Week InReview | HFT dream team. Asset managers knock FSOC SIFI tags. IAIS commits to ambitious capital standards. Bats not just in Kansas anymore. IOSCO's final code of conduct for credit rating companies.
Friday, March 27, 2015
High-frequency trading competitors join forces
Form microwave dream team
(Mar. 24) A new joint venture called New Line Networks LLC -- which will pool two companies' microwave infrastructure to try and create a dominant, global network, may mean that HFTs will buy microwave services directly from a competitor for the first time. KCG Holdings Inc., a brokerage with roots in high-frequency trading, and World Class Wireless LLC will unite their networks of microwave towers, connecting major market centers around the globe. WCW, which is owned by ECW Wireless, has the same address and senior managers as high-frequency trader Jump Trading LLC.
Asset managers knock FSOC SIFI tags
Advocate for SEC as regulatory top dog
(Mar. 26) In many of the nearly 50 letters sent to the Financial Stability Oversight Council, asset managers and trade groups say FSOC should defer to the SEC on regulating asset managers, move away from tagging individual firms, and that federal regulators should be less concerned with tagging specific firms as "systemically important" and focus more on particular products and activities with the industry. FSOC will consider comment letters as part of its overall review of the asset management industry.
IAIS commits to ambitious capital standards timeline
Final standards by end of 2016  for adoption by 4Q18
(Mar. 25) Extensive changes have occurred within the International Association of Insurance Supervisors structure in recent months, resulting in a less transparent process and few technical certainties as to how the international capital standards will evolve. At the same time, it remains clear that the IAIS is committed to finalizing these standards for internationally active insurance groups by December 2016, with adoption by its members in the fourth quarter of 2018.
You're not just in Kansas anymore
Bats plans European currency expansion with London hub
(Mar. 24) Bats Global Markets Inc., which made its name in stock trading, is accelerating an expansion into currencies by opening a European hub. The company's newly purchased Hotspot FX division will later this year start running its trading software in a data center in Slough, England, complementing its existing U.S. operations. Physically locating its technology there will make connecting to the market cheaper and easier for traders who've already set up around London, the global center of FX transactions. Exchanges have sought to diversify the way they make money as European rules sparked greater competition, and in turn reduced trading fees. Bats, based in Lenexa, Kansas, operates Europe's biggest pan-European stock market and has the second-biggest share of U.S. equity trading.
IOSCO issues final code of conduct for credit rating companies
Includes 'significant revisions' of the current code
(Mar. 24) The International Organization of Securities Commissions issued its final 'Code of Conduct Fundamentals for Credit Ratings Agencies code of conduct fundamentals for credit rating companies. Secretary General for IOSCO, David Wright, when asked by a reporter how we can trust the supervision of markets, their assessment, made by rating agencies that have systematically failed in their predicts, said "In general what we have is quite a sort of oligopolies: credit agencies, auditors.... Competition is a good thing and the more we can encourage it, the better. Now if you take the credit rating agencies, for sure their performance on rating securitized products were disgraced, and they know that. And measures have been put in place, both by legislators and the firms themselves to avoid these sort of things happening again."
Transparency. Inclusiveness. Consensus.