Forefront Fintech Digest Week in Review: February 27 - March 3
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Broker News
BTIG Selects Head of Equities to Take the Helm
The TRADE News | Annabel Smith
Agency broker BTIG has selected its former head of equities and chief operating officer to become its new chief executive officer. Luke Hodges has been promoted to chief executive officer after spending the last two years and eight months as its operating and equities head. Hodges originally joined BTIG in 2020, tasked with developing a firm strategy, recruiting talent, and investing in technology to boost the firm’s trading platform and multi-asset product suite. He joined the agency broker after almost 18 years at Goldman Sachs as its EMEA execution lead.?
Brokerage Firms Face Internationalization
Traders Magazine | Anna Lyudvig
One of the interesting trends observed in the US retail markets is the internationalization of the US brokerage industry, according to Dan Raju, Co-Founder, Chairman & CEO of Tradier. They’re almost ten million brokerage accounts in the US that are coming from other countries including Asia Pacific, Middle East, Latin America, and Europe in the last few years, he told Traders Magazine. The US stock market provides the largest opportunity for citizens of many developing countries to diversify their domestic portfolio, he said. According to Raju, the retail markets have become so large that they are the single largest dominant force in the market.?
London Dealmakers Say Move to Wall Street From The City Is Just Starting
Bloomberg News | Dinesh Nair, Sabah Meddings & Sagarika Jaisinghani
London’s public companies are looking to New York as a preferable market for listing their shares, with City dealmakers handling frequent inquiries from clients asking how they could shift across the Atlantic. Just this week, it was revealed that two major companies had picked the US for their main listings ahead of London — CRH Plc, one of Europe’s biggest building materials companies, and Softbank-owned Arm Ltd., a jewel of Britain’s technology industry. It was the latest blow to the UK’s Conservative government which says it’s determined for London to prosper post-Brexit.
Why Goldman’s Consumer Ambitions Failed, and What It Means for CEO David Solomon
CNBC | Hugh Son
When David Solomon was chosen to succeed Lloyd Blankfein as Goldman Sachs CEO in early 2018, a spasm of fear ran through the bankers working on a modest enterprise known as Marcus. The man who lost out to Solomon, Harvey Schwartz, was one of several original backers of the firm’s foray into consumer banking and was often seen pacing the floor in Goldman’s New York headquarters where it was being built. Would Solomon kill the nascent project? The executives were elated when Solomon soon embraced the business.
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Exchange, ATS & Clearing News
HKEX to Open London Office
Markets Media | Staff
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to confirm today (Thursday) that it will open an office in London in the first half of 2023. The new UK office will further expand the Group’s international reach, promoting greater global connectivity and facilitating opportunities for HKEX’s customers and issuers around the world. The new office will promote the attractiveness of HKEX’s international equities franchise, its exclusive connectivity with Mainland China’s capital markets and its rapidly expanding derivatives product suite.
MTS and WeMatch Combine to Launch Euro Swap MTF
Risk.net | Lukas Becker
European government bond venue MTS has entered the interest rate swaps space, teaming up with fintech firm WeMatch to launch a venue that will start with the interdealer market before expanding to the dealer-to-client sector within the next year. The Euronext-owned venue switched on the MTS Swaps multilateral trading facility (MTF) this morning (February 27). It goes live with around 10 dealers, offering euro interest rate swaps trading using WeMatch’s technology. Once that has bedded in, MTS will look to expand into the dealer-to-client sector – taking on the might of Tradeweb, which has a 70–80% market share in the swaps market, depending on the metric used.
LSEG Shifting from Integration to Transformation
Markets Media | Shanny Basar
London Stock Exchange Group completed its acquisition of data provider Refinitiv two years ago and chief executive David Schwimmer said the firm is shifting from integration to transformation. Schwimmer said on the results call that the success of the Refinitiv integration means the group can bring forward delivery of the cost synergy programme by two years, and significantly increase the revenue synergy target. “We started the year in a strong position and we are not stopping here,” he said.
London Metal Exchange Faces Prospect of Fines Over Nickel Market Chaos
Financial Times | Harry Dempsey & Laura Noonan
The London Metal Exchange faces the prospect of hefty fines and censure after the UK’s top financial regulator launched an enforcement investigation into the company over the decision to freeze nickel trading during last year’s market mayhem. The Financial Conduct Authority said the probe, the first such action it has launched against an exchange, would include actively monitoring the LME’s efforts to improve its conduct, controls and governance.?
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Vendor News
Two Sigma Insurance Quantified and SambaSafety Partner to De-Risk Doctored MVRs for Commercial Auto Underwriting?
Press Release | N/A
Two Sigma Insurance Quantified (TSIQ), a leading underwriting technology company for the commercial property and casualty industry, today announced a partnership with SambaSafety, the market leader in driver risk management technology. The partnership makes SambaSafety’s suite of driver intelligence data available to users of TSIQ’s leading-edge underwriting workbench, SubmissionIQ. With the integration now live, underwriting teams utilizing the SubmissionIQ workbench have the ability to access a comprehensive set of SambaSafety data, including current and historical motor vehicle records (MVRs), traffic court data, aggregated telematics data and more.?
