Buyside focus : Multi-asset trading : Gill Wadsworth

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July 3, 2018

FINDING THE RIGHT FIT.

Multi-asset trading requires particular skillsets that not all traders possess. Gill Wadworth looks at the challenges in creating those desks.

Multi-asset mandates are expected to continue their upward trajectory, growing by approximately 11% per year until 2020; rising from $220bn to $373bn. Total European multi-asset mandates stood at €1.8tn last year so it is no wonder managers want a piece of the pie.

This 2017 research from consultant Spence Johnson reflects the increasing expectation from institutional investors that asset managers should be able to solve their problems holistically. There has long been a desire to move away from hiring multiple specialists and instead choose a multi-asset manager who can do the lot.

However, being a credible provider – rather than a factotum – requires the right mix of skills and experience. Asset managers know they cannot jump from being an equity or fixed income specialist to a multi-asset house overnight. They need the right faces in the shop front and the best brains out the back to deliver an effective solution.

This is demonstrated clearly in the talent war which gathered pace in the past 12 months. In June last year T. Rowe Price appointed Lowell Yura, as head of multi-asset Solutions for North America and Yoram Lustig, in the same role across Europe, the Middle East, and Africa. Yura was formerly of BMO Global Asset Management, while Lustig joined from Axa Investment Managers.

This year, Wells Fargo Asset Management has been on a hiring spree, poaching two senior multi-asset team members from Schroders in mid-February having enticed Neuberger Berman’s head of quantitative investments just two weeks earlier. Meanwhile, in March, Hermes hired Stephane Michel as senior portfolio manager to ‘build out [its] wider multi-asset credit capabilities’.

Some firms have focused on hiring wider multi-asset experience to bolster their credentials. Wells Fargo, for example, selected Schroders’ Peter Weidner and Mark Brandreth because of their ability to construct wider portfolios which focus on solving specific goals, such as wealth preservation.

Meanwhile Hermes talked of Michel’s broad fixed income experience, including trading roles, as critical to his hire. Hermes explained that Michel’s career ‘spanned a multitude of asset classes within fixed income and has included roles on the buyside and sellside’.

Typically, there is a considerable amount of focus on portfolio managers as the drivers of successful multi-asset strategies, but the traders are also key. Nico Marais, president of Wells Fargo Asset Management and head of multi-asset solutions since 2017, has spent the past year building his team from five to 25 individuals. He says that successful portfolio managers must be supported by an equally credible execution team.

“The client expects you to understand their problems; they want seniority and someone they respect,” adds Marais. “That is where the solutions people – the architects, the conductors – come into play. Alongside them they need the builders or the orchestra to execute on their behalf.”

Specialist or generalist

The question facing many asset managers as they have built their multi-asset trading desk is whether to build teams of specialists or generalists. Specialists may deliver best execution in a particular asset class but could lack the holistic view a multi-asset desk needs. Yet a generalist may – to revert to the earlier cliché – be a jack of all trades and master of none.

There is no right answer, according to Matt Howell, head of derivatives and multi-asset trading solutions at T. Rowe Price. However, he says that whether an investment house employs generalists or specialists usually reflects the reason the multi-asset desk exists in the first place.

“Whether you have specialist or generalist traders usually depends on what the multi-asset desk is trying to achieve,” Howell says.

He explains that some investment managers have implemented multi-asset trading as a means of reducing costs because it is often more efficient to push trades through one centralised desk. In this case, Howell says it is more likely the desk would be staffed by generalists.

Technological advances in the operating systems used by trading desks make it far easier for generalist to trade across asset classes. This can be useful in allowing smaller desks to pick up large volumes of work. And asset managers may also find they limit trader churn if individuals can expand their skill sets to include additional asset classes.

Yet the generalist approach may not be suitable to investment houses looking to respond to investors’ specific objectives. “If you are looking to address a business need in meeting client demand for multi-asset solutions, then you are more likely to ensure that you are elevating and growing existing talent which takes you down the specialist route,” says Howell.

Investec Asset Management has been growing its multi-asset team for 15 years. As the desk first started to grow ‘rapidly and organically’ Mark Denny, head of trading at Investec, says it helped for the ‘relatively small desk’ to wear multiple hats. However, to meet client demand, he recently divided the fixed income and equity desks.

“Until two years ago I was running a desk as a multi-asset function but given the growth we have had, I have split the desk into broadly fixed income and equities.”

The same is true of T. Rowe Price where the firm has invested in building specialist knowledge among individual traders. However, the teams also understand multi-asset as a holistic strategy.

Howell says, “We take a holistic view across all the traders and the investment teams to ensure that anyone with a multi-asset view can get the best from the credit, rates, FX teams and equity teams and compare them and think about how they might choose to do an implementation.”

The right skillsets

Irrespective of whether you build a generalist or specialist multi-asset trading team, there are clear skills individuals must have. As the war for multi-asset talent continues so investment managers might have their work cut out finding both portfolio managers and traders with the requisite skills.

Marais says it is challenging recruiting the people with the high levels of skills he requires and concedes that the senior hires made this year were realised thanks to his personal network. “It is very hard to find the right people. The type of talent I look for have quant skills and they can all code. I want super smart people with actuarial and consulting backgrounds, too.”

Denny agrees about the importance of computer science and data management skills. “There has been a shift in the type of skills that we are looking for,” he adds. It’s not the old barrow boy traders today. A lot of people have a computer science ability, they know about coding because that is the new world we are in.”

Denny expects traders to understand the ‘pipework of electronic trading’, and as MiFID II beds in this year, the importance of transparency and operating within tight parameters across all asset classes is paramount. “Trading desks need people who are tuned into the electronic trading environment. This is an important skill that is not always easy to find,” he adds.

Whether a trader on a multi-asset desk is a generalist or a specialist, they certainly need to have a particular skillset. And while securing best execution, all traders need to understand what their multi-asset strategies are trying to achieve. The best people will appreciate how they can feed into other desks, and back to portfolio managers, to get more from the multi-asset solutions. If those traders exist, they will be in great demand.

©BestExecution 2018[divider_to_top]

Data management : Taking stock : Heather McKenzie

By

Ian Rycott

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July 3, 2018

ON SOLID GROUND.

Data management may be critical but many financial service firms
are still lagging behind in developing the right strategy.
Heather McKenzie reports.

A word often uttered in data management discussions is foundation. Capital markets firms realise that data should be the bedrock of any process but the adage, rubbish in, rubbish out, still applies. A variety of factors is driving this renewed focus on data, one of which is technology advances such as artificial intelligence (AI). For firms to take advantage of such data hungry technologies, they must first get their data house in order.

