Forefront Fintech Digest Week in Review: Oct 30 – Nov 3
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Broker News
Christopher Brown Heads Up Instinet LSET Business
Best Execution | Alex Pugh
Christopher Brown has moved to Instinet, equity trading arm of Nomura, to head up the LSET (latency sensitive electronic trading) business. Brown joins Instinet from JP Morgan, where he spent nearly four years as executive director within quantitative investment strategies (QIS). Brown’s new remit is to help grow Nomura’s LSET business but also assist with the buildout of the firm’s quantitative prime brokerage. He will report to Salvador Rodriguez, EMEA head of global execution services, Instinet, who said: “Christopher brings with him a wealth of knowledge, experience and expertise in low latency trading. This skill set will prove invaluable as we embark on the next stage of our growth plans and journey with our clients."
As Citi Cuts, One of Its MDs Arrived at Jane Street in New York
eFinancialCareers | Zeno Toulon
Citi might be in the midst of a substantial re-shuffle, involving both job cuts and senior leadership “optimization”, but that doesn’t mean some of its managing directors aren't leaving of their own accords and joining Jane Street, in the promised land of electronic trading. Christopher Suozzo spent nearly 20 years at Citi, most recently as head of North American cash prime brokerage. He moved to Jane Street last week and is based in New York for the firm. Suozzo has a side job as a board member of NYNY Baykeeper, an organization that advocates for the NY-NJ Harbor Estuary.
TabbFORUM at STA: CAPIS' Christopher Hurley Discusses Outsourced Trading
TabbFORUM | Michael Scotti
In this segment of TabbFORUM at STA, Christopher Hurley, Director of Institutional Sales at CAPIS, addresses the number of factors that have driven institutional fund managers to focus on outsourced services, particularly the use of outsourced trading. In this interview, conducted by TabbFORUM Editorial Director Michael Scotti, Mr. Hurley says that the reason firms consider outsourced trading varies from manager to manager, so it is key to understand the logic behind such a move and what they hope to accomplish.
Exchange, ATS & Clearing News
ICE Completes Rebuild of NYSE Technology Stack
Markets Media | Staff
ICE has completed rebuilding the technology stack for the New Stock York Exchange, which it acquired in 2013. Jeffrey Sprecher, chair & chief executive of ICE, said on the third quarter results call on 2 November that the New York Stock Exchange had been built on a technology stack that was overly complicated, hard to manage and unreliable. Since ICE acquired NYSE it has aimed to completely rebuild the underlying architecture with modern technology. However, given the importance of the stock exchange to the global economy, the exchange had to remain in daily use and retain its extensive connectivity to the global financial services industry, while at the same time customers could not be required to invest in making changes on their side of the firewall.?
Aquis Hires From Within to Replace Retiring Chief Operating Officer Jonathan Clelland
The TRADE News | Claudia Preece
Aquis exchange chief operating officer Jonathan Clelland is set to depart next April, with chief revenue officer and head of Aquis Markets David Stevens appointed to replace him. Prior to joining Aquis, Clelland was chief operating officer at HSBC Investment Bank corporate finance division and of Shearman & Sterling in London.? Stevens’ new role is effective as of today with Clelland remaining as a special advisor in order to “ensure a smooth transition”. Stevens joined Aquis in 2021 and had previously held various senior roles across financial services and technology.?
LCH SA and GLMX Complete Integration to Support Clients With Sponsored Clearing
The TRADE News | Wesley Bray
Repo trading platform GLMX Technologies has completed its integration with LCH SA to support classic and sponsored clearing for the benefit of mutual clients in Europe. Founded in 2010, GLMX facilitates dealer to buy-side securities finance trading with over $1.7 trillion in daily balances. The firm has a network consisting of over 115 global clients as well as more than 20 third part OMS/EMS and industry utility, including Triparty agent and central clearing counterparty connections. “Central clearing reduces capital costs, mitigates credit risk and generates liquidity, which are essential characteristics for securities finance participants.?
Vendor News
Broadridge’s LTX Looks to GenAI as It Competes for Market Share
WatersTechnology | Nyela Graham & Eliot Raman Jones
Breaking into a market where giants already loom large isn’t for the faint of heart, nor the shallow of pockets. In fixed-income trading platforms, there are the Big Three: Bloomberg, MarketAxess, and Tradeweb. But two years ago, Broadridge ambitiously threw its hat into the bond trading ring with its LTX platform. LTX’s value proposition is that broker-dealers stand to gain better execution and price improvement by aggregating liquidity across multiple buyers.
Texting: Wall Street's Latest Dilemma
Wall Street Journal | Mengqi Sun
Wall Street firms are facing a problem that is growing more difficult by the day: how to capture staff communications as required by regulators while the ways their employees talk to each other keep changing. On one hand, the Securities and Exchange Commission has been cracking down on so-called off-channel communications, where employees use personal devices and banned apps to send business-related messages that rules say must be recorded. On the other hand, the ways people communicate have changed since the regulations were first enacted, with almost everyone texting about almost everything these days.
