DATA MANAGEMENT
Thomson Reuters goes
head-to-head-to-head
with Dow Jones and
MSCI Barra in indexes.
PAGE 8
HOW WALL STREET OPERATES
Volume 21 Number 21 • October 5, 2009
UPTICK p. 3
The More Things Change ...
NEWS DESK p. 4
FINRA Faces Fee Fury
RISK p. 16
New Model Sought for Ratings
DATA SWEEP p. 22
Volatility Down, Volume Up
SPONSOREDACCESS
Learning from Lehman Brothers:
How to Avoid Collateral Damage,
A Year After The Collapse
SHOULD TRADES BE
MONITORED BEFORE
THEY’RE MADE?
FULL STORY ON PAGE 10
You’ve given your customer your
seat at the trading desk. Now,
protect yourself.
By Chris Kentouris
DO YOU KNOW WHERE
your collateral is on all your trading positions?
And whether,
in fact, you are
considered the
owner of that
collateral?
That is some
of the collateral
damage playing
out around the
world one year
after the collapse of Lehman
Brothers.
Hedge funds
which pledged
collateral with
Lehman Brothers International Europe as their counterparty are now realizing
that the terms of their prime
brokerage agreements with
that arm of Lehman Brothers in Europe weren’t quite
the same as those of Lehman
Brothers in the U.S.
Nut nut: They’re discovering the collateral they posted
got used again as collateral—
legally—by Lehman in Europe
and there is no clear redress.
As a result, what was their
collateral no longer is. When
it comes to getting anything
back, the hedge funds are now
considered unsecured creditors, on that continent.
That’s just the tip of the
iceberg facing Lehman’s former trading partners, accord-
ing to one former Lehman
Brothers operations executive in London. “Some of the
thousands of
counterparties
which engaged
in over-the-counter derivative deals with
Lehman Brothers overcollat-eralized their
transactions,”
he told
Securities Industry
News last week.
“Either Lehman
requested ex-
tra or variation
margin beyond
the initial margin because of
the poor creditworthiness of
the counterparties involved
or the counterparties did not
correctly calculate their col-
lateral exposure and took
Lehman’s analysis at its word.
about by extensive renova-
tions to the trading floor in the
stock exchange’s 106-year-old
Main Room.
Broker booths will be replaced with modern trading desks. Each trader will
face four screens, instead of
one. And a new, more powerful network, better capable of
supporting all of a firm’s trading applications, according to
the NYSE, will create what
the exchange calls a “unified
trading environment.” This
CONTINUED ON PAGE 14
The Cost of
Cost-Basis
Reporting
CONTINUED ON PAGE 6
BACK FROM THE BRINK:
TAKING STOCK
Wall Street is breathing easier.
But volatility and volumes are
up and the ripple effects of the
near-meltdown a year ago of
credit markets not resolved.
Operations: Reducing Collateral
Damage ...........................(Starts p.1)
Risk: Establishing Your
Own Ratings .................................... 16
Rules: Is the SEC Still
Necessary? ........................................ 18
Case Study: Implementing a New
Prime Brokerage Strategy........... 20
Data Sweep:
The New Normal ........................... 22
Take A Seat (and Four Screens): Broker Booths
Disappearing From NYSE Trading Floor
By Alexa Jaworski
PULL UP A SEAT, FLOOR
traders at the New York Stock
Exchange.
Starting early next year,
NYSE traders will no longer
have to stand at their stations
all day without a place to rest
their feet. That will be one of
the many changes brought
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for a Fresh Week
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