Technology
MF Global's Computers Overwhelmed In Final Days
Wallstreet and Technology - 6 hours 44 min ago
MF Global's computer systems couldn't keep up with the unprecedented volumes of transactions during its final days, according to a trustee's report, noting that some were never recorded.A report issued yesterday by the trustee of MF Global#8217;s Bankruptcy revealed the chaos that reigned at MF Global in the firm#8217;s final days from Oct. 26 until its bankruptcy filing on Oct. 31, 2011. P The four-page statement issued yesterday by James Giddens, the trustee appointed by the bankruptcy court who is in charge of liquidating the firm to recover customer#8217;s missing funds, described what led to MF Global#8217;s unraveling in the final week. P After a three-month investigation, the trustee#8217;s investigators have traced the majority of the transactions, totaling more than $105 billion, made in and out of MF Global, in addition to $100 billion in securities transactions during its final week of operations. P Why did it take three-months to understand what transpired in the futures and commodities brokers last week? Investigators had to piece together the movement of cash and related securities #8220;that were not always accurately and promptly recorded due to the chaotic situation and the complexity of the transactions,#8221; the report explained. P blockquoteThe number of transactions executed by MF Global during the last week prior to the bankruptcy escalated to unprecedented volumes. The rush to meet funding needs for collateral, margin and customer liquidations led to billions of dollars in securities sales, draws on credit facilities, and a web of inter-company loans across affiliates, some foreign. /blockquote P MF Global#8217;s trading systems couldn#8217;t keep up with the volume of transactions that were flying out the door to meet margin calls and collateral obligations from exchanges and trading counterparties, suggesting that this contributed to chaos of the final days and investigator#8217;s ability to trace the $1.2 billion in missing customer funds. P blockquoteThe flood of transactions was so intense that the company#8217;s computer systems and employees had difficulty keeping up with the #8220;unprecedented volume of transactions,#8221; states the report. In addition, #8220;a number of transactions were recorded erroneously or not at all.#8221; The fail rate on transactions #8211; where either the buyer or seller fails to deliver the cash or the security, respectively #8211; were five times the normal volume during the firm#8217;s final week./blockquote P While farmers, ranchers, hedge funds, CTAs and other clients are still waiting for their money, the pressure has been mounting on the trustee to cover their assets. P But the trustee doesn#8217;t sound too positive about recovering or clawing back the money for MF Global#8217;s customers, warning that this will entail "very complex legal and factual determinations. But ultimately this is consistent with the trustee's role, which is to advocate for MF Global's clients, states the trustee. P
Categories: Technology
When Facebook Answers to Wall Street
Wallstreet and Technology - Thu, 02/02/2012 - 05:59
To meet Wall Street's demands for ever increasing revenues, Facebook's IPO likely means more ads and even more changes to its "privacy" policy.As we all know, once a company goes public, Wall Street expects better results each quarter. That means, a company such as Facebook must continue to find new ways to boost revenues, which are already amount to multi billions annually. P So what can Facebook do? Expect increasing ads, different forms of marketing and even more changes to Facebook#8217;s #8220;lack-of-privacy#8221; policy. P Here is American Public Media#8217;s ba href=http://www.marketplace.org/ target="_blank"Marketplace/a/b take on what the Facebook IPO means to Wall Street and Facebook#8217;s 800 million users. P iframe src="http://www.marketplace.org/node/50629/player/popout" width="450" height="200" /iframe
Categories: Technology
Do Stock Exchange Operators Need More Rules to Monitor Trading Platforms?
Wallstreet and Technology - Fri, 01/27/2012 - 05:47
After a series of technology glitches over the past year, the SEC is setting up new standard for trading systems that would impact 13 US stock exchanges and smaller venues, according to today's Wall Street Journal.Regulators are said to be scrutinized the trading systems used by U.S. stock exchanges as a result of several technology breakdowns that occurred over the past year. P According to an article in today#8217;s a href=http://www.wsjonline.com target=#8221;_blank#8221;Wall Street Journal/a, the a href=http://www.sec.gov target=#8221;_blank#8221;Securities and Exchange Commission/a is looking to set standards for trading systems that will give the agency the authority to intervene when problems flare up. P The regulatory body is focusing on technology in the wake of the May 2010 #8216;flash crash#8217; which illustrated how interdependent electronic trading platforms can impact one another. Also, over the past year, exchanges run by Nasdaq OMX Group and Direct Edge have had technical glitches that forced them to reimburse investors for millions of dollars of losses. The article notes that minor server outages, such as the one impacting trading data for some stocks on the New York Stock Exchange this week, are more typical. P As the article notes, exchanges are spending hundreds of millions of dollars to build state-of-the-art data centers, hardware and networks to capture the business of high frequency traders. But are they focusing on speed at the expense of stability? P On the other hand, the current guidelines adhered to by exchanges and automated trading systems for maintaining computer operations, telecommunications networks, data security and back up systems in case of disaster, may not be up-to-date, the article suggests. P These guidelines were set by the SEC in the 1980s, reports the Wall Street Journal, which points out that these guidelines are #8220;voluntary#8221; though the exchanges treat then as rules, contend exchange officials who are not identified in the article. P As a consequence of their voluntary nature, and the reality that trading is so sophisticated today, regulators find these guidelines difficult to enforce, and would prefer to have a rule on the books. The idea is to lay out clear standards for the 13 U.S. stock exchanges and smaller trading venues (i.e. 40 dark pools) that span the market and run on different technologies. The rules may have the support of Democratic and Republican members of the Commission. P The article points out that exchanges feel the current guidelines provide flexibility and have worked for more than two decades including the evolution of electronic trading. P But, strict rules or standards may not be necessary because the primary motivator for avoiding outages is competition. If the exchanges don#8217;t maintain their systems, or suffer repeated glitches, they will simply lose business and force their customers to route to another venue. The "reputational hit" may be all that exchanges need to maintain their technology, Sang Lee, Aite Group managing partner, tells the Wall Street Journal. P
Categories: Technology
How the Government Flips Insider Trading Witnesses
Wallstreet and Technology - Fri, 01/20/2012 - 05:49
