Forefront Fintech Digest Week in Review: February 21-24
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Broker News
Credit Suisse Names Hosie as Head of Global Equities
Bloomberg News | Olivia Tam & Myriam Balezou
Credit Suisse Group AG named Neil Hosie to lead the bank’s global equities team, amid ongoing management turnover and restructuring at the investment bank unit. Hosie will be based in London and report to co-head of markets, Michael Ebert, according to an internal memo seen by Bloomberg News that was confirmed by a spokeswoman. Hosie, who has been with Credit Suisse since 2017, was previously co-head of global equities alongside Doug Crofton, who is leaving to join Royal Bank of Canada in May.
Citigroup’s Jane Fraser Bucks Rivals as 2022 Pay Rises to $24.5 Million
Bloomberg News | Jennifer Surane
Citigroup Inc. awarded Chief Executive Officer Jane Fraser $24.5 million in pay for 2022, making her the only major US bank CEO to receive a bump in compensation for the year. In her first full year atop the company, Fraser, 55, was granted stock awards totaling about $19.6 million, a cash bonus of $3.45 million and $1.5 million in salary, the New York-based bank said in a filing Tuesday. “Notwithstanding challenging macroeconomic and geopolitical developments, under Ms. Fraser’s leadership Citi made solid progress on each of our priorities, and the compensation committee recognizes the strategic direction that took shape during 2022,” Citigroup’s board said in the filing.
JPMorgan Restricts Employees From Using ChatGPT
Wall Street Journal | Alyssa Lukpat
JPMorgan Chase & Co. is restricting employees from using ChatGPT, according to a person familiar with the matter. The bank didn’t restrict usage of the popular artificial-intelligence chatbot because of any particular incident, the person said. It couldn’t be determined how many employees were using the chatbot or for what functions they were using it. ChatGPT has grown increasingly popular since the startup OpenAI released it in November, crossing a million users a few days after its launch. People have used the chatbot to automate tasks at work and school, raising questions about how AI could replace some white-collar jobs.
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Exchange, ATS & Clearing News
LSEG’s FXall and Saphyre Form Strategic Alliance to Digitise Client Onboarding for Buy- And Sell-Side
The TRADE News | Wesley Bray
London Stock Exchange Group’s (LSEG) FXall business has entered a strategic alliance with Saphyre to digitise account onboarding for FXall clients through Saphyre’s AI technology. Saphyre’s patent-approved AI technology gives liquidity providers the ability to systematically approve accounts and is validated and live for a subset of FXall clients – with plans for all FXall clients to receive the offering as additional enhancements are made this year. The technology will offer asset owners and buy-side users the ability to share all their FX account data and documents with their respective liquidity providers and FXall.
IEX Taps Potential Partner for Regulated Crypto Exchange
Fox Business | Eleanor Terrett & Charlie Gasparino
Brad Katsuyama is hoping the second time’s the charm. Katsuyama, the Chairman of the stock exchange IEX and his staff are now in talks with publicly traded cryptocurrency exchange Coinbase to create a federally approved digital asset marketplace, people with direct knowledge of the matter tell Fox Business. As reported by Fox Business, Katsuyama, a veteran trader who was the protagonist in the book "Flash Boys," author Michael Lewis’s account of high-frequency trading on Wall Street, was previously meeting with officials from the Securities and Exchange Commission for a crypto exchange that would have been the first to receive an explicit blessing from Wall Street’s top cop, Gary Gensler.
Hong Kong to Consider Allowing Stock Trading During Severe Weather
Bloomberg News | Kiuyan Wong, Shirley Zhao & Charlotte Yang
Hong Kong stock traders may no longer get their “typhoon holidays” as the city’s bourse explores arrangements to continue trading under severe weather. Hong Kong Exchanges & Clearing Ltd. will study a series of proposals on the optimization of its trading mechanism, including “arrangements for maintaining operation for the market under inclement weathers,” the city’s Financial Secretary Paul Chan announced in his budget speech Wednesday. The exchange operator will also put forward specific reform recommendations on Hong Kong’s GEM board this year, he added.
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Vendor News
Blue Ocean & FlexTrade Form Connectivity Partnership
Markets Media | Staff
FlexTrade Systems, a global leader in high-performance multi-asset sell-side technology and Blue Ocean Technologies (BOT), a unique capital markets fintech leader in global afterhours trading, announced a connectivity partnership to broaden access to FlexTrade’s sell-side order management solutions for broker-dealer subscribers. As part of the partnership, FlexTrade is offering broker-dealer clients access to the Blue Ocean ATS trading platform for after–hours trading in US equities from 8:00 pm – 4:00 am EST, further driving development within the 24-hour global equities trading sector.
