Securities Industry’s Oldest SDV-Owned Firm Gives Back and Pays Forward

(AP Newswire) Stamford, CT & Newport Beach, CA –November 1, 2016 —Veterans Day is observed by Americans each year on November 11; the day that is dedicated to honoring and extending our gratitude to the millions of men and women who have served within the US military. At Mischler Financial Group (“Mischler”), the financial industry’s oldest institutional brokerage and investment bank owned and operated by service-disabled veterans, Veterans Day is observed every day, and each November Mischler pledges a percentage of the entire month’s profits to carefully-vetted charitable organizations that support veterans and their families in recognition of this national holiday.

To honor Veterans Day Month 2016, Mischler Financial Group has made a financial pledge to three separate organizations that go above and beyond the call of duty to support military veteran families and local communities. Those 501c3 organizations are Bob Woodruff Foundation, The Johnny Mac Soldiers Fund and Buildon.org.

Stated Dean Chamberlain, Chief Executive of Mischler Financial, a 20-year veteran of the securities industry and a U.S. Military Academy at West Point alumni, “There are now more than 20 million Americans who have served with integrity and honor in the US Armed Forces, yet when transitioning back to civilian roles, too many are encountering challenges as they seek higher ground. The Mischler Financial year-round philanthropic mission is dedicated to the military veteran community at large, and Veterans Day Month provides a special opportunity for our trading desk and our clients to work together to give back and pay forward to the veteran community in ways that can truly help change lives for the better.”

Added Chamberlain, “This past May, we made our Memorial Day Month pledge to crowdfund campaign Veterans Education Challenge,  as we believe that advanced education is a core component to both personal and professional success. The organizations that we have pledged our Veterans Day Month support to provide equally unique runways by which veterans can further bolster their knowledge base and self-confidence, and in turn, help them to more easily target and capture opportunities as they advance forward.”

About The Bob Woodruff Foundation (501c3)

Mission Statement: Founded in 2006 by ABC News reporter Bob Woodruff and his wife Lee after Bob was hit by a roadside bomb while covering the war in Iraq. The Bob Woodruff Foundation has led an enduring call to action for people to stand up for heroes and meet the merging and long-term needs of today’s veterans. To date, BWF has invested more than $33 million to find, fund and shape programs that have empowered more than 2.5 million impacted veterans, service members and their families. To learn more, visit their website

About The Johnny Mac Soldiers Fund (501c3)

Mission Statement: Committed to providing support to those most affected by the Global War on Terror. Assistance includes: College scholarships and grants; Financial aid for professional certification programs and non-degree programs; Educational career counseling and mentorship. To learn more, visit their website.

About Buildon.org (501c3)

Mission Statement: To break the cycle of poverty, illiteracy and low expectations through service learning programs in many of America’s most under-resourced high schools. Buildon.org is dedicated to engaging and training high school students in the country’s most challenging urban areas by providing those students with the tools to proactively advance programs that can better the quality of life for members of their communities who are in need. To learn more, visit their website.

About Mischler Financial Group Inc.

Established in 1994, Mischler Financial Group, Inc. (“Mischler”) was the first broker-dealer certified as a Service-Disabled Veteran owned Business Enterprise (SDVOBE).Since that time, Mischler has become widely-recognized by Fortune corporate treasurers, public pension sponsors and the industry’s leading institutional investment managers for “punching above its weight class” while serving as a boutique investment bank and conflict-free institutional brokerage. Mischler is unique among its peers for its capital markets capabilities, as well as the firm’s year-round advocacy and support of veteran-centric causes. Mischler maintains offices in 8 major cities and is staffed by more than 55 securities industry veterans whose expertise extends across virtually all primary and secondary debt and equity capital market silos. In addition to traditional DCM and ECM services and secondary market best execution, Mischler administers corporate share repurchase programs for leading Fortune companies, cash management for government entities and corporations, and asset management programs for liquid and alternative investment strategies. The firm’s website is www.mischlerfinancial.com

For Additional Information:

Attn: Office of the Chief Executive

Email: info@mischlerfinancial.com

Boutique Broker-Dealer Makes Veterans Day Month Pledge

The post Boutique Broker-Dealer Makes Veterans Day Month Pledge appeared first on BrokerDealer Blog.

