Forefront Fintech Digest Week in Review: March 13-17
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Broker News
Signature Bank Is Shut by Regulators After SVB Collapse
Wall Street Journal | David Benoit, Rachel Louise Ensign & Caitlin Ostroff
Signature Bank was closed by regulators on Sunday, the second massive bank failure in three days. The New York-based bank faced a crisis of confidence after midsize lender SVB Financial Corp. was seized by regulators on Friday. Signature was also reeling from a bet on crypto banking that foundered after the sector imploded and banking regulators cracked down on lenders’ exposure to digital assets. The failure is the third-largest in U.S. history.?The bank raced to find a buyer or another solution to shore up its finances before Monday morning, but failed to get a sale done in time, according to people familiar with the matter.
Credit Suisse Erupts Into Full-Blown Crisis as Rivals Back Away
Bloomberg News | Abhinav Ramnarayan, Jennifer Surane & Katherine Doherty
The long-brewing troubles at Credit Suisse Group AG exploded into a full-blown crisis Wednesday as its stock and bonds cratered and some of the world’s biggest banks raced to shield their finances from the potential fallout. The stock fell as much as 31%, hitting record lows, and prices on its benchmark bonds sank to levels that indicate the Swiss lender is in deep financial stress — something rarely, if ever seen at a major global bank since the throes of the 2008 crisis. Meanwhile, banks that trade with Credit Suisse snapped up contracts, known as credit-default swaps, that will compensate them if the crisis deepens.
First Republic Goes From Wall Street Raider to Rescue Target
Bloomberg News | Tom Maloney, Devon Pendleton, Biz Carson & Suzanne Woolley
Just days ago, First Republic Bank boasted of another coup for its wealth-management business: poaching a six-person team from Morgan Stanley in Los Angeles.That followed hiring sprees targeting Bank of America Corp., JPMorgan Chase & Co., Bank of New York Mellon Corp. and Wells Fargo & Co. — raiding crews in Boston, New York and Palo Alto, California. It reflected how the San Francisco-based bank was rapidly expanding on the back of tech riches. Now First Republic is racing to reassure customers and clients that it can avoid the fate of Silicon Valley Bank, which collapsed last week after its depositors fled.
Introducing Mondeum: A Broker-Dealer with Next-Generation Solutions to Power the Active Trader
Mondeum | Michael Milani, CEO
In today’s markets, many self-directed traders use user-friendly, app-based interfaces from retail broker-dealers to do their trading.?As their accounts grow and they pursue more advanced strategies, switching from web interfaces to desktop applications is a natural progression – but they want to maintain the simple and intuitive experiences of the more retail-oriented providers. We’re here to deliver the best of both worlds. Today, I’m extremely excited to announce the launch of Mondeum, a broker-dealer providing next-generation solutions to the active trading community. We’re bringing the functionality, flexibility, transparency, control and cost effectiveness this market has been seeking to trade equities and ETFs.
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Exchange, ATS & Clearing News
Exclusive: FENICS Invitations Closes
The Desk | Dan Barnes
Multiple market sources have confirmed that Fenics Invitations has closed. The execution service, run by interdealer broker BGC Partners, was intended to provide an all-day trading protocol that combined the ‘call and response’ and anytime aspect of request for quote (RFQ) trading, with the mid-market pricing and pre-trade anonymity of a session-based auction.It offered a way for the IDB’s sell-side clients to support the liquidity requirements of buy-side firms by using proprietary smart order routing technology, so the counterparties could be certain they were trading with a relevant, interested firms on the other side.
Euronext FX Names New CEO
The Full FX | Colin Lambert
Seven months after former CEO Kevin Wolf stepped down, Euronext FX has named a permanent replacement from within its ranks, taking a slightly different route with the appointee having little direct markets or technology experience. Nicolas Jégou has been appointed to the role – he joined Euronext in 2021 as the chief of staff to the group CEO and head of special projects. Before joining the exchange group Jégou worked as a European technical advisor to the French president for just under four years.
Tim Cook Joins Tradeweb
The Desk | Dan Barnes
Tim Cook has been named director for emerging markets at market operator Tradeweb. Cook was the head of business development at LedgerEdge until the end of last year, prior to a change in strategic direction which also saw the departure of CEO, David Nicol. Cook previously headed up EMEA sales for rates-trading platform LiquidityEdge between 2016 and 2020 and sales at HQLA? which he joined in 2016. Prior to that he spent eight years at EBS Brokertec managing repo sales in the European Union and electronic trading for credit default swaps (CDS).?
