www.securitiesindustry.com

^SEPTEMBER ^29, ²⁰⁰⁸^Placing ^Blame^N“^It ^appears ^that^EWS ^D^ESK^Lawmakers: ^ARS ^a ^FinancialSecurities Technology Analysis Cen- On Naked Shorts, ^unbridled ^short_{er issues} _benchmark _specs _for _mar-‘Roach Motel,’ Problems Remain _selling _is _contributing

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^ket ^data ^technology; ^Nasdaq ^signsMOU with Ho Chi Minh exchange. BYCAROLE. CURTIS ulators Sept. 18 that while progress SEC Overlooks to the recent, sudden

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PAGE 3 ast week’s standing-room-only has been made in restoring liquid- _Reg _SHO _Issuesprice declines in _P_ERSPECTIVESL _House _Financial _{Services ity} _and _returning _money _to _in-_the _securities _of

_COMMENT:_After _the _bailout _plan _isCommittee hearing on the Trea- vestors, major steps need to be _finalized, _legislators _will _begin _tak-_sury _{Department’s} _bailout _{plan taken} _on _the _regulatory _and _en-_BYJOHNHINTZE_financial _institutions

^ing ^a ^long, ^hard ^look ^at ^the ^regula-^stood ⁱⁿ ^marked ^contrast ^to ^{one forcement} ^fronts ^to ^guard ^{against he} ^Securities ^and ^Exchange^unrelated ^to ^truetory regimes of the past. But as the _saying _goes, _you _can’t _step _twice _inheld days earlier on auction rate se- conflicts of interest, maintain the T Commission has banned _REGISTER _NOW!price valuation.” _the _sa_S_m_E_e _r_C_ive_O_r._{N D} _{A N N}_P_U_AGE_A₄_L_curities _(ARS). _Playing _to _{empty fiduciary} _obligations _of _{broker-deal- short} _selling _for _nearly ₉₀₀ _finan-_Call _Joe _Frega _at_{—Securities} _and _ExchangeSe_curitise_eats, t_she c _Tomm_eittee_cadd_hressed the ers an

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₂d₁p₂r_-e₈v₀e₃n_-8t₃s₄im₈ilar meltdowns. cial services securities—at least until _Commission,ORIGINAL SOURCES: The SEC’s re- collapse of the $330 billion market, “A duty must be imposed on the Oct. 2—and issued other emer- Sept. 19 emergency order

strictions on short selling could “re- _sult _in _market _{inefficiency,} _reducedwhich save for the economy-shak- seller to be aware of the circum- gency orders cracking down on il- _liquidC_ity, _ano_d _inhn_ibit f_thee_pricr_e _de_is-ningceveents of recent weeks would stances of the buyer,” Massachu- legal short sales. However, the nies, whose prices can be more covery process,” says the Security still be front-page news. setts Secretary of State William agency’s own rules governing the easily manipulated.

Traders Association, which argues Committee members told reg- Galvin told the lawmakers. “There transactions may have helped facil- In the aftermath of the col-

that aggressive enforcement of Reg-

ulation SHO provisions is the most has to be much stronger regulation itate the recent financial stock sell- lapses of Bear Stearns, Lehman _effective _remedy._PAGE ₆related to conflict of interest. There offs, an issue market participants are Brothers and American Inter-

has to be a review of the products hoping to resolve. national Group, some of those

^D^EPARTMENTSthat are out there. The money Regulation SHO, the SEC’s critics are pointing to the com-

^COMPLIANCE: ^The ^trend ^toward ^in-could have been working in our rules governing short sales, became mission’s elimination in July of

creased cross-border cooperation _could _eventually _lead _to _EuropeanOCec ToOnoBmEyR, a6nd -7it, w2a 0s0n8ot available.” effective at tAhe cstoarmt opf 2 re00h5e. Cnsriitvices pthreougprtaicmk ruole n, which required

Union-wide regulation of the securi- _MILLT_Eh_Ne_NA_IUR_MS m_Ba_Rrk_Oe_At s_De _Wize_Ad _Yu_Hp _Oin _TEh_Lave long kcoemypilsasinueed sthcaot nRfergonetvie nrgy scho arpt istaalel to be entered at

ties industry. PAGE 7 February, triggering complaints SHO has no_mt b_ae_re_kn_es_tu_sffi_pci_re_ont _fl_ey_se_sn_i-_ona_ap_lr_sice higher than that of the ^NEfr ^Wom ^YOhu^Rn^Kdr^Ced^ITs ^Yof investors who forced and its loopholes allow for previous trade.

