www.securitiesindustry.com
JUNE 23, 2008
Transfer Agents to

NEWS DESK
Nasdaq readies a Market Replay up-
grade; London Stock Exchange
plans to bolster its electronic trading
platform. PAGE 3
PERSPECTIVES
COMMENT: Almost a year after the
crisis began, the financial services
industry is still waiting for strong
leadership to emerge. PAGE 4

Could Revamped NYSE Fix Fragmentation?
DTC: Not So Fast
Seeking lost liquidity, Big Board to transform market structure
Do proposed operational
changes overstep bounds?

Under the new

BYCHRISKENTOURIS

rules, “NYSE will do
the quoting and

ORIGINAL SOURCES: Recent events have exposed the vulnerabilities of the financial markets, says New York Fed CEO Timothy Geithner, making “a compelling case for a comprehensive reassessment of how to use regulation to strike an appropriate balance between efficiency and stability.” PAGE 6

U.S. transfer agents are battling with the Depository Trust Co. (DTC) over guidelines for their participation in a service that lets investors hold shares through direct registration.

send in the order
flow, so the
specialists will no

DEPARTMENTS

TRADING: Restricted Stock Partners is running a trading platform for bankruptcy claims, its second new illiquid market since the start of the year.

PAGE 8

ASSET SERVICING: JP Morgan expands its collateral management service for OTC derivatives with TriOptima’s automated reconciliation service. PAGE 8

Since DTC first proposed changes to the Fast Automated Securities Transfer (Fast) system in October 2006, it has filed three amended versions with the Securities and Exchange Commission. Over the past few months, transfer agents have responded with a flurry of negative comment letters sent to the SEC both individually and through the Securities Transfer Association (STA). The American Bankers Association has also voiced its disapproval.

BYJOHNHINTZE der to be put in place by year-end.
Abevy of proposed rule changes The larger questions may be
from the New York Stock Ex- whether the Big Board can per-
change, designed to accelerate au- suade Wall Street of the merits of
tomation while maintaining most its leap into 21st century trading
of the exchange’s distinctive char- and, if successful, the ultimate shape
acteristics, was applauded last week that its storied floor will take.
by brokers anxious for a solution to The hope, both for NYSE,
mend the fragmented U.S. market. which has seen its market share in
The extent to which NYSE’s listed stocks drop precipitously in
waning fortunes can be turned the last few years, and for investors
around may depend on how effec- seeking to execute large blocks, is —Todd Abrahall,
tively the new rules are imple- that the exchange will recoup some NYSE Euronext
mented, both in terms of necessary of its former depth of liquidity.
technology changes and its sales “We’ve encountered a tremendous
pitch to Wall Street. frustration among customers be-

longer act as agent.”

The latest version of the proposal, published June 17 in the Fed-

Continued on page 17

NYSE plans to begin making cause 40 other venues trading systems changes later this summer, NYSE stocks have caused enor-when the majority of its proposals mous market fragmentation, and are expected to receive regulatory customers feel they have to be in approval. In its June 11 filing with so many places to execute large the Securities and Exchange Com- trades,” said Doreen Mogavero, mission, to be published in the Fed- president and CEO of floor bro- eral Register within the next few kerage Mogavero Lee & Co. weeks, the exchange says that most Mogavero said her firm has of-of the changes will be effected in fered the ability to find the other side the third quarter, with the remain- of a trade through other floor bro-

kers or by working with specialists representing a security. While the effectiveness of a trad-er-driven market has been lessened by technology that enables faster trading speeds and regulatory mandates such as Regulation National Market System, “investors are clamoring for that kind of service again,” she noted.

STANDARDS & PROTOCOLS: Advancing efforts to bring standardization to distribution, FIX Protocol Ltd. releases a new version of its specification for algorithmic trading support. PAGE 10

Joint Solution for
Corporate Actions

However, returning liquidity to NYSE may be a tall order, given that the largest flow providers have either set up their own matching engines, often in the form of dark liquidity pools, or invested in competing platforms.

TRADING: SunGard links its FIX order routing network with MetaBit’s hub in Tokyo. PAGE 10

In XBRL and ISO?

BYCHRISKENTOURIS

TECHNOLOGY: Avistar Communications is introducing a real-time collaboration community for buy-and sell-side research staff.

Trading Metrics lets traders view their speed of executions.

Latency Testers Take Magnifying

XBRL International’s U.S. branch is talking with the Depository Trust & Clearing Corp. (DTCC) about establishing semantic interoperability between the extensible business reporting language and International Organization for Standardization (ISO) message types for corporate actions.

“The Wall Street firms who built the dark books have a disincentive to fix [NYSE], because they benefit from the fragmentation,” said Richard Rosenblatt, CEO of New York-based agency brokerage Rosen-

Continued on page 15

PAGE 12

TRADING: Quantitative Services Group’s analysis of Nyfix Milleni-um trade data demonstrates dark pool advantages. PAGE 13

Glass to End-to-End Performance

BYKATHERINEHEIRES that level or take a system- or net-

With trading firms dwelling work-wide view.
on the tiniest delays in “Performanceandlatencytesting
their systems, a growing number of is nothing new,” said Adam Honoré,
p3 technology companies are making a senior analyst at Boston-based Aite
p18 name for themselves by offering Group, “but these new services make
^p18tools that test, monitor and rate it far easier for people to do it. While
end-to-end latency in real time. testing across the board for latency
Testing service providers such levels has been lacking, now firms
as Corvil, Correlix and Trading have new products that can provide
Metrics argue that firms can’t ef- global oversight.”
fectively address latency issues un- A slew of next-generation la-
less they can examine their perfor- tency testers had their products on
mance at the most granular level. display at the Securities Industry
Older or homegrown solutions, say & Financial Markets Association’s
the companies, can’t drill down to Continued on page 16