Not to mention the other requirement of MIFID II: strict requirements for soft-dollar commissions for research. When I started working on the trading floor, soft-dollar commissions were the way business was done. A quant (me) would generate trading ideas that would be subsequently distributed to the desk’s institutional clients. An example of a trading idea could be the economic rationale for why the futures prices on Canadian dollar were about to rise, and, hence why someone like a treasurer of a business with Canadian exposure would choose to buy the futures now, rather than wait for the quarter end. Clients choosing to trade on the research were invariably charged a spread with the cost of the research idea priced-in, and that was just business as usual.

In addition to the secret sauce that will be spilled by transparency requirements and the tight control of soft-dollar commissions, the last component of traditional brokerage businesses was quality relationship management. Can one differentiate a business by a friendly attitude and a free pint of beer? Of course, yes. However, a client can only drink so much beer on a given day, and the prospect of hanging out with yet another broker can be daunting, to say the least.

So where is the brokerage industry going under the new regulations? Technology is certainly not only enabling the requirements of transparency, it is also leveling the field as far as investors are concerned, making broker-shopping easy. How are brokers to retain their clients?

BrokerDealer.com maintains the largest database of broker-dealers across 35 countries

The answer once again lies with technology. Smart order routing solutions should enable brokers to compete for clients beyond beer outings and popular tickets. A solid example of someone who has been doing this well for the past decade in the U.S. equities is Pragma Securities: leveraging PhD-level research and the technology to deliver benchmark-beating routing to their clients. However, even Pragma cannot fully disclose its secret sauce – doing so would make it vulnerable to competition and likely affect its business considerably.

Irene Aldridge

Irene Aldridge is Managing Director, Head of Research and Development, AbleMarkets.com
and Able Alpha Trading, LTD. She is the author of High-Frequency Trading: A Practical Guide
to Algorithmic Strategies and Trading Systems. She can be seen at the Big Data Finance
conference at New York University on May 19 and 20, 2016. Irene can also be reached at Irene@AbleMarkets.com.

For the entire column from Traders Magazine, click here

The post MiFID II and The End of Brokers? appeared first on BrokerDealer Blog.

According to a recent column by John D’Antona Jr. in sell-side industry TradersMagazine, “After years of using a separate and siloed approach to its trading high- and low-touch trading desks, it appears that the brokers are starting to meld the two desks into a single or one-touch trading desk….

The reason? Costs to maintain the two separate groups have risen amid stagnant commission spend, to be sure. But also, U.S. institutional equity investors accept coverage from a single sell-side sales trader for both e-trades and traditional block trades.

Also, since the start of the e-trading era, the buyside has insisted that the two execution channels remain separate and that specialists who monitor their algorithmic trading be distinct from the experts who manage their block orders. The primary reason for this divide: Investors were concerned about information “leakage” and saw this hard separation as key to preserving their anonymity.

Ryan Moran, Mischler Financial Group

Noted Ryan Moran, Director of US Equities Execution for agency-only, institutional boutique Mischler Financial Group, the financial industry’s oldest and largest minority brokerdealer owned and operated by service-disabled military veterans, “Institutional clients have become increasingly fluent as to the benefits of algo-centric tools, which explains why these tools have become pervasive across the trading ecosystem, but as much as all of us appreciate the efficacy of these so-called “low-touch-only” tools, in many cases those who migrated to algo-only have deprived themselves of the long-proven benefits of high-touch execution. We’ve always offered a combination, as a 3-dimensional view that only humans can provide addresses the fiduciary best execution obligations of buyside managers, many of whom oversee public pension funds.”

Added Moran, “Having a single point of contact who provides a consultative approach and is fluent in both practice areas is arguably the best practice within the context of true best execution for those engaged in block trading.”

Among the more than 300 institutions Greenwich Associates interviewed in 2015 as part of its annual study, the quality of execution consultancy saw the greatest increase in importance as a criterion for e-trading among buy-side traders.

However, a new Greenwich Associates report, “Blurred Lines: Sales Traders Drift Toward Execution Consultancy,” shows that a majority of the more than 300 U.S. institutional equity investors participating in the study are now willing to accept single coverage across high-touch and electronic trades. Only a declining 31% of the institutional investors participating in annual Greenwich Associates U.S. Equity Investors Study still prefer separate coverage.