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Vendor News
Broadridge and CQG Partner to Integrate EMS and OMS
The TRADE News | Annabel Smith
Financial technology providers Broadridge and CQG have partnered to integrate their order management and execution management systems. The pair said the solution offers the first “out-of-the-box” to institutional clients looking to leverage the front, middle and back-office by combining CQG’s front-end trading technology and Broadridge’s OMS and NYFIX network. As part of the integration process, CQG has completed a FIX connection into Broadridge to allow for its order flow to be directly managed and routed out to its network of exchanges and liquidity providers via Broadridge’s infrastructure.
Witad Awards 2023: Startup Professional of the Year—Cynthia Sachs, Versana
WatersTechnology | Staff
Cynthia Sachs, CEO of Versana, wins the startup professional of the year category in the 2023 Women in Technology and Data Awards. It goes without saying that starting a business from scratch in any industry is anything but a trivial undertaking. That challenge is all the more acute in the unforgiving world of financial services where the attrition rate for new entrants is staggeringly high—upwards of 90%. There are numerous reasons why startups fail, chief among which is running out of funding due to an inability to generate sustainable revenue, the significance of which Sachs is all too aware of.
High-Frequency Flap Over CME’s Aurora Data Center
WatersTechnology | Bernard Goyder
CME Group is considering closing its main data center in Aurora, Illinois as part of the cloud services deal it signed with Google in 2021, despite fierce opposition to the move among Chicago-based proprietary trading firms (PTFs). Late last year, the exchange group privately asked some PTFs where it should locate its data center if it decided to leave Aurora, around 35 miles from downtown Chicago. The question did not go down well with local firms, which have spent small fortunes connecting to the facility. “The answer is prop traders don’t want to move,” says a senior executive at a large Chicago-based proprietary trading shop.
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Buy-Side News
MSWM to Develop Service with OpenAI
Markets Media | Staff
Morgan Stanley Wealth Management (MSWM) announced an important milestone in its innovation journey through the launch of a strategic initiative to create a bespoke solution with OpenAI, the artificial intelligence research and deployment lab. The business unit is one of a handful of GPT-4 launch organizations, and Morgan Stanley is currently the only strategic client in wealth management receiving early access to OpenAI’s new products. MSWM will leverage OpenAI’s technology to access, process and synthesize content to assimilate MSWM’s own expansive range of intellectual capital in the form of insights into companies, sectors, asset classes, capital markets, and regions around the world.?
Tech Veteran Launches Global Macro and Technology Hedge Fund
Hedgeweek | Staff
Apjit Walia, a tech veteran with over 20 years' experience researching technology companies as a sell-side analyst, and running portfolios at some of the largest global macro hedge funds, is launching DVN Capital, a global macro and technology hedge fund. Walia, whose previous employers include Caxton Associates and Moore Capital, is assembling a team of seasoned investment professionals with extensive experience in both technology and global macro at DVN Capital. Walia says the team will employ a rigorous process to identify high-potential investment opportunities using AI as well as bottom-up research.
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Odey Reopens Three Hedge Funds
Hedgeweek | Staff
Odey Asset Management, the London-based hedge fund firm founded by Crispin Odey, has reopened three funds which were soft closed in November 2022, including its flagship Odey European fund, according to a report by Financial News citing a letter sent to the firm's clients. The OEI Mac and Odey Swan funds have also reopened alongside the flagship strategy and will now start to accept new investors again. In the letter, Odey AM chief executive Peter Martin said the managers were "satisfied that there is sufficient capacity within the strategy for greater assets, and an improved opportunity set".?
Brevan Howard Grounds a Few Traders After Losses in Bond Rout
Bloomberg News | Nishant Kumar & Donal Griffin
Brevan Howard Asset Management has grounded some of its traders to stem losses after the collapse of Silicon Valley Bank triggered wild moves in the bond market. The macro hedge fund firm curtailed the betting of at least three money managers after they hit maximum loss levels, according to people with knowledge of the matter. The traders all specialized in rates trading, the people said, asking not to be identified because it’s private. Large hedge funds like Brevan Howard spread their money across many managers and use the loss limits to help ensure the overall performance can’t be sunk by a few losing bets.?
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M&A / Investment News
HSBC Pays ￡1 to Rescue UK Arm of Silicon Valley Bank After All-Night Talks
CNBC | Elliot Smith
HSBC on Monday announced a deal to buy the U.K. subsidiary of collapsed U.S. tech startup lender Silicon Valley Bank, following all-night talks. HSBC confirmed that its U.K. ring-fenced subsidiary, HSBC UK Bank, had agreed to acquire SVB U.K. for ￡1 ($1.21). The assets and liabilities of SVB U.K.’s parent company are excluded from the transaction. The acquisition “strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the U.K. and internationally,” said HSBC Group CEO Noel Quinn.
