Buy-side warns brokers on SOR rebates

Almost half of buy-side traders say their primary consideration when using brokers’ smart order routers (SORs) is that orders are routed to support best execution, rather than covering sell-side costs. A total of 47% of respondents to theTRADEnews.com’s June poll indicated that rebates for placing liquidity on trading venues should not skew routing by SORs at the expense of best execution.

“These results are very consistent with feedback we have received from our institutional clients,” said Michael Seigne, head of European algorithmic trading, Goldman Sachs. “Clients want to be sure that their brokers are prioritising client order execution quality over and above the brokers’ own cost when optimising smart order routers.”

Concept hires to grow Chicago sales and trading desk

US brokerage Concept Capital has expanded its institutional sales and trading team in the mid-west region of the country.

The firm has hired a five-member institutional sales team from Jesup & Lamont, a Chicago-based full-service brokerage and investment banking firm, to broaden its institutional sales and trading business in equities. The new hires are the latest in a series of senior appointments Concept Capital has made in the last six months.

Buy-side warns brokers on SOR rebates

Almost half of buy-side traders say their primary consideration when using brokers’ smart order routers (SORs) is that orders are routed to support best execution, rather than covering sell-side costs. A total of 47% of respondents to theTRADEnews.com’s June poll indicated that rebates for placing liquidity on trading venues should not skew routing by SORs at the expense of best execution.

“These results are very consistent with feedback we have received from our institutional clients,” said Michael Seigne, head of European algorithmic trading, Goldman Sachs. “Clients want to be sure that their brokers are prioritising client order execution quality over and above the brokers’ own cost when optimising smart order routers.”

Concept hires to grow Chicago sales and trading desk

US brokerage Concept Capital has expanded its institutional sales and trading team in the mid-west region of the country.

The firm has hired a five-member institutional sales team from Jesup & Lamont, a Chicago-based full-service brokerage and investment banking firm, to broaden its institutional sales and trading business in equities. The new hires are the latest in a series of senior appointments Concept Capital has made in the last six months.

Liquidnet Europe’s traded value up 30% in Q2

Buy-side dark crossing network Liquidnet’s total principal traded in Europe in Q2 2009 was £13.38 billion, a 30% increase over Q1 and a 21% year-on-year rise. The figure equates to an average daily principal traded of £219.3 million.

“We are delighted with these figures. They clearly show that European institutional investors have a healthy and increasing appetite for block-sized execution and execution quality,” said John Barker, managing director of Liquidnet Europe, in a statement.

Liquidnet Europe’s announcement closely follows fellow European dark pool NYFIX Euro Millennium’s news that its average daily matched value had increased 70% to €82 million in May, from nearly €48 million in December 2008.

Pipeline appoints senior European salesperson

Pipeline Financial Group, an operator of equity block trading venues in the US and Europe, has appointed Richard Gray as senior salesperson for its European operations as it moves ahead with its launch schedule in the region.

“Richard will be a key part of our team as we enter the latest phase of our launch roll-out and his track record in the trading environment will be a valuable addition to our European team,” commented Marcus Hooper, executive director of Pipeline Financial in Europe.

Gray has over 25 years experience in the capital markets industry, most recently at broker-dealer Millgate Capital, where he was responsible for the development and integration of technology based systems into order flow.

Investit releases new buy-side benchmarking tool

Investment management consultancy Investit has released a new integrated benchmarking tool to allow asset management firms to compare their processes with their peers and industry best practice.

“The industry has become far more competitive over the last two years with different players coming onto the market. It is more important than ever for firms to implement a best practice framework,” said Peter Ellis, managing director, Invesit, in a statement. “The challenge is how to do this in the current environment when the value of assets is being reduced and IT budgets are under pressure.”

Penson offers clients sponsored access to Nasdaq MTF

Clearing, settlement and execution broker Penson Worldwide has become the first sponsoring participant in pan-European multilateral trading facility (MTF) Nasdaq OMX Europe’s sponsored access programme.

The programme allows clients of sponsoring participants to connect directly to Nasdaq OMX Europe without being members of the MTF. Penson clients will gain access to the platform through Penson Financial Services, the firm’s UK subsidiary. Clients can connect to Nasdaq OMX Europe through proximity hosting or remote access.

Penson plans to offer sponsored access to Nasdaq OMX Europe to its clearing and execution services correspondents.

LSE to drop maker rebate in favour of "balanced" fee

The London Stock Exchange (LSE) will introduce a new pricing schedule for trading on its UK order books from 1 September, abolishing the rebate for providing liquidity it introduced on the same date last year.

The LSE said the new charges will balance the charges applicable to each side of a transaction and substantially lower the thresholds for volume discounts, meaning that a greater number of firms should benefit from incentives.

Under the new schedule, the LSE will charge 0.45 basis points per trade for the first £2.5 billion of value traded, 0.40 bps for the next £2.5 billion, 0.30 bps for the next £5 billion and 0.20bps for all subsequent value traded. The charge for SETS Internaliser trades, which do not incur post-trade costs, is 0.10 bps.

Glitch delays NYSE close after new system goes live

A “communications issue” affecting trading and market data dissemination forced the New York Stock Exchange (NYSE) and the American Stock Exchange to delay their close yesterday.

The two exchanges, both owned by the NYSE Euronext group, closed at 16.15 instead of the usual time of 16.00 to allow the execution of orders affected by the glitch. The group said in a market notice that because of the timing of the problem, quotes were indicated as closing quotes even though the market was still open.

Frankfurt bourse to move more floor trading to Xetra

German exchange group Deutsche Börse is planning to migrate the remainder of the trading done on the floor of the Frankfurt Stock Exchange to its Xetra electronic trading system from the existing XONTRO system.

It is also planning to phase out ‘lead brokers’ – market makers that operate on the exchange trading floor – and replace them with ‘specialists’. The specialists are market makers whose trading activities are governed by a private agreement with Deustche Börse rather than public law.

The exchange has already shifted mutual funds and structured products onto a specialist system on Xetra, but is now planning to transfer bond and illiquid stock trading.

EC unveils plans to strengthen OTC derivatives market

The European Commission (EC) has released its long-awaited guidelines on reducing risk in Europe’s over-the-counter (OTC) derivatives markets.

The commission has launched a public consultation on the guidelines, which closes on 31 August, and will present the results in a public hearing on 25 September. It will then publish conclusions before the end of its current mandate on 31 October and present initiatives, including legislative proposals where justified, before the end of the year.

In the document released today, the commission outlines four ‘tools’ to ensure that OTC derivatives do not harm financial stability. The first is standardisation of derivatives, which the EC contends would enhance operational efficiency and reduce operational risks through broader take-up of standard contracts, electronic trading affirmation and confirmation, central storage, automation of payments and collateral management processes.