Forefront Fintech Digest Week in Review: September 9 – 13
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Broker News
JP Morgan Targets Leading Credit E-trading Position
IFR | Christopher Whittall
JP Morgan is investing heavily to make up ground in electronic trading of corporate bonds, an area where it has lagged rivals, in the latest confirmation of the pivotal role that technology now plays in the once human-dominated credit markets. The US’s largest bank has long maintained top rankings in underwriting companies’ debt offerings and trading those securities in secondary markets. But it has fallen behind the likes of Goldman Sachs, Morgan Stanley and Jane Street in electronic trading of corporate credit, which has grown significantly in recent years.
Northern Trust Adds Fixed-Income Capabilities for Outsourced Trading in Asia-Pacific
WatersTechnology | Wei-Shen Wong
Northern Trust has expanded Integrated Trading Solutions—its outsourced trading solution—in the Asia-Pacific region with the addition of fixed-income trading capabilities. With the addition, provided through Northern Trust Securities in Australia, Northern Trust now offers 24/6 fixed-income trading coverage with desks in Chicago, London, and Sydney. Northern Trust’s ITS clients have access to a global, multi-source liquidity network of more than 160 fixed-income counterparties, ranging from bulge-bracket institutions to local specialists.
Election Betting Is Going Mainstream After Major Brokerage Gets on Board
Wall Street Journal | Alexander Osipovich
Until a few days ago, election betting was banned by the federal government. Now it is set to reach millions of Americans. The popular trading platform Interactive Brokers plans to launch a market where investors can bet on the outcome of the presidential election, taking advantage of a federal court ruling that has effectively legalized election betting in the U.S. Starting Monday, Interactive Brokers plans to allow its users to place wagers on whether Vice President Kamala Harris beats former President Donald Trump in November, the company’s founder and chairman Thomas Peterffy said in an interview.?
MUFG Brings Its Trading to Electronic Age, Except for JGBs
Bloomberg News | Alice Atkins
Mitsubishi UFJ Financial Group Inc. is on a big drive to update its trading capabilities while preserving old style voice methods for dealers in Japanese government bonds, according to Stu Taylor, the head of electronic trading at Japan’s largest bank. “We’ve been late to the e-trading party,” Taylor, who spearheaded the expansion of the electronic trading team at MUFG to more than 50 people around the world, said in an interview. “Japan has been a very relationship-based market and continues to be, but against a world of data, compliance and efficiency, that has toppled slowly.”
Why This Wall Street Firm Wants Its Traders to Play Poker
Bloomberg News | Gunjan Banerji
Young traders who join the trading giant Susquehanna International spend at least 100 hours playing cards during a 10-week training program. When the stock market closes at 4 p.m., they often head straight from the trading floor to a dedicated poker room at the firm’s headquarters in the Philadelphia suburbs. Jeff Yass, Susquehanna’s co-founder, sometimes joins in, scrutinizing hands new hires play and gauging how effectively they bluff. Thousands of employees, from traders to technologists, participate in the firm’s annual poker tournament. At least three have notched wins at the World Series of Poker in Las Vegas.?
Exchange, ATS & Clearing News
Construction Underway on MIAX Sapphire’s Trading Floor?
Market Media | Staff
In August this year Miami International Holdings (MIH), which builds and operates regulated trading venues across asset classes, received a $100m investment from Warburg Pincus and launched its fourth national securities exchange for US multi-listed options. MIAX Sapphire began operating on August 12 with the rollout of options on its first symbol, IBM, before adding more symbols each week. Thomas Gallagher, chairman and chief executive of MIH, said in a statement: “MIAX’s expansion in the US options space has been accomplished entirely through organic growth and the successful launch of four options exchanges since 2012 is a significant achievement for our company.”
New Whitepaper Emphasizes the Benefits of Credit-Sensitive Rates
American Financial Exchange | N/A
The American Financial Exchange (AFX), a self-regulated exchange that provides banks and financial institutions a marketplace for overnight unsecured interbank lending and borrowing, announced today that it has published new research in coordination with the University of Massachusetts Amherst’s Marco Macchiavelli, Assistant Professor of Finance with the Isenberg School of Management and former Principal Economist at the Federal Reserve.?
ASX Names Clarke Chair as Roche Retires Amid Tech Upgrade Woes
Bloomberg News | Adam Haigh
David Clarke will become chair at ASK Ltd., the operator of Australia's main equities and derivatives exchange that's battled with a years-long upgrade of its clearing and settlement technology. Clarke assumes the role on Oct. 28, when current chair Damian Roche will retire, according to a statement Wednesday. Clarke has held senior roles at Westpac Banking Corp. and ran Investec Bank (Australia) Ltd. earlier in his career. He’s currently also chair of Charter Hall Group.
