www.securitiesindustry.com
FEBRUARY 16, 2009
NEWS DESK
Investment Technology Group
globalizes its execution manage-
ment system; Tibco Software
launches messaging hardware; and
more. PAGE 3
Swift Is Thinking Small
Securities head Church
says cost-efficiencies and
localization are priorities
PERSPECTIVES
GUEST COMMENT:
As compliance
officers are asked to do more with
less, Deloitte’s Michael Zeldin offers practices that can enhance a
firm’s effectiveness in guarding
against money-laundering. PAGE 4
ORIGINAL SOURCES:
With the Securities and Exchange Commission
coming under increas-
ing fire, the time has
come for the agency to
“answer its critics by
demonstrating its commitment to be the markets watchdog,” says commissioner Luis Aguilar. PAGE 6
BYJOHNSANDMAN
In a chilly economic climate, the
8,300-member Swift messaging
cooperative has been extending its
reach, says Chris Church, global
head of the organization’s securities division and CEO in the
Americas. Swift, which is headquartered in La Hulpe, Belgium,
has been bolstering its presence in
North America and elsewhere as
its “center of gravity is moving toward where our customers are,”
he explains.
According to Church, who
joined in August, “regionalization”
has been a priority at Swift under
Lazaro Campos, chief executive
since April 2007 and former head
of the banking industry division.
The Americas are “particularly important,” says Church, “because
of the growth opportunities that
exist in Canada, the U.S. and
South America. But all the regions
are important. It’s part of our strategy of reach.”
Bank Shakeups Recast
Correspondent Clearing
Joe Triarsi
Chris Church
VIEWPOINTS:
Financial firms must
address the risk management mistakes that helped fuel the current
crisis by embedding a new risk culture, which is a hard thing to put in
a manual, says Towers Perrin’s
Prakash Shimpi. PAGE 8
DEPARTMENTS
TECHNOLOGY:
A Thomson
Reuters hub lets enterprise instant
messaging users connect through
a single link. PAGE 10
That strategy also applies to the
type of clients Swift is pursuing.
Alliance Lite, a lightweight interface introduced in September, is
likely to draw low-volume firms
to the Swift network. “Later on
this year,” notes Church, “we think
smaller hedge funds will be users
of Alliance Lite.”
Church has maintained a relatively low public profile since taking over a post left vacant for more
Continued on page 14
Crisis shines spotlight
on widening services
BYJOHNHINTZE
Over the last several years, correspondent clearing firms
have broadened the services they
offer—an expansion that has been
welcomed by today’s cash-strapped
broker-dealers. But last year’s bank
implosions and government-assisted acquisitions are helping to
resculpt the clearing industry.
When revenues are tight, more
efficient operations become paramount. “Margins are under pressure, so you look to cut costs and
improve services to keep existing
clients and attract new clients,” said
Howard Abner, chairman of Abner
Herrman & Brock, an asset management firm that operates its own
broker-dealer. That approach, he
added, applies as much to clearers
as it does the brokers they support.
Abner’s Jersey City, N.J.-based
firm faced a choice last spring
when its clearer, Bear Stearns, was
rescued from imminent bankruptcy by regulators that arranged
its acquisition by JP Morgan
Chase & Co. Abner chose to stay
put. Since then the clearing unit
has received significant investments from its new parent and is
now part of one of the few major
banks that boasts capital strength
and a double-digit stock price.
TECHNOLOGY:
Derivix and Activ
Financial announce partnerships
that signal growing competition in
the options market. PAGE 10
CLEARING & SETTLEMENT:
European clearinghouses and depositories take steps to reduce post-trade
processing costs by improving
interoperability. PAGE 11
Legislators and
Industry Players
Struggle to Find
Common Ground
On Credit Swaps
Regulation on the Horizon,
Funds Automate Compliance
ronment, chose not to appeal.
Under the Hedge Fund Transparency Act, fund managers
would not be subject to all of the
rules and regulations that apply
to mutual funds but would need
to file an annual disclosure form,
making detailed information publicly available. They would also
have to maintain books and
records for the SEC and cooperate with information requests and
examinations.
But beyond having a chief
compliance officer (CCO) in
place, or assigning the functions
to a COO or CFO, setting up
and documenting compliance
processes could be the most
burdensome—and costly—task.
Continued on page 12
BYCHRISKENTOURIS
With hedge fund regulation
viewed by many as a near
certainty, fund managers are turning to an array of technology offerings and consulting services to
cope with the anticipated rules.
Charles Grassley, R-Iowa, and
Carl Levin, D-Mich., introduced
a bill in the Senate late last month
that would require hedge fund advisers with more than $50 million
in assets under management to
register with the Securities and
Exchange Commission. An earlier bid by the SEC to impose a
registration mandate was overruled by the U.S. Court of Appeals for the District of Columbia Circuit in 2006. The commission, in a very different envi-
Correspondents of Bank of
New York Mellon Corp.’s Pershing subsidiary and Broadridge Financial Solution’s Ridge Clearing
& Outsourcing Solutions may feel
similarly confident, at least for now.
Broker-dealers clearing through
Merrill Lynch & Co.’s two clearing units—Broadcort and Merrill
Lynch Professional Clearing—
could have more concerns, given
that the firm’s new owner, Bank of
America Corp., has seen its stock
price drop precipitously since mid-January. The Charlotte-based
banking giant, which declined to
comment for this article, was
TRADING:
European market participants did less of their fixed-income trading electronically in
2008, says Sifma. PAGE 11
Continued on page 9
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People in the News
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On the Web
Asset Control, Avox team on
business entity data; IRS seeks
input on cost-basis reporting.
See Breaking News at
www.securitiesindustry.com.
BYSHANEKITE
“You can’t eat credit derivatives,” said Rep. Collin Peterson, chairman of the House
Agriculture Committee. It was one
of several memorable utterances
at two tense hearings earlier this
month, as key industry players and
legislators sought to build consensus on the future of credit default swaps (CDS).
Peterson, D-Minn., who last
week introduced the Derivatives
Markets Transparency and Ac-
Continued on page 14
