Citigroup has made four hires to its London power and gas sales team, as the US investment bank continues to build its commodities arm while its peers scale back in the sector


Citigroup has made four hires to its London power and gas sales team, as the US investment bank continues to build its commodities arm while its peers scale back in the sector

http://www.efinancialnews.com/story/2013-07-02/citigroup-commodities-four-hires?omref=email_TopStories

Citi adds four to growing commodities roster

Suzi Ring

02 Jul 2013

Citigroup”>Citigroup has made four hires to its London power and gas sales team, as the US investment bank continues to build its commodities arm while its peers scale back in the sector, Financial News has learnt.

Citi adds four to growing commodities roster

Branko Pribicevic will join Citi in September from energy trading company Vitol to take up the role of head of European power and gas sales and origination, according to two people familiar with the situation. He has been at Vitol since 2009, prior to which he was at Morgan Stanley, according to his LinkedIn profile. Pribicevic did not respond to a LinkedIn request for comment.

Colin March is set to join Citi from Morgan Stanley. According to the UK’s Financial Services Register he had been at Morgan Stanley since 2007 but left the bank last month. March could not be reached for comment.

Former Goldman Sachs executive director Diana Beverly and Benjamin Davis from Macquarie Bank will also join Citi’s power and gas group in the coming months. Beverly was at Goldman Sachs for six years until 2012, according to one person familiar with the situation. Davis has been at Macquarie since 2009, according to the Financial Services Register.

Beverly did not respond to a LinkedIn request for comment. There were no contact details available for Davis.

 

Citi has been taking steps to grow its commodities arm at a time when other investment banks have been doing the opposite due to increased capital requirements and tighter restrictions around proprietary trading. The Wall Street Journal reported last month that Morgan Stanley plans to cut 10% of the staff in its commodities unit, or about 30 jobs.

Deutsche Bank has also been scaling back its commodities business in some areas. This year the bank has put parts of its European physical gas and power books up for sale, which has led to about 10 traders being cut this year, according to a person familiar with the plans.

Other departures from the bank’s commodities business in recent months include David Silbert, global head of commodities; Ray Key, global head of metals trading; and John Redpath, global head of oil products and agricultural trading.

In contrast, Citi recently hired a senior metals duo from UBS to lead its global metals sales and base metals trading divisions – moves first revealed by Financial News. Rick McIntire will join Citi from UBS as global head of metals sales this month, while Dylan Morgan joined the bank from UBS as co-head of base metals trading in May.

 

Other notable hires include Jose Cogolludo, the former BNP Paribas global head of sales and marketing for commodity derivatives, who joined Citi as global head of commodities sales at the close of last year; and Kris Van Broekhoven, who joined from Deutsche Bank as global head of commodity finance in September.

According to research firm Coalition, Citi was ranked as a “tier three” investment bank commodities sales and trading in its 2012 investment bank league table. Tier three means the bank ranks between seventh and tenth among the top ten investment banks for sales and trading revenue.

Just three of 10 of the largest investment banks in commodities trading increased revenues from this business last year, according to a JP Morgan report published in April. Goldman Sachs, Morgan Stanley, Macquarie Group, Deutsche Bank, Barclays, Standard Chartered, Credit Suisse, RBC Capital Markets, BNP Paribas and UBS shared total commodities trading revenues of $6.74bn last year, down from $7.04bn during the previous 12 months. Of these, only Macquarie, Barclays and RBC saw figures increase.

JP Morgan did not include itself or Citi in the April report.

Eurex Clearing said it launched Eurex Clearing Prisma, a risk management system that applies a portfolio methodology


Eurex Clearing said it launched Eurex Clearing Prisma, a risk management system that applies a portfolio methodology

http://www.automatedtrader.net/news/at/142960/eurex-clearing-launches-new-risk-management-system

Frankfurt – Eurex Clearing said it launched Eurex Clearing Prisma, a risk management system that applies a portfolio methodology.

The new system will be rolled out for all products cleared by Eurex Clearing and will replace the current Risk Based Margining methodology.

Eurex Clearing said that by capturing risk reducing portfolio effects, Prisma promotes hedged positions and increases capital efficiency.

“After full roll-out, Eurex Clearing will, as the first major clearing house, apply a single consistent methodology and system across all asset classes cleared including listed and OTC products and thereby increase operational efficiency,” the company said.

