Last week was a particularly busy one for Forefront — in addition to our usual day-to-day, we also attended the Quandl Data Conference on February 28, where John Collins of client Thasos Group was on hand to present and help advance the conversation around data-driven investing. If you missed us, don’t be too disappointed — next week, starting on March 12, we’ll be in sunny Florida for FIA Boca, so don’t be afraid to flag us down and say hello.
If the past week has been any indication, there will be plenty of hot topics to discuss. For one, Members Exchange — or MEMX — has named a CEO: Jonathan Kellner, the former Instinet head who was set to join Coinbase before the cryptocurrency exchange opted to shift course. MEMX is backed by a deep roster of established firms, including Bank of America Merrill Lynch, Fidelity, Morgan Stanley and Virtu Financial; now it has a chief executive to match. A number of details surrounding the planned exchange remain hazy, but as long as the war between investors and exchanges wears on, MEMX will supply intrigue.
Other headlines from the past week included Piper Jaffray’s acquisition of Weeden & Co., Barclays’ new approach to trading and a Bridgewater alum launching a new systematic fund.
This week’s Week in Review features stories by Nick Baker of Bloomberg, Dan DeFrancesco of Business Insider and Frank Chaparro of the Block, among others. Keep scrolling for more, and don’t forget to subscribe to the Forefront Fintech Digest if you’re not on our list already.
Barclays Is Revamping How It Trades Stocks as It Welcomes in the ‘Golden Age for Electronic Trading’
Business Insider | Dan DeFrancesco
A new era of electronic stock trading has arrived. Equities have always been considered on the cutting edge of trading technology, as Wall Street firms have pushed to trade faster and smarter over rivals. Traders have grown increasingly comfortable with algorithmic trading over the years. The potential around using artificial intelligence and machine learning have only bolstered this trend. As a result, Daniel Nehren, Barclays’ head of statistical modeling and development for equities, said the level of innovation that can be expected coming out of Wall Street’s stock trading desks in the coming years will be unparalleled.
Exchange, ATS and Clearing News
Wall Street’s New Stock Exchange Picks Instinet Veteran as CEO
Bloomberg News | Nick Baker
Jonathan Kellner, a veteran of brokerage Instinet, was picked to lead the U.S. stock exchange that some of Wall Street’s biggest traders are building. He starts immediately as chief executive officer of the Members Exchange, according to a statement Wednesday. Kellner spent more than a decade at Nomura Holdings’ Instinet, running its U.S. trading division before serving as CEO from 2014 to 2018. He left last year intending to oversee cryptocurrency exchange Coinbase’s attempt to drum up more business from institutional customers, but that fell through when Coinbase scaled back the project.
Former Global Head of Trade Surveillance at JP Morgan Joins Fonetic
The TRADE News | Hayley McDowell
Voice processing, compliance and surveillance technology provider Fonetic has hired a former head of trade surveillance at JP Morgan to lead its business in the Americas. Thomas Dinneny has been tasked with driving strategy and new business in the region as demand for voice surveillance systems in the industry grows amid regulatory developments. He has significant experience in trade surveillance, having worked as head of compliance, surveillance and derivatives solutions at Thomson Reuters. Prior to that, Dinneney was global head of trade surveillance and corporate compliance technology at JP Morgan.
Buy Side News
Bridgewater Alumni to Launch Systematic Fund
HFM Week | Miluska Berrospi
A group of former Bridgewater investment associates are launching an equity hedge fund manager in New York, HFMWeek has learned. True Signal, led by founder and CEO Eric Arnold, is due to launch later this year with internal capital. The firm’s first hedge fund will be called True Signal US Fund, according to a Delaware SEC filing dated last week. It will run a long/short strategy, using alternative data. As of the date of filing, the fund had around $13m, although no targeted or expected AuM is yet known.
