Valverde taps Broadridge for tech update amid ASEAN equity growth

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August 19, 2024

Valverde Investment Partners, a newly established Singapore-based independent investment management firm specialising in ASEAN equities, has tapped Broadridge to enhance its portfolio management, trade order management, and risk analytics processes.

The move is designed to support Valverde’s newest fund launch – Valverde ASEAN+ Fund – and strengthen its operational efficiency, risk management, and data insights, enabling the firm to scale for growth.

John Foo, founder and chief information officer at Valverde, said: “Demand is rising as ASEAN is increasingly recognised as a standalone investment asset class, and having proven operational technology in place is key to our ability to deliver our innovative investment strategies for years to come.”

Hock Meng Tan, chief operating officer at Valverde, said: “Our approach involves scanning the entire capital structure to identify the most favourable risk/reward trade-offs. Broadridge’s investment management solution provides the operational efficiency, flexibility and scalability we need to deliver bespoke client solutions at the scale the ASEAN market now demands.

The Valverde ASEAN+ Fund, a Singapore Variable Capital Company, represents Valverde’s intention to realise long-term absolute returns primarily composed of publicly traded equities within Southeast Asian countries.

©Markets Media Europe 2024

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Iress’ UK operations contribute to strong H124 results

By

Alex Pugh

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August 19, 2024

Iress has seen revenue growth of 2% in the first half of 2024, against the same period last year, thanks in large part to a successful UK business and new leadership, the firm said.

The firm reported recurring and total revenue growth of 4% and 5% respectively on a continuing businesses basis (excluding the recently divested UK Mortgages and Pulse businesses) in H124 compared to H123. Iress saw its adjusted EBITDA growth hit 34% in H24 compared to H123, and an adjusted EBITDA margin of 19% over the same period.

Iress Group CEO Marcus Price said the firm is “executing well on our transformation initiatives”, a program of cost cutting and investing in sales, technology and account management, which the firm is set to have completed by the second half of the year.

“Strong action on cost reduction has delivered operating leverage with our adjusted EBITDA margin up 760 basis points to 21.7% and adjusted EBITDA growth of 52%. Along with disciplined capital management we are driving increased returns and have upgraded our adjusted EBITDA guidance to $A135 million-$141 million for FY24, adjusted to $A126 million-$132 million post asset sales.

“Through the sale of non-strategic assets, we have considerably strengthened our balance sheet which sits at 1.2x leverage following the completion of the sale of our UK Mortgages business early in the second half. Pleasingly, we now expect to be in a position to reinstate a final dividend for FY24.”

The firm divested non-core businesses in UK Mortgages (sold for £85 million in a cash deal) and Pulse, enabling the firm to focus on its “core competencies” of sourcing and wealth in the UK.

Iress also re-signed three significant clients in UK wealth, opening up approximately £43 million in revenue over the next five years.

Looking ahead, the firm expects full year 2024 adjusted EBITDA to hit somewhere between US$135 million and US$141 million, against previous forecasts of US$122 million and US$132 million.

Alistair Morgan, executive managing director for the UK, Iress

Iress’ executive managing director for the UK, Alistair Morgan, said: “We have now streamlined our business through the targeted Mortgages and Pulse divestments to concentrate on our core Wealth and Sourcing businesses, and are continuing to invest in our product and service delivery to clients. We are already seeing the benefit of this with improved revenue and margin, a testament to the dedication and client-focus of our people.

“The renewal of three enterprise Wealth clients with a combined contract value of £43 million over the next five years and the consolidation of our clients’ acquisitions onto Xplan demonstrates that the model of empowering the UK business to autonomously operate its product, technology and commercial operations is resonating with clients. Combined with new wins in Wealth and Sourcing, this demonstrates the strength of our value and commitment to clients in a key market for Iress that is poised for future growth.”

©Markets Media Europe 2024

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CFTC commissioner: no evidence of CFTC violation in recordkeeping case

By

Alex Pugh

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August 16, 2024

Commodity Futures Trading Commission (CFTC) commissioner Caroline Pham has claimed the regulator has “piggybacked” on a Securities and Exchange Commission (SEC) enforcement action in order to obtain a US$3 million settlement.

Referring to the CFTC case against TD Bank and Cowen, commissioner Pham has dissented, pointing to the fact that no CFTC registered associate person — an individual who solicits orders, customers or customer funds on behalf of an introducing broker (IB) — has violated CFTC recordkeeping requirements. Pham noted that the CFTC only reviewed evidence provided to the SEC and suggested that such enforcement could limit market access.

