SEC Advisory Group Proposes BrokerDealer Background Check Database

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Brokerdealer.com blog update profiles the SEC Investor Advisory Committee’s proposal for the SEC to develop a database of brokerdealers and investors’ information regardings secruities law violation in order to protect clients from fraud. This update is courtesy of InvestmentNews’ article, “SEC panel calls for a single database to run background checks on all financial professionals“. with an excerpt from the article below.

The Securities and Exchange Commission should develop a database that compiles information about securities law violations and is easy to use for investors, especially the elderly, an advisory group said Thursday.

In its quarterly meeting at SEC headquarters, the SEC Investor Advisory Committee floated a proposal to have the SEC work with other federal and state financial regulators to develop a single website to house disciplinary information about investment advisers, brokers and other financial professionals. As a step toward that goal, an IAC subcommittee suggested the agency provide a single portal for investors to access information in SEC and Finra databases.

The proposal likely will be voted on by the full IAC at the group’s July meeting.

“This is something from an investor protection perspective, which certainly is the mission of this committee, [that] can play a very important role for the public,” Ms. Sheehan said.

To read the entire article from InvestmentNews, click here.

 

Etsy’s IPO Plan Is Very Crafty

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Etsy is a peer-to-peer e-commerce website focused on handmade or vintage items and supplies, as well as unique factory-manufactured items. Last month, brokerdealer.com profiled  Etsy’s preperation for an IPO, now new details are emerging about Etsy’s plan for its IPO. Etsy hopes to target small investors and focus on fewer big investors as part of its plan for their IPO. By using this unusual practice, Etsy hopes to gain shareholders who share in Etsy’s commitment to socially responsible business practices. This brokerdealer.com blog update is courtesy of the Wall Street Journal’s article, “Even Etsy’s Initial Public Offering Process Is Artisanal” with an excerpt below.

Leave it to Etsy Inc. to craft an artisanal public offering.

The Brooklyn, N.Y.-based online marketplace for handmade and vintage goods has altered the playbook for its initial public offering, launching an expansive effort to attract small investors and focusing on fewer big investors, according to people familiar with the deal.

The custom-made process is intended to build a shareholder base that is on board with what Etsy says is its commitment to socially responsible business practices and its plans to spend heavily on marketing to grow its membership over the next few years, the people said.

But going off script comes with some risk. The moves include limiting the amount of stock retail investors can get in the IPO to $2,500 so more individuals can take part, and concentrating many of the shares among a relatively small number of big holders. The approach could turn off some traders whose presence can help stabilize a stock once it begins trading.

To continue reading about Etsy’s plan for its IPO from the Wall Street Journal, click here.

BrokerDealers Beware: Big Brother Is Watching..and Predicting Your Next Move

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BrokerDealer.com blog update is courtesy of financial industry-focused site “MarketsMuse.com“…

While the title could be “Big Data Bags BrokerDealers”, MarketsMuse.com Tech Talk update is courtesy of extract from the 07 April Bloomberg LP story by Hugh Son profiling the recent initiative by JPMorgan (and presumably their bulge bracket brethren, and likely, a select band of black box-centric buysiders from the Hedge Fund world) to keep closer tabs on their respective ‘human assets’ via stealth “algorithmic” software designed to predict what’s going on inside the heads of traders, sales folks and well, everyone else that logs into a device monitored by JP’s surveillance sleuths.

We preface Son’s story with “Unless you’ve been asleep at your trading screen for the past 10 years, you already know that Algorithms aka Algorithmic Trading aka HFT are all the rage and that “algo-based trading” accounts for approximately 70% of daily US equity market trading, as well as increasing percentages across fixed income, FX and currency markets. Simply put, Wall Street quants were arguably the first to turn “big data” into big bucks via algorithmic models, which are now ubiquitous across an assortment of industries that are relying evermore on digital data to drive decisions that are neuroscience-based.

Well, Wall Street’s brokerdealers are once again ahead of the curve, as we’re now in the Big Brother phase of this algo evolution..

With this new chapter, its safe to presume that whatever you type into a keyboard is not only going to be stored by compliance wonks, its going to be analyzed by predictive Surveillance Dept. software to determine if you are prone to crashing planes into the side of mountain or likely to pose an assortment of other risks to the enterprise.

Here’s the opening extract of Son’s report:

Hugh Son, Bloomberg LP

Hugh Son, Bloomberg LP

Wall Street traders are already threatened by computers that can do their jobs faster and cheaper. Now the humans of finance have something else to worry about: Algorithms that make sure they behave.

