Forefront Fintech Digest Week in Review: February 6-10
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Broker News
Main Street’s Brokers Earn Big Revenues in Retail-Options Boom
Bloomberg News | Eva Szalay
With the meme-stock army in retreat and crypto fervor cooling, the booming marketplace for stock options proved a lucrative substitute for US retail brokers last year. Now the explosion in short-term derivatives trading is showing no signs of easing, a boon for major online brokers as they gear up to report earnings. Demand for speculative options helped spur a more than $2 billion revenue haul in 2022 as market makers paid out beefy commissions to retail brokers, including Robinhood Markets Inc., to execute their orders.
Morgan Stanley Asia ECM Co-Head Andersson Retires After 15 Years
Bloomberg News | Pei Li
Magnus Andersson, Morgan Stanley’s Asia Pacific co-head of equity capital markets, is retiring after more than 15 years at the firm. Cathy Zhang, the other co-head of equity capital markets for the region, will continue to lead the team after Andersson’s departure, according to an internal memo seen by Bloomberg News that was confirmed by a spokesperson. Andersson joined Morgan Stanley in London in 2007 and has worked across a number of roles in equity capital markets in Europe and Asia Pacific. In 2019, he moved to Hong Kong and became co-head of equity capital markets for the region.
From Financial Planning to Dealmaking, Here’s How ChatGPT Could Impact Jobs Across Wall Street
Insider | Paige Hagy & Bianca Chan
Experts have predicted ChatGPT's impact on a variety of industries, and it appears Wall Street will be no exception. OpenAI's ChatGPT has been the subject of public fascination recently. Microsoft poured $10 billion into the startup during its most recent round at the end of January, which reportedly valued the startup at $29 billion. ChatGPT is a chatbot that generates conversational written responses to a user's questions and prompts by using generative artificial intelligence that recognizes and mimics human speech patterns while dispatching encyclopedic knowledge.
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Exchange, ATS & Clearing News
NYSE Plans to Pay in Full Majority of Claims After Glitch
Bloomberg News | Katherine Doherty
Investors burned by last month’s malfunction on the New York Stock Exchange can recoup all of their losses, but only if their trades fit certain parameters. The rest may wind up with nothing. The exchange operator told clients in recent days about its plans to cover all losses for orders posted or routed to NYSE, while loss-making trades triggered on other venues will not be covered, according to people with knowledge of the matter. In practice, three firms say NYSE will only reimburse roughly 60% of the claims filed. Others may qualify for more, one person said.
Google Cloud to Power Deutsche B?rse’s D7 Platform
Markets Media | Staff
Deutsche B?rse and Google Cloud have announced a new strategic partnership to enhance, economize and concentrate Deutsche B?rse’s cloud adoption. Specifically, Deutsche B?rse will leverage Google Cloud’s secure infrastructure and leading data and analytics capabilities to accelerate the development of its digital securities platform D7, innovate its digital asset market operations, and enhance its data distribution and data use cases in the cloud. With its hybrid, multi-cloud strategy, Deutsche B?rse Group has already successfully set new standards for cloud innovation within the financial services industry.
LSEG Capital Markets Leadership Structure Revealed with Two New Senior Equities and Trading Appointments
The TRADE News | Annabel Smith
The London Stock Exchange Group (LSEG) has promoted from within for two new senior equities and trading roles as it continues to overhaul its leadership, The TRADE can reveal. Lida Eslami, LSEG’s former head of business development for exchange traded products and its international order book, has been appointed head of equities and ETP sales and relationship management. She is reporting into Sally Francis-Cole, head of global FX sales and equities trading sales.
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Vendor News
Edgewater Hires Senior APAC FX Trading Veteran Chan Chong San To Run Expanded Asia Headquarters in Singapore
Press Release | N/A
Edgewater Markets, a leading provider of technology, trade execution and liquidity aggregation across foreign exchange (FX) and precious metals, today announced the addition of Chan Chong San as Managing Director of APAC. He will lead the firm’s Singapore office, supporting continued investment and growth in the region. Chan brings to Edgewater more than 30 years of experience in the region, where he has repeatedly spearheaded significant growth of FX trading volumes and revenues and has demonstrated deep experience in the non-deliverable forward (NDF) space.
