SPECIAL REPORT
Complex Event Processing:
Brokers Embrace CEP
Tech for Real-Time Risk
PAGE 12
VOLUME 21 NUMBER 10
MAY 4, 2009
COMMENT p. 4 OPERATIONS p. 8 TECHNOLOGY p. 18 RISK p. 20
Is the industry ready for the swine flu? Buy side demands more detailed TCA LiquidPoint beefs up options tool Buy-side firms overhaul risk systems
Large Pension Funds Trimming
Broker Lists to Bolster Service
By John Hintze
THE TEACHER RETIREment System of Texas (TRS)
is taking steps to categorize
its broker-dealers according
to the level of service they
provide, reflecting a growing
emphasis among institutional
investors on reevaluating—
and paring—the brokers they
work with.
Last fall, TRS, which had
$70.6 billion in assets under
management at the end of
February, sent out a questionnaire to broker-dealers seeking details about the firms. It
asked about trading histories,
capitalization and compliance
records, and requested copies
of documents including their
most recently audited financial statements, licenses, registrations and certifications.
The questionnaire is part
of a process at TRS designed
to identify brokers with which
it wants to develop a stronger
relationship. “To maximize
trading performance, TRS will
provide greater leverage of our
key strategic partners,” said
Claudia Williams, senior director of trade management.
TRS is not alone among
large pension funds in reexamining its executing brokers
—coveted relationships in the
broker-dealer community. The
California Public Employees’
Retirement System (Calpers)
implemented a similar program earlier this year. In an
April 20 presentation to the
fund’s investment committee, Calpers staff said that its
number of active brokers has
dropped from 78 to 30 since
the program started.
CONTINUEDONPAGE16
Q
&A
PITT: SEC CAN OVERCOME CONSTRAINTS
Former SEC chairman Harvey Pitt says there are a number of
ways the Securities and Exchange Commission can be more
efficient—and more effective—in spotting fraud and other
violations.
FULL STORY ON PAGE 10
Industry Struggling
To Meet New
Cost-Basis Demands
By Chris Kentouris
FINANCIAL FIRMS ARE VOIcing concerns about the operational and systems changes
required to accommodate the
Internal Revenue Service’s new
cost-basis reporting mandate,
which will be phased in beginning in 2011.
To prepare, broker-dealers, banks, mutual funds and
transfer agents will need to
update an array of front- and
back-office client interfaces,
securities masterfiles, tax-lot
accounting systems and reporting platforms.
When a firm’s client buys
a security, the shares are assigned a tax-lot number. Under the new rules, “major
IT changes will be required
for firms to capture the tax
lots of securities purchased
through trading and dividend
reinvestment plans and keep
them appropriately updated,”
CONTINUEDONPAGE17
Speed Trumps ‘Virtual’ Savings at Credit Suisse
By Tom Steinert-Threlkeld
WHILE OPERATIONAL AND
capital savings were the initial drivers behind Credit Suisse’s four-year-old
effort to create a virtual infrastructure,
the Zurich-based financial services firm says the
real payoff is increased speed
and agility.
Credit Suisse in 2004 an-
nounced plans to spend $100
million on a new applications
development, securities operations and data center facility
in Raleigh, N.C. But
the center never got
built. Instead, the
firm opted to find
ways to manage the growth
of its trading and other operations within its existing IT infrastructure.
ONtheWEB
securitiesindustry.com
Risk Mitigation Tops DTCC
Agenda
CASE
STUDY
That meant Credit Suisse
had to accelerate its move
into the virtual world, where
physical servers, storage devices and communications
channels get chopped up and
the pieces managed as virtual
machines. Turning all computing resources into virtual
resources was the only logical path to meet a “real-world
CONTINUEDONPAGE21
FICC Plans August Launch
for MBS Central
Counterparty Service
DTCC Ends Merger Talks
With LCH.Clearnet
