RISKY DATA

Inconsistent Identification of Companies Increases Systemic Risk. Here’s What To Do About It. PAGE 16

HOW WALL STREET OPERATES

Volume 21 Number 20 • September 21, 2009

UPTICK p. 3

Getting Past the 100-foot Cable

TRADING p. 6

Turning News Into Numbers

OPERATIONS p. 11 After the Bomb

TALENT p. 20
Avoiding the Long Ring Finger

‘Maker-Taker’
Fees Losing
Out on Options
Markets

MARKET RULES

More or Less:
Some Assets Will
Get More Than
One Price

By John Hintze

TWO OF THREE OPTIONS exchanges offering the “ maker-taker” fee model, which fueled the growth of electronic equity markets by incenting trading firms to provide aggressive quotes, have opted instead to focus on the tried and true formula that instead pleases retail and institutional investors.

The Boston Options Exchange (BOX) and Nasdaq Options Market (NOM) have decided in the last six weeks to move away from the maker-taker model, in which trading firms get paid rebates for “making” liquidity by posting limit orders. Retail or institutional investors, known as “customers,” instead pay fees for “taking” liquidity from those markets.

BOX and NOM accounted for 49 percent of the 100 million options contracts that were traded on the maker-taker model in the first quarter

By Carol E. Curtis

TWO YEARS AGO, RBC Correspondent Services and RBC Advisor Services, wealth management units of Minneapolis-based RBC

Capital Markets, faced a CONTINUED ON PAGE 8

FULL STORY ON PAGE 18

TRUTH ... OR CONSEQUENCES
Email indicates UBS sold Pursuit
Partners $35.6 million worth of “crap”
derivatives. The cost of hidden messages.

RBC Capital Markets: Embracing “The Big I”

strategic dilemma.

The divisions support ad-vice-giving financial consultants, brokers and registered investment advisers (RIAs). Technology is critical to these advisers, whose success depends on charting and executing a course of action for their clients, explaining it simply and effectively, and tracking its progress.

“At the end of the day, [the advisers] need to understand the client,” says Craig Gordon, director of RBC Correspondent Services and

RBC Advisor Services. “Our strategic view of how technology can support that [is that] we think about technology as making investment advisers work more effectively.”

Key to that effectiveness is managing records on client accounts as well as contact information, tracking current assets and investments, planning the allocation of available funds to different types of assets, analyzing client holdings and executing on a

CONTINUED ON PAGE 21

CASE STUDY

By Chris Kentouris

AN ASSET-BACKED SECUrity is trading at a price of $100. Suddenly, the market freezes and only a handful of transactions take place. The last one is for $20.

One fund manager prices the security at $20 and yet another one using projected future cash flows and taking into account the somewhat illiquid market picks $60 as the correct price. Each fund manager discloses the price of the asset on a financial report.

Sounds fair enough. But the Financial Accounting Standards Board, the standards setter for the U.S. accounting industry, is now proposing that firms disclose not only how they came up with their valuations for such a hard-to-price asset, but a range of fair values they