Eurex Clearing Prisma applies a simulation-based Value-at-Risk model which covers historical and hypothetical stress scenarios

Meeting Multi-Asset Trading Challenges: Workable Approaches for Success in a Dynamic Capital Markets Arena – A white paper from Smarttrade


 

 

Meeting Multi-Asset Trading Challenges:

Workable Approaches for Success in a Dynamic Capital Markets Arena

a White Paper from

Meeting Multi-Asset Trading Challenges:

Workable Approaches for Success in a Dynamic Capital Markets Arena

2

Introduction

There has been widespread change in the global capital markets in the last few years, and it has had significant effects on banks’ trading platforms. Banks must provide trading platforms that can access the global financial markets, manage increasingly complex transactions involving multiple asset classes, and handle a range of protocols and market structures that are constantly evolving. Add to this the requirements to respond to evolving regulatory mandates, client demands for increased functionality and transparency, and increasing volumes and volatility; and it’s clear sell-side banks face a new, challenging trading terrain where they must quickly react to changing markets in order to remain competitive.

Institutional dealing is extending globally with more liquidity sources to manage, and involves more and more disparate counterparties. This creates the need to aggregate, create orders, and deal or trade faster with clear market views in a fast moving trading environment. The stakes are higher. Clients demand transparency and best execution even while trading larger volumes in more volatile markets across various market structures and across multiple asset classes.

Meeting Multi-Asset Trading Challenges: Workable Approaches for Success in a Dynamic Capital Markets Arena

3

 

Multi-Asset Trading Landscape

Siloed trading operations are becoming less and less optimal in this new environment. Clients want sell-side banks to support complex trades, often involving multiple legs in multiple asset classes. These trades may include instruments traded in more than one geographic region, in more than one time zone, and with multiple settlement arrangements. To compete in this kind of trading environment, sell-side banks need harmonized trading systems that enable deeper and richer cross-asset functionality.

In addition, they now need systems that can monitor risk more holistically and in real time across client accounts with diverse holdings. The pressure for sell-side banks to more transparently manage exposure across all business comes from both regulators and banks’ own risk management mandates, both of which continue to evolve.

Focus on Dealing Systems

Tier 1 and Tier 2 sell-side banks generally grow both organically and by acquisition. In the process of this growth, they build or acquire a plethora of trading systems that are disparate in terms of infrastructure, architecture and software. Some are legacy systems using old code bases and outdated hardware, some are purpose-built and best-of-breed, some are asset-class specific, and some handle multiple asset classes. A typical large global financial institution might have as many as 20, 50 or even 100’s of separate trading platforms. Many of these platforms may have open systems with flexible and scalable architectures, but others may be brittle, unable to scale, and difficult to modify to comply with a changing market environment. These platforms often operate independently of one another, requiring a spider’s web of interconnections and interfaces to enable connectivity with clients and interoperability with compliance, risk management, clearing, and other back office functions.

Evolving market structure, regulatory pressure, client demands, cost reduction, and consolidation are forcing many firms to consider a new paradigm for trading systems. They look for ways to harmonize their trading infrastructure across multiple asset classes; re-using functionality, data models, database, message transports, and protocols while still supporting the distinct workflows required by each asset class and market. There are a number of business benefits obtained from unification of platforms, technology and processes:

Meeting Multi-Asset Trading Challenges: Workable Approaches for Success in a Dynamic Capital Markets Arena

4

 

Rationalize operations across asset classes by removing silos, eliminating redundant infrastructure, 1. and dramatically reducing latency as well as the maintenance and support costs associated with siloed IT environments.

Standardize messaging to the back office, enabling a unified and normalized approach to allocations, 2. clearing, settlement, and reporting.

Meet customer needs for more complex trades involving multiple transactions across multiple 3. asset classes.

Provide buy-side customers with the ability to trade different asset classes in the same manner, 4. with similar algorithms, and from one point of connectivity.

Manage risk more holistically by providing complete, real time views of exposure across asset classes 5. and traditionally siloed systems.

Better prepare trading desks to meet evolving regulatory requirements without having to recode 6. multiple systems.

Provide customers and regulators with improved transparency into pricing, liquidity, transaction cost, 7. and risk.

Integrated, Multi-Asset Trading Systems

A single, integrated dealing system can deliver dramatic improvements in cost reduction, risk control, and profitability. So what components would need to be included in such a system?

It would have to include functionality for liquidity aggregation, pricing, order management, position-keeping, smart-order routing, and internalization. Such a system should be modular, allowing a firm to turn on features or asset classes one at a time to manage migration. It should also enable the firm to turn on or off specific functionality at discreet levels (for example, turning on a specific liquidity seeking algorithm for use with equities in the US markets, modifying it for use in the EU, and leaving it disabled for futures).

