High-frequency trading concerns return to the fore


High-frequency trading concerns return to the fore

http://www.efinancialnews.com/story/2013-07-18/high-frequency-trading-concerns-return?omref=email_TradingTechnology

High-frequency trading has risen to the forefront of hedge fund regulatory concerns, according to a new report.

High-frequency trading concerns return

High-frequency trading concerns return

While the level of regulatory concern remains far from 2011 levels, it has increased since last year, according to the report, which was published yesterday by research firm Tabb Group. The research was based on conversations with 63 head traders of US hedge funds, managing $301 billion in total assets.

The research said: “In light of the public debate and media scrutiny of market structure issues, such as exchange order type disclosure, the hash crash, and early looks at machine readable economic indicators, concerns over high frequency trading have risen. Meanwhile, with initial registration costs in the rearview mirror, compliance costs concerns have dropped off.” (See graph bottom-right)

Top of the list is uncertainty regarding how hedge funds will be treated under mandatory registration with the US Securities and Exchange Commission for managers running $100 million or more, and the implications of Form PF, which requires them to provide information on the hedge funds they run to the Financial Stability Oversight Council, the report found.

LSE to launch Luxembourg CSD


LSE to launch Luxembourg CSD

http://www.efinancialnews.com/story/2013-07-16/london-stock-exchange-luxembourg-csd-jp-morgan?omref=email_TradingTechnology

The London Stock Exchange Group is establishing a new central securities depositary in Luxembourg, building on its existing Italian central securities depository and following previously-outlined plans to compete more aggressively in settlement.

LSE to launch Luxembourg CSD

As part of the stock exchange group’s announcement, JP Morgan confirmed that the group will provide it with settlement, custody and asset servicing as part of its international collateral management business.

In June Financial News reported that JP Morgan and the LSE were teaming up as part of a CSD launch.

The new CSD, which builds on the existing infrastructure of the LSE’s Italian CSD Monte Titoli, will be located in Luxembourg. According to a statement, the CSD will “allow the Group to broaden its customer base as it expands its custody and settlement services”.

The CSD will support clients as the European Market Infrastructure Regulation comes into play across the region. Emir will force the majority of over-the-counter derivatives trades to be cleared through a central counterparty. These CCPs are required to hold collateral assets as an insurance policy against any defaults at a securities settlement system – such as a CSD – where possible.

 

JP Morgan said it will use the LSE as its CSD in its strategy for Emir. The agreement to use the CSD “enhances JP Morgan’s Collateral Management service”, according to a statement.

Speaking during the LSE’s full-year results call in May, chief executive Xavier Rolet, described settlement as the “next frontier” for the industry, and outlined plans to compete more aggressively in this sector.

In May, he told Financial News: “We see an opportunity to go from being a competitive and successful Italian CSD to a eurozone CSD. Monte Titoli has an opportunity to partner with our customers and provide settlement services, and partnership is something we do well.”

Raffaele Jerusalmi, chief executive of Borsa Italiana and director of capital markets at the London Stock Exchange Group, said in a statement: “The Group is well placed to provide a full range of post-trade services to meet the evolving needs of our customers arising from on-going financial regulatory change and the continued focus on operational efficiency.”

 

Monte Titoli, which is the third-largest CSD in Europe, will drive the growth of the international custody and settlement business at the LSE. It will provide technology, operational services and access to Target2-Securities – the European Central Bank’s pan-European platform, designed to harmonise settlement – for the new CSD. It is expected to launch in the first half of next year.

–write to sophie.baker@dowjones.com and follow on Twitter @SophieBaker_FN

 

CVA risk – Central Clearing


CVA risk – Central Clearing
Posted on July 10, 2013 by Ravikanth Borra
CVA risk (Credit Valuation Risk)

What is credit valuation adjustment?
Credit valuation adjustment (CVA) is an adjustment made by a bank to the market value of an OTC derivative contract to take into account credit risk of the counterparty, i.e. the risk that the credit quality of the counterparty deteriorates or that the counterparty in question defaults. As such, in accounting terms, CVA is the “market value” of credit risk.

