Ian McGinley, director of the enforcement division, CFTC
The Commodity Futures Trading Commission (CFTC) has issued a US$5 million civil monetary penalty to the Bank of New York Mellon (BNYM) following its failure to report millions of swap transactions to a registered swap data repository.
These actions were in violation in a previous CFTC order against the firm, the commission stated, and demonstrated a failure in the supervision of BNYM’s swap dealer business as required by the Commodity Exchange Act and CFTC regulations.
An order filing and settling charges with BNYM was issued on 26th August. Alongside the penalty, BNYM will retain an independent compliance consultant to review and advise on its compliance programme, it said.
Ian McGinley, director of the division of enforcement at the CFTC, commented: “Accurate reporting is a core pillar of the regulatory regime for swaps, and every individual data field matters. It is essential that swap dealers get this right. In that vein, I commend BNYM for its extensive cooperation, remediation, and decision to retain an independent compliance consultant to assist the bank in improving its compliance program and preventing the reoccurrence of misconduct.”
Piper Sandler Companies has completed its acquisition of alternative investment bank Aviditi Advisors.
Per a definitive agreement entered into in early June, Aviditi Advisors will become Piper Sandler’s private capital advisory group. Cofounders Ryan Schlitt and John Robertshaw will become head of private capital advisory and vice chairman of private capital advisory, respectively.
Commenting on the agreement at the time, Schlitt said: “We are extremely excited to be joining the Piper Sandler platform. It represents the next chapter of growth for our firm and service capabilities.”
Adiviti Advisors provides full lifecycle services to financial sponsors, global alternative investment managers and limited partner investors. It offers guidance and insights into primary fundraising with global project management, distribution capabilities and secondary solutions for GPs and LPs across asset classes and structures, and capital markets solutions for GPs across the lifecycle of their portfolio companies.
Through the acquisition, global co-head of investment banking at Piper Sandler Mike Dillahunt explained, the firm will be able to increase the value of its combined platform to its private equity client base.
Transaction Network Services (TNS) is expanding access to US equity options with connectivity and market data support for the newly launched MIAX Sapphire Options Exchange.
TNS will provide market data and order routing access to customers in an ultra-low-latency trading environment. With the addition of MIAX Sapphire, traders using TNS can now gain access to all 18 US equity options exchanges.
Tom Lazenga
Tom Lazenga, general manager, TNS Financial Markets, said: “TNS’ managed service approach streamlines everything from connectivity to market data support, allowing institutional traders to focus on their core activities.”
MIAX Sapphire will be MIAX’s fourth national securities exchange for US multi-listed options and will operate both an electronic exchange and physical trading floor to be located in Miami, Florida.
Matthew Rotella, executive vice president and chief technology officer of MIAX, said: “The launch of the MIAX Sapphire electronic exchange will be followed by the opening of a state-of-the-art physical trading floor in Miami in 2025 which will allow our market participants to access 100% of the multi-listed options market.”
The market is split on the FCA’s unbundling rules, which came into force on 1 August, with a core of potential early adopters, a substantial ‘wait-and-see’ group, and a number of sceptics.
The findings come from a Substantive Research survey of 33 global asset managers.
Mike Carrodus, CEO and founder, Substantive Research
The aim of the survey was to gauge asset managers’ reaction to the final rules and to see whether the FCA’s changes to their initial proposals will change the industry response. Key findings compare how the buy side feels now with the final rules in place, versus the reaction to the Consultation Paper in April.
After the FCA published its Consultation Paper on “Payment Optionality for Investment Research” (CP 24/7) in April 2024, the industry came back to the FCA with very clear concerns and requests, in advance of the final Policy Statement (24/9).
Mike Carrodus, CEO of Substantive, said: “The changes in asset managers’ attitudes are driven by changes in the FCA’s final rules when compared to the initial consultation. It’s clear that the biggest sticking point was the impression that the Consultation Paper was mandating strategy-level research budgets. This is something that many firms are loath to do, as they share research across the firm and would find allocating that spend at a granular level problematic.”
The FCA removed key operational barriers that were hampering the potential take-up of greater flexibility in research funding, and there is a group of asset managers gearing up to test market reaction, save money and potentially increase their access to research inputs.
The group of managers who are “Neutral and waiting to see how the rest of the market moves” has grown slightly to 45%, up from 42%
The potential early-adopter group who are “Broadly interested but not a first mover” has doubled to 18.2%, up from 9.1%
The proportion of those “interested but put off by the detail of the FCA guardrails” (on budgeting, disclosure, cost allocation and valuation) has shrunk by 9%, down to 9.1%.