Data management in many financial institutions is characterised by workarounds and manual solutions. Firms are running legacy information systems that can be more than 30 years old. Many were custom built – in the days of build, rather than buy) – and have been patched and upgraded multiple times over the years. Weaving new technologies such as AI, big data and machine learning into these existing systems to seamlessly exchange structured and unstructured data between internal and external systems is a considerable challenge.

Traditionally, data and its management were viewed as a cost centre; a necessary evil that provided limited value. Buyside firms in general surrendered responsibility in this area to their sell side suppliers, although that is changing. Marion Leslie, managing director of Thomson Reuters Financial and Risk Enterprise, said in a recent interview that buyside firms must change their whole approach to data, taking greater accountability for their data and becoming more self-sufficient.

Firms must set up data management and data governance processes, she added, ensuring they have access to data and can integrate it and gain value from it. To get the most out of AI and other technologies, data needs to be packaged and structured appropriately.

One of the biggest challenges with data management is that there are still organisations who know that data is important but have not assigned clear ownership for it, according to Peter Moss, CEO of SmartStream RDU. “They know that they need a strong finance, technology and operations function but have not realised that this is now the case with data as well. There needs be strong co-ordination across the organisation – although the data ownership will often be federated”.

He adds that currently best-in-class companies are leading the way, followed by many who are still working through their data management issues. “Then, there is also a long tail that is not coming to grips with it,” says Moss. “Senior executives like to focus on AI and big data, but the fundamental problem is that these projects need a common language, or well managed master data, for the results to make sense.”

Patrick Kirchner, a Boston-based director at consultancy Citisoft, says a majority of the firm’s customers, particularly large ones, are interested in AI. However, he believes most firms are trying to “put the cart before the horse”. Many, he adds, will struggle with data and how to consume it. “It’s a cliché to say big data is a big priority, but firms still have to develop a strategy of how and where they want to use big data.”

This is no mean feat, either. One Citisoft client spent almost three years putting 20 years of historical data, which had remained unmanaged and unreconciled, into order so that it could be consumable “at the lowest level”.

Virginie O’Shea, research director at Aite Group, says the biggest issue with firms’ data is that it is heterogenous and hence is stored in many different systems and different formats. “The quality of the data in aggregate is therefore often questionable because dummy fields may have been created for various purposes and there is no common taxonomy to be able to ensure the correct information is being consumed in the correct manner,” she says.

“In order to avoid making trading decisions based on bad data, firms need to take the time and effort to identify the level of data quality across the relevant data sets and implement a rigorous data governance programme across the organisation.”

Data governance comes to the fore

According to the Rimes 2017 Buy-Side Survey, 65% of respondents see data governance as a primary data management priority (compared with 62% in 2016). It relegated data quality improvement into second place in the list of priorities, with cost control taking third place.

When asked about the key benefits of a data governance programme, 80% – the same as the previous year – stated data quality. This was followed by efficiency (68%), costs (40%) and regulatory compliance (34%). “These figures show that good data governance is an enabler of many strategic goals, including better data quality, higher efficiency, lower costs and easier regulatory compliance,” says the report.

“As we saw last year, data governance success does not come easily, with only 9% of respondents confident enough to claim they had a mature data governance programme. Feedback from our forums shows that good data governance requires perseverance – firms periodically outgrow their governance processes and need to renew these to meet emerging challenges.”

When asked to choose from a set of attributes that best describe their governance programme, respondents consistently reported their data governance to be more mature than it was, says the survey. Some respondents reported a ‘mature’ or ‘work in progress’ governance programme but relied on their data management teams to implement it on an ad hoc basis. Rimes defines a mature or work in progress data governance programme as one that is sanctioned by senior management, with an executive data governance team comprised of the business and data management, continuously focused on data policies and compliance.

More than half of the respondents (59%) reported that data management teams led data governance efforts or attempted to implement best practice, but only during strategic projects or on an ad-hoc basis.

“Good data governance fulfils many business goals, particularly as regulations demand greater transparency. However, many firms are struggling to track which data is coming into the firm, how it is transformed, and where it is ultimately used. This is a critical data governance issue that demonstrates the ongoing nature of the challenge. Firms must do more than implement good data governance – they must maintain it,” says the report.

O’Shea notes that basic data management and governance should be the groundwork for any kind of innovation or transformation project. “Making sure that outputs are based on solid and accurate inputs is key to ensuring success. The reason so many projects fail is that C-suites try to rush the early and important stages (as well as ignoring the cultural aspects of change). If a firm really wants to transform the way it does business and adopts technology, it needs to make data a C-level function and not just in a token or purely nominal way,” she says.

The reality of AI

Kirchner does not believe buyside firms will adopt AI significantly over the next few years because the foundational data “is still not ready for it”. Firms must ensure they have a “hard core” data strategy first, with a plan on how they will use and consume data.

O’Shea agrees: “AI could potentially help firms in the long run, but the technology is only as good as the data that is fed into it. I can see some aspects of data reconciliation that could be aided by machine learning, so that common mistakes are corrected, and fuzzy matches become much more accurate. But it is still relatively early days for the technology in the capital markets space.”

The challenge with automating a process, she adds, is that it needs to be a fully-formed process and a very mature practice within the organisation. “Just look at the industrialisation of securities settlement for proof. Data is the foundation of every part of the capital markets, yet it has not been given enough attention over the years.”

Kirchner also does not see AI systems eventually taking over and replacing portfolio managers. Rather, he says, they will be used as a tool to undertake repetitive tasks more efficiently, while portfolio managers focus on finding new sources of alpha.

©BestExecution 2018[divider_to_top]

Data analysis : European equities

By

Ian Rycott

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July 3, 2018

LIQUIDITY LANDSCAPE IN EUROPE POST MIFID II.

Big xyt shares independent insights on European trading derived from a consolidated view on cash equity markets.

The measures covered below are used as a reference by exchanges, brokers and buyside firms, reflecting answers to relevant questions occuring in the post-MiFID II era. The methodology is fully transparent and applied to tick data captured from all major venues and APAs (Approved Publication Arrangements).

Preface

During the first half of 2018, market participants and observers are continuing to evaluate the changing liquidity landscape of European equities. One of the key questions this year is around the introduction of a ban on Broker Crossing Networks (BCNs), thereby outlawing the matching of a bank or broker’s internal client orders without pre-trade transparency for the rest of the market. Would this ban effectively force BCN activity onto the lit markets (public exchanges), as intended by the regulator with its desire to maximise the transparency of all orders, both pre- and post-trade, for the benefit of the end clients? Or would this BCN activity migrate to another mechanism or perhaps be diluted altogether?

