OPERATIONS p. 4 TECHNOLOGY p. 7 COMPLIANCE p. 8 MESSAGING p. 18

Is the Cusip Service Bureau too transparent? Marathon bolsters risk and reporting Securities enforcement cracks down Could trade messages unravel Madoff fraud?

Investment Firms
Avoid Merger
With Operational
Joint Venture
CASE
STUDY
PHLX Veterans
Plan New Venue
In Crowded
Options Market

By John Hintze

IN AN ATTEMPT TO BUILD scale while retaining their independence, Roanoke Asset Management and Abner Herrman & Brock have formed a joint venture to share information technology infrastructure and cut operational expenses.

“The joint venture gives us the ability to pare our cost structures,” said Howard Abner, chairman of investment advisory Abner Herrman, which has more than $500 million in assets under manage-

CONTINUED ON PAGE 20

securitiesindustry.com a SourceMedia brand

IT Improvements Could Be

Key to Hedge Funds’ Survival

York Capital CTO details technology initiatives

By Chris Kentouris

AS SCANDALS AND SHRINKing assets take their toll on hedge funds, strong operational controls and technology will be key to survival, according to Gary Maier, chief technology officer of

York Capital Management.

For most firms, of course, improvements will need to come amid budget cutbacks. Global IT spending by hedge funds will fall 20 percent this

year, to $1.35 billion from $1.7 billion in 2008, estimates Celent. Unless they are faced with a collapsing platform, funds likely

will postpone acquiring

Q

or replacing large-scale

&
A

systems in 2009, says the research firm.

But York Capital, a global, multi-strategy fund with $9 billion in assets under management, is in the process of launching just such a system—York for Information, or Y-FI, a proprietary portfo-

By John Hintze

SEVERAL FORMER PHILAdelphia Stock Exchange executives are planning to start an options exchange and have begun soliciting support from liquidity providers.

According to sources with knowledge of the initiative, former PHLX vice chairman John Wallace is involved, as are at least two other executives from the Philadelphia options venue, which was purchased by Nasdaq OMX Group last summer. Wallace, a longtime PHLX market

FULL STORY ON PAGE 25

participant who twice served
as chairman during the 1990s,
declined to comment. Wallace
lio management platform that left the Philadelphia exchange
ties together functionality from following the acquisition, said a
both third-party and in-house Nasdaq spokesperson.
software. That initiative, along Representatives from three
with a new Hong Kong office, major options market makers
telecommunications efforts and and one of the largest order
data center upgrades, have kept providers said last week that
Maier busy since he joined the CONTINUED ON PAGE 24
firm in July 2007.

Previously, Maier, who has 20 years of IT experience, spent about four years as CTO of Five Mile Capital Partners, a fixed-income alternative asset manager in Stamford, Conn. He has been head of financial services at middleware systems provider Iona Technologies and a managing director at KPMG, where he focused on enterprise integration. As VP

METADATA DRIVES EFFICIENCIES AT BMO FINANCIAL

BMO Financial’s metadata management program ensures that every unit of the firm understands the information it stores, where it is located and how to use it.