The Magazine for Securities Industry Professionals

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Four of the six charges against former NYSE chairman Richard Grasso have been overturned regarding his $187.5 million compensation package. The final outcome?

Grasso will settle the case
NY State will not pursue the case
Grasso lost his reputation, regardless
Not Spitzer's worst decision but up there

Previous Polls

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Small is Beautiful

Gregory Bresiger
Hedge funds managers using structured products and other exotic strategies have become toxic for small prime brokers. Small primes, sometimes referred to as "mini-primes," might have tallied some business with big hedge funds that had exotic strategies. But these days, that is no longer the case, after the credit crunch and the fall of Bear Stearns. This change in strategy speaks to the severity of the impact that illiquid securities can have on markets.

The Young Guns of Prime

John Hintze and Gregory Bresiger
Pershing and Fidelity, two recent prime brokerage entrants backed by deep-pocketed parent companies, hope securities lending will propel them among the elite primes. Still, these prime brokerage units-launched by financial services giants Fidelity Capital Services and BNY Mellon's Pershing-are competing with long-established, bigger firms like Bear Stearns and Goldman Sachs. "Fidelity, as an agency-only broker, could be an effective prime broker player," says Josh Galper, managing principal with the consultant Vodia Group.

Pershing's Mexican Interdealer Coup

John Hintze
Pershing recently won a mandate to clear for a Mexican interdealer broker after making efforts over the last few years to strengthen that niche clearing service-a win that provides the added benefit of displaying the clearer's cross-border expertise. The clearer announced in December that Enlace Int. S.A., a Mexican interdealer broker specializing in Mexican government bonds, had appointed Pershing as its principal clearing agent. Pershing said the move establishes it as the first provider of clearing-and- settlement services to the Mexican interdealer brokerage market.

Broadridge Brings on New Outsourcing Customers

John Hintze
Broadridge Financial Solutions is gaining traction with its outsourcing solution, signing two new clients over the last several months, including a startup focusing on institutional business. The offering allows clients to continue self-clearing but outsource most back-office tasks.

OneChicago Launches ETF Futures Listings

John Hintze
OneChicago, an electronic exchange specializing in single-stock and other securities futures, began listing in December futures on three major exchange-traded funds (ETFs). It is a move that it hopes will push clearing firms to begin clearing securities futures products. The exchange has faced an uphill battle since it opened its doors in November 2002, mainly because the vast majority of clearing firms have yet to retool their operations to clear the products in securities accounts. Securities futures can be placed in futures accounts as well as securities accounts, such as portfolio margin accounts, where they can be used to achieve significant margin reductions.

OTC Derivatives Volume Posing Problems

Gregory Bresiger
The explosion in over-the-counter derivatives trading could overwhelm the timely processing and settlement procedures of brokerages. That's what a Depository Trust & Clearing Corp. (DTCC) executive recently said in a published report in Hedgeweek.

New Securities Lending Exchange Finds CCP

Gregory Bresiger
Lendex LLC, looking to establish an electronic securities lending exchange, signed an agreement with a small trust company to act as the exchange's central credit counterparty (CCP). Alaska USA Trust Company-one of the smaller trust companies, compared with banks like State Street or Northern Trust-will not bring inventory for lending, but will ensure the credibility of transactions on the exchange and guarantee them. Officials of Alaska USA Trust said their direct links to the industry utility are important to any new securities lending platform.

NSCC Awaits SEC Ruling

John Hintze and Gregory Bresiger
The cost-cutting needs of brokers are clashing with the continuity demands of a utility. That is how the debate is shaping up over a National Securities Clearing Corp. trade-compression plan pending before the Securities and Exchange Commission. Brokerage officials charge the plan is arcane and would hurt them. "This would be a substantial cost for everybody," says Neil Fitzpatrick, head of retail executions at Chicago's Citadel Investment Group, which aggregates high volumes of orders to execute for brokerage customers.

Boosting Securities Lending at Quadriserv

Gregory Bresiger
Former Nasdaq and CIBC World Markets trading executive Bruce Turner was once part of the solution that helped over-the-counter equities become more efficient. Now he hopes to do the same for securities lending. Turner, a rabid Boston Red Sox rooter, likes underdogs who overachieve. His journey has taken him from one of the biggest trading houses, CIBC, to a relatively small securities lender, Quadriserv. He says he likes the challenge of serving a niche business at a small firm.

Passing the Buck: Regulators Say All Introducing Broker-Dealers Must Ensure Reg NMS Compliance

John Hintze
Assume nothing. That’s the approach that clearers and their clients should take as Regulation National Market System rules are in force, according to clearing consultants and regulators. They warn that Reg NMS ignorance will be no defense when Securities and Exchange Commission examiners start looking at the clearers’ books.

Clearer, Clearer on the Wall. Who Has the Fairest Model of them All

Gregory Bresiger
Two competing clearing models are battling for the hearts and minds—and the business—of the institutional clearing client.

Merrill’s Broker-Neutral Play

Gregory Bresiger
With hedge funds using multi-prime broker platforms, Merrill Lynch says its new middle- and back-office management system, Merrill Middle Office Solutions, will provide a broker neutral technology solution.

Self-Clearing in Danger

Gregory Bresiger
It’s more and more difficult for brokerages to self-clear, so the trend toward fewer clearers should continue in the near future. That’s according to two clearing officials, one with a wirehouse and one with a regional, who declined to be quoted by name.

DTCC Offers Prime Brokers New Way to Match

Gregory Bresiger
The explosion of hedge fund trading in government securities and repurchase agreements is leading to greater risks and clearing costs, say officials at the Depository Trust & Clearing Corp., who are offering a new service. Prime Broker Netting, designed for prime brokers and their executing brokers, is a new matching, comparison and clearing service of the DTCC’s Fixed Income Clearing Corp (FICC).

RBC Dain Rauscher Goes After Institutions

Gregory Bresiger
RBC Dain Rauscher’s clearing division hasn’t been a strong player in the institutional market, but officials of the Minneapolis basedbroker say that will change in 2008.