Why is CVA important
Under the proposed Basel III framework, the capital charge will be enhanced by a new charge, called the Credit Valuation Adjustment (‘CVA’) Risk Capital Charge.
This is a capital charge, whereby the bank is required to hold additional capital when entering an OTC trade. The charge is designed to cover losses arising from the fact that as the counterparty’s financial position worsens, the market value of its derivatives obligation declines, even though there might not necessarily be an actual default.

Central Clearing

Trades that are cleared through a central counterparty (‘CCP’) will be collateralized daily, reducing any potential CVA charge, but not completely eliminating.
In a centrally cleared model, counterparty risk is reduced by each end investor facing a clearing broker, that clearing broker then facing the CCP. The exposure that the clearing broker has to the client is identical to the exposure it has to the CCP, effectively
‘passing through’ the client’s counterparty risk to the CCP.

Under current proposals, this structure may be treated as a bilateral trade between the end investor and clearing broker, and a centrally cleared trade between the clearing broker and CCP. The ‘end investor to clearing broker’ leg would attract a higher risk weighted capital charge and the ‘clearing broker to CCP’ leg would attract an additional lower risk weighted capital charge.

The charge for entering into a centrally cleared trade may therefore be higher than a bilateral trade alone, the opposite of the desired effect.

EMIR Consultation

The purpose of this consultation is to gather stakeholders’ views on two specific issues in the area of counterparty credit risk, on which:
– Capitalisation of bank exposures to central counterparties (Section I) and
– Treatment of incurred credit valuation adjustments (Section II)

The EMIR consultation paper below describes the proposed solution and issues if any

http://ec.europa.eu/internal_market/consultations/docs/2011/credit_risk/consultation_paper_en.pdf

Bank Of Queensland (BOQ) chooses SuperDerivatives front office solution


BOQ chooses SuperDerivatives front office solution

http://www.automatedtrader.net/news/at/143823/boq-chooses-superderivatives-front-office-solution

Singapore – Bank of Queensland has chosen a front office solution from SuperDerivatives to provide BOQ with advanced pricing capabilities and risk management tools. The solution includes the cloud-based DGX market data platform.

SuperDerivatives’ distribution solution will provide independent price discovery, pre and post-trade deal management tools and real-time market data. Additionally, it will provide access to advanced analytics and coverage for cash and derivatives products across multiple asset classes.

David Hillhouse, BOQ’s Head of Financial Markets said: “The SuperDerivatives distribution solution has proven valuable for our sales and trading desks, allowing them to quickly get a comprehensive view of multi-asset portfolios, and identifying hedging and structuring opportunities for our clients. Bank of Queensland chooses SuperDerivatives Having the right tools at the right price allows our team greater efficiency and, most importantly, allows us to give better service to our clients.”

Noam Shefi, Regional Sales Manager at SuperDerivatives added: “We are proud to help BOQ enhance its new Financial Markets offering. Our solution will help them to increase their efficiency and improve client servicing, whilst keeping costs under control – key elements to success in Australia’s competitive financial markets. We look forward to working with BOQ as they grow and succeed in the future.”

 

eClerx offers new solutions for credit and risk management


eClerx offers new solutions for credit and risk management

http://www.automatedtrader.net/news/at/143824/eclerx-offers-new-solutions-for-credit-and-risk-management

New York – eClerx, the provider of knowledge and business processing to the financial services industry, has launched its ISDA Credit Support Annex (CSA) Document Risk Review solution that allows financial institutions to strategically mine information from CSAs for management of credit and legal risk, optimization of cash and collateral, and operational risk mitigation. Firms can leverage the data pre-trade to enable correct pricing of derivative trades, and post-trade to optimize collateral movements across counterparties.