An F.B.I. agent has persuaded Wall Street suspects to collect evidence against their business colleagues or friends, playing a key role in the government's insider trader investigations. Did you ever wonder how federal prosecutors have been so successful in tracking down insider trading cases on Wall Street? P This is no longer a mystery. Today's a href=http://www.wsjonline.com target=#8221;_blank#8221;Wall Street Journal/a reports there#8217;s an F.B.I. agent based in New York who specializes in persuading people to become a witness against their business associates or friends. P The agent, David Makol, who shows up at unexpected places -- such as when his subjects are in gym parking lots or having breakfast at Wendy's, reportedly played a role in the government's latest insider trading investigation to shake-up Wall Street. On Wednesday, the U.S. attorney's office charged 7 investment analysts/traders with using illegal tips to profit from trading in Dell's stock. Those charged included the co-founder of a prominent hedge fund, Level Global, and a former trader at Diamondback. P The WSJ reports that many of the government's cases over the past two years have relied on evidence gathered by witnesses that Makol "flipped" to the government's side. P Makol, a 41-year old forensic accountant and son of a forklift drive, declined to be interviewed by the Wall Street Journal, but was photographed on Wednesday, the day of the insider trading raids. According to the WSJ, Markol, an avid runner and Boston sport fan, is part of a Brooklyn-based FBI squad known as C-35. He also teamed up with a competing squad in Manhattan to help flip Galleon Group trader David Slain, which led to last May's conviction of hedge fund honcho Raj Rajaratnam. P One tactic used is to gather information about the suspect's regular routines and personal details, like his wife's name. P In one scenario, Makol approached Karl Motey, an independent stock researcher, who had just finished his workout, when he was in the gym parking lot. Wearing suits, the F.B.I. agents spoke with Motey in a coffee shop and within a few minutes, he admitted to insider trading in technology companies. The WSJ reports that within a week, Motey met with prosecutors in New York and agreed to gather evidence on investment fund employees leading to Wednesday's arrests. P Defense lawyers on Wall Street have criticized the use of these techniques, particularly the use of wiretaps, by F.B.I. agents in these insider-trading probes, since such tactics were previously deployed in organized crime more so than white-collar investigations. Such overbearing techniques are used more often than people realize, a defense lawyer, told the Wall Street Journal. P In the case of Motey, who taped dozens of phone calls for the F.B.I., he pleaded guilty to securities fraud and conspiracy in December and is awaiting sentencing. P Meanwhile, a F.B.I. spokesman defends their actions telling the WSJ, this is the way the government needs to gather evidence in complex cases. P Click here for the full a href=http://online.wsj.com/article/SB10001424052970203735304577169154000870984.html?mod=WSJ_hp_LEFTTopStories Target=#8221;_blank#8221;Wall Street Journal/a article
Categories: Technology
Pipeline Transforms Itself into Aritas
Wallstreet and Technology - Thu, 01/19/2012 - 07:37
Yesterday, the former Pipeline Trading Systems said it's new name is Aritas, citing many changes, including product updates, it's made since it reached a settlement with the SEC. After surviving a media storm in the past three months over an SEC settlement disclosing that buy side orders were matched outside of its dark pool with an affiliated trading entity, Pipeline Trading Systems LLC is looking for a second chance. P The company said yesterday that it has changed the name of the business to Aritas Securities LLC, replacing Pipeline Trading Systems. The new identity is the culmination of a number of steps it has taken since a settlement was announced on Oct. 24 with the SEC requiring it to pay a $1 million fine for violations related to Reg ATS and the confidentiality of customer information. P Here are the major steps: P After severing ties with senior management (a.k.a. Fred Federspiel, a founder and CEO and Alfred Berkeley, its former chairman), the board a href=http://www.advancedtrading.com/crossingnetworks/231903157 target=#8221;_blank#8221;hired Jay Biancamano/a in November as executive chairman to restore credibility with institutional customers and get the business back on track. The company also discontinued operations of its controversial affiliate Milstream Securities, a wholly owned trading entity that traded against buy-side order flow without their knowledge and matched 80 percent of the orders in Pipeline#8217;s BlockBoard ATS. Management has also completed work on a new version of its product Alpha Pro, updated its Algorithm Switching Engine and reorganized its internal structure. P In the European Union, Aritas Financial Ltd. will succeed Pipeline Financial Group Ltd., where it will offer updated versions of Alpha Pro and the Algorithmic Switching Engine. P Aside from revamping its products, the company is counting on new leadership under Biancamano to rectify mistakes from the past and chart a new path. P blockquote#8220;Of all that we#8217;ve done here in the past three months, the most important thing is to dedicate ourselves to doing business with the utmost integrity,#8221; said Aritas Executive Chairman Jay Biancamano. #8220;Pipeline created great, game-changing technology, and clients continue to see the value in that technology. With a fresh commitment to serving our customers transparently, Aritas will offer them a new opportunity to take advantage of our unique offerings. The popularity of Alpha Pro was growing rapidly prior to Pipeline#8217;s SEC agreement. We believe we can regain that momentum and build on it in 2012.#8221;/blockquote Aritas Financial Ltd. is also looking to regain momentum in the European Union where it will offer a multilateral-trading-facility (MTF) block liquidity, not related to the ATS in the US. P Obviously, the board of directors is eager to put the past behind it. But can a new name erase this painful episode? That#8217;s a difficult question. It will be interesting to see if institutional traders feel comfortable enough to trust their order flow to the new Aritas. In the meantime, Aritas continues to operate its ATS "as an alternative to blotter scraping" #8212; which is a reference to Liquidnet. But will Aritas be prepared to scrap its U.S. equities dark pool if it doesn#8217;t attract enough liquidity? In a previous interview shortly after he was appointed executive chairman, Biancamano said that Pipeline generated about 30 percent of its revenues from the ATS and 70 percent from software. While Aritas software products, AlphaPro and the algo switching engine, are evidently most important to its future revenues, the company's future will depend on regaining trust with clients. P
Categories: Technology
MF Global's Bankruptcy Impacts Bloomberg
Wallstreet and Technology - Fri, 01/13/2012 - 06:28
The loss of subscription revenue from MF Global's collapse, is causing suffering at Bloomberg, reports The New York Times.The bankruptcy of a href=http://www.mfglobal.com target=#8221;_blank#8221;MF Global/a shocked farmers, commodity trading advisors and other types of investors who are clamoring for $1.2 billion in missing customer funds, but it also has impacted Bloomberg L.P., a supplier of computer terminals to the futures and commodities brokerage firm. P According to today#8217;s a href=http://www.nytimes.com target=#8221;_blank#8221;New York Times/a, the financial information giant lost 600 subscriptions to its market data and news terminals, which amounts to $1 million in monthly revenue, after MF Global filed for bankruptcy on Oct. 31. While $1 million is a small sum next to the $7 billion in revenues that Bloomberg reportedly generates from selling its terminals around the globe, it underscores the interdependent relationship that exists between the fortunes of Wall Street firms and their technology/financial information providers. P The loss of business from MF Global caused the Bloomberg staff to miss their sales targets by 12 percent in 2011, and could impact their bonuses, reports the New York Times article. According to a bankruptcy filing first in a Manhattan court, Bloomberg Finance, LP