Forefront Fintech Digest Week in Review: April 10-14
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Broker News
Wedbush Securities Expands into FX Prime Brokerage with the Hire of Michael Stone
Business Wire | Staff
Wedbush Securities, one of the nation’s leading diversified independent financial services providers, announces the expansion into FX Prime Brokerage services directed by industry veteran, Michael Stone as Senior Vice President. The firm will begin this offering in May 2023 and rounds out its multi-asset clearing services. FX will be part of the newly named Fixed Income, Currencies, Commodities, and Securities Finance (“FICCS”) Division of Wedbush Securities, led by EVP Bob Fitzsimmons.
Goldman Reshuffles Trading Executives After Exit of Top Money Spinner
Financial Times | Joshua Franklin & Ortenca Aliaj
Goldman Sachs has made several leadership changes in its global equities trading business following the departure of one of the division’s biggest money spinners last month, the bank told employees in an internal memo on Wednesday. The staffing changes include Dmitri Potishko and Erdit Hoxha becoming co-heads of Goldman’s global flow derivatives and emerging markets trading, the bank said in the memo, a copy of which was seen by the Financial Times. The bank confirmed the contents of the memo.
Instinet Expands Block Trading in Asia Pacific
Markets Media | Shanny Basar
Instinet, the agency broker owned by Nomura, has expanded securities coverage within its dark pool in Hong Kong and launched conditional order management platform BlockCross in Asia. Ian Lauder, head of liquidity strategy, Asia Pacific at Instinet, told Markets Media that securities from Indonesia, Malaysia and Philippines were added to the agency broker’s dark pool in Hong Kong on 9 March this year. “We will further be expanding our securities coverage in BlockMatch Asia to provide trading for additional APAC markets,” Lauder added.
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Exchange, ATS & Clearing News
LSE Group Joins Battle Between Exchanges for Crypto Derivatives
Financial Times | Nikou Asgari
The London Stock Exchange Group plans to begin clearing crypto derivatives, joining the battle among the world’s big exchanges to grab a slice of rising institutional demand to trade digital assets. The UK group will use the Paris arm of its clearing subsidiary, LCH, to manage the risks on bitcoin futures and options traded on GFO-X, a UK regulated marketplace, the company said on Thursday. Its move comes in spite of waves of bankruptcies among crypto companies, sharp declines in the prices of tokens and a series of enforcement actions by US regulators.
Liquidnet Adds Liquidity-Seeking Alerts to Equities Trading Application
The TRADE News | Wesley Bray
Liquidnet is set to integrate actionable alerts to its equities trading application to improve execution and alpha generation. This latest addition to Liquidnet’s equities trading application, which is available to all US and Canadian clients and powered by the firm’s suite of algorithms, will offer improved liquidity-seeking capabilities through new alerts. These alerts will offer traders the ability to quickly take advantage of liquidity events created by dark blocks, alongside the chance to reengage within the Liquidnet network on missed opportunities to trade.
LSEG Launches New Retail Trading Service with Hudson River Trading and Stifel as First Liquidity Providers
The TRADE News | Annabel Smith
The London Stock Exchange Group (LSEG) has launched a new retail trading service aimed at supporting European retail brokers in meeting best execution obligations and delivering price improvement. Named Turquoise Retail Max, the service is accessible through LSEG’s Turquoise Plato Lit Auctions order book. Hudson River Trading and Stifel will be the first liquidity providers to use the service. “Offering a fair and open auction mechanism for European retail brokers not only creates an environment where retail investors can achieve price improvements, but also diversifies the sources of liquidity for retail and institutional investors,” Adam Wood, chief executive officer of Turquoise Global and head of equities trading commercial proposition at LSE, told The TRADE.
IEX Exchange Enhances ‘Crumbling Quote Indicator’ to Further Protect Investors Amid Volatile Market Conditions
The TRADE News | Wesley Bray
IEX Exchange has introduced a new version of The Signal, also referred to as the Crumbling Quote Indicator, a predictive model which targets adverse price changes and powers the exchange’s protective order types. According to the exchange, The Signal is designed to predict imminent changes to the National Best Bid/Offer (NBBO) and allow order types including D-Peg and P-Peg to react positively to unstable market conditions. IEX and co-founder Brad Katsuyama have claimed to champion better protection for investors from adverse price selection since the inception of the exchange in 2013.
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Vendor News
Sterling Trading Tech Launches Calculation Service for FINRA Member Firms to Comply with Enhanced Portfolio Margin Reporting Requirements
Press Release | N/A
Sterling Trading Tech (STT), a leading provider of order management systems, risk and margin solutions and trading platforms to the capital markets worldwide, today announced the launch of a calculation service for FINRA member firms in response to the recently announced enhancements to the regulator’s portfolio margining requirements. These new requirements were set to go into effect April 1 of this year, which FINRA recently updated to be later in 2023.