Piper Jaffray Agrees to Acquire Weeden & Co
Traders Magazine | John D’Antona
Piper Jaffray today announced that it has reached a definitive agreement to acquire 100% of Weeden & Co., a broker-dealer focused on providing institutional clients with premier execution services. Upon closing, Weeden & Co. will convert to and operate as Piper Jaffray & Co. The acquisition will significantly strengthen Piper Jaffray’s position as a top institutional equities trading platform, diversifying and expanding its client base while adding best in class execution capabilities and proprietary technology. The transaction will complement Weeden & Co.’s existing business, through Piper Jaffray’s added research and capital markets capabilities.
Regulatory & Legal News
IEX Alleges That Certain Nasdaq Patents Are Invalid
Financial Times | Nicole Bullock
A legal dispute between Nasdaq and IEX Group over trading technology is heating up in the latest example of the fiercely competitive landscape in the world’s largest equity market. In a filing late on Tuesday, IEX alleged that patents held by Nasdaq were invalid and has separately petitioned patent authorities to have them declared as such. Two of IEX’s patent challenges were rejected, one is going to move forward to the merits stage and four are still pending. The moves come after Nasdaq last year sued IEX alleging that it knowingly violated a series of Nasdaq patents in developing the Investors Exchange’s trading platform.
Blockchain & Crypto News
itBit Is Trying to Lure Traders with Rebates, and It’s Already Helping Pump Up Its Ether Volumes
The Block | Frank Chaparro
Paxos’ itBit, the tiny New York-based crypto exchange, is hoping incentives for traders will continue to drum up new business on its market, the company revealed to The Block in an exclusive interview. Earlier this year the firm began supporting trading for Ethereum, the second largest cryptocurrency. In order to attract new business, the firm has started to offer so-called rebates to folks adding liquidity to the platform. “We were low single-digit market share and the customer feedback we were getting had to do with pricing,” David Wells, general manager of the exchange, told The Block.
Forefront Client News
2 Crypto Startups Want to Put 10 Million Used Cars on a Blockchain
CoinDesk | Ian Allison
Cryptocurrency non-profit the Fusion Foundation, and the Automotive eXchange Platform (AXP) are joining forces to bring the U.S. second-hand car market and its insurance and financing to a blockchain. The first step in the partnership, according to a Monday announcement, is to integrate Fusion’s blockchain platform and digitize AXP’s current database of 10.5 million automobiles, so they can be properly tracked and audited. The auto industry has long struggled with a lack of transparency and widespread information inaccuracies from titles all the way through financing, said Max Kane CEO and co-founder of AXP.
Outsourced Trading: Opportunity Amid Disruption
Markets Media | John D’Antona
In just 14 months, MiFID II has proven to be a disruptive force, upending business models and causing a new era of scrutiny in how firms spend. “As a result of new regulation, changes in technology and a host of other factors, we are now seeing larger funds experience some of these same cost pressures,” said Tim O’Halloran, Managing Director at Tourmaline Partners. “In addition, larger firms that do employ traders are starting to realize our global scale and expansive network of sell-side relationships can supplement their in-house trading activities. The result is that outsourced trading has become a much bigger tent.”
OpenFin Launches Cloud Services to Accelerate Digital Transformation Across Capital Markets
Markets Media | Staff
OpenFin, the operating system (OS) of finance, today announced the launch of OpenFin Cloud Services, providing every bank, asset manager, hedge fund and wealth management firm with its own FDC3-standard private app store and workspace management solution out of the box, eliminating the need for time-consuming and costly internal builds. Nick Kolba, Chief Product Officer, OpenFin said: “We provide the technology, but it’s not Our app store; it’s Your app store. You decide what’s in your store, you set your branding, you decide who has access to what.”
Confluence Successfully Readies Clients for First Form N-PORT Filings in April 2019
Globe Newswire | Staff
Confluence, the global leader in investment data management automation for regulatory, financial and investor reporting, today announced that their clients – fund administrators and asset managers servicing or managing over 75% of ’40 Act funds – are on target to meet their first Form N-PORT filing deadline, arriving in April 2019. Confluence has worked closely with its clients to map source data to the form and successfully conduct Form N-PORT test filings across a variety of client and fund types. On behalf of clients, Confluence systems currently load more than 30 million data records per month, representing over 4000 unique source file types.
That’s all for this week. Don’t forget to subscribe to the Forefront Trading Digest for more headlines like these.