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People Profiles, Tech Talk

Buyside Block Trading Venue Luminex Readies Launch

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As if there were not enough electronic trading platforms,  the buyside remains determined to have their own equities trading platform open only to buy-side block trading peers. MarketsMuse Tech Talk Editors tip our hats to FierceFinanceIT.com  for the following update re  Luminex Trading & Analytics, the ATS block trading venue backed by a consortium of large asset managers, which recently announced an updated management team in preparation for the venue’s Q4 launch.

The new management team in place is led by Jonathan Clark, former managing director and head of U.S. equities trading a BlackRock, who will serve as Luminex Trading’s CEO. Clark replaces interim CEO Michael Cashel, who will return to his position as SVP of Fidelity Trading Ventures. Plans for Clark to take over as permanent CEO were previously announced, and as of Tuesday he has officially begun the role.

Plans to build the Luminex Trading venue, which is backed by nine leading investment managers that collectively manage approximately 40 percent of U.S. fund assets, were first announced in January.

The venue will be a buy-side only block trading platform “open to any investment manager primarily focused on the long term and with the desire to trade large blocks of stock with other investment managers,” according to an earlier announcement from the company. The nine investment managers in the consortium backing Luminex are BNY Mellon, BlackRock, Capital Group, Fidelity Investments, Invesco, JPMorgan Asset Management, MFS Investment Management, State Street Global Advisors and T. Rowe Price.

David Hagen, Luminex
David Hagen, Luminex

Luminex Trading announced four other members of the management team this week. Brian Williamson will be head of sales, tasked with further building the client base. Williamson was previously senior global relationship manager with Liquidnet. James Dolan is chief compliance officer, joining the company from Fidelity, where he was previously vice president of compliance for Fidelity Institutional. David Hagen will head product development as Luminex Trading’s new head of product. He was previously director at Pico Quantitative Trading. David Consigli is the company’s new controller, joining from IDB Bank.

Luminex says its platform will offer investment managers lower-cost and more efficient block trading, with transparent trading rules and protocols.

ETF News

ETFs in Europe: What’s Next?: Continent’s First Corporate Share Buyback ETF Courtesy of Powershares

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Below extract courtesy of Wealth Manager Magazine

The Invesco subsidiary Powershares officially launched its European PowerShares Global Buyback Achievers Ucits on the London Stock Exchange on 28 October.

The ETF, which is the first of its kind to be available in Europe according to Morningstar, invests in companies which have bought back at least 5% of their own shares in the past twelve months.

It tracks the Nasdaq Global Buyback Achievers Net Total Return Index, comprising securities from the Nasdaq US Buyback Achievers Index, through full physical replication as well as the Nasdaq International Buyback Achievers Index.

Bryon Lake, head of Invesco Powershares said: ‘This new product offers an innovative yet simple factor-based way to invest in global equities. Through the underlying index, the PowerShares Global Buyback Achievers Ucits ETF provides access to a “smart beta” approach to investing in companies that return value by buying back shares.

He added: ‘Buybacks can be more tax efficient than dividends, and this new ETF offers a low-cost, transparent and liquid vehicle through which to access this strategy.’

People Profiles, Strike Price

BuyWriting Back in Vogue: Mutual Funds Warm To “CYA”

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We all know that equity markets have been climbing the wall of worry for the past number of months. With both the Dow and S&P recovering to the sanguine levels not seen since the spring of 2008, covered call (buy-write) strategies within the mutual fund complex has until recently remained  a relatively untapped strategy, despite the time-tested success of many fund managers who have systematically used this style of hedged investing throughout both bull and bear market cycles.

But, “the tide seems to be turning,” according to recent coverage by Peter Chapman over at Traders Magazine, who spotlights a trend change in the course of his profiling the launch of two new covered-writing closed-end funds courtesy of Mario Gabelli’s GAMCO (” GAMCO Natural Resources, Gold & Income Trust”) and John Hancock’s  “Hedged Equity & Income Fund.” These are only two of the funds that are embracing a “CYA” strategy in the face of most market pundit predictions that the current upward trend is your friend, and should be expected to remain positive throughout the balance of 2012.

Whether the renewed interest in using the simplest of “hedging” strategies is attributable to percolating geopolitical concerns, or a need to enhance yield as interests rates continue to race to zero, or the growing consensus among market skeptics that what looks and sounds too good to be true often is (despite historical trends where markets typically rise into presidential elections), traders who have been around for more than 15 minutes  see the resurgence of institutional option-related strategies as an approach that simply makes sense.

Observed option market pro David Beth, the Pres/COO of  institutional options and ETF broker WallachBeth Capital, ” Its good [for investors] to have more options, no pun intended. The fund industry’s limited use of the most conservative option-related strategies has always been a “head-scratcher” for those who have lived through multiple market cycles over the years and always perceived that big funds are obliged to use conservative strategies.  Regardless of where one thinks the market is headed in the short or medium term, these new funds illustrate the growing recognition that systematic covered call writing can cushion downside exposure and enhance portfolio returns in both low-interest rate and stagnant market cycles; especially for funds with conservative mandates.” Continue reading →