is owed $276,064 by MF Global. P But Bloomberg is not the only technology vendor suffering from the bankruptcy. A list of MF Global Holding's unsecured creditors and shareholders includes Caplin Systems Ltd., owed $427,520; Headstrong Services, an IT consultant, owed $3.9 million, according to the story a href= http://www.wallstreetandtech.com/trading-technology/232200547 target=#8221;_blank#8221;#8220;Bankrupt MF Global Sticks Tech Vendors with Unpaid Bills#8221; in Wall Street Technology/a. P However, the New York Times points out that subscription fees from Bloomberg customers contribute 85 percent of the company#8217;s revenues and go toward paying for the company#8217;s huge global news operations. Still, the company has 314,000 terminals worldwide, so 600 terminals lost is no more than a speck on an elephant#8217;s back. Also, Bloomberg has survived turbulence on Wall Street before as when Lehman Brothers, which had 3,500 subscriptions, went bankrupt in September 2008. P And despite the challenging market in 2011, Bloomberg had a good year since subscriptions in total were up by 14,000, a company representative told the Times. P Another interesting aspect of this story is that MF Global, led by Jon Corzine, the former Goldman Sachs executive, apparently spared no expense in awarding Bloomberg terminals #8211; which cost as much as $1,600 a month per terminal#8212; to its employees. Even though MF Global was a moderate size brokerage firm with 2,500 employees, nearly one-third had subscriptions to Bloomberg terminals, a sign that the firm was rolling the dice on its expenses as well as European debt. Not only did the futures and options traders need to have real-time market data, news and analytics, but reportedly, even a human resource employee had an elite Bloomberg terminal on its desktop, the Times article noted. P Click here for a href= http://dealbook.nytimes.com/2012/01/12/bloomberg-suffers-too-in-collapse-of-mf-global/?nl=businessemc=dlbka35 target=#8221;_blank#8221;The New York Times article/a. P
Categories: Technology
SunGard's Top Ten Historical Data Predictions Call For Ecosystem
Wallstreet and Technology - Tue, 01/10/2012 - 06:50
While banks and asset managers are facing demands for more frequent risk reporting and analytics, but big banks and asset managers still run multiple historical data silos. Yesterday a href=http://www.sungard.com target="_blank"SunGard/a published a list of ten historical market data trends for 2012, forecasting that firms will need more timely and consistent risk reporting to meet new regulations and investor demands. No. 2 is that regulators and investors will want more frequent risk reports, almost daily, while on-demand data will be needed to meet more advanced analytics. P I spoke with Oliver Muhr, SVP of SunGard#8217;s MarketMap business unit, which spans the gamut of real-time and historical market data solutions, to get his view on the underlying drivers for these 2012 predictions. #8220;While everybody is talking about new regulations, they need to get ready,#8221; says Muhr, who predicts there will be more and more demand from internal and external business customers for historical data. P Beyond compliance with new regulations, firms can use data management solutions to #8220;differentiate themselves with new or better services to make their data more quickly,#8221; Muhr suggested. P Practitioners such as MBAs and CFAs want more flexible data management solutions that require less IT support so they can spend more time discovering market opportunities, wrote SunGard's Muhr in his list ofa href=http://www.sungard.com/pressreleases/2012/marketmap010912.aspx. target="_blank" top 10 predictions/a. Quants who are supporting electronic trading strategies will need for their firms to implement platforms that can store vast quantities of data and quickly retrieve and accurately process historical and time series data. P However, SunGard is also predicting that demand for more timely risk reporting by regulators and investors as well as the need for larger data sets to feed predictive models, will put a strain on existing data infrastructures. P Home-grown tools are the norm inside big banks, big asset managers with portfolio managers and risk managers who need access to historical data. Also economists or public sector agencies have to deal with historical data and run analytics on top of the data. P #8220;On the historical side of market data, we see more home-grown systems, silos for US equity prices,#8221; said Muhr. SunGard has found that banks have four, five or six homegrown systems for U.S.equities alone, says Muhr. These home grown applications and silos are not designed for nor are they capable of handling those new demands, Muhr contends. P #8220;What banks and other firms want is more of an ecosystem where you can create scale and efficiencies around your existing data," said Muhr. This will enable them to use historical data with other open source tools such as R, a statistical toolkit for creating queries on top of historical data, and open source programs like Jasper Software for creating reports, said Muhr. P On the data and content side, there is a lot of work involved in maintaining data quality and consistency, such as checking on the accuracy and format of data from the exchanges. While firms can do this on their own, managed data can bring efficiencies and scale, notes Muhr. P Another challenge is analyzing the relationships between asset classes, such as complex derivatives, and this in turn is going to fuel the need for standardized entity and security identifiers and cross symbology services. These are translators between various identifiers offered by Bloomberg and Reuters, notes Muhr. This is a huge problem for big financial institutions, but takes two minutes for MarketMap, said Muir. P Another aspect of historical data management is storage. #8220;Historical data management is all about a technology container and logic and how to store historical information,#8221; explained Muhr. Vector storage, rather than traditional relational database, will be needed since it lends itself to storage of tick data from exchanges, every data, week or month, and then to run analytics on top of that, said the company. P Firms are focused on controlling variable data costs by centralizing historical data in one location to assess best price, according to the vendor#8217;s top 10 predictions. #8220;We#8217;re talking more about an ecosystem where you can cross leverage data for your applications,#8221; emphasized Muhr. By sharing data across different units, #8220;You can break down those silos of having ten databases for US equities within the same company,#8221; he said. P Obviously, SunGard sees a business opportunity in these predictions since it provides a range of light-weight and scalable data feeds and analytics as well as a technology stack that firms can use to store their own proprietary data, and clean it and run reports on top of it. P
Categories: Technology
Swiss Central Banker Faces Insider Trading Allegations
Wallstreet and Technology - Thu, 01/05/2012 - 07:06