Cboe Set to Launch New Cboe S&P 500 Variance Futures
The TRADE News | Wesley Bray
Cboe Global Markets announced that its new Cboe S&P 500 Variance Futures are expected to begin trading on Monday 23 September on the Cboe Futures Exchange. The new futures aim to provide market participants with an additional tool to calculate implied volatility of the US equity market as measured by the S&P 500 Index, and to manage volatility risks and express directional views. The futures are designed to offer an improved approach to trading the spread between implied and realised volatility, allowing users to take advantage of discrepancies between market expectations and actual outcomes.
Russian Hackers Hit Taiwan Bourse, Bank in Surprise Attack
Bloomberg News | Betty Hou & Yian Lee
Russian hacker groups briefly disrupted Taiwanese financial platforms including the stock exchange and lender Mega Financial Holding Co.’s website, exposing the vulnerability of the island to foreign cyberattacks. Two groups that go by the handles “NoName057” and “RipperSec” on Telegram swamped targeted websites with a so-called Distributed Denial of Service attack, which caused unstable connection issues for the platforms Thursday afternoon, the Ministry of Digital Affairs said Friday.
Vendor News
Dealer Relief at Delays to Refinitiv Matching’s Tech Migration
WatersTechnology | Joe Parsons
The delayed replatforming of London Stock Exchange Group’s spot and forward foreign exchange trading venues onto upgraded technology infrastructure has been welcomed by dealers wanting more time to prepare for the costly project. The first phase of migrating Refinitiv Matching onto the Millennium platform, which also supports LSEG’s equities exchanges, was initially scheduled for completion by late 2024, before being pushed back to March 2025. Risk.net now understands this date has been revised to mid-2025, with one source suggesting it could be as late as September.
MarketAxess Expands Partnership with BlackRock
Markets Media | Staff
MarketAxess Holdings, the operator of a leading electronic trading platform for fixed-income securities, announced an expansion of its decade-long partnership with BlackRock to seamlessly integrate MarketAxess credit trading protocols, pricing and data into BlackRock’s Aladdin? order execution management system (OEMS). This announcement builds on the MarketAxess and BlackRock partnership in Open Trading and MarketAxess analytics that began in 2013.?
Barclays Joins Push to Get Rid of Faxes in the Loan Market
Bloomberg News | Jan-Henrik Foerster
Barclays Plc is joining rivals in backing a firm that's looking to upend the way Wall Street keeps track of corporate loan data. The UK lender participated in a $26 million capital raise for Versana, a two-year-old platform that allows lenders to access data and information about $2.7 trillion worth of loans in one place, according to a statement. Existing investors including Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. also joined in the fundraising. As part of the deal, Barclays will also provide its agented corporate loan data to Versana, the 10th bank to do so. It’s also the first British bank to join the platform.
Axoni Unveils Hydra, a New Era for Real-Time Data Replication in Capital Markets
Traders Magazine | Staff
Axoni, a leading provider of trade workflow applications and real-time data replication technology, today announced the rebranding of its flagship data platform, AxCore, to “HYDRA.” This rebranding marks a significant step in Axoni’s product evolution, delivering unparalleled solutions for secure, real-time data replication across financial institutions. HYDRA is trusted by many of the world’s largest Central Counterparty Clearing Houses (CCPs) and leading sell-side and buy-side firms.
Should Banks Risk Lightning Hitting Twice for CrowdStrike?
WatersTechnology | Menghan Xiao
As bank technology and information security teams return from their vacations in the US and Europe, one question sits at the top of their in-trays: ‘What to do about CrowdStrike?’ After a software update by the security vendor triggered a widespread outage in July, many companies including banks are reassessing the firm’s products and capabilities, while its rivals see an opportunity to expand their market share.
Buy-Side News
Multi-Strat Hedge Funds Are Using Moneyball Tactics to Spot Top Traders
Bloomberg News | Tracy Alloway & Joe Weisenthal
One of the problems in investing or trading is that — to use a common disclaimer — past results are no guarantee of future success. Someone can have a great track record in their stock picks, but maybe they just got lucky. Or maybe they were particularly well-dialed into one market regime that inevitably shifts. Or maybe they're actually just better than other traders. For multi-strategy hedge funds or "pod shops," there's an ongoing battle to hire or train the next great portfolio manager. But how can managers tell who is actually good and who isn't??
Cliff Asness Has Steered Hedge Fund AQR Through Not One, Not Two, But Three Quant Crises
Institutional Investor | Michelle Celarier
Cliff Asness would prefer you not talk about Peloton, the home exercise bike company whose stock soared beyond all rationality during the early days of Covid, when everyone worked — and worked out — from home. That period was one of pain for Asness and AQR Capital Management, the quant hedge fund he co-founded in 1998 just before an earlier tech bubble that, as he will tell you in mind-numbing detail, was an especially traumatic event for the firm’s value-oriented strategies.
