Commentary

John Turney
Traders Magazine Online News

Foreign Exchange Infrastructure: Yesterday, Today and Tomorrow

In this exclusive to Traders Magazine, John Turney, Global Head of Outsourced FX at Northern Trust, discusses the evolution of the fx infrastructure and what is to come.

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June 6, 2006

At Deadline

By Editorial Staff

ISE Eyes Equities

*The International Securities Exchange, which became a force in options as an electronic marketplace, is hoping to do the same in equities. The ISE expects to launch an electronic matching system-MidPoint Match-early in the third quarter with the help of major liquidity providers. Strategic partners include Bear Stearns, Citadel Derivatives Group, Deutsche Bank, Interactive Brokers Group, JPMorgan, Knight Capital Group and Sun Trading. Later this year the exchange will roll out a displayed continuous electronic market.

A new order type aimed at drawing out liquidity is the solicitation of interest (SOI), an executable order for a minimum of 2,000 shares that enables the SOI party to jump ahead of other orders in MidPoint Match, said Thomas Ascher, ISE's chief strategy officer. The exchange plans to offer minimum-size block executions once the crossing system is running.

-Nina Mehta

Liquidnet's Partners

*Liquidnet has revealed its "streaming liquidity partners" for its vaunted H20 product, which allows block orders sitting on the buyside's blotter to get nibbled at by retail-sized pass-through orders.

Bloomberg Tradebook, BNY Brokerage, Instinet, FutureTrade, Miletus Trading, Piper Jaffray, EdgeTrade, UNX and Goldman Sachs Execution & Clearing have all been signed on to provide liquidity. Four of the nine are already hooked up to Liquidnet, according to Jay Biancamano, Director of Corporate Strategy. The other five liquidity providers should be on-line shortly, as Liquidnet is in negotiations to add others, he said. Currently, 77 out of the 329 subscribers are signed up for H20, he said.

-Michael Scotti

Jefferies Reorganizes

*Five offices housing sector traders will become one. Jefferies & Co. is in the process of reorganizing approximately 65 of its sector traders into a single New York location. The move is expected to be complete by the end of the third quarter, according to Scott Jones, the firm's Director of Global Equity Trading.

The consolidation is in response to a move to sector trading last year, and the need to leverage information in a centralized, team-oriented framework, Jones explained.

The first phase of the reorganization recently moved most of the Dallas office's sector traders to Jersey City. The move joins the Dallas OTC tech traders with the listed tech traders in Jersey City, making the various pads interchangeable, Jones said. Sector traders in Stamford will also move to New York.

-Michael Scotti

An NYSE TRF?

*While mounting a campaign to stop Nasdaq/NASD's proposed trade reporting facility, the Big Board was in discussions with the NASD for its own TRF.

That's what a knowledgeable regulatory source, speaking on background, told Traders Magazine. "They (the NYSE) have talked to the NASD recently about their own TRF as have many other exchanges," said a source familiar with the talks.

Nasdaq officials have insisted the TRF would not give them a unique benefit because any exchange could also have a print facility with the NASD (See Washington Watch). NASD, which declined comment, said that the TRF application was expected to have been filed in early May. NYSE declined comment.

-Gregory Bresiger