Momtchil Pojarliev
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Some Like It Hedged

BNP Asset Management's Pojarliev discusses a variety of options to address foreign currency exposures. Although there is no single best-practice solution for addressing foreign currency exposures, institutional investors have three main choices, he says.

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April 1, 2011

Come Together

By Michael Scotti

In this issue, you'll notice there is more coverage of international markets than usual. Without question, the Deutsche Boerse's deal to purchase NYSE Euronext has certainly pushed us in this direction. I'm confident the knowledge our staff has gained from covering the complex U.S. market will translate into insightful reporting of foreign markets, which should benefit our readers.

Michael Scotti

This month you'll find a piece on our neighbor, Canada, which is weighing regulations on dark pools in equities. It seems as much as Canada likes its neighbors to the south, it doesn't like our dark pools. The debate surrounds establishing a minimum trade size of 5,000 shares, which could really hamper the growth of dark pools there. Canadian regulators are concerned that too much trading in dark pools could hurt price discovery. In the meantime, U.S. brokerage firms are waiting to see what happens before opening dark pools into Canada.

You'll also learn that MiFID II was under attack at the recent TradeTech USA conference. The MiFID panel revealed that brokerage could be an endangered species-or at the very least, less profitable-if some of the proposals go though.

Two topics getting a great deal of attention these days are the possibility of a trade-at rule and obligations for high-frequency traders. Both come from the "flash crash" advisory committee from the CFTC and the SEC and are covered in our Rules and Regs section. If a trade-at rule were to be approved, it would require brokers to price improve the best bid or offer, rather than simply matching it. This would effectively make trading in the lit markets even more popular-about one-third of trading is executed off board today. Of course the U.S. exchanges are of the same opinion as the Canadian regulators, regarding dark pools hindering price discovery.

Whether their position is one of self interest or not is debatable. Regardless, traders still need an execution management system, or EMS, to access the market. This month's cover story describes the convergence of EMSs. More and more, they are becoming commoditized in that they are all multi-asset, multi-region, multi-broker and also offer analytics, like measuring trading costs. as these systems become more commoditized, the 15 system operators are doing their best to differentiate themselves by adding new features. The EMS is command central for any trader. I hope you find this story of interest. Enjoy the issue.


Michael Scotti

Editorial Director


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