In the following analysis, we go some way to answering the questions posed above and provide guidance as to some of the other observed consequences, intended and unintended, of the MiFID II regulatory changes.

Double volume caps and dark pools

Since 12th March 2018, reported trading in dark pools decreased by approx. 50% (from E4bn to E2bn) due to the implementation of DVC (Double Volume Caps). As Large-In-Scale (LIS) trades are not affected by DVCs, reported block trading in dark pools doubled at the same time, growing from 25% last year to more than 50% in May.

Dark pools – breakdown by region

Dark trading has seen an impact across regions, with volumes dropping more than 50% for several indices. The UK100 and Scandinavia were affected most and others less, e.g. France, Belgium and Germany.

For some markets like Denmark (DK25) we see that the market share of LIS trading in the dark reached nearly 100%, i.e. with the implementation of DVC, sub-LIS trading in the dark nearly disappeared for this index in Q2 2018.

Auctions

Despite the increase in LIS activity, we have seen a decrease in dark trading from 8.5% to less than 6%. Some flow has moved to auctions, rising from 12.3% to more than 14%, while lit trading (CLOB) volume stayed constant for RM/MTFs.

Periodic auctions

Periodic auctions have seen strong interest within the trading community with daily volumes growing from a few million to E1bn in May 2018. We expect this trend to continue with new auction initiatives announced for 2018.

The breakdown of market share in dark pools and in periodic auction volumes by regions demonstrates that with the implementation of DVCs the restricted dark flow has partially moved to periodic auctions. Regions with the largest decrease in dark trading have seen strong growth (market share) for periodic auctions.

Systematic internalisers

Systematic internaliser (SI) trading has increased with MiFID II in January 2018. From the overall ADVT (average daily value traded) reported, only a fraction is price forming and addressable. Excluding several condition codes (e.g. Non Price Forming Trade or Give-Up/Give-In Trade) reduces the SI volumes by more than 50%. The real price-forming value is expected to be even lower and will become clear as more granular reporting flags are introduced.

Since the launch of MiFID II in January, the daily volumes (addressable) remained stable at approx. E13bn. It will be interesting to see whether the market share for SIs will grow as expected by SI operators.

Market share by venue

MiFID II has helped all major venues (primary markets and MTFs) to grow their market share (in both lit and dark trading). We will keep an eye on the market share of SIs and off-book volumes. Results will be published in the upcoming issues.

The breakdown for individual indices shows the impact of the regulatory environment on the competitive landscape where Cboe’s venues have gained market share from Q4 2017 to Q2 2018 (primarily in Scandinavia).

Spreads at touch

Since Q4 2017, MiFID II along with changes in tick size rules have resulted in tighter ‘at touch’ spreads across the majority of regions, e.g. in the UK100 we see 4.1bps in Q2 2018, down from 4.7bps in Q4 2017

Market depth

Market depth (measured as the effective spread for a deal size of E25k) shows similar improvements across regions, e.g. in the UK100 we see 7.6bps in Q2 2018, down from 8.1bps in Q4 2017.

Price movement – A ripple before as well as after the pebble hits the water

With MiFID II and the growth of periodic auctions, it is worth having a look at price movement. The results are in-line with the patterns observed pre-MiFID II for existing mechanisms: Blocks have the smallest post-trade impact (3% vs 1% for the 10ms window) followed by dark pools (40% vs. 17%) and lit markets (71% vs. 17%).

Within the 10ms time window, Periodic Auctions show the same price movement as block trading (1% pre-trade vs. 3% post-trade). A unique pattern can be observed for the 100ms window where periodic auctions show a larger probability of a pre-trade move (18%) compared to a post-trade move (8%). This observation is potentially related to the duration and randomisation of periodic auctions with a max duration of 100ms.

Footnote: When referring to dark trading in this study, we refer to trades taking place on MTFs above Large In Scale (LIS), on Systematic Internalisers, on periodic auctions, all of which avoid the need for pre trade transparency.

For the purposes of this study, off-exchange and off-book activity has been excluded as deemed to be inaccessible volume to market participants.

©BestExecution 2018[divider_to_top]

Derivatives trading focus : Overview : Lynn Strongin Dodds

By

Ian Rycott

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July 2, 2018

DERIVATIVES’ STEADY MARCH ONTO ELECTRONIC VENUES.

Lynn Strongin Dodds assesses the ongoing trends and challenges of regulation on the derivatives industry.

There are many moving parts sweeping over the derivatives landscape but there is no doubt that regulation, starting with Dodd Frank and continuing with MiFID II, is having a profound impact. It is not only changing the way market participants are trading and clearing but also how they are leveraging technology to enhance processes and data management.

The latest survey for over the counter (OTC) markets by the Bank for International Settlements says it all – the gross market value of OTC derivatives contracts fell to $11tn by the end of 2017, down 15% from the first six months of the year, to a level last seen in 2007. The most recent slump in the cost of replacing all outstanding contracts at current market prices marks a continued retreat from the $21tn seen at the end of June 2016.

Moreover, the gross market value of OTC interest rate derivatives fell further in the second half of 2017, to $7.6tn – also the lowest ebb in 11 years. The amount denominated in all major currencies also declined during this period, reflecting rises in long-term yields, which reduced the gap between market interest rates on the reporting date and those prevailing at contract inception.

By contrast, a separate study by the World Federation of Exchanges shows that last year exchange traded derivatives (ETD) volumes overall were up 0.6% on 2016, driven largely by increases in volumes traded of single stock options, stock index options and interest rate futures. Interest rate derivatives seem to be the most popular with the latest European Securities and Market Authority report revealing that they represented over 80% or Ä166tn of the total Ä200tn volumes. In addition, for swaps, the top 10% of transactions accounted for more than 50% of the traded volume.

The UK was not only the largest market but as of September 2017, almost half of all the 152 MTFs were registered in the country with the remainder distributed across the rest of the EU.

Travel in one direction

The migration to the exchanges is only expected to continue as MiFID II beds down. In fact, a new report by TABB Group – Selective RFQ – Voice Bridging E-Trading – notes that participants are becoming increasingly confident that further electronification of fixed income derivatives markets will stem from a range of ancillary factors such as standardisation of products and services. Improved automation will also translate into better trading workflows and decision-making capabilities.

Due to the ongoing regulation of trading, best execution and more stringent collateral obligations “there has and will be an ongoing shift of transaction-based trading onto automated venues such as MTFs, and less voice trading,” says Simon Davies, senior consultant at Field Consultancy. “This reduces the risk but does add complexity to the data processing component. Once the dust has settled, I think we will see people focus more on the most efficient ways to meet the different requirements.”