The core of this type of integrated system is a reliable, scalable, low latency, and high-throughput messaging capability. Scalability is crucial. Equities, options, and forex volumes have all been growing for years. As more of the products traditionally traded over the counter (OTC) are migrated to central clearing and electronic trading, volume in these assets is expected to swell dramatically. Systems used for trading these instruments will need to scale easily using industry-standard hardware.

Meeting Multi-Asset Trading Challenges: Workable Approaches for Success in a Dynamic Capital Markets Arena

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An open architecture that facilitates easy integration with external systems is also crucial. Open application programming interfaces (APIs) can simplify and standardize integration, making the trading platform more flexible, and more customizable. These APIs should allow integration of applications to extend functionality, custom analytics and algorithms, specialized compliance and risk checks, and client-, market- or asset class-specific functionality.

Such a system would also need a standard set of adaptors to facilitate quick and flexible integration with counterparties for both liquidity and order inflows and pricing and execution outflows. It should have multiple deployment options: internally within the firm, hosted/colocated, distributed across multiple centers, with all corresponding monitoring tools depending on the option chosen.

A standardized data model needs to be flexible and robust enough to preserve all the nuances and unique identifiers present in each asset class while normalizing the data to enable common processes to handle liquidity aggregation, order book management, order routing, state management, etc.

Lastly standardized tools should be available for managing and monitoring connectivity, latency, and performance across counterparty connections, liquidity venues, back office connections, and internal processes.

Aggregating Liquidity

Banks need to easily identify, connect to, collect and aggregate prices or market data from a growing number of increasingly diverse liquidity sources. Market data comes in different formats and often in different protocols, depending on the source and instrument. These market data require normalization to effectively capture prices, apply analytics, and determine the best available prices for each instrument set up to trade. These capabilities must support both the most simple and the most complex versions of pricing, providing capabilities to capture and determine top of book for OTC and listed flow based on price, size, and spread.

Price Distribution

Approaches to price distribution can vary by asset class, by trading objectives, and by client. A multi-asset system needs the ability to customize pricing on a client-specific basis, applying risk analytics, credit checks, spread data, and trading limits based on customer-specific criteria.

Meeting Multi-Asset Trading Challenges: Workable Approaches for Success in a Dynamic Capital Markets Arena

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In addition, the system must be flexible in the way it distributes prices. Some clients may wish to receive every price update streamed into high-frequency trading systems, while others may require only incremental snapshots of conflated data. Some clients may need conflation to preserve system resources or to support click-trading. Scalability and resilience are also critical, enabling the system to function smoothly during periods of extraordinarily high volume and volatility.

Order Management

Effective order capture, whether from internal or external sources, is another given in a high-speed, multi-asset trading environment. Standardized formats ensure orders are normalized in the trading book and properly managed, tracked and reported throughout their lifecycles. A critical feature of an order management component is the ability to track and monitor state throughout the order’s lifecycle. By standardizing the approach to order management across asset classes, firms can better track state and monitor complex, multi-leg orders involving multiple asset classes, each with multiple executions and fills.

In addition, a single, multi-asset platform gives traders and risk managers a holistic understanding of client positions, outstanding orders, and buying power across all their trading activity to better manage pre-trade risk in real-time. By aggregating all the order flow and positions for all asset classes together, firms can also get a real-time view of P&L dynamically and apply analytics as needed to ensure the highest level of risk management while pursuing best execution.

Internalization and Matching

To internalize or cross orders for best execution and maximum advantage to the bank also requires advanced tools that route to match orders within trading books. Normalized data model technology ensures parallel buys and sells in the trading book execute and move to trade reporting. A matching engine should be flexible, accepting and matching internalized orders based on pre-set rules implemented by asset type, security being traded, and by region to accommodate varying market structure and regulatory demands.

With increased volume and the technological means to pre-evaluate orders, sell-side banks can establish their own dark pools for trading in different instruments. The ability to show or not show the trade – based on pre-set rules – will need to be an integral part of order management with the continuing development of these internalized markets.

