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Darren Toulson : Liquidmetrix

By
Ian Rycott
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LiquidMetrix - Darren Toulson
LiquidMetrix - Darren Toulson

CAN YOU HIDE IN THE DARK?

LiquidMetrix, Darren Toulson

Darren Toulson, Head of research, LiquidMetrix explains why MTF dark pools are playing an increasing role in European algorithmic execution strategies.

In recent years the job of effectively executing large orders and minimizing impact costs has become ever more complex. Lit markets have fragmented, trade sizes decreased and a perception has grown that market impacts are being exacerbated by the strategies of heavily ‘quant’ HFT participants.

In an ideal world, from the buyside’s point of view, their larger orders would be matched with other buysides in natural crosses via an agency matching mechanism. This minimizes information leakage and so decreases the possibility of being ‘gamed’ by other market participants. In reality, creating venues that can achieve this type of match ‘immediately’ has proven difficult, and is usually arrived at through a negotiation process. So if a natural block match can’t be found quickly, larger buyside orders are usually sliced, scheduled and then fed in chunks to smart order routers that will hunt for liquidity while attempting to mask the true size of the order.

Until very recently, the algorithms used to optimize trading schedules were based on the assumption that the sliced orders would be sent aggressively to lit markets and would impact the market price in a predictable way. Picking the best trading schedule becomes a job of balancing the market impact of trading too fast in lit markets versus the market risk of waiting too long.

One of the side effects of MiFID, apart from lit market fragmentation, has been the formation of a number of new ‘MTF’ mid-point matching dark pools. These MTF pools are open to both larger resting orders and smaller aggressive ‘IOC’ (immediate or cancel order) flow and are therefore a potential additional source of liquidity.

How might the presence of these MTF dark pools affect the choice of optimal execution strategy? In theory, due to the mid-point matching nature of the dark pools and the fact they are pre-trade opaque, orders sent to – and trades executed in – dark pools should cause less (or even no) market impact compared to orders sent to lit venues. So, any part of a trading schedule that can be executed on a dark rather than lit venue would seem to be ‘cost free’ in the sense that the volume traded in the dark won’t contribute to market impact. Some researchers [e.g. Schöneborn, Kratz] have recently updated the ‘standard’ pre-trade cost / scheduling models to include the possibility of executing on dark pools.

However, this is all based on the assumption that trading on a dark pool really does have less market impact than trading on lit. It seems intuitive, but is it actually true? And are all dark pools the same?

We present a result here that tries to broadly answer that question based on analysing price movements following executions of a similar size on lit and dark venues where we know the side of the aggressor.

Liquidmetrix_Winter2012_Charts

Figure 1 shows the adverse price movement against resting orders (measured using EBBO mid-price moves) following an execution on different lit and dark venues. Price impact for the aggressor is the inverse, of course.

Looking at the results it’s clear that EBBO price movements in the direction of the aggressor following a trade on dark venue are considerably smaller than on lit. There is evidence of mean reversion in both types of venues, though reversion for the dark trades is greater leaving a much smaller lasting price impact. The impact characteristics of different dark pools varies considerably (see Figure 2).

MTF dark pools appear to offer an opportunity to trade with less market impact (or rest passively with less adverse selection) than lit venues. For this reason, they should be part of any optimal execution strategy seeking to lower impact cost. However, impact in dark pools is not zero and different pools appear to offer quite different behaviours. As always, it’s vital that any use of these pools is based on an analysis of what actually happens when trades are sent to them as opposed to what theoretically should be the case. Also, of course, executions on a dark pool aren’t guaranteed so any modelling of their use must take into account the probability of execution.

So whilst you can’t hide completely in the dark you can at least lower your profile.

©BestExecution

 

 

 

 

Luis Negrete : Accival

By
Ian Rycott
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Accival - Luis Negrete
Accival - Luis Negrete

TAKING POLE POSITION.

Accival, Luis Negrete

Luis Negrete, Equity Director at Accival puts forward the case for Mexico becoming Latin America’s predominant market for the next decade.

From a global and macroeconomic point of view, for Mexico to become the leading Latin American market, a number of different factors need to come into play, and I believe that alignment is happening now. These comprise both the global and regional economic factors, the domestic economy and developments in Mexico’s investment markets.

Global and regional factors

Over the last few decades China’s high growth rates were fuelled by a considerable increase in the consumption of raw materials, which benefited the producers such as Brazil. However, there are signs that this trend is changing. On one hand we have a slowdown in China’s growth rates and in addition, as China’s middle class grows, the country is starting to become an important consumer of manufactured products, which directly benefits economies like Mexico’s where 80% of exports are manufactured products.

In addition, the financial crisis in Europe has translated into slower growth, and even recession, in much of that region, while the lack of clarity regarding a solution to the issue of the fiscal cliff in the United States, have caused the flows of global capital to look for investment alternatives in countries with stable economies and growth prospects.

Furthermore, Brazil which over the last 12 years has been a focus of attention in Latin America for international investors, is starting to show signs of fatigue and over-regulation. This in turn is causing global markets to consider alternatives in the region which have the size, stability and market depth to be able to capture these flows.

The macro-economy

This leads us to Mexico. The fiscal discipline that has been followed during the last three presidential periods (totalling 18 years), the sustained growth, the independence of Banco de Mexico, social stability, and especially the prospect of far-reaching structural reforms make Mexico an appealing option. This has been evidenced by the strong interest in Mexico shown by several Asian sovereign funds in the latter months of 2012. This is something that has not been seen since the 1990s.

Currency markets

There have been a number of important developments in Mexico’s financial markets in the last few years, key among them being the exchange rate. The Mexican Peso has become one of the more liquid currencies in the world, and without a doubt the most heavily traded within those of the emerging countries, to the degree that its value now depends more on the international perception of risk than on the state of the Mexican economy.

Debt markets

In the case of debt instruments, Mexico has also had a developed strongly in the last few years. In government debt there are issues that reach one hundred years, providing a very complete curve to international investors, which in addition is usually very liquid in the majority of its notes. The levels of interest shown by international institutional clients in the instruments issued by the Federal Government have grown significantly over the period and they are now important holders of Mexican debt instruments. The market has also had very strong growth in the issuance of corporate debt, where in many cases, issues of corporate notes have rates that are very close to the government debt.