Hedge Fund Boss Alan Howard Considers Leaving London for Geneva
Bloomberg News | Nishant Kumar, Benjamin Stupples & Donal Griffin
Alan Howard, the co-founder of Brevan Howard Asset Management, is considering a move to Geneva from London, according to people familiar with the matter. The billionaire hedge fund founder may leave London within coming months, according to people with knowledge of the matter. Howard, a British national, has spent the past seven years in the UK capital after a previous stint in Geneva, the people said, asking not to be identified because the details are private. The plan is early and may change, they added.
Millennium to Raise Up to $10 Billion of More-Permanent Cash
Bloomberg News | Katherine Burton & Nishant Kumar
Izzy Englander’s Millennium Management is looking to raise between $7 billion and $10 billion of new capital in a structure aimed at giving the hedge fund firm a more permanent source of capital. Millennium has, like many of its peers, been moving to lock up client cash for longer. The firm, which now manages about $69 billion, has more recently taken a page from private equity firms and started raising money that’s callable — rather than taking it in all at once like most hedge funds. A spokesperson for the firm declined to comment.
Private Markets Seem Out of Reach for Individual Investors. BlackRock Thinks It Has an Answer.
The Wall Street Journal | By Miriam Gottfried & Jack Pitcher?
It might be getting easier for individual investors to tap in to the opaque world of private markets. BlackRock plans to offer wealthy investors a way to access areas such as private equity and private credit in an attempt to build a new revenue stream. The asset manager is joining with private-equity firm Partners Group to create a so-called model portfolio that wealth advisers could use to help clients invest in a variety of private-market offerings in one fell swoop.
M&A / Investment News
AXA IM Alts Buys CAPZA to Enter Private Equity
Markets Media | Staff
AXA IM Alts, a global leader in alternative investments with over €184 billion (circa $198 billion) of assets under management (‘AUM’)1, announces the acquisition of CAPZA, increasing its position from majority shareholder to full ownership by 2026. Formed in 2004, CAPZA is an established private investment platform focused on mid-market corporates across private debt and private equity in EMEA with more than €9.0 billion of AUM2 . The acquisition provides AXA IM Alts with global expertise in mid-market direct lending, which is highly complementary to its existing private debt offering, alongside entry into the Private Equity leveraged buyout market, a growth sector it has identified as of strategic importance.
BNY to Acquire Archer
Traders Magazine | Anna Lyudvig?
The Bank of New York Mellon Corporation has agreed to acquire Archer Holdco, a technology-enabled service provider of managed account solutions to the asset and wealth management industry. The transaction is expected to close in the fourth quarter of 2024, subject to regulatory approvals and other customary closing conditions. Financial terms were not disclosed.
CME's Duffy Ambivalent About Sale of Join Venture with S&P Global
Chicago Business | Mark Weinraub?
CME Group’s top executive expressed ambivalence regarding a possible sale of OSTTRA, the exchange’s joint venture with S&P Global that provides post-trade services in derivatives and foreign exchange markets. “I’d sell it if the price was right, but I do not have to sell it,” CME Chairman and CEO Terry Duffy said at Barclays' annual global financial services conference. “We do not need to have them, but they are actually doing fine and we don’t need to sell them."
FE fundinfo Buys Out Investment Research Platform AdviserAsset
Fintech Futures | Tyler Pathe?
Financial data firm FE fundinfo has expanded its UK product suite with its acquisition of due diligence and product selection tool AdviserAsset for an undisclosed sum.?Founded in 2010, the AdviserAsset platform seeks to support financial advisors, wealth managers and paraplanners with enhanced processes for fund research, analysis, and portfolio management. Its suite of tools includes fund and fee analysis, performance reporting, model portfolio management, and compliance support, enabling clients to undertake product and platform switch analysis while managing multiple holdings.
StoneX to Acquire Fixed Income Broker Octo Finances
The TRADE News | Annabel Smith
StoneX has moved to increase its remit and geographical reach through the acquisition of fixed income broker Octo Finances SA. The completion of the transaction is subject to regulatory approval and closing conditions. StoneX will acquire 100% of Octo Finances SA shares once complete. The move is designed to expand StoneX’s capabilities in fixed income and grow its presence in Europe, with a particular focus on France.
Regulatory & Legal News
US Treasury Clearing to Increase Trading Costs, Study Finds
Bloomberg News | Greg Ritchie
Mandatory central clearing of US Treasuries will make the market safer, but at the expense of costlier trading and potentially curtailed volumes, according to a new Coalition Greenwich survey. Over 70% of the 34 market participants questioned expect the cost of trading to rise due to new margin requirements and clearing fees, the study published Wednesday found. And around 85% of respondents believe increased margin costs could cause them to reduce their trading activity. The survey included four of the top five Treasury dealers by revenue, and was conducted during the second quarter.