More than a quarter of firms do not intend to move budgets and are sceptical that this will gain traction with peers, with 18.2% positioning themselves as “Sceptical and not engaged” and 9.1% “Not interested in moving”.
60% of respondents cited “Relaxation of the rules around strategy level budgets” as the most important change, followed by 18.2% who said the most important change was “Removing the requirement for buy side firms to have separate written agreements with providers.”
Carrodus added: “We are now faced with two sets of firms with completely opposing views, both representing approximately a fifth of the market, and nearly half of the buy side on a ‘wait and see’ mode.”
The market is also split when it comes to expectations on how fast the new rules will be adopted. The group of firms that expect no change within 2 years has grown by 7%, up to 42.4%. In contrast, within the same 2 year time-frame, 15.2% think that the majority of research budgets will be client-funded, with a significant 42.4% expecting that there will be a “broadly equal mix of client-funded and P&L” budgets by then.
Carrodus concluded: “The source of this uncertainty is the conversation with the end investor. The FCA has clarified that it only needs asset owners to be informed of the new policies and changes if asset managers do move to “joint payments”, so explicit consent is not required. However, many senior executives on the buy side do not want to open up the fees discussion during such a challenging time for asset gathering and retention.
“As these are new costs being reintroduced after 6 years of asset managers paying for them out of their own pockets, they anticipate pushback from clients and do not want to have to try and figure out what to do if a handful of clients object and opt out of paying while the rest acquiesce.
“Brokers and independent research providers may target a more lucrative future after years of price deflation, but we’ll only know if those hopes are well founded when the first canaries venture down the coalmine this winter!”
Global commercial real estate services firm Cushman & Wakefield has hired Miles Treaster as president, capital markets, Americas, effective 1 September 2024.
Miles Treaster
Based in San Francisco, Treaster will oversee all operations and shape the long-term vision of the capital markets group, strengthening the capital markets platform and driving scalable growth through the integration and pairing of AI technology and data.
Andrew McDonald, global president and chief operating officer, said: “Today’s announcement demonstrates our commitment to growing our institutional capital markets platform with the right expertise. We are transforming our capital markets business, and Miles is the right leader to drive our collaborative and data-driven approach to advising our investor clients.”
Treaster has more than 20 years of experience in institutional real estate debt and equity capital markets with an extensive background in acquisitions, structured finance, management and disposition of office, multifamily, industrial, retail and hotel asset classes.
ASIC has affirmed its commitment to improving Australian market integrity in its 2024-25 corporate plan, naming consistency and transparency across markets and products as a strategic priority.
In the plan, Joseph Longo, ASIC chair, discussed what ASIC is already doing in this space. “ASIC is one of Australia’s most active law enforcement agencies. We are in court nearly every day of the year to hold those who breach the law to account and to deter misconduct. Last year we significantly increased our number of new investigations and many of those matters will result in important compliance and enforcement outcomes in the year ahead,” he commented.
Four other strategic priorities are listed in the plan, namely improving consumer outcomes, addressing financial system climate change risk, providing better retirement outcomes and member services and advancing digital and data resilience and safety.
A number of factors have led to these areas being prioritised, ASIC said, including an uncertain economic environment, climate change risk, an ageing population and technological change – both to the advantage of the financial system and as a threat.
Longo added: “While the overarching themes of our existing strategic priorities remain consistent, our updated corporate plan demonstrates how we are evolving and adapting to the changing needs of our operating environment.
“Our latest corporate plan and strategic priorities represent the next step of ASIC’s transformation journey to being a modern, confident and ambitious regulator.”
Pieter Koekemoer, head of personal investments, Coronation Fund Managers
Coronation Fund Managers has listed three new actively managed exchange traded funds (AMETFs) on the main board of the Johannesburg Stock Exchange (JSE), following its launch of the Coronation Global Strategic USD Income Prescient Feeder AMETF (COUSDI) earlier this month.
In partnership with Prescient Asset Management, Coronation was the first to list an AMETF on the JSE. Sharing the firm’s intentions upon the announcement, Pieter Koekemoer, head of personal investments at Coronation, stated that six AMETF feeder funds would be launched.
On the latest listings, Adèle Hattingh, manager for business development and exchange traded products at the JSE, noted: “These new listings play a pivotal role in enriching our offerings, providing investors with sophisticated, flexible investment options that cater to a broad spectrum of financial strategies and goals.”