A weekly paper alleges that Switzerlands top central banker profited from currency trades, but are the charges the work of political enemies?In an ironic turn of events, Switzerland#8217;s top central banker Philipp Hildebrand is facing allegations of insider trading on foreign currency trades from critics who claim that he profited from taking measures to stem the rise of the country#8217;s strong currency. The situation is comparable to US Fed Chairman Ben Bernanke executing currency trades for his personal account while trying to stabilize the U.S. dollar against the euro. P According to the a href=http://www.nytimes.com target=#8221;_blank#8221;New York Times/a, Hildebrand, who is chairman of the Swiss central bank, is under pressure to come clean on his currency trades after a report by Welwoche, a weekly magazine with ties to a right wing political group, alleged that Hildebrand bought dollars in October after he oversaw measures in September to prevent the strong Swiss franc's from rising further since this was hurting exporters. Specifically, the report said Hildebrand made 75,000 francs or $79K from dollar trades. The publication cited copies of statements obtained by an employee of a private bank where Hildebrand had an account. P Interestingly, Hildebrand previously worked at a New York hedge fund Moore Capital Management, and is known internationally for drafting the controversial Basel III regulations, which would require banks to limit their leverage and boost their risk management and capital reserves. Many banks across the world hate these regulations because they will have to set aside higher capital reserves to prevent another financial crisis, which will curtail their ability to invest in other profitable activities. P It#8217;s plausible that the rumors are unfounded and politically motivated since the rightist Swiss Peoples#8217; Party has been critical of Hildebrand#8217;s policies on enacting tougher banking regulations. P Apparently, Hildebrand made enemies both at home and abroad for attempting to impose tougher rules on Credit Suisse and UBS, the nation#8217;s biggest banks, than those in other countries. The Swiss central banker also ticked off his former financial colleagues with comments against banker compensation and risk management. P The private bank, Bank Sarasin, where Hildebrand kept an account, revealed that one of its employees leaked information about the currency trades to a lawyer close to Swiss People#8217;s Party. The employee has been fired and turned over to the police for violating Swiss secrecy laws, according to a statement from the bank, reported by the New York Times. P But the council that oversees the central bank reportedly hired PricewaterhouseCoopers to examine #8220;rumors#8221; about the transactions made by Hildebrand and members of the family. On Wednesday, the central bank released a report by Pricewaterhouse Coopers saying it had examined more than $2 million in transactions related to family financial transactions involving the purchase of real estate, and found no violations of central bank rules. P Even if these allegations aren't true, the family should keep better tabs on monitoring one another's trades. Pricewaterhouse found that Kashya Hillebrand, the central banker#8217;s wife, who met her husband at Moore Capital in the 1990s, made one of the trades without her husband#8217;s knowledge. P From a href= http://www.nytimes.com/2012/01/05/business/global/05iht-snb05.html?pagewanted=2_r=1sq=Insider%20Trading%20Accusationsst=Searchscp=1 target=#8221;_blank#8221;The New York Times story/a: P blockquoteAccording to the PricewaterhouseCoopers auditors, Mrs. Hildebrand made a $500,000 currency transaction in August, days before the central bank stepped up its intervention in currency markets. But e-mails indicated that Mr. Hildebrand learned of the transaction only after the fact, and then instructed Bank Sarasin not to make any more trades without his approval, the auditors said./blockquote P Citing her work in the banking and financial industry for more than 15 years, Mrs. Hildebrand, who owns an art gallery in Zurich, told a Swiss television station, #8220;I felt at ease with this transaction,#8221; according to the New York Times which gleaned the quote from Reuters. P So far the council overseeing the Swiss National Bank is standing by Hildebrand. The central banker is expected to respond by making a statement today. P P P
Categories: Technology
Avoiding Another MF Global
Wallstreet and Technology - Tue, 01/03/2012 - 06:15
Tips for futures and commodities trading firms choosing FCMs in 2012.As the search continues for $1.2 billion in missing customer funds that may have vanished during bankrupt a href=http://www.mfglobal.com target="_blank" MF Global#8217;s/a last week of frantic trading, hedgers and farmers that placed their trust in the bankrupt FCM, are feeling ripped off. P While investigators and regulators are still searching for the missing funds, the question is what steps can retail traders and institutions take to avoid the next MF Global? P Clearly, futures and commodities traders need to deploy better risk management practices to avoid the next MF Global. One CTA told me that he used MF Global as a bank and had two-thirds of his assets there and one third was with a second FMC. Oddly enough, this firm kept its excess cash in Treasury-bills at MF Global, based on the view that U.S. government would guarantee the return of money invested in T-bills, but those positions were liquidated in the bankruptcy. P There are a couple of tangible steps that would not only serve FCM customers but are good business practices across the financial transaction spectrum, according to Russ Chrusciel, product manager, SunGard#8217;s Global Trading business. P First, people need to talk to others in the trading industry about their relationships with FCMs, says Chrusciel. Since this whole business is still a relationship-based business, Chrusciel says, #8220;Speak candidly with two or three clients about how the relationship from the FCM to the end client is being handled,#8221; advises Chrusciel. However, in MF Global#8217;s case, the firm had a good reputation, and it was easy to be spell bound by the reputation of former CEO Jon Corzine, who was a former senator and governor of New Jersey, and a former CEO of Goldman Sachs. P On a more macro level, customers should get access to potential rating reports from third party firms, adds Chrusciel. The problem, here, however, is that Standard Poor#8217;s and Moody#8217;s were late in downgrading MF Global. Both agencies had investment grade ratings on MF Global until after its earnings call in late October. But if customers had checked with alternative ratings firms, they would have spotted the red flags sooner. For example, Rapid Ratings, a quantitatively based ratings firm, had a low rating on the stock as far back as 2009 and downgraded it in 2010 to junk status. P #8220;Our system is reacting to how well a company#8217;s able to withstand a shock from the inside or outside. A company like MF Global was rated 23 #8212; the equivalent of an SP CCC- and a Moody#8217;s Caa3. It#8217;s not only junk, it#8217;s deep junk,#8221; explains James Gellert, CEO of Rapid Ratings. P The bottom line is that folks to need to diversify their risks when it comes to picking an FCM. #8220;Just like in the trading strategy or in money management, more and more trading firms and money managers are going to use portfolio theory in their FCM relationships,#8221; says SunGard#8217;s Chrusciel. #8220;If they had one primary FCM perhaps they#8217;re going to have accounts with two or three different firms, so they#8217;ll have the ability to conduct their business in some shape or form, says SunGard#8217;s executive. P In the wake of MF Global, no doubt many firms will be evaluating their risk exposures to FCMs and other brokers. Not only are they diversifying the number of FCMs they utilize for executing futures and options trades, but commodity trading advisors and other trading firms are no longer keeping excess margin money at these firms. Unfortunately, it#8217;s believed that MF Global raided the segregated accounts of its customers to margin and collateral calls with counterparties and banks. While MF Global customers are protected on the securities side (up to $500,000 per account) through a href=http://www.sipc.org/ target"_blank"SIPC/a (Securities Investor Protection Corp.), there is no such guarantee fund on the futures side. No longer putting all their eggs in one basket when it comes to picking an FCM is probably the most prudent action. P
Categories: Technology
Is Oracle Earnings Forecast Ominous for Other Tech Providers?