Equity markets

Let’s not forget the equity market, which has also shown important advances. First are the regulatory issues, which thanks to the co-operation between the Mexican Stock Exchange (BMV) and the brokerage houses that operate locally, have been updated to the level of international standards in regard to issues of corporate governance for quoted companies as well as in their operational practices. Second, thanks to comprehensive investment in technology by the Mexican Stock Exchange and brokers, we now have a market in which algo trading, Direct Market Access (DMA) and the High Frequency Trading (HFT) are common tools and operating models in the Mexican market. These can be offered by several intermediaries to their international and domestic clients.

Another crucial element in the development of the Mexican market is the SIC (International Quotation System) that allows investors operating in Mexico to buy and sell company’s titles and ETFs that are quoted on international markets. The growth of this market is such that they already quote close to 400 names. It is also worth mentioning that for the local institutional investors (Mutual Funds and Afores), the SIC has been an excellent tool enabling them to diversify their portfolios internationally.

Finally, together with the three markets mentioned (FX, Debt and Equity) there is the possibility to trade derivatives on any of the underlying instruments mentioned either in the OTC market or through an organized market which is the Mexder, in which futures and options on exchange rates, interest rates, stock indexes and individual stocks are quoted.

Conclusion

Mexico’s markets are ready to receive the capital flows that are looking to leverage the growth and the stability of its economy in the coming years. The investment options in Mexico range from short-term debt instruments issued by the Federal Government, to structured products with levels of sophistication that match those of any developed market in the world. In most cases the financial intermediaries that operate locally have in addition the advantage of being affiliates of international groups, giving them an important strength as well as local know-how, together with the global scope the international client can find in the world’s main financial markets.

 

©BestExecution

Olga Pokhvalova : ARQA

By
Ian Rycott
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ARQA - Olga Pokhvalova
ARQA - Olga Pokhvalova

AN ENRICHING EXCHANGE.

ARQA, Olga Pokhvalova

In a shrinking world, trading securities across the globe is now commonplace, with brokers routinely accessing trading venues thousands of miles apart. Olga Pokhvalova, head of sales & marketing of ARQA Technologies explains that innovative technologies are also more accessible than ever before – as long as you are prepared to look.

Located about 5,200 km from London, 9,200 km from New York and 4,800 km from Tokyo is the Siberian city of Novosibirsk. Not perhaps the first place you’d look for cutting edge technology solutions, but local firm ARQA Technologies has perhaps engineered another small step towards closer integration of traders and markets across the globe by developing a new trading interface with the London Stock Exchange (LSE).

This solution works in both directions: it obtains and supplies market data to clients as well as routing orders to the exchange through the same interface. In addition to the first iteration, which was based on the FIX Protocol, ARQA Technologies has implemented another version of interface which is called FIX2LSE. This was built on the basis of the exchange’s own API and was recently certified. This solution is the fastest in a range of similar solutions developed by the company. FIX2LSE will be used for the direct connection of external software suites or broker platforms. The interface also includes a fast pre-trade control module.

Past Experience

Along with new interfaces, ARQA Technologies draws upon technological approaches that have been developed traditionally for its domestic Russian clients. This experience of an alternative developmental history presents opportunities for users of the company’s trading platform (called QUIK) and also for any broker ready to try risk control approaches developed in Russia. When used by any trading platform the new interface will provide access to various risk management tools developed for QUIK, which in our opinion contain original ideas and address pressing challenges which have came to the fore recently – particularly issues of risk control.

Due to historic reasons the issues of risk mitigation and compliance have been the focus of Russian software developers for a long time. Risk control became a hot issue right at the time when financial markets started to develop in post-soviet Russia. From the mid 1990s brokers had to be extremely careful and consider all possible precautions against the multiple risks of the emerging Russian markets. They always had to make sure that clients had sufficient resources before placing orders and never let them trade beyond deposited cash or assets. Russian financial markets have been electronic from the very start. They have always been closely regulated and strict compliance was enforced. Such issues were immediately translated into standard requirements for trading software solutions.

Different models

There are four basic models widely used by Russian traders. One makes sure that trading is done within combined buying power limits. Another is used for margin trading and dynamic evaluation of collateral. For positions in various instruments spread over several markets and having diverse settlement dates within one account, a SPAN-like approach is employed. Finally, there is a model of risk control particularly suited for setting limits in proprietary trading. All of these models may be applied separately or in a combination.

Historically, solutions for pre-trade control have always sought a compromise between the complexity of evaluation approach (relevance and adequacy of checks) and the duration of transaction delay. Available solutions range from fairly simple checks for latency sensitive strategies to complex calculations embracing scenario evaluations for less low-latency dependent clients.

A breakthrough solution for comprehensive pre-trade control in situations when low-latency is critical employs a separate module which makes rather straightforward checks. This is sufficient due to the fact that all the more complex calculations have previously been done by the risk server and the result has been fed to the module. The decision made by the module is to let through, or block an order on the basis of previously processed data. By the moment a new order needs to be forwarded to a trading engine all essential parameters of the client’s position (including his buying power) have already been computed by the separate server. All previous changes have been accounted for and positions adjusted. This is really a pre-trade check based on post-trade data. This is an alternative approach to a more traditional concept of pre-trade risk control – using pre-set limits – which is fast but rather unsubtle. The fast pre-trade solution combines accurate assessment of the current position, including portfolio analysis performed post-trade, with a quick pre-trade check of the current order. This approach proved effective when pre-trade control was applied to low-latency infrastructures or used for HFT clients. Additional checks such as restricted securities’ lists or limits on volumes are often included as well. The check itself adds a fractional overhead (less than 10µs) to the time of order placement.

Far from perfection

All around us technological development is progressing so fast that sometimes one gets an impression that this is as good as it gets. But, frankly, it is far from perfect. There is still a lot of inefficiency. Here is a banal example. Almost everybody now uses an array of devices such as a cellphone, a smartphone, a tablet, a camera, a headset, etc. All these devices come with their own chargers, so one cannot help accumulating a lot of these things and is burdened with a heap of snakelike cables. Why can’t there be a universal charging device with a small set of plugs (or an even better solution) to connect to all of them? The need exists and will no doubt be resolved in the future, but not just yet. However, when the solution arrives, it may be something altogether unexpected, who knows?

For all its sophistication and complexity, the world of trading infrastructure and trading platforms may be somehow similar, though on a different scale. It is not inconceivable that in the future front-end platforms will be much more flexibly connected to trading engines across the globe. The existing universal protocol FIX already solves many connectivity issues. And from time to time here and there appear solutions which brokers and other financial market participants can use to their advantage. Technology knows no boundaries.

