Customer, deal-maker, CEO: What will Rolet bring to LSE role?

Former Lehman Brothers France CEO Giles Rolet, who will take the helm of the London Stock Exchange from long-serving chief Clara Furse on 20 May, could be the shot in the arm the exchange needs to cope with its current challenges, according to market observers.

Rolet has a strong background in trade execution. Before his eight-year stint at Lehman Brothers (Europe), he held senior equity trading positions at Dresdner Kleinwort Benson, Credit Suisse First Boston and Goldman Sachs. Some feel this experience could help the exchange weather the storm.

“Volumes are down everywhere and all trading venues are competing for a smaller pot,” said Bob McDowall research director for Europe at research and advisory firm TowerGroup. “In this environment, it is all about the basic issues of quality and speed of execution. The appointment shows that the exchange is a little rattled by the inroads that some of the alternative trading venues are making into blue-chip stocks.”

In recent months, the LSE, like other major European exchanges, has been rocked by competition from multilateral trading facilities (MTFs) and dwindling trading volumes and values. The average daily value of trades on the LSE fell 60% £6.2 billion in January 2009 from the record volumes seen in January 2008.

McDowall also expects Rolet to focus on resilience of the LSE’s systems. “The LSE clearly can’t have another outage as they did on 8 September last year. In that sense he is the right man for the times,” he said.

Credit Suisse AES forges derivatives links

Investment bank Credit Suisse’s Advanced Execution Services (AES) division, which supplies algorithms and trading tools to the buy-side, has expanded its derivatives capabilities by joining financial software firm Orc’s ExNet broker connectivity network and launching a joint offering with US options pricing and analytics firm Derivix.

AES’s new link with ExNet, which provides hedge funds, proprietary traders and other advanced traders access to liquidity pools, allows users of Orc’s trading systems to trade futures, options and cash equities using AES algorithms and market access.

“In particular, we have an advanced set of algorithms available in derivatives markets where Orc Software is well known,” said Guy Cirillo, global head of channel sales at Credit Suisse AES. “Now, Orc and Credit Suisse customers can together take advantage of our execution algorithms and market connections.”The joint solution with Derivix will allow the firm’s customers direct access to AES’s options and stock algorithms for use alongside Derivix’s options pricing and analytics. Using FIX connectivity, options traders will be able to access AES from within Derivix’s analytics front-end.

Nasdaq OMX installs low-latency Colombian trading platform

The Bolsa de Valores de Colombia (BVC), Colombia’s domestic stock exchange, has launched a new high-speed cash equities trading system powered by Nasdaq OMX technology.

The new BVC system was introduced on 9 February and offers a high-volume, low-latency platform for market participants in Colombia.

The new engine will enable algorithmic and high-velocity traders to trade on the platform, as well as allowing the introduction of new trading products and services.

“Through our new equities system we are in a great position to grow business at our exchange and thus reach our 2015 goal of 200 new companies and 1.5 million Colombian families investing in our market,” said Juan Pablo Córdoba, president, BVC.

Brokers bidding against themselves in LCH battle

US post-trade processing firm Depository Trust and Clearing Corporation's (DTCC) member-owned structure could complicate its battle to acquire European clearing house LCH.Clearnet.

The DTCC revealed its bid for LCH.Clearnet last October, but earlier this month a consortium of brokers, including inter-dealer broker ICAP, signalled its intention to launch a counter-offer. Many of the firms reportedly involved in the consortium either have significant US subsidiaries that are member-owners of DTCC, or, in the case of US institutions, are members themselves.

In challenging the DTCC for possession of LCH.Clearnet, consortium members are effectively competing with an organisation in which they collectively own a substantial stake.

“We don’t want get into a bidding situation where a firm is bidding against a branch of the same firm,” said a source familiar with the situation.

The brokers reported to be involved in the consortium with ICAP are BNP Paribas, Citi, Deutsche Bank, HSBC, J.P. Morgan, Royal Bank of Scotland, Société Générale and UBS. ICAP is the only firm that has publicly confirmed its participation.

Trading Technologies upgrades derivatives platform

Trading Technologies (TT) has released X_TRADER 7.6, the latest version of its derivatives trading platform. The new version adds features designed to enhance functionality, usability, deployment and user administration.

“In this tough economy, traders are demanding more and more from their trading platforms,” said Harris Brumfield, CEO, TT, in a statement. “This new version of X_TRADER incorporates a number of enhancements and should give our customers an advantage.”

X_TRADER 7.6 improves performance across all major functional areas, including price updates, order handling, contract loading and workspace opening. The new version also benefits from TT’s upcoming PFX price protocol architecture, which is designed to maximise the speed of price delivery, minimise the size of price messages, reduce client interactions with the price server and achieve faster price recovery in network outages.

X_TRADER 7.6 also provides new ways to filter and manipulate the display of market data, price movements and specific trading activity.

Smart Trade liquidity management tool adopts CEP

Smart Trade Technologies has agreed a deal to integrate EsperTech’s complex event processing (CEP) capabilities into its smartTrade liquidity management system (LMS).

The smartTrade LMS is used by buy- and sell-side firms to manage liquidity for best execution, smart routing of orders across multiple asset classes and geographies, and tighter control of order flow for risk management purposes. The system comprises four elements: LiquidityAggregator; LiquidityCrosser; LiquidityOrchestrator, a smart-order router; and LiquidityConnect, which link to multiple execution venues.

EsperTech uses an open-source Java CEP engine that detects and correlates complex situations in real time when user-defined conditions occur among large volume event streams. CEP is used by financial market participants to identify and exploit trading patterns using streams of market data.

Asian investors cut broker relationships, execution fees - Greenwich

Asian institutional investors are prioritising sell-side research and advisory over execution services in volatile markets, while also cutting back their number of sell-side relationships, according a new report from consultancy Greenwich Associates.

The firm’s ‘Asian Equity Investors Study’ revealed that, among the largest trading institutions in Asia, the average number of sell-side relationships fell to 20.5 in 2008, from 24.5 in 2007.

The research also noted that a sharp decline in portfolio values and stock prices had shrunk the pool of institutions’ equity brokerage commission payments. Within these diminished pools, the proportion allocated to research, sales coverage and advisory services jumped 11 percentage points in 2008, to 66%, according to the study. This came at the expense of trading coverage and agency execution, which now accounts for to 26% of total commissions, down from one-third a year ago.

“The reversal of this trend does not mean there is less desire for superior execution, but rather that, in times of unprecedented market turmoil, the need for timely insights and access is even greater and the opportunity cost of not securing them is not something that investors want to risk,” said John Feng, consultant, Greenwich Associates.