Wednesday, January 9, 2019

Big: Wall St. Moves on Exchange Fees with Members Exchange

In a nod to the past when Exchanges were owned by the members who traded on them, a consortium of Wall St. firms have announced plans for a low cost members exchange to challenge the equity market oligopoly in U.S. equities: 

Named MEMX, the exchange will be controlled by the nine banks, brokerages and high-frequency trading firms funding it, according to a news release.

The founding members are Bank of America Merrill Lynch, Fidelity Investments, Morgan Stanley, UBS, Charles Schwab, TD Ameritrade, Virtu Financial, E*TRADE, and Citadel Securities.

Wall St. has been whingeing over market data fees for some time, of course, a battle most recently (October 2018) highlighted by the SEC’s recent decision to overturn previous fee approvals for NYSE and Nasdaq, and to institute new procedures for how exchanges should file proposals for fee-liable data services.

This will take a while to play out – wouldn’t launch until 2020 at the earliest, and attracting liquidity will be a significant challenge, but this might help put some fees pressure on the 3 firms – ICE, NASD and CBOE – that dominate us equities trading.

Press Round-up

WSJ: Wall Street Firms Plan New Exchange to Challenge NYSE, Nasdaq
Traders: Members Exchange Set to Open But is it Needed?
Bloomberg: Traders Want Their Own Exchange Too
Business Insider: Big Wall Street names are teaming up to launch a stock exchange

- Kevan Huston

Thursday, January 3, 2019

Trade the News: Wall Street goes to war over market data and access

Great post from Trade the News summarizing the market data access and fees battle underway on Wall Street: 
At the heart of the debate are the SIPs – or Securities Information Processor feeds – which are real-time consolidated feeds of trade and quote data, including ‘top of book’ quotes for stocks consisting of each exchange’s best bid price, thus providing key information on the national best bid and offer (NBBO) for NMS stocks.
Investment banks, broker-dealers and trading firms argue that SIP and direct data feeds are grossly overpriced considering how little they allegedly cost to produce and how important they are in terms of regulatory compliance
The exchanges, specifically in this case Cboe’s Concannon, argued that SIP revenue has been flat-to-down over the past decade and that firms have a choice when it comes to purchasing direct data feeds and market access due to increased competition. Concannon took no prisoners when delivering his opening statement to the SEC, highlighting that the debate has led to a battle between Wall Street and the regulated exchanges around profits and economic frets.
Excellent summary of the battle lines and stakes in this all important market data conflict.

Wednesday, December 26, 2018

Thought Leadership Update, December 2018

Two long reads worth checking out, both from Waters (subscription required):

Deep Learning: The Evolution is Here

Advancements in AI have led to new ways for firms to generate alpha and better serve clients. The next great evolution in the space could come in the form of deep learning. WatersTechnology speaks with data scientists at banks, asset managers and vendors to see how firms are experimenting with this form of machine learning, and where challenges still exist

Untapped Potential:The Road to Semantic Heaven

There is a movement underway to establish universal standards and the semantic ontologies that make them sing. As the industry approaches semantic utopia, questions remain about what steps need to be taken to get there and whether all the work will be worth it in the end.