Author: Tony Scianna, deputy head of strategy, SunGard
While we may sometimes consider 2011 to be the year of change for the financial system, the reality is we all work in an industry that is constantly growing, evolving, and changing.
Just look at exchange-traded derivatives. Back in 2001, exchange-traded derivatives volumes were only a fifth of what they are today. Ten years later, an average of 500 ETD contracts are executed every second. And with more and more OTC contracts moving onto exchanges, this number is only rising.
With all this growth, firms need fast, reliable solutions to help them seize new opportunities and keep up with the pace of change. Watch the brief video below (about 40 seconds), which illustrates this topic. How are you responding as these numbers continue to grow? How are you capitalizing on change in exchange-traded derivatives?
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Read what our capital markets experts have to say about derivatives
Dodd-Frank with its many nascent requirements was, of course, the subject of many conversations at FIA Expo. One question that many people discussed was, “What is the biggest challenge?” From my perspective, the most pressing issue today is that the industry needs to be ready to comply with new regulations that are not fully developed yet. Right now it is about preparing to respond. As I say in the video, the “biggest challenge is understanding the challenges themselves.”
When it comes to OTC derivatives in particular, we also talked about the push to increase transparency. As I say in the interview, regulators will require transparency into what’s being traded, how it’s being traded, how it’s being priced, how it’s being processed, exposures, and positions… Are you ready for this?
Watch the video above and tell me your thoughts here in the comments section. How would you have answered the questions? What do you think is “the biggest challenge” as we head into 2011?
Charles Henry Choel, head of trading and client connectivity at SunGard’s global trading business, explains how decreasing revenues and increasing connectivity costs are forcing brokers to evaluate and change their business models, and describes how technology can facilitate this change.
Author: Tony Scianna, executive vice president, SunGard’s brokerage & clearance business
During a recent trip to snowy London, I was fortunate to finally meet Finextra’s Liz Lumley in person. As the multimedia and special projects editor, Liz conducted a brief video interview with me that is now live on the Finextra site.
In the video, you will see us discuss several topics that I believe are only going to become a bigger conversation as we move into 2011. This includes the move toward central counterparty clearing of OTC derivatives; the imperative for centralized, holistic, real-time data aggregation; and on-demand, standardized reporting. I may sound like a broken record, but when it comes to the new financial regulatory landscape, we are still just beginning to learn what the regulators have in mind for the industry in the coming months and years.
Click the video below to watch (it will take you to Finextra’s website) and then join the conversation that Liz and I have started. Here on this blog, I’d encourage you to comment on a few relevant questions: What are your thoughts regarding the move to central clearing of OTC derivatives? Do you agree with Liz that the notion of a centralized, holistic, real-time view of your data and risk may be “mythical?” This time next year, how will this conversation sound different?
Index Futures and Equity Swaps (also known as CFDs) are products that give similar exposure to ETFs. While ETFs are not yet as widely used as the other two products, around a third of the larger firms are using them today with a significant increase in adoption over the last two years. Equity swaps can be used for purposes of hedging protection, access, “equitisation” and leverage; that most ETFs are useful only for access and “equitisation” may be limiting their adoption. However, in the US, ETFs are traded at fine spreads and can enable a better appreciation of transaction costs which may be attractive to asset managers.
Watch the video to listen to the full session on the growth potential for ETFs in Asia.
In Japan, by 2008, the majority of trading was already through electronic channels. There is also a trend, within that flow, for more algorithmic execution and less ‘point-and-click’ DMA. In Hong Kong around 28% of institutional flow was electronic with two-thirds of it DMA. However, this data is a more than a year and we would expect to find a greater share for algorithmic solutions today. Singapore, Korea and Taiwan show similar figures and trends: around 25% being electronic and a slow trend within that flow for more algorithmic trading at the expense of DMA.
Watch the video to listen to the full session on the rise of Asia as a Global Trading Destination.