Wallstreet and Technology - Wed, 12/21/2011 - 06:36
Oracle's 2012 earnings forecast is causing concern among investors who worry that industrywide technology profits may sag next year.ba href=http://www.oracle.com/us/industries/financial-services/018739.htm target="_blank"Oracle/a/b, the technology industry behemoth that has deep penetration in the financial services market, issued a forecast for 2012 that is causing some concern among investors. P The database and CRM product provider saw license revenue grow by only 2 percent this past quarter and actually saw maintenance revenue drop, quarter to quarter, for the first time in many years. P What this means for the broader technology market remains to be seen, but investors who are already concerned about a sluggish US economy and an unstable euro, have weakening tech profits to add to the list of worries. P Here's some more analysis from the ba href=http://online.wsj.com/home-page target="_blank"Wall Street Journal/a/b: P object id="wsj_fp" width="512" height="363"param name="movie" value="http://s.wsj.net/media/swf/VideoPlayerMain.swf"/paramparam name="allowFullScreen" value="true"/paramparam name="allowscriptaccess" value="always"/paramparam name="flashvars" value="videoGUID={54E14BAA-68CE-4C58-ADF1-C203DC589765}playerid=1000plyMediaEnabled=1configURL=http://wsj.vo.llnwd.net/o28/players/autoStart=false" base="http://s.wsj.net/media/swf/"name="flashPlayer"/paramembed src="http://s.wsj.net/media/swf/VideoPlayerMain.swf" bgcolor="#FFFFFF"flashVars="videoGUID={54E14BAA-68CE-4C58-ADF1-C203DC589765}playerid=1000plyMediaEnabled=1configURL=http://wsj.vo.llnwd.net/o28/players/autoStart=false" base="http://s.wsj.net/media/swf/" name="flashPlayer" width="512" height="363" seamlesstabbing="false" type="application/x-shockwave-flash" swLiveConnect="true" pluginspage="http://www.macromedia.com/shockwave/download/index.cgi?P1_Prod_Version=ShockwaveFlash"/embed/object
Categories: Technology
Cha Ching! The Sound of Colocation Fees
Wallstreet and Technology - Tue, 12/20/2011 - 07:20
A regulatory filing by NYSE Arca offers a glimpse into NYSE Euronext's plans to allow vendors into its Mahwah data center, and what it will charge them for hosting applications per user in the colocation facility. As exchanges look to generate more revenues from colocation services provided in their liquidity centers, a href=http://www.nyse.com target=#8221;_blank#8221;NYSE Euronext/a took steps to expand the scope of users of its colocation services in its Mahwah, New Jersey data center. P A a href= www.sec.gov/rules/sro/nysearca/2011/34-65625.pdf target=#8221;_blank#8221; regulatory filing/a dated Oct. 26, 20011 provides insight into NYSE Euronext#8217;s plans to open up the Mahwah data center to third party application providers. The filing notifies the SEC of a proposed rule change by NYSE Arca, one of three U.S. equities matching engines housed in the Mahwah data center. P On October 11, 2011, NYSE Arca filed a notice with the a href=www.sec.gov target=#8221;_blank#8221;Securities and Exchange Commission/a requesting to expand the scope of users for colocation services in its Mahwah data center, to include vendors. Previously, the only users of colocation services were electronic trading permit (ETP) holders and sponsored participants. But under the proposed rule change, users could include non-ETP Holder broker-dealers and vendors. P blockquote#8220;The exchange anticipates that the potential additional users would provide, for example, hosting, service bureau, technical support, risk management, order routing and market data delivery services to customers while the user is co-located in the Exchange#8217;s data center.#8221;/blockquote P In the filing, NYSE Arca also proposes to amend its fees for colocation since the vendors would provide hosting for hosted user inside the colocation facility. From the filing, the exchange proposes to charge a fee of $500 per month for each hosted user (end customer) that the user (vendor) hosts in the exchange#8217;s data centers. This sounds like the vendor will need to pay $500 per month for each user they are hosting in the colo facility. Beyond this, the vendors would charge their customers fees (set independently) which the exchange would not share in. P While the filing has some confusing language around the terms User and Hosted User, it defines "hosting"as supporting the end user's technology, either hardware or software in the user's co-location space. Evidently, vendors will need to pay to be in the colocation space and naturally, end users (presumably brokers, market makers, and hedge funds and possibly, buy side firms sponsored by member firms), will pay fees to the vendors as well as to the data center for renting colocation space. P One can quickly see how colocation is shaping up to be a lucrative business for exchanges. P
Categories: Technology
CME Exec Drops Bombshell that Corzine Knew About Customer Fund Transfers
Wallstreet and Technology - Wed, 12/14/2011 - 06:53
The executive chairman of the CME told lawmakers that MF Global borrowed $175 million from customer accounts and implied that its former CEO Jon Corzine knew about it.In yesterday#8217;s senate hearing about the collapse MF Global, a href=http://www.cme.com target="_blank"CME Group/a executive chairman Terrence Duffy tossed a grenade when he implied that Jon Corzine, the former CEO of the brokerage firm, knew about the transfer of customer funds, though he stopped short of suggesting it was illegal. P According to today#8217;s a href=http://www.nytimes.com target=#8221;_blank#8221;New York Times/a, Duffy told lawmakers that a href=http://www.mfglobal.com target="_blank"MF Global/a had used $175 million in customer funds to lend from the futures side of the business over to another part of the firm, and that Corzine knew about the transfer. P blockquote#8220;Mr. Corzine was aware of the loans being made,#8221; Mr. Duffy told the Senate Agriculture Committee, adding that MF Global had submitted documents to the CME, the major exchange where MF Global did business, that kept #8220;regulators in the dark.#8221;/blockquote P But CME#8217;s executive did not mention this piece of controversial information in his prepared remarks submitted prior to his testimony, so it surprised lawmakers. P As for the source of this information, Duffy told lawmakers he heard it from one of his lawyers, who learned of the details from a lower-level CME auditor, who had spoken with an MF Global employee. The unidentified MF Global employee indicated that Mr. Corzine had known MF Global had used customer funds to lend to itself. Duffy told lawmakers that he referred the information to the Justice Department, which is investigating some of the customer#8217;s missing money. P But Corzine was no longer in the room to defend himself, or to offer an alternative version of the story. P Duffy dropped this bombshell at a time when the CME, the front-line regulator for MF Global, has been criticized for not discovering that cash had vanished from the brokerage firm#8217;s segregated customer accounts. P The comment caused #8220;confusion#8221; at the Senate Agriculture Committee hearing where Corzine along two of his two former colleagues, MF Global#8217;s COO Bradley Abelow and CFO Henri Steenkamp had testified minutes before. All three executives claim to know nothing about the $1.2 billion in missing customer funds that were allegedly moved from the futures side to the proprietary trading side to invest in European sovereign debt. P However, brokerage houses are allowed to borrow customer funds if they replace it immediately with collateral, according to Jill Sommers, commission of the Commodity Futures Trading Commission (CFTC) who testified last week. P While such a transfer may not be illegal, brokers need to replace the customer cash with a placeholder security. P blockquote#8220;Reg 1.25 never allowed an FCM to take funds out of a customer aggregated account and invest it without simultaneously putting it back,#8221; stated Sommers. P #8220;If the money is moved from a #91;segregated#93; account to a permissible investments, the exact amount has to be put back into the customer segregated accounts,#8221; said Sommers last week./blockquote P Corzine told lawmakers in the prior panel that he knew nothing about the transfer of customer funds. Corzine drummed away at the point that he never gave any instructions to authorize misuse of customer money and that he didn#8217;t have access to documents. P When the former MF Global executives were pressed by lawmakers to name which employees were responsible for safeguarding customer money, or had the power to authorize transfers, former CFO Steenkamp evasively answered #8212; #8220;In MF Global Inc. my understanding is there were numerous controls in place.