Extreme Market Conditions Spark Upgrade to Nasdaq Risk Platform
The TRADE News | Annabel Smith
Nasdaq has expanded the capabilities of its risk platform to help broker-dealers and banks better navigate the extreme market conditions seen throughout this year so far. The updates allow users to view risk across proprietary and client trading platforms. They also add fixed income securities to the platform including government bonds, corporate bonds and convertible bonds. Nasdaq said the addition of fixed income would offer clients a broader view of risk across asset classes and enhance multi-factor and intraday stress testing tools which it claimed were capable of managing specific risks in “complex scenarios”.
Are There Limits to Machine Learning in Trade Surveillance?
WatersTechnology | Nick Wallis
Compliance professionals face the daunting task of making sense of mounds of data, alerts, and shifting regulations. The power of AI and machine learning (ML), as evidenced by the text-generating software ChatGPT, has ignited imaginations as to how new tools can empower teams to achieve more accurate results more quickly. For compliance officers, the allure of ML is that it can address the problems inherent in most surveillance systems: They generate too many alerts and false positives, leading to the costly endeavor of humans having to investigate.
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Buy-Side News
Millennium Taps Morgan Stanley for Emerging Market Equities Analyst
The TRADE News | Wesley Bray
Hedge fund Millennium has appointed Utkarsh Khandelwal as an emerging market equities analyst, The TRADE can reveal. Khandelwal joins Millennium from Morgan Stanley, where he spent the last 13 years, most recently serving as vice president, Asia equity sales for the past four years. Prior to that, he held the position of India specialist for institutional equity sales. Elsewhere in his tenure at Morgan Stanley, Khandelwal held research associate positions in both the internet and media sector as well as in India equity strategy.
Liontrust Appoints New Deputy Head of Trading as McLoughlin Takes on C-Level Role
The TRADE News | Annabel Smith
Liontrust Asset Management has selected one of its multi-asset traders to co-lead the trading desk alongside Matt McLoughlin who is taking on a new role within the organisation, The TRADE can reveal. Martin Hendry, who has been part of firm’s multi-asset desk for the last six and a half years, will ascend to the position of deputy head of trading. Current lead McLoughlin is set to become chief commercial officer after spending the last seven and a half years with the asset manager, joining in 2015 as a senior trader. He will retain overall responsibility for the trading desk.
Hedge Funds Like Top Credit Suisse & Goldman Sachs Engineers
eFinancialCareers | Alex McMurray
For the hedge funds looking to hire technology staff, banks have long been a key source of talent. Goldman Sachs people have always been appreciated, but other banks' alumni are moving too. Mike Grimaldi, the chief information officer at Balyasny, joined from JPMorgan in 2021 and has hired plenty of his former colleagues. However, Grimaldi likes to hire from Goldman Sachs too. His recent big recruit is Andrew Richards, who spent over nine years at Goldman, becoming an executive director. He joins Balyasny as a risk engineer.
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M&A / Investment News
Fintech Startup Clear Street Raises $270M at a $2B Valuation
TechCrunch | Mary Ann Azevedo
Clear Street, which says it is building “modern infrastructure” for capital markets, has raised $270 million in the second tranche of a Series B funding round at a $2 billion valuation. Growth equity firm Prysm Capital led the financing, which brings the round total to $435 million. New York-based Clear Street raised the first tranche of the round in May of 2022 at a $1.7 billion valuation. Prysm led that first tranche as well, which was the company’s first round of funding raised from outside investors. Until last year, Clear Street had been operating with only capital provided from its co-founders.
Numerix Announces the Acquisition of FINCAD
PR Newswire | Staff
Numerix, a leader in capital markets risk management technology, announced today that it has acquired FINCAD, a leading analytics company in the pricing and risk analytics of financial derivatives and fixed income products, from Zafin, a leader in Product and Pricing SaaS solutions for global financial institutions. The combination of Numerix and FINCAD will bring together two of the industry's most preeminent independent providers of analytics for the capital markets. Together, Numerix and FINCAD are deeply penetrated across the capital markets ecosystem, including sell-side, buy-side, corporate and insurance market customers.
Crypto VC Funding Plunges by 80% in Dire Quarter for Startups
Bloomberg News | Hannah Miller
Venture capitalists are continuing to pull back from crypto, an industry that’s been plagued by scandals, a market downturn and regulatory uncertainty. Private funding for crypto startups in the first quarter of this year plunged to its lowest level since 2020, according to data from research firm PitchBook. Global VC funding for the industry fell to $2.4 billion in the quarter, an 80% decline from its all-time high of $12.3 billion during the same period last year, according to PitchBook.