Dan Marcus, CEO of Trad-X also sees a significant uplift in electronic trading, but the drivers are not only regulatory reform. “Although it is easier from a compliance and audit trail perspective to trade electronically, we are also seeing a generational change,” he adds. “We are seeing young technical traders more used to the efficiency and immediacy of electronic execution. However, voice trading is far from dead and the perfect symbiosis enabled by a hybrid system in fact enhances. In many instances electronic interaction furnishes price discovery by enabling the first trade on screen. A follow up voice execution enables suitable size discovery, thereby mitigating market impact and reducing slippage. The result is a fully compliant system that works effectively for the market.”

Tom Lehrkinder, author of the TABB report believes that the Central Limit Order Book (CLOB) model is not the answer to all electronic trading solutions and that selective request for quote (RFQ) goes a long way to comply with the MiFID II requirements around best execution. “The ability to preserve key elements of the OTC trading workflow while leveraging the benefits of electronic price formation is a key advantage for market participants,” he adds.

Tradition, as well as stalwarts Tradeweb and MarketAxess, have been ahead of the curve with their hybrid platforms but European venues are hoping to catch up with their own home-grown crossbreed offerings. For example, last December, Deutsche Börse’s Eurex launched EnLight, a RFQ platform which allows banks and brokers to selectively contact market makers to find a trading counterparty.

The data hurdle

While the trading dynamics of derivatives will continue to focus the mind, coming to grips with the data burden – present in almost all other sets of regulation – is also consuming time, money and resources. Detailed reporting of trades across a range of asset classes is now required but, as with trading, asset managers just crossed the MiFID II finishing line and are planning to enhance their services.

“There were some last minute changes which did not leave asset managers enough time to fully implement the rules”, says Neil Vanlint managing director, EMEA and Asia at GoldenSource. “There were a lot of frantic IT departments in the run-up to MiFID II, and many put in tactical solutions in order to be able to comply. Now they are reviewing their operations, looking at the pain points and how to build a strategic architecture. It is still early days and it takes time to get it right.”

Dario Crispini, CEO of Kaizen Reporting believes that the “biggest challenges are data quality, reporting accuracy and getting a complete picture,” he adds. “There is a lot of choice in terms of the number of reporting systems but choosing one is not the end of the story. There needs to be a strong control and governance element.”

Alexander Dorfmann, director of product management on the financial data side of SIX, also adds that firms are still getting to grips with International Security Identification Numbers (ISINs), a 12 character code, that is now to be used for the reporting of derivatives as well as legal entity identifiers (LEIs), which under MiFID requires investment firms to only trade with counterparties holding LEIs. “The saying is no ‘LEI, no Trade’, so firms need to have the identification or else their internal compliance and risk management function will not let them do the trade,” he adds.

Blockchain

Not surprisingly, the new derivatives world order has been a breeding ground for new innovations and this has certainly been the case with blockchain. There is a lot of hype but as Val Wotton, managing director at DTCC Deriv/SERV, puts it, rapid advances in distributed ledger technology (DLT) have proven its ability to provide a single, immutable and commonly accessible record of transactions among multiple parties, thereby increasing transparency and reducing costs for market participants.

As a result, he says the industry is already discussing whether DLT can enable a shift to searchable databases and full regulatory access. DTCC is in the process of re-platforming its Trade Information Warehouse (TIW) for CDS transactions from a mainframe to a DLT system with the aim of enhancing efficiencies and generating new value-added services. Standardised process flows and data models make credit derivatives an ideal use case and provide an opportunity to test the technology with appropriate and meaningful scale.

“For DLT-based OTC derivatives platforms to be deployed successfully however, it is imperative to avoid past mistakes, utilising technology, governance and data standards to ensure compatibility between ledgers and prevent any local customisations made during development and implementation from compromising end objectives,” he adds

However, he acknowledges that while DLT offers a promising solution for meeting the challenge of global data harmonisation in the OTC derivatives space, the case for a DLT-based approach may take some years to evolve. “It is also worth noting that even without DLT technology, centralised data warehouses conforming to consistent standards could help make data reporting less complex and costly,” he says.

©BestExecution 2018[divider_to_top]

Fintech : Risks and rewards, Part 2 : Chris Hall

By

Ian Rycott

-

July 2, 2018

FINTECH RISKS DRIVE NEW REGULATORY MINDSET.

Regulators are getting to grips with the fintech’s transformative power, but will need new approaches to collaboration and oversight. Chris Hall reports.

Well-known to financial regulators, the ‘Goldilocks’ principle was recently invoked in the debate on cryptocurrency regulation. “Too much regulation and cryptocurrencies will succumb to compliance costs. Too little regulation and the cryptocurrency market will fail to achieve the integrity it needs to attract mainstream investors,” warned Paul Kupiec, resident scholar at the American Enterprise Institute (AEI) and former chairman of the Basel Committee on Banking Supervision’s Research Task Force.

Kupiec’s concerns are echoed in regulators’ responses to the shifting risks and opportunities arising from fintech dynamism. It’s hard to define, let alone regulate a fast-moving, constantly-evolving range of diverse technologies and organisations. However, it is critical to finance sector growth and strength. The Financial Stability Board has called for collaboration to address operational, cyber-security and macro-financial risks stemming from increased fintech activity as an “essential” part of regulators’ efforts to safeguard financial stability.

For regulators, fintech represents as many downsides as upsides. If they are too slow to adapt, they may miss opportunities to improve outcomes and reduce risks and costs, e.g. by not providing sufficient support, or not leveraging regtech innovations to enhance supervision. If they are too ‘gung ho’ though they might ignore or misunderstand attendant risks, introducing competition too fast or underestimating fintech’s impact on dependencies and relationships in a complex eco-system. Either way, ignorance of fintech’s transformative power exacerbates risks.

Enter sandbox

Sometimes the boldest steps are taken by necessity. Hit hard by the global financial crisis and ensuing scandals, the UK’s finance sector was in dire need of new blood. Armed with a new pro-competition mandate in 2014, the Financial Conduct Authority’s (FCA) innovation-friendly agenda, ‘Project Innovate’, placed incumbents on notice to deliver cheaper, simpler and transparent services – or face the consequences.

Executive director of strategy and competition Christopher Woolard says the FCA had to shift its mindset from ‘what’s the risk’ to ‘what’s the risk of not doing this’. The risk of inaction was that new technologies and providers would go underground if not permitted to flourish, evading the attention of the authorities until too late. Nevertheless, the FCA had to offset the reality that new entrants can bring new risks if balance sheets or operating infrastructures are too weak or too porous, or if services are overly complex or opaque.

