facebook linkedin twitter
Saturday, March 15, 2025
facebook linkedin twitter

GFXC Updates FX Global Code

By
Anna Lyudvig
-

Trading platforms must clearly disclose how they use data from client transactions, particularly regarding order handling, fees, and post-trade reviews, according to the updated FX Global Code.

In addition, the updates encourage a “hierarchy of settlement methods” and a risk waterfall approach, to address settlement risk, a significant concern due to increasing off-CLS trades.

The Global Foreign Exchange Committee (GFXC) completed its review of the Code on Friday, January 24.

The December 2024 version of the Code, which will supersede the July 2021 version, updates its principles of good practice in the foreign exchange market in two key areas: one focused on enhancing transparency around certain types of execution activity and the utilization of client-generated FX data, and the other on FX Settlement Risk.

Updates have been made to five of the Code’s fifty-five principles to strengthen the Code’s guidance on FX Settlement Risk, as well as to increase transparency around certain types of FX transactions and the use of client-generated data on electronic trading platforms.

Basu Choudhury

“Settlement risk and liquidity remains one of the most pressing challenges in the FX market, and the updated FX Global Code rightly prioritises its mitigation,” said Basu Choudhury, Head of Trade Lifecycle Strategy, OSTTRA.

“We see this as a pivotal moment to ensure market participants not only manage settlement risk but also optimise their FX liquidity comprehensively,” he told Traders Magazine. 

“Only by integrating tools to facilitate full visibility of exposures from point of execution with effective netting protocols and intraday FX payment-versus-payment (PvP) can firms be empowered to navigate future FX settlement challenges with greater confidence and precision,” he added.

As of December 2024, 1,328 entities globally have indicated their adherence to the Code’s principles by signing a Statement of Commitment (SoC). With the publication of the updated Code, the GFXC encourages all market participants to review the amendments and to consider renewing their SoC, taking into account the nature and relevance of the updates to their FX market activities. 

The GFXC has given firms a 12-month period to adjust to these changes, designed to improve transparency, efficiency, and risk mitigation in FX markets.

Alex Knight

Alex Knight, Head of EMEA at Baton Systems, commented: “The updates to the global FX code are a significant step forward in enhancing transparency and reducing risk in FX markets. It is now incumbent upon firms to use the next 12 months to implement the available solutions to facilitate payment-versus-payment (PvP) settlement.” 

“Even where PvP settlements aren’t yet available, most firms still have an opportunity to deploy technology to further de-risk their business through the use of real-time information to track and orchestrate settlements in a controlled manner, and to reduce the volume of business that is settled gross.”

The December 2024 version of the Code will also include new links in its Foreword section that highlight some of the existing GFXC Reports. These reports are intended to facilitate wider awareness and understanding of specific aspects of the FX market and, where relevant, describe how they relate to the Code’s principles. 

While these reports are not part of the Code or the SoC, they contain useful explanatory material and offer insight into the practical implementation of the Code principles.

A summary of the outcomes of the 2024 Code Review highlighting the specific changes to the Code is also being published, along with a document that includes the responses received by the GFXC to the Request for Feedback on the proposals to amend the Code and the DCS.

Alongside the revised Code, the Committee will also publish enhanced Disclosure Cover Sheets (DCS) for Liquidity Providers and Platforms.

In addition, the DCS for Liquidity Providers and Platforms were also extended with the objective to enhance transparency and comparability across providers on the use of FX data. 

The GFXC met virtually on 5-6 December 2024 to endorse the outcomes of the Code Review. The GFXC Chair, Gerardo García, commented: “In terms of the 2024 Code Review, there has been strong GFXC support for the final proposals of the FX Settlement Risk and FX Data Working Groups. The Code amendments clearly address the concerns that Market Participants and LFXCs expressed during the review process and are consistent with the objective of having a more robust and transparent FX market.” 

TECH TUESDAY: Top Trading Trends from 2024

By
Phil Mackintosh
-

By Phil Mackintosh, Nasdaq Chief Economist

Last year, a number of new records were set, and today, we take a look at some of the top trading trends from 2024.

Markets rallied to new all-time highs

As interest rates fell, markets around the world rallied. Last year was a good year for stock investors in many countries, with markets hitting new all-time highs, including in the Japanese market, which had taken more than three decades to recover from highs set in 1990. 

But global markets were also driven by consumer spending and earnings recoveries – which were strongest in companies exposed to spending on artificial intelligence (AI) – as we discussed in our recent macro outlook. That helps to explain the outperformance of the Nasdaq-100® and U.S. large-cap indexes, generally.

Chart 1: Global indexes rallied with U.S. large caps leading  

Global indexes rallied with U.S. large caps leading

ETFs saw record inflows

The U.S. exchange-traded funds (ETF) industry also saw record inflows in 2024, with creations adding to more than $1 trillion for the first time ever. 

That, combined with the positive returns (as noted above), helped propel U.S. ETF assets to end the year with more than $10 trillion in AUM.

Most new ETFs are active funds

ETF inflows were more than double active mutual fund outflows of $450 million. However, assuming that is the same as an active-to-passive investment shift is wrong.

As data shows, the majority of new ETF launches are actively managed portfolios, and inflows into active ETFs are represented 28% of all ETF inflows. 

Chart 2: Active ETFs dominate new listings and received overt 28% of ETF inflows

Active ETFs dominate new listings and received overt 28% of ETF inflows

Not all ETFs hold U.S. stocks

However, you can’t compare this directly with U.S. stock market capitalization (which ended the year at almost $72 trillion). 

That’s because not all U.S. ETFs hold U.S. stocks. In fact, the U.S. ETF AUM includes:

  • Bond ETFs, which add up to $1.8 trillion (or 17.3%).
  • International stocks, which add up to $1.5 trillion (or 14.8%).
  • Commodities and currencies (including Crypto ETFs), which add to $286 billion (or 2.75%).