New FX Algo Forecasting Suite from Tradefeedr
The TRADE News | Laurie McAughtry
London-based FX data analytics platform Tradefeedr today released its Algo Forecasting Suite, a collection of pre- and post-trade tools for clients to analyse and select the most appropriate FX execution algos. The new service was developed, refined and back-tested against Tradefeedr’s database to achieve accuracy, resulting in a mean global forecast for the dataset in 2022 that differed from the actual result by only 0.06bps. The new service supports client decision-making in terms of whether to use an FX algo, expected algo behaviour, and the most suitable algo given market conditions, risk appetite, time, or audit constraints.
Confidential Computing Won’t Save You from Data Breaches—but It Can Help
WatersTechnology | Rebecca Natale
Data privacy and security is a minefield. A cybersecurity team can deploy layers of encryption, firewalls, and anti-malware to protect their organization, but a savvy hacker needs only one loosely defended entry point to wreak havoc. With well-organized hacking groups able to take servers offline for days or even weeks—as seen at the end of January, when LockBit forced Ion Trading to shut down a key futures trading service using ransomware—privacy-enhancing technologies have been touted as a safeguard against data leakage and theft.
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Buy-Side News
Brevan Howard Hires Ex- Nomura VP Murray Colville as Head of Systematic Operations
Financial News | Bilal Jafar
Hedge fund Brevan Howard has hired former Nomura vice president Murray Colville to head its systematic operations. Colville joins Brevan Howard after spending four months at institutional crypto trading platform Elwood Technologies as a technical account manager. Prior to joining Elwood, Colville worked for more than three years as a middle office manager at hedge fund Millennium’s London office. He previously worked with Nomura for more than four years in different positions including as a vice president from June 2016 to November 2019.
iShares Co-Creator Morgan Stanley Finally Enters ETF Race
Financial Times | Steve Johnson
In a parallel universe Morgan Stanley might be Europe’s pre-eminent exchange traded fund provider. In this one it is the wet-behind-the-ears newbie, beaten to the punch by the more than 400 issuers globally that have already entered the ETF fray. Despite its tardiness Morgan Stanley, the 18th-largest manager in the world with assets of $1.3tn, and the biggest without ETFs, has ambitious plans. Six ETFs were unveiled in the US earlier this month, with many more in the pipeline. Europe is also on the radar, although the first launches are unlikely before 2024.
Goldman Says Hedge Funds Primed to Gain From Stock-Picking Boost
Bloomberg News | Abhishek Vishnoi
Hedge funds are positioned to benefit from an increasingly favorable environment for stock-pickers in the US, according to Goldman Sachs Group Inc. One measure of funds’ use of leverage to take positions is close to record highs, suggesting they are “well-timed to take advantage” of improving conditions for stock picking, strategists including Ben Snider wrote in a note dated Feb. 21, after analyzing the holdings of 758 hedge funds with $2.3 trillion of gross equity positions at the start of this year. “An increasingly micro-driven market bodes well for hedge fund returns.”
Inside Citadel’s Internship Program for Aspiring Traders That Paves the Way for a Six-Figure Salary at the Elite Hedge Fund After College
Insider | Emmalyse Brownstein
Few college students know what a hedge fund is, let alone that they want to work for one. Not Caleb Nuttle. He got his first taste for buying and selling stocks through an investing club at New York University, and had learned to build an argument in high-school debate competitions. So when he learned about Citadel's program that places college students on track to work for the firm and one day maybe run their own portfolios, he jumped at the chance. It wasn't easy. Citadel — headed by billionaire CEO Ken Griffin — is a top hedge fund that manages about $66 billion in assets for an array of large investors, like pension funds.
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M&A / Investment News
Euronext in Talks to Buy Allfunds, Conditional on Shareholder Approval
The TRADE News | Laurie McAughtry
Europe’s biggest pan-European stock exchange group, Euronext, today confirmed that it is talks to buy wealthtech platform Allfunds, following media speculation. The group confirmed in a statement on 22 February that it has submitted an indicative offer to the Allfunds board and is currently in active discussions with the firm’s largest shareholders – upon whose agreement the deal is conditional. Allfunds shareholders include private equity firm Hellman & Friedman (H&F) and BNP Paribas, who together own 46.4% of the firm. Allfunds confirmed that Euronext has been in touch with both firms to obtain their support for the deal.
Galaxy Acquires Institutional Custody Platform GK8
Hedgeweek | Staff
Galaxy Digital Holdings (Galaxy), a financial services and investment management specialist in the digital asset, cryptocurrency, and blockchain technology sectors, has completed its acquisition of substantially all of the assets of GK8, a secure institutional digital asset custody platform, for approximately $44 million. GK8’s technology aims to put custody of digital assets into the hands of the institutions that manage them and broadens ecosystem access by enabling staking, decentralised finance networks (DeFi), tokenisation, NFT support, and trading services.