To balance these risks, the FCA built a sandbox. Since 2016, 70 firms (not all from UK and not all start-ups) have used it to test new services, models and platforms in a safe, closely monitored environment with a limited time period and customer base. This brings products to market quickly, cheaply and safely, whilst giving regulators ground-level view on potential risks. The concept has been adopted and adapted in multiple markets, and is now going global.

At the Innovate Finance Global Summit 2018, Woolard said the pace and scale of innovation called for cross-border collaboration on a multi-jurisdictional framework to road-test new services. To this end, the FCA and peers are discussing a global dictionary to cover jurisdictions’ data needs and oversight by a college of regulators to better support innovation, “especially for smaller firms who are keen to expand internationally”. Another sign of changing attitudes is that pragmatism trumps perfection. Perhaps alert to the limits of collaboration, Woolard has eschewed developing global standards to focus on pressing common priorities, such as financial crime.

Growing up in public

Regulatory collaboration does not require lockstep coordination. The FCA has signed multiple cooperation and framework agreements with like-minded regulators, including ‘referral mechanisms’ that smooth fintech entry into new markets. Another example is a UK-Australia fintech ‘bridge’ announced in March to explore opportunities and risks associated with cryptocurrencies and blockchain.

However, are regulators doing enough to support innovation? A collective failure to create a cohesive global framework for OTC derivatives reporting ten years after a G20 mandate reflects the challenges. Some argue current initiatives don’t go far enough in supporting the practical implementation of fintech innovation. By agreeing common frameworks for bringing fintech solutions into the mainstream or integrating fintech solutions with the legacy technology infrastructures of incumbents, regulators could counter operational risks arising from creative chaos.

“Whilst too rigid a framework could stifle innovation, there is an argument for regulators to collaborate with the industry in support of a more standards-based approach to implementation and connectivity,” says Mark John, head of product and business development for BNY Mellon’s Pershing and broker-dealer services in EMEA, noting both the difficulties for incumbents in identifying suitable fintech partners and future connectivity challenges as new services flood onto the market. “As the sandbox concept evolves and broadens, it can address the industry’s increasing ‘plug and play’ needs through standards.”

Realms of fantasy

Holding the hands of innovators helps to bring new ideas and technologies further and deeper into the financial markets in a safe and sustainable manner. How do regulators though handle the pace of change and the shift from human to digital that fintech represents?

“One of the biggest challenges is how we move from processes designed to be conducted by humans to ones designed to be executed by machines. We need to be conscious of how the replacement of humans by machines alters the risk profile of a process,” notes PJ Di Giammarino, CEO of regulatory consultancy JWG.

The wider use of artificial intelligence is being constrained by difficulties explaining machine-generated recommendations, but there are opportunities to reduce risks too. The data generated by digitised processes makes them more easily and cheaply monitored, and potentially in real time, which is critical when it’s not just in the trading room that risks can be transferred at warp speed.

Di Giammarino predicts digitisation of the relationship between regulator and regulated. “By making rules machine readable, we can reduce the considerable cost and risk currently involved in achieving regulatory compliance. We’ve made trading an STP process: we can do the same for regulation by matching a firm’s standards and processes to the rule book,” he says.

Machine-readable compliance might sound like science fantasy to anyone still adjusting to MiFID II’s reporting requirements, but several strands of FCA Innovate’s work programme are aimed at using semantics and standards to enable compliance via digital means, thus making reporting, approvals and other regulatory processes more timely and accurate. The UK regulator launched a consultation in February on how technology can improve the quality of information supplied to regulators, while an Australian counterpart, the Australian Securities and Investments Commission, is conducting proofs of concept involving natural language processing.

Jo Ann Barefoot, former deputy head of the US Office of Comptroller of the Currency and CEO of Barefoot Innovation Group, supports the development of ‘alternative regulatory channels’ for both fintechs and incumbents. A community bank, for example, might submit data for evaluation against known quantitative metrics to prove its services are simple and transparent, perform as advertised, do not rely on penalty income, and generate low levels of complaint. By automatically generating and sharing this data with regulators, the firm could be relieved of most traditional oversight of its compliance management system.

While acknowledging recent advances, Barefoot suggests further mindset changes are needed among regulators and regulated. “Today, the process takes so long that by the time the compliance-driven changes have been built into the investment cycle the risks may no longer exist. In future, regulators could have such data-rich monitoring processes that they can focus on outcomes and results rather than line-by-line compliance,” she says.

In future fairy tales, the three bears might not need to come home to know they have a visitor.

©BestExecution 2018[divider_to_top]

Regulation & compliance : LIBOR : Dan Barnes

By

Ian Rycott

-

July 2, 2018

LIBOR: BETTER TO FADE AWAY THAN BURN OUT.

Dan Barnes looks at the different moving parts in LIBOR.

Like the Brent crude benchmark, interbank offered rates (IBORs) carry a huge notional burden based on ever-shrinking real-world underlying deals. The Financial Stability Board (FSB) and Financial Stability Oversight Council (FSOC) have estimated that contracts with around $200tn in gross notional exposure were referencing US dollar London Interbank Offered Rate (USD LIBOR) by the end of 2016, including both derivatives and cash instruments such as floating rate bonds. Yet less than $1bn is traded each day in three-month funding transactions, with three-month LIBOR being the most heavily referenced tenor of USD LIBOR in contracts.

Meanwhile, the panel of banks providing input for the Euro Interbank Offered Rate (EURIBOR) panel decreased from 43 to 20 firms since 2013. At a time of rising interest rates floating rate notes become more popular, making certainty around the use of benchmarks more common.

“I know of a significant number of LDI (liability driven investment) funds that are trading in 30-year OIS (overnight index swaps) rather than LIBOR swaps, because the benchmark is changing, and even if it is still published it might not track in the same way,” says Andy Ross, CEO of CurveGlobal. “That is quite a big risk in the market, and so making that switch is about risk management for them.”

If the benchmarks were ceased to be published tomorrow, there would be serious consequences. They not only underpin many existing financial contracts, but there are no alternative benchmarks that are used in contracts with sufficient liquidity to act as alternatives.

However, the manipulation of IBORs first proven in court during 2012, demonstrated that using a submission-based rate was too unreliable, and support for them has been dwindling ever since. The authorities need to shift these elephants onto the backs of something that can carry them forward. A move towards the use of alternative nearly risk-free rates (alternative RFRs) has been undertaken by major markets.

