This blog collects thought leadership from SunGard’s market structure experts, looking at how transparency, efficiency and networks are shaping the future of this critical area of financial services. For more of SunGard’s views, see http://blogs.sungard.com/ten/
Market Structures
Contributor: Daniel Parker
This blog post was originally published on TabbFORUM. New rules have recently come into effect that have substantively changed the customer collateral asset protections relevant to central clearing. Specifically, the Dodd-Frank Act prescribed that the CFTC adopt rules that provide for enhanced protections of cleared swaps customer margin collateral. The mandate is known as “legal segregation with operational commingling,” or LSOC. LSOC provides a fundamental change in how futures commission merchants (FCMs), as members of central clearing counterparties (CCPs), must manage customer margin collateral. As a result of these rules, there was an initial flurry of activity to automate compliant processes. For instance, the first phase simply provided a bridge whereby FCMs reported excess collateral without reaching individual-customer-level granularity.... read more
Contributor: Laurence Wormald
The post-crisis business environment poses new challenges for risk management. Buy-side firms are faced with a risk challenge trio – the emerging regulatory regimes and the interconnectedness of financial markets in the form of liquidity risk and counterparty risk. Recently we conducted our second annual global risk management survey with the Professional Risk Managers’ International Association (PRMIA). Compared to last year’s survey, the focus on risk regulation has increased and it is now top of risk managers’ priority list. ... read more
Contributor: Marcus Cree
This blog post originally appeared on TabbFORUM. Risk can and should be seen as the core of a financial institution. The management of risk has become an industry in itself, led in turn by regulatory drivers, technological advancement, trading floor developments and quantitative research. In this blur of evolution, it is easy to lose sight of exactly what is required of the risk department, and it is worth taking a step back to refocus on what is important.... read more
Anthony Becker is a Product Manager for SunGard’s Valdi Trading Compliance solution. Anthony has been involved in US equities and compliance for over 10 years. He has most recently been with the Transaction Auditing Group (TAG) where he headed up the Client Services Department for 5 years. Prior to that role, he was with CIBC, where he held roles with trade support and as an assistant trader on the US equities desk. Anthony received his MBA with a dual concentration in Finance and Management at Fordham University. Anthony received a Bachelor’s of Arts degree in Political Science at Boston University and currently holds the Series 7, 55 and 63 FINRA licenses.
Contributor: Anthony Becker
With the advent of this new Limit Up-Limit Down rule, the onus is on broker-dealers to have a system in place that will not allow executions to occur outside the set price bands nor quote outside the price bands, and will monitor for executions that might occur during a halt after a limit state has been enacted for more than 15 seconds. Broker-dealers will also need to have access to this market data to truly understand the price band movements and how this may impact their resting limit orders. In the end, it feels like this rule is a blanket oversight that fails to tackle the real issue around extraordinary market volatility, the rise of high frequency trading and rogue algorithms. When it comes to Limit Up-Limit Down, when will the regulators realize their limits?... read more
Contributor: Laurence Wormald
Separating the alpha from the beta - savvy investors know they need to separate the alpha, or investment gains made from decisions made by manager, from the beta, or returns attributable to the market. Traditionally this has meant seeing how individual funds or managers do compared with an index or other baseline. But these simple measurements have led to underestimating the effects of beta and giving too much credit to active managers.... read more
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