Welcome back to the Forefront Week in Review, and to everyone we saw last week at FIA Boca, welcome back to your regularly scheduled round of cold, gray weather. Between insightful panels, valuable networking opportunities and, yes, 80-degree days, the event was a tremendous success, and we were thrilled to be there to support our clients Dash, HPR and OpenFin.
One of the biggest stories to come out during the conference was Brookfield Asset Management’s acquisition of Oaktree Capital Group, a $4.8 billion deal that sets the newly-formed giant up to be a major rival to firms like Blackstone Group. The deal comes amid growing uncertainty around the future of the asset management industry as the buy side continues to face tremendous pressures. The news broke mere days after Martin Flanagan, CEO of Invesco, predicted that we could see one in three asset management firms disappear in the years ahead. With this latest deal, we’re off to a rousing start.
Other headlines from the past week included Goldman Sachs making moves to cut around 5% of its sales and trading staff, Cboe Europe and CME Group gaining approval for Amsterdam entities and Coinbase unveiling the next phase of its OTC rollout.
This week’s Week in Review features stories by Dakin Campbell of Business Insider, Robin Wigglesworth of the Financial Times and Dave Michaels of the Wall Street Journal, 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.
Goldman Sachs Is Cutting About 5% of Sales and Trading Staff After Senior Equities Leaders Delivered a Tough Town Hall Talk
Business Insider | Dakin Campbell
Goldman Sachs is in the process of cutting roughly 5% of its sales and trading staff, as new CEO David Solomon conducts a review of the business and looks for ways to improve collaboration between the divisions. The company notified staff in the securities division of the cuts this week, including those employees who deal with clients trading stocks, bonds and currencies, according to a person with knowledge of the matter. Staff in commodities were told earlier this month. Bloomberg reported that at least 10 commodities employees had been fired.
Exchange, ATS and Clearing News
Cboe Europe Gains Approval for Dutch Trading Venue
The TRADE News | Hayley McDowell
Cboe Europe has received approval from authorities in the Netherlands to operate a trading venue in Amsterdam in preparation for Brexit. The approval means that Cboe is now permitted to run a MTF and APA, which will be regulated by the Dutch Authority or the Financial Markets (AFM). The exchange operator added that it will continue to operate its recognised investment exchange (RIE) in the UK and will offer the same services at its trading venues in the UK and Amsterdam.
Alt Data Moves From ‘Nice’ to ‘Need’
Markets Media | Terry Flanagan
Alternative data has moved into the mainstream. Data found off the beaten path of wire services and economic reports was an input in investment decision-making at 79% of financial firms surveyed in the third quarter of 2018, according to a Dataminr and WBR Insights report. Notably, 82% of non-users said they plan to use alt data within a year. In essence, four of five trading and investment firms source data from social media, credit-card transactions, weather reports, satellite imagery, and other non-traditional areas. And of those who aren’t, four of five soon will.
Buy Side News
One in Three Asset Management Firms Could Disappear, Says Invesco Chief
Financial Times | Robin Wigglesworth
A third of the asset management industry could disappear over the next five years, as mounting fee pressures and rising costs spur more closures and consolidation, according to Invesco’s chief executive. The headwinds faced by the investment industry have already triggered a series of big mergers and acquisitions in recent years, with Janus Capital merging with Henderson Global Investors, Aberdeen Asset Management falling into the arms of Standard Life, and Invesco last year buying OppenheimerFunds for $5.7bn.
Brookfield Asset Management Inc said on Wednesday it will buy most of Oaktree Capital Group LLC in a roughly $4.8 billion deal, creating an alternative-asset manager that would rival industry leader Blackstone Group in size. The decision by Oaktree, led by distressed debt investor Howard Marks, to sell a majority stake of itself comes after a sustained period in which its stock has underperformed the broader market. Oaktree’s stock is down around 13 percent in the last five years, even after a price bump on Wednesday following the deal’s announcement. By comparison, the S&P 500 Index is up more than 50 percent over the same time.
Regulatory & Legal News
Senators Want a Boost for the SEC’s Financial Recovery Powers
Wall Street Journal | Dave Michaels
A bipartisan pair of U.S. senators want to give Wall Street’s top cop more power to recover funds for burned investors. The legislation, to be introduced on Thursday, would allow the SEC to recover money for harmed investors based upon wrongdoing that occurred as much as a decade ago. The measure would help restore some of the muscle the SEC lost when the Supreme Court unanimously decided in 2017 that federal regulators are bound by a five-year statute of limitations. Sens. John Kennedy and Mark Warner said the bill would give the SEC more time to spot hard-to-detect financial crimes.
Blockchain & Crypto News
Coinbase Has Unveiled the Next Phase of Its OTC Roll-Out, and It Shows Where Crypto Trading Is Heading
The Block | Isabel Woodford
Coinbase is preparing to usher in a new era of crypto trading. The U.S. crypto exchange announced Wednesday that its OTC trading desk will now complete trades directly from cold storage, aiming to address concerns about moving funds out of custody to trade. The move means Coinbase Custody clients will no longer need to transfer their assets online and onto the exchange to complete an OTC trade. Coinbase discreetly launched its OTC desk late last year for U.S. accredited investors, later expanding into Asia and Europe.
Forefront Client News
From Russia with Love: How BCS Transformed from a Regional Player to an Emerging Markets Leader
Traders Magazine | John D’Antona
An ocean away from New York and nearly 4,000 miles east of London, broker-dealer and investment bank BCS Financial Group is a 24-year veteran of the Russian financial services industry. Now the firm is making efforts to ramp up in the world’s biggest financial centers, and the early returns have been nothing short of remarkable. Last year, BCS Americas became a member of NYSE. In addition, BCS Americas recently announced the launch of its new global equity trading platform, which allows investors access to robust suites of algorithmic trading tools with a comprehensive global market reach.
LiquidityBook Opens Sydney Office
Waters Technology | Wei-Shen Wong
Trading solutions provider LiquidityBook has opened an office in Sydney to support its growing expansion within the APAC region. Chief revenue officer Sean Sullivan says clients have shown increasing interest in trading into APAC as a result of the overall growth in the region in the past few years, as well as the maturation of the Asia market. “Our US and Europe-based clients need local support as they hunt for alpha, and our new Sydney office fulfils that need. In addition, we think it will prove valuable to have a foothold in the APAC region as we work to expand our client base around the world,” he tells WatersTechnology.
Former Virtu Executive Joins Dash Financial as Compliance Chief
The TRADE News | Hayley McDowell
US agency brokerage Dash Financial Technologies has bolstered its senior management team with the appointment of a chief compliance officer. Venu Palaparthi joins Dash as chief compliance officer and head of regulatory affairs, tasked with overseeing the firm’s compliance strategy, government relations and internal regulatory practices. Palaparthi has 25 years’ experience working in the industry at major financial institutions including Nasdaq and Virtu Financial.
Pico Staffs Up in Singapore
HFM Technology | Shannon Smith
Pico, the infrastructure, connectivity, data and cloud technology provider, has added three new staff to its Singapore office as it looks to continue its Asia-Pacific expansion. Nicolas Friceau has joined as global head of data center engineering, Jasmyne Tung as Apac regional head of sales and Elton Pang as regional head of service operations. The trio report to Roland Hamann, managing director and global head of product.
That’s all for this week. Don’t forget to subscribe to the Forefront Trading Digest for more headlines like these.