LiquidityBook Marks Banner Expansion Year in EMEA, Announces 2023 "EMEA in Focus" Initiative
Press Release | N/A
LiquidityBook, a leading provider of cloud-native buy- and sell-side trading solutions, today announced 2023 as its “EMEA in Focus” year. On the backs of new client wins, user growth at existing clients, expansion of the firm’s managed FIX network in EMEA and key personnel moves, the region represents one of the firm’s fastest growing and highest potential regions. “As we continue to invest in developing new products and enhancements for the buy side and sell side, EMEA has emerged as a parallel growth track for LiquidityBook,” said Sayant Chatterjee, Chief Operating Officer at LiquidityBook.
ION: After the Hack, the Clean-Up
Risk.net | Luke Clancy, Costas Mourselas & Josephine Gallagher
Ion Group is allowing some customers to access its systems again after a cyber attack took them offline last week, though it could still be days before the affected services are fully functional. Clients were informed on February 5 that restoration of the servers and data for futures trading service XTP was around 80–90% complete. “They have already brought two players back online, and they’re replaying prior trade day activity to bring them current,” says a source who has been working with.
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Buy-Side News
Invesco Names Andrew Schlossberg as President and CEO
Markets Media | Staff
Invesco Ltd. announced at Marty Flanagan, under whose strong leadership Invesco has grown to become one of the world’s leading global investment management firms, has decided to retire as President and CEO on June 30, 2023. “During his time at Invesco, Marty’s relentless focus on understanding and meeting client needs while building a world-class investment organization has helped Invesco strengthen its global leadership position and grow its AUM from $400 billion to $1.4 trillion1,” said G. Richard Wagoner, Jr., Chair of the Invesco Ltd. Board.
AllianceBernstein Eliminates More Than 100 Jobs From Global Workforce
Bloomberg News | Loukia Gyftopoulou, Ruth David & Annie Massa
AllianceBernstein Holding LP has eliminated more than 100 jobs from its workforce after a year of turmoil in equity and credit markets, according to people familiar with the matter. The firmwide cuts, announced this week, included roles in North America and the UK, the people said, asking not to be identified discussing non-public information. One person estimated the exits amount to about 4% of the staff. The investment-management firm had 4,436 employees at year-end. In an earnings statement Wednesday, the company said it’s reducing headcount to lower costs after a 17% drop in assets under management from a year earlier.
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M&A / Investment News
Morgan Stanley IM Takes Full Control of China Joint Venture
Markets Media | Staff
Morgan Stanley Investment Management announced that it has received approval from the China Securities Regulatory Commission (CSRC) to take a full controlling stake in Morgan Stanley Huaxin Funds, marking a key strategic advancement for the company’s broader footprint in China. The equity step-up is subject to business registration and other procedures required by Chinese regulatory entities. Upon completion Morgan Stanley Investment Management will have increased its stake in Morgan Stanley Huaxin Funds from 49% to 100%.
Carlyle to Sell Metals Trader Traxys to Group Led by High-Frequency Firm Optiver
Bloomberg News | Jack Farchy
Carlyle Group Inc. and hedge fund tycoon Louis Bacon agreed to sell commodity trader Traxys to a group of investors led by high-frequency firm Optiver, and also including the company’s management. The deal could see Optiver and Traxys join forces to develop new derivatives markets for the niche metals Traxys specializes in, said Chief Executive Officer Mark Kristoff. Dutch firm Optiver is a top market maker in liquid electronic markets such as exchange-traded funds, while Traxys is a mid-sized physical trader with a focus on metals like rare earths, cobalt and tin.
Goldman Sachs AM Closes $2.5bn Growth Equity Fund
Markets Media | Staff
Goldman Sachs Asset Management announced the final close of West Street Global Growth Partners. The fund, which closed at $5.2bn, is Goldman Sachs’ inaugural direct private markets fund dedicated to investing in high-growth businesses with strong market positioning, high growth rates and durable business models. The fund represents the continuation of Goldman Sachs’ longstanding proprietary growth investing strategy. The fund exceeded its initial fundraising target to close on $5.2 billion, including $3.7 billion of commitments from a diverse group of institutional and high net worth investors globally, alongside a significant commitment from Goldman Sachs and its employees – making it one of the largest first-time growth equity fund raised in history.