The first of the latest three funds is the Coronation Global Capital Plus Prescient Feeder AMETF (COGCAP), which feeds into the Coronation Global Capital Plus Fund. This is a moderate risk balanced fund for investments lasting more than three years. It is invested in international assets, primarily in developed economies.
The Coronation Global Managed Prescient Feeder AMETF (COGMAN) feeds into the Coronation Global Managed Fund, invests into various asset classes globally across both developed and emerging markets.
Finally, the Coronation Global Equity Select Prescient Feeder AMETF (COGES) feeds into the Coronation Global Equity Select Fund. This fund targets attractively valued equity opportunities worldwide, investing 70% in companies listed in developed markets.
Koekemoer commented: “We are very pleased to make our well-established offshore range of expertly managed investment opportunities available to clients who prefer on-market investing. We will be listing two more AMETFs later this month, and will continue to add to our suite over time.”
Corporate and trading risk solutions provider KRM22 Group has adopted PortfolioScience’s RiskAPI platform to power the value at risk calculations in its Risk Manager application.
KRM22’s Risk Manager, a web-based graphical user interface, brings together real-time P&L and exchange margin, parameterised stress risk, value at risk and further account credit metrics to give firms greater control over their trading.
Using RiskAPI, users will be able to generate dynamic risk calculations through multiple levels, the firm stated. Covering data, computing and analytics across global equities, options, currencies and fixed income, alongside global physical, listed and OTC derivatives, will allow for more comprehensive risk analysis infrastructures to be implemented, it added.
Dan Carter, CEO of KRM22, commented:”We are delighted to have partnered with Portfolio Science’s RiskAPI to bring full Value at Risk calculations on account portfolios alongside KRM22’s real-time P&L, margin and stress results. This will allow risk managers full visibility across their client portfolios in one place, which, when combined with the integration to KRM22 Limits Manager, allows full control of trading activity in a first for our industry.”
Ittai Korin, founder and president of PortfolioScience, added: “The risk management requirements of the sell-side brokerages served by KRM22 are challenging and complex. We are pleased that they selected RiskAPI to power the VaR calculations available in the Risk Manager product with dynamic quantitative risk calculations.”
Kepler Cheuvreux was the winner of this year’s best electronic equities trading award at the European Market’s Choice Awards. Bobbie Port, KCx’s Head of Electronic Distribution, tells Global Trading what has led to the firm’s success.
Bobbie Port, Head of Electronic Distribution, KCx.
What has driven your success this year?
This year, we have achieved revenue growth, improved market share, and increased client mandates across all our execution businesses.
Following the launch of our new global execution strategy, we set about improving our engagements with our clients. Through constant client consultations and partnerships, we focus on delivering products designed to respond to the evolving needs of our clients. Our clear priority is to remain focused on our mission statement “to build solutions which clients love”.
Our KCx API Analytical Suite enables clients to access the same forecasts and analytics that we use for our own quantitative intelligence, which powers our trading engine.
Our new liquidity-seeking algorithm, Pulse, launched in Q3/23. It targets arrival price and strategically prioritises non-displayed venues to source liquidity. The adoption rate has been very impressive, with over 500 clients now using the algorithm.
By leveraging our Flow Aggregation design, we have successfully implemented aggregation of multiple orders to support consolidation of algorithmic flows for the same security, improving execution quality, reducing market impact, reducing costs, and boosting overall trading efficiency.
Our DynVWAP model utilises our new proprietary volume forecasting and uses real-time data to continuously predict volume distribution throughout the trading day. The model enables us to manage unexpected events, such as sudden spikes in volatility or liquidity, more effectively.
How have you focused investment to support this growth? As our electronic trading business grows our priority is to deliver innovative products for our clients. To support this growth, we have focused our investments into diverse talent, new expertise and technology advancements.
In the past two years, we have made deliberate efforts to recruit talent from a variety of sectors, including stock exchanges, technology and asset management firms. This approach has brought fresh perspectives and innovative solutions.
As our electronic trading footprint has been growing, we have introduced two newly formed teams; Algo Trading and Market Structure. The Algo Trader role bridges the gaps between trading, sales trading, and quants, breaking down traditional barriers across teams. The market structure role oversees macro and micro level content and provides key regulatory insights to assist clients in navigating the complexities of the equities trading ecosystem.
Continuous investment into our custom framework allows us to maintain a resilient and agile platform that can sustain the increasing growth of our algorithmic usage. This framework offers high flexibility, allowing users to tailor trading algorithms by designing their own specifications with our team to meet their unique needs and preferences to fine-tune the approach with precision.
