TECHNOLOGY

PAGE 20

VOLUME 21 NUMBER 15

JULY 6, 2009

COMMENT p. 4

MiFID: Get Priorities Straight

DATA MANAGEMENT p. 20

Options Exchanges Go With Equinix

STANDARDS p. 21
Avox Pushes New Business Entity ID

DATA SWEEP p. 22

Taking Contol Of Spreadsheets

Banks Say Upgrade Repo Clearing, Don’t Centralize It

By Shane Kite

BANK EXECUTIVES ARE urging voluntary adoption of tougher margin requirements for risky assets and predetermined protocols for liquidating collateral in the repurchase, or “repo,” market to blunt any effort by regulators to propose a central clearing utility for the short-term financing industry.

A central clearinghouse could replace the use of two banks that currently clear the massive market – Bank of New York Mellon and J.P. Morgan Chase.

In return for putting up more collateral, dealers say they want more certainty, if

securitiesindustry.com a SourceMedia brand

not a guarantee, that their credit agreements will remain, even in times of stress.

“If you thought as a dealer that you could get some certainty in these terms, you might be willing to post more cash or margin,” said a repo exec at one of the top investment banks.

In the overnight repo market, firms trade Treasuries and other securities for cash and repurchase them the next day. Without access to the overnight loans, a broker-dealer cannot survive. A clearing bank facilitates the exchange of the securities and cash.

The Federal Reserve has been assessing ways to bolster the overnight financing industry’s resilience after it ground to a halt several times last year. Fed Chairman Ben Bernanke suggested in March considering central clearing for repos, given the market’s “magnitude” and “vital impor-

CONTINUEDONPAGE18

SPECIAL REPORT

7-STEP SURVIVAL GUIDE

Improving operations and saving money are now every bit as important as making money on smart trading strategies. Here’s a seven-step prescription for profiting while financial markets struggle. COVERAGE BEGINS ON ON PAGE 8

Firms Find More
Uses For CEP,
But Lack Of
Standards
A Concern

By Katherine Heires

COMPLEX EVENT PROCESSing technology appears to be growing up and moving far beyond its original focus as a development platform for algorithmic trading.

The latest sign: On June 23, CME Group, the Chicago-based derivatives exchange, chose to deploy StreamBase Systems’ complex event processing (CEP) software to help it tackle the massive quantities of real-time streaming data associated with the pricing and settlement of derivatives —specifically options pricing for now – but with the potential for usage in the real-time pricing of a broad range of products.

CONTINUEDONPAGE16

By Maria Korolov

Enterprise Risk Management: Getting Holistic

THE RECENT FINANCIAL crisis has demonstrated that securities firms need to change the way they approach risk, needing now to consider a wider variety of economic scenarios and to evaluate risk in an enterprise-wide holistic way

To date, most securities firms have focused on segments of risk, said Richard

Thornton, a manager with the London-based PA Consulting Group, including risk adjusted return on capital, risk adjusted return on risk-adjusted capital and return on equity.

“However, the credit crunch has highlighted that these approached do not work under stress conditions and fail to take into account internal systemic risks and correlation

risk across portfolios,” he said. “They also generally fail to address funding and liquidity risks and their impact across the group.”

Despite an abundance of limited solutions, and risk dashboards, there aren’t yet any true enterprise risk management systems on the market, said Jim Deloach, man-