#8221; P Lawmakers who represent farmers, grain elevator operators and food companies #8211; are furious since their constituents are out of cash and relying upon them to get answers, so there is a lot of finger pointing going on, and regulators are on the hot seat too. P With plenty of blame to go around, one MF Global client is blaming the CME for not detecting the shortfall in customer-segregated accounts. #8220;They#8217;re the designated regulatory authority. They should have been in there five days leading up to this#8230;to verify customer funds,#8221; says Ken Kinkopf, founder and president of Kinkopf Capital Management, a commodity trading advisor (CTA) in Chicago whose assets are frozen in the MF Global bankruptcy. #8220;They were stating that everything was secure and they were meeting their requirements. But obviously this wasn#8217;t true.#8221;
Categories: Technology
With MF Global Rule, Regs Finally Take One Small Step In Right Direction
Wallstreet and Technology - Tue, 12/06/2011 - 09:07
In so far as it increases transparency into how funds are handled, it is a positive step -- but regs still have much more to do.At long last, regulators seem to be at least taking one step in the right direction, though they still have a long road ahead. P The MF Global Rule which limits investment choices for client funds and was approved by the CFTC yesterday squarely aims to pacify investors whose confidence has been bruised by the sudden collapse of MF Global. P In so far as the rule increases transparency with customers and into how funds are handled, it is a positive step on the part of regulators, says Matt Simon, senior analyst, TABB Group. P The MF Global rule limits the ability of firms to invest client money in risky foreign sovereign debt, while also banning in-house repurchase agreements, or repos, in which one part of a futures firm swaps customer assets for securities such as municipal bonds or foreign-government bonds held at another part of the firm. P "Client money needs to be in safe hands and this is a clear message," Simon says of the new CFTC rule. By imposing stricter limits on repo agreements and getting rid of potential sovereign debt investment, the CFTC seems to be trying to build back the confidence of the futures customer base. "This is probably a needed step." P In its statement, the CFTC also said it will remove its reliance on credit ratings agencies, making it less easy for firms to invest their client money in certain instruments - a provision originally set out in the Dodd-Frank Financial Act which is a strong stand that major credit rating agencies are not always a reliable source when it comes to investing client funds, Simon points out. P Still, regulators still have a lengthy road ahead of them if they want to fully restore investor confidence, and prevent another MF Global scandal from unfolding at another firm down the line. "Regulators still need to look at audits and the right way to do compliance examinations, among other things," Simon notes. P The MF Global rule itself isn't devoid of potential problems, John Jay, senior analyst at Aite Group, adds. P A rule that is too specific in its scope can cause trouble, he points out. "Sovereign debt could mean a specter of things. What if it refers to German debt, which right now is very safe?" P Meanwhile, regulators still need to explain to the public how MF Global's disgraced CEO, Jon Corzine, was able to lobby the CFTC so powerfully that the regulator, which had voted unanimously to approve the so-called MF Global Rule in 2010, delayed action for over a year. P Lobbying on behalf of the industry and a company is permissible and completely legal, Aite's Jay points out. But "what really gives off a bad appearance is Corzine's proximate activities. It's one thing to lobby against such a rule. But Corzine did something proximate to the action he took. At the end of the day it was the very thing that blew up the company," he notes. P Regulators have notoriously come under investors' fire for years, and more so since the 2008 financial crisis, and the 2009 Madoff scandal. P They have made some progress since then at boosting investor confidence that changes are underway. The wide-reaching Dodd-Frank Act was passed last year, in light of the Madoff scandal regulators have implemented a seemingly successful whistleblower program, and now the MF Global Rule will aim to further limit firms taking undue risk with client money. P But if regulators really want to keep up with the industry they are overseeing, they need to up the ante on their technology. In a statement this week, CFTC Commissioner Scott O'Malia noted that the Commission is "currently overseeing a 21st century market with 20th century tools." P "It is that time of year again when I start to fill out my Christmas list. This year I have some new requests and I am going to ask again for things I didn't get last year," CFTC Commissioner Scott O'Malia said in a statement this week. One of his wishes is that the "Commission continues its early efforts to reorganize itself around technology," he said. P "This year, the Congress appropriated $55 million for technology alone. This funding will allow the Commission's new Office of Data and Technology to facilitate a comprehensive approach to developing advanced technology aimed at automating regulatory functions and improving the Commission's data analysis in support of mission-critical functions under the Commodity Exchange Act. I feel that it would be a missed opportunity if the Commission doesn't capitalize on this targeted investment to focus on developing a strategic plan for technology investment for the next several years," O'Malia added. P O'Malia said he also hopes the Commission will "schedule a series of roundtables to provide market participants an opportunity to fully vet their concerns with staff before they are in that sea of uncertainty between effective dates and implementation dates." P Technology on its own isn't enough. Regulators need to make sure they listen to the industry's concerns on an ongoing basis - and not just after another scandal or crisis - and that they also conscientiously investigate firms, even using old-fashioned procedures. P For example, the Dodd-Frank whistleblower program should ensure that the next time someone tries to lift the lid on another Madoff's criminal activities, he is actually listened to. P But regulators still have a way to go. For instance, they need to make sure there is no way another Corzine could so greatly influence a watchdog as to delay a rule just to protect his own firm's dodgy activities, without anyone raising an eyebrow. P It's no easy task to spot the next fraud before it happens, but it's something regulators are ultimately responsible for doing: prevention of course, is always so much better than a cure. P
Categories: Technology
Regs Crack The Whip On Wall Street Risk-Taking With New "MF Global" Rule
Wallstreet and Technology - Mon, 12/05/2011 - 08:18