Venture Fundraising Hits Nine-Year Low
Wall Street Journal | Berber Jin
Fundraising by venture-capital firms hit a nine-year low in the fourth quarter, as the macroeconomic pressures that already weighed on technology startups began to affect the investors who underpin the industry. Venture firms raised $20.6 billion in new funds in the fourth quarter. That was a 65% drop from the year-earlier quarter and the lowest fourth-quarter amount since 2013, according to data firm Preqin Ltd., which tracks venture-fund data. The amount was also less than half the level raised in the preceding three months, the first time fundraising volumes decreased from the third to fourth quarter since 2009, the data shows.
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Regulatory & Legal News
Wall Street in Line to Reap Benefits of US Crypto Custody Shake-Up
Bloomberg News | Emily Nicolle
Traditional financial firms and the crypto custodians they’ve backed may be best-positioned to cash in on proposed changes to US regulation for safeguarding digital assets, thanks to an existing portfolio of licenses and a trusted reputation in handling client funds. But first, it’ll take some grit. Digital asset custodians that are either wholly owned or backed by Wall Street names, like PolySign Inc.’s Standard Custody & Trust, Copper Technologies Ltd. and Zodia Custody Ltd., are among the firms that are seeing an uptick in interest from traditional financial clients for their services, according to interviews with more than half a dozen executives.
Industry Fears Burden of SEC’s Giant Equity Market Makeover
Risk.net | Janice Kirkel
The biggest equity market overhaul in almost two decades, aimed at improving pricing for retail investors, has been greeted with a pendulum-sweep of reactions – a few thumbs up, some deep disapproval, and plenty of confusion. Some of the reactions are predictable, others more surprising. One surprise around the Securities and Exchange Commission’s proposed package of rules is the lukewarm reaction so far, even from some groups representing the investors who are supposed to benefit. The confusion stems mainly from the sheer scale of the proposals, released on December 14 last year.
Wall Street Firms Fight SEC Push to Change Mutual-Fund Pricing
Bloomberg News | Emily Graffeo
A Securities and Exchange Commission proposal to overhaul how mutual-fund shares are priced has provoked fierce opposition from some of the biggest money managers on Wall Street. BlackRock Inc., Charles Schwab Corp., Fidelity Investments and Morgan Stanley are among those pushing back against a sweeping set of regulatory changes that would include the introduction of a “swing pricing” mechanism for the funds’ shares. That price-adjustment process is intended to protect investors who remain in a fund from bearing the costs when others enter or exit.
A Rough Race Begins: Industry Faces Uphill Transition to T+1 Settlement
WatersTechnology | Nyela Graham
Next May, on the Tuesday following Memorial Day weekend in the US, shorter settlement cycles under T+1 will begin. But it’s not the Tuesday after a holiday weekend that the industry was asking for. Earlier this month, in letters sent to the US Securities and Exchange Commission, the Securities Industry and Financial Markets Association (Sifma), Association of Global Custodians, and Canadian Capital Markets Association advocated 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
Canadian Crypto Trading Platforms Face 'Enhanced' Rules Under New Regulations
CoinDesk | Nikhilesh De
The Canadian Securities Administrators published new guidance for the local crypto industry Wednesday, warning exchanges and other platforms they would have to abide by "enhanced investor protection commitments." According to a press release, companies hoping to operate in Canada would have to make these commitments through a pre-registration process while working on their actual registrations. They have 30 days to comply. In this pre-registration process, exchanges and other companies will have to abide by custody rules, which discuss segregating crypto assets held for local clients, a ban on margin or other forms of leverage and a ban on selling stablecoins without the CSA's permission.
Stablecoins Attract Scrutiny in SEC’s Drive to Control Crypto
Wall Street Journal | Dave Michaels
Washington’s battle to rein in crypto has a new front: stablecoins. The Securities and Exchange Commission is investigating whether stablecoins, cryptocurrencies that maintain a price of $1, are among the products that were issued in violation of investor-protection laws. SEC enforcement lawyers have told Paxos Trust Co. that regulators plan to take enforcement action over its stablecoin, BUSD, although that decision isn’t final. An SEC lawsuit over BUSD, the third-largest stablecoin by market value, would be a significant jolt to an industry that has suffered a series of shocks in recent weeks.
Crypto Has an Incest Problem
CoinDesk | Jack Schickler
Last year, failings at crypto issuer Terra ricocheted across the crypto ecosystem, ultimately claiming crypto exchange FTX, a giant in the space. This investigation of court records shows how the millions – if not billions – of dollars’ worth of exposures among companies including Three Arrows Capital, Voyager Digital and Celsius Network allowed a ripple to turn into a tsunami. It’s well known that crypto companies are closely intertwined, but privately owned firms like FTX don’t usually have to reveal their financial secrets. That changed when the exchange was placed in the transparent fish tank of Chapter 11 bankruptcy.
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1 年Well Said.