SPECIAL REPORT

ENTERPRISE DATA MANAGEMENT:
Can Semantics
Repository Bring Order
To Information? PAGE 10

VOLUME 21 NUMBER 6

MARCH 16, 2009

TECHNOLOGY p. 4
4 cost-cutting keys for asset managers

OPERATIONS p. 8

Class-action surge tests firms

TECHNOLOGY p. 9

Lime weighs option-router launch

DATA MANAGEMENT p. 11

BNY Mellon’s unique data education program

Has Hedge
Fund Regulation
Hit a Wall?

By Carol E. Curtis

THE HEDGE FUND INDUSTRY has largely accepted regulation as inevitable, and legislators have called it a priority, but despite the apparent momentum, there is little to indicate that federal oversight will become a reality anytime soon.

Prompted by risk concerns highlighted by scandals and the financial crisis, Congress has introduced several bills addressing hedge funds. While the two main measures each take different ap-proaches, neither is given much chance without key players signing on. Yet to make their positions

CONTINUED ON PAGE 18

CASE
STUDY
Tech Focus
Drives TMX
Expansion

LSE deal one of many efforts, says CEO Kloet

BLACKROCK GEARS UP FOR CREDIT SWAP OVERHAUL

As regulatory and industry initiatives reshape the credit default swaps sector, asset management firm BlackRock is adjusting its Aladdin technology platform to accommodate the changes.

FULL STORY ON PAGE 21

securitiesindustry.com a SourceMedia brand

One Year After Bear’s Collapse,
JP Morgan Reaping Benefits

By John Hintze $15.4 billion to $5.6 billion and JP JP MORGAN CHASE & CO.’S Morgan’s investment banking di-acquisition of Bear Stearns may vision lost $1.18 billion. In a Feb. not have helped its profits last 26 presentation to investors, Black year, but prudent risk manage- noted that “de-risking” Bear ment, a relatively strong balance Stearns’ positions took a greater sheet and the rapid integration of toll than anticipated. Had the deal legacy platforms has strengthened not been done, “the heritage JP its customer-facing businesses Morgan investment bank would such as prime brokerage and cor- have shown a modest profit for respondent clearing. the year,” he added.

According to Steve Black, co- The Bear purchase— an-head of investment banking, JP nounced last March and com-Morgan’s fee revenue fell by 11 per- pleted May 31—took its toll on cent last year—from $6.6 billion in employees as well. Black noted 2007 to $5.9 billion—compared to that the deal added 11,000 em-the industry average 35 percent. ployees to JP Morgan’s original

Net income dropped from 28,000, which is the headcount

the bank had returned to by February. Bear Stearns staffers likely took the brunt, especially those involved in fixed income and derivatives—areas that ultimately caused the firm’s downfall.

But given that Bear’s operationally intensive prime brokerage and correspondent clearing arms were well respected, it’s no surprise that Louis Lebedin, who headed up Bear’s prime unit, and Joe Triarsi, who co-headed broker-dealers services, have stayed on at JP Morgan in nearly equivalent positions.

In fact, many of Bear’s prime brokerage and clearing clients were relieved when the agreement was announced. And non-clients may also have viewed it

CONTINUED ON PAGE 17

By Alexa Jaworski

TMX GROUP, AS REFLECTED by a derivatives platform deal with the London Stock Exchange (LSE), has been moving quickly on the technology front since it was formed last May by a merger of the Toronto Stock Exchange (TSX) and Montreal Exchange.

In a partnership announced last week, TMX licensed Sola— trading technology developed

by the Montreal Tom KLOET Exchange (MX)—to LSE for use in its EDX London derivatives exchange. The Canadian exchange operator says it is also in negotiations to acquire a stake in the London venture.