WASHINGTON Regulatory and compliance concerns, among other causes, will lead 60% of asset management firms to increase their technology budgets this year, compared with 50% in 2006, according to results of a survey co-sponsored by the Investment Adviser Association, a non-profit trade association of SEC-registered investment firms, and SEI.
Regulatory and compliance were cited as a factor for increased spending by 84% of respondents. The online survey polled 31 firms with assets under management ranging from less than $100 million to more than $40 billion.
TowerGroup: Nasdaq to benefit from interoperability with LSE
NEEDHAM, Mass. TowerGroup sees a possible operational tie-up between Nasdaq and the London Stock Exchange following Nasdaqs failed February bid for its British peer. In a report titled Interoperability: a Route to Salvation for Nasdaq and the LSE, Bob McDowall, TowerGroup senior analyst for Europe, said setting up bilateral operational ties would enable members of each exchange to access services of the other.
Mr. McDowall noted that the LSE announced a similar agreement with the Tokyo Stock Exchange on Friday, including schemes to encourage member firms to access each others markets, with the eventual aim of providing a round-the-clock trading environment.
Nasdaq must wait another year before it can submit a new bid for the LSE unless a rival offer is made. Nasdaq may find it difficult to sell its 29.16% stake in the LSE, a stock that is not very liquid, he said.
I suggest that Nasdaq may be in a delicate situation over an extensive period of time. Moreover, Nasdaq is precluded from working in concert with the hedge funds, whose significant minority shareholding may well determine the destiny of the LSE, Mr. McDowall noted. But interoperability offers distinct business and technical benefits as a mechanism for consolidation of the exchanges.
ICE electronic energy exchange looks at global clearing
NEW YORK The Intercontinental Exchange, the electronic energy market based in Atlanta, is considering a unique global clearing solution that would result in significant clearing cost savings for investors, according to analyst Richard Repetto at investment bank Sandler ONeill.
In a research note, Mr. Repetto commented on a recent meeting with ICE senior executives, including CEO Jeffrey Sprecher, who said the energy market is looking for a more innovative, global clearing solution.
Although the executives did not provide details, Mr. Repetto said: We expect that ICE could be looking to create a global solution that links energy clearing in Europe, the U.S. and Asia, providing capital and margin benefits to the end user.
ICE in January acquired the New York Board of Trade, which has a clearing house that could help support the plan.
Mr. Repetto also raised his earnings-per-share estimates for ICE to $3.52 from $3.29 in 2007 and to $5.53 from $5.04 for 2008, based on higher expected growth in over-the-counter commissions and higher NYBOT electronic volumes.
Lehman, Fidelity Brokerage link alternative trading systems
Lehman Brothers and Fidelity Brokerage linked their respective alternative trading systems to give clients greater scope to cross trades discreetly, without having to trade through public exchanges, said Lehman spokeswoman Tasha Pelio. Combining the liquidity of Fidelitys CrossStream system and Lehmans Liquidity Center Cross system will help investors execute large trades with minimal market impact and information leakage, according to a news release from the two companies.
Bill Baxter, senior vice president and head of equity for Fidelity Capital Markets Services, said in an interview that the two systems with Lehmans primarily institutional client base and Fidelitys base, which includes a sizable chunk of retail clients form a nice fit strategically, improving the prospects of both to executive fast trades at a good price. The firms could eventually link up with other brokers that complement what we are offering, Mr. Baxter said.
Proposed CME-CBOT merger to have global ramifications
CHICAGO The Chicago Mercantile Exchanges proposed merger with the Chicago Board of Trade will help the new derivatives group better compete against foreign rivals, according to a news release from the CME.
The CME-CBOT merger increases competition in the global derivatives marketplace and better positions the U.S. to compete against rapidly growing international exchanges, dealers and platforms in the over-the-counter markets and national securities exchanges that are continuing to enter U.S. futures markets, the release. said.
The release was in response to a statement by the Futures Industry Association issued last week cautioning that the CME-CBOT merger would substantially lessen competition among U.S. futures exchanges, and raise even higher the barriers to entry for new competitors.
The FIA statement was made at the request of industry participants and differed from comments made by FIA President John Damgard, who said consolidation usually leads to greater efficiencies when the merger was announced in October.