Chart 3: ETP assets under management continue to trend higher

ETP assets under management continue to trend higher

Looking for the most popular ETFs

It’s also interesting to see what specific ETFs were the most popular in 2024. 

In the table below, we look at ETFs that saw the largest flows and change in share of all ETF trading (the last two columns in Chart 4). We rank by each of those factors, then sort by the combined rank below. It shows that investors:

  • Were diversified, with strong activity in stock, bond and currency ETFs.
  • Bought U.S. large cap, with most of the positive net flows in ETFs related to Nasdaq-100® or S&P 500.
  • Sold bonds, with most of the negative net flows in ETFs related to bonds.
  • Rotated into the new Bitcoin ETFs, making IBIT, one of the newly approved Bitcoin ETFs, the fastest ETF to $50 billion AUM ever.

Chart 4: Top ETFs ranked by trading and flows 

Top ETFs ranked by trading and flows

Volumes jumped again!

Although quarterly volumes didn’t hit the record set during the meme stock craze in 2020, we have seen a consistent rise in volumes (ADV) since the initial jump when Covid started, just after retail investors received Stimulus checks and realized trading was now commission-free.  In Q4 of 2024, market wide ADV averaged more than 13 billion shares per day.

Higher ADV driven by low priced stocks

However, as we see from the data, most of the recent increase in top-line ADV is due to growth in trading of sub-$1 stocks (green bars). In fact, their share of trading ADV has consistently increased since 2017. 

Of course, because these stocks have low prices, they trade a lot more shares than they trade in value. In fact, in Q4 of 2024, sub-$1 stocks made up:

  • 16% of volume (ADV) traded.
  • Just 0.1% of value traded.

Sub-$1 stocks trade differently, too. On average, 60% of their trading occurs off-exchange, and 18% of shares traded “overnight” (from just after market close to right before market open).

Higher-priced stock ADV is falling

Interestingly, trading in stocks with prices above $5 has actually been essentially unchanged. That’s despite the number of high-profile stock splits in recent years in stocks like AMZN, GOOG and NVDA. In fact, we estimate 2024 forward splits have added 479 million shares a day in additional volumes during the year – meaning higher priced stocks activity has actually been falling.

Chart 5: Increased trading in low priced symbols pushing market wide volumes higher  

Increased trading in low priced symbols pushing market wide volumes higher

Off-exchange trading hit new records (over 50%)!

Fragmentation has been increasing for decades. In 2008, the top three exchanges represented nearly 69% of all equity volume traded. 

Over the same time, off-exchange market share has consistently gained. Clearly, U.S. market economics favor fragmentation, and lean toward off-exchange trading.  In 2024, off exchange trading was more than 50% of all ADV on a total of 37 days.

Ironically, it wasn’t that long ago, that an academic posited that 50% off exchange would be a tipping point critical to market quality – where there was enough competition and incentive to have an NBBO, that the NBBO was actually a meaningful benchmark to protect investors. 

Chart 6: Volume traded off-exchange continues to grow despite new exchange entrants   

Volume traded off-exchange continues to grow despite new exchange entrants

Options trading saw even stronger growth 

In the past eight years, options trading has grown even faster than stock trading. Options volumes have increased 317%, compared to stock volumes that have only gone up 221%. One reason for the growth of options trading is the increasing use of options in managed portfolios – like many of the ETFs with embedded options hedges we discussed here. Not surprisingly then, the composition of options trading has changed as well in the past few years, with ETF options growing the most.

However, index options ADVs have also more than doubled. A number of factors may be driving this, including:

  • Increased demand for broad market hedging.
  • Tax advantages of trading index options (which qualify for 60/40 long-term/short-term capital gains tax treatment).
  • Also, the growth of shorter-dated options that need to roll more frequently.

Options on the Nasdaq-100 Index® (NDX®), with its exposure to AI companies, saw ADVs grow 39% year-over-year in 2024, building on an already record year in 2023.

Chart 7: Options ADVs by underlying 

Options ADVs by underlying

The data suggests retail investors are an increasing share of options trading, too. Our estimates, consistent with those in some academic studies, show that retail options ADVs grew 13% YoY in 2024, have over tripled since 2019, and now make up over 30% of the options market.

It’s hard to compare stocks and options volumes

Some will say that options now trade more value each day than stocks. However, that’s a little misleading.

For a start, we have shown that most options are traded with delta well below 50%, meaning the theoretical impact on the stock market from hedging is well below one-for-one. 

In addition, because options expire, traders need to “roll” positions each quarter, month, or week – just to maintain exposures or hedges – something we see in the way open interest changes (Chart 4 here). The increased adoption of shorter-dated weekly options means that expiry trading happens more frequently, which has added significantly to roll and expiry date volumes. 

Households now have highest exposure to equities in past 80 years

We’ve previously noted that over the long term, stocks tend to outperform other assets that households own, including bonds and housing. So, the fact that data shows household ownership of stocks is at the highest level in over 80 years should be good for the financial security of many more Americans heading toward retirement.

Chart 8: Retail ownership of stocks in the U.S. also at highs 

Retail ownership of stocks in the U.S. also at highs

U.S. exceptionalism continues

The good news is that the U.S. stock and options markets continue to grow. That helps U.S. households grow wealth and adds to their financial independence. It should also help U.S. companies finance the growth and innovation that has been helping the market outperform in 2024.

That, in turn, boosts investment, employment and the economy. 

And that’s how efficient markets can be good for everyone. 