“I am unable to support an enforcement action that does not have any evidence that the alleged violations actually occurred. Therefore, I must dissent,” Pham wrote. “This case appears to be the CFTC’s piggybacking off the SEC’s investigation to misuse the power of the US government to obtain a $3 million settlement — all without any evidence of a CFTC violation.”

Pham suggested that because two of the firms outlined in the case have deregistered with the CFTC, the regulator may be creating an environment in which firms decide not to engage in business activity subject to CFTC oversight, and that firms would rather not participate in US markets than deal with the CFTC.

“The CFTC should be promoting greater access to markets—not limiting access. In the last several years, customers and clients now have less choice of market participants to conduct trading because of the de-registration of IBs. Fewer market participants leads to less liquidity and less efficient markets,” Pham added.

Broadridge names Simon Robertshaw CTO for front office trading capabilities

By

Alex Pugh

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August 16, 2024

Broadridge has appointed Simon Robertshaw as chief technology officer (CTO) for front office trading capabilities.

Based in London, Robertshaw will bring together and develop all front-office trading capabilities across the organisation – both sell side and buy side – across asset classes and jurisdictions.

Jason Birmingham, global head of engineering at Broadridge, said Robertshaw will lead the firm’s technology trading capabilities, and help to simplify and optimise the client experience.

“Simon’s impressive track record and his expertise in trading technology, across global markets, are an invaluable asset and will enable us to continue advancing our trading solutions for financial institutions,” Birmingham added.

Robertshaw joins Broadridge from The Bank of London, where he was chief operating officer. He has held leadership roles at firms UBS, Wachovia Bank, JP Morgan and Goldman Sachs.

On his new appointment, Robertshaw said: “I look forward to collaborating across teams to simplify and streamline trading solutions to optimise our customers’ entire trade lifecycle.”

©Markets Media Europe 2024

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EMCA 2024 WINNER – Key Influencer in Equity Markets

By

GlobalTrading

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August 15, 2024

EMCA 2024 WINNER – Key Influencer in Equity Markets:

Chris McConville, Global Head of Execution Services and Trading, Kepler Cheuvreux

Chris McConville, global head of execution services and trading at Kepler Cheuvreux, was named key influencer in equity markets at this year’s European Market’s Choice Awards. He spoke to Global Trading after the ceremony to share his story and offer industry insights.

You spent most of your career in UBS, what were your greatest lessons and takeaways from that period?
I spent 22 wonderful years at UBS, starting with Warburg Dillon Read and O’Connor. During this period, I gained invaluable experience in building teams, innovating products, and growing businesses. However, the most significant takeaways came from traveling the world and forming valuable relationships in cities like New York, Hong Kong, Jo’Burg and Zurich. I learned key lessons about understanding different cultures and conducting business internationally. This experience pushed me out of my comfort zone, taught me to embrace failure, and showed me the effective use of body language. The structure of a large global institution also emphasised the importance of discipline, impactful marketing, and effective communication. I carry these lessons with me today at Kepler Cheuvreux, where I continue to learn and grow every day.

How is your role at Kepler Cheuvreux enabling you to move the market forward?
We aim to show that smaller, agile boutiques can disrupt the market and gain share from bulge bracket firms. By focusing on sourcing unique liquidity, enhancing the client experience, and delivering solutions rapidly, we believe we can boost buy-side productivity and bring added-value services to the market participants. As firms grow larger, innovation often becomes more challenging. In my role, I can concentrate on the decisions that truly matter and spend more time with clients, without having to navigate the corporate politics and administrative overhead that are common in larger firms. Although investing in talent and products may seem daunting in the current environment, we are dedicated to demonstrating that with a disciplined roadmap, selective partnerships and executive board support, significant progress is possible.

What have been the most positive changes you have seen in the equities market over your career, and what have been the greatest challenges to resolve?
I believe the electronification of finance and trading has been very positive, and created a shift in attracting diverse talent and skill sets to the City and Wall Street. Although I embrace change, not everyone welcomes it equally. The greatest challenge I faced was others’ reluctance to accept algorithms and AI. Many feared electronic trading would signal the end of high touch trading and commissions, which, of course, did not happen. Instead, we saw firms continually investing in technology infrastructure to support low latency, improve analytics, and provide best execution. These investments led to faster trading, greater accuracy, improved efficiencies, and enhanced back-testing capabilities for investors, buy-side, and sell-side firms, which benefitted all facets of execution. I believe that, as an industry, we now have a greater understanding of how electronic and high-touch trading work in tandem. The emergence of what we refer to as mid-touch trading further demonstrates the complementary, rather than opposing, nature of different execution channels.

