https://tabbforum.com/opinions/the-importance-of-research-and-how-you-pay-for-it/ Christopher Tiscornia - Westminster Research Associates, which is owned by Cowen Inc., has always been a strong proponent of allowing the use of client commissions to pay for research, particularly through commission sharing arrangements (CSAs). In the simplest form, trades are executed with a broker-dealer, generating commission credits that are housed in a CSA account with a broker-dealer such as Westminster, a pioneer in the business. These credits can then be used to acquire research from a variety of sources, including independent research boutiques as well as the research departments of larger investment banks in accordance with Section 28(e) of the Securities Exchange Act of 1934. As will be discussed here, we believe it is important that managers continue to have the flexibility to use commissions to acquire research.
https://tabbforum.com/opinions/heres-how-outsourced-and-supplemental-trading-solutions-reduce-operational-risk-and-cost/ Daniel Dispigna - Amid these challenges, one of the standout pain points is the sheer amount of work involved in running operations on the buy side, particularly as it relates to managing relationships with brokers. Liquidity fragmentation means it is now essential for firms to have relationships with a wide variety of brokers globally in order to diversify into new markets, instruments and regions, while also making it possible to participate in hard-to-trade names. But addressing one issue sometimes creates another; building and maintaining lengthy broker lists creates work of its own, from trade settlement to the complexities involved with managing such a wide network of counterparties. And if investors opt to keep their broker lists short, they are effectively limiting their access to invaluable sources of information and liquidity.
https://www.morningbrew.com/emerging-tech/stories/2019/09/03/ltse-wants-tech-startups-stock-exchange Ryan Duffy - LTSE bills itself as a better venue for startup IPOs. ... Emerging tech startups could be interested in the LTSE route because it’s designed to withstand public markets' short-termism and the obsession over quarterly performance. After all, companies focused on advanced technology usually have longer product roadmaps, heavier R&D spending, and the habit of putting off profitability for as long as possible. I like Morning Brew, great fast tech email. If you click the following link to sign up- I'll get stickers. https://link.morningbrew.com/click/17949547.20597/aHR0cHM6Ly93d3cubW9ybmluZ2JyZXcuY29tL2VtZXJnaW5nLXRlY2gvci8_a2lkPWJmYTQ4OWRl/5cbe3a7a24c17c6c936a9d54B26026a06
https://www.thestreet.com/technology/what-is-fintech-14885154 What Is Fintech?Anne Sraders - Fintech is a term used to describe financial technology, an industry encompassing any kind of technology in financial services - from businesses to consumers. Fintech describes any company that provides financial services through software or other technology, and includes anything from mobile payment apps to cryptocurrency. Top 10 Fintech Companies to watch in 2019 https://www.thestreet.com/technology/fintech-companies-14891479 As of 2019, there are 39 VC-backed fintech companies worth $1 billion - with a combined valuation of $147.4 billion, according to CB Insights. The 11 Biggest Fintech Companies In America 2019 https://www.forbes.com/sites/jeffkauflin/2019/02/04/the-10-biggest-fintech-companies-in-america-2019/ Jeff Kauflin U.S. fintechs raised $12.4 billion in funding, or 43% more than 2017, reports CB Insights. That growth outpaced the 30% increase in venture investments across the entire U.S. market. And fintechs will need those dollars—they tend to burn about two to three times as much cash compared with other startups, according to an analysis by Brex, likely due to factors like regulatory hurdles.
https://tabbforum.com/opinions/unintended-consequences-conflicting-regulations-the-sec-and-mifid-ii-requirements/ Douglas Christensen - Investment firms are moving more and more toward a situation in which they will be paying for research from profit and losses (P&L) instead of using client money. This isn’t necessarily due to firms seeing unjust value in using client money, but more likely a reaction to conflicting regulations across regions and requirements. Inconsistent regulations across regions have forced firms to dip into P&L to pay for research services instead of paying out of expenses of the fund. Investment firms, particularly the large and global, cannot be seen as treating clients differently based on their location. These changes have reverberated across the industry and are potentially doing more harm than good.
https://tabbforum.com/opinions/sec-rule-606-endgame-the-guidance-is-out/ Chris Montagnino, Jordan & Jordan - The SEC staff released the long awaited and heavily anticipated guidance on Rule 606 to assist broker-dealers and the industry with implementation of the new disclosure requirements that were issued back in November 2018 and are scheduled to go into effect on Oct. 1, 2019. There are 32 detailed questions and responses available for your reading pleasure on the SEC website, and if the thought of slogging through the minutiae of the requirements appeals to you, have at it (and please get yourself some help). If you prefer a five-minute read with a consolidated synopsis of the most salient aspects of the guidance and potential impact, you’ve clicked on the correct link.
https://tabbforum.com/opinions/meet-crowdfunding-2-0-micro-stock-deals-for-small-fry-investors/ By Foster Winans - Meet crowdfunding 2.0, a sophisticated, regulated, entrepreneurial version of platforms like GoFundMe that facilitate donations for people and projects. Instead of donating to a fund to help a local employer whose business was flooded out, it’s now possible for that employer to sell stock which could become more valuable as the firm recovers.
https://tabbforum.com/opinions/mifid-ii-equities-dark-pools-hit-high-during-summer-slowdown/ Tim Cave, TABB Group- Dark trading reached its highest level under MiFID II in July, accounting for 9.6% of all on-exchange activity. It is dark pools’ largest market share since April 2019, when they accounted for 9.1% of activity. Block specialist Liquidnet enjoyed a particularly strong month, with total daily notional volumes of €454 million, its third-highest total since January 2017. The biggest factor affecting dark volumes in Europe is MiFID II’s dark pool caps, which limit the amount of dark trading in a stock to 4% of total on-exchange volumes on any one dark pool and 8% across all dark venues. Volumes are monitored on a retrospective 12-month basis every month, and those stocks breaching the caps are banned from trading in the dark for the next six months.
https://tabbforum.com/opinions/an-integrated-technology-stack-for-the-sell-side-is-key-to-managing-risk-and-regulations/ Lisa Bravo, Bloomberg LP- By creating a systematic, streamlined workflow that prioritizes intraday risk metrics, it’s possible to solve for some of the biggest sell-side challenges, including tech stack fragmentation and adherence to new requirements. The key lies in integrating all the disparate elements – sifting through analytics in a piecemeal way, for example, wastes time. Integrating the workflow allows traders and salespeople to move much faster and use that efficiency to capitalize on trade ideas.
https://tabbforum.com/opinions/despite-pressure-from-both-sides-of-the-street-oms-ems-connectivity-fees-remain-shrouded-in-secrecy/ Sean Sullivan, LiquidityBook - There is no question that Wall Street is a far more transparent place today than at any point in history. Generally speaking, broker-dealers are well aware of the pricing models employed by the exchanges, investment managers know how and for what their brokerage counterparties charge, and end investors can see exactly what fees they are incurring. For trading in particular, there is now a tremendous amount of data – some of it mandated by regulators, and some driven by market forces – around order routing that only a few years ago would have been nearly impossible to obtain. But even as the industry continues to laudably move forward on this score, one area has remained stubbornly opaque for far too long: the transactional connectivity fees charged by some OMS and EMS vendors.