As a result of regulatory mandates such as Basel and Dodd Frank living will requirements, as well as the increased demand for collateral due to OTC clearing, the information in ISDA CSA documents has become critical to firms’ credit risk management and planning. On average, more than 65% of agreements contain discrepancies when compared against representations in client systems. By leveraging eClerx’s ISDA CSA Document Risk Review solution, users gain access to information clients have legally agreed to but do not have the ability to systematically act upon, due to the unstructured nature of the information embedded within faxed PDF documents and image files.

“The industry is challenged by the complexity of screening the data in their ISDA CSA documents,” said Mahesh Muthu, Associate Principal at eClerx. “Our new ISDA CSA Document Risk Review solution will allow firms to utilize that information through eClerx’s strategic decision analytics facilitated by a metrics and analytics suite. By engaging with a third-party expert, financial institutions can leverage the toolset and processes already developed and mastered, allowing their internal teams such as legal, credit valuation adjustment (CVA) trading desks, and treasury, to focus on optimizing day-to-day decisions with a more accurate, granular dataset. With pending regulations, firms need to ensure they have a comprehensive solution in place to remain competitive while managing costs.”

The ISDA CSA Document Risk Review offering provides clients with:

• Electronic, usable records of agreements which can be mapped and reconciled to client systems or used as a golden source repository, facilitated by a system based dual capture and audit methodology

• An operational reporting suite summarizing discrepancies between systems and electronic CSA records, benchmarking against industry standards and portfolio averages, and isolating legally unenforceable documentation

• An analytics suite customized for various consuming departments, such as client on-boarding, legal, credit valuation desk (CVA), credit risk, operations and liquidity management

In addition to the new product, clients will also have access to eClerx’s existing pre‐validated capture forms, taxonomical database and data capture rule set, as well as an operational reporting suite to govern the process and analytics suited to each consuming department within a financial firm.

S&P Capital IQ launches new Portfolio Risk solution delivering Real-Time Risk Analysis for Multi-Asset Class Portfolios


S&P Capital IQ launches new Portfolio Risk solution delivering Real-Time Risk Analysis for Multi-Asset Class Portfolios

http://www.bobsguide.com/guide/news/2013/Jun/17/sp-capital-iq-launches-new-portfolio-risk-solution-delivering-real-time-risk-analysis-for-multi-asset-class-portfolios.html

Solution incorporates leading risk and scenario analytics with essential market data and fundamentals to produce a one-of-a-kind offering

S&P Capital IQ today announced the launch of its Portfolio Risk solution, an advanced risk and scenario analytics tool that provides traders, portfolio and risk managers with the ability to make decisions about the pricing, hedging and capital management of multi-asset class portfolios in real-time.

Available on the S&P Capital IQ desktop, the product brings together leading risk and portfolio analytics acquired through last year’s purchase of R(2) Financial Technologies and S&P Capital IQ’s extensive market and reference data. The Portfolio Risk solution offers a fully integrated data and analytics platform, eliminating the need to invest in separate data to run risk systems. In addition, it gives users the ability to use interactive portfolio dashboards to aggregate data or drill down to the most detailed level of fundamental financials and research, enhancing understanding of impacts of potential changes on P&L at an actionable level. These views are comprehensive, yet easy to change and organized to suit individual needs.

The Portfolio Risk solution covers a diverse range of asset classes from cash, fixed income and equities to exotic derivatives. By offering best-in-class instrument pricing, portfolio analytics, scenario analysis and stress-testing capabilities via shareable dashboards, it facilitates communication and collaboration around risk and investment strategies while also providing full transparency into underlying methodologies and on-the-fly calculations. These features ensure that risk metrics can be calculated quickly and that new scenarios or market strategies can be tested and acted upon swiftly.

“In just over a year since our acquisition of R(2) Financial Technologies, we have successfully brought together rich data, sophisticated analytics, and relevant market commentary, news and analysis,” said Lou Eccleston, President, S&P Capital IQ. “The result is that our clients can quickly generate a transparent, fully customized risk picture enabling them to react quickly to changes in the market and to new investment ideas.”