Greenwich pointed to two main changes are driving this shift:

To continue reading this story from TradersMagazine, please click here

The post BrokerDealers Merge High-Touch With High-Tech Execution appeared first on BrokerDealer Blog.

MarketsMuse dip and dash department frequently prefers spotlighting altruists and do-gooders, including Agency-only execution firms in the brokerdealer sphere who, unlike “principal trading desks”, do not take the contra side to institutional customer orders as a means of making a profit; agency-only firms merely execute those client orders via the assortment of major exchanges and dark pools that traffic in equities and equity options. Today’s spotlight is on Dash Financial; the only position they purportedly take is a business model position by promoting the fact they act as a conflict-free agent only representing the best interest of their institutional brokerage clients in consideration for an agreed-upon commission.

BrokerDealer.com provides a global database of brokerdealers operating in more than three dozen countries throughout the free world.

The phrase “Best Execution” is therefore popular jargon among agency-only firms and implies that customers are receiving ‘the best” execution. What that means is a function of who you ask, particularly when considering the brokerdealer community has proven uniquely adept at capturing hidden revenue via rebate schemes in consideration for orders routed to those respective venues for execution. These schemes are aggressively promoted by the nearly two dozen major exchange and dark pools that facilitate trading in equities and equity options.

Courtesy of our friends at FierceFinance, today’s altruist of the week award goes to equity and options market agency brokerage Dash Financial, who asserts that being a broker in today’s fast-paced market is about being a technology expert and a consultant on clients’ execution objectives.

Below is the extract from FierceFinance’s interview with Dash Financial’s CMO:

David Karat, Dash Financial

“Everything is a tradeoff,” said David Karat, chief marketing officer for Dash Financial. “Every action you take to minimize fees, you risk losing liquidity, and for every technique to maximize liquidity it will cost you more money because it will be less relevant which venues you go to get that liquidity. It’s that balance we sit on top of and consult with our clients on.”

To that end, Dash Financial aims to help clients achieve what it calls on best net execution – execution that incorporates exchanges fees and all other associated costs.

“If there is liquidity in multiple places we are going to capture that liquidity based on the cheapest economics for the client,” Karat said. But Dash Financial has also designed its tracing architecture to couple its best execution algorithms with a focus on in-depth transparency, Karat said.

“We actually want you to see all the child orders, the millisecond time stamp of which destinations we are going to and what happened,” Karat said.

To continue reading the entire story, please visit MarketsMuse.com

The post BrokerDealer Bent on Best Ex Via Agency-Only appeared first on BrokerDealer Blog.

Below video provides true color and frames the firm’s value proposition in a comprehensive manner. Further below is a Q&A with firm principals Michael Wallach and David Beth, both of whom are 25+ year sell-side trading market veterans and are each considered to be industry thought-leaders by both buyside clients and sell-side peers.

Q. I’m familiar with the term “inter-dealer-broker” aka “IDB”, a broker that serves as intermediary between competing sell-side broker/dealers for the purpose of maintaining anonymity; why does WallachBeth refer to the firm as “inter-market broker.”

Wallach: We go far beyond the typical sell-side boundaries, which is the universe that IDB’s limit themselves to.
Our trading relationships extend not only across the spectrum of competing Tier 1 sell-side facilitation desks, but also includes high-touch prop trading and market-making firms, along with a wide range of hedge funds and other buy-side managers, all of whom actively trade the underlying cash instruments, options, futures, fixed income or commodities that map to the products that we specialize in.

Q. The industry at large emphasizes the phrase “best price execution”, yet WallachBeth refers to “execution at the right price” as one of your value propositions. What’s the distinction between the two phrases?

Wallach: “Best ex” is a broadly-interpreted phrase; it means different things to different people. Best ex metrics are merely derived from one-dimensional pricing data displayed on screens.
The fact is that screens, including Level II, rarely display what is actually obtainable at a given point in time, simply because most liquidity providers won’t show their “best hand” on a screen. Independent best ex analytics don’t necessarily tell the real story. There’s no such thing as a truly accurate 360° best ex “view” for those trading volatile products, complex option spreads, or seemingly illiquid ETFs or options.