The rule had been approved months ago but was delayed due to strong opposition from none other than Jon Corzine, the disgraced former CEO of MF Global.In light of the MF Global collapse, federal regulators are cracking the whip on Wall Street risk-taking. On Monday, the Commodity Futures Trading Commission approved the "MF Global rule," named after disgraced brokerage firm believed to have improperly used hundreds of millions of dollars of customer money. P The new rule will limit investment choices for customer cash in futures firms, mainly preventing firms from using client funds to buy foreign sovereign debt. It also forbids a complex transaction that allowed MF Global to basically borrow money from its own customers. P Until now, brokerage firms could invest client money in a number of securities, including sovereign debt. The list of permitted investments grew under the administration of President George W. Bush, the a href="http://dealbook.nytimes.com/2011/12/05/regulators-approve-mf-global-rule/" target="_blank"New York Times/a reports. #91;subscription required#93;. P But under the new MF Global rule, if firms want to invest customer funds in foreign government bonds, they must petition the agency for a special exemption. The new rule also bans in-house repurchase agreements, or repos, in which one part of a futures firm swaps customer assets for securities such as municipal bonds or foreign-government bonds held at another part of the firm, pocketing the higher interest rates the securities yield, the Wall Street Journal a href="http://online.wsj.com/article/SB10001424052970204903804577080280622231726.html" target="_blank"notes/a. #91;subscription required#93;. P From the Wall Street Journal: blockquote Since such deals are done internally, they expose customers to a firms' ability to manage risk, critics of the practice say. They also leave it up to the firm to price the securities, leading to potential accounting abuses. P "I believe there is an inherent conflict of interest between parts of a firm doing these transactions," CFTC Chairman Gary Gensler said. The existing policy had been in place since 2005./blockquote P The Commodity Futures Trading Commission (CFTC), which voted unanimously to approve the rule in 2010, had originally planned to finalize it months ago -- but delayed action due to strong opposition and a powerful lobbying campaign the futures industry, largely from Jon Corzine, the former governor of New Jersey and CEO of MF Global, who resigned from the his position at the brokerage last month, amid the scandal. P At the time, Corzine said the rules were unnecessary because federal laws already prevented brokerage firms from mixing client money with company funds. The Times reports that in a letter, MF Global insisted to regulators that they were trying to "fix something that is not broken." P On Monday, the CFTC voted 5-0 for the rule. P Under the new rule, firms trading futures can still invest customer cash in securities, but they would have to do so through a third party such as a bank, in a bid to provide more transparency. P From the New York Times: P blockquote P The revelation that client money was missing at MF Global has incited panic in the once-quiet futures industry. MF Global's customers, including farmers, hedge funds and other investors, are still owed millions of dollars. P Now, some customers say they are losing faith in a system that promised to protect their money. While brokerage firms can invest client money, such funds must never be comingled with company funds. P MF Global violated that principle in its final chaotic days, tapping its segregated client accounts to meet its own financial obligations, people briefed on the matter have said. About $200 million in customer money that disappeared from MF Global surfaced at one point at JPMorgan Chase in Britain, the people said. P The missing money, thought to be as much as $1.2 billion, has prompted several federal investigations in recent weeks. The futures commission is leading the hunt for the money, while the Federal Bureau of Investigation is examining potential wrongdoing. P Some regulators are also examining a flood of new rules for brokerage firms, part of an effort to prevent a repeat of the MF Global debacle. /blockquote P Among these is the SEC, which is examining new regulations for accounting disclosures. P "As recent events have highlighted, the protection and preservation of customer funds is fundamental to our markets," Scott O'Malia, a Republican member of the CFTC, said in a statement. "By limiting investments of customer funds to a subset of instruments that currently have minimal risk, this final rule is a step towards enhancing customer protection." P
Categories: Technology
Multi-Billion Dollar Traditional Asset Managers Now Using Twitter As Source of Breaking News
Wallstreet and Technology - Fri, 12/02/2011 - 07:36
Large hedge funds and traditional asset managers, rather than start-ups, are now using social media as a source of breaking news, not just as a sentiment indicator.While asset managers have traditionally used social media as a sentiment indicator to gauge people's positive or negative feelings about a particular issue or company, they are now increasingly also using breaking news culled from Twitter and other social media feeds for their algorithms, and trading on it. P It is multi-billion dollar hedge funds and other large, traditional asset managers, rather than start-ups that are driving the trend, says Seth McGuire, director of asset management and financial technology, Gnip. P One of the latest indicators of Twitter's worth as a news feed - and not just as a channel for idle gossip - was Osama Bin Laden's death. P Keith Urbahn, the former chief of staff for Don Rumsefeld, is widely credited with the breaking that story through Twitter . The story was rapidly re-tweeted, and within 19 tweets, a company called DataMinr had identified this as an important and breaking story. DataMinr then sent an alert about the news to their clients, including hedge funds, McGuire explains P Ultimately, news of Bin Laden's death broke on Twitter a full 20 minutes before the story appeared on traditional news sites and TV networks, so that traders and investors were able to feed the information into their algos and act on it within just few minutes. P With market volatility at record levels, it makes sense for firms to aggregate data from various countries and use it to as an additional indicator to trade currencies or equities, McGuire points out. Tweets about the euro crisis for example can also capture the mood of the market in the U.S., he explains. P As for concerns that breaking news on Twitter sometimes isn't reliable enough to act on, McGuire counters criticism by saying the truth often lies in the numbers, and a close look at who is "retweeting" the news. P In other words, if a large enough number of people are tweeting the news, it is more likely to be true. "You see a greater rate of retweets repurposed when it's true. It's a crowd sourcing exercise," says McGuire. (Although I think any news on Twitter should initially be taken with a grain of salt as any one tweet can spread incredibly quickly). P But equally important, says McGuire, is to see who is retweeting the news. "People retweet content from users they trust," he says. P
Categories: Technology
Cloud of Uncertainty Over Entire U.S. Financial System
Wallstreet and Technology - Wed, 11/30/2011 - 03:32
A look at the SP's shock downgrade of major banks worldwide. Standard Poor's downgraded all big U.S banks, in a lowering of credit ratings that hit 37 financial institutions worldwide. Banks including JP Morgan Chase went from A+ to A; Goldman Sachs, Bank of America, Morgan Stanley and Citigroup were downgraded from A to A-. This Marketplace Morning report looks at how the European debt crisis played into the downgrades and its potential impact on the world's financial system. iframe src="http://www.marketplace.org/node/48368/player/popout" width="600" height="300" /iframe
Categories: Technology
Why Dubai Could Be A Banker's Next Best Career Move
Wallstreet and Technology - Tue, 11/29/2011 - 06:42