“We are just beginning to leverage the depth of S&P Capital IQ’s data resources to deliver what we call ‘risk intelligence,’ including the power to gather new insights into how portfolios behave under varying scenarios,” said Dan Rosen, Managing Director, S&P Capital IQ. “We have assembled one of the most experienced teams of risk and financial engineering experts in the world and dedicated them to delivering interactive, real-time risk analysis as a central part of the investment decision making process.”

RISK AS A SERVICE


via Pocket http://www.securitiestechnologymonitor.com/news/risk-as-a-service-offering-povides-tools-for-hedge-funds-31767-1.html?ET=securitiesindustry:e4247:190117a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=SIN_DailyClose__061413 June 14, 2013 at 10:25PM

SIFMA Plans Cybersecurity Test


The exercise, code-named Quantum Dawn 2, is intended to improve the readiness of the financial sector to cope with a market-wide disruption The Securities Industry and Financial Markets Association will test its members’ responses to a street-wide cyber attack later this month.

via Pocket http://www.securitiestechnologymonitor.com/news/sifma-plans-cybersecurity-test-31773-1.html June 14, 2013 at 10:19PM

ConvergEx upgrades pre-trade risk controls for ConnEx (FIX as a Service)


ConvergEx upgrades pre-trade risk controls for ConnEx

 

http://www.automatedtrader.net/news/at/142876/convergex-upgrades-pre_trade-risk-controls-for-connex

New York – ConvergEx Group has announced that ConnEx, its outsourced hosted connectivity infrastructure business, has launched an updated version of its pre-trade risk management system, ConnEx Risk Management.

“There have been a number of recent market events and new regulations that have highlighted why risk management continues to be a very important and ever-evolving topic in our industry,” said George Rosenberger, managing director and head of ConvergEx’s ConnEx.

With this upgrade, ConnEx customers can configure risk controls for their clients using additional pre-trade checks. The interface allows users to create customized client groups which can have one set of risk parameters or create a customized risk profile on a client-by-client basis. The software is deployed directly to ConnEx customers and the interface allows them to assign buying power, credit and risk checks for their underlying clients.

The new version of ConnEx Risk Management also addresses the challenge of multiple internal trading platforms that sell-side firms are faced with. This decentralization creates a challenge to administer consistent risk checks for all of their clients. However, by centralizing all client inbound connectivity through the ConnEx FIX gateway, ConnEx customers can administer consistent risk checks regardless of the trading system their client is using or the internal trading platform that the order is destined for.

“Sell-side firms need to invest in up-to-date risk management tools now to make sure that they have the right controls in place to help protect themselves against an unexpected market event today or in the future,” concluded Mr. Rosenberger.

Kusiri overview – transforming Client On Boarding, KYC, KYB, AML&Risk Management.


WWW.KUSIRI.COM

Kusiri is an information retrieval company and data platform. Our products help organisations to maximise their return on data and help researchers and analysts do their jobs more quickly and effectively. Our specialist teams are based in  London.

                       Connect, Collect& Protect

The power of the world’s data at your disposal– transforming Client On Boarding, KYC, KYB, AMLRisk Management.

The task of sourcing and extracting data from multiple sourcesin order to truly understand your customer, or to cost effectively manage risk and compliance obligations can be daunting, slow and increasingly costly.  In today’s Big Data world the information you need is not just in databases inside your firewall – relevant data must be found in multiplesources and file types, including in databases, e mails, online social networks, web sites, web search engines, newspaper archives, news feeds and other sources. 

 

Each different data source has its own means of access and retrieval. This can be challenging and time consuming using conventional tools and methods. Failure to source all relevant data from difficult-to-reach web sites and other sources, could lead to flawed on-boarding and client maintenance decisions. Failure to ensure you on-board and retain only the right clients for your business could cost significantly in terms of profits, resources and reputational damage. These are strategic issues and Kusiri provides analysts with a strategic platform to optimiseon-boarding and client maintenanceworkflow and help removeCOB and AML risk.