We expanded our global fix specification with over 70 new algorithmic parameters, allowing for greater customization and precision in executing client strategies. This formed the foundation for new product rollout such as PAIRs Algo Trading, Scaling Close, CBOE Super Sweep, Swiss AVD and TAL.
What has been customer response? Our clients value our transparent, proactive and collaborative approach. We have successfully established a strong foundation of customer loyalty, with clients consistently supporting and partnering with us as we introduce new products. The market clearly appreciates disruption and continuous change driven by agility.
We are pleased to see significant progress in the US, both in acquiring US-based clients and trading in to the US market. Through 2023 and 2024, 15% of our new client acquisitions came from the US, making it our second most successful region after the UK, which accounted for over 30% of new clients. The US is now our second-highest region in terms of executed volumes.
According to an industry survey, we rank in the top 10 for European Cash Equities (Execution and Research). Our low-touch product gained share in all client regions, with double-digit gains across the US and Europe. More interestingly, our recent investments and client engagements have further strengthened our high-touch offering, with double to triple-digit share increases.
In which areas are you building the team (numbers/skills etc), and why? We are strengthening all KCx teams, having welcomed over twenty new members since early 2022. Ten new members sit within Electronic Distribution and the Quant space, reflecting our commitment to expanding our algo product offering.
The US region is a core part of our strategy and one of our fastest growing offices, now housing a team of trading specialists. We are investing significantly in both personnel and product development, reinforcing our commitment to expanding our presence and capabilities in that region. In the last year, we have fostered new relationships with market leading technology firms, venue operators, and execution partners to enhance our access to unique liquidity.
Our clients will notice an increased focus on market structure. There is a growing interest from our European clients to understand US microstructure and how this compares to Europe, such as guidance around the US SIP versus the potential EU consolidated tape, and the ATS ecosystem versus the MTFs and Periodic auctions, that exist in Europe. Lastly, our US clients have shown interest in the Microwave technology developed in Europe, a technology that has been highly effective in the US.
How will the market see your offering evolve over the next twelve months? The market should expect more innovation, products and advancements in our technology over the next 12 months.
Our partnership with Adaptive will bring multiple benefits to our client base. This a very ambitious project aims to deliver a proprietary, scalable sequencer-based architecture known as KCx Omni enabling us to continue innovating at a rapid pace. The new architecture will greatly enhance our electronic trading capabilities.
An extra layer of integration will include our API powered TCA platform KCx Vector, delivering advanced analytics and customized TCA for order performance monitoring, live TCA, pre- and post-trade analytics.
In 2022, we selected BMLL as a partner. By leveraging BMLL’s order book analytics and advanced insights we better understand market microstructure and optimise our trading strategies. Clients will notice improved routing capabilities in the US and EU.
Client demand in Portfolio trading has increased over the last 12 months. To enhance our offering, we invested in a new PT system that has already been deployed across our execution desks. This upgrade not only strengthens our existing services but also empowers our expansion into new markets, including APAC, and MENA (via our European entity).
The Kepler Cheuvreux team at this year’s EMCAs on 3rd July.
Bajraj Briah, head of multi-asset services, Liquidnet
Liquidnet has released a multi-asset services offering, in response to member demand. Balraj Briah has been appointed head of the division.
The services provide access to multi-asset liquidity along with bespoke trading tools and analytics, all through a single desk. This will help to enhance decision-making processes, Liquidnet stated, and will support buy-side firms as they seek to improve efficiency.
Chris Jackson, global head of equity strategy and head of equities EMEA at Liquidnet, observed: “We continue to see subtle yet significant changes in the structure of the markets. As the asset management industry evolves, we see our members taking a broader view of the capital markets environment – many are diversifying by asset type, creating new opportunities to outperform for their clients. The launch of our multi-asset services desk is a natural next step in this evolution.”
Briah, who will lead the new division, has 25 years of industry experience and joins Liquidnet from BTIG, where he has been managing director since 2017. Earlier in his career, he spent six years at Citi in a number of sales trading roles.
On the new offering, he commented: “Technology is improving, allowing asset managers to consolidate the execution function across assets into single desks. This presents both opportunities and challenges for the asset management industry. For traders, it is the chance to learn new skills, increase their value within the organisation as well as rationalise technology and reduce cost.
“However, for heads of desk, this move to multi-asset creates a number of challenges around best execution, training staff, technology and liquidity. There is a role Liquidnet can play to help the buy side execute efficiency in this space and I’m excited by the opportunities ahead.”
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