Broker-Neutral Trading Technology Firm OMEX Systems Now Offering Sweet Suite of Algo-Friendly DMA Tools For BrokerDealers

Posted on August 7, 2014 by admin

BrokerDealer.com blog update courtesy of latest clipping from Wall Street Letter, the sell-side industry’s leading publication profiling trading technology initiatives. The article below was authored by WSL staff reporter Sean Creamer.

August 7, 2014 –OMEX Systems, a provider of web-based, broker-neutral and FIX-compliant front, middle, and back office platforms for broker-dealers and buyside firms will craft a direct market access offering to aid broker-dealers in choosing algo providers, according to John Houlahan, chief operations officer.

New York City-based OMEX is creating functions for traders interested in setting up direct market access to allow brokerages to place and modify orders on a faster basis, noted Houlahan.

John Houlahan, OMEX Systems

“We are also building out functionality to facilitate direct market access clients via internal algorithmic parameter metrics,” said Houlahan. “We are building a DMA tool to allow broker-dealers to pick and choose various algo providers to place, modify, and monitor trades for intraday modification for cash desk, options, fixed income and futures.”

OMEX is also preparing to make its trading and execution functions available across the pond, so that global broker-dealers can have access to the offering, Houlahan said. The expansion comes on the heels of the firm being certified for use in the Mexican exchange network, he added.

“We are working with firms that want to offer our product to clients globally,” said Houlahan. “This type of global reach would not be aimed at retail, but more at the investment advisor and broker-dealer level.”

OMEX has also planned upgrades that will allow broker-dealers to process multiple basket orders at a single time when trading in the ETF space before the year’s end, Houlahan noted.

“We are also further refining our program trading desk module to better enable those broker-dealers who are seeing an influx of basket trading on the level of Russell Indexes baskets,” said Houlahan. “In an upcoming release, we’ll process multiple baskets with multi-routing capabilities for those orders.”

New York AG Puts Top BrokerDealer Dark Pools In Cross-Hairs (Again)

Posted on August 7, 2014August 7, 2014 by admin

BrokerDealer.com blog update courtesy of multiple news sources.

NY AG Eric Schneiderman

Less than two months after N.Y. Attorney General Eric Schneiderman levied charges against Barclays that it deliberately misled investors in its dark pool, regulators are reportedly looking into operations at five more investment banks. No specific allegations have been revealed, but several firms have confirmed that either Schneiderman’s office or another agency is investigating their practices.

The latest additions to the list of firms under scrutiny by the N.Y. attorney general’s office are Goldman Sachs and Morgan Stanley, according to The Fox Business Network, which cited people with direct knowledge of matter as sources. Neither firm has publicly acknowledged an investigation, but they also would not deny the scrutiny, according to the report.

Press officials at both firms as well as at the N.Y. attorney general’s office all declined comment.

One week ago, Credit Suisse revealed that regulators have asked the firm for information about its alternative trading system (ATS) as part of an investigation into dark pools. Credit Suisse said it was cooperating with “various governmental and regulatory authorities” regarding its ATS but would not specify which regulators were investigating, according to the Wall Street Journal. The bank further said that it is one of 30 defendants named in lawsuits related to high-frequency trading or other alleged violations filed with the U.S. District Court for the Southern District of New York.

Days earlier, UBS and Deutsche Bank disclosed that they were the subject of inquiries. UBS said that it was being investigated by the Securities and Exchange Commission, the N.Y. attorney general’s office and other regulators as part of an industry-wide investigation, according to the New York Times.

“These inquiries include an SEC investigation that began in early 2012 concerning features of UBS’s ATS, including certain order types and disclosure practices that were discontinued two years ago,” the firm said, according to the New York Times article.

At the same time, it was reported that Deutsche Bank separately disclosed it had been contacted by regulators. Deutsche Bank did not reveal which regulators had contacted the firm, but the New York Times report cited an unnamed source familiar with the matter as saying that the N.Y. attorney general’s office was investigating. Deutsche Bank and UBS both said they were cooperating with authorities.