©BestExecution

 

Asset class focus : FX

By
Ian Rycott
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SPECIAL FX.

Foreign exchange is increasingly seen as an investible asset class by the buyside but it is dogged by a lack of transparency. Dan Barnes reports.

Buyside firms across the spectrum are lining up to improve execution quality in FX. Foreign exchange is seeing a boom in interest from some short-term investors, as other asset classes prove too volatile, correlated or just plain doomed to invest in. Meanwhile a series of high profile lawsuits brought by fund managers against their custodian banks, for allegedly overcharging their clients on FX transactions, has increased interest in active trading of FX with monitoring of and improvements made to execution quality for FX trades.

The FX market has been set up to reflect the supporting function that foreign exchange has for most trading firms as they seek to trade overseas bonds and equities. The single-dealer-platform long allowed sell-side firms a virtual monopoly over their clients’ FX trading, but this is now being questioned by asset managers looking afresh for best execution, as has wholesale outsourcing of FX trading to sellside partners.

At the same time a growth in firms’ trading of FX to generate alpha has required them to build relationships with multiple dealers. This move towards transparent trading across so many counterparties will require a fundamental shift in the way that buyside firms access prices and liquidity in the foreign exchange market.

“Five years ago people started to talk about the potential of FX to function as an asset class in its own right rather than as a funding mechanism for other investments or as a hedge,” says Jim Kwiatkowski, head of sales at FXall. “At the time, there were already some firms investing and we’ve seen that on the rise. There are multi-asset hedge funds that have currency strategies and we continue to see the number of firms participating in that market growing. We’ve also seen high-frequency trading of FX grow as an investment strategy, but I think the bulk of volume in any given day is done by people who have a need to execute FX which is why the liquidity pool is so deep.”

The established models for buyside participation in FX have only been partially profit driven. Typically the group can be divided into three categories: institutional, corporate and retail. Retail FX traders use it as a speculative asset class while corporate traders use it almost purely on transactional basis either to pay bills or to exchange funds that they have received as payment in overseas currencies. In the institutional space it is typically a bit of both, depending on the company in question, partly to support trading of other instruments, but also trading in FX as an asset class.

“A significant driver of FX as an investment nowadays is the fact that it is one of the few relatively uncorrelated asset classes left,” says Paul Caplin, CEO of online trading platform provider Caplin Systems. “Since the credit crunch, there has been an uncomfortable degree of correlation between previously independent asset classes, which makes it very hard for people to build neutral portfolios.

A break with tradition

Service providers are seeing demand from financial services clients grow for multi-dealer FX related products, as traditional assets and markets deliver poor returns over a sustained period as a consequence of the crisis, implying that speculators are becoming increasingly involved in the FX business.

“There is a mixture of players in this space,” says Paul Tivnann, global head of FX electronic trading at data provider Bloomberg. “On the institutional side you have sovereign wealth funds and asset managers running typical FX strategies such as carry trades where you profit from the interest rate differential between two countries, or momentum strategies where you are betting on continued appreciation of currencies that have been performing strongly.”

To accommodate growing interest in FX products, Bloomberg’s multi-bank trading platform, FXGO, launched a request for quote facility for FX options on 15 November, which consolidates pricing from multiple providers across currency options. Firms have been sourcing information on the OTC market as well, suggesting future growth in trading activity.

Rob Lane, head of trading for EMEA at Interactive Data said, “We are seeing a growing demand for OTC data into applications as well as demand for trading connectivity to new venues, which is partly a reflection of the financial crisis; as people edge off local cash equities they look for alpha in either other regions or OTC markets.”

The move away from the single-dealer model does not necessarily require a change in technology to deliver best execution, says Caplin, but rather a selection of partner that are best able to support the business.

“Meeting best execution requirements in FX doesn’t require traders to get multiple quotes in a formal way,” he says. “They can simply look at their Bloomberg, Reuters or other multi-dealer screens and see where the market is at, before executing a trade on a single-dealer platform. There are very few major currency pairs. And when everyone quotes tight two-sided streaming prices in the majors, there isn’t much room for price improvement. If the spread on euro-dollar is less than one basis point, how much better are you going to get? As such best execution is not the issue, it’s more about certainty of execution, speed of execution, functionality and quality of service.”

Of course FX is very different to other assets and the direct transposition of trading styles from other products is not realistic. Firstly the vast majority of trading occurs in a few currency pairs; comparatively both equity and debt markets see trading in hundreds or thousands of products. Secondly the lack of any centralised markets makes the process of data collection for trading far more complex and the measurement of best execution a significant challenge. Nevertheless concerns around transparency mean that the existing model is expected to change, with eight new currency trading platforms launched in June 2012 and some noticeable changes taking place in the composition of the players.

A new way

Research provider TABB Group notes that FX trading volumes have grown by 20% since 2007 to US$4 trillion per day but have tailed off more recently due to the wider economic conditions and regulatory changes impacting both the dealer-to-client and interdealer market makers. However the growth in electronic order flow from just 20% in 2001 to 60% in 2010 will continue to be a driver for change in FX market structure.

“Roll forward five years and the foreign exchange markets will be unrecognisable from the voice-based bilateral OTC model which has dominated until now,” says Rebecca Healey, senior analyst at TABB Group. “Liquidity in FX is a mirage. The prices on the screen are not a stock and that is a challenge as firms to try to establish what is real and what is phantom liquidity. With high-frequency trading (HFT) firms coming into the market that has massively impacted people’s level of comfort in interacting with the market place.”

High frequency trading firms are a cause for concern in the equity markets where their trading tactics of placing and cancelling multiple orders at sub-millisecond speeds have seen them characterised as middlemen that serve no useful purpose. “FX traders are currently struggling to compete as HFT traders shift away from equities and into their domain. As technology costs continue to fall we can expect further innovation as FX market participants will look for new methods to understand and engage with this new type of flow” Healey states.

Where reporting dealers accounted for 70% of FX trading in 1992 according to the Bank of International Settlements, they now only account for 39% and as Healey notes, “Bank’s customers are now trading more than the banks themselves.”

©BestExecution

 

 

Research : Buyside OMS/EMS

By
Ian Rycott
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UNITED WE STAND, DIVIDED WE FALL.

GreySpark explains the growing popularity of OMS and EMS.