Climate Disclosures & Transition Finance: APAC’s Path Forward

By
Markets Media
-

2024 has been a pivotal year for climate, marked by record-breaking hurricanes, devastating floods, and the looming milestone of surpassing the 1.5°C warming threshold, a benchmark set by the Paris Agreement representing a tipping point for avoiding the severe impacts of climate change. It has also been a turbulent year in global politics with governments and multi-nationals slowing down on climate action. On a positive note, convergence has been achieved around the disclosures set by the International Sustainability Standards Board (ISSB), including in the Asia-Pacific (APAC) region. The region has witnessed landmark transition finance deals, such as the world’s first sovereign climate transition bonds from Japan, but challenges remain around the availability and quality of ESG data.

Disclosures – a global baseline
The ISSB was formed in 2021 at COP26 in Glasgow to develop global standards for high-quality, comprehensive sustainability disclosures focused on the needs of investors and financial markets. Although ISSB sets a global baseline, the progress in sustainability has differed across regions. Jules Bottlaender, Head of Sustainable Finance in APAC, Securities Services at BNP Paribas, said innovation and regulation around sustainability have moved very quickly in the European Union, while in contrast, there has been a backlash in the US. He described the progress in APAC as being in the middle of the latter two regions and more government-driven, as there is fragmented regulation across different countries in the region.

Jules Bottlaender

“APAC is on a good track, closely monitoring industry’s developments to implement swiftly the successful formulas,” he added. For example, following a public consultation, Singapore Exchange Regulation (SGX RegCo) has said it will incorporate the ISSB climate-related requirements into its sustainability reporting regime. From the financial year 2025, all issuers will have to report Scope 1 and Scope 2 greenhouse gas emissions. Boon Gin Tan, Chief Executive Officer of SGX RegCo said in a statement that this is an important step to enable larger issuers to report their Scope 3 GHG emissions from financial year 20261.

Similarly to Singapore, the Australian Government’s Treasury has released a Sustainable Finance Roadmap and mandated sustainability reporting aligned with ISSB from the beginning of 2025. The Australian Sustainable Finance Institute (ASFI) has launched a second round of public consultation on the development of an Australian sustainable finance taxonomy. ASFI is seeking feedback on the climate change mitigation criteria for all six priority sectors for development (including electricity generation and supply; minerals, mining and metals; buildings; manufacturing and industry; transport; and agriculture and land use), a Do No Significant Harm framework, minimum social safeguards and ways in which the taxonomy can be used2.

New Zealand was the first country in the world to legally mandate climate change reporting for financial institutions in October 2021 and has required sustainability reporting since the beginning of 2023. The country also has a 2030 roadmap, which includes plans for a sustainable finance taxonomy which have been published by the industry-led Aotearoa New Zealand Sustainable Finance Forum3.

New Zealand’s External Reporting Board (XRB), the country’s standard-setting authority, has implemented climate-related disclosure standards for specific companies, drawing from the Task Force on Climate- Related Financial Disclosures’ (TCFD). The board plans to review the country’s climate standards by December 2025 to assess whether updates are necessary to align with current or upcoming requirements4.

Iain Martin
Iain Martin.

In November 2024, the XRB published a consultation on proposed amendments to its climate and assurance standards and approved three of the four proposals. XRB authorised a one-year extension to the adoption provision for Scope 3 GHG emissions disclosures due to current data challenges; a one-year extension to the adoption provision for anticipated financial impacts disclosures and a new one-year adoption provision relating to the assurance of Scope 3 GHG emissions5. However, it did not adopt a proposal to delay transition planning by an additional year due to strong user demand for this information.

“Data has now become critical for firms in New Zealand. As a local custodian, our role is to help these firms by providing the necessary data and reporting services to meet these obligations,” said Iain Martin, Head of Securities Services, New Zealand at BNP Paribas.

Martin said: “For Securities Services at BNP Paribas, we have been focused on ensuring our organisation has a positive impact on the world. This has meant embedding ESG features into our core solutions, sharing ESG insights globally and giving clients access to market leading ESG and sustainability reporting.”

Transition finance
It has been estimated that USD $3 trillion a year by 2030 is needed to support the global transition to a net-zero economy by 2050. More than half of it is needed in APAC, and especially in emerging markets6. Bottlaender said: “You can only improve what you can measure. ISSB filled this gap by framing climate disclosure in jurisdictions covering over half of the world’s GDP. The next big challenge is to transition our economies.”

There was a landmark in transition finance this year when the Japanese government issued the world’s first sovereign climate transition bonds in February and raised JPY 1.6 trillion7. The Hong Kong Monetary Authority has also announced that it wants to extend its Green and Sustainable Finance Grant Scheme and expand the scope of the subsidy to cover transition finance instruments8.

Data challenges
However, Bottlaender highlighted that APAC lacks data on the energy transition and in addition to the lack of availability, there are challenges around quality and consistency. He said: “Countries in APAC such as Indonesia, India, Thailand have significant populations and need to create an ecosystem to gather transition data.”

Nearly three quarters, 71%, of respondents in BNP Paribas’s 2023 ESG Global Survey of 420 asset owners and managers, hedge funds and private equity firms said that inconsistent and incomplete ESG data is a significant barrier to the greater adoption of ESG, an increase of 17% from 2021. To overcome these data challenges the majority, 65% of respondents, said they use and compare multiple sources of data, while more than one third, 37%, conduct their own research methodologies9.

To help institutional investors with their ESG data challenge, Securities Services at BNP Paribas allows them to store their fund data on a central platform, Manaos (a fintech which is a subsidiary of BNP Paribas), to obtain a comprehensive and transparent view of their investments and estimate their ESG footprint. The platform was developed to meet the advent of regulation in Europe around the Sustainable Finance Disclosure Regulation (SFDR), and so can now benefit firms in APAC. Manaos can seamlessly connect clients’ portfolios with a wide range of third-party ESG data vendors and fintechs, all secured by bank-level security standards.

