The industry demands quality, impartial and detailed analysis of market trends.
GreySpark’s response is
Capital Markets Intelligence
– a research and strategy offering which delivers research reports on current industry topics. GreySpark’s innovative approach is based on
with key decision-makers across the financial industry,
in delivering actual business and technology solutions to financial institutions and rigorous
quantitative and qualitative analysis
executed by a specialist team.
A new piece of research from GreySpark Partners examines the state of fixed income electronic trading for bonds, CDS and IRS. The report analyses how the traditional roles of investment banks and trading venues for these products are changing. These changes are being driven by a combination of macroeconomic forces and incoming capital markets regulations, bringing to an end the practice of debt warehousing by market-making dealers.
The report is one of four reports GreySpark are set to publish in 2013 that build on the success of the Trends in E-Commerce and Electronic Trading annual report.
The third report in a three part GreySpark series on low-latency technology looks at messaging middleware, in a vendor review that concludes that the pursuit of nanosecond trading speeds is well underway. Seven vendors are comparatively analysed across functionality, performance, resilience, scalability and maintainability. Current trends in the low-latency messaging middleware space are explored. They orient on the expansion of available network protocols, the growing use of hardware appliances, emerging industry message standards and unified messaging on a single platform.
How Appropriate Risk Management Practices Can Offset HFT Risks
In part two of the GreySpark research on High-Frequency Trading High-Frequency Trading: The Good, the Bad and the Ugly – risk controls for HFT are highlighted as essential elements of e-trading. High-frequency trading can increase liquidity, reduce volatility and enhance price discovery and price improvement in global capital markets. HFT firms and venues where HFT is present are failing to safeguard their operations if they do not correctly implement the necessary risk management measures.
Defining HFT Activity and Its Regulatory Landscape
Part one of the GreySpark research on High Frequency Trading – High Frequency Trading: The Fast and the Furious – explores how, despite regulatory efforts to curb the trend, HFT and low latency trading continue to grow in popularity. The financial incentives and drives for efficiency in markets support the use of HFT enabled by developments in low latency technology. Meanwhile, new financial markets regulations could assist in making the trading environment safer rather than hinder the natural development of trading practices, which is a topic addressed in this report.
Buyside portfolio managers are faced with the challenge of balancing the conflicting requirements of investments, objective matching, asset allocations and balancing risk against performance. These requirements can be addressed by employing an automated Portfolio Management System (PMS) that navigates the complex landscape, supporting decision-making processes and implementing these decisions.
This is a third report in a three part series. Click here to read more.
After the success of the 2012 Trends in e-Commerce and Electronic Trading report, GreySpark Partners is continuing and expanding its series of reports on e-commerce and e-trading. The 2013 edition of this report will cover in four parts fixed income, FX and equities e-trading and e-commerce. Last year, a survey of over 100 industry participants enabled us to provide evidence-based advice to the capital markets community on the best approaches to e-commerce. To get a fresh view of the market every year, we are conducting a survey this year of buyside and sellside institutions across all asset classes.
Click here to access the survey.
High Frequency and Algorithmic Trading, over the past 30 years, have grown from being the latest fad to hit global markets into a significant part of daily activity in electronic markets around the world. And while critics say High-Frequency Trading has contributed to a number of recent hair-raising flash crashes, hedge funds and banks are increasingly looking to HFT as a driver for liquidity in an increasingly complex world of interconnected asset classes.
The fundamental driver for the growing popularity of HFT systems among hedge funds and banks is a market environment that incentivises the provision of liquidity as the financial products across a number of asset classes become more complex. Advances in the speed and technical complexity of HFT systems designed to find arbitrage opportunities are daunting to many market observers. As a result, the exact nature of HFT and how it differs from specialised algorithmic trading or general electronic trading creates misunderstandings when negative market events occur, caricaturing public perception of HFT systems.