Exegy Announces Executive Leadership Appointments
Press Release | N/A
Exegy Inc., a global leader in intelligent market data and future-proof trading technology, announced today that David Taylor has been promoted to Chief Executive Officer. In addition to Taylor’s appointment, Exegy has hired Peter Feret as Chief Financial Officer and promoted Jason White to Chief Technology Officer. Taylor has been with Exegy for 18 years, serving in product strategy and engineering leadership roles, and recently as President. James V. O’Donnell, who has led the company since 2005, announced his retirement in tandem with Taylor’s appointment. Taylor will serve on the board, joining O’Donnell, who will remain a member.?
Man Group and Bloomberg to Bring Data and Front-Office Research Solution to Market
The TRADE News | Wesley Bray
Man Group and Bloomberg have entered a multi-year open-source technology development and product integration agreement for ArcticDB, a new DataFrame database product. Python-native database, ArcticDB, was built to address the continuously increasing amount of data and complexity of front-office research at Man Group, a challenge that many large buy- and sell-side institutions face. The agreement is a first-of-its-kind transaction for Man Group and the resulting product will be implemented into Bloomberg’s BQuant offering.
Broadridge Appoints Asia Pacific Head of Asset Management Solutions
Hedgeweek | Staff
Fintech specialist Broadridge Financial Solutions, has appointed Wout Kalis as Head of Asia Pacific for Broadridge Asset Management Solutions. As well as driving growth and product expansion, Kalis will oversee day-to-day operations and provide senior asset management leadership in the region. Kalis has extensive regional leadership experience in the fintech and fund administration spaces in APAC. Most recently, he served as Regional Head of Alternative Investment Services for BNY Mellon with responsibility for building out the company’s footprint in Asia.
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Buy-Side News
Bridgewater to Cap Funds and Cut Jobs
Hedgeweek | Staff
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Bridgewater Associates is planning to cap the size of its flagship hedge funds, invest more in artificial intelligence and machine learning, and cut up to 100 jobs, as part of a restructuring plan aimed at boosting returns, increasing profitability and developing new sources of revenue, according to a report by Bloomberg. CEO Nir Bar Dea, who took over running the business after founder Ray Dalio stepped down five months ago, disclosed the changes in an email on Wednesday to employees and clients, shifts that he said were necessary to “align with our strategic direction.”?
Adapting to the Decline of Block Trading?
Markets Media | Shanny Basar
With cyclical and secular trends driving the recent decline in block trading volumes, the buy side has to find smarter ways of interacting with fragmented liquidity to execute large size orders.?According to Liquidnet data, block trades of greater than 10,000 shares accounted for an average of just 0.026% of each S&P 500 stock in 2022, compared with 0.114% in 2017. This equates to a 77% decline in the frequency of block trading as a percentage of overall trading. Jeff O’Connor, Head of Americas Equity Market Structure at Liquidnet said the current macroeconomic conditions and volatility are making buy-side traders wary of trading large blocks due to the fear of adverse selection.??
Asset and Wealth Management to Drive Growth at Goldman Sachs
Markets Media | Shanny Basar
Goldman Sachs’ asset and wealth management platform is the key driver for growth and increasing management fees will be?key to meeting the firm’s targets. David Solomon, chairman and chief executive of Goldman Sachs, said at the bank’s investor day on 28 February that the group had identified four growth opportunities at the first investor day three years ago – asset management; wealth management; transaction banking; and consumer banking – and set targets and metrics in order to be held accountable and create more transparency for investors.
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M&A / Investment News
TD Receives Regulatory Approval to Acquire Cowen Inc.
PRNewsire | Staff
TD Bank Group and Cowen Inc. today announced they have received all regulatory approvals required under their merger agreement to complete TD's acquisition of Cowen. With this step completed, TD expects the acquisition to close on March 1, 2023, subject to the satisfaction of other customary closing conditions. Cowen provides highly complementary strengths to TD Securities' existing businesses. When finalized, the acquisition will add new capabilities in U.S. equities, including a strong sales, trading and execution platform as well as a renowned global research platform.?
Euronext, Allfunds Deal Off the Table
The TRADE News | Laurie McAughtry
Euronext has terminated its indicative proposal to acquire 100% of Allfunds’ share capital, the pan-European exchange group announced last night.?The group, which had offered €8.75 per share in an unsolicited acquisition proposal confirmed on 22 February, was in talks with Allfunds shareholders including BNP Paribas and private equity firm Hellman & Friedman (H&F) to finalise the deal. However, in a statement released at 11pm on 28 February Euronext said that it had informed the board of Allfunds that its offer was withdrawn. “Following due diligence we have decided to withdraw our offer,” Euronext told The TRADE this morning.?