When we say “right price”, it’s the best obtainable price with the least market impact within the context of the actual market and the real liquidity available, displayed and hidden. That’s our definition of best execution.

Q. The issue of “capital commitment trades” or principal vs. “agency-execution” is a topic of ongoing and spirited debate. Where does WallachBeth sit in this discussion? And, why would I call you instead of calling or directing my order to my prime broker or my custodian’s facilitation desk?
Beth: The “need” for capital commitment trades is typically driven by a sense of urgency on the part customer who wants to quickly liquidate, or acquire a large block of stock, or a complex options position. In a perfect world, a “principal trader” is also extending the best price that can be obtained in that split-second moment in time. But the world isn’t always perfect.

WallachBeth discretely aggregates the Industry’s foremost capital commitment providers, often in less time than a customer might get a quote from a single “principal desk.” In many (but not all) cases, we can prove to be the de facto, single source of a particular product’s total capital-centric liquidity that’s immediately available to transact with.
That said, we also know that certain customers are compelled to direct orders to their custodian or “PB” when there’s an obligation to compensate for research or other “value-added” services received from the PB.

Wallach: We know the pendulum swings both ways. The ‘agency-only’ proposition is obviously compelling to managers who need to distance themselves from any potential conflicts of interest that their counterparty might have when offering a trade price. On the other hand, a principal trader is taking on risk in consideration for providing the customer immediate gratification. Nobody takes on risk without being compensated, and the fee paid for a capital commitment trade is necessarily a premium vs. an agency rate.

The higher rate paid for a principal trade vs. agency execution might be justifiable at the time, or it might seem nominal to some customers. For Alpha-centric managers, our aggregation model and our networking approach to securing the best price can noticeably impact a manager’s overall performance.

Speaking as a long-time principal trader, I’d argue that almost every order can be best executed only after properly canvassing the market for price improvement. The perceived need to execute “on the wire” can, in hindsight, prove to be very costly in more ways than one.

Q. Can WallachBeth administer customized orders or program orders?
Beth: Absolutely. Many of our clients depend on us to execute VWAP, TWAP and similar algo-dependent execution strategies. Our trading system technology connects to all market centers and supports a full-range of order strategies, including sophisticated option-related orders.

Q. Client “A” often requires step-out trades, average trade price reporting, and often, their trades need to be allocated and reported to more than one custodian. Does WallachBeth accommodate this type of reporting?
Beth: We use a very sophisticated technology platform that blends front-end DMA, EMS, and OMS with a full range of back-office modules. This enables us to seamlessly accommodate just about any type of the most demanding customer requirements, from “best ex metrics” to Commission Sharing Agreements, corporate actions and a full menu of regulatory reports.

Q. What type of research or market commentary does WallachBeth provide?
Wallach:When we formed the firm in 2008, our mandate was focused on filling a considerable Industry void by providing conflict-free trading market insight and integrity-rich best execution services for both institutional fund managers and sell-side liquidity providers. Since that time, our platform has grown exponentially and we’ve established a significant presence within multiple product areas.That said, and as our business has evolved, and as the industry at-large continues to be increasingly aware of enhanced fiduciary standards, we heard loud and clear from clients that even with today’s more proactive regulatory landscape, there is a dearth of un-conflicted, granular equity research available to institutional investors.
Our complementing best execution services with a product that delivers objective, unqualified and highly-exhaustive analysis specific to public companies within the Healthcare vertical is not only consistent with our mandate to be a niche provider of in-demand, yet under-served markets, it is an ideal complement to our providing true best execution

Q. When comparing institutional brokers, what makes WallachBeth unique?
Beth: Our culture and our approach to executing orders is much different than any other firm we know of. We have a team-based, customer-service model; our clients have a relationship with our firm, and are not dependent on a particular ‘covering broker.’
When you look at our team member bios’, you’ll find real trading market veterans with unparalleled experience and product knowledge.
In “former lives,” we were trading floor specialists at major stock and option exchanges, OTC market-makers, open-outcry trading pit brokers, upstairs proprietary fund managers, and traders that ran risk arb and facilitation desks at Tier 1 banks. Several of us were also instrumental in developing trading system technologies that are now used throughout the Industry. You simply won’t find that combination or caliber of professional at a typical “broker shop.”

