Forefront Communications

Forefront Week in Review: September 2, 2018

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.

This week saw another major move in the discount brokerage space: Robinhood shored up its trading app by adding 250 stocks from around the world, boosting its appeal in an increasingly crowded market. The additions came one week after J.P. Morgan announced a digital brokerage service of its own, which offers 100 free trades to anyone who downloads the app or visits the firm’s website.

Other major stories included Cboe’s plan to launch ether futures by the end of 2018, the SEC’s ongoing quest for a Consolidated Audit Trail and the continued institutionalization of the crypto world.

This week’s Week in Review features stories by John McCrank of Reuters, Joe Parsons of The TRADE and John D’Antona of Traders Magazine, 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

Robinhood Adds Hundreds of New Stocks to Its Trading App as Retail Investing Competition Heats Up
CNBC | Kate Rooney

Robinhood is ushering hundreds of global company stocks onto its platform, as firms such as J.P. Morgan vie to compete using the same no-fee model. The Menlo Park, California-based start-up announced Tuesday that it is adding 250 American depositary receipts of companies from Japan, China, Germany, the U.K. and Canada. They will be available to trade on the app starting Tuesday, and ADRs of companies from France will be added in the coming months. It is the biggest addition of securities since the platform launched three years ago.

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Exchange, ATS and Clearing News

Nasdaq Reports Seven-Year Error in Closing Auction
The DESK | Dan Barnes

Nasdaq has admitted that it has not been including minimum quantity orders in the calculation of the cross price for its daily auction, since 2011. “In certain instances orders on the continuous book priced more aggressively than auction price could be traded though in favour of orders in the crossing book that are at inferior prices,” it reported in a notice published at 5.12pm ET on Friday 24 August. The notice said that it had allowed those orders to be used “in the actual execution of the auction if necessary”.

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Vendor News

Buyside Seeks AI Tools to Interpret New and Alt Data, Report Says
Traders Magazine | John D’Antona

Wealth managers are requesting improved insight into internal, customer and third-party data alongside alternative data to power AI technology and identify new opportunities that deliver improved outcomes for clients, according to a new Thomson Reuters and Celent report. According to the report, in recent years, data has become the lifeblood of the modern wealth management organization, with firms starting to review the ways their enterprise information is managed and integrate alternative data into their wealth management platforms. The issue is that some of this data may be difficult to analyze or store within a conventional relational database.

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Buy Side News

Hedge Funds Seek Review of Market Data Fees, ‘Pickles’ and All
Reuters News | John McCrank

The two main hedge fund trade groups have joined a growing chorus of stock market participants asking U.S. regulators to reign in “unreasonable” data fees charged by some exchanges, which they said restrict trading and harm competition. The Managed Funds Association and the Alternative Investment Management Association, in a petition dated Aug. 22, asked the SEC to conduct a full review of market data costs and to require exchanges to be more transparent about the fees they charge.

[minti_button link=”https://www.reuters.com/article/us-usa-exchange-data-sec/hedge-funds-seek-review-of-market-data-fees-pickles-and-all-idUSKCN1L91ZM” size=”small” target=”_blank” lightbox=”false” color=”orange” icon=””]Read More[/minti_button]

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M&A/Investment News

Deutsche Boerse Invests in Blockchain Start-Up for Securities Lending
The TRADE News | Joe Parsons

Deutsche Boerse has purchased a minority stake in HQLAx, a start-up which aims to bring blockchain technology to the securities lending market. The investment expands the partnership with HQLAx, first established in March this year, with the aim of building a fully integrated, front-to-back operating model for securities lending transactions, using blockchain technology developed by the R3 consortium. Deutsche Boerse stated it has begun the on-boarding process with an initial set of banks, as well as holding detailed discussions with relevant regulatory authorities.

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Regulatory & Legal News

NY Cybersecurity Deadline Looms
Markets Media | Rob Daly

In a few short days, the rubber meets the road for those financial organizations that fall under the New York State Department of Financial Services’ cybersecurity regulation. By September 4, each covered entity will need to have commenced annual reporting by the firm’s chief information security officer regarding the company’s cybersecurity program to the board; established controls for access to nonpublic information; implemented cybersecurity training for employees based on the firm’s risk assessment, and encrypt nonpublic data while in transit and at rest. The encryption requirement brings a new set of challenges for these organizations.

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Blockchain & Crypto News

A New Code of Conduct for Cryptoassets
Tabb Forum | Jeff Bandman (Bandman Associates) & Ari Yannakogeorgos (Cornell Tech)

The latest trends in cryptocurrencies, whether new cryptoassets or tokenization of existing assets, come with many associated risks and uncertainties. Standardized practice is still developing in the space, whether that is in the form of operating procedures or white paper drafting standards. There is a need to ensure that this exciting new technology is adequately understood, and the associated risks managed. To help achieve the potential of these exciting new technologies, Global Digital Finance has published for public comment a Code of Conduct for cryptoassets as well as a Taxonomy of cryptoassets to promote common understanding.

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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.