYSHANEKITE nounced the release of the blue-
Calling it systemically impor- print that had been in the works for
tant, the Treasury Depart- about a year.
ment has proposed that the pay- Such a step would at a minimum
ment and settlement infrastructure require additional data retrieval ca-of the over-the-counter derivatives pabilities from industry infrastruc-markets be placed under the over- tures such as the Depository Trust
sight of the Federal Reserve. & Clearing Corp. (DTCC), which
The recommendation, part of provides a centralized platform for
the much-debated plan to overhaul electronically settling fixed-income
the U.S. regulatory structure, was trades, including the OTC credit de-cited by Treasury Secretary Henry rivatives that dealers choose to chan-Paulson last week when he an- nel through its Deriv-Serv system.
On March 13, Paulson, urging
the industry to take up recommendations from the President’s Working Group on Financial Markets to
improve the processing of OTC
derivatives, suggested an “industry
cooperative,” pointing to DTCC’s
role in other bond markets. But
Treasury’s blueprint calls for regulatory supervision of any system
deemed “systemically important.”
Continued on page 14
Change Is Afoot in European Settlement
CDSs launch cross-border initiative; EuroCCP gets approval
BYJOHNHINTZE ing is costly. Exchange members
Bringing a new dynamic to Eu- must connect to multiple clearing
rope’s shifting trading land- and settlement units—compared
scape, seven central securities de- to one equity settlement house,
positories (CSDs) last week an- DTCC, in the U.S.—or pay agent
nounced a plan to make cross-bor- banks that already have links.
der settlement more efficient. Days The CSDs’ joint venture,
earlier, Depository Trust & Clear- called Link Up Markets, seeks to
ing Corp. (DTCC) said it had made create a “common infrastructure”
progress toward setting up a clear- by the first half of 2009 that will
ing shop on the other side of the absorb the differences in com-
Atlantic. munication standards “currently
Because the national European existing between the CSDs,” ac-exchanges use either in-house or cording to Bruno Rossignol,
third-party clearance and settle- spokesperson at German deposi-ment providers, cross-border trad- Continued on page 17
Bids Makes Block Trading ‘Democratic’
CEO Mahoney on dark
liquidity, NYSE joint venture
BY J.R. MAGEE
Timothy Mahoney saw his
first “dark” trade in June
1979 as a college intern at the
New York Stock Exchange. Mahoney, now CEO of Bids Trading,
was nervously running orders for
a more experienced trader when
he realized that he was putting
forth considerable effort to keep
his positions hidden so as not to
affect the pricing of the stocks.
“Dark orders as a tool have
been around for as long as people
have existed,” said Mahoney.
“What is happening now is that
it’s done in cyberspace.”
Mahoney’s dark liquidity alternative trading system (ATS), which
Timothy Mahoney
began operations about a year ago,
targeting institutions seeking to
move large blocks while minimizing market impact, has been growing steadily—its total volume in
2007 was 2.34 billion shares. Average daily volume for the year was
12. 8 million shares, rising to 17. 6
million in the fourth quarter.
Continued on page 19
ASSET SERVICING: A voting confirmation service from HSBC Securities Services and Computershare
ensures that shareholder votes are
recorded accurately. PAGE 12
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On the Web
Nasdaq launches options market; NYSE will offer reserve
orders for electronic entry.
See Breaking News at:
www.securitiesindustry.com.
Wall Street Expanding Virtual Horizons
BYMARIATROMBLY stead of deciding to store data in lo-
Virtualization, in one form or cation #84AF, a user could enter a
another, has been around al- command—LET NAME$= “John
most as long as computers. When Smith”—and allow the compiler to
the term arose in the 1960s, it re- decide where NAME$ would be
ferred to the partitioning of main- stored. Shortly after, disk operating
frame computers. But virtualiza- systems were invented: Users could
tion soon became a way to let peo- assign file names to programs and
ple stop worrying about the inner data; the operating system figured
workings of their hardware. out where to put them.
In the earliest days, to put some- Without an OS, you would have
thing in a computer’s memory you to manually track files’ locations, not
needed to know the physical loca- to mention be sure to leave plenty of
tion of every byte of storage. Then room between them—if you add data
virtualization tools came along. In- Continued on page 16