As Citi, Credit Suisse and UBS among others lay off thousands of employees, a banker's best bet might just be in the emerging markets.As U.S banks continue to lay off thousands of employees, job opportunities are increasingly cropping up in emerging markets. P According to a report by Accenture, financial institutions in the Gulf are racing to adapt to more demanding customers, but at the same time they are facing a serious shortage of skilled bankers. The survey found that 69 percent of executives from the largest banks in the Gulf region cited a skills shortage as the biggest challenge facing the Gulf Cooperation Council (GCG). P This is indicative of a broader trend, which is seeing an increasing number of job opportunities shift to emerging markets just as Western banks, from UBS to Citi and Credit Suisse, are laying of thousands of employees. P In China, 95% of financial industry professionals acknowledge a skills shortage, with more than 28% seeing it as "chronic," according to eFinancialCareers. India too is undergoing a shortage of skilled bankers: research shows that the country will need to fill 5 million financial sector jobs by 2015./p P In the Gulf region, Accenture's survey of 47 C-level executives from the banking industry in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates revealed that attracting and retaining talent will be the most important strategy their banks will use to increase shareholder value, according to 89 percent of respondents./p P As competition heats up in the region fueling the battle for talent, "banks will be looking for the skills required to develop more innovative products and to manage and grow their businesses," commented Amr Elsaadani, managing director of Accenture's banking practice in the Middle East./p P U.S. bankers take note: to address skill shortages and retain talent in the Gulf region, banks are revamping compensation through higher salaries and bonuses (51 percent) and are increasing transparency in career paths (47 percent). More than half the banks surveyed (53 percent) have also instituted coaching and mentoring programs. /p
Categories: Technology
Extreme Volatility Is The New Way For The Markets
Wallstreet and Technology - Mon, 11/28/2011 - 06:16
Volatility is here to stay. But what's driving the market swings?2011 has been a year of historic volatility in the financial markets. Theories behind the wild market swings include a surge in electronic trading to the growth of hedge funds and the eurozone crisis. P Here's a look from MarketPlace Morning News at what's driving the volatility both short-term and long-term. iframe src="http://www.marketplace.org/node/48188/player/popout" width="600" height="300" /iframe P
Categories: Technology
Algos Once Again Come Under Fire
Wallstreet and Technology - Mon, 11/28/2011 - 05:48
Rogue algos have been increasingly scrutinized by regulators and critics since the Flash Crash.Highlighting broadening concerns about the reliability of trading algorithms, CME Group has fined high-frequency trading firm Infinium Capital Management a total of $850,000 for three separate computer malfunctions that shook futures markets in 2009 and 2010. P Trading programs at Infinium, one of the biggest automated trading firms in the U.S., went haywire on two separate days in October 2009, causing the uncontrolled selling of e-mini contracts on CME, the New York Times a href="http://www.nytimes.com/2011/11/26/business/high-frequency-trading-firm-fined-by-cme.html" target="_blank"reported/a. A few months later, in February 2010, Infinium lost control of an algorithm that had been created the previous night with little back-testing, according to a report in the a href="http://www.ft.com/cms/s/0/f97e0668-1783-11e1-b157-00144feabdc0.html#axzz1f0zLwBzi" target="_blank"Financial Times/a. The algo bought oil futures in rapid succession on the CME. P The Chicago-based futures exchange operator charged Infinium for "acts detrimental" to the marketplace in the October incident and for failing to supervise its activities in both cases. Infinium neither admitted nor denied the rule violations. P From the Financial Times: P blockquote Bart Chilton, a commissioner at the Commodity Futures Trading Commission, the US futures regulator, and one of the most outspoken critics of what he calls "cheetah traders", told the Financial Times that the Infinium case highlighted the problem. P "These superfast trading systems, when they go feral, can do so in a hurry," Mr Chilton said. "They are out there trying to scoop up micro-dollars in milliseconds. I do question the value they add to markets. And get this, they aren't even required to be registered with the regulator. That needs to change." /blockquote P Rogue algos that have the potential to send markets into a tail-spin have come under fire since the May 6, 2010 Flash Crash which saw markest plunge and recover within 20 minutes. P Critics claim that many algos are not properly tested before being used in the markets, and that by the time humans are able to intervene to correct a problem extensive damage can already have taken place. P In Europe, automated trading is also being scrutinized. The European Commission has proposed that firms that use trading algos would also have to provide regulators with a description of their strategies.
Categories: Technology
Bankers Finally Recognize Appetite For Wealth Management Apps
Wallstreet and Technology - Wed, 11/23/2011 - 05:21
Still, while they are taking small steps in the right direction, financial organizations still have a way to go to meet and exceed their wealth management clients' expectations.Banks are finally taking note of their private banking clients' appetite for wealth management smartphone apps that allow them to track their portfolios almost in real-time. P Despite demand from investors for such apps, wealth managers have been slow to embrace smartphone apps for their clients due to security concerns but also, oddly, to a misconstrued impression that private banking clients do not want that kind of relationship with their bankers. P Still, it looks like private bankers are now coming round to the idea. The PricewaterhouseCoopers Asia Pacific Private Banking Survey 2011 found that nearly 50 percent of private banks expected to use mobile technologies over the next two years, the New York Times a href="http://www.nytimes.com/2011/11/23/business/global/with-apps-wealth-management-goes-mobile.html?_r=1ref=technology" target="_blank"reports/a. P In a sign that private bankers might finally be catching up with the times, 35 percent also said that in the next couple of years they expect to interact more with their clients -- wait for it -- through social media. P From the New York Times: P blockquote "I think banks will have to go that way," said Nick Pollard, chief executive of RBS Coutts Asia. The venerable British private bank is using YouTube, Twitter and Facebook to reach out to its clients; a smartphone app is in the works. P "It's less about today's clients and more about tomorrow's clients," he said. "Whether we like it or not, this generation and certainly the next one has no boundaries when it comes to accessing information."/blockquote JP Morgan, Merrill Lynch and UBS are part of a small group of banks that are now offering apps to their wealth management clients. P Still, there is much banks must still do to present their clients not just with apps, but with apps that are actually exciting and do things most private banking clients are pining for. P In the New York Times article, Steffen Binder, managing director of MyPrivateBanking, highlights a "lack of brokerage and trading features, too little informational content as banks are proving hesitant to open their research libraries to app users, little integration with social media," and poor communication facilities, since there is no direct link to send messages to a personal adviser or even the possibility to get a call-back or chat with an adviser. P Banks should take note. They usually proudly promote themselves as being at the cutting-edge of new technology. But here's the thing: most consumer sites, from Ikea to ATT have had instant chat features for years. P It's time banks stop thinking that private banking clients, or any other segment of clients, live on a different planet. We all live in a world where we want to stay connected with our banks and businesses 24/7 in as seamless a way as possible. Banks need stop making other assumptions and start meeting, and exceeding, their clients' expectations.
Categories: Technology