Tag Archives: trading technology

BNY-Mellon

BNY Mellon Introduces New ETF Tool

MarketsMuse blog update profiles The Bank of New York Mellon Corporation aka BNY Mellon, and their introducing a new ETF negotiation tool. This update is courtesy of Asset Servicing Times’ article, “BNY Mellon launches new ETF negotiation tool“,  with an excerpt below. 

BNY Mellon has introduced a new automated process to aid authorised participants in the creation and redemption of exchange traded funds (ETFs).

The new process allows these participants to use BNY Mellon’s ETF centre to conduct propositions and negotiations on underlying data for ETF baskets with a fund sponsor.

It is designed for large financial institutions that are chosen by such a sponsor to obtain the necessary assets for creating or redeeming an ETF.

Usually, participants will have to go through more than one institution to do this, before shares are transferred to a custodian bank.

The new system is designed to offer a more flexible and more efficient environment for negotiating ETF baskets.

Steve Cook, global head of ETF services at BNY Mellon, said: “Helping authorised participants become more efficient ultimately benefits the other participants in the ETF marketplace, ranging from issuers to those in the secondary trading market.”

To continue reading about this new ETF negotiation tool, click here.

lse plato retreat

What’s Next? Another Dark Pool: LSE Jumps In via Plato’s Retreat

MarketsMuse.com Tech Talk update profiles the latest news flash for FinTech wonks: Whilst the securities industry landscape continues to debate the “dark pool vs. lit market” topic, the London Stock Exchange (LSE) is taking a chapter from the behometh brokerdealer universe with their own scheme to introduce a dark pool, but the regulated LSE proposes to make their platform a ‘non-profit utility”. Below is courtesy of extract from Bloomberg LP reporting. MarketsMuse Editor’s note: Our MM title editor apologizes to those who might be confused by the reference to the once notorious Manhattan NY gathering place for those seeking to keep their wild side ‘dark’..but we thought it was a fun title nonetheless..
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cynic marketsmuse

Trading Technology, Fintech and “Fuhget About It!” A Cynic’s Soliloquy

The senior curator for MarketsMuse.com Tech Talk section was so inspired by a recent article “A Cynic’s Guide to Fintech” by Dan Davies, the Senior Research Advisor at Frontline Analysts and published via Medium.com, we wanted to share the opening elements with our audience..For those of you following the various forays into fixed income electronic trading platforms, Davies has a pernicky point of view worth considering. Dan Davies’ twitter feed is worth following as well.

Dan Davies, Frontline Analysts
Dan Davies, Frontline Analysts

A Cynic’s Guide To Fintech

Several business models that are bound to fail — and a few that might have a chance.

A pal working in and around the VC industry asked me the other week what I thought about financial technology, or as the unlovely abbreviation has it, “fintech”. Here are my edited thoughts, from the point of view of someone who spent many years as a banks and diversified financials analyst, and who has some fairly strong prejudices about what works and what doesn’t work in financial services industry. In my view, the portmanteau term “fintech” groups together a number of different business models; I haven’t included “something something Bitcoin” in the list because that’s a slightly different debate. Here’s my partial list …

Fintech business model #1. Reinventing past mistakes of the banking industry because you don’t know about adverse selection

There are a lot of people out there who have expertise in data science, and who think that the incumbents in the industry don’t have sophisticated risk-based pricing because their technological skills aren’t up to the task of identifying risks. These people tend to think that they can go into the credit cards business, or the payday lending business or even the car insurance business, and pick up market share from the dumb old banks by using algorithms! and social media data! and so on.

This is not true. It is true that banking IT is generally terrible, but actually, if you look into the digital archives of any large incumbent player, you will tend to find an extremely sophisticated, cutting-edge algorithmic risk pricing system which was thrown away a couple of years ago because it worked great in testing and then fell apart really badly in the real world.

There are two reasons why fine-grained risk based pricing has been such a catalogue of failure. First, banks almost never lose money on bad risks. They lose money on good risks, which go bad. The nature of algorithm-driven pricing is that you are searching out profitable niches, Moneyball style, in the form of customers which have some set of characteristics in common which marks them out as statistically better than the average. Unfortunately, this tends to mean that you get a book of business which has loads of little concentrations in them — you’ve got all the mixed-race dentists in Yorkshire, or something. And this, in turn, means that when the world changes, your risks tend to be very correlated and you lose years’ worth of profit in one lump. Continue reading

trading-technology-image

Talking Trading Technology: This BrokerDealer Has Buyside Clients’ Back

marketsmedia logoBelow extract courtesy of 08 Dec edition of MarketsMedia.com; reporting by Steve Marlin

Agency Broker WallachBeth Raises Tech Bar

WallachBeth Capital, a provider of institutional execution for buy-side investment managers, recently appointed quantitative trading veteran Matthew Rowley to the newly created role of chief technology officer, signaling the firm’s commitment to delivering customized services that address specific and often complex order-execution and related business-process needs.

The company’s founders, Michael Wallach and David Beth, “have a vision of the industry becoming even more technologically driven,” Rowley told Markets Media.

Matt Rowley, WallachBeth
Matt Rowley, WallachBeth

Rowley joined WallachBeth from Crédit Agricole Cheuvreux, where he was credited with helping the firm attain a leadership position in the global electronic brokerage space. more

Fragmentation Harming Market Quality, Warn Traders

Courtesy of MarketsMedia

With new trading venues catering to institutional investors ready to enter the fray, market participants say that more fragmentation is not necessarily the solution to cure market imbalances.

‘Fragmentation of the markets is not a good thing for long-term investors,” Manoj Narang, chief executive and founder of Tradeworx, a hedge fund and technology firm, told Markets Media. “Regulators need to look at ways to defragment the market. The more different venues there are, the more traders who are technologically sophisticated are at an advantage.”

Narang asserts that market fragmentation hurts, rather than helps, longer term investors because the technology utilized by institutions is not as sophisticated and advanced as those used by high-frequency trading firms. They are less able to effectively wade through the plethora of lit and dark venues in the markets.

“Having more trading venues just complicates matters,” Dennis Dick, a proprietary trader with Bright Trading, a prop trading firm, told Markets Media. “We keep adding more and more layers, adding exchanges and adding dark pools, to try to find a solution, but really the solution is to break it down and start simplifying it all.”

Noted John Houlahan, Chief Operating Officer of OMEX  Systems, a broker-neutral order routing and risk management platform that provides direct market access to major equities and options exchanges as well as so-called “dark pools” for broker dealers and buyside firms, “We seem to spend as much time adding routes to new exchanges and ECNs as we do building order and risk management applications. I’ve been in this business for 20 years, and I find myself scratching my head when discovering yet another new “liquidity center”, but with a different ‘spin’ compared to already-existing exchanges.

There are currently 13 equities exchanges in the U.S., along with nine options exchanges. Many of the exchanges are operated under the same corporate umbrella, with NYSE Euronext and Nasdaq OMX each operating three equities markets and two options markets apiece. This is an addition to the 40-50 dark pools operated by independent firms and broker-dealers.

“Do we really need 13 exchanges and 50 dark pools and 200 internalizing broker-dealers,” said Dick. “I know the Securities and Exchange Commission had good intentions with Reg NMS but now we’ve gone too far the other way. We need to start simplifying. The solution is not to add more dark pools.” Continue reading