In October 2024, BNP Paribas’ Securities Services also launched an ESG investment compliance monitoring service in Australia and New Zealand to support local clients and avoid potential compliance breaches. The service, which has also been successfully deployed in Europe, includes a wide range of ESG criteria and delivers external assurance that funds are meeting their ESG commitments through automated post-trade assessment10.

Martin said: “BNP Paribas’ ESG monitoring solution can help each client screen their portfolios against customised and flexible criteria using a range of data feeds from external and internal sources. They can include or exclude specific activities, compare portfolios to ESG ratings and benchmarks, review carbon intensity against a benchmark and review adherence to global standards.”

Embracing a wider path going forward
Now that climate disclosure has been enforced in many parts of the world, there needs to be more specifics about the distinctions between green finance and transition finance, as well as between climate mitigation and adaptation.

Indeed, by focusing solely on green assets, the fact that most of the economy needs to transition is overlooked. Similarly, by concentrating only on mitigation, the necessity to adapt to the physical risks of climate change is neglected, and becoming more pronounced every year.

Additionally, 2024 will be the first full year since the establishment of the TNFD (Taskforce for Nature related Financial Disclosure). It will be interesting to see the outcomes of the first disclosures. Meanwhile, the Taskforce on Inequalities and Social (TISFD) was created in September 2024, tasked with the challenging mission of developing a framework to address the most overlooked aspect of sustainability.

While the journey toward full adoption and implementation will require collaboration between governments, businesses, and financial institutions to address regional nuances and challenges, it also presents an opportunity to drive meaningful change. For APAC, a region rich in diversity and economic dynamism, embracing these standards not only aligns with global ESG trends but also positions businesses to lead in sustainable innovation and resilient growth.

bnpparibas.com

References:

1. Singapore regulator drops 2026 timeline on ISSB-aligned Scope 3 disclosures for listed firms | News | Eco-Business | Asia Pacific

2. Australian Taxonomy Second Public Consultation

3. Sustainable Finance Forum sets out Roadmap for a sustainable financial system by 2030

4. Where does the world stand on ISSB adoption? | S&P Global

5. 2024 Climate and Assurance Proposals announced – Latest News | XRB

6. New Initiative to Help Unlock $3 Trillion Needed a Year for Climate and Nature > Press releases | World Economic Forum (weforum.org)

7. Climate Transition Bonds Show Japan’s Commitment to Carbon Neutrality | The Government of Japan – JapanGov

8. HKMA announces details on extending the Green and Sustainable Finance Grant Scheme and expanding subsidy scope to cover transition finance instruments – HKMA

9. Global ESG Survey 2023 – Securities Services at BNP Paribas

10. Launch of BNP Paribas’ ESG investment compliance monitoring solution into Australia and New Zealand helps local investors monitor their ESG objectives – Securities Services

TradeStation Securities Becomes First US Broker to Launch Options Trading on TradingView

By
Editorial Staff
-

TradeStation Securities, a self-clearing online brokerage firm for trading stocks, options, futures, and futures options, has announced that it will be the first US broker to launch options trading on TradingView, a charting and trading platform, and social network for traders and investors.

John Bartleman

“TradeStation will be the first US broker for options trading as TradingView introduces this asset class to its platform,” said John Bartleman, President and CEO of TradeStation Group, Inc., the parent company of TradeStation Securities.

“With the options integration, new and existing TradeStation clients can leverage direct-market access, free real-time and Level 2 data as well as Market Depth trading, all through one single connection on the TradingView platform. This collaboration reinforces TradeStation Securities’ role as a catalyst for traders looking to create their ultimate trading experience,” he said.

“For over a decade, TradingView has consistently expanded its offerings, adding new assets and markets to its global platform,” said Pierce Crosby, General Manager of TradingView.

“We are excited to collaborate with TradeStation Securities to bring options trading to our community, reinforcing our shared commitment to democratizing data and information access for investors worldwide,” he added.

TradeStation Securities, Inc. (Member NYSE, FINRA, SIPC, NSCC, DTC, OCC, NFA & CME) is a subsidiary of TradeStation Group, Inc.

It offers self-clearing equities, options, futures, and futures options brokerage services as a licensed securities broker-dealer and futures commission merchant (FCM). TradeStation Securities is a member of major equities and futures exchanges in the United States.

Founded in 1982, TradeStation Group companies (TradeStation) provide institutional-grade fintech tools and personalized services – and is where sophisticated traders can find their home.

TradeStation seeks to deliver the ultimate trading experience to retail and institutional clients that need a customizable trading ecosystem to perform their strategies.

TradeStation provides trading and analysis platforms and self-clearing online brokerage services for equities, options, futures, and futures options.

These advanced tools are accessible on desktop, web, and mobile devices, as well as via API technologies that provide seamless access to TradeStation’s brokerage environment through third-party platforms.

Trading Technologies Advances Data and Analytics

By
Editorial Staff
-

Crisil Coalition Greenwich cited “insatiable” demand for market data as a top market structure trend to watch in 2025. “Market participants once again expect to spend more on market data in the year ahead,” the consultancy said in a report. “Whether moving into a new country, a new asset class or a new investment strategy, the first step is always gaining access to new data.” 

“The data itself is only the first step in that journey,” the report stated. “New delivery mechanisms (e.g., cloud for real-time market data), better analytics (AI anyone?) and tools to make that data actionable on the trading desk are all areas of critical investment that support the demand for more market data.”

Peter Weiler, Trading Technologies
Peter Weiler

Trading Technologies, a SaaS provider to the global capital markets industry, is emphasizing buy-side product offerings of data, analytics, and transaction cost analysis as a key business line for this year.

Traders Magazine spoke with Peter Weiler, Executive Vice President and Head of Data & Analytics at Trading Technologies, to learn more. 

What is your professional background?

I came to TT via the 2023 acquisition of Abel Noser Solutions. I was the CEO there after we did a management buyout with a private equity firm, and then we managed to find TT – (CEO) Keith Todd and the rest of the team.

