https://tabbforum.com/opinions/sef-trading-stumbles-to-end-the-year/ Colby Jenkins TABB Group - "Taking all of this into account, 2019 was nonetheless an up year for SEF trading (Exhibit 4, below). Compared to total notional volume traded two years ago, notional SEF activity has grown by just under 40%, or roughly $58.15 trillion, since 2017 – primarily driven by the IRD market. With a significant slowdown in IRD SEF trading over the past quarter, though, 2020 is already shaping up to be a year of further departure from the SEF market status-quo."
https://tabbforum.com/opinions/from-too-big-to-fail-to-too-large-to-survive/ Larry Tabb TABB Group - "The trading business is being captured by electronic market makers/liquidity providers, and the short-term risk transfer business is being poached by shorter-term quantitative and specialized hedge funds." ... "If the business isn’t shuttered, it becomes almost impossible to rip out the core processing systems, order management platforms, algorithmic infrastructures, reporting lines and business planning processes to achieve the cost structure and agility needed to succeed. Unfortunately, for most firms, that is what is needed."
https://tabbforum.com/opinions/the-strange-economics-of-exchange-management/ Kurt Dew Northeastern University - "The markets are evolving toward a two trading-space system. The first: exchanges trading SEC-regulated publicly held corporate equity and debt; the second: exchanges trading more generic non-SEC-regulated markets." ... "There is a growing opportunity for a new blockbuster exchange to seize the volume going to generic futures and OTC instruments by a single exchange with spot trading capability. But to be successful, this spot market must be at least as efficient as the existing futures markets, reducing trading costs to a minimum, thereby attracting volume."
https://tabbforum.com/opinions/the-problem-with-algo-wheels/ Michael Mollemans - TABB Group "The problem with algo wheels, however, is that they tend not to account for the risk factors underlying the fat-tail distribution of algo returns, and algo wheel selection processes often turn into a game of guessing the finer points in the algo wheel’s logic. The better the guess, the better the fit to the algo wheel, the better the ranking. All in all, algo wheels need to go beyond gross median cost calculations to include standard deviation risk factors, as well as netting out market and sector betas, or the end result likely will be broker algo rankings that just oscillate between best to worst and then from worst to best along a mean reverting system over time." Click here for other articles on the wheel.
http://www.globenewswire.com/news-release/2019/12/17/1961861/0/en/InfoReach-Includes-Algo-Wheel-with-TMS.html InfoReach TMS Algo Wheel includes: Broker and algo selection backed by machine learning Best execution reporting Improved performance Decision making based on Historical performance with a variety of benchmarks Commission schedules and commitment levels Which broker has received orders in the same instrument TMS’s Algo Wheel is an excellent option for many buy-side teams.
https://www.nasdaq.com/articles/what-is-liquidity-2019-12-12 Phil Mackintosh "There is an entire industry dedicated to collecting and computing trading costs. The data overwhelmingly show that transaction costs are falling, and that U.S. costs are the lowest in the world." Article originally seen by BizTT editor on Tabb
From Beginning to ‘N’: What the History of Regulations from Reg ATS to Form ATS-N Tells Us About the Future of Dark Pools
https://tabbforum.com/opinions/from-beginning-to-n-what-the-history-of-regulations-from-reg-ats-to-form-ats-n-tells-us-about-the-future-of-dark-pools/ Craig Viani Liquidnet - "Based on the intensification of regulatory scrutiny in the past few years, it’s probable that the number of US dark venues will remain stagnant for a period of time. Additionally, with future rule changes such as proposed amendments to Rule 605 requiring greater granular statistical measures of execution quality17, we believe that it’s likely the competitive landscape will remain in a narrow band for the coming years."
Trading Technologies Contracts with SBI Thai Online for Distribution of the TT® Platform from Thailand
https://www.tradingtechnologies.com/news-releases/trading-technologies-contracts-with-sbi-thai-online-for-distribution-of-the-tt-platform-from-thailand/#more-87850 SBI Thai Online’s client base will have access to the TT platform’s full range of professional trading tools, including Autospreader®, ADL, and APIs. “We are thrilled SBI has chosen TT as a solution to extend to their clients. As we expand into what are new markets for TT and exchanges such as TFEX, having the endorsement of local brokers like SBI, who are the experts in their region, is important. It allows us to bring our technologies to a brand new set of customers and extend the reach and interest in the Asian markets as a whole out to our wider international clients,” said Mark Pottle, Regional Executive Sales Director for Trading Technologies in Asia.
https://tabbforum.com/opinions/are-crypto-miners-the-modern-hedgers/ Thomas Chippas ErisX - "Miners, similar to traditional hedgers, are foundational elements of a well-functioning capital, commodity and commercial market. The act of mining is performed by high-powered computers that solve mathematical puzzles to produce digital assets such as bitcoin or Ether. Miners are rewarded with the respected coin and are similar to traditional hedgers in that they are looking to offset the market risk of their production related to price volatility and offsetting counterparties. This is a nearly identical use case to a traditional physical commodities producer that uses futures contracts to lock a price at the present for the future sale of the commodity. The producer foregoes the potential upside if the commodity increases in price beyond the settlement price of the futures contract but is also protected on the downside if the price falls."
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.” "