UK Regulator Charges Man With Unlawfully Running Crypto ATMs
Financial Times | Sarah Wynn
The UK’s financial regulator has charged a man with unlawfully running a network of crypto ATMs, its first criminal prosecution for an activity that is widely used for money laundering.?The Financial Conduct Authority said on Tuesday that it had charged Olumide Osunkoya, a 45-year-old living in London, with running multiple crypto ATMs that had allegedly not been registered with the watchdog.
Fed’s Basel III Rollback Gives Clearing Units a Capital Break
Risk.net | ?Philip Alexander
US regulators have ditched plans to increase capital requirements for derivatives clearing businesses as part of their Basel III endgame package. Michael Barr (pictured), the US Federal Reserve’s vice-chair for supervision, announced extensive changes to bank capital rules proposed last year in a speech at the Brookings Institution earlier today (September 10).
American Bankers Assoc. Asks SEC: Do You Know What You’re Doing?
WatersTechnology | Rebecca Natale
In a public comment letter on potential rules proposed last month by nine US regulators, the American Bankers Association (ABA) came out swinging at the agencies’ suggestion to replace the Cusip and Isin identifiers with the FIGI for reporting financial transactions and holdings. The letter asserts that the various agencies – which include the Securities and Exchange Commission (SEC), the Federal Reserve and the Commodity and Futures Trading Commission – have acted “arbitrarily and capriciously” under the Administrative Procedure Act (APA), a federal law that requires federal agencies to follow certain procedures as part of the rule-making process.
Finra’s Enforcements Are Down, but Its New Adverts Are Up
Financial Times | George Steer
Two weeks ago, Elizabeth Warren extended her long-running beef with the Financial Industry Regulatory Authority, Wall Street’s self-regulatory body mostly just known as Finra. In a letter pointedly cc’ing the SEC’s Gary Gensler, the senator asked why — per a Bloomberg article — the number of fines levied against brokers and dealers last year fell to the lowest level in the regulator’s history, noting that?there were 426 enforcement actions in 2023, the lowest since Finra’s inception in 2007 (before that it was known as the National Association of Security Dealers, or NASD).
eToro Reaches Settlement with SEC and Will Cease Trading Activity in Nearly All Crypto Assets
SEC | Press Release
The Securities and Exchange Commission today announced that eToro USA LLC has agreed to pay $1.5 million to settle charges that it operated an unregistered broker and unregistered clearing agency in connection with its trading platform that facilitated buying and selling certain crypto assets as securities. eToro has agreed to cease and desist from violating the applicable federal securities laws and will make only a limited set of crypto assets available for trading.?
Crypto?& Digital Asset News
VanEck to Close Ethereum Futures ETF
Markets Media | Staff
VanEck announced that it plans to close and liquidate its Ethereum futures ETF (EFUT). On September 5, 2024, the Board of Trustees of VanEck ETF Trust approved the liquidation and dissolution of the following fund (the “Fund”). As the sponsor of VanEck ETFs, VanEck continuously monitors and evaluates its ETF offerings across a number of factors, including performance, liquidity, assets under management, and investor interest, among others. The decision was made to liquidate the Fund based on an analysis of these factors and other operational considerations.
Crypto Plan Creates Potential Conflicts for Trump
Wall Street Journal | Vicky Ge Huang & Maggie Severns
Republican presidential candidate Donald Trump has been stepping up his efforts to court the money and votes of the crypto industry. His latest attempt: a digital-currency project called World Liberty Financial. While details about the project are scant, the team behind it said this week that it will focus on “spreading U.S.-pegged stablecoins around the world” and ensuring the dominance of the U.S. dollar.?
OneTick Taps HFT Start-up Lo:Tech for Crypto Market Data
WatersTechnology | Eliot Raman Jones
OneTick, a provider of tick data, complex event processing, and analytics technologies, will use market maker Lo:Tech’s crypto market data services to enhance its trade surveillance platform and deliver granular, tick-level trade and order book information across numerous venues in a normalized format. Lo:Tech, which stands for Low Observable Technology, created its data offerings as an offshoot of its proprietary trading infrastructure, and is aiming to bring HFT-grade tools.
Janus to Follow BlackRock and Fidelity Into Tokenisation
Financial Times | Steve Johnson
Janus Henderson is to become the latest large asset manager to experiment with securities tokenisation, joining a trend that industry observers believe will eliminate many costs, disrupting the industry. The $360bn US asset manager plans to take over the management of the $11mn Anemoy Liquid Treasury Fund, which invests in short-term US Treasury bills. Tokenisation describes the process of converting units in a fund into unique digital tokens on a blockchain.?