Our TCA practice at Abel Noser was US-centric, but now we are expanding, particularly into EMEA. That was an important reason why the acquisition was made, and more importantly, we really felt that data and analytics and trading all coming together is the future. So having an ecosystem that includes data and analytics along with trade execution is going to be critical.

What distinguishes the Trading Technologies TCA product?

We have all the asset classes you can think about in terms of measurement, and we’re now streaming a lot of our practices, particularly on the futures side. When you have a platform like TT’s that handles as much as 15% to 25% of a contract’s volume, it gives us a lot of ability to observe trades and benchmark trades. That’s a big part of what we do on the analytics side – we want to be able to provide absolute costs versus different benchmarks, and then create a relative benchmark that’s apples to apples.

We’re really thrilled about the data side of our business. We have a lot of proprietary data – it’s not data we own, but it’s data we control. Our thought process here is to bring unique products derived from this data to the marketplace to help our clients. 

What are your primary data & analytics initiatives currently?

The next step is expanding our derivatives practice. We have options on cash equities, but in the next phase, we’re talking about options on futures, options on fixed income, and options on other asset classes down the road.

We’re incorporating technology, whether it’s large language models or machine learning, into our analytics and into our data. Whether that’s a chat box-type technology or querying systems, we are training models to answer simple questions that come up that are derived from user manuals, for example. 

We’re also taking it to the next level with some clients, where we’re looking at their trading and their historical trading results versus what our model was telling them to do. These clients want automation, but rather than just automating their trading they really need the serious gray matter of being part of a machine learning process that is continually improving.

How is data & analytics evolving more broadly?

TCA is emerging as a must-have, and the use cases are changing as we go along. What used to be mostly just tick-the-box is now something that people use for alpha creation. They still are ticking the box with TCA, i.e., using it for regulatory purposes, but they also want to leverage that data to improve their trading. The end goal is for the data and analytics to come together in an intuitive way to produce actionable recommendations.

One trend we’re starting to see is cross-asset measurement analysis. As we know, many trading desks are becoming more centralized, and you need to be somebody who knows a lot of the asset classes. There are many paired transactions done for which people want to see total transaction costs, and you need large data universes to know those costs.

Another advance is what I would call a state-of-the-art graphic user interface. The GUI we have is one we’re always refreshing and is being modernized. Delivery is via APIs and/or our GUI, including dashboards, and we’ll have chat boxes to answer complex data queries.

I think all of that will come together this year, and this evolution is top-of-mind for everybody at TT.

Client-Centric Product Innovation in Capital Markets: 2025 Outlook

By
Celent
-

By Monica Summerville, Head of Capital Markets, Celent 

Monica Summerville

For buy side and sell side firms, alike, enhancing the customer experience (CX) is one of the top priorities driving IT strategies. Meeting—or exceeding—client expectations is central to good business. That’s true in capital markets, where focusing on client-centricity and client enablement is essential for effective implementation of tech initiatives, as I’ve addressed before.  

This topic is worth an additional look at the start of 2025, when focusing on client-centric product innovation is one of the key business trends driving technology investments in capital markets, as detailed in Celent’s Capital Markets: Technology Trends Previsory 2025. Additional key business trends driving technology investment in capital markets in 2025 include balancing efficiency and innovation (where too much focus on cost-cutting can lead to missed opportunities); building NextGen ecosystems; establishing credibility and value in data; and navigating tactics, risk, and strategy across regulatory regimes.  

Keeping a close eye on the possibilities for improved customer experience—and how investing in technology enables these enhancements—will always be valuable.  

Technologies Converge to Support Client-Centricity 

Today we’re seeing a convergence around emerging technologies, cloud computing, and data initiatives. Cloud adoption is high, with investment technology ecosystems migrating to the cloud, service providers consolidating data onto cloud infrastructures, and confidence growing as banks build cloud expertise and embrace cloud delivery models. Cloud is also an emerging technology enabler, such as for artificial intelligence (AI), quantum, and blockchain. As these new technologies come together, they can facilitate everything from new business approaches to new product and service proposition, digital interaction channels, and personalization of client relationships.  

To ensure effective initiatives while embracing new technologies for the purpose of supporting client-centric product innovation, the imperative for a new approach is also becoming clear: financial institutions must de-silo their tech stacks and their “tech thinking.” Whereas before there may have been separate groups working on separate initiatives, firms are finding that they must bring these areas together to unlock the usefulness from their technologies. Similarly, firms are creating next generation data ecosystems which bring together sourcing, storage, management, analytics, and advanced technologies. to help facilitate initiatives. 

Sell Side Client-Centricity 

Source: Celent

The sell side is doubling down on digitization and tech-enabled differentiation to drive client-centric product innovation. Leading investment priorities, as found in Celent’s 2024 Dimensions: IT Pressures & Priorities research include digital assets/crypto assets/tokenization; client/regulatory reporting; research services; environmental, social, and governance (ESG) and sustainability; and origination. Some ways that firms are taking action on these initiatives for digitalization include:  

  • Tokenization networks/standards: making digital plays across banks, custodians, and financial market infrastructures (FMIs), and asset managers to identify new services which can be offered in this space to meet client needs.  
  • Sustainability initiatives, driven with proprietary data and data sets, designed with client-centricity front and center. Societe Generale, for example, has added sustainability data sets to its in-house developed, and client accessible, Data & Analytics platform.  
  • In-production blockchain platforms from firms, such as Kinexys (formerly Onyx) from J.P. Morgan, that realized a need early on to innovate to meet the needs of clients. 

Client-centric product innovation provides a range of opportunities. Firms can embrace opportunities to focus on unstructured data to improve communications. With great potential for both back office (where emails and faxes are still prevalent) and front offices. Emerging technologies, especially some of the new AI offerings, support opportunities for new products around data transfer, which leverage automation, to streamline and improve communications, and shorten onboarding cycles.   

