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Messaging Harmonization Moving Forward
FIX, Swift, FpML plan A Blueprint for Standards Cooperation
for cooperation revealed
BYJOHNSANDMAN
Since its emergence nearly three
years ago, the so-called standards road map has been known by
several names, but the general concept has remained the same: harmonization of the FIX protocol,
Swift messaging standards and the
financial products markup language, or FpML.
Now dubbed the business investment road map, the plan calls
for increased cooperation between
FIX Protocol Ltd. (FPL) in the
pre-trade and trade space for equities, fixed income, foreign exchange
and listed derivatives, Swift in clearing and settlement, and
FpML.org—part of the International Swaps & Derivatives Association (ISDA)—for over-the-counter derivatives. The International Securities Association for In-
As Brokers Gain
Mutual Fund Clout,
Directors Look to
Increase Oversight
BYCAROLE. CURTIS
As power shifts to the broker-dealers marketing mutual
funds, industry executives are increasingly focused on trading costs
and the need for greater oversight
of traders by fund management. As
a result, the Securities and Exchange Commission is preparing
guidance for fund directors on evaluating portfolio trades, the importance of best execution and how to
determine if commissions are reasonable.
The emphasis is moving from
manufacturing to distribution as
p18 the mutual fund industry matures,
p18 growth slows and funds become
ever-more reliant on fee-based broker-dealers to market their wares,
said panelists at an April 17 meeting of the Mutual Fund Directors
Forum in Washington, D.C. Brokers “know the clout they have, and
have increasingly asked for more
and more [fees] to get the product
Continued on page 16
APRIL 28, 2008
NEWS DESK
Tokyo Commodity Exchange opts
for Nasdaq trading platform; Al-
phacet taps OneMarketData; Port-
ware links to Chi-X. PAGE 3
PERSPECTIVES
COMMENT: Many financial firms are
taking a cautious approach to IT
spending. Financial Insights’ Sean
O’Dowd highlights ten initiatives
he says can improve competitive-
ness and position them for future
success. PAGE 4
ORIGINAL SOURCES: NYSE Euronext chief executive Duncan
Niederauer says that streamlining
the regulatory structure could go a
long way toward addressing the international “crisis in confidence” in
the U.S. capital markets. PAGE 6
Source: Swift
DEPARTMENTS
TRADING: : For firms trading 5 million shares daily, the ISE Stock Exchange is raising its rebate to post
limit orders. “We’re looking to at-
tract greater liquidity,”
says exchange head Andrew Brennar, “and we
feel a $0.0035 per-share
rebate is very attractive.” Meanwhile, Nasdaq is making
it easier for members to reach top-tier pricing status. PAGE 14
stitutional Trade Communication
(ISITC) will be responsible for establishing best practices, and occasionally contributing messages.
Though the four groups were
expected to jointly issue the plan,
it surfaced at an ISITC conference
in March and was discussed again
at the Swift Operations Forum for
the Americas (Sofa) in New York
earlier this month. Sources at FPL
said they were unaware that Swift
was going to present the road map
and were anticipating launching the
program at the FPL Canadian
Electronic Trading Conference in
Toronto on May 5.
“Standards are something nobody likes to talk about but, ultimately, we have to discuss them,”
said Joshua Derrick, manager of
trading standards in Swift’s standards department, at Sofa. “It’s
Continued on page 18
Trade Reporting
Proposal Could
Burden ECNs
BYJOHNHINTZE
In a move that may raise costs
for electronic communications networks (ECNs) and
their customers, the Financial
Industry Regulatory Authority
(Finra) has proposed that over-the-counter execution data that
had previously gone unreported be supplied to the self-regulatory organization (SRO).
The result could be one less
trade reporting facility (TRF).
The industry appears to support the general intent of the
proposal, issued April 17, to
clarify ambiguous and outdated trade reporting rules that explain which types of transactions must be reported to Finra.
Under the proposed rules, the
Continued on page 17
TRADING: Emergent Trading Solutions aims to automate options execution by providing a single hosted pricing interface and model.
PAGE 8
DATAMANAGEMENT: Dow Jones acquires a provider of business intelligence tools and establishes a new
unit in its Enterprise Media Group.
PAGE 9
TRADING : An array of new European venues are likely to attract liquidity but make order-routing increasingly complicated. PAGE 10
TRADING : The Direct Edge electronic communications network is
preparing to file for two exchange
licenses. PAGE 17
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Company Index
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On the Web
Fidessa launches liquidity-access
offering; the SEC previews its
proposal to revamp Rule 12b-1.
See Breaking News at:
www.securitiesindustry.com.
Dark Pool Upgrades at Credit Suisse, Pipeline
BYKATHERINEHEIRES fering state-of-the-art processors Finder’s software, speeding up
In response to demands for and significantly more memory. operations by eliminating steps.
heightened performance, two “They are about four times as pow- Previously, when an order came
well-known dark liquidity destina- erful,” said Galinov. in it had to pass through an in-tions—Credit Suisse’s CrossFinder The changes come at a time ternal execution management
and Pipeline Trading Systems—have when competition is heating up system and a smart-order router
been bolstering their technology. among the many sources of non- before reaching CrossFinder.
Over the past six months, Cred- displayed liquidity, as venues seek Now, a FIX-based server sends
it Suisse Advanced Execution to grow their user base and differ- orders directly to the matching
Strategies (AES) has adjusted or up- entiate their offerings. According engine. The FIX servers are
graded CrossFinder’s servers, soft- to Tabb Group, there are more than also aware of the available liq-ware, processing capacity, and mes- 40 dark pools and broker-run cross- uidity—essentially, the match-saging and collocation capabilities. ing networks currently in operation. Continued on page 15
Dmitri Galinov, director of liquid- CrossFinder, which opened in
ity strategy at AES, said the dark 2004, saw its average daily volume
pool has gone from two to eight rise to 92 million in February, up
servers, with the new machines of- from 76 million in January, according to Tabb Group’s Liquidity Matrix.
As a result of the server upgrade,
the crossing network can now handle 4. 5 billion shares on a given day,
“and we haven’t even hit 50 percent
of our capacity,” said Galinov. A recently implemented internal messaging platform from Chicago-based 29West has produced only a
slight improvement in speed but
lets the network handle significantly
greater message volume.
Fred Federspiel AES has also enhanced Cross-
