Forefront Communications

Forefront Week in Review: August 5, 2018

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Sam Belden

Sam Belden

Welcome to the Forefront Week in Review, where we take another look at top recent stories from the action-packed world of trading and market structure.

In a space where news moves so quickly, it can be hard to find the time to stay on top of the latest developments. Whether you’re a trader, a portfolio manager or simply a news junkie, we hope you’ll join us every Sunday for a look back at the week’s essential headlines.

The recent news cycle has been dominated by the continued consolidation of the OMS space. Less than two weeks after State Street announced it was acquiring Charles River Development for a staggering $2.6 billion, SS&C revealed its plan to purchase Eze Software for just over half that cost. It will be SS&C’s third acquisition of the year, following deals for DST Systems and CACEIS North America back in January.

In other news, ICE has announced a plan to launch a new fixed income ETF, and big names from Point72 and Fortress Investment Group have left to start their own funds.

This week’s Week in Review features stories by Olga Kharif of Bloomberg, John McCrank of Reuters and Frank Chaparro of Business Insider, among others. Keep scrolling for more, and don’t forget to subscribe to the Forefront Trading Digest if you’re not on our list already.

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Broker News

A Top Morgan Stanley Electronic Trading Exec is Out
Business Insider | Frank Chaparro

A top electronic trading executive at Morgan Stanley has left the firm after 15 years, according to people familiar with the matter. Brian Gallagher, a managing director of sales in Morgan Stanley’s equities electronic trading business who was with the firm since 2003, exited the bank in recent weeks. Gallagher formerly headed European electronic trading at the bank. He was part of Morgan Stanley’s star equities division which is the top stock trading business on Wall Street ahead of Goldman Sachs and JPMorgan.

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Exchange, ATS and Clearing News

NYSE-Owner ICE to Launch New Fixed Income ETF Platform
Reuters News | John McCrank

ICE is partnering with BlackRock on a new fixed income exchange-traded fund execution platform to open next year, the owner of NYSE said on Thursday after reporting a rise in quarterly earnings. The new platform will be a wholly-owned subsidiary of ICE and is aimed at simplifying the creation and redemption process for ETF units, which can then be split up and sold to investors in the secondary market, ICE said. BlackRock will help develop and support the system. ICE has invested heavily in the fixed income space in recent years and the new venture will help the Atlanta-based company bring those investments together, while potentially attracting new business.

[minti_button link=”https://uk.reuters.com/article/us-ice-results/nyse-owner-ice-to-launch-new-fixed-income-etf-platform-idUKKBN1KN1OY” size=”small” target=”_blank” lightbox=”false” color=”orange” icon=””]Read More[/minti_button]

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Vendor News

Questions Raised on State Street and Charles River’s Boston Wedding
Waters Technology | Anthony Malakian

Last week, it was announced that custody giant State Street will buy Charles River Development for an eye-popping $2.6 billion. In a statement, CRD founder Peter Lambertus said that “State Street is an ideal partner for us” and that the firm’s management is “excited about the opportunities ahead and what the combination of our two firms can do for the industry overall.” Still, even if the sale itself wasn’t surprising, the valuation was. “That is a lot of money that State Street paid. How the hell does Charles River go for that?” asks one hedge fund chief information officer, who has used Charles River’s OMS. Others concurred, variously describing the amount that State Street agreed to pay for Charles River as “outlandish,” “unbelievable,” and that Lambertus had made out remarkably on what should have been a much lower valuation.

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Buy Side News

Point72 Trader to Launch L/S Equity Fund at Drexel Hamilton
HFMWeek | Miluska Berrospi

Former Point72 Asset Management trader Brody Howatt is launching a long/short equity fund as part of brokerage firm Drexel Hamilton’s new asset management arm, HFMWeek has learned. The new l/s equity fund, named Bellator, meaning warrior in Latin, will be the broker dealer’s first foray into asset management. The business is already running a money market fund named Azimuth with around $75m, according to industry sources. Bellator, which will begin trading in the next two weeks, has already raised around $100m from a West Coast-based multi-billion family office, sources said.

[minti_button link=”https://hfm.global/hfmweek/news/point72-trader-to-launch-l-s-equity-fund-at-drexel-hamilton/” size=”small” target=”_blank” lightbox=”false” color=”orange” icon=””]Read More ($)[/minti_button]

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M&A/Investment News

SS&C to Buy Eze Software for $1.45 Billion
The TRADE News | Jonathan Watkins

SS&C Technologies has agreed to buy investment management software solutions Eze Software provider for $1.45 billion in another major acquisition for the technology giant. The purchase continues the trend of back- and middle-office service providers enhancing their front-office capabilities, following the news that State Street will buy Charles River Development for $2.6 billion. The deal is SS&C’s third of the year. The technology giant is renowned for acquisitions, particularly in the fund administration world after acquiring the businesses of Citi, Wells Fargo and Conifer in recent years.

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Regulatory & Legal News

Bitcoin Believers are Flocking to a Sympathetic SEC Commissioner’s Twitter Account
Quartz | John Detrixhe

Crypto Twitter is rallying behind a sympathetic watchdog at the SEC. Not long after commissioner Hester Peirce dissented from the agency’s rejection of a bitcoin exchange-traded fund, her count of Twitter followers soared from around 1,000 to just over 14,000. Peirce’s social media exposure got a boost from a Reddit user who goes by lamb0x, who called for readers on the site to “show her some love from the Crypto Community.” She’s not the first buttoned-down American official to win Twittersphere adoration—the chairman of the CFTC, J. Christopher Giancarlo, had his turn in February after he gave senators an unexpected education on crypto slang during a hearing. Giancarlo was dubbed “Crypto Dad” by the cryptorati; inevitably, Peirce earned the moniker “Crypto Mom” from some Redditors.

[minti_button link=”https://qz.com/1342037/bitcoin-believers-are-flocking-to-a-sympathetic-sec-commissioners-twitter-account/” size=”small” target=”_blank” lightbox=”false” color=”orange” icon=””]Read More[/minti_button]

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Blockchain & Crypto News

Northern Trust Looks to Join Burgeoning Crypto Custody Business
Bloomberg News | Olga Kharif

Northern Trust is looking to get into the embryonic business of safeguarding digital assets such as cryptocurrencies. The 129-year-old Chicago-based company has begun developing a way to secure digital assets held in custody while seeking to charge lower fees than existing crypto custodians, according to Pete Cherecwich, head of corporate and institutional business. “The fees right now the custodians are charging are pretty high, not the same fees that we get –- ultimately, I believe unsustainable, because it needs to be an efficient model,” Cherecwich said in an interview. Existing cryptocurrency custodians are charging multiple times more than traditional custodians to safeguard assets, Cherecwich said.

[minti_button link=”https://www.bloomberg.com/news/articles/2018-07-31/northern-trust-looks-to-join-burgeoning-crypto-custody-business” size=”small” target=”_blank” lightbox=”false” color=”orange” icon=””]Read More[/minti_button]

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That’s all for this week. Don’t forget to subscribe to the Forefront Trading Digest for more headlines like these.