TECHNOLOGY: As handheld devices in Regulatory oversight _finasaid the securities were mislead- naked shorting—when a borrowed So far, the SEC has said lit- _Onci_ual _rser_Svic_pes_eco_am_ke_eun_rde_Fr i_anc_cre_uas_le_td regulatory scrutiny, vendors are re-^y ^Includes:ingly sold to them as cash equiva- stock is ne ver Rdieslkivemreadn. aTgheomseentlte about whether it might re-

leRaosibnegrtpLro.Dd.uCctoslbtoy ease GracleenBt.sV.oAgesl of Sept. 16, Wall Street complaints have_Ot_pyp_eic_raal_tl_iy_oc_ne_an_lte_er_fe_fid_cii_en_nst_ca_yte the rule, but it did im- co

D^mep^pu^ltⁱy^anD^ci^erec^cto^orⁿD^ceiv^riⁿs^sio^.n of Trading and Markets _Vicefi_Pr_rm_ess _ideh_na_t,v_Me _ea_mg_br_ee_re_Rd_egi_un_lap_tir _oi_nnciple to on the less liquid, or hard-to-bor- pose Rule 10b-21, which applies ^WSE^itC^hU^tR^hI^eTI^tE^eS^chAⁿN^oD^loE^gX^yCⁱⁿHANGE COMMISSION ^William ^Galvin

_FINRA New & emerging technologies _the _marketplace, _says Continued on page 15 row, securities of smaller compa- to naked short selling. In the Onset’s Patrick Corr, Transaction cost Saenpat.ly2s3isFederal Register, the “firms will have^Rt ^oo^bb^He^er^ge^aa^rd^tyy to answer Keith White

Vice President, Information Technology Risk ^Data ^managemen^co^t^mmission ^said, “^We ^intendwhen regulatorMsaasnka,g‘WinghDyidreidcnto’tr you ^{DOL Guidelines} Point-in-Time Cross Upstart Sees

CREDIT SUISSE Securities exchan^thg^ee^sest^erⁿa^ht^aeⁿg^ci^ee^ds^delivery ^re-deploy the cont ^Tr^Ool ^Ws t^Eh^Ra^Gt ^Rar^Oe^Un^Pow avail- able ?’” PAGE 8 On Pension Plans’ Liquidity Opening, Challe

_Kevin _Lupowitz _En_vag_lue_ats quirements and the antifraud ^ing ^execur^tu^ioleⁿto impose powerful disin- _TECHNOLOGY_C_:_C_hi_M_ef_E_In_j_f_oi_r_n_m_s_a_th_tio_e_n_L_O_in_ffi_u_c_x_erValuation Practices: Mismi applying new technology to portfpoelio rfomrmaatcnhcieng _centives _to _those _who _might

Foundation, a LnIQoUnIpDrNoEfi Tt fHoOcLuDseINdGoSn, INC.Com_ing _Soon?_{BJ H}_otherwise _exacerbate _artificialfurthering the usage of the open- ^{Y OHN INTZE}_sourprice movements through w^cewowp.es^ro^au^tirⁿc^ge^sm^yse^ted^mia^.confer^Pe^An^Gc^Ee⁸s.com/SCT08 | 800-803-3424 | 212-803-8348

_p3alternative vehicles. However, new TL Ventures and Saturn Partners p15 regulations, if implemented, could in Boston, Mismi aims to bridge the ^Andrew ^Papandreadis^p15pile on the administrative workload gap between a portfolio manager’s

_Erisa _advisory _council M ismi, a point-in-time crossing network expected to naked short selling.”

STANDARDS & PROTOCOLS: Swift is _examines _plans’ _procedureslaunch by year-end, plans to pro- James Angel, associate pro- ^working ^with ^the ^Object ^Managementvide users with more effective tech-

Group on standards that will help ISO for hard-to-value assets ^Continued ^on ^page ¹¹20022 deal with multiple syntaxes. ^nology ^to ^execute ^{portfolio-wide}

SecurIndNews_COVER WRAP_p1.indd 1

_{PAGE 10}BYCHRISKENTOURIS trades. Though the concept is

The Department of Labor decades old, Mismi management

^TRADING ^: ^Buy-side ^firms ^may ^have(DOL) could soon begin sees it as ripe for revival amid grow-

grown more sophisticated, but they _still _derive _value _from _the _sell _side, _saywork on guidelines for how pen- ing concerns about information

panelists. _{PAGE 10}sion plan managers, or fiduciaries, leakage at continuous dark books.

▼

People in the News

Company Index

People Index

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On the Web

should value their investments in Funded by Philadelphia-based

and expenses for the plans. strategy to optimize returns and the

On July 15 and Sept. 11, a sub- trader’s goal to optimize executions.

committee of the 15-member Em- Its CEO, Andrew Papandreadis, is

Nasdaq pan-European platform ployee Retirement Income Securi- a crossing technology veteran—he

^launches; ^SEC’s ^emergency ^or-ty Act (Erisa) advisory council—led developed Instinet’s JapanCrossing

^ders ^test ^operations ^depart-_ments. _{See Breaking} _News _at:by Stephen McCaffrey, senior in 2000 and helped build a point-

_{www.securitiesindustry.com}_.counsel of power company Na- in-time cross for Burlington Capi-

Continued on page 12 tal Markets in 2003.

The first crosses were initiated

in the late 1980s by Investment

Technology Group (ITG) and In-

stinet, and their point-in-time, call-

auction structures were determined

as much by the state of technolo-

gy—often employing fax machines

Continued on page 14

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