Our survey explored the use of colocation services and low latency infrastructure components in e-Trading
This survey coincides with GreySpark’s latency series that includes Low Latency: Faster than Light , Low Latency in Asia-Pacific: an Infrastructure View and the forthcoming Low Latency Middleware Review. It explores the relationship between the use of colocation services, low latency technologies and low latency requirements through an evaluation of the following:
• Colocation services used across asset classes and regions
• Desired latency figures
• Low latency technology used across switches, network bandwidth, firewalls, hardware, network cards, messaging and monitoring
Review of Buyside OMS and EMS is the second report in the portfolio, order and execution management systems series.
Across the Buyside OMS and EMS are needed to improve efficiencies in the trading process. For the buyside trading process performance is one of drivers of profitability. This paper sets out responses to client demands for more efficient pricing and how best to achieve this via OMSs and EMSs by providing an impartial review of Buyside OMS and EMS from the most popular vendors. The degree of sophistication of process automation is determined by its importance to the business operating model. This results in offerings that vary in terms of comprehensiveness and specialisation which is examined by the report.
This is a second report in a three part series. Click here to read more.
This analysis explores the current order management and execution management system landscape across the brokerage industry.
Equity and listed derivatives trading, in line with all other flow businesses, is dominated by the need for greater efficiency; the emphasis is on speed, scalability, execution quality and minimised cost per ticket. The overarching trend is towards automation of trading activities and ancillary functions such as netting, reporting and connectivity with other systems within the trading chain. Active execution management controls when, where and how an order is executed, and enables analysis for future improvements.
Portfolio, Order and Execution Management Systems – a three part series by GreySpark explores the technology landscape surrounding order and execution management systems for both the Buyside and the Sellside, and portfolio management systems for the Buyside. The three reports offer, in total, a comparative analysis of 40 vendor solutions.
The purchase of the complete series of three reports will be rewarded with a complimentary copy of GreySpark Index: OMS Vendor Benchmarking 2012, additionally you can contact us to see if you qualify for a free copy.
Swap Execution Facilities (SEFs) are emerging from the Dodd-Frank Act, this research forecasts how the market structure for swaps trading might develop and presents how the emerging SEFs will evolve by asset class. Under Dodd-Frank legislation, the Commodities Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) are responsible for OTC derivatives, demanding trading of swaps on exchanges or SEFs.
While this regulation is set to improve market transparency, both the Buyside and Sellside will need to ensure connectivity is maintained or new lines are established, in order to retain their access to liquidity, ultimately retaining profitably during this transition. Both the Buyside and Sellside need to determine which SEFs will provide the capabilities they need in order to continue to execute swap transactions after Dodd-Frank. Our report provides the guidance needed to make these assessments with an in-depth analysis of 12 leading SEFs.
Asian markets are undergoing a paradigm shift as they mature, grow and react to the redistribution of global wealth. Markets in the US and Europe have been undergoing rapid change over the last few years with volumes rising, spreads tightening, and significant growth in high frequency and algorithmic trading, together with widespread regulatory change. Some of these changes are spreading to Asian markets with the changing financial landscape presenting a number of challenges. From a technology infrastructure perspective the demand will be on supporting changing business requirements.
‘e’ relates to e-commerce and electronic trading. e-Trading refers to trading through electronic platforms including direct connectivity and Application Programming Interfaces (APIs), Multi Dealer Platforms (MDPs) and Single Dealer Platforms (SDPs). ‘e’ is emerging from a market that had traditionally been voice based. Across asset classes and types of organisation, this transition takes different paths. The Buyside and Sellside have distinctive motivators and prerogatives when pursuing ‘e’.
Break ahead of the competition by jumping to the next generation of market data and trading infrastructure
Having responsibilities in a global financial institution, your priorities are likely to concern how to deal with trading technology innovation, the future of existing legacy market data infrastructures, shrinking budgets as well as the need for speed, service availability and increased performance. These are indeed big challenges but as recognized market leaders, we can help you deal with those challenges by leveraging our knowledge.