Firms also have new opportunities to cross-sell by focusing more holistically on the client. Technology now makes it possible for areas within a firm, which were once separated and operated as silos, sometimes for regulatory reasons, to be cross-sold. New technology taps into the potential to leverage adjacencies through cross-selling and up-selling at the group level, between banking units, while remaining compliant with securities, market abuse, and privacy rules. Examples here may include across: asset and liability management (ALM) and treasury and markets, looking at flow; wealth management and capital markets, for structured products, issuance, and product placements; transaction banking and capital markets, looking at foreign exchange (FX) or interest rate derivatives; or asset servicing and capital markets, in areas like collateral management and FX. 

Buy Side Client-Centricity 

Source: Celent

Similarly, as our team has found, the buy side is putting new energy into client-centric product innovation. Firms here are evolving from traditional analog distribution models to digitally-enabled strategies to engage advisors, allocators, and other intermediaries using technological capabilities, insights, content, and analytics. Various firms are building out digital channel capabilities and partnerships, such as product/service customization initiatives, new hybrid public/private product launches, and new opportunities for private asset investing in retail and defined contribution (DC) pensions. 

What we’re likely to see in the coming year on the buy side will include scaled product innovation and hyper customization, which is becoming a core capability. Firms will look to enhance capabilities for faster product innovation and customization, aiming to counteract the ongoing pressures on margins. By developing tailored investment products and swiftly adapting to market demands, firms can differentiate themselves and attract a broad client base and ultimately improve profitability.  

This emphasis on innovation will help mitigate margin compression, also allowing firms to better align offerings with the evolving needs of investors. Traditional and alternative investment managers are taking action around the expansion of private assets into non-institutional segments, such as defined-contribution pensions, private banks, wealth managers, and independent financial advisors that service a more retail-oriented client base. By expanding offerings to include alternative investments (private equity, credit, hedge funds, real estate, and other non-traditional assets), firms can cater to a wider-range of clients while seeking diversification and enhancing returns beyond traditional asset classes.  

Private credit crossovers and collaborations, between banks and alternative/private credit managers, are set to grow. These are becoming increasingly prominent. As firms navigate the complexities of these opportunities and some of the involved risks, emphasis on digitization will likely grow as a means to optimize the private credit operations in terms of greater automation, efficiency, and more accurate information exchanges across the multiple participants.  

Plan for Uncertainty, While Focusing on Client Needs 

Technology needs to support capital markets firms, no matter what is thrown at them in the coming year. For a business to be agile, it must plan for uncertainty, all while embracing the technology that can not only support innovation goals, but meet current and prospective clients’ needs.  

ON THE MOVE: Prometheum Appoints Dr. Arthur Laffer; Sarah Salih to State Street

By
Anna Lyudvig
-
Dr. Arthur Laffer

Prometheum has appointed Dr. Arthur Laffer as a senior strategic advisor, and the inaugural member of its advisory committee. Dr. Laffer is well known for the Laffer Curve, which illustrates a theoretical relationship between rates of taxation and the resulting levels of tax revenue. He rose to prominence as a member of President Reagan’s Economic Policy Advisory Board (1981–89) and has advised multiple high-level policymakers in the U.S. and abroad. In 2019, Dr. Laffer was awarded the Presidential Medal of Freedom, the nation’s highest civilian award, by President Donald J. Trump. Dr. Laffer is the founder and chairman of Laffer Associates, an institutional economic research and consulting firm.

Sarah Salih

State Street Corporation has hired Sarah Salih to executive vice president and head of North America for its Investment Services business. Based in Boston, Salih reports to Joerg Ambrosius, president of State Street Investment Services. In this new role, Salih will establish a cohesive operating model to deliver a consistent experience for clients in North America. She joins from HSBC Securities (USA), where she was most recently head of Regional Coverage, Americas, leading Global Banking coverage of clients across multiple sectors in the Americas. Prior to HSBC, she held several senior positions with Deutsche Bank Securities across banking and markets.

Harry Jung

The Commodity Futures Trading Commission has announced that along with serving as Acting Chairman Caroline Pham’s top advisor, Harry Jung will also lead the CFTC’s engagement on crypto, decentralized finance (DeFi), and other digital assets, building upon his work in this space as the Designated Federal Officer of the CFTC’s Global Markets Advisory Committee. In addition, Meghan Tente has been appointed Acting General Counsel. She has served in multiple leadership roles at the CFTC, including most recently as Chief of Staff to then-Commissioner Pham.

Northern Trust has appointed Robert (Bob) Moritz and Richard (Rick) Petrino to its board of directors. Moritz, the former global chairman of PricewaterhouseCoopers (PwC), will join the Northern Trust Board of Directors effective March 1, 2025. Petrino, a former American Express Company executive, joins effective immediately. Moritz is a member of the Walmart board of directors. He is a member of the International Business Council of the World Economic Forum and a director of the Oswego University Foundation, as well as a member of the board of Generation Unlimited. Petrino held several leadership roles during his nearly three decades at American Express Company, most recently serving as chief operating officer of American Express National Bank

T. Rowe Price has hired Jeff Helsing as Institutional Business Development (IBD) Executive, Fixed Income, a new role. He will report to Doug Greenstein, the Head of US Institutional Business Development in T. Rowe Price’s Americas institutional division. Before joining T. Rowe Price, Helsing served as a Senior Product Manager at Western Asset Management. Prior to that, he spent 20 years at PIMCO in both Portfolio Specialist and Portfolio Manager capacities. He holds a Bachelor of Science degree in Finance from Arizona State University and an MBA from the Marshall School of Business at the University of Southern California.