Capital markets participants are increasingly turning to combined execution and order management systems that include tools for algorithmic and basket trading strategies in multiple asset classes, according to a new report by consultancy GreySpark Partners.

The report which canvassed 12 vendors noted that OMS and EMS technology spending is expected to rise between 1% and 5% over the next two years. By contrast broker-funded EMS platforms are becoming less popular, with a 3% decrease since 2008.  This is because firms are choosing to access preferred brokers through a single platform, increasing execution efficiency.

OMS first came onto the scene in the 1990s to connect the buyside to their brokers while reducing errors and fostering a paperless trading environment. They revolutionised the way the industry conducted business. Fast forward to today and they are robust, multi-functional and continually evolving as regulation and technology develops. The same trends have applied to EMS, which is a relative newcomer. They typically provide smart order routing (SOR), connectivity to an array of trading venues, market data (directly or through third party vendor feeds), real-time pricing, pre-trade transaction cost analysis (TCA) and algorithms, as well as integration with upstream OMSs.

Traditionally, these systems were separate, but in recent years, they have become more integrated as the services such as best execution reporting and regulatory reporting are becoming commoditised and their position as competitive advantages is being challenged. The goal of these hybrid OEMS solutions is to try and straddle the whole trade life-cycle and to rely on a catalogue of dedicated modules in order to cater for specific client uses. New features include real-time TCA, limit checking, basket and list trading, and strategy as well as algorithmic trading and execution benchmarking,

Multi asset class trading has also become a prominent feature due to relatively poor returns from equities over the last five years. This trend has led trading desks to widen and diversify their coverage both geographically and in terms of asset classes. Moreover, baskets of securities, such as exchange-traded funds, have gained traction.

There are several benefits to the integrated platform most notably cost reductions wrought from automation, straight-through processing and simpler work-flow. The speed and efficiency also helps sharpen the buyside trader’s edge over the use of a slower less integrated platform.   In addition these platforms are helping to usher in a new era of consolidated market data which has been one of the biggest bones of contention with the fragmentation of trading venues in the wake of the introduction of MiFID.

As with any technology, there is always room for improvement. According to Anna Pajor, consultant at GreySpark, these include functionality around margin management, books delegation and transfer, netting and give-up management as well as further development of the connectivity coverage. These can be managed by other buyside systems, for example portfolio management or treasury systems, but investment in developing these features should be considered in the context of the entire client offering, beyond order management.

GreySpark Partners is a business, management and technology consultancy specialising in the capital markets. The company has a demonstrable track record across the marketplace and a deep understanding of the industry. GreySpark Partners works with investment banks, hedge funds and asset management firms to deliver solutions that work across all asset classes, with a particular focus on risk management and electronic trading. For further information please visit www.greyspark.com

©BestExecution

 

 

Market opinion : Marcus Hooper & Jannah Patchay

By
Ian Rycott
-

THE NEXT STAGE.

Marcus Hooper
Marcus Hooper

 

Marcus Hooper and Jannah Patchay, Agora Global Consultants look at the fate of equities

If we tried to place the maturity of the equities markets on a human life span, where would we put it? Teenager or young adult? Not likely. With the challenges and compression in equities right now it’s far more likely we’d say that, at the very least, equities markets are going through a mid-life crisis, and at the most extreme end, looking frail and progressing towards the stages of old age. There’s no suggestion that equities are somehow going to die, but it is increasingly looking like this asset class has long since reached its zenith, and is likely declining to a very different future equilibrium state.

The youthful explosion of growth has long since disappeared. Primary issues are in decline and many of the most visible ones to emerge recently have been fraught with difficulty. Facebook may well have deterred an entire generation of fledgling equity investors. Younger investors who had no particular interest in equities but did have a significant interest in this technological aspect of their lives are all too aware of what happened when this company came to market. The market should have taken advantage of this flotation to inspire confidence in these aspirant investors, but instead the outcome was disastrous, and it will take a great deal to rebuild the reputation of equities in the future. In Europe, Megafon’s recent issue was hit with its own difficulties and is no flag bearer for equity markets either.

When we look further down the food chain to the small and mid-cap stocks, sadly there is no better inspiration. Primary issuance in smaller companies is laggardly and if anything getting more burdensome. ICAP realised that, in order to make its acquisition of PLUS Stock Exchange more commercially viable, listing requirements had to be strengthened. A clear consequence is that this makes it even harder for smaller companies to launch and sustain on this market in future, but that really isn’t ICAP’s problem and nor should it be. Commercial viability has to be the first consideration.

Pleas that small companies should be encouraged and supported in order to drive the growth of the greater economy as a whole seem worthy, but are utterly hollow without concrete action backed by government and regulators. The extraordinary growth of equity market regulation can only act to stifle market access for smaller businesses. There are significant questions around whether or not equities markets are indeed fit for purpose, when it comes to enabling businesses to raise funds from investors, but these unfortunately are outside the scope of this piece.

We hardly need to mention the declining state of secondary markets trading and increased regulations are taking their toll already, even though many are not even close to coming into force. The shock wave is already ahead of the explosion.

So for those businesses trying to survive in the provision of financial services around equities, what to do? If you are an exchange, then fundamental change is the only viable way forward. Revenues from the old business models simply aren’t going to sustain; we are well down the road on the race to the lowest fee for trading. Vertical integration across trading, clearing and other services is only a temporarily sustainable model – this movement away from fungibility and standardization runs contrary to the general market zeitgeist. Whoever delivers the now-mythical consolidated tape will also have to smash the present Exchange charging model for market data fees; otherwise it won’t represent a low cost solution as demanded by European governance. That being said, even when the consolidated tape eventually becomes available, how much do besieged traders really want to identify that they need to set up new trading venues, with all of the costs that this will entail? The consolidated tape may indeed solve one problem, but it shall certainly be a stepping-stone to identifying the next problem and no doubt will open the doors to further regulatory scrutiny of the trading process.

Exchanges will evolve, decline or consolidate, and very likely trading firms will do much the same for the foreseeable future. It is, however, often less onerous for a trading firm, to diversify into more exciting asset classes, than it is for an exchange, which typically lacks the agility to react swiftly to changing market conditions. Those firms that are today weathering the storm best are generally those who are capable of combining introspection and forward thinking. They also tend to look at their businesses in terms of life spans and the maturity of the market and their activities. This type of business review, maturity modelling, is common practice in general industry and now increasingly used in financial services too. In general industry it is common for a product or service to follow the path of a defined life span, and in the case of equities we can now see this trend replicated.