TS Imagine Rolls Out Best Execution Module and Analytics Dashboard
Finextra | Staff
TS Imagine, the leading global, cross-asset provider of real-time trading, portfolio, and risk management solutions for financial institutions, today announces the availability of a module within TradeSmart OEMS and TS One that streamlines Best Execution compliance and reporting. The module and analytics dashboard provides provide traders with a comprehensive view of their trading activity, real-time comment capture and best execution reporting. The advanced functionality within the module and analytics dashboard saves users time by automatically capturing and immediately analyzing their trading activities.?
Buy-Side News
Trading Hacks and Force Multipliers for the Smaller Trading Team
The DESK | Dan Barnes
Faced with rising trading volumes and falling returns, buy-side bond desks are frequently either shrinking or at best struggling to match resource with requirements. We spoke with several market participants about the ways they see buy-side firms outperforming their apparent capabilities, using hacks or more frequently ‘force multipliers’ to overcome an imbalance in scale. The first issue was identifying execution goals. Fighting for best price at the expense of getting trades done, when time is of the essence, is not clever. Balancing execution goals such as fills and speed of execution against the price received is a major starting point as it then allows the desk to bucket up certain trades.
US Media Veterans Back New Trading Firm with Financial News Arm
Financial Times | Kate Duguid, Joshua Franklin, Ortenca Aliaj & James Fontanella-Kahn
A group of veteran US financial journalists is teaming up with investors to launch a trading firm that is designed to trade on market-moving news unearthed by its own investigative reporting. The business, founded by investor Nathaniel Brooks Horwitz and writer Sam Koppelman, would comprise two entities: a trading fund and a group of analysts and journalists producing stories based on publicly available material, according to several people familiar with the matter.
Hedge Funds Increasingly Uneasy Over Impact of FX Prime Broker Consolidation on Liquidity
The TRADE News | Claudia Preece
As consolidation among sell-side providers of FX prime brokerage (FX PB) continues, hedge funds are growing increasingly uneasy about the risk of reduced access to liquidity, an Acuiti report has found. This is specifically as a result of offboarding, a highly disruptive process which is also costly due to the process of finding and onboarding new prime brokers, highlighted by respondents as a significant drag. Over the past five years the number of prime brokerage relationships has been reducing.?
How Does the World’s Largest Hedge Fund Really Make Its Money?
New York Times | Rob Copeland
For years, the whispered questions have passed from one Wall Street trading floor to the next. Bridgewater Associates, a global investing force, had $168 billion under management at its peak in 2022, making it not just the world’s largest hedge fund, but also more than twice the size of the runner-up. Bridgewater’s billionaire founder, Ray Dalio, was omnipresent in the financial media and said publicly that he had cracked what he termed “the holy grail” of investing, including a series of trading formulas bound to make money, “by which I mean that if you find this thing, you will be rich and successful.” So why didn’t anyone on Wall Street know much of anything about it?
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M&A/ Investment News
Rithm Wins Dan Och’s Support for Sculptor Bid at $720 Million
Bloomberg News | Katherine Burton & Hema Parmar
Sculptor Capital Management Inc. said major shareholder and founder Dan Och and his group agreed to a sweetened deal from Rithm Capital Corp., in what may be the deciding bid for the struggling hedge fund. Rithm’s amended offer increased the bid to $12.70 a share from $12.00, Sculptor said in a statement Friday. It values Sculptor at about $720 million. While shareholders still have to vote on the deal, Och’s support potentially puts an end to a bidding war that pitted Rithm against Saba Capital Management founder Boaz Weinstein and a group of billionaires who most recently said they’d pay $13.50 a share.
Nasdaq Completes Acquisition of Adenza
Markets Media | Staff
Nasdaq announced the completion of its acquisition of Adenza, a provider of mission-critical risk management, regulatory reporting, and capital markets software to the financial services industry, from Thoma Bravo, a leading software investment firm. The acquisition advances Nasdaq’s transformation, further expanding the company’s capabilities to support the world’s financial institutions with mission-critical solutions designed to manage risk and compliance, strengthen integrity, and enhance market and trading infrastructure.
LMAX Group Completes Acquisition of Cürex’s FX Business
Markets Media | Staff
LMAX Group (or “the Company”), the leading independent operator of institutional execution venues for FX and digital assets trading, announces that it has successfully completed the acquisition of the FX business of Cürex, a New York City‐based institutional foreign exchange execution services and data analytics company. The combination of LMAX Group and Cürex brings together the distribution scale and technical capabilities of both businesses to create a stronger, more diversified, firm liquidity, institutional FX offering for clients to include execution venues, precise market data and trade analytics.
Why Bank Mergers Keep Falling Through
American Banker | Jim Dobbs
A total of 10 bank acquisitions have been nixed this year. That puts 2023 on pace to match the 13 deals called off last year. Only four deals were scuttled in 2021. What gives? The Biden administration in July 2021 called for ramped-up M&A scrutiny. Within a year, dozens of deals encountered delays, and several were eventually quashed. The trend extended into this year. Increased regulatory scrutiny took the blame in several cases, including most notably the oft-delayed merger of TD Bank Group and First Horizon. It was called off in May, with both companies citing insurmountable regulatory hurdles.?