There are several key risks that might impact trading desks during the migration process. The first is the potential reduction of liquidity across contracts as a result of a patchy shift. “Not everybody is going to move at the same speed, which is where the risk lies in transition,” says Stuart Giles, managing director for strategy and business development at interdealer broker, Tradition.

The second is the lack of any fall-back language in long-term contracts that currently cite LIBOR, to support those contracts in the event LIBOR ceases to be published. “The absence of such language creates the potential for large-scale disorder in global financial markets should LIBOR go away,” said Bill Dudley, chief executive officer of the Federal Reserve Bank of New York, speaking at the Bank of England’s Markets Forum on 24 May 2018.

The alternatives

The Federal Reserve Bank and Bank of England have since built roadmaps to support the shift to alternative rates while in other jurisdictions, existing IBORs are under review. These include the ICE Benchmark administered LIBOR, which is published in pound sterling (GBP), US dollar (USD), euro (EUR), Swiss franc (CHF) and Japanese yen (JPY).

Also on the list are the Tokyo interbank offered rate (TIBOR) which is offered in the Japan interbank market used for over $5tn in contracts and administered by the Japanese Bankers Association TIBOR Administration as well as the euro interbank offered rate (EURIBOR) which is found in the euro interbank market and run by the European Money Markets Institute (EMMI) underpinning more than $150tn in contracts.

The market-led, central bank-governed approach has led to both confusion and division over the RFRs being adopted. In the US the Alternative Reference Rates Committee (ARRC) which consists of market participants, chose the Secured Overnight Financing Rate as the alternative to US-dollar LIBOR. SOFR is the overnight rate for borrowing cash using US Treasury securities as collateral and is entirely based on transactions that are assessed by the Fed as having a daily volume of more than $700bn.

ARRC also developed the transition plan to facilitate the adoption of these rates in a voluntary programme.

The UK’s Working Group on Sterling Risk-Free Reference Rates determined that Sterling Overnight Index Average (SONIA), a benchmark now administered by the Bank of England since April 2018, should be used. It measures the rate at which interest is paid on sterling short-term wholesale funds, underpins the OIS market and is supported by £50bn average daily volume.

In Europe, the low volume of transactions to underpin EURIBOR has led to an alternative model being investigated, whilst the TIBOR administrator, JBATA which took over administration in 2014, became subject to the Financial Instruments and Exchange Act in 2015. This involved rules regarding the calculation, publication and administration of the benchmark rate.

Time to breathe

The expected drop off for LIBOR will occur in three years after which contributing banks will no longer automatically make submissions. Andrew Bailey, chief executive of the UK’s Financial Conduct Authority said in 2017 that “the survival of LIBOR on the current basis… could not and would not be guaranteed” beyond 2021. That timeframe is giving firms room to breathe – in some cases the switch is not expected to take place until forced to by the risk that the rate will no longer be published.

The global head of fixed income trading, for a Tier One investment manager, speaking anonymously, says, “It is a massive change. However, its two years down the line before LIBOR goes away and we are not actively doing anything that is not LIBOR right now.”

Managing the switch for contracts has driven some firms towards an early migration to alternatives, especially where long-dated contracts need to be pinned down now.

Ann Battle, assistant general counsel at the International Swap Dealers Association (ISDA) believes the main issues at this point around adoption relate to the level of take-up for the alternative rates outside of the interdealer derivatives market.

“I think all signs are good that in the interdealer derivatives market we are going to see adoption of risk free rates (RFRs) as an alternative to LIBOR on a going forward basis and, as a result, you will see the notional value of derivatives that reference LIBOR in all of the currencies decline over the next 2½ years,” she says.

Giles believes that the timing for that migration will depend upon the dealer-to-client market. However, the conduit for making the transition will be the dealer-to-dealer market. “If you are going to move from LIBOR to SONIA the key to that will be the efficiency of the SONIA/LIBOR basis market, which is the transition trade that allows you to go from LIBOR to SONIA,” he says. “The interbank market will allow that basis market to develop, to move that position from LIBOR to SONIA. It is the conduit, while the trigger is the buy-side.”

Firms will not only need to monitor how the rest of the market is changing, they will need to look at their own books and assess the treatment of their existing contracts. Battle says, “An unknown is the extent to which people will close out their existing LIBOR transactions and replace them.”

The concern that Dudley has noted is the risk that firms have not set up the measures needed to move contracts across from one rate to another, and that will require support from authorities.

Speaking on 24 May, Dudley said, “Put simply, this is an unacceptable risk. The ISDA has been working on this issue for the derivatives market and is expected to issue a consultative document soon that should prove instrumental in making further progress. The ARRC has also been co-ordinating a similar effort across cash products of all types. The goal is to achieve consensus on a consistent approach across markets whenever feasible.”

Viewpoint : Market evolution : Chris Jackson

By

Ian Rycott

-

July 2, 2018

BUYSIDE TAKES CONTROL:

THE CONVERGENCE OF TECHNOLOGY AND REGULATION .

By Chris Jackson, Head of EQS, Liquidnet Europe

It is a universally acknowledged truth, that when two dominant trends converge, the intended consequences become more powerful and far-reaching than previously anticipated. Technology and regulation, two key drivers in the last 10 years in capital markets, are empowering buyside firms at a global level. This shift in responsibility, away from the sellside to the buyside, brings to the fore an ever-present objective of obtaining excellence in both execution and research. The buyside can now profit from the full array of trading technology on offer and take control of their own destiny.

Automation of trading processes, infrastructure and capital commitment

Technology has clearly moved on significantly over the past 20 years with a marked automation of trading processes occurring in the 1990s. The period between 1997 and 2008 saw an increased level of technology being brought to trading; nevertheless, execution of the majority of flow for the sellside remained a largely manual function and, more often than not, the actual decision to trade was left to an individual pressing a button. Equally, the commitment of capital was essentially a human decision, with a trader intermediating every principal transaction.

Since 2008, the logical endgame of the automation of trading infrastructure was put on fast forward. All the themes that began to appear in the 1990s and early 2000s started to become the norm, with technological processes making up the bulk of trading rather than simply being a component or minority part of the trading infrastructure. The core market infrastructure was installed with high-speed, order-driven markets, growing algorithmic businesses, and clients increasingly embracing self-directed trading through algorithms. Automated capital commitment techniques across the market became dominant: in notional terms, single-stock risk trading for institutional clients increasingly became the exception rather than the rule.