Meeting Multi-Asset Trading Challenges: Workable Approaches for Success in a Dynamic Capital Markets Arena

7

 

Smart Order Routing

Dynamic trading environments require sophisticated smart-order routing capabilities, and multi-asset trading systems demand even more sophistication. The system must be able to route orders for execution, separating multi-leg trades for routing to different execution points. The system should support execution algos to ensure best execution. A router should also manage the life cycles of orders, reconciling “child” orders to parent orders for reporting, allocations, settlement, and for proving best execution. The router should have access to the current top of book and depth information from the liquidity aggregator to manage best execution strategies.

Tracking the state of an order – monitoring the level of fills versus open orders, knowing where the child orders are and the state of those open orders, and knowing the status of internal and external markets enables cross-asset trading desks to dynamically manage trading activity. Along with the order’s state, current views of market price/volume activity, internalized or crossing trade books, and rules, such as credit tolerance and client preferences, further enable dynamic management of orders to ensure best execution.

Messaging Layer Real-time Multi-asset Trading Environment (Pre-Execution) Normalization to a Standard Data Model Price and Order Aggregation Smart Order Routing Business Rules/Algos Crosses Internalization Liquidity Sources Other OTC Fixed Income Futures Equities FX Other OTC Fixed Income Futures Equities FX

Order Entries Credit/Pricing Rules Price Distribution

 

R

eal-time Multi-asset Trading Environment (Pre-Execution)Meeting Multi-Asset Trading Challenges: Workable Approaches for Success in a Dynamic Capital Markets Arena 8

The Importance of Post-Trade

Rapidly increasing volumes across asset classes like equities, options, futures, and FX create challenges because most legacy post-trade processing systems have difficulty keeping up during spikes in activity. Automation of post-trade operations is growing in importance and in complexity as firms work to consolidate their trading activity in multiple assets that clear and settle in multiple markets, across different time horizons, and with different settlement arrangements.

Systems that enable post trade convergence, providing all the messages related to order handling and executions in a standardized data model, with infrastructure capable of handling sharp volume spikes, can simplify post-trade challenges and therefore streamline post-trade operations.

A standardized approach can also help optimize risk management by enabling real-time clearance and settlement reporting. By processing in real time, firms gain global, real-time views of actual positions and exposure. This provides them with a better grasp of client opportunity and risk in a demandingly dynamic trading environment.

This approach also adds flexibility to respond to market structure changes. When, for example, interest rate swap trading becomes centralized, volumes are likely to grow exponentially. Sell-side banks with established operations in a multi-asset trading environment will be better prepared to quickly scale to meet this new demand. Accommodating new volume will impact everything from the trading desk operations to clearing and settlement.

A standardized data model ensures that post-trade reporting is uniform and universally accessible firm-wide. This way, all the post-trade systems for confirmations, allocations, settlement, the accounting systems, post-trade risk management and regulatory reporting systems can be updated in real time as trades complete. Real-time Multi-asset Trading Environment (Post-Execution)

Exchange OTC Dark Pool Profit & Loss Clearing & Settlement Messaging Layer Data Model Execution Reporting Consolidated Book

R

eal-time Multi-asset Trading Environment (Post-Execution)Meeting Multi-Asset Trading Challenges: Workable Approaches for Success in a Dynamic Capital Markets Arena 9

Conclusion

We operate today in a global trading environment that is significantly different from just a few years ago. Volumes are growing rapidly in every asset class, complexity is increasing as clients demand abilities to effect multi-leg trades in a variety of instruments. Asset classes are more correlated than ever, creating needs to effectively manage complex trading workflows to achieve best execution and effectively hedge. Successful trading in this environment requires not only algorithms and speed, but integrated tools to provide order life cycle intelligence for risk, position and asset management, always with an eye toward firm-wide impact.

Solutions must work in open architectures to enable integration across trading functions with multiple applications while remaining flexible and responsive to client and internal trading needs based on business demand and anticipated regulatory mandates.

Business demands from buy-side clients will be driving these processes, even while sell-side banks face resource pressures from regulatory changes, consolidation and cost-cutting. Clients will continue to look to the sell-side to handle more complex trades and provide tools to facilitate their trading and trade reporting. At the same time, the need to effectively manage exposure and risk across all client business also requires effective real-time tools. Implementing a standardized, multiple-asset trading platform that unifies all this trading activity and workflow can create an opportunity for firms to service a client’s entire book of business, enhance execution quality, improve risk management, and reduce infrastructure and support costs.

About smartTrade Technologies

Founded in 1999 by former IT and trading professionals from Citigroup, Credit Agricole and Société Générale, smartTrade provides the industry’s most sophisticated Liquidity Management System (LMS) to banks, broker-dealers, ECNs, asset managers and large hedge funds. Cross asset by design, smartTrade’s LMS platform performs best execution as defined by both the market and your firm.