Maturity modelling enables firms to identify positive opportunities rather than simply focusing on the negative impacts and challenges of a tough market environment. Even in hard times there are always commercial opportunities and you can’t spot them unless you set aside time to look at where you are, and where you want to be. The tough conditions aren’t unique to your own firm either, and the grass isn’t greener on the other side of the fence.

The current compression in listed markets, that makes it so hard for smaller companies to raise funds, actually lends itself to the emergence of opportunistic new businesses and new commercial opportunities. Crowd funding and crowd lending will certainly be beneficiaries of the equities market’s inability to service smaller companies, no matter how immature such models appear right now. After all, when you first saw the Facebook application, did you really think it would become so pervasive?

The pendulum is still hanging over the territory of cost reduction and survival. Even if we agree with the cliché that “this is the new normal”, the environment isn’t going to stay like this forever.

Market change is inevitable and inexorable. The companies that succeed are those who do not merely react passively to new environments, but who proactively help create those new environments through their forward thinking and innovative approaches

Marcus Hooper and Jannah Patchay provide financial markets consulting services through Agora Global Consultants.

©BestExecution

 

Post trade : Collateral management

By
Ian Rycott
-

THE BIG SQUEEZE.

SunGard_T.Allen
SunGard_T.Allen

 

A new dawn of central clearing is almost upon us but sourcing the right collateral may be tricky. Lynn Strongin Dodds reports

Ever since Dodd Frank, the European Market Infrastructure Regulation (EMIR) and Basel III hit the financial scene, collateral management has become a key buzzword. Navigating the new centrally cleared landscape is no easy task especially as the ink is not yet dry on the final versions. The impact will vary according to which camp industry players sit in but balancing the new regulatory minefield while trying to generate growth will prove challenging for all.

For the buyside, firms will not only have to post higher initial margins for all over the counter transactions to clearinghouses but the collateral used will be restricted to conservative assets such as cash or government bonds. In the pre-Lehman world, OTC contracts were typically bilateral agreements between parties with established relationships and they rarely had to deal with initial or variation margin – the amount of collateral required to cover changes in an instrument’s value. Fund managers relied on Excel spread sheets and legacy systems to manage, but in the new regulatory dawn they will have to post both margin, choose clearing members and negotiate new legal documents.

One of the biggest concerns is that there will be a shortage of eligible collateral to meet the growing demand. It is also difficult to put a number on the costs of the additional margining that will be required as there are many estimates being bandied about in the marketplace. They range from the International Monetary Fund forecasts of $2 trillion to $4 trillion, to industry trade group International Swaps and Derivatives Association’s which puts the margining of non-centrally-cleared derivatives at between $15.7 trillion and $29.9 trillion. Meanwhile the Bank of England’s figure stands between $200 bn and $800 bn.

Industry players attribute the discrepancies to the assumptions that are factored into the equations. Numbers can be skewed if FX and forwards are excluded or if netting is taken into account. For example, the ISDA report assumed no netting, while the Bank of England supposed netting benefits across cleared and uncleared interest rate trades of 95–99%.

The other unknown is the expense involved in overcoming these new hurdles. Not only will institutional investors have to optimise and transform unacceptable assets into eligible collateral but they could also face a drop in the netting options they can pursue since a single clearinghouse may not be able to initially clear all products traded by the client. “The buyside is facing more and more collateral needs on the back of Dodd Frank and EMIR and they are looking towards their service providers for product solutions to turn non eligible to eligible collateral,” says David Raccat, head of global markets for market and financing services, BNP Paribas Securities Services. “Although it is not completely clear when the implementation dates will be, there is no doubt it will create additional costs for the buyside.”

Ted Allen, vice president, collateral management at SunGard’s capital markets business, adds, “What we are seeing is financial institutions are making more effort to better understand the costs and collateral requirements pre-deal. This means calculating the margin impact of the transactions at different central counterparties and looking at collateral optimisation which is to reduce the total cost of collateral of the firm as a whole.”

Global banks as well as custodians have also adopted a more inclusive approach and can offer clients a comprehensive view of positions, where the collateral is being held and availability of assets across the firm. Sophisticated processes and systems have also been developed to optimise as well as transform assets with many pulling together services under one roof. For example, J.P. Morgan has merged its global clearing, collateral management and agency execution businesses into a new integrated offering while BNY Mellon recently launched its global collateral service which brings together the firm’s global capabilities in segregating, allocating, financing and transforming collateral.

Market participants are re-evaluating the way they conduct collateral management today,” says Tom Riesack managing principal at of Capco. “They realise that a siloed approach won’t work in the future and that it is essential to use what is available in the best possible way. This requires a holistic, company-wide view on collateral management as close to real-time as possible. The sellside is ahead while the buyside is still trying to get to grips and catch up with the regulatory impact.”

Despite their lead, banks and brokerage houses still have their work cut out for them, according to a recent survey by SunGard and IntelDelta, which canvassed 100 market participants including banks, asset managers and clearinghouses. To date, most banks have built their cleared OTC collateral management capabilities out of their existing bilateral function. This is mainly due to the inherent flexibility required by an OTC derivatives platform to be able to handle a wide variety of products and agreements. However, very few respondents – only 10% – felt that their systems and processes were fully complete in their ability to support the combined cleared/non-cleared model for processing collateral.

Breaking it down into specifics, the sellside is falling short on the full automation front as well as their collateral optimisation capabilities which are one of the keys if they want to capture new revenue streams. The study shows that only 21% of respondents felt that they were fairly advanced or better in this space. In fact, it is one of the areas in which banks may look to build or buy a new technology component rather than simply build on existing platforms.

While few doubt that the sellside will step up to the servicing and technological plate, the bigger question perhaps is whether their buyside counterparts will continue to trade derivatives at the same levels. A new study conducted by Tabb Group which polled 31 hedge as well as traditional funds, bank and insurance companies, showed that to date, the impending regulation has had little impact on notional volumes with 88% of the firms noting the size of their swaps books were flat to up over the previous year. However, up to 14% of fund managers have changed their trading patterns, with some withdrawing from the so-called exotic products because many of those contracts are ineligible for central clearing.

“I think what we will see is that the buyside will look at the potential costs and weigh those against whether trading OTC derivatives achieves a fund’s strategic goals,” says Fergus Pery, director and global product head for OpenCollateral in Citi’s Securities and Fund Services. “Some may find other routes while others especially those with liability driven strategies will continue to use them.”

