Wall Street Operations

New FinanciaL Regulations

2010-06-26T17:07:22Z

The bill has been reconciled and next week both houses will vote on it. Initial reviews are mixed but the impact will be felt across the industry. I am looking forward to reading more but am somewhat skeptical about regulations to wind-down a too big to fail firm. Isn’t that what the bankruptcy courts are for? And how will Regulators gain and keep current on the existing and new products?

Certification for Securities Operations - Part Two

2010-05-30T16:40:26Z

FINRA recently released an update on their joint, SEC and SIFNA, effort towards an certification of securities operations professionals. The May 26th announcement is encouraging and will hopefully provide an educational path for current and future industry managerial staff. I am somewhat disappointed by remarks I’ve heard from industry professionals critical of how this certification might be used to place blame on operations staff. I believe that it may very well avoid scandals and other mis-deeds.

I look forward to learning more about the efforts towards certification.

Pending financial regulations

2010-05-25T00:16:37Z

Now that the Senate has passed their version the next step is reconciliation which is the process of forming the bill into one cohesive bill. The process will be worth observing as their are substantial differences. Hopefully our government will be sensitive to the fact this they should not inhabit the financial markets. This is a perfect time to see how well they understand the markets and the role they play in the economy. After two + years of demonizing banks, brokers and hedge funds and demonizing derivatives it will be interesting to observe the process.

Certification for Securities Operations

2010-05-30T16:29:17Z

As an industry trainer I am very interested in the recent announcement that SEC, FINRA and SIFMA are exploring licensing securities operations professionals. This has been attempted in the past by a number of organizations but none have resulted in a ground-swell of interest. I believe that this is due to a lack of clarity of the fundamental objectives of the certification, inconsistent training tracts and most critical; no firm commitment by the industry.

I look forward to observing the process and will opine here as the process continues.

Effective Information Technology in securities operations

2010-05-04T17:55:56Z

Over the past few weeks I’ve spoken to friends, clients and prospective clients throughout the financial services industry and I am still amazed on how many firms are still struggling with product-centric processing systems also known as “silos” that add more complexity in an already onerous industry. Another issue that further complicates this situation is that the more “global” US firms become is the struggle to make one or more of these product-centric systems support multiple currencies.

This situation is more prevalent in sell-side firms,m as buy-side firms are smaller and more focused on cost-containment or avoidance. There are a number of solutions to this situation but I don’t seem many firms addressing this. Why not?

Senate Hearings or US v Goldman Sach

2010-04-28T15:41:03Z

I was in class for most of Tuesday and missed most of the proceeding, but I was able to watch during the Lloyd Blankfein testimony.

As a professional in the financial services I was disappointed at how convoluted the process was and how posturing takes place to make themselves look better at the expense of the other or at least minimizes the downside.

disappointed that these proceeding are more often used for purposes other than determining the “what, where and why” of the topic. In fact they should be a learning opportunity for the citizens of how the system works, what if anything went wrong and what should be done to remedy the situation.

Fixed Income Trading

2010-03-29T22:44:06Z

It seems that many of the established exchanges, across the global markets, have or plan to, list bonds. Is the motivation to offer retail investors another venue away from the Dealer market? Or is it an add-on that will contribute to a more complete listed exchange offering? Overall this is a positive step by the exchanges and can add competition to the marketplace. My down-side concern is that where will the liquidity come from? I’m sure the exchanges have been wrestling with that as well.

Corporate Action Events

2010-03-17T15:01:53Z

Yesterday I conducted a training program for a leading training company on Processing Corporate Action Events. The participants represented buy-side, sell-side and industry firms and everyone had the same objectives;

1. Identify the most accurate and complete source of event data

2. Best practices guidelines for the event processing to minimize risk

In 2010 I am surprised, and a bit frustrated, by the lack of real progress in this area. I expect that this reflects the complexities associated with this of function. Beginning with the Corporation that creates the event to the methods on to the process of gathering the event details, to advising the investor of the event and sometimes waiting for the investor’s decision as to yes or no to participating in the event.

Finally after all of this then the event has to be processed.This function continues to be a cause of considerable risk and concern all behalf of investors and securities firms alike as well as firms providing support during the event life cycle.

When will we make real progress in this critical function?`

Derivatives coming into the 21st Century

2010-04-19T21:53:08Z

I see that along with the move to greater regulatory oversight, creating a depository or warehouse and exchange listings many markets are looking at placing limits on some contracts. Specifically governments and market regulators are seeking to address “speculative” swaps, In light of some of the challenges that EU members are facing, I expect that there is some concern about investors betting against a smooth recovery. Again we come back to the question of “did derivatives contribute, or even cause, the financial crisis or did they reflect the crisis.

Time will tell.

Corporate Actions

2010-03-05T22:09:56Z

While preparing for a training class on processing corporate action events I did some research on the current status of mandated disclosure of pending corporate events that impacts investors. This is critical issue for firms in the securities industry which includes brokers and banks as well a investors.

There are few if any requirements for official disclosure of events, such as mergers, acquisitions or other deals that impact existing security investments. In this, the day of the Internet and mass communications, the distribution, collection and processing of these events are cumbersome, manual and often require reprocessing making it a less than ideal experience for investors and the firms that support investors.

When will this 1960- era processing nightmare gain the attention of regulators?