For more information, visit http://www.smart-trade.net.

© 2012 smartTrade Technologies | http://www.smart-trade.net

The_golden_age_of_cross-asset_strategies


http://thetradenews.com/USA/Expert_Opinions/2012/March/The_golden_age_of_cross-asset_strategies.aspx.

Changing the Rules of Access :: TabbFORUM – Where Capital Markets Speak


Changing the Rules of Access :: TabbFORUM – Where Capital Markets Speak.

Carolina Capital Markets, Inc. – Fixed Income Trading – Soft Dollars – Client Commission Arrangement – Bond Calculator


CCM’s clearing agent is BB&T. CCM’s outside legal counsel for SEC & FINRA regulations is Pickard & Djinis LLP.

via Pocket http://www.ccmfit.com/ June 10, 2013 at 07:21PM

Hong Kong Subsidiary Opened by MIG Bank


Switzerland’s MIG Bank has opened a new brokerage subsidiary in Hong Kong, MIG Capital Asia Limited. The office will be MIG Bank’s hub as it seeks to expand in Asia and improve its broking, foreign exchange (FX) and other services for the Asian financial markets.

via Pocket http://www.bobsguide.com//guide/news/2013/Jun/5/hong-kong-subsidiary-opened-by-mig-bank.html June 06, 2013 at 06:48PM

ABG Sundal Collier Selects SunGard’s Hosted Front Arena Electronic Trading Platform To Support Global Operations And Growth


ABG Sundal Collier (ABGSC), a Nordic institutional brokerage firm, has chosen SunGard’s Front Arena to replace its former multi-vendor infrastructure for trade execution, order management, and proprietary trading.

via Pocket http://www.mondovisione.com/media-and-resources/news/abg-sundal-collier-selects-sungards-hosted-front-arena-electronic-trading-platf/ June 04, 2013 at 07:02PM

Why should a trading firm try to be an IT firm?


Why should a trading firm try to be an IT firm?

Posted by Sébastien Jaouen on  May 08, 2013

319fb4fe-2bd7-47e7-8078-682d63856f0e_Sebastien-Jaouen.jpg

It used to be the case that the more complex your trading infrastructure, the larger your IT team needed to be. Systems specialists, networking gurus, database administrators, telephony and IT support were all needed to manage these systems front-to-back, globally.

Arguably, things have become even more complex in recent years – multi-asset, multi-jurisdictional strategies need to be combined with more onerous regulatory oversight and more demanding client expectations. IT budgets (and staff) can no longer cope. Combine this with increased pressure on spending and bottom line and it’s clear that the equation doesn’t balance.

So what’s to be done? How can trading firms reduce IT spend whilst having the capability to meet current and future demands? Trading infrastructure and connectivity is one area which lends itself being managed outside the firm. For a global institution with multiple platforms located around the world, managing proprietary connections is not the best use of resources. In addition, trading centres rise and fall, today’s Brazil could be tomorrow’s Cyprus and nobody wants to pay for redundant infrastructure.

Some advocate a wholly outsourced or managed solution but this sits a little uncomfortably with firms where security, reliability and accuracy are competitive differentiators. After all, if you’re using the same system as your competitors, where’s the technology advantage?

A more sensible solution is to take an approach that allows you to play to your strengths whilst using external partners to take care of non-core functions. Data centres and connectivity can be outsourced to cloud or managed services providers, saving institutions the headaches of managing multiple carriers across different time zones and SLAs. Economies of scale can be achieved by making use of existing connections whilst connections that are no longer needed do not have to be a burden. Relying on a dedicated partner also means that no network improvement work needs to be done or upgrades performed.

This refocusing of the IT department’s efforts removes the issues involved with running a global infrastructure and allows businesses to concentrate on what makes them competitive. All too important in today’s cost- and regulatory-conscious world.

Credit Europe Bank adopts SDX to boost structured products offering13-May-13


London,13 May 2013: Credit Europe Bank NV, one of the top 10 banks in the Netherlands,has chosen SDX, the real-time cross-asset front office system fromSuperDerivatives, to enhance its structured products offering in equities andforex.

via Pocket http://www.sdgm.com/NewsAndEvents/News/2013/Credit%20Europe%20Bank%20adopts%20SDX%20to%20boost%20structured%20products%20offering.aspx May 15, 2013 at 07:31PM

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