NEWS
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fund. “If I buy $5m worth of a bond and need to figure out how to hedge it, rounding to the nearest million may not get me close enough to my hedge, but $100,000 is more precise,” he explained. Kevin Wolf, chief business and product development officer at Eris, said the reduction also prepares the exchange for the future. “In two years from now, we’re confident the average size of a trade will go down,” he said, noting that the trend may be partially driven by smaller end users such as hedge funds and asset managers that are not currently active in OTC swaps, but are frequent users of interest rate futures. “Trade sizes may also fall as end users break up large trades into smaller pieces as has been observed in other asset classes that have migrated to electronic trading,” he said, adding Eris is not pushing for a move in either direction. “We don’t have a view on how it should be but we want to provide the market with flexibility to trade the way it wants.” With the June 10 deadline looming, Wolf said having a contract size simi-
lar to the size of alternative products will also help end users by making it easier to analyze their trades from an economic perspective. O’Brien noted Eaton Vance, which falls into the phase two group for compliance, has been prepared for the clearing mandate for a while, having cleared its first trades in September and clearing contracts that aren’t required for Monday’s deadline. EXCHANGES & ATSs
Instinet looks to incorporate visualization tech
Instinet is looking at incorporating visualization technology in the future, according to comments from Jonathan Kellner, regional head of the Americas, during a presentation at a TABBForum event in New York last week. Kellner told the audience the activity falls in line with trends inside and outside the financial markets related to big data and the need to interpret
it. “I think on Wall Street we haven’t called it big data but we’ve been dealing with big data and we will continue to deal with it,” he said. “It’s about… seeing the information quickly and then verifying it and retaining it. Those are the things we are working on ALFRED ESKANDAR CEO of Portware and other firms are working on.” On a separate panel, Alfred Eskandar, CEO of Portware, said the issue for traders is that, with more responsibilities in terms of trades they are managing and other responsibilities, it’s easier to interpret data by looking at a picture rather than looking at just graphs or a heat map. “We’re actually taking blotters and converting them to pictures because it’s quick to trade and eye important information, and essentially the pictures are becoming actionable,” Eskandar added. Kellner noted he expects to see
TECHNOLOGY
Vendors say technology still secondary to people
n spite of the increasing role of technology in trade execution, service providers consider talented staff is still more important than the technology you choose, according to execs who participated in the TABBForum’s “The Fate of US Equities” event last week in New York. “The strength is not the underlying technology, it’s prioritizing the R&D budget... and managing talent to create value for the customer,” said Brennan Carley, global head of Elektron and Enterprise Platform at Thomson Reuters. “If you look at the technology that we’re all dealing with – CPUs, the size of databases and the underlying technology capabilities – frankly there is more there than we know what to do with.” Rishi Nangalia, head of REDI Technologies, Goldman Sachs’ electronic trading software group, agreed. “There is no one framework that will make you successful – it’s the process.”
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Execs from the service providers said that, because of the numerous options available from third parties, firms can take the time to determine and carve out core competencies. “We can take on the tech work, whatever it is from the sellside and buyside, and let them focus their resources on what they have to do,” Nangalia added.