Brokerage

Competition among broker-dealers offering low-latency high frequency trading services continues to ratchet up, as Morgan Stanley has released an updated and faster version of its sponsored-access risk checking software.

Knight Capital Group, which recently expanded its global program trading effort, is eyeing an expansion into the capital commitment game and moving in the direction of the blind-risk business.

Teacher unions violently oppose merit pay, and so the schools have evolved into egalitarian paradises where no one need fear discrimination based on their lack of teaching ability. Similarly, at most of the world's exchanges, no attempt is made to evaluate or incentivize based on the quality of order flow.

Scott Harrison joins Liquidnet as global head of product and will be responsible for overseeing and expanding the company's product offerings. Based in New York, he will report directly to Liquidnet chief executive and founder Seth Merrin. Prior to joining Liquidnet, Harrison was the chief executive of agency brokerage UNX.

According to buyside traders surveyed, the most important market structure or regulatory issue they face is high-frequency trading. Nearly half the traders interviewed for a 2010 industry survey felt HFTs were a problem, up from 29 percent the prior year. The biggest concern, according to the traders, was that the marketplace had become an "uneven playing field" and the speed advantage of HFTs worked to their disadvantage.

Blue Capital Group, a market maker in index options and futures, shut its doors last week. The firm is the latest in a long string of options market makers to close since the advent of penny trading.

Gaming was a hot topic at this year's TradeTech USA conference. Brokers were under the gun to defend their order handling and explain how they were protecting their customers' orders from opportunistic high-frequency traders. And, for the most part, that's what they did.

Trading in options on exchange-traded funds is soaring. Based on data provided by the Options Clearing Corp., volume in ETF options is ripping this year, outpacing that of rival index products. Market volatility and good liquidity play a large role.

Several topics stand out in this month's issue. First is the big drop in trading volume. The anemic numbers in the first quarter took everyone by surprise. Given that the first quarter is usually a robust period, industry execs were concerned. In this month's feature, "Where's the Flow?" you can read what happened to institutional flows and what might jump-start trading.

Equities trading volume in the first quarter disappointed many industry pros. However, they see several bright spots that could juice volumes the rest of the year. First, the bad news. On March 28, just 5.973 billion shares traded. It was the slowest day in the markets this year. It also wrapped up a quarter that saw a 7 percent drop in volume last year.