Lazard Asset Management Acquires Truvvo Partners
Markets Media | Staff
Lazard Asset Management (LAM) announced that it has acquired Truvvo Partners (“Truvvo”), a U.S.-based firm with $3.8 billion of Assets Under Management (AUM), dedicated to providing strategic advice, wealth planning, and investment management to families. Truvvo and LAM have formed Lazard Family Office Partners, which combined will manage approximately $8 billion in assets, including LAM’s existing U.S. private client business, and provide advice and investment solutions across public and private markets. Lazard Family Office Partners will integrate investment management, risk management, and family office services into one offering to help meet the evolving needs of our clients.
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Regulatory & Legal News
SEC’s Gensler Steps Up Warnings to Money Managers on Everything From AI to Crypto
Bloomberg News | Lydia Beyoud
Gary Gensler is stepping up warnings to asset managers about their use of predictive data analytics and how they work with digital-asset firms. The head of the US Securities and Exchange Commission said on Thursday that predictive data technologies may create “inherent conflicts” of interest related to the duty that investment advisers have to their clients. Gensler said that he’d asked the agency’s staff to recommend how to address the issues.
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Close Ally of FTX Founder Sam Bankman-Fried Pleads Guilty to Fraud
Wall Street Journal | James Fanelli, Corinne Ramey & Alexander Osipovich
A third member of FTX founder Sam Bankman-Fried’s inner circle pleaded guilty to fraud charges and agreed to assist federal prosecutors, expanding the pool of cooperating witnesses against the former head of the failed crypto exchange. Nishad Singh, the company’s former director of engineering, pleaded guilty to six criminal counts, including conspiring to commit securities and commodities fraud, during a hearing Tuesday in federal court in Manhattan. “I’m unbelievably sorry for my role in all of this and the harm that it has caused,” Mr. Singh, 27 years old, told U.S. District Judge Lewis Kaplan.
Competition in Wholesale Data Market Is Not Working, First Phase of FCA Investigation Finds
The TRADE News | Annabel Smith
Following the launch of its investigation into the wholesale data markets last year, the UK Financial Conduct Authority (FCA) has found that competition within them is not working. In its phase one report, the UK watchdog concluded that some trading markets are concentrated on too few firms, limiting choice for institutions and making switching suppliers difficult. It also found that the process of procuring data – in particular the way it is sold – is too complex, again having the effect of limiting choices for investors when sourcing this essential data.?
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An Uphill Climb to T+1 Settlement
Risk.net | Nyela Graham
Next year, on the Tuesday following the Memorial Day holiday weekend, US equity and corporate debt markets will move to T+1 settlement. But it’s not the Tuesday after a holiday weekend that the industry was asking for. Earlier this month, three trade associations sent letters to the US Securities and Exchange Commission advocating for a compliance date of September 3, 2024. The Labor Day holiday weekend is shared with Canada, which will also move to T+1 in 2024. In 2017, when the US and Canada moved to T+2, the transition took place over the Labor Day weekend.
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Crypto?& Digital Asset News
Bybit Connects with Talos
Finextra | Staff
Bybit, the world’s third most visited crypto exchange, has announced a dynamic partnership with Talos, the premier institutional digital asset trading technology provider. The integration combines the power of Talos's robust trade infrastructure solutions with Bybit's access to a wide array of digital assets and best-in-market enterprise solutions including trading execution with precision. This partnership will enable Bybit to streamline access for institutions looking to get into the crypto space via the Talos platform. Additionally, this new collaboration will boost real-time liquidity, elevating the user experience on Bybit even further.
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Crypto’s Correlation with Macro Events, US Equity Markets Is Weakening, Bernstein Says
The Block | Adam Morgan McCarthy
Crypto prices are continuing to trade in a broadly similar range as the correlation with U.S. equities and macro events weakens, Bernstein analysts said. Crypto-related stocks opened higher on Monday, with Silvergate leading the gains. Bitcoin was trading at $23,800, by 10 a.m. EST, according to TradingView data. "The crypto market remained range bound, with bitcoin correcting early in the week and then recovering over the weekend, to end marginally lower by 3% to $23,600," the Bernstein analysts wrote in a note, adding that "ether was also lower by 2.3%, still trading in the $1,600 range."
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The Next Frontier For Bonds: Blockchain?
Wall Street Journal | Eric Wallerstein
Crypto news has been largely negative as of late, but blockchain technology has a multitrillion-dollar industry coming off the sideline to give it a boost. Roughly $1.5 billion of digital bonds have been issued over the past year, "up from almost nothing a year earlier," wrote S&P Global Ratings credit analyst Mohamed Damak. He expects issuance to grow. Digital bonds are like normal bonds, but hosted on the blockchain. While many issuers still use traditional banks and exchanges to list their bonds, some use strictly digital exchanges and others use a mix.
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