For those that do want to continue to be active users of OTC derivatives, they should conduct a review of their strategies to establish what cleared contracts will be used, according to Jonathan Philp, a specialist in OTC clearing and collateral management at the business and IT consultancy Rule Financial. Buyside firms should also model the initial margin requirements of their portfolios and determine whether they are using the most cost-effective services. In some cases, using an outsourced collateral management service provider or moving towards a tri-party collateral management service which could bring real efficiencies in sourcing and deploying CCP-eligible collateral.

©BestExecution

Execution venues : Strategy

By
Ian Rycott
-

THE HONEYMOON IS OVER.

The screw is turning and MTFs now have to prove their staying power. Mary Bogan reports 

The tables have turned in the marketplace for execution venues in Europe. Caught on the back foot by the arrival of a pack of leaner, hungrier, techier and cheaper MTFs it’s not long since traditional exchanges looked like sleeping dinosaurs in the revolutionary new trading landscape created post-MiFID. More recently, however, it’s the alternative trading venues, not the exchanges, who have found themselves fighting a rear-guard action.

With business plans that were written for more buoyant times, many MTFs have found the going tough in subdued equity markets. In 2010, NASDAQ OMX Europe closed its doors for good while Turquoise, the trading platform set up by banks in competition to the London Stock Exchange (LSE), was bailed out by its arch rival. More recently, Chi-X Europe fell to BATS Global Markets then, in October, the Nordic-focused platform, Burgundy, was sold to Oslo Bors.

Even after this major consolidation the environment is still challenging. Over the last year, BATS’ market share in FTSE 100 stocks, for example, has fallen from 40% to around the 30% mark and, with indications that business is flowing back to the LSE, the young pretender has been forced to come up with new strategies to drive up revenues.

“What the new guys did was create a commoditised marketplace in trading equities,” says Hugh Cumberland, solutions manager with technology provider, Colt. “That worked when volumes were high but this is a new market scenario. The challenge facing all MTFs now is to figure out how they can innovate to make money out of a commoditised service, or how they can create or acquire new added-value businesses. But without deep pockets, that’s going to be tough. Diversification is a capital-intensive strategy.”

Innovate or die

Continued pressure on pricing, and innovation in the trade and post-trade space, will be key strategic goals for BATS Chi-X going forward, according to chief executive Mark Hemsley. But that hasn’t stopped the venue announcing effective price hikes in trading fees as it grapples with difficult conditions. From January, under changes to the “market taker” scheme operating on its two ‘lit’ books, BATS will no longer offer a rebate to customers adding liquidity to BXE, the old BATS Europe platform.

Traders taking liquidity will be charged a fee of 0.15 basis points, a removal rate which, BATS claims, is the lowest in Europe. Meanwhile, for adding liquidity to CXE, the old Chi-X order book, participants will receive a lower rebate of 0.15 bps while the 0.30 bp fee for removing liquidity remains the same.

Squaring the circle, says Hemsley, is about offsetting price increases with new ways to trade. “Whilst we do want a higher margin out of both books, we haven’t just raised prices. We’ve also been innovative in how the books are structured so we can put pricing pressure on different parts of the market. We’re proposing a different theory about how our books work and how customers interact with them,” he adds.

In tandem with pricing changes, BATS has also created new order types that allow traders to ‘sweep’ the two books. It means orders not filled on, say, BXE can be directed straight to CXE.

“What we’re saying is: try to get filled at 0.15 but, if you can’t, we will automatically send you straight to the other book and you will execute at 0.30. We were the first to offer this dual book structure but, before, they were just the original BATS and Chi-X books moved onto new systems. Now we’ve used pricing in an innovative way that not only differentiates between the books but also creates new order types to help customers access the books in a way they would logically if removing liquidity. The changes also leave posters of liquidity with an interesting decision too. They can either go for a rebate on CXE, or they can get a first look at liquidity on what maybe a less-busy BXE book, and stand a better chance of getting to the front of the queue to interact with the flow.”

Innovation in execution isn’t the only area of focus for BATS Chi-X. It is also in the post-trade space, following the introduction of four-way interoperability on its platform, is designed to drive down post-trade costs and make consolidation in the CCP market, easier, less risky and less costly to achieve. The firm has also turned its attention to the high cost of market data charged by the incumbent exchanges.

In October, BATS started charging for market data in a move some observers interpreted as another sign of a struggling firm. However, the change, says the firm, is more about provoking the argument on high data costs, a major barrier to a consolidated tape, than earning revenue. By showing it can charge a price for data that covers a significant part of the European market, BATS is hoping to exert pressure on exchanges to unbundle data packages and lower prices.

The decision though by BATS Chi-X to apply for a licence, and become a fully-fledged exchange, is probably the clearest sign yet that the writing is on the wall for the old MTF model. If given the go-ahead, BATS would be able to trade in derivatives contracts, compete for retail investors and challenge the LSE for listings business. It would also stimulate more flow from conservative fund managers whose mandates require they trade solely on licensed exchanges.

The jury is out

According to Peter Lenardos, an analyst with RBC Capital Markets, this latest move, which is part of a series of growth initiatives undertaken by BATS since its failed IPO in the US in March, makes sense. “This seems like a natural progression for the company to legitimise its business,” he says, although he expects it to have little impact on LSE’s market share.

However, as BATS’s transitions from Young Turk to establishment player, the need for a new trading organisation that can kick up some dust again is pressing, says one of the men who led the MTF revolution, the former chief executive of Chi-X, Alasdair Haynes. Heading a new MTF, Aquis, which plans to launch next year, Haynes says recent price hikes are just one indication that competition is weakening.

“The duopoly has become the pervasive model in Europe’s markets. Over 95% of all business in the UK, Germany and Switzerland, for example, is shared between two venues – BATS and the national market. Duopolies may be marginally better than monopolies but it’s not what regulators or the MiFID regulations had in mind. What we’re offering is a brand new business model with a brand new pricing structure designed specifically for the austerity age.”

The big idea behind the Aquis model is to turn trading into a utility business. In just the same way as mobile phone companies charge different prices for different packages, so the Aquis plan is to charge a monthly flat fee for connection and then a set fee relating to usage only and not the value of the share traded. “There is no reason why what you pay is linked to the underlying value of the equity. Why should it cost more to trade a Glaxo than a Vodafone when the underlying cost of the message is the same?” says Haynes.