Sellside order and execution management systems for equities and listed derivatives trading, in line with all other flow businesses, is dominated by the need for greater efficiency; the emphasis is on speed, scalability, execution quality and minimised cost per ticket. Therefore the overarching principle is one of automation of the trading activities and ancillary functions such as netting, reporting and connectivity with other systems within the trading chain. Active execution management controls when, where and how the order is executed, as well as enabling analysis for future improvements.
The biggest challenge for securing budget for IT infrastructure investment is to build a compelling business case – this paper explains how to build one by showing, quantitatively, what the costs and risks of not investing will be so that a clear cost-benefit analysis underpins the request for budget. The paper also discusses reducing infrastructure costs by better leveraging service, utility and virtualisation models in step with current trends toward cloud computing and datacentre consolidation.
GreySpark Partners’ research practice, Capital Markets Intelligence, has launched a new subscription based membership model, via annual corporate membership. Gold membership offers clients the opportunity for continued engagement with up to date Capital Markets insights, developed by a team of experienced consultants across our Technology, Business and Management Practices.
The corporate membership subscription provides full access to all GreySpark research content including comprehensive industry insight reports and articles on industry trends, best practices, regulations and technology trends. You are provided with unrestricted distribution of the downloadable research papers within your firm (for external distribution, please contact your GreySpark account manager).
Topics covered span three main domains
1. Risk and Trading
2. Market structure and regulations
Over the past 15 years (since the majority of securities exchanges became electronic), speed has become the weapon of choice for major financial institutions.
Five years ago, in the run up to the first major financial crisis of the century, significant marketing and media hype surrounded low, and now ultra-low latency. The industry has grown wiser and more mature on these topics, yet a range of misconceptions remain about what latency really means. Client testimonials and ‘latency busting’ projects across all asset classes are the basis through which this paper dispels such misconceptions, revealing a landscape of organisational latency requirements. It defines a clear methodology for measuring and accounting for latency, as well as reviewing the quality of existing latency tools, whilst evaluating and assessing the comparative effectiveness of latency reduction strategies.
Regulatory changes in the EU and US require OTC derivatives to pass through a clearing house, requiring organisational and technological changes (a précis of the findings).
Regulatory developments in the EU and US will have a significant impact on the OTC derivative environment. Key changes will make central clearing and transparency mandatory to the OTC market along with capital requirement adjustments, as part of a global move to reduce systemic risk. This report illustrates a buyside and sellside perspective of OTC derivative clearing, offering an inside view on the effect of regulatory changes on trading and operations. Key observations are made of operational areas that will be affected by the move to clearing houses, the expected growth in trades being centrally cleared, and the future of the OTC derivative trading environment.
This GreySpark report determines that best execution generates distinctive expectations, benefits and delivery methods across buyside and sellside players, and technology providers (a précis of the findings).
The best execution requirement serves clients interest in an equitable trading environment, mitigating the advantage of sellside market information. Highlighting buyside concerns with best price and sellside interest in liquidity and low latency, this report establishes that technology providers bridge these matters through execution management and benchmarking solutions. Such technology is continuously advancing offering new solutions, accompanied by an increased service orientation of providers. Further to this we explore responses to regulatory calls for best execution as APAC begins to fall in line with EU and US policies.
MiFID II should not adopt a universal approach for addressing faults in market segments, but should be more product-specific in its method (a précis of the findings).
A new study by Best Execution and GreySpark Partners shows that the buyside are embracing electronic trading but the sellside needs to adopt a much more holistic approach to win business (a précis of the findings).
E-commerce no longer just applies to the trading end of the spectrum but needs to be across the entire investment life cycle if banks want to maintain their edge. The biggest challenge for the sellside will be to switch from a product and asset class centric approach to a client focus in order to deliver the best platforms across functions and divisions.