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Regulatory & Legal News
Societe Generale Gets Pulled Into SEC’s Widening Messaging Probe
Bloomberg News | Steve Arons
Societe Generale SA has been drawn into the industry-wide investigation by the US Securities and Exchange Commission whether banks’ staff have made use of unauthorized communication channels. The French lender’s US unit received an information request from the SEC “focused on compliance with record-keeping requirements in connection with business-related communications on messaging platforms that were not approved by the firm,” it said Wednesday. “The inquiry follows a number of regulatory settlements in 2022 with other firms covering similar matters,” Societe Generale said, adding it’s “cooperating with the investigation.”
SEC Intensifies Crypto Enforcement With Exchange Settlement
Wall Street Journal | Paul Kiernan
The Securities and Exchange Commission escalated its enforcement campaign against the cryptocurrency industry Thursday with a settlement that could imperil a lucrative activity for other major crypto firms. On Thursday, Payward Inc.’s Kraken platform agreed to stop offering so-called crypto staking services in the U.S. and pay $30 million in penalties to the SEC. Staking allows investors to earn a yield by temporarily handing their crypto tokens over to either an intermediary or a cryptocurrency network. The first case of its type, the settlement advances SEC Chair Gary Gensler’s effort to rein in what he characterizes as widespread noncompliance with U.S. securities laws by crypto platforms.
Open Call Recap – SEC Equity Proposals: Disclosure of Order Execution Information (Rule 605)
TabbFORUM | Sam Belden
The SEC recently unveiled the most comprehensive reforms to the US equity markets since Reg NMS was instituted in 2005. Since then, there has been much debate and many questions about how the new rules will impact trading. Security Traders Association (STA) hosted an open call entitled “SEC Equity Proposals: Disclosure of Order Execution Information (Rule 605),” featuring Mark Davies, Co-Founder and CEO of S3, a compliance and trade analytics software company. In this write-up, Forefront Communications' Sam Belden unpacks the issues discussed on the call.
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Crypto & Digital Asset News
SEC Warns That Retirement Accounts’ Crypto Stakes May Be Unregistered Securities
CoinDesk | Jesse Hamilton
The U.S. Securities and Exchange Commission (SEC) again made its case Tuesday that crypto assets are often unregistered securities being traded on unregistered exchanges, issuing an investor alert warning that people should be wary of crypto in individual retirement accounts (IRA). Self-directed IRAs sometimes offer crypto investments, the SEC said, and those “may be securities that are offered without SEC registration or a valid exemption from registration, and may not be accompanied by complete or accurate information to aid investors in making informed decisions.”
How Mastercard, Goldman Sachs And Other “TradFi” Titans Are Using Blockchain To Rewire Global Finance
Forbes | Nina Bambysheva & Michael del Castillo
"There will always be new payment technology,” says Michael Miebach, chief executive of Mastercard, the world’s second-largest payments company. “First there were cards using ISO 8583 [ISO numbers refer to international standards] messaging technology, which is 50 years old, then real-time payments became real with ISO 20022. And then came blockchain, and we said okay, what would that solve? There’s a whole set of real-life problems out there that blockchain can solve.”
Crypto Is Becoming More Correlated to Stocks — And It’s Your Fault
Institutional Investor | Hannah Zhang
Digital assets are losing their hedging benefit just as more institutional investors enter the crypto world. In fact, allocators may be the cause. The correlation between the price of cryptocurrencies and the stock market has increased over time, according to a recent research study from Georgetown University. The study also found that crypto assets followed the market’s lead even more closely during periods of high market volatility, such as the Covid pandemic and Russia’s invasion of Ukraine. Many individual investors, market watchers, and entrepreneurs have argued that crypto assets are a safe haven given their scarcity and independence from national governments.
After ‘Crypto Bowl,’ Super Bowl LVII Will Be a Crypto Bust
Wall Street Journal | Joseph Pisani
The “Crypto Bowl” was short-lived. There won’t be any national ads from cryptocurrency companies during Super Bowl LVII, according to a spokesman for Fox, which is airing the matchup between the Kansas City Chiefs and the Philadelphia Eagles on Sunday. That’s a reversal from a year ago, when crypto companies splurged on star-studded ads during the game, earning it the nickname “Crypto Bowl.” “We did have that category blow up on us,” Mark Evans, head of ad sales for Fox Sports, said about the crypto industry during a call with reporters last week.
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