JPMorgan Chase & Co., which has racked up more than $36 billion in legal bills since the financial crisis, is rolling out a program to identify rogue employees before they go astray, according to Sally Dewar, head of regulatory affairs for Europe, who’s overseeing the effort. Dozens of inputs, including whether workers skip compliance classes, violate personal trading rules or breach market-risk limits, will be fed into the software.

“It’s very difficult for a business head to take what could be hundreds of data points and start to draw any themes about a particular desk or trader,” Dewar, 46, said last month in an interview. “The idea is to refine those data points to help predict patterns of behavior.”

JPMorgan’s surveillance program, which is being tested in the trading business and will spread throughout the global investment-banking and asset-management divisions by 2016, offers a glimpse into Wall Street’s future. An industry reeling from billions of dollars in fines for the actions of employees who rigged markets, cheated clients and aided criminals is turning to technology to police itself better. Failure to do so will provide ammunition for those pushing to separate trading operations from retail banks. Continue reading →

Bojangles’ Filing Takes IPO Down South

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Bojangles is a chain fast food restaurant that is based out of North Carolina. They are most well known for their spicy, “Cajun” fried chicken and buttermilk biscuits. After being around for 38 years, the company has decide to go public and filed for an IPO earlier this week. Bojangles is expected to raise $372 million from the initial public offering. Brokerdealer.com blog update profiling Bojangles’ IPO and key things to know about Bojangles before investing in their IPO is courtesy of MarketWatch. An excerpt from Ciarra Linnane of MarketWatch’s article “6 things to know about Bojangles’ ahead of its IPO“.

Chicken-and-biscuit restaurant chain Bojangles’ Inc. has filed for an initial public offering. The North Carolina-based company has tapped Bank of America Merrill Lynch, Wells Fargo Securities, and Jefferies as lead book runners on the deal. The company is planning to list on the Nasdaq exchange under the ticker symbol “BOJA.”

Here are six things to know about Bojangles’:

It doesn’t meddle with its menu

Bojangles’ menu hasn’t changed much since it opened its first outlet in Charlotte, N.C., in 1977, according to its IPO prospectus. The company now boasts 622 stores across 10 states and Washington, D.C., but is still famous for its bone-in fried chicken, its buttery biscuits and its home-brewed — sorry, that’s home-steeped — ice tea.

It is very U.S. focused

Bojangles’ is very much a domestic U.S. operation. It currently operates in Alabama, Washington, D.C., Florida, Georgia, Kentucky, Maryland, North Carolina, Pennsylvania, South Carolina, Tennessee and Virginia. Internationally, it has three restaurants, all of them located in Honduras.

To read the other four things to know about Bojangles and its IPO, click here.

 

Bond Trading: Smaller BrokerDealers Displace Bulge Bracket Market-Makers

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BrokerDealer.com blog update profiles the emergence of specialist brokerdealers who are poised to displace the once dominant ‘bulge bracket’ aka “6-pack” firms in the world of making markets and providing liquidity across the bond marketplace.  As regulations and capital requirements upend the legacy role played by Wall Street’s biggest investment banks, technology advances coupled with modern day perspectives as to how to source actionable liquidity and secure best execution when trading bonds is providing an opportunity for smaller and savvy broker-dealers to play an important role. Coverage is courtesy of excerpt from feature story published by MarketsMedia.com.

Since 2008, there has been an increase in electronic trading of fixed income securities, along with a decrease in inventory held by larger dealers and banks.

“If we look at some of the subtle changes in market structure that have come about, we see non-traditional liquidity providers, or price makers, coming up within the marketplace,” Bill Vulpis, managing director at KCG BondPoint, told Markets Media. “By non-traditional, I mean companies other than banks and large sell-side firms, including smaller broker dealers who are reliant upon electronic platforms to make markets.”

According to a January 2015 study by Greenwich Associates, 80% of institutional investors report difficulties executing corporate bond trades of more than $15 million, reflecting decline in market liquidity caused by the pullback of fixed-income dealers in the wake of new and more stringent capital reserve requirements.

With dealer inventories shrinking, investors’ search for new liquidity providers is proving a boon to the fast-developing ranks of electronic trading platforms, according to Greenwich. All-to-all trading accounted for an estimated 6% of electronically executed U.S. trades in 2014.

To read the full article from Markets Media, click here.