Bloomberg Agrees to Acquire Broadway Technology
Markets Media | Staff
Bloomberg has entered into an agreement to acquire Broadway Technology, LLC, a cutting-edge provider of high-performance front-office fintech solutions. This acquisition will enable Bloomberg to provide a low latency execution management offering optimized for rates trading, and deliver further innovations in multi-asset software. As electronic trading volumes in the rates and credit markets continue to grow, there is a commensurate need for solutions that meet the demands of a broader variety of client workflows and trading, including across fixed-income asset classes.
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Regulatory & Legal News
As Banks Topple, Regulators Face Reckoning on Week of Mayhem
Bloomberg News | Hannah Levitt, Katanga Johnson & Katherine Doherty
On Monday, the head of the Federal Deposit Insurance Corp. warned a gathering of bankers in Washington about a $620 billion risk lurking in the US financial system. By Friday, two banks had succumbed to it. Whether US regulators saw the dangers brewing early enough and took enough action before this week’s collapse of Silvergate Capital Corp. and much larger SVB Financial Group is now teed up for a national debate. SVB’s abrupt demise — the biggest in more than a decade — has left legions of Silicon Valley entrepreneurs in the lurch and livid.?
Justice Department Probes Collapse of Do Kwon’s TerraUSD Stablecoin
Wall Street Journal | Alexander Osipovich
The Justice Department is investigating last year’s collapse of the TerraUSD stablecoin, adding the risk of U.S. criminal charges to the pressure on its creator, South Korean crypto entrepreneur Do Kwon, people familiar with the matter said. The Federal Bureau of Investigation and the Southern District of New York have questioned former team members of Mr. Kwon’s company, Terraform Labs Pte. Ltd., in recent weeks and sought to interview others, the people said. The FBI and SDNY are both parts of the Justice Department, and SDNY often takes the lead in high-profile prosecutions of financial crimes.
SEC Proposes New Cybersecurity Rules for Financial Firms
Wall Street Journal | Paul Kiernan
Brokers and asset managers would have to notify their customers of data breaches as part of a raft of cybersecurity and resiliency rules the Securities and Exchange Commission proposed Wednesday. The customer-notification requirement would give firms no more than 30 days to alert individuals whose sensitive information was likely to have been accessed without authorization. The new rule would come alongside additional expansions to the SEC’s 24-year-old regulation governing financial firms’ protection of customer data, which SEC Chair Gary Gensler tied to soaring reports of identity theft.?
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Crypto?& Digital Asset News
Fordefi Becomes First Institutional DeFi Wallet to Earn SOC 2 Type II Certification
PRNewswire | Staff
Fordefi, a financial technology and software company, today announced that it has completed its SOC 2 Type II certification by Ernst & Young in accordance with the American Institute of Certified Public Accountants’ (AICPA) standards for SOC (Service Organization Control). Fordefi is the first and only institutional DeFi wallet to be granted this standard of certification. This achievement validates Fordefi’s focus on the security necessary for institutions to hold digital assets and safely transact in DeFi.
Banking Giant State Street Cuts Ties With Crypto Custody Firm Copper
CoinDesk | Ian Allison
Global custody bank State Street said it has ended its working relationship with Copper, the cryptocurrency custody firm which announced earlier Thursday that it was closing its enterprise infrastructure division. “State Street and Copper have mutually decided to end their licensing agreement and both companies will continue to build on their digital strategies within their own respective product development approaches,” a State Street spokesman said via email.?
Coinbase Enters Singapore
Markets Media | Staff
As we prepare to ramp up our international expansion over the next 8 weeks, we are thrilled to begin this journey in Singapore. Our upgraded retail platform, in addition to our new strategic banking partnership with Standard Chartered, aims to provide you with a seamless, safe, and convenient experience when trading digital assets. Effective immediately, customers in Singapore can easily transfer funds to and from their Coinbase account using any local bank in Singapore for free. This means you can easily cash in or cash out of your Coinbase account using bank transfers, giving you more flexibility and control over your assets.
Santander, HSBC, Deutsche and Others Still Willing to Serve Crypto Clients After Banking Failures, DCG Says
CoinDesk | Lavender Au
Crypto conglomerate Digital Currency Group (DCG) is trying to find new banking partners for portfolio companies following the collapse of Silicon Valley Bank (SVB), Signature Bank (SBNY), and Silvergate (SI), according to messages viewed by CoinDesk. Santander (SAN), HSBC (HSBA), Deutsche Bank (DB), BankProv, Bridge Bank, Mercury, Multis and Series Financial are still willing to connect with crypto firms, according to the messages. DCG's efforts come on the back of banking failures in the U.S., which left a lot of crypto firms and tech startups stranded and hunting for new banking partners.
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