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

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Vendor Solutions

Chaperoning Liquidity Seekers

Nina Mehta
The problem: a shortage of displayed or available liquidity for institutional traders. The solution? Encourage wary liquidity providers to post large markets by making executions as likely as possible. PDQ Enterprises, a five-year-old technology company founded by a former chief technology officer of the New York Stock Exchange, is setting itself up as a kind of dating service for liquidity providers and takers. The idea is that the shy party-the liquidity provider-can be encouraged to respond to the party seeking liquidity if there's proper chaperoning and sensitive information on both sides is safeguarded. If interest transpires, PDQ, which stands for Procedure Derived Quotes, ships the orders, independently but in tandem, to the desired exchange or ECN for a potential consummation of the trade.

OMS Vendors Regroup

Peter Chapman
NYFIX's sudden decision last year to stop selling order management systems to market makers highlights the difficulties vendors face in supporting this segment of the sellside market. The three vendors that remain acknowledge the challenges, but claim their multi-faceted strategies fit the times.

Neovest’s Do-It-Yourself Algo Revolution

Nina Mehta
It's official. First came the OMS. Then the EMS. Now there's an AMS. Neovest, the builder of a popular execution management system, is incorporating functionality into its platform that lets traders more efficiently manage their use of the 100-plus algorithms on the system. The vendor, a subsidiary of JPMorgan, calls AlgoGenetics, its new software toolkit, an algorithmic management system, or AMS.

OMS Vendors Eye the Buyside

Nina Mehta
In April, sellside order management system vendor Fidessa bought LatentZero, an aggressive purveyor of buyside systems for large asset managers, for $126 million. The acquisition surprised industry watchers. In recent years, London-based Fidessa has forged deep inroads into U.S. broker-dealer territory traditionally dominated by SunGard's Brass OMS, while LatentZero focused on the buyside.

Gentlemen, Start Your Engines

Nina Mehta
The official theme of this year's annual Securities Industry and Financial Markets Association technology show-"Tech Be Nimble! Tech Be Quick!"-was borne out by a tour of the exhibition halls. With speed becoming increasingly critical to trading-related applications, dozens of vendors emphasized their low-latency, high-throughput services for buyside and sellside firms.

Sellside OMSs Get Ready

Nina Mehta
After priming for Regulation NMS for at least a year, sellside order management systems are in the initial stages of enabling their broker-dealer customers to be Reg NMS-compliant and effective in this new era. For brokers, the new era started on July 9. "Reg NMS raises the bar in terms of what brokers expect of their OMS," says Chris Kelley, an executive vice president at Fidessa, a large sellside OMS vendor. "These new functions are critical in the restructured environment." The Securities and Exchange Commission's Reg NMS requires broker-dealers to avoid trading through protected quotes. At the same time, liquidity has fragmented across dozens of trading venues. The quote-protection obligation, coupled with brokers' best-execution duty, has made finding and aggregating liquidity more complex.

ESP's Cost-Saving Service Attracts New Investors

Melanie Wold
Three sellside firms are betting that virtual clearing brokerage Electronic Specialist (ESP) has the key to cutting costs for the buyside with its aggregated trade allocation and settlement service. Credit Suisse, Bear Stearns and Susquehanna International Group have invested an undisclosed amount in ESP, an institutional broker and technology provider. The firm's claim to fame is that it streamlines workflow by offering buyside users a single, aggregated custodial ticket for multiple trades with its central counterparty clearing services.

Trading Spaces When the Lights Go Out

Melanie Wold
Disaster recovery and business continuity planning are essential for financial services firms, partly because they don't want to see any interruptions in their business if the worst should happen, and partly because of demands from regulators. Business continuity plans have been through some stress-testing for terrorist attacks and hurricanes in the past few years; and most large equities firms are now better prepared to deal with similar issues should they happen again. But, as if brokerage firms didn't have enough to worry about, there are two new worries to add to the list

Supercharged Routing Firms Court Rapid Traders

Melanie Wold
Black box traders want-and need-greater bandwidth to execute their high-volume and quant strategies. Traditional voice and Internet protocol telecommunication lines just can't handle the sheer volume they churn into the marketplace. To execute their statistical arbitrage and pairs strategies, these traders need information highways with unlimited space and autobahn-style speed limits if market data, trades, and even clearing and settlement are going to move at lightning speed. As a result, these information aqueducts-or ultra low-latency communications networks-are red hot.

Reg NMS Spawns New Order Management Player

Peter Chapman
The restructuring of the nation's regional stock exchanges spells opportunity for one vendor. Selero, a Denver-based connectivity provider, hopes to take over the role some regionals once played in supplying trading technology to their broker-dealer members. Regionals such as the National, Boston and Chicago stock exchanges once provided their members with order management and trade execution systems, but have since abandoned those platforms as they reinvent themselves under Regulation NMS. Selero hopes to fill that void. Last summer, the vendor