Q. Aside from transaction costs, every buy-side manager is focused on internal infrastructure and operating costs. From the perspective of a buy-side client, how does WallachBeth improve a customer’s “operating efficiency”?
Beth: More than a few of our customers view us as a turnkey, but otherwise captive trading department. We provide more than 3 dozen expert traders, an Olympic-size liquidity pool, all of the ‘bells and whistles” with respect to trading and back office technology, and all without our customer(s) having to incur 1 penny of overhead insofar as office space, equipment, salaries, benefits or bonus.
Wallach: Let’s not forget the “Alpha” element, which is the real benchmark for operating efficiency. By virtue of continuously getting better price executions than what you might have received from a different firm, what might seem like a few pennies better “here and there” can actually make a real difference to overall operating efficiencies for any active manager with more than $10 million AUM. For those with more than $50 mil-$100mil AUM, the savings can, in theory, equate to six, if not seven figures annually.

Q. No doubt the depth and experience of the WallachBeth team is compelling, is there anything else that sets you apart?
Wallach: Anybody that knows us, or anybody that’s observed our trading floor knows that every customer order, however small, however big, or however complex, is treated as if it were our own order, for our own account.
It might sound like a cliché to some, but we truly believe that our revenue is derived from commissions that we earn, and that our profit is the trust that we’ve created.

Additional information about WallachBeth Capital can be found via their website: www.wallachbeth.com

The post For this Best-In-Class BrokerDealer, Its About Best Execution appeared first on BrokerDealer Blog.

Mischler is the securities industry’s only federally-certified BD and maintains a significant footprint across both primary debt and equities capital markets where the firm serves as a underwriter, manager, co-manager and/or selling group member for corporate issuers bringing new debt or equities to the investment marketplace. The firm is also one of few in the industry that operates a 24/6 “high touch + high tech” trading desk that facilitates agency-only, direct market access and best execution for institutional clients transacting in US domestic markets and 100+ international equities markets. The firm’s website is located at www.mischlerfinancial.com

The post Best-In-Class Minority BrokerDealer Profile: Mischler Financial Group appeared first on BrokerDealer Blog.

Global Bank Trading Veteran Appointed to Senior Role for 24/6 Agency-Only Platform

Immediate News Release

Stamford, CT July 14, 2014—Mischler Financial Group (“MFG”), the securities industry’s oldest minority investment bank/institutional brokerage owned and operated by service-disabled veterans announced that Eric Michalisin, a close on 20-year sell-side industry veteran and a recognized specialist in international equities execution has joined the firm’s agency-only trading desk. Mr. Michalisin has been appointed, Director, International Equities Sales/Trading. Michalisin will be based in the firm’s Stamford, CT office where he will work directly with Managing Director Rob Livio, who oversees the firm’s 24/6 international equities sales/trading platform.

During the 3 years immediately prior to joining Mischler, Mr. Michalisin was Director, International Equities for RBS Securities. During the 7 years prior, he was a senior member of the international equities desk for JP Morgan Chase. Mr. Michalisin began his sell-side career in 1996 as a Far East equities sales/trading specialist for Robert Fleming, Inc and remained with predecessor firm Jardine Fleming Securities throughout 2001.

Noted Joe Digiammo, Mischler’s global head of equities, “Eric’s major firm background, coupled with his unique insight to local market trading, as well as best execution for US-listed ADRs provides our institutional clients with yet another highly-experienced touch-point for those seeking to navigate global equities markets on a 24/6 basis.”

About Mischler Financial Group

Established in 1994, Mischler Financial Group, Inc. (“Mischler”) is the oldest and largest FINRA member firm certified as a Service Disabled Veterans Business Enterprise (SDVBE). Headquartered in Newport Beach, California with regional offices in Stamford, CT, Boston, MA, Chicago, IL and Detroit, MI,the firm serves leading institutional fund managers, corporate treasurers, public plan sponsors, endowments and foundations by providing agency-only execution within the global equities and fixed income markets; new issue underwriting and syndication within the US Equity and Debt capital markets; and asset management for liquid and alternative investment strategies. The firm’s website is located at www.mischlerfinancial.com

For the full news release, please visit the Mischler Financial Group website via this link.

