Forefront Communications

Forefront Week in Review: September 16, 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.

One of the biggest headlines of the week came from IEX, the two-year-old exchange that landed its first stock listing. Interactive Brokers, formerly listed with Nasdaq, was the firm that took the plunge, citing better execution prices for its customers. In other news, Millennium Management shut down a pioneering hedge fund that had been active since the early ’90s, and Cowen Execution Services was fined $2.75 million by the SEC for submitting incomplete securities and trading information.

Finally, one of the best parts of our business is keeping up with the financial journalists who write about the biggest names on Wall Street, and every once in a while, these scribes move the needle as much as the firms they cover. On Thursday, Frank Chaparro — better known to the Twitterverse as Fintech Frank — announced he was leaving Business Insider after two years. Chaparro’s scoops on cryptocurrencies, digital wealth management and a number of other topics have been a fixture in the Forefront Trading Digest for some time, and he’ll continue his work as a senior correspondent at The Block, a new media site aimed at simplifying the crypto space for readers. We at Forefront wish him all the best in his new endeavor!

This week’s Week in Review features stories by Chaparro, Samuel Agini of Financial News and Hayley McDowell of The TRADE, 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

Got Transparency?
Markets Media | Terry Flanagan

Supporters of exchanges paying rebates on order flow say it is a perfectly legitimate practice of rewarding customers and offering volume discounts. Critics say rebates create conflicts of interest, and shortchange end investors if brokers route in ways that disadvantages clients. Dash Financial Technologies COO Stino Milito says rebates themselves aren’t a bad thing. “When used properly they lower – sometimes drastically – transaction costs for clients and switching to a cost-plus model when possible better aligns the interests of the broker and the client. But the issues arise if brokers aren’t using them in their client’s best interest.”

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Exchange, ATS and Clearing News

‘Speed Bump’ Exchange Gets Its First Stock Listing, as Interactive Brokers Jumps from Nasdaq
CNBC | Liz Moyer

IEX Group, the two-year-old stock exchange known for putting a “speed bump” on trading, now has its first stock listing, as Interactive Brokers announces plans to move there from Nasdaq. The stock will begin trading on IEX on Friday, Oct. 5, under the same ticker, IBKR. Thomas Peterffy, Interactive Brokers’ founder and chairman, acknowledged in a statement Wednesday that being first to list on a relatively new exchange may have some risks, “but we think that individual and institutional customers who own and trade our stock will receive better execution prices and that advantage will outweigh the risk.”

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Vendor News

Refinitiv Opportunities: The Future of Thomson Reuters’ Financial & Risk Business
Tabb Forum | Larry Tabb

Blackstone’s investment in Thomson Reuters’ Financial & Risk (F&R) business is scheduled to close on Oct. 1. The closing of the deal will mark a very meaningful realignment of F&R (soon to be called “Refinitiv”) and will reposition the business well into the future. F&R already has been a leader in many of its market segments; with independence – and capital from Blackstone – there are tremendous opportunities in this spinoff. While the assets of F&R are robust and extensive, there is much more that can be done to extend, reposition and better monetize these assets outside of the quarterly pressures on a public company.

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Buy Side News

Millennium Shuts Down Pioneering Quant Hedge Fund
Bloomberg News | Vincent Bielski & Saijel Kishan

Millennium Management has shut down a quant hedge fund founded by two acclaimed physicists that suffered only one losing year since it began trading in the early 1990s. The closing of Prediction Company, which Millennium bought in 2013, came as a surprise to employees because the firm was profitable, according to a person familiar with the matter. The hedge fund was started by Doyne Farmer and Norm Packard, who are known for their seminal work in developing chaos theory, and managed about $4 billion at its peak.

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M&A/Investment News

Nasdaq to Buy Swedish Tech Rival Cinnober for $190m
Financial News | Samuel Agini

Nasdaq has offered to buy a Swedish competitor for around $190m to strengthen its hand as a provider of technology to rival stock exchanges and clearing houses. Nasdaq, which has a strong presence in the Nordic market, made its all-cash offer for Cinnober on Friday. The deal would take out one of Nasdaq’s rivals in the market for trading systems, clearing and surveillance tech. Cinnober, which was founded in 1998, posted losses of 97.6m Swedish kroner ($10.69m) in 2017 and in August hired Peter Lenardos, a former Royal Bank of Canada managing director, to replace Veronica Augustsson as its chief executive.

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Regulatory & Legal News

Cowen Execution Services Fined $2.75 Million for Incomplete Trading Data
The TRADE News | Hayley McDowell

The US financial regulator has handed Cowen Execution Services a fine of $2.75 million for submitting incomplete securities and trading information. Cowen Execution Services suffered various coding errors meaning a substantial number of the firm’s ‘blue sheet’ submissions were incorrect. According to the SEC, the broker-dealer’s submissions missed vital information and contained deficiencies on customer identification, order execution times, exchange codes and transaction type identifiers, across a four year period between 2012 and 2016.

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Blockchain & Crypto News

Coinbase, the Cryptocurrency Powerhouse, Has Doubled Its Staff to 500 Even Amid Bitcoin Market Rout
Business Insider | Frank Chaparro

Coinbase has doubled its staff even as the market for digital assets sheds billions. The exchange, which Business Insider on Thursday reported has been looking into a crypto ETF, is known for its wide-ranging business model. The firm, which was founded in 2012, has been making a big push into Wall Street, beefing up its institutional business with hires in recent months from the New York Stock Exchange, Credit Suisse, and Apex, the clearing house. It has also opened up offices into Chicago, Tokyo, Dublin, and Portland in the last year.

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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.