Forefront Communications

Forefront Week in Review: September 9, 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 yet another major deal in the fintech space: SS&C is set to acquire data-sharing platform Intralinks, according to a report from Reuters. It will be SS&C’s third marquee acquisition of the year, coming on the heels of a $5.4 billion deal to buy DST Systems in April and a $1.45 billion deal for Eze Software reported July. It’s just the latest instance of consolidation in what has been a wild summer for tech vendors. Just 11 days before the Eze acquisition, State Street closed a deal to purchase Charles River Development for $2.6 billion, sending shockwaves throughout Wall Street and around the world.

In other news, Goldman Sachs has chosen to abandon near-term plans for one of its more intriguing crypto projects, and Nasdaq released a batch of proposed market data reforms aimed at creating fairer, more competitive markets.

This week’s Week in Review features stories by Alexander Osipovich of the Wall Street Journal, Annie Massa of Bloomberg News and Dakin Campbell and Frank Chaparro of Business Insider, 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

Tech Exits from Deutsche Bank’s Algo Trading Team Threaten Equities Recovery
eFinancialCareers | Sarah Butcher

Deutsche insiders say that Florian Miciu, Deutsche Bank’s EMEA head of equities product development, resigned around a month ago. Miciu’s exit follows that of Taras Bondar, the co-head of equities algo quants at Deutsche Bank in London, whose departure we were first to report in May. Bondar is understood to have joined Exane as of today, where he will be building out an algo execution development team in London. Insiders say Deutsche’s equities product development team is demoralized.

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Exchange, ATS and Clearing News

Promoting Transparency: Nasdaq Market Data Proposals
Traders Magazine | John D’Antona

Exchange operator Nasdaq has proposed market data reforms that will make the financial markets fairer, more transparent, and more competitive. Its goals are to enhance multi-stakeholder participation in market governance, encourage better price discovery, and provide broker-dealers more clarity, choice and flexibility. Nasdaq’s proposals are: Expand the authority and responsibilities of the SIP advisory committees, Modify the SIP revenue formula to increase market quality and strengthen “lit” quotes, and Clarify the Vendor Display Rule.

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Vendor News

Research Goes Free Agency
Markets Media | Rob Daly

As sell-side commissions continue to compress and more buy-side firms adopt MiFID II’s research unbundling globally, more sell-side analysts are setting up shop as independent research providers. This shift has put further competitive pressure on the non-global broker-dealers and their research departments as well as leading to a slide in their revenues. The move towards independent research has fueled an explosion in research aggregators like Analyst Hub, ResearchExchange, VisibleAlpha, and Red Deer that approach the issue in their respective ways.

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Buy Side News

BlackRock’s Decade: How the Crash Forged a $6.3 Trillion Giant
Bloomberg News | Annie Massa

BlackRock, the world’s largest money manager, may never have grown as far and as fast as it did without the unprecedented changes brought about by the recession. The business now towers over its competitors; its $6.3 trillion in assets under management exceeds the size of Germany’s economy. The rise of exchange-traded and index funds and low-fee investing; lower risk tolerance on consumers’ part and higher anxiety within institutions; the government’s scramble to understand this crash and prevent future ones — all of these played to BlackRock’s benefit.

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M&A/Investment News

SS&C Nears Deal to Buy Intralinks – Sources
Reuters News | Liana B. Baker & Greg Roumeliotis

Financial software company SS&C Technologies is nearing a deal to buy data-sharing platform Intralinks, in what would be its third major acquisition this year, people familiar with the matter said on Tuesday. The move underscores how SS&C has embarked on an acquisition spree as it seeks to expand its financial services offerings beyond its core clientele of hedge funds and private equity firms. It agreed in July to buy Eze Software for $1.45 billion, to cater more to buyside investors. That was just three months after it closed a $5.4 billion deal to buy DST Systems Inc, to bulk up its products serving banks and healthcare institutions.

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Regulatory & Legal News

SEC’s Stock Trading Experiment Cost Investors Over $300 Million, Study Finds
Wall Street Journal | Alexander Osipovich

An SEC experiment designed to stimulate trading in shares of smaller companies has cost investors more than $300 million in the past two years, according to a study released Thursday. The study by brokerage Pragma Securities LLC adds to a growing body of research that suggests regulators’ Tick Size Pilot Program has added to investors’ costs without doing much for the small and midsize companies it was meant to help. Under the program, the “tick size” for hundreds of companies was changed from one to 5 cents.

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Blockchain & Crypto News

Goldman Sachs is Ditching Near-Term Plans to Open a Bitcoin Trading Desk — and Instead Focusing on a Key Business for Driving Wall Street Investment in Crypto
Business Insider | Dakin Campbell & Frank Chaparro

Even Goldman Sachs can’t find a way to trade bitcoin. The bank is ditching plans to open a desk for trading cryptocurrencies in the foreseeable future, according to people familiar with the matter, as the regulatory framework for crypto remains unclear. As part of that decision, Goldman has moved earlier plans to open a desk for trading cryptocurrencies farther down a list of priorities for how it can participate in cryptocurrency markets, the people said. For now, Goldman is focusing on other projects such as a custody product for crypto, which would mean that the bank holds cryptocurrency and, potentially, keeps track of price changes, on behalf of large fund clients.

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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.