The post International Equities Execution Expert Enlists With BrokerDealer Industry’s Oldest Firm Owned-Operated By Service-Disabled Veterans appeared first on BrokerDealer Blog.

From: Gerald Lam <gerald.lam@iextrading.com>
Date: July 9, 2014 at 6:26:32 AM PDT
To: brokerdealer.com@gmail.com
Subject: Contact email from Gerald Lam

I work at IEX, managing media & communications. I read your blog post on us from Monday, July 7 with concern.

Unfortunately, Bradley Hope’s article was misleading. And some of his inaccuracies have bled onto your piece.

For one thing, the “scheme” as you put it, is nothing new. We’ve offered it since the day we launched: October 25th, 2013.

Secondly, your second paragraph is wrong. Broker-dealer orders would not jump to the top of the order book over orders submitted by buy-side investors. Every buy-side investor (retail included) must be represented by a broker-dealer at IEX. There are no broker-dealer orders competing with non-broker-dealer orders here because every order at IEX is submitted by a broker-dealer.

Who does get “jumped”? Orders from other broker-dealers who are not providing both buyer and seller for a particular order at a particular price.

At the same time, investors (i.e. retail, mutual funds) who are represented by the internalizing broker-deal stand to benefit when they’re represented by the internalizing broker-dealer…their orders receive priority on the order book!

The bigger picture here is liquidity fragmentation — namely it’s detrimental impact to the investor experience. Our feature Broker Priority was designed to encourage brokers to internalize in once central, neutral (i.e. not owned by broker-dealers) venue.

I hope this sheds light on where the WSJ article got it wrong. I’m happy to talk through any of these issues.

I’d be grateful if you could address these clarifications in your blog.

Thank you,
gerald

The post Electronic Exchange Venue IEX’s Corporate Communication Exec Speaks Out re: BrokerDealer.com Blog Post appeared first on BrokerDealer Blog.

Bowing to increasing pressure from regulators, law makers and law enforcement officials, Finra, the securities industry “watchdog” has launched its own probe into how retail brokers route customer orders to exchanges, according to recent reporting by the Wall Street Journal’s Scott Patterson.  In particular, through the use of “sweep letters” targeting various broker-dealers, Finra is purportedly focused on whether rebates associated with schemes that brokers receive when directing their orders to specific venues is a violation of conflict of interest rules, given that customers presume they are receiving best price execution when in fact, they often do not.

MarketsMuse, the securities industry blog that has long reported about payment-for-order-flow and the unsavory practice in which customer orders are “sold” by custodians and prime brokers to “preferenced liquidity providers,” who then trade against those customers and profit from price aberrations between multiple exchange venues and dark pools, takes pride in pioneering the coverage of this topic.

Now that main stream media journalists are beginning to “get it”,  a growing number of those following this story hope that WSJ’s Patterson and other journalists will shine light on the even more unsavory practice in which these same brokers imposing egregious fees on customers who wish to “step out” aka “trade away” and direct their orders to agency-only execution firms, whose role as agent is to objectively canvass the assortment of marketplaces and market-makers in order to secure truly better price executions for their institutional and investment advisory clients.

In a further sign that the current market structure could be cracking, one that has morphed away from a model based on centralization and transparency to disjointed fragmentation [a shift that has ironically been continuously supported Finra-sponsored government lobbies on behalf of that "regulatory authority's" senior constituents], Jeffrey Sprecher, the CEO of IntercontinentalExchange and owner of the New York Stock Exchange  appeared before a U.S. Senate hearing yesterday and called for the end of the now scrutinized fee and rebate system known as “maker-taker.” In what would seem like a walk-back given the NYSE’s own rebate scheme for brokerdealers as a means to attract order flow to that venue, Sprecher stated “Maker-Taker adds to the complexity and the appearance of conflicts of interest.”

The post Will BrokerDealers Get Busted For Promoting Maker-Taker Rebate Schemes? Finra Joins Investigation of Payment-For-Order Flow appeared first on BrokerDealer Blog.