Forefront Communications

Forefront Week in Review: July 29, 2018

OpenFin

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.

Don’t forget to subscribe to the Forefront Trading Digest to receive headlines like these in your inbox every weekday morning at 8:00 sharp. Now, let’s get to the latest batch of can’t-miss stories from across the industry in each of the seven segments we track each day.

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Broker News

When Market Makers Ate Their Own…
Alphacution Research | Paul Rowady

As the functioning of markets become more “digital,” a single leader can emerge in that market. This is how we end up with the “FANG’s” – Facebook, Amazon, Netflix and Google. It’s also how US equity markets end up with ~80% lit market-making flows being split between Virtu and Citadel. Here are some facts to fill in the background: In the three years beginning 2006, the Timber Hill market making unit of Interactive Brokers had an annual revenue run rate of around $1 billion, peaking at over $1.3 billion in 2008. By 2017, Timber Hill’s revenue run rate had declined 94% to $86 million – when it was then sold to Two Sigma. Although we at Alphacution could articulate the phenomenon early on, we did not have a picture of the impacts — until now.

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Exchange, ATS and Clearing News

Senior LSE Markets Head Appointed CEO at EuroCCP
The TRADE News | Hayley McDowell

EuroCCP has appointed a senior markets business head at the LSE as its new chief executive officer. Cécile Nagel joins the equities clearinghouse after almost 10 years with the LSE in various roles, most recently as head of LSE markets global product development and LSE exchange traded products. Around five years after joining LSE, Nagel also worked at the exchange operator’s clearinghouse LCH as global head of equities and commodities, overseeing the company’s cash equities, equities and commodities derivatives business.

[minti_button link=”https://www.thetradenews.com/senior-lse-markets-head-appointed-ceo-euroccp/” size=”small” target=”_blank” lightbox=”false” color=”orange” icon=””]Read More[/minti_button]

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Vendor News

Q&A Interview: AI’s Next Craze Will Be Explainable
MarketBrains | Anna Reitman

Causality Link has launched an AI research platform that its team claims can “build a big-picture understanding of financial markets.” The platform uses natural language processing and machine learning technologies to analyze tens of thousands of public and proprietary texts per day, and marries the knowledge gained from that analysis with big data to surface relationships in real-time. The startup’s first partnership is with the Toulouse School of Economics, which will integrate a research library into the Causality Link platform. MarketBrains talks to CEO Pierre Haren about why the next craze is going to be “explainable AI.”

[minti_button link=”https://marketbrains.com/interviews/qa-interview-ais-next-craze-will-be-explainable/” size=”small” target=”_blank” lightbox=”false” color=”orange” icon=””]Read More[/minti_button]

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Buy Side News

Leon Cooperman’s Omega Hedge Fund Converts to Family Office
Bloomberg News | Katherine Burton & Katia Porzecanski

Leon Cooperman told investors that he plans to convert his Omega Advisors at year-end into a family office, managing his own money rather than for other investors. “This decision is a very personal one driven not by any health concerns, but solely by how I want to spend my remaining years,” Cooperman, 75, said Monday in a letter to clients. “I don’t want to spend the rest of my life chasing the S&P 500 and focused on generating returns on investor capital.”

[minti_button link=”https://www.bloomberg.com/news/articles/2018-07-23/cooperman-s-omega-investment-firm-converting-to-family-office” size=”small” target=”_blank” lightbox=”false” color=”orange” icon=””]Read More[/minti_button]

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M&A/Investment News

State Street’s Acquisition of CRD: Off Their Meds, or Crazy Like a Fox?
Tabb Forum | Larry Tabb

State Street just acquired Charles River Development for $2.6 billion – that’s nearly nine times revenues and almost three times the global annual software spending for all order management platforms combined. But there is no way anyone would pay that much for a platform in this space, argues Larry Tabb. State Street has another plan.

[minti_button link=”https://tabbforum.com/opinions/state-streets-acquisition-of-crd-off-their-meds-or-crazy-like-a-fox” size=”small” target=”_blank” lightbox=”false” color=”orange” icon=””]Read More[/minti_button]

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Regulatory & Legal News

What to Do When the FCA Comes Knocking on Mifid II
Financial News | Emma Margetts (Head of European Operations at Visible Alpha)

Many in the investment community were taken by surprise in June when the FCA said it would begin conducting audits of brokers and fund managers to ensure they were all properly complying with regulations under Mifid II. In the six months since the rules have been in place, the FCA has remained quiet, and the probe announcement is the regulator’s first signal that it is expecting progress to have been made. Firms are estimated to have collectively spent over $2bn getting themselves in line with the regime, and yet confusion remains, as the regulations are inundated with complexity – at around 7,000 pages long, it is five times longer than Tolstoy’s War and Peace – which has unsurprisingly led to some ongoing legal uncertainties. So what will the FCA review first and what do firms need to have ready?

[minti_button link=”https://www.fnlondon.com/articles/what-to-do-when-the-fca-comes-knocking-on-mifid-ii-20180725″ size=”small” target=”_blank” lightbox=”false” color=”orange” icon=””]Read More ($)[/minti_button]

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Blockchain & Crypto News

Bitcoin King Mike Novogratz Leads $52 million Investment in Crypto-Lending Startup
Business Insider | Frank Chaparro

Mike Novogratz’s merchant bank Galaxy Digital has led a $52.5 million fundraising round for crypto-lending startup BlockFi, the firm announced on Tuesday. The New York-based firm offers corporate and retail clients loans on their crypto holdings, with a loan book in the millions. Founded by former Cognical senior vice president Zac Prince, the firm has raised money in two rounds this year. In February, it raised $1.55 million from ConsenSys Ventures, SoFi, and Kenetic Capital, as CoinDesk previously reported. The most recent round comes as BlockFi eyes expansion in new states and international markets, and the addition of new products. It is also looking to support more cryptocurrencies.

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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.