TECHNOLOGY
PAGE 14
The 4 Key Phases
Of Server, Storage
Virtualization
VOLUME 21 NUMBER 13
JUNE 15, 2009
DERIVATIVES p. 8
A Call For CDS ‘Liquidity’ Test
OPERATIONS p. 10
5 Ways Tech Can Cut Buy-Side Costs
RISK p. 17
Are There Real-Time Solutions?
TRADING p. 18
How To Speed Trades, Lower Cost
Online Brokerages
Split On Benefits
of ‘Flash’ Orders
SIFMA
PREVIEW
Fidelity Makes
Push Into Prime
Brokerage
By John Hintze
TWO OF THE LARGEST
online brokerages—Charles
Schwab and TD Ameritrade
—are divided on whether the
exchanges’ programs to flash
orders briefly to dark liquidity
providers before routing them
to other exchanges helps or
hinders their businesses and
the long-term effects on their
retail customers.
At the same time, two other
major financial-industry play-ers—electronic trading powerhouse Getco Inc. and the Securities Industry and Financial
Markets Association (Sifma)—
CONTINUED ON PAGE 6
By Gregory Bresiger
FIDO IS GROWLING, SHOWing his teeth and ready to eat
the lunch of some much bigger dogs.
Fidelity, familiarly known
as Fido, is a relatively small
dog in prime brokerage, but it
is moving aggressively to re-
cruit hedge fund clients. The
latest step is the appointment of a former Goldman
and Citigroup executive.
Thomas Tesauro has
been named executive vice
president of the Prime Services
Securities executives, despite tight spending limits, will attend this year’s Sifma conference
unit, which is part of Fidelity
FOCUS: MANAGING BETTER DESPITE CUTS
eying risk management software, cloud computing services, alternative trading systems, virtu-
Capital Markets, the institu-
alization platforms and other strategic purchases.
FULL STORY ON PAGE 9
tional trading unit of Fidelity
Investments.
securitiesindustry.com
a SourceMedia brand
Failure Isn’t An Option for
Franklin Templeton
By Chris Kentouris
CLEANING UP A TRANSACtion that fails to settle on time
can cost anywhere
from a few hundred
dollars to a few thousand depending on
its complexity and whether it
takes several hours or several
days to resolve.
The cost of such failures
can be significant for a fund
manager such as Franklin
Templeton Investments, the
San Mateo, Calif., global fund
manager with $421 billion in
assets under its roof. About
a half a percent of the 68,000
equities transactions it executes each month fail to settle
on time. In addition,
about two percent
of its 13,000 fixed-income transactions
don’t settle up on time.
Officials at Franklin Templeton declined to specify their
cleanup costs, but other fund
managers who spoke with
Securities Industry News on the
condition of anonymity say
they allocate at least $10,000 a
month in labor costs, fines and
other fees to fix failed trades.
“I would definitely give
Like many fund managers, Fido a try because they have a
Franklin Templeton relies on a strong reputation for financial
central matching service from stability,” says William Fleck-Omgeo called Central Trade enstein, a Seattle-based hedge
Manager to acknowledge fund manager and the presi-the details of a trade with its dent of Fleckenstein Capital.
broker dealers and custodian Although he says he is happy
banks. But that doesn’t always CONTINUED ON PAGE 8
prevent a trade from failing to
CASE settle. Broker-dealers might STUDY not have delivered the securi- ONtheWEB
securitiesindustry.com
ties or custodian banks might
have received the wrong set- Why Valuation Is More Than
tlement instructions. Making A Mark
In February, Franklin Templeton opted to ease its burden
with an online service called
FailStation, which aggregates
information on all failed trades
DTCC Lobbies For Trade
Warehouse As Central OTC
Repository
ISLA Seeks Comments On
and puts them at the fingertips
Central Counterparty Service
of investment managers on a
CONTINUED ON PAGE 21