Kusiriprovides enterprise search solutions to deliver effective data acquisition from multiple sources, and formats… simultaneously

 

Kusiri CAMRA 2.5 integrates structured and unstructured data sources regardless of their means of access.  The platform enables  youto easily collect distributed data and transform it into a single data stream so that you can analyse and process big-data quicklythrough a single, normalised data stream that is generated dynamically.CAMRA is designed to“integrate everything” APIs, databases, deep web, file stores, web sites,etcfrom whichever infrastructure silos they originate. Kusiri provides connectors into potentially thousands of data sources and types that are searched  simultaneously to maximise scope and reduce data acquisition times to a fraction of that needed usingtraditional methods. Additional data sources can be added with no additional processing time overhead. The Kusiri system is integrated into your workflow or datastore via a single data API. It isdesigned to run on-premise or in the cloud, and our system architecture for data processing  means that performance is governed by CPU power – not network or source latency.

Appliance

The Kusiri platform is an integrated hardware and software solution.  It is supplied on a dedicated server cluster (Appliance) that is available for use within minutes of being plugged into a power supply and network access.  There is no additional hardware requirement and no need for any operating system configuration.  All the required software is pre-installed and an administrator chooses the components that need to run via an administration console, through which the appliance can be remotely managed. 

 

Applications

 

Kusiri technology is used in a variety of sectors including Financial Institutions and Audit Firmsto enable them to better support their critical research and investigation workflow with dramatically increased speed and effectiveness, and at optimum cost. The Kusiri system ‘landscape’ is easily integrated with customers’ analysis and on boarding workflow so that existing best practice can be enhanced with superior decision support data from a single source.

Anti Money Laundering (AML)

AML activity is estimated to be the worlds second largest business sector after Oil & Gas, at around $2 trillion. To protect banks, businesses, governments and individuals, regulatory obligations mean that institutions must deploy systems and processes to detect and report money laundering. Kusiri technology enables organisations to capture, monitor and analyse relevant data from the widest necessary range of sources, to help minimiseoperational and reputational risk as well as protecting customers and shareholders’ interests.

Know Your Customer (KYC)

Engaging in new business relationships and On-Boarding can be risky. Managing risk across new & existing clients is critical to business performance and reputation. In order to properly complete the necessary searches and investigationsnecessary to reduce risk and comply with KYC regulations, your business needs fast and regular access to multiple data sources combined with Kusiri technology. Trusting Kusiri to automate data acquisition from any and all relevant sources can empower your organisation to achieve the highest levels of governance, compliance and competitiveness

graph_small_updated

Kusiri

http://www.kusiri.com

info@kusiri.com

 

5 New Street

London

EC2M 4TP

United Kingdom

+44 (0)208123 8765

 

Kusiri is an information retrieval company and data platform. Our products help organisations to maximise their return on data and help researchers and analysts do their jobs more quickly and effectively. Our specialist teams are based in  London.

 

 

© 2013 Kusiri Limited.

All rights reserved.

 

Kusiri, CAMRA, and all other related logos and product names are either registered trademarks or trademarks of Kusiri Limited in the United Kingdom, the United States and/or other countries.  All other company, product and service names are the property of their respective holders and may be registered trademarks or trademarks in the United States and/or other countries. 

User Features Summary

  • Unlimited datasources into a single results table for analysis
  • Query Phrase Lists Directory for shared team tasks
  • Comprehensive deep search data acquisition options
  • Clone / Batch Queries – accelerated investigation tool
  • Results Preview to help accelerate analysis and decision support
  • Identify Meaning – entities and topics for sentiment analysis
  • Research Management–  embed research methodology into system
  • Multiple simultaneous projects for increased productivity

 

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