OPERATIONS
CEO Will Geyer
Leads JonesTrading’s
Latest Expansion
PAGE 11
VOLUME 21 NUMBER 12
JUNE 1, 2009
TECHNOLOGY p. 6
Citi’s Algo Uses Artificial Intelligence
DERIVATIVES p. 9
Why OTC CDS Market Won’t Go Away
TRADING p. 12
4 Habits Of Efficient Brokers
RISK p. 22
Big Jump In Securities Fraud
Will SEC Be Able To Enforce
Proposed Custody Rules?
By Carol E. Curtis
EVEN AS THE SECURITIES
and Exchange Commission
proposes new rules to
strengthen oversight of registered investment advisers
(RIAs), experts warn that the
agency may not be able to enforce them due to inadequate
staff and budget resources.
With 425 examiners to
cover 11,300 RIAs along with
8,000 mutual funds, the SEC
“has proven to be outmatched
by their sheer numbers,” says
Matthew Bienfang, senior research director at Needham,
Mass.-based Tower Group and
author of “Broker vs. Adviser
Regulation,” a report released
by Tower Group last month.
securitiesindustry.com
a SourceMedia brand
Still, the SEC has not been
shy about touting its new proposals as measures that “
substantially increase protections
for investors” who trust their
money to investment advisers. The proposals, approved
by the agency on May 14, aim
to tighten reporting requirements for investment advisers
who have legal custody of clients’ assets.
They mandate an annual
surprise exam for all registered investment advisers who
have the authority to withdraw
securities or funds on behalf of
their clients from institutions
which have physical custody
of the assets. The exam would
apply to about 9,600 advisers,
according to SEC Chairman
Mary Schapiro.
The rules also require all
physical custodians to send account statements directly to
the owners of the assets, rather
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TECHNOLOGY
REPORT
GETTING STREET SMART
Securities firms are increasingly utilizing business intelligence
and analytics to model investments, value risk and analyze
their high-frequency trading strategies.
FULL STORY ON PAGE 8
Demand Stays
Strong For
Aggressive
Algorithms
By Katherine Heires
TRADERS’ APPETITE REmains strong for algorithms
which aggressively complete
transactions in the least
amount of time and as unobtrusively as possible, as prices
of securities continue to swing
widely on financial markets,
say both professional traders
and technology providers.
Use of algorithms that can
move rapidly to grab liquidity
found in either displayed and
non-displayed markets in fact is
on the upswing, say these traders and providers. This is leading to almost constant tweaking of the most aggressive
algorithms to take advantage
of changing markets, they say.
One example: The launch
in April of ITG’s Raider, cre-
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Why Cowen and Co. Moved Into The Cloud
ONtheWEB
securitiesindustry.com
By Bob Violino
KEEPING TRACK OF WORK
it performs for customers is key
to the success of Cowen and
Company.
So the New York-based provider of
investment banking,
sales and trading and equity
research services for corporations and institutional investors
has replaced an aging program
for managing relationships
with customers it developed
in-house, with one that it uses
“on demand.”
In so doing, its
salespeople now get
reports 60% faster,
even though the new
customer relationship management (CRM) application is hosted on someone else’s computers.
Cowen, in effect, has moved
CIA Looking To Hire Wall
Street Pros
CASE
STUDY
the administration of its interactions with customers into the
“cloud,” now using software
that is installed, maintained and
updated at a distant data center
and provided as a service by a
vendor, Salesforce.com.
Using software as a service means Cowen purchases
and pays for the use of the
software as it’s needed. The
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Princeton Financial Launches
Investment Compliance Data
Center
TowerGroup: New Reg
Structure Coming For
Investment Advisers