How do you approach the provision of better execution in equities trading on behalf of your clients?
Providing better execution is multi-faceted and involves various approaches. We believe the key priorities for clients are enhancing productivity, delivering white-glove service and top-tier customer support, and offering simple, user-friendly tools and products. To boost client productivity, we emphasise innovation and transparency, enabling clients to access our execution models, forecasting, and analytics tailored to their strategies. This led us to develop the KCx API Analytical Suite. Our API provides clients with actionable insights to improve the workflows and strategies of trading desks and portfolio managers. Additionally, we recognise the importance of delivering white-glove service and best-in-class customer support across all execution areas. This includes not only dynamic access to trading venues but also advanced analytics, reject and performance monitoring, assistance during system downtimes, and the highlighting of key events such as corporate actions, exchange and settlement holidays, and expiries. Finally, we strive for continuous innovation for our clients, such as portfolio algorithms, advanced analytical tools, and enhancements in ETF trading.

Are there universal best practices that dealers can adopt to provide sustainable and profitable equities trading units?
There are many ways to run a business, but achieving consistent profitability year after year is a unique challenge. Some firms accept that certain units will be unprofitable, viewing them as part of a larger strategy. Kepler Cheuvreux does not have that luxury; every unit must be profitable and self-sustaining. To maintain sustainability and profitability across our equities business, we need a comprehensive understanding of the entire group’s activities—research, execution, ECM, corporate, retail, advisory, and asset management—and what truly matters to clients. This is why our mission statement includes “building solutions which clients love”; we cannot afford to guess what clients ‘might’ want. Investing in products and businesses requires meticulous cost management and careful development. Agility is crucial for us. Clients expect rapid change and innovation; this is why we closely monitor market developments to stay relevant, as seen with Swiss AVD, new venues, and VWAP trajectory cross.

You are a keen advocate of supporting military veterans in the City, tell us about that work.
Besides finance, supporting military veterans is my passion. I work with ‘Bootnecks in2 Business’* and specialised military units to provide mentoring support for veterans transitioning to civilian life. I help them explore various opportunities, expand their networks, develop CVs, and prepare for interviews. My goal is to offer a personalised approach, tailored to each individual. My efforts encompass all branches of the military, including the British Army, Royal Navy, RAF and Royal Marines, spanning all ranks. I love every minute of it. The City is increasingly opening up opportunities for military veterans, recognising the unique and diverse range of skills they bring. A unique opportunity to blend finance and military veteran representation occurred at our inaugural KCx women’s event. We had the great honour of hosting a former military captain who delivered an inspiring interactive talk on decision-making, resilience, and leadership skills.

What are your top three priorities for the next year?
First and foremost, we are dedicated to launching KCx_Omni, which will complement our new research platform, ‘Insight . KCx_Omni is our new low-latency, cloud-enabled, next-generation execution platform that integrates HT, LT, PT, and ETF trading. It features a fully sequenced, event-based proprietary infrastructure, along with a new UI suite. Next, we aim to further improve our rankings with clients, striving to move further up the ‘top ten’ in both execution and research, competing with the world’s largest bulge bracket banks. Finally, we will continue to expand our footprint in regions such as the US, increasing our client coverage and broadening our product suite. With the successful implementation of the US T+1 regulatory change behind us, we can now focus on offering execution access into the Middle East via our European entity, and low-touch access to APAC, both of which are in high demand from our clients.

*Bootnecks in2 Business (Bi2B) is a network of professionals that helps all British Royal Marines Commandos, past and present, transition from military to civilian life.

©Markets Media Europe 2024

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EWIFA: Celebrating excellence in equities trading

By

Alex Pugh

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August 15, 2024

This year’s European Women in Finance Awards are fast approaching and Markets Media are looking forward to your 2024 nominees for Excellence in Trading – Equities.

Valérie Nöel, global head of trading at Syz Group, scooped the award last year at a glittering event held at the Langham Hotel in London.

Talking to Global Trading after the event, Nöel said winning an award for ‘excellence in equity trading’ is the result of years of hard work, dedication, passion and expertise. “The feeling of this recognition is immense.”

On the achievements of which she is most proud, Nöel told GT: “It’s undoubtedly the ability to persistently pursue this career with unwavering passion, spanning over three decades in the world of trading. I’ve navigated the ever-changing landscape of trading since 1994, weathering the storms of the internet bubble, the subprime crisis, the era of pink and blue ‘tickets’, the rise of algorithms, and the advent of digital assets.