So, whilst in 2008 the majority of orders were still being sent to brokers to work, today the majority of orders are routed from the desk by the client themselves. As a result, the traditional gatekeeper function of the sellside has changed as the buyside now has a significant increase in choice as to how and where they execute. Further, the automation of trading processes, increased competition, spread compression, and unbundled files, have meant a significant dilution of profits for the traditional capital commitment business. In the 2000s, the engine of the bulge bracket trading floor was the single stocks market maker. In the last 10 years, this core liquidity proposition has been replaced, in some cases by largely automated, central risk books, and until January 2018, internal crossing platforms.

Regulation keeping up

MiFID I was introduced to Europe in 2007, in part to bring about competition between stock trading venues and introduce the concept of best execution with the broker, which in practice meant a ‘best-effort process’ for market participants.

The origins of MiFID II came about directly as a result of the 2008 financial crash, contributing to an increase, rather than the originally-intended decrease, in financial regulation. For example, Over-The-Counter (OTC) business was forced onto exchange and cleared to limit bilateral risk as much as possible. Further, best execution became an obligatory process for the buy- and sellside.

Today, rather than the buyside being simply a consumer of services from the sellside, and forced to accept what they were given in terms of execution and advice, asset managers are now mandated by the regulator to take a greater level of control. Equally, the technology has evolved to give asset managers greater control. This has been a natural case of the regulator catching up with changes in market process as algorithmic trading has become more and more dominant.

Evolution in practice…

But what do the opportunities for the buyside taking control of their own destiny look like? Liquidnet, at its heart a financial technology firm, has dedicated its focus of the past 10 years on empowering the buyside.

In 2008, a broker-dealer typically provided three tiers of service – liquidity, trading tools, and execution advisory on how to trade. Liquidnet started out by empowering the buyside to negotiate their own block-trade and remove the intermediary with the introduction of a liquidity platform, Liquidnet Negotiation MTF. Over the past five years this offering has evolved significantly. Liquidnet is no longer simply a liquidity platform, but an end-to-end, transparent technology solution that gives Member firms an understanding of, and access to, the broader liquidity environment. Liquidnet also provides state-of-the-art market intelligence tools to enable traders to make more informed trading decisions throughout their day. Liquidnet’s Virtual High Touch (VHT) decision-support trading platform now provides all three services that were originally performed exclusively by the broker-dealer community.

Evolution continues…

The traditional client coverage model as provided by most broker-dealers has come under increasing pressure with compressed margins, shrinkage of sales, reduced trading resources, and the juniorisation of sales-trading. This means that many buyside clients are no longer getting the level of coverage and content they were used to at a time when, paradoxically, they are under pressure to add value. In addition, regulatory demands have meant an increasing set of responsibilities, and information overload continues to make the traders’ ability to make intelligent trading decisions a constant challenge. There is a real need, therefore, for clients to have additional value on their desk; Liquidnet’s decision in 2017 to acquire trading analytics firm, OTAS, was a clear acknowledgement of this need.

In the same vein, core to Liquidnet is the provision of a set of technologies in which information is compiled on an impartial and transparent basis, ultimately helping the buyside decide on how to trade. For example, Liquidnet’s Targeted Invitations assist the buyside in finding additional block liquidity by using data analysis to allow qualifying Members to send anonymous, actionable invitations to others who have recently traded or shown interest in a certain security. Targeted Invitations are composed of a set of clearly understood rules using a controlled and auditable approach so that technology can now reconstitute the trading process, giving the trader better information to make better decisions.

Liquidnet will be looking to the next stage of technological evolution to provide even more levels of transparency and control, including the integration of trading signals into algorithmic trading, as well as the creation of an environment where traders can actually visualise the decision-making process of an algorithm.

Buyside as a driving force

The years 2008 through to 2018 have seen the transformative evolution of technology supported by regulatory revisions, all placing the buyside trader firmly in the driving seat. Whilst the advancement of technology over the past 10 years has been truly impressive, it is important that the goal of these transformations is enabling the trader to leverage technology, rather than be controlled by it. Ultimately, the technology and regulatory trends have given, and should continue to give, greater empowerment for the buyside, along with the associated expectations and responsibilities.

Viewpoint : The impact of regulation : Silvano Stagni

By

Ian Rycott

-

July 2, 2018

DATA IS STILL KING.

Silvano Stagni, Managing Director of PMCR (Perpetual Motion Consulting and Research), explains why about 50% of the work in the forthcoming regulatory framework for Shadow Banking (Market Based Finance) will be data driven.

The most common definition of shadow banking is ‘credit intermediation carried out by non-banks, featuring: maturity transformation, liquidity transformation, leverage and credit risk transfer’ These activities which are also described as Market Based Finance” (MBF) are also carried out by regulated financial institutions although they are not being monitored by regulators so far.

The pledge to monitor shadow banking is a global as well as regional promise and will go ahead regardless of Brexit. The EU ‘inherited’ this commitment from four of its members that are also members of the G20: the UK, France, Germany, and Italy. The framework devised by the European Supervising Agencies (ESMA, EBA and EIOPA) consists of three regulations: Securities Financing Transaction Regulation (SFTR), Money Market Fund Regulation (MMFR) and Securitisation Regulation (SR).

They have four common goals:

minimise the pro-cyclical nature of unregulated credit intermediation;
enhance disclosure to investors and central authorities;
enhance risk management and risk awareness for investors; and
minimise contagion.

Level 1 texts of SFTR, MMFR and SR were approved by the European Parliament between 2015 and 2016, the technical standards of SFTR and MMFR are being examined by the European Parliament and are likely to be published before the end of Q3 2018. ESMA and EBA are expected to publish the final text of SR technical standard in September 2018, in time to be approved by the European Parliament for a 2019 start.

Whatever happens to the negotiations, Brexit will not have an impact on the applicability of these regulations in the UK because the Great Repeal Bill states that any EU law at the time of leaving the EU will become UK law, eventually to be modified or repealed later, and the UK made a commitment at G20 level as a sovereign nation.

SFTR will affect any entity that lends or borrow securities and commodities, short-seller, repo dealer and anybody who re-uses securities and commodities given as margin or collateral. UCITS and alternative investment fund managers will have an enhanced disclosure to investors if they engage in any of those activities.

Not surprisingly one of the biggest challenges emanating from all these regulations will be the data burden because they all have complex reporting. This includes the two new repositories (SFT Repository and Securitisation Repository) and the SFTR’s over 50 data fields. The most common industry wide assessment states that 40% of those data fields is not being captured at the moment. There is a wider use of the legal entity identifier (LEI), International Securities Identifier Number (ISIN) and Classification of Financial Instrument (CFI) codes and therefore there may be considerable data gathering exercise. This is not even mentioning the MMFR and SR which will introduce reporting and changes in the nature of Money Market Funds and Securitisations.