BofA Breathes Some Life Into Bank ETFs

Posted on August 7, 2014August 7, 2014 by admin

BrokerDealer.com blog post courtesy of extracts from ETF Trends.com, written by Todd Shriber.

Moribund financial services exchange traded funds got some much-needed good news Wednesday when Bank of America (NYSE: BAC) announced the Federal Reserve granted it permission to raise its dividend to common stockholders for the first time in seven years.

BofA said it will pay a quarterly dividend of 5 cents per share up from the paltry penny a share it had been paying since early 2009. Today’s news removes some of the embarrassment suffered by the bank in April when it said it would be forced to suspend its planned $4 billion share repurchase plan and its previously announced dividend increase due to a calculation error related to the company’s acquisition of Merrill Lynch during the financial crisis.

The BofA dividend news sent shares of the Financial Select Sector SPDR (NYSEArca: XLF), the largest U.S. sector ETF, up 0.6% while the iShares U.S. Financials ETF (NYSEArca: IYF) added 0.55%. XLF and IYF have BofA weights of 5.76% and 4.41%, respectively. Continue reading →

BlackRock Balks at Quality of European IPOs

Posted on August 6, 2014 by admin

BrokerDealer.com blog post courtesy of extracts from FT.com

BlackRock, the world’s largest institutional investor, has sounded the alarm over the quality of European IPOs as hedge funds increase their bets against private equity-backed flotations, after the market for companies going public was soured by a string of high-profile failures. BlackRock said the flotation process needed to be improved, after the best six months for European IPOs since the financial crisis was ruined by poor market debuts from companies including Saga, the UK retirement group, Applus, the Spanish industrial testing business and eDreams Odigeo, the online travel agent.

Mr Leach told the Financial Times that the sheer volume of IPOs coming to market this year had affected communication between issuers and investors: “There has not been the same level of thoughtfulness and dialogue on valuation and structure.”

BlackRock tracked 104 IPOs in Europe in the first six months of this year, of which 38 deals – just over a third – are trading below their issue price. The Eurostoxx index is down around 0.5 per cent so far this year. Twenty companies which had been planning to go public – including names such as retail chain Fat Face – pulled their flotations. This year €33.7bn has already been raised in the European IPO market, more than in any full year since 2007, according to PwC.

Some of the worst performing IPOs in Europe have been those brought to market by private equity investors, with eDreams Odigeo, backed by Permira and Ardian, and Applus, the Carlyle-backed inspection group, both issuing profit warnings soon after listing. Many private equity groups use independent advisory firms such as STJ Advisors, which investment bankers say are too aggressive on pricing.

Investment bankers hit back at BlackRock’s criticisms of recent IPOs. A senior banker at one large bank said: “BlackRock wasn’t complaining after the first quarter when all the IPOs were up. Every potential investment should be looked at on its individual merits. The last time I checked, fund managers weren’t forced to invest.”

For the entire story from FT.com, please click on this link.

BrokerDealers’ Prime Brokers Cutting Back on HF Clients:Goldman Sachs Squeeze

Posted on August 5, 2014August 5, 2014 by admin

BrokerDealer.com blog update courtesy of extract from Finalternatives.com

New U.S. banking regulations are putting the squeeze on prime brokerage units, and none are feeling it more than clients of brokerdealer Goldman Sachs.

The Wall Street giant has cut ties with some unprofitable clients and begun to impose new fees on others, as it seeks to cut its assets to increase its leverage ratio, which must rise from 4.5% to at least 5% by 2018. “It’s a total redefinition of what’s a good customer,” S3 Partners’ Robert Sloan told The Wall Street Journal.

In order to reduce its balance sheet, Goldman has asked clients to withdraw cash held in their prime-brokerage accounts. It is also charging more to finance trades and has added fees for untapped credit lines, according to the Journal.

Whereas Goldman and other prime brokerages have previously evaluated their business based on revenue, Goldman is now telling clients it is judging theirs on return on assets. The result has been that some hedge funds that produce little or no return for the bank have been asked to take their business elsewhere.

For the full coverage from Finalternatives.com, please click here.