Miami International Holdings has promoted Joseph Bracco to the position of Executive Vice President, Global Head of Sales. Bracco has been an integral part of the MIH senior management team since joining the company in 2015, leading MIH’s sales efforts since then. Bracco’s career spans over 40 years in financial markets. His contributions at MIH include initiating and managing relationships within the financial industry, as well as strategic development of new products and venues. 

CoinShares International has appointed Calvin Tintle as Sr. Manager, National Accounts & Distribution. Tintle joins CoinShares with nearly two decades of experience in institutional sales and distribution strategies. During his tenure as Senior Manager for National Accounts at ProShares, he established and deepened relationships with major wealth management platforms while driving institutional adoption of innovative investment products.

If you have a new job or promotion to report, let me know at alyudvig@marketsmedia.com

CSA Publishes Notice and Request for Comment on Proposed Amendments to Trading Fee Caps

By
Editorial Staff
-

The Canadian Securities Administrators (CSA) has published a Notice and Request for Comment on proposed amendments to National Instrument 23-101 Trading Rules (Proposed Amendments) and proposed changes to Companion Policy 23-101 Trading Rules (Proposed CP Changes) related to the recent rule changes announced by the United States Securities and Exchange Commission (SEC). 

The Proposed Amendments and Proposed CP Changes ensure trading in Canadian securities that are inter-listed on U.S.-registered national securities exchanges (U.S. Inter-listed Securities) remains competitive. If adopted, alignment of the Canadian trading fee cap with the fee cap in the United States would continue for U.S. Inter-listed Securities priced at CAD 1.00 or more. The comment period to solicit feedback on the Proposed Amendments and Proposed CP Changes will run for 60 days and close on March 24, 2025.

The Proposed Amendments and Proposed CP Changes follow the SEC announcement of its final rules on September 18, 2024, specifically (i) reduced trading fee caps for National Market System (NMS) stocks and (ii) reduced minimum pricing increments for certain NMS stocks priced at USD 1.00 or more per share (together, SEC Final Rules). 

On December 12, 2024, the Canadian Investment Regulatory Organization published proposed amendments to the Universal Market Integrity Rules (Proposed UMIR Amendments) that, if adopted, would conform the minimum pricing increments with the SEC Final Rules for U.S. Inter-listed Securities priced at CAD 1.00  or more  per share. The comment period to solicit feedback on the Proposed UMIR Amendments will close on January 27, 2025. 

The planned implementation date for the SEC Final Rules was November 3, 2025, however, on December 12, 2024, the SEC issued an order staying the implementation of the SEC Final Rules pending completion of judicial review of those rules. The Proposed Amendments, Proposed CP Changes and Proposed UMIR Amendments would not be implemented in Canada before the SEC Final Rules are implemented in the U.S.

The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.

FLASH FRIDAY: Andy Lowenthal, Travelin’ Man

By
Editorial Staff
-

FLASH FRIDAY is a weekly content series looking at the past, present and future of capital markets trading and technology. FLASH FRIDAY is sponsored by Instinet, a Nomura company.

Andy Lowenthal’s corporate career was a bit of a throwback, in that he spent 40 years with one employer.

Andy Lowenthal (LinkedIn photo)

His retirement, however, is a far cry from the old archetype of playing shuffleboard in Florida.

Since calling it quits from Cboe Global Markets at the end of 2023, Lowenthal has kept busy with travel, nonprofit work, and dabbling in business advisory. And, never say never — he doesn’t rule out a return to the corporate world.

Traders Magazine chewed the fat with Lowenthal, 63, earlier this month.

How did you first get into the business?

I was interested in trading a little bit when I first came out of school. I had a buddy working at Cboe so I went in to take the fractions test, which was about adding and subtracting fractions. In those days, trading was in sixteenths, and you needed to pass the fractions test to be able to start as an entry-level price reporter on the trading floor. 

What was your career path at Cboe?

I started on the trading floor, entry level. I completed my degree while I was working at Cboe, as I took night classes at DePaul University. The degree allowed me to move up in the organization. I had a short stint in regulation, and then, pretty much the first half of my career was in trading operations, which I would describe as being the liaison between the trading community and the technology staff. I was very involved in the transition of trading away from paper. It didn’t transition to fully electronic, because we still had the trading floor, but we electronified many processes that had been paper.

The second half of my career was in business development. I remember telling Phil Slocum, who was head of trading operations, that I was leaving operations to go to biz dev. He said “Oh, that makes sense. You’re going from making to selling.” I always liked that line. Phil was a great man, who unfortunately is no longer with us.

I worked for Ed Provost who was then head of biz dev. Ed mentored me and increased my role over time, and when he became the president of the exchange, I moved to head of biz dev, which is where I was when Cboe acquired BATS in 2017. That acquisition expanded Cboe’s offering significantly, as we went from an options and a small futures exchange to a global exchange operator across multiple asset classes. I became executive vice president, head of options and futures.  Then Bryan Harkins and I created the Markets Division that took all the US based transaction-based business lines, plus the listings business, under one umbrella first reporting to Chris Concannon and then Ed Tilly.

One reason we made this change was that customers were being negatively impacted by having a division of trading products. As an extreme  example, my options team and Bryan’s equity team might have seen a client the same day without communicating with each other. So Bryan and I made a plan to address this. 

I was in this role until 2019 when I moved into a late-career type role, which was a combination of strategy and business development. My main goal was to help plot a path for Cboe to move into new geographical markets. With COVID that plan got waylaid a little bit. That’s the role where I ended up and had some nice successes.  I also able to mentor many associates which I found quite rewarding.

What might you point to as a best accomplishment in your career? What was the biggest challenge?

My answers to both are related to the VIX futures. I’ve had a lot of successes, but one in particular was when I was named the head of the Cboe Futures Exchange (‘CFE”). Prior to 2008 there had been a lot of consternation, both across Cboe and on the street, whether this product made sense at all. But we kept at it. And then with the 2008 market correction and the small number of people that had made VIX allocations well-outperforming the rest of the market, that really helped us, and from there it catapulted to became a big part of the exchange. 