According to Haynes, the “revolutionary” pricing model will result in “a significant lift in volumes, attracting business from mainstream investment banks, high frequency traders and mid-tier brokers and, in time, innovation could spread to other underlying asset classes.

Whether there is room for a third player, and whether a new MTF can succeed where others have failed, remains to be seen, says Steve Grob, group strategy director at Fidessa.“What is evident to date is market participants don’t want five venues; so far, they’ve preferred one primary and one alternative. The interesting question now is, with BATS raising prices and starting to charge for market data, will the marketplace decide it wants three venues – a primary, a pan European and a small domestic MTF that makes sure the big guys don’t run away with themselves. Can a new venue do to BATS Chi-X what BATS Chi-X did to the LSE? My feeling is it won’t be easy and it will probably need more than just cheaper pricing. But it’s not impossible.”

©BestExecution

 

Frédéric Hannequart : Euroclear

By
Ian Rycott
-
Fred Hannequart
Fred Hannequart

STRIKING ALLIANCES.

Fred Hannequart

Frédéric Hannequart explains how Euroclear Group is helping clients respond to the new regulatory regime.

There is so much regulation, but what are the most important rules impacting Euroclear?

Target2-Securities will have an impact in so far that central securities depositories will have to refocus their activities. The Central Securities Depository Regulation (CSDR) may have the effect of creating a parallel universe whereby some CSDs will have to ring fence their banking operations while others can operate under a derogation regime and keep them under one roof. I do believe the biggest impact on our business will come from Basel III and the European Market Infrastructure Regulation, both of which aim to mitigate risks and increase the need for collateral efficiency. We are restructuring our services to meet the new regulations. Many of the services are already core to our business, so the main objective for us is to deliver very quickly a range of relevant, value-added products that will benefit our clients.

What are the non-regulatory drivers?

There are two main drivers.

The days of the market growing 8% to 10% per year are gone. Growth has not come back since the financial crisis and it has been a tough few years. A lot of our clients are focused on cost reductions because business volumes have not increased. Cutting our fees is only one answer. We have also enhanced our services to provide more for less, particularly in collateral management, asset servicing and straight-through processing. It is also very important to be agile in this marketplace in order to respond quickly to new client needs.

The greater focus on cost has meant a trend towards mutualisation. This second business driver has led us to form partnerships and joint ventures with companies that are the best at what they do. For example, we recently partnered with SmartStream to create a centralised reference data utility service that sources securities data from data vendors and data originators, including CSDs and stock exchanges. We believe that together we can deliver meaningful back-office savings as well as the highest possible level of securities information accuracy. We also have an agreement with Broadridge to provide an automated end-to-end proxy voting service, as well as Markit which will distribute our Eurobond reference data.

Any other drivers?

The other main driver is the move towards collateralisation, which I think would have happened outside the regulatory requirements anyway because of the need for transaction security. The potential problem is the shortage of eligible collateral and we see our role as helping clients source and mobilise the right collateral more efficiently. In the past, this would be done through our tri-party services with assets that were held in Euroclear Bank, but we have recently opened our collateral management system to firms that do not have assets with us.

Can you explain in more detail?

In the summer we launched what we call the ‘Collateral Highway’, which helps market participants move securities from wherever they are held to serve as collateral for access to central bank liquidity, secured transactions such as repos and securities loans, and margins for CCPs (central counterparties) and bi-laterally cleared OTC derivative trades. It has multiple collateral entry and exit points and is open to a wide range of collateral givers and takers, including all CCPs, CSDs, central banks, global and local custodians, investment and commercial banks. BNP Paribas, the Banque de France and the CSD of the Hong Kong Monetary Authority were the first to sign on. We most recently reached an agreement with the Korea Securities Depository.

The aim is to facilitate the provision of collateral for multiple types of transactions and we believe that our open architecture model will help solve a lot of the problems. It was important for us not just to announce that we were working on this project, but to actually deliver the business and bring all our collateral management products together on the Collateral Highway.

What have you been doing at the CSD level on the collateral side?

We have been active in the collateral management space for over 20 years and we are sharing our expertise with the clients of our CSDs by expanding our triparty services across the group. Last year, Euroclear France (the French central securities depository) launched its first triparty collateral management service for the French market with Banque de France. The new service collateralises exposures arising from domestic credit operations conducted by the French central bank. We also launched a term delivery-by-value collateral management service in Euroclear UK & Ireland.

Can you explain why you launched EasyWay?

EasyWay is a new web-based tool that gives clients an integrated, holistic view of all their activities within Euroclear regardless of where the assets are held in the group. It can be accessed not only on a desktop, but also on an iPad and other tablet devices, which has become increasingly important in today’s world. People want to monitor and track information when they are out of the office and EasyWay allows them to do so. We launched in November and started with corporate actions, but the plan is to gradually extend EasyWay to include settlement, collateral management and other custody services. It will ultimately be used by clients of the entire Euroclear group of CSDs. We designed and built it in collaboration with clients with the main objective to give them a product that will help them efficiently and effectively perform operational tasks while better managing operational risk in real time.

Can you tell me more about your global plans?

We have increased our focus on emerging markets in Asia, Latin America and Eastern Europe because these markets are becoming more important and the markets are growing. We recently announced that UBS and HSBC conducted their first ever renminbi (RMB) triparty repo using Euroclear Bank and the Hong Kong Monetary Authority (HKMA) as collateral management agents, respectively. Also, Russia’s Federal Financial Markets Service decided to open its markets to Euroclear Bank, which we see as a positive step. We will soon be offering post-trade services for Russian OFZs, which are one of the most actively traded classes of the country’s government bonds.

[biog]
Frédéric Hannequart, executive director of Euroclear SA/NV is a member of the Euroclear Group management committee and also chairman of the board of directors of Euroclear Bank, Euroclear Finland, Euroclear Sweden and Euroclear UK & Ireland. He joined Euroclear in 1998 and was previously, chief financial officer of both Euroclear Bank and Euroclear SA/NV, responsible for Euroclear group finances, including each of its subsidiary companies. Earlier in his career, Hannequart headed up Euroclear Bank’s treasury and collateral services division. Before Euroclear, he was vice president of Bank Brussels Lambert (BBL) in Brussels, responsible for marketing the bank’s retail and private banking products. During his 12 years with BBL, Hannequart also held senior positions in the bank’s offices in Singapore and Australia. He holds a Bachelor’s degree in Law from the Katholieke Universiteit Leuven (Belgium), a Bachelor’s degree in Economics from the Université Catholique de Louvain (Belgium), and an MBA from Cornell University (USA).
©BestExecution

 

 

 

William Capuzzi : ConvergEx

By
Ian Rycott
-
Bill.Capuzzi
Bill.Capuzzi

HITTING THE SPOT.

