LME looking to improve liquidity

Interested in trading metals? The LME launched a month-long consultation on proposals designed to broaden access to its electronic trading platform. 

According to LME the proposals are crucial to  maximize liquidity and participation. CEO Garry Jones believes that opening up access to trading on LMEselect is beneficial to everyone  active on all LME's venues. 

More flexible application criteria for LME membership may lead to some prospective members benefiting from exemptions from the UK Financial Conduct Authority (FCA).

The effort is an important step in  LME’s liquidity roadmap.

Fix security group established

FIX is the standard messaging protocol used by trading platforms, banks and brokers to communicate trade information. Traditionally the FIX protocol only offers very basic security options. In the past the opinion of the FIX organisation has been that security is not part of the core expertise of the FIX organization. The FIX organisation did provide some help and guidelines.

Now a working group has been formed to research the need and possibility for hardening the technology used for transactions around the world.  Because the threat of financial institutions being breached is very real, its a topic worth following.

Tullet Prebon launches matching engine for alternative investments

Tullet Prebon is one of the largest interdealer broker worldwide. It has now launched a matching engine for alternative investments called TP-AIME. The enigine will also serve as an auction facility for secondary investments in hedge funds, private equity and real estate funds.

The matching engine is the first of its kind and Tullet Prebon believes it will increase transparency and simplify transactions in a relatively opaque market.

Users of the plaform will be 'LP's' (Limited Partners) such as the funds to buy or sell illiquid interests and 'GP's' (General Partners) such as private equity firms looking to run auction events.

Read the full press release here

The Economist Special on Fintech

If you ever wondered what all the Fintech fuzz is about and how it may or may not affect your business, read the special written by the Economist.

It gives a very clear overview of what Fintech is general is and how it can gradually bite bits and pieces away from the traditional industry untill there is not much left.

There is not much protecting the financial industry. Regulation is basically the only hurdle most fintech companies have to cross. Other than that, everything seems to fall in their favor:

• There is not a whole lot of love for the financial industry (putting it mildy)
• Millenials will be the new big spenders and tech is engrained in their system
• With no legacy systems, fintech can operate more smoothly and efficiently
• Venture Capital has money to burn and not afraid to take risk

Read the full article here

How tech startups will become major competitors to HFT trading

It used to be relatively easy for the financial industry to attract the smartest people in the workforce. High salaries, big bonusses and the aura of succes when you'd be working for a major investment bank on Wall Street or the City. Prop trading firms were the first companies to offer more than just a desk and a big paycheck to keep the traders happy. In-house chair massages, play rooms with a bar and football tables, luxurious company outings, design offices, name it and they had it. The mantra was, work hard, play harder.

Tech companies took a page from that playbook, combining a good environment to work in, then work your butt off and reap the benefits from a sky high valuation of the stocks everyone was given. 

The financial industry has rapidly lost its appeal. The outside world identifies the industry with greed, and overpayed risk takers gambling away money and screwing the economy. It will take years (if ever) before the image of the industry will be restored. Tight regulation also does not add to the appeal as it curbs opportunities.

So, the best and the brightest are increasingly looking for opportunities outside the industry and for those with a quant background, Silicon Valley is the way to go. 

Quants, the people that lifted this industry from a gut instinct trading community to a data mining technology driven trading bot are now more popular than ever in Silicon Valley. After all, it is all about data science and optimizing the data. Wheter it be Google, Uber, Amazon, or Goldman, it is all about making sense of the data that drives business.

Working in 'Silicon Valley' is the new sexy. Hard work, long hours, fun offices, chair masages, and huge financial opportunities much like working for an HFT firm. But, witout the negative stigma. And, if trading does not pan out, the experience in working for a tech company can easily be applied anywhere else in the Valley.

In this article, the author signals this trend and foresees that tech companies will not just be the drain of good work force but also become the major competitor to the the industry as they will have the technology, the data and now also the knowledge.

Tradetech Paris

Last week the wise men of the financial world gathered in Paris to discuss the future of the equity markets in the Tradetech conference. A very good blog was written by Tim Cave summarizing the key takeways from the conference. So, for all that were not there, catch up by reading this article.

Is Bitcoin the Myspace of currency?

Being first to market, is not all what it's cracked up to be. Yahoo search was out there way before Google, Myspace explored senseless blabber way before Facebook and Blackberry was making phones smart before other made them even smarter and more functional.

 Found an interesting slideshow from a tech angel investor underlining this point:

First mover disadvantage from Eric Tachibana

In that perspective it is interesting to look at Bitcoin. Hyped, feared, misunderstood and abused but all in all, a potential game changer. 

Question though is, will it change the game and become  the world's new currency, or will it simply pave the way for a model that is better. David Mazieres, a Stanford professor definetely seems to think so. He has developed a new digital currency that relies less on 'mining', is more secure and processes the transactions faster. Read the full article (also a link to the white paper) here .

Why bankers should be scared of fintech startups!→

Paul Dowling from Dreamscape wrote an interesting blog providing some food for thought on the different ways fintech is changing banking. The full story is available here.

Is the arms race ending as HFT firms merge technologies?

Last month KCG Holdings (the Knight/Getco combination) announced a joint venture with World Class Wireless, a technology company closely related to Jump Trading, to pool their array of microwave towers worldwide and jointly operate them.

Microwave towers are used by HFT firms to be faster than fiberoptic networks to connect them to the various exchanges.

According to the article in Traders Magazine, it signals a shift in the way HFT firms operate and compete. Over the years, these firms were involved in a technology race to be the fasted firm out there. Huge efforts and huge costs were made. Now  the end of this race appears in sight and the costs have come under scrutiny. 

According to the magazine it is a sign of a maturing market. Perhaps the local (and more modest) Dutch players can take a page from this scenario and see where they can save costs by combining their technologies. Click here for the full article.

Time-stamps

Bloomberg published an article on synchronizing the exchange clocks. Not a big deal you might think but then you're wrong. A lot of infrastructure is worthless without having an accurate idea of when something was traded. 

ESMA is taking this a step further: they want to see nanosecond accuracy on time stamps. You can read the article here.

EDIT: Interesting post from some professionals on time recording. What the ESMA is looking for, is extremely difficult to deliver outside of a lab setting. Read their blog post here

Hibernia Project Express advancing steadily.

The new submarine cable between the US and the UK is progressing steadily and should be available summer 2015. This will reduce latency to the US. You can get updates on the progress via: http://go.hibernianetworks.com/project-express