Although the actual ‘kick-off’ date may not be set in stone – as yet – there are enough knowns to start planning the transition into the new regimes for funds but also to start looking at your data landscape. Once again, clean up your data and you won’t regret it!

Industry viewpoint : Andy Ross : Curve Global

By

Ian Rycott

-

July 2, 2018

FROM LIBOR TO SONIA – ENSURING A SMOOTH TRANSITION IN THE FUTURES MARKET.

By Andy Ross, CEO, CurveGlobal.

In April, the Bank of England launched its reformed Sterling Overnight Index Average (SONIA*), not only to minimise “opportunities for misconduct” but also to make the calculated rate more representative of the underlying market – addressing one of LIBOR’s more notable shortcomings. But with SONIA set to replace LIBOR by 2021, how do we ensure a smooth transition between the benchmarks?

Andy Ross, CurveGlobal

There has been widespread attention on the establishment of new and liquid short-term benchmarks globally, with regulators in the UK, US and Switzerland in particular driving benchmark reform. The revamped SONIA represents the UK’s most significant effort to improve the credibility, resilience and effectiveness of benchmarks.

There are many unknowns, such as whether we can expect the development of multiple new benchmarks. But ultimately there is widespread agreement that, for reform to take hold in a meaningful way, the existence of a liquid and active futures market is imperative. This market needs to align with the regulatory agenda and meet the needs of participants, while supporting competition and choice, and enabling best execution.

Early adoption
There’s no doubt that the migration to overnight indexed swap (OIS)-based contracts is a challenge for financial markets. In order to ensure market efficiency, regulators are urging participants to make the transition away from LIBOR well before 2021. When trading OTC or listed derivatives with a maturity over two and a half years, there is risk associated with changing the underlying benchmark. How much additional risk is priced in? Early adoption of the SONIA benchmark will help reduce any potential instability when LIBOR is changed, or if it continues in a different form from 2021.

This requires sufficient liquidity in the vital early stages of the new benchmark. With the current focus on LIBOR reform there is growing interest in SONIA futures. For example, in the swaps market we’ve seen over 100% growth (year to date) on LCH cleared GBP swaps with a SONIA underlying rate to over £10tn notional outstanding (as of 31 May 2018).

Managing the transition
Central to managing a smooth transition from LIBOR to SONIA is the ability to hedge risk effectively. In the futures markets it is essential that there are tight, liquid futures available to participants to manage the spread risk between LIBOR (short sterling) and SONIA (OIS). CurveGlobal launched the first Three Month SONIA futures contract to meet demand for liquidity in the new benchmark. Our SONIA futures contract is contributing to a competitive marketplace, providing participants with choice, and enabling them to get best execution through access to all available liquidity.

The inter-commodity spread (ICS) functionality between the CurveGlobal® Three month SONIA Future and Three month Sterling Future (the listed derivatives equivalent of the OTC FRA/OIS spread) is a key differentiator for CurveGlobal. It eliminates legging risk when trading the spread, with the LIBOR and SONIA legs traded as a single package. This ability to trade the spread between the two indices is crucial to facilitating the migration from LIBOR to SONIA.

In the first month of trading (to 31 May 2018), 58% of our SONIA flow came from ICS orders, with volumes seen in spread, butterfly and condor strategies, as figure 1 shows – adding meaningful innovation to the market.

New benchmarks and best execution
The overhaul of fixed income benchmarks is not about challenging OTC markets or forcing changes on the futures markets. The addition of SONIA is about the fixed income market being more robust, transparent and safe.

The challenge for the end-user for this migration is how to assess what risk premium to pay or receive for changing the rate to SONIA from LIBOR. When weighing up the decision to trade futures or OTC, how do you choose where and what to execute for best execution?

Already in fixed income markets, participants are scratching their heads over how to assess best execution on the same benchmark between two similar risk products. The addition of a new benchmark makes this even harder. For example, are you best trading the SONIA ICS or the FRA/OIS IMM package OTC? The answer to this will clearly depend on factors such as market access, fees and liquidity.

But we’re not here to tell you what or how to trade, rather to add value by helping reduce risk in execution – not least in benchmark transition.

CurveGlobal, the interest rate derivatives trading platform, is a venture between London Stock Exchange Group, Cboe and several leading dealer banks.

*The “SONIA” mark is used under licence from the Bank of England (the benchmark administrator of SONIA), and the use of such mark does not imply or express any approval or endorsement by the Bank of England. “Bank of England” and “SONIA” are registered trademarks of the Bank of England.

Enterprise DevOps in the Cloud

By

Ian Rycott

-

June 27, 2018

Enterprise DevOps in the Cloud

GreySpark Partners presents a report that examines the broken nature of IT departments in the capital markets and discusses how to remedy some key challenges they face. Adopting in combination the Agile software development framework, DevOps approach to IT development and operations and cloud technology across the enterprise facilitates healing of the increasingly brittle infrastructures typically found in investment banks in 2018.

Enterprise DevOps in the Cloud

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FINDING THE RIGHT FIT.

Multi-asset trading requires particular skillsets that not all traders possess. Gill Wadworth looks at the challenges in creating those desks.

ON SOLID GROUND.

Data management may be critical but many financial service firms are still lagging behind in developing the right strategy. Heather McKenzie reports.

LIQUIDITY LANDSCAPE IN EUROPE POST MIFID II.

Big xyt shares independent insights on European trading derived from a consolidated view on cash equity markets.

DERIVATIVES’ STEADY MARCH ONTO ELECTRONIC VENUES.

Lynn Strongin Dodds assesses the ongoing trends and challenges of regulation on the derivatives industry.

FINTECH RISKS DRIVE NEW REGULATORY MINDSET.

Regulators are getting to grips with the fintech’s transformative power, but will need new approaches to collaboration and oversight. Chris Hall reports.

LIBOR: BETTER TO FADE AWAY THAN BURN OUT.

Dan Barnes looks at the different moving parts in LIBOR.

BUYSIDE TAKES CONTROL:

THE CONVERGENCE OF TECHNOLOGY AND REGULATION .

By Chris Jackson, Head of EQS, Liquidnet Europe

DATA IS STILL KING.

Silvano Stagni, Managing Director of PMCR (Perpetual Motion Consulting and Research), explains why about 50% of the work in the forthcoming regulatory framework for Shadow Banking (Market Based Finance) will be data driven.

FROM LIBOR TO SONIA – ENSURING A SMOOTH TRANSITION IN THE FUTURES MARKET.

By Andy Ross, CEO, CurveGlobal.

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Data management may be critical but many financial service firms
are still lagging behind in developing the right strategy.
Heather McKenzie reports.