Academic Research Takes Center Stage at IEX

https://www.tradersmagazine.com/departments/algos/academic-research-takes-center-stage-at-iex/

Elaine Wah – “After opening the call for papers in early August, we received nearly 60 submissions — addressing a wide range of modern market structure topics. We ultimately selected eight papers, some of which focus on the most important issues being debated today, others on those which will likely be discussed in years to come. For those who were not able to attend, we are providing brief summaries of the eight papers in this blog post. Of course, as we cannot do full justice to the papers here, we encourage you to read the papers, which are hosted on the conference website.

Refinitiv Appoints News Industry Veteran as Head of News Performance

http://svdaily.com/refinitiv-appoints-news-industry-veteran-as-head-of-news-performance/

BUSINESS WIRE – “New role created in response to increased demand for trusted news in turbulent geopolitical environment.” … “Refinitiv has appointed Richard Mably as Head of News Performance to enhance the value of Refinitiv’s extensive news coverage to help power and advance the financial community.” … ” Refinitiv has invested heavily to expand news coverage on the Refinitiv Data Platform in response to demands from customers for market moving insight across the globe. Refinitiv now carries news from over 10,000 sources up from 7,000 thousand sources two years ago.”

Blockchain for the Buy Side

https://tabbforum.com/opinions/blockchain-for-the-buy-side/

Monica Summerville TABB Group – “The areas of significant benefits in using blockchain-based solutions were overwhelmingly cited as improved clearing and settlement as well as increased operational efficiency. The areas in which respondents said blockchain would have a significant impact over the next five years were:

  • Fees and costs.
  • Compliance and regulation.
  • Data management.”

Mutual fund giant Vanguard has partnered with Nasdaq Ventures-backed blockchain startup Symbiont to develop a trading platform for the $6 trillion currency market, the companies said.

https://www.coindesk.com/vanguard-developing-blockchain-platform-for-6-trillion-forex-market

Revised SEC Rule 606 Shines a Light on Order Routing Disclosures

https://tabbforum.com/opinions/revised-sec-rule-606-shines-a-light-on-order-routing-disclosures/

Ivy Schmerken FlexTrade Systems – “Currently, an OMS has the primary level information, and gets the last market where the order was executed, including whether it added or removed liquidity, and it can calculate execution costs based on known fees, explained Chu. “But, if those algo providers routed the order to another venue or exchange, and that gets routed out further, we don’t have that secondary or third-level or fourth-level of information today,” said Chu. “There’s no structure to get that information today,” he said.

Gathering the information on these downstream orders has been a challenge, especially if brokers utilize more than one OMS or have an EMS, said Chu.

“If our clients use us solely for their trading, we have all the data in the OMS, so we would provide the data over to the 606 [data] vendor,” said Chu. “When some clients use another OMS or EMS, we have no visibility.” “

Due Diligence 2.O: How Vendor Risk Assessment Will Evolve

https://www.finextra.com/blogposting/18200/due-diligence-2o-how-vendor-risk-assessment-will-evolve

Alex Golbin IHS Markit – “Due diligence transformed … Redesigning due diligence with control objectives makes the process more logical and the outcomes more applicable to assessing and managing third-party risk. … Notably, the process is more efficient for financial institutions and vendors alike, time to market is faster for firms making risk-based decisions, and firms can have much more confidence that their assessment and monitoring procedures produce actionable insight. … All of these combine to improve the overall risk posture of the industry. … It will be a journey, but the faster we start, the better off we will be.”

SIX’s Bid to Acquire BME will Ultimately Prevail, Creating a New Pan-European Exchange

https://tabbforum.com/opinions/sixs-bid-to-acquire-bme-will-ultimately-prevail-creating-a-new-pan-european-exchange/

David Tabaka – Burton-Taylor International Consulting “A combination of the two exchange operators would reach Pro Forma 2019 revenues totaling $1.2 billion, with the largest revenue impact in the Trading, Clearing & Settlement segment, increasing SIX’s existing revenues by more than 35% as it brings equity, fixed income, and derivatives trading revenue to the combined entity. The deal would also further bolster SIX’s information services efforts that include data sold by SIX’s Securities & Exchanges unit as well as data, indices and other services from SIX’s Financial Information unit. The acquisition would give SIX a new data footprint in the EU, and significantly expand its ability to offer Spanish datasets and index products.”

Routing 201: Some of the Choices an Algo Makes in the Life of an Order

https://www.nasdaq.com/articles/routing-201%3A-some-of-the-choices-an-algo-makes-in-the-life-of-an-order-2019-11-14

Routing 101: Identifying the Cost of Routing Decisions

https://www.nasdaq.com/articles/routing-101-identifying-cost-routing-decisions-2018-12-14

 

AI-Washing: Is It Machine Learning … Or Worse?

https://tabbforum.com/opinions/ai-washing-is-it-machine-learning-or-worse/

Dr. Bimal Roy Bhanu AiXPRT – “In terms of regulatory compliance in financial services – for example, automating the KYC processes for AML and CTF – the utopia is an AI solution system that harnesses machine learning and natural language algorithms. The AI engine should not be static; rather, it should be trainable to understand any regulation regardless of geography. Also, once the system has learned a regulation, it should be simple – using a straightforward text input interface – to teach the engine to understand any differences or changes in regulation. It might take a person weeks to understand and be trained for changing regulations, whereas the AI solution can do it in a matter of hours.

Given that it can take months to manually complete compliance assurance processes, the business case for embracing the automated efficiencies, cost savings and analytics delivered by AI compliance solutions is undeniable. Such platforms are available and are infinitely superior to the illusory masquerade of the AI-washing brigade.”