“Throughout this journey, I’ve remained resolute in upholding my core values: authenticity, integrity, curiosity, and hard work.”

This year’s ceremony will take place at the Pan Pacific London on 25 September. Nominations are open until 23 August.

©Markets Media Europe 2024

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Cybersecurity and cloud lead budget priorities amid AI boom

By

Lucy Carter

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August 15, 2024

Mandeep Singh, senior technology analyst, Bloomberg Intelligence

Chief information officers (CIOs) are prioritising cybersecurity and cloud in their IT spending, according to a recent survey from Bloomberg Intelligence.

Budget priorities are shifting from servers, storage and networking solutions to large language model (LLM) deployment, the survey found, with Microsoft the preferred provider for cloud deployment.

However, cloud fell into second place for IT spending priorities since the study’s last iteration in December 2023, replaced by cybersecurity. This hike is likely the result of the CrowdStrike outage, which took place as the study was running and highlighted the risk of business disruption. Servers, storage and networking also fell back somewhat.

The broad prioritisation of cloud is the result of pressures to remain competitive by using emerging AI technology, the report suggested, with many setting the groundwork for future AI infrastructure with foundational models, GPUs and cloud technology.

As these groundworks become more well established, the study noted that many firms are moving from proof-of-concept to deployment for their AI copilots. Considering which public cloud provider offers the best value for cost, scalability and performance for data analysis, Microsoft’s Azure came out on top in the July 2024 survey, selected by 38% of participants. It swapped positions with Amazon AWS, which fell by 17 percentage points since December’s study.

Commenting on the findings, the report’s author, senior technology analyst Mandeep Singh, said: “We’re witnessing a significant shift in CIO preferences as enterprise AIs move towards the deployment of their copilots, with 66% of respondents saying they are in the process of deployment compared to December’s 32%. This, coupled with newfound visibility in the need for robust cybersecurity spending in the wake of the CrowdStrike disruption, have significantly shifted the spending needs of CIOs even in the last six months.”

Bloomberg Intelligence expects to see spending on AI models and workloads increase over the next year, it stated, as a greater number of firms move into larger-scale deployments.

©Markets Media Europe 2024

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Firms hit with CFTC, SEC recordkeeping and communication failure fines

By

Alex Pugh

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August 15, 2024

Gurbir Grewal, director of division of enforcement, SEC

More than two dozen firms have been hit with fines by US regulators the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) over recordkeeping and communications violations.

Truist, TD Bank and Cowen received penalties from both regulators.

Twenty six broker-dealers, investment advisers, and dually-registered broker-dealers and investment advisers were fined a combined US$392.75 million by the SEC over widespread recordkeeping violations under the Securities Exchange Act, the Investment Advisers Act, or both.

The SEC uncovered “pervasive and longstanding” use of off-channel communications by the firms’ personnel which preclude their ability to preserve and maintain records of these communications.

A number self-reported their violations (Truist, Cetera Advisor Networks, Hilltop Securities) and therefore received a reduced penalty.

Among the 26 firms targeted by the SEC are RBC Capital Markets (US$45m), BNY Mellon Securities (US$40m), TD Securities (US$30m), and Cowen (US$16.5m).

Gurbir Grewal, director of the SEC’s division of enforcement, said, “As today’s enforcement actions reflect, we remain committed to ensuring compliance with the books and records requirements of the federal securities laws, which are essential to investor protection and well-functioning markets.”

The CFTC found that Truist Bank failed to maintain required records, as well as failing to adequately manage matters related to its business as a CFTC swap dealer.

The firm has been ordered to pay a reduced US$3 million penalty, after it self-reported its failings to the regulator following an internal review which revealed “widespread and long standing use” – 2019 to the present – of unapproved communication methods by swap dealer employees, including senior-level employees.

CFTC director of enforcement Ian McGinley said, “Truist’s decision to self-report, cooperate, remediate, and be held accountable allowed it to benefit in the form of a substantially reduced penalty. At the same time, the CFTC’s message remains clear—recordkeeping and supervision requirements are fundamental, and registrants that fail to comply with these core obligations do so at their own peril.”

On Truist’s fine, Matt Smith, CEO of SteelEye, said: “Truist’s penalty highlights the increasing need for effective communication oversight, particularly in the highly complex world of swaps trading. Swaps, especially those involving multiple counterparties or intricate hedging strategies, generate vast amounts of communication across different channels. All this data needs to be captured. Further, analysing it requires specialist technology capable of understanding the nuances of financial trading.