Convergex, Bill Capuzzi

William Capuzzi talks industry trends and ConvergEx’s liquidity seeking algos.

There has been so much discussion about high frequency traders. What is your view?

It is the proverbial double-edged sword. On the one side, they have been part of the fabric in the US market for many years and are quickly evolving in Europe and Asia. Without them, spreads would widen and liquidity would become even scarcer. On the flipside, the velocity of the trades may introduce risk.  We are supporters of high frequency trading (HFT) so long as it can be properly managed.  In addition, regulators have a tough job defining HFT and what controls should be in place and many well intended rules often have unintended consequences.

How do you see the market evolving?

Europe has changed significantly on both the lit and dark side.  Five years ago, if you wanted to trade Vodafone, for example, you had to go to the London Stock Exchange, but now around 30% of volume is on multilateral trading facilities (MTFs) and there’s an ever-growing percentage of the market moving toward the electronic dark side.  In some ways it’s not surprising that it has evolved in the same way as the US which had exchanges and then alternative trading systems (ATSs).  The difference is that in the US it took about 20 years for the transformation to happen, but in Europe it was compressed into a relatively short space of time. Going forward, I think three types of liquidity will continue to dominate the European trading landscape – exchange, dark and MTF liquidity. We should, though, start to see disparate dark pools start to connect with each other due to MIFID II and other market forces as well as more transparency into this dark flow.

What do you see as some of the biggest stumbling blocks in Europe?

The lack of transparency and post-trade interoperability between clearinghouses has certainly been the most visible challenges facing both the buy and sell sides.  A consolidated tape would be a great improvement for both the buy and sell side because it would provide for greater transparency into lit prices.  In addition, regulation seems to be on the horizon in terms of truly understanding dark liquidity in Europe.  Although things are changing, the post-trade clearing and settlement environment in Europe is still much more inefficient and expensive than in the US. In many cases, the region still operates along vertical silos and although the concept of a European DTCC makes sense, it is complicated in terms of how to develop one.

How important is dark liquidity for the buyside?

Buyside firms have begun to look at different ways of accessing liquidity; especially as electronic dark liquidity has become much more relevant in Europe. They understand the many advantages of executing in the dark pools – minimal information leakage and market impact, potential price improvement and the potential to find natural liquidity for illiquid names. Industry reports peg European dark volume to be around 5% of the overall trading volume and many dark aggregation algorithms show an even higher percentage, so it is important that buyside firms do not miss this growing liquidity. However, transparency is key for these firms when they are executing in the dark and they need to know how orders are routed and where they are executed.

What do you see as your biggest challenges on the buyside?

Understanding and addressing the changing microstructure of the market is something we are constantly monitoring and adjusting tools and strategies to account for daily. We’ve dedicated significant resources to this effort.  This is different from transaction cost analysis in that it is not just how you perform on a post-trade basis, but also on the pre-trade and intra-trade sides.  As an example, before I trade and when I’m trading an order, what venues should I include in my search for liquidity, which dark pools should I trade in, what flow is potentially toxic  and what implicit and explicit costs should be considered.  We have developed a comprehensive suite of algos that provide a greater level of transparency and access to dark liquidity. Last year, we launched Spectrum which enables portfolio traders to execute across a diverse array of dark venues while allowing them to maintain their required cash and sector balances. It offers features that are included in many portfolio algos for lit markets, but are not always available in the dark such as three separate cash objective options based on a customer’s preferred level of cash constraint, enabling them to keep the appropriate level of cash on their books for a portfolio.

We also enhanced Darkest, our global liquidity-seeking algorithm, which allows users to simultaneously access the vast majority of the dark liquidity spread throughout Europe — all with a single order and with minimal information leakage.  This aggregation, across disparate dark pools, is extremely important as without this logic, it’s virtually impossible to wrap your arms around the liquidity available today.  We have agreements with the major broker crossing networks and dark MTFs and the algo directly connects to these pools. It constantly readjusts where orders are being sent in real time thus creating a one-stop-shop for access to dark European liquidity. We also show where orders were executed with real-time notifications and end-of-day reports.

How do you keep the edge in these markets?

We are in constant full speed ahead mode and are continually tweaking our algos from a performance standpoint. You cannot stand still because liquidity keeps shifting and there are different places to trade. Our goal is to win a greater share of the commission. We don’t have research or a commitment to principal trading, so it is all down to our trading ability and our technology to achieve best execution for our clients.

What other execution tools do you offer?

We have a suite of American depositary receipts (ADR) products which offers institutional clients the ability to convert underlying stocks listed in a number of foreign markets into ADRs, denominated in US dollars. ADR Direct® can execute conversion trades in 32 countries through any order or execution management system. The most recent additions include Indonesia, Korea, Malaysia, Thailand and Turkey.

We have Reverse ADRsSM which extends local trading into US trading hours so there is continuous trading when there is news and activity during the Europe/US overlap. Customers who trade ADRs in the US receive a local currency conversion price in seconds and settle the trade in ordinary shares in the local currency, all according to the local settlement cycle.  There is also ADR PlusSM which is an advanced percentage-of-volume algorithmic strategy that allows customers to source liquidity for their ADR trades in both the overseas and US markets. It provides customers with access to deeper pools of liquidity and the ability to achieve better price execution without having to manage the ADR conversion process.

Looking ahead, do you think market conditions will improve?

Post-election in the U.S., we are still in the pretty low part of the trough and a lot of money is still sitting on the sidelines. There are concerns over the fiscal cliff in the U.S., China’s economy and the eurozone debt crisis.  As a result of these factors I think portfolio managers will continue to hold their breath waiting for things to sort themselves out.  The collective hope out there is that 2013 brings renewed confidence in the markets both from a retail and institutional perspective.

[Biography]
William Capuzzi is president of  | Group’s global execution business. Previously he was a director at Pershing, responsible for their institutional product suite. He also directed their global re-engineering efforts firm wide. Prior to joining Pershing in 1999, Capuzzi was a principal for a large financial consulting firm.  He has a BSc degree from Wesleyan University and a Master of Business Administration in Finance from Rutgers University.
©BestExecution
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