Regulatory & Legal News
Trading Startup Sues Regulator in Effort to Launch Election-Betting Market
Wall Street Journal | Paul Kiernan & Alexander Osipovich
A financial startup is turning to the courts to settle a long-running debate over whether Americans should be able to bet on U.S. elections. Online-trading startup Kalshi sued the Commodity Futures Trading Commission on Wednesday, arguing the regulator wrongfully denied its application to launch a market for derivatives tied to results of congressional elections.?The lawsuit could help determine whether Americans will be able to bet significant amounts of money on election outcomes, after gambling revenues in the U.S. reached a record last year.?
MiFID II Unbundling Rules Dented Research and Liquidity in London’s Main Stock Market, Study Finds
Best Execution | Alex Pugh
A study from the University of Bath shows the European Union’s MiFID II financial market reforms inadvertently reduced research activity and adversely affected liquidity in London’s main stock market. Despite the drop in research activity, the Research unbundling and market liquidity: Evidence from MiFID II study found that the impact on London’s relatively less regulated Alternative Investment Market was mitigated by its special adviser rules. London’s more lightly regulated Alternative Investment Market saw research coverage increase over the same period by 6.3%, albeit from a much smaller level of around 1.5 analysts per company, and liquidity improved.?
Hedge Funds, PE Firms Accuse SEC of ‘Vast Power Grab’ With New Rules
Bloomberg News | Sabrina Willmer
Hedge funds and private equity firms took a bigger swing in their legal fight with the Securities and Exchange Commission, alleging that the regulator lacked authority to impose a slate of new restrictions in August. Trade groups including the American Investment Council and the Managed Funds Association said the SEC didn’t properly weigh costs and benefits of the regulations. They again asked a federal appeals court to gut the new rules, which require funds to disclose more about quarterly fees and expenses, as well as keeping some favored investors from cashing out before others.
They Scammed Wall Street. Now They Want to Get Out of Prison Early
Bloomberg News | Sabrina Willmer
US prosecutors described Gary Frank as “nothing but a con man” when he was sentenced to more than 17 years behind bars for scamming Prudential Insurance and others out of tens of millions of dollars. But the Philadelphia-area businessman is expecting to find out this month if his sentence will be reduced under a US appeals court ruling that’s generated waves across the country. The opinion upended a long-standing practice of lengthening sentences for white-collar criminals based on how much they intended to defraud victims — versus the amounts they actually stole.
Crypto?& Digital Asset News
Sam Bankman-Fried Is Convicted of Fraud in FTX Collapse
Wall Street Journal | James Fanelli & Corinne Ramey
FTX founder Sam Bankman-Fried was convicted Thursday of stealing billions of dollars from customers of the doomed crypto exchange, in what prosecutors called one of the biggest financial frauds in U.S. history.? A New York federal jury convicted him of all seven counts he faced. The verdict capped the stunning fall of the onetime crypto king, whose shaggy-haired, boy-genius persona helped catapult FTX into a powerhouse trading platform that sponsored sports teams and ran glitzy ads featuring football great Tom Brady, model Gisele Bündchen and comedian Larry David.?
Gemini Sues Genesis for Control of $1.6 Billion in Grayscale Bitcoin Trust Shares
Decrypt | Mat Di Salvo
Gemini today sued digital asset lender Genesis over who rightfully owns $1.6 billion in Grayscale Bitcoin Trust shares. A Friday lawsuit filed in the U.S. Bankruptcy Court Southern District of New York shows that New York-based cryptocurrency exchange Gemini wants to regain control of the shares to pay back the clients of its Earn program. Gemini and Genesis have been at war since last year because Genesis once served as a primary lending partner to the New York exchange for the Gemini Earn product. Gemini Earn allowed customers to get returns money on their crypto.
Hong Kong Crypto Exchange HashKey Launches App, Targets Retail Users
The Block | Timmy Shen
HashKey Exchange, an Asia-based cryptocurrency exchange with operations in Hong Kong, officially launched its app for retail trading today as it expands its presence in Hong Kong. In an interview with The Block, Livio Weng, HashKey’s chief operating officer, said that HashKey has received approval from the Securities and Futures Commission to launch the app to serve both professional investors and retail users. The app launch comes after the exchange started to offer retail trading services on its website on Aug. 28.
New Crypto Isins Seen as ‘Really Important’ Step for TradFi Adoption
WatersTechnology | Emma Hilary Gould & Theo Normanton
As disgraced crypto mogul Sam Bankman-Fried took the stand on Friday, something far more subtle—but arguably more important in the long run—was taking place in the world of financial data. In the latest sign that traditional finance may be reaching an accord with digital assets, the Association of National Numbering Agencies (ANNA)—the issuer of International Securities Identification Numbers—and the Digital Token Identifier Foundation (DTIF) have announced the phased introduction of new Isins for identifying crypto assets.
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