“As evident in this case, self-reporting is becoming increasingly important and can lessen the impact of a compliance failure. This is why supervision systems should be able to not only capture and monitor communications but also flag any intent by employees to use unauthorised channels.

“As regulatory scrutiny intensifies, the importance of self-reporting and proactive compliance grows, making it essential for firms to manage this complexity effectively.”

TD Bank has been hit with a US$4 million CFTC fine over failure to monitor certain communications for hundreds of its swap dealer personnel over a five-year period.

McGinley said, “Communications surveillance is a critical component of an effective system of supervision. This order and the significant monetary penalty reflect that swap dealers must not only have robust systems to detect and prevent market abuse and other misconduct, they must also vigilantly oversee and monitor those systems to ensure they are working.

The order finds TD Bank lacked effective oversight over its electronic communications surveillance system, that the monitoring used to identify gaps in its surveillance was insufficient and that it did not escalate any of its surveillance technology issues to a more senior oversight body until after it discovered its years-long failure in June 2023.

TD Bank and Cowen were also charged with failing to maintain and preserve records that were required to be kept under CFTC recordkeeping requirements.

TD Bank must pay a US$75 million penalty, and Cowen a US$3 million penalty.

The CFTC found that TD Bank, from at least 2015 to the present, and Cowen, from at least 2019 to February 2024, failed to prevent employees, including those at senior levels, from communicating using unapproved communication methods, including messages sent via personal text.

There was a 31% increase in the value of fines issued in H1 2024 compared to H1 2023, with the Asia-Pacific region (APAC) seeing the steepest rise in penalties, totalling more than US$46 million – a 266% increase compared to H1 2023.

The findings come from Fenergo, which said the rise in the value of fines reflects a global regulatory crackdown and technology advancements, which enhance the accuracy of detecting illicit activity.

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How to excel at client engagement: ditch Microsoft desktop tools

By

Alex Pugh

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August 14, 2024

Client engagement now tops performance when it comes to investment flows. But asset managers, hedge funds, and wealth managers’ reliance on Excel and other outdated desktop tools may be hindering their ability to cater to clients effectively.

The findings are revealed in a survey conducted by Clearwater Analytics, in which 48% of 136 buy-side market participants selected client engagement as the primary driver of investment flows, with just 30% picking performance. The survey also found 44% are still overly reliant on Microsoft desktop tools, such as Excel, for the aggregation and management of their investment data for client reporting, rather than modern data management systems.

Given that it has been a bumper year for elections – more than half the world’s population will be making their way to the polls this year, and client reporting teams receive more requests during electioneering periods – the findings may suggest that teams could be falling short in their levels of client servicing due to their reliance on Excel, particularly during times of market turbulence.

Sam Idle, solutions consultant at Clearwater Analytics, said: “The formula for effective client reporting simply isn’t going to be found in Microsoft Excel, not with the amount of data that asset managers now have to grapple with. That is on top of the fact that the depth and range of insights investors now demand from those managing their money has dramatically increased over recent years.

“To produce both regular and bespoke client reports that are going to differentiate an investment manager from their competitors, the tools they rely on to aggregate and manage the vast swathes of data being used have to be more advanced than archaic Excel spreadsheets scattered across an organisation’s IT infrastructure,” Idle added.

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ESMA adds CDSC to list of recognised third-country central counterparties

By

Lucy Carter

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August 14, 2024

The European Securities and Markets Authority (ESMA) has signed a memorandum of understanding (MoU) with the British Columbia Securities Commission, recognising CDS Clearing and Depositary Services (CDSC) as a Tier 1 third-party central counterparty.

Under EMIR, the authority has 26 cooperation arrangements with non-EU supervisory authorities in place. This allows for cooperation between ESMA and authorities with equivalent legal and supervisory CCP frameworks to EMIR.

This latest MoU established cooperation arrangements between CCPs established in Canada, authorised by the British Columbia Securities Commission and which have applied for EU recognition under EMIR. EMSA already has MoUs in place with the Ontario Securities Committee and the Autorité des Marchés Financiers of Québec.

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EMCA 2024 WINNER – Key Influencer in Equity Markets:

Chris McConville, Global Head of Execution Services and Trading, Kepler Cheuvreux

Chief information officers (CIOs) are prioritising cybersecurity and cloud in their IT spending, according to a recent survey from Bloomberg Intelligence.

The European Securities and Markets Authority (ESMA) has signed a memorandum of understanding (MoU) with the British Columbia Securities Commission, recognising CDS Clearing and Depositary Services (CDSC) as a Tier 1 third-party central counterparty.

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