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Regulatory & Legal News
Main Street Investors Plan To Keep Pressure on Gensler as Citadel Securities Fights Auction Reform
MarketWatch | Chris Matthews
The SEC is embarking on its most ambitious program of market-structure reform in a generation in the wake of the meme-stock saga that focused the public’s attention on stock-market plumbing like never before. The financial rule making process is typically dominated by insiders with the knowledge and resources to keep up the pressure on regulators, but this time around individual investors are using the power of social media to organize and make their voices heard. Their newfound might can be seen in the more than 2,600 comment letters submitted to the SEC by We The Investors (WTI) over Chairman Gary Gensler’s proposed overhaul of the system for routing stock-market orders submitted by individual investors.
Goldman Sachs Ordered by CFTC to Pay $15M for Violating Swap Business Conduct Standards
The TRADE News | Wesley Bray
The Commodity Futures Trading Commission (CFTC) has issued an order which simultaneously files and settles charges against Goldman Sachs for violations of the regulator’s Business Conduct Standards applicable to swap dealers. Goldman Sachs was found by the CFTC to have failed to disclose dozens of pre-trade-mid-market marks (PTMMM) alongside failing to communicate to clients in “a fair and balanced manner based on principles of fair dealing and good faith”.
DOJ Antitrust Unit Urges Caution in SEC Stock Market Revamp
Bloomberg News | Lydia Beyoud & Leah Nylen
Top Justice Department antitrust officials are taking the unusual step of urging Wall Street’s main regulator to proceed with caution on a suite of proposals to overhaul the plumbing of equities markets. The US Securities and Exchange Commission in December unveiled plans for the most sweeping overhaul of Wall Street stock-trading in more than a decade through a series of four proposals. Many industry players have called on the financial regulator to consider how the various proposals interconnect with each other before moving forward, with some asking the SEC to phase in the rules slowly or not move forward with some of them at all.
Pay Now or Pay Later: Regtechs Make Play to Spare Banks Steep Fines
WatersTechnology | Elliot Raman Jones
The purchasing power of the money financial services firms spend on regulatory fines can be difficult to conceptualize. So it can be useful to express the figures in more practical terms. For instance, a gallon of gas in California costs around $5, while the median price of a house sold in Q4 of 2022 was $467,700. So, the $17 million fine imposed in February by the US Securities and Exchange Commission (SEC) on the Options Clearing Corp. (OCC) for failing to pass its stress testing and clearing fund methodology rule between October 2019 and May 2021, equates to buying 36 houses or 3.4 million gallons of gas—that’s enough to drive around the globe more than 3,400 times.
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Crypto & Digital Asset News
CROSSx Aims to Guide the Market Toward Further Institutional Crypto Adoption
Traders Magazine | Anna Lyudvig
The decentralized nature of crypto presents unique challenges to investors of all types, according to Anthony Mazzarese, Co-founder and Chief Commercial Officer, Crossover Markets Group. For individual retail traders, bundled services—such as execution, liquidity, custody and so on—made the market more accessible and easier to understand, he said. For institutional clients, it is necessary to seek out best execution, and in most cases, this means being able to trade across multiple exchanges and venues, he added.
Binance.US Struggles to Find Bank to Take Its Customers’ Cash
Wall Street Journal | Caitlin Ostroff, Rachel Louise Ensign & Alexander Osipovich
The U.S. affiliate of global crypto exchange Binance has struggled to find a bank for its customers’ cash after the failure of Signature Bank left it without a key banking partner, people familiar with the matter said. Users’ dollar deposits were previously sent to either Signature Bank or Silvergate Capital Corp., decrease; red down pointing triangle according to Binance.US’s website. The failures of Signature and Silvergate, both seen as friendly to crypto companies, left many crypto firms rushing to find new banking partners. As a stopgap, Binance.US is using at least one middleman to store funds on its behalf.
Coinbase Head of Exchange Departs and Plans to Start New Crypto Project: Report
CoinTelegraph | Turner Wright
Vishal Gupta, who has been the head of exchange at Coinbase, is reportedly leaving his position after more than two years at the United States-based cryptocurrency exchange. According to an April 10 Bloomberg report, Gupta planned to exit Coinbase but remain in the crypto space, suggesting he could be planning to start a new project focused on digital assets or blockchain. Prior to his time at Coinbase, Gupta had been the head of USD Coin for stablecoin issuer Circle and earlier was a vice president for Goldman Sachs.
FTX Is Considering Using Creditor Money to Restart Crypto Exchange
Bloomberg News | Steven Church
FTX may use money marked to repay customers to restart its failed crypto exchange because the project would require a significant amount of cash, a lawyer for the company said in court Wednesday. The company is still in the early stages of deciding whether to bring back the exchange, which allowed customers to trade digital assets before FTX collapsed, Andrew G. Dietderich, an FTX attorney with law firm Sullivan & Cromwell told US Bankruptcy Judge John T. Dorsey. The company could also try to raise money to fund a restart or drop the entire concept.
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