We only listed VIX futures because we were only an options exchange and we wanted a viable VIX options product. But the market making community told us that without a futures contract, there was nothing for them to hedge with. So that was the initial driver for creating the CFE.

Now, of course, the CFE and VIX futures are an integral part of Cboe Global Markets  Us turning that into a successful product line from being on a respirator and almost dead, was definitely a challenge that turned into one of the crowning moments in my career.

The biggest challenge was “Volmaggedon” (in February 2018), when two VIX ETPs blew up. These were inverse levered ETPs tied to VIX futures meaning their daily return equaled   -1X the daily move in a VIX futures index. So, on a day when the VIX futures index doubled, the ETPs were forced to liquidate or de-lever to survive. Unfortunately, many people lost significant amounts of money. And while these products were not issued by Cboe, the episode caused a significant hit to the reputation of the exchange and the VIX complex. We spent a lot of time from a Legal and crisis management perspective addressing the issue with customers and rebuilding confidence in the exchange. It was a really challenging time for both Cboe and me personally. 

What have you been up to since you left Cboe at the end of 2023?

I created ABLL Markets Advisory LLC – it’s not full-time, but it has kept me engaged in the industry. Beyond that I have a combination of advisory roles: one is with Oliver Wyman, where I’m a senior advisor to their investment banking team; another is with a firm called Ironbound Group, which is a boutique investment banking group; and a third is with a startup firm called Adaptive Investment Solutions LLC. That one is right in my wheelhouse because they’ve developed software where you upload your equity portfolio and it will give index option suggestions to either hedge or enhance income using cash settled indices, S&P, Russell, and or Nasdaq. I’m also doing a great bit of non-profit work .

How about personally?

My wife and I travel a lot – we did 24 trips last year. We did seven weeks in Europe, covering Istanbul, Greece, and London. That trip was a real highlight.

Andy experiencing low liquidity in Crete. (Photo courtesy of Andy Lowenthal)
Andy with his wife Tracey at the Grand Bazaar in Istanbul. (Photo courtesy of Andy Lowenthal)

Stateside we split our time between Chicago and New Buffalo, Michigan, which is a beautiful little vacation community on Lake Michigan. 

Beyond that, my son got married last year, which was a big event, and my daughter got engaged. 

On a typical day I might spend the morning talking to people in the industry or doing some non-profit work. I try to keep my afternoons free to do things I like to do – taking a woodworking class, exercising, bike riding, whatever.

Free from the guardrails of the regulated exchange business. (Photo courtesy of Andy Lowenthal)

What does the future hold for you? 

Probably not as much travel in 2025, but we’re still exploring new things. I’m still open to advisory work, although right now my plate is about as full as I want it to be. 

I work with the Illinois Holocaust Museum and Education Center – I’m on the board and I serve on several committees, which I love. My father was a Holocaust survivor, so it’s something that I’m very passionate about. I also do some work with the United States Holocaust Memorial Museum. The other nonprofit I work with is Renaissance Social Services, which provides social services to people transitioning off the streets and into housing. We provide them with the support they need to succeed. These nonprofits are great causes.

I don’t have the desire to jump back into full-time work. Look, my phone is on, so if someone made me an offer I couldn’t refuse, I would have to give it serious thought. But it’s not something I’m looking for right now.

Firms Urged to Invest In AI-Driven Identity Fraud Prevention

By
Editorial Staff
-

While over 76% of fraud decision-makers recognise the growing threat of AI in fraud, only 22% of organisations have started implementing AI-driven fraud prevention measures, according to Signicat’s report The Battle Against AI-driven Identity Fraud.

Pinar Alpay

“Despite the alarming rise in AI-driven identity fraud techniques like deepfakes, most organisations are stuck in the planning phase,” said Pinar Alpay, Chief Product & Marketing Officer at Signicat.

“The gap between awareness and action is widening, creating a ticking time bomb, especially for the financial sector and other regulated industries,” she added.

The research surveyed over 1,200 fraud decision-makers across banks, fintechs, payment providers, and insurance companies in Europe.  

The report highlights that organisations are aware of the problem but struggle to implement the necessary defences due to: lack of expertise: 76% of fraud decision-makers cite inadequate skills as a major barrier; lack of time: 74% admit that they do not have the time to address the problem with the urgency it requires; and budget shortfalls: 76% report insufficient funding to deploy robust fraud prevention technologies

As organisations face the challenges of 2025, the report warns that fraudsters are set to leverage AI to unprecedented levels, combining scale with sophistication.

Deepfake attacks, which have grown by 2137% over the past three years according to Signicat’s data, are just one example of how rapidly AI-driven fraud techniques are advancing. 

To stay ahead of fraudsters, companies must act swiftly by: prioritise multi-layered defence approach: From early risk assessment to robust identity verification and authentication tools combined with data enrichment to ongoing monitoring for a comprehensive approach covering the primary vulnerable fronts; investing in AI-driven fraud prevention; and building in-house awareness and partnering with trusted vendors: A proactive approach to staff training and external collaboration is key to managing this evolving threat landscape. 

“Just as our industry is constantly updating and preparing for new challenges, companies must do the same. Relying on obsolete solutions is the opposite of what’s needed. Organisations must invest in new technologies that enable AI-based fraud detection,” Alpay said.

“According to our own data, deepfake attacks only accounted for 0.1% of all fraud attempts we detected three years ago, but today they represent around 6.5%, which is an increase of 2137% in the last three years’,” she added.

1...121314...2,164Page 13 of 2,164

MOST READ

✕

SUBSCRIBE FOR TRADERS MAGAZINE EMAIL UPDATES

[activecampaign form=12]