Forefront Communications

Forefront Week in Review: September 30, 2018

DASH

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.

Coinbase was in the news again this week, announcing a major adjustment to its policy for listing new coins. The crypto exchange rose to prominence listing only coins that are compatible with US securities law, but in an effort to reflect the global nature of the business, it will now list coins regardless of US regulation. Other major stories included Eurex’s plan to install a speed bump in December and Dash Financial Technologies’ new portfolio-trading algorithm.

Finally, we at Forefront are excited to spend our week in Washington, D.C. at the Security Traders Association’s annual Market Structure Conference, a three-day gathering of senior executives from the industry’s top exchanges, regulators, vendors and buy- and sell-side firms. The deep roster of speakers and panelists includes TD Ameritrade CEO Tim Hockey, Cboe President Chris Concannon and Charlie Cook of the Cook Political Report. Space permitting, you can still register onsite on Wednesday — we hope to see you there!

This week’s Week in Review features stories by Frank Chaparro of The Block, Emilia David of Waters Technology and Rob Daly of Markets Media, 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

Dash Dives Into Portfolio Trading
Markets Media | Rob Daly

As the portfolio-trading market continues to grow, agency-only brokerage Dash Financial has launched it first portfolio-trading algorithm for the buy side. “We felt strongly that the market is underserved by some of the legacy portfolio-trading solutions available today,” Barbara Francis, director of portfolio trading at Dash, told Markets Media. The algorithm sports a proprietary multi-factor risk model, covariance matrix, and an optimization engine to create trading waves that minimize the risk of the residual portfolio, subject to certain user-defined constraints.

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Exchange, ATS and Clearing News

Eurex Plans Speed Bumps to Favor Traditional Investors – CEO
Reuters News | Staff

Futures exchange Eurex will impose a speed limit on trading from December that seeks to restore the balance between high-frequency traders and traditional investors, its CEO told Germany’s Boersen-Zeitung. The imposition of such speed bumps should support liquidity in markets where computer-driven traders have gained the upper hand over players that prefer to place passive orders that are only triggered if an instrument hits a certain price, the paper on Thursday quoted Thomas Book as saying. U.S. stock markets have already introduced such speed bumps, while Eurex proposes its own so-called “latency protection”.

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Vendor News

CAT Selects Exegy for Timestamp Data
Waters Technology | Emilia David

The Consolidated Audit Trail (CAT) committee has chosen Exegy for timestamp data it needs to reconstruct trades made during the day. Exegy will provide the timestamp data to the CAT, one of the data requirements the system has in order to determine the exact market price for a trade at a particular time. Through its packet-capture service, the company will push timestamps for equities and options trades over to the CAT without the need to build its own timestamping software. The data can be used by those with access to CAT data to rebuild trades. Exegy aggregates, processes, and distributes real-time market data to its clients including large banks.

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Buy Side News

AQR Quants Say Most Long-Vol Bets Lose Even If They’re Right
Bloomberg News | Yakob Peterseil

A new paper this month from two executives at AQR Capital Management delivers a sobering conclusion: Buying options to profit from a surge in equity-price swings is typically a losing proposition, even if volatility jumps. It’s the fuel for the enduring boom in the short-vol trade — one that keeps regulators and investors on Wall Street awake at night. “Tactical long volatility traders face a steep uphill battle,” Roni Israelov and Harsha Tummala at the quant giant write. “Some amount of healthy skepticism is likely warranted for those who claim to consistently have such exceptional skill.”

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M&A/Investment News

Blackstone Weighs Sale of Thomson Reuters’s FXall Unit
Bloomberg News | Stefania Spezzati, Sarah SyedKiel Porter

Blackstone Group, the soon-to-be owner of Thomson Reuters’ financial-and-risk arm, is weighing a sale of FXall, a currency trading platform, according to people familiar with the matter. The business could fetch more than $3 billion, said one of the people, who asked to not be identified because the matter isn’t public. A representative for Thomson Reuters said in a statement that the company does not comment on market rumors and that FXall “remains a very strategic part” of its foreign exchange operations.

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Regulatory & Legal News

SG Americas Securities Fined $800.000 for Improper Handling of ADRs
LeapRate | Valentina Kirilova

The SEC has announced that SG Americas Securities will pay more than $800,000 to settle charges of improper handling of “pre-released” ADRs, predominantly by its predecessor entity. In its order against SG Americas, the SEC found that the misconduct of predecessor entity Newedge USA LLC allowed pre-released ADRs to be issued that were not backed by the appropriate number of ordinary shares. This is the fifth action against a depository bank or broker for abusive pre-release practices resulting from the SEC’s ongoing investigation into abuses involving pre-released ADRs.

[minti_button link=”https://www.leaprate.com/financial-services/fines/sg-americas-securities-fined-800-000-for-improper-handling-of-adrs/” size=”small” target=”_blank” lightbox=”false” color=”orange” icon=””]Read More[/minti_button]

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Blockchain & Crypto News

Coinbase Has Revamped Its Listing Policy, and It May Mean New Coins Are Coming to Certain Regions
The Block | Frank Chaparro

Coinbase, the US cryptocurrency exchange operator, announced Tuesday a major revamp of its policy for listing new coins, and it could mean more cryptos will list on its markets.  The San Francisco-based firm traditionally has listed coins that fit the firm’s own internal standards and don’t conflict with US securities law, according to a blog-post penned by the exchange-operator. Now, the firm will list coins in certain regions irrespective of US regulation. In an interview with The Block, Coinbase’s chief technology officer Balaji Srinivasan described the move as key to more quickly listing additional coins and becoming a more globally-oriented company.

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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.