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Tuesday, March 18, 2025
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Derivatives Group Publishes Paper on Position Transfers

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Press Release
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DMIST Publishes Consultation Paper on Position Transfers

Washington, DC — DMIST, the Derivatives Market Institute for Standards, today published a proposed standard aimed at improving the processing of position transfers in the exchange-traded derivatives markets. This is the third standard proposed by DMIST, an independent organization formed by FIA in July 2022, to promote greater efficiency in the trading and clearing workflow for derivatives. 

Today’s action kicks off a consultation process with industry stakeholders that will last until March 21. DMIST aims to finalize the standard by the end of the Q2 2025. Any member of the public may submit a comment, and DMIST will post all comments at its website. 

The proposed Standard Regarding Position Transfers applies to the process of moving an open position from one account to another at the same clearing member firm or between different clearing member firms. Position Transfers are used to manage risk, optimize margin, correct allocations, balance portfolios, change clearing relationships and address changes in beneficial ownership due to mergers and acquisitions. 

Today the Position Transfer process is almost completely manual. DMIST believes a standard would increase operational efficiency and resiliency, reduce operational and regulatory risk by minimizing manual touch points, and simplify communication between clearing members and their clients. The development of this standard represents the first step towards automating the process.  

Samina Anwar, Director of Derivatives Operations at Cargill and Chair of the DMIST Sponsor Board, said: “Position transfers are vital for clients to manage risk and optimize margins effectively. Many clients face inefficiencies and delays due to varying processes across clearing brokers. A standardized template for requesting position transfers will streamline workflows, enhance accuracy, and significantly reduce errors in both requesting and booking transfers. 

Don Byron, Executive Director, DMIST: “Today’s release of the proposed standard continues DMIST efforts to address some long-standing pain points in the trading and clearing process. The standard is designed to improve efficiency, reduce risk and increase the speed at which a position transfer can be completed. Through this effort, DMIST continues to serve the industry as a driving force for consistency, resilience, and common-sense solutions.” 

Tim Hoopes, Executive Director, Morgan Stanley and Leader of the DMIST Position Transfer Working Group: “This is an exciting step toward improving an important process with longstanding challenges for the industry.  Not only does the proposed Position Transfer Standard provide immediate efficiency and risk reduction benefits to clients, clearing members, and CCPs by streamlining communication and reducing the need for data transformation, it also strengthens the pathways to increased automation of this process in the future. 

For questions regarding DMIST, contact Don Byron at  +1 202.772.3090  or dbyron@fia.org. Contact FIA Media Relations for other inquiries. 
 
DOWNLOAD PROPOSED STANDARD
Proposed standard 

The Consultation Paper: Standard Regarding Position Transfers recommends publishing a standard that establishes 1) a template clients can use to submit a Position Transfer Request to its Clearing Member(s) and a standard template for Clearing Members to more easily upload Position Transfer data to CCPs; and (2) a corresponding standard template for CCPs to adopt for receiving data from Clearing Members. 

It also seeks comment on the timing for simple and complex position transfers. It recommends that simple position transfers requested five hours ahead of the market clearing close be completed the same day. Complex position transfers that require exchange approval should be completed 48 hours ahead of the nearest market clearing close. The standard also recommends that the Client send the Client Request Form simultaneously to both the originating and receiving clearing members.  

The FIA Operations Americas Division, with input from FIA’s European and Asian Operations Committees, submitted a proposal to the DMIST Sponsor Board in May 2024 to standardize Position Transfers. The Sponsor Board approved the proposal and formed a DMIST Working Group, which reviewed and enriched the proposal.  

Don Byron: “This was the first time a standard was proposed by a group external to DMIST. The Division’s proposal not only laid the groundwork for the DMIST Working Group to draft a consultation paper, it sped up the process. We welcome standard proposals from members of the public as well as DMIST and FIA members.” 
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DMIST encourages widespread adoption of standards in the exchange-traded and cleared derivatives industry that will help make markets more efficient, resilient, and competitive for all.

DMIST has 35 members including executing and clearing brokers, exchanges and clearinghouses, clients and service providers. Approximately 200 representatives from these firms contribute to the identification, development and implementation of standards.

A Tradition of National Unity and Hope

By
STA
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By Jim Toes, STA President & CEO
Presidential inauguration addresses are a cornerstone of American democracy. More than mere ceremony, they provide an invaluable opportunity for the incoming president to articulate their vision, unify the nation, and inspire confidence in their leadership.
These speeches also serve as a moment of accountability, reminding the president of their solemn duty to uphold the Constitution and serve all Americans.
Throughout history, inaugural addresses have marked transformative moments for the nation. George Washington’s humility in his first inaugural speech set a standard for presidential leadership. Abraham Lincoln’s second inaugural address, delivered in the midst of the Civil War, emphasized healing and reconciliation. Decades later, John F. Kennedy’s iconic call to action inspired a generation to embrace public service.
Today, the nation witnesses its 60th inauguration address. At a time when our country is often divided by politics, we look to these remarks with hope that they will transcend partisanship, foster reflection, and serve as a unifying moment. In doing so, they remind us of our shared values and the enduring principles of democracy that bind us together. These ideals continue to offer the best hope for a brighter and more united future.
“The preservation of the sacred fire of liberty, and the destiny of the republican model of government, are justly considered as deeply, perhaps as finally, staked on the experiment entrusted to the hands of the American people.”-George Washington, 1789
“With malice toward none, with charity for all.”- Abraham Lincoln, 1865
“Ask not what your country can do for you—ask what you can do for your country.”- John F. Kennedy, 1961

FLASH FRIDAY: Paul Jiganti, Over and Out

By
Editorial Staff
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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.

Paul Jiganti recently bade farewell to the securities industry after a 40-year career.

Earlier this week, Traders Magazine caught up with the well-known trading and market structure veteran to hear about his past, present and future.

Paul Jiganti

How did you first get into the business? 

Out of college I interviewed for entry-level jobs at banks and the Fed, but I didn’t land anything. A friend of my older brother’s was on the trading floor at the Cboe — he knew I had been a runner on the Board of Trade for two summers, and he let me clerk for him.  Once I got on the floor that first day as a clerk, in 1985, I knew it was for me. It was the constant competition and action all day. 

It checked a lot of boxes. It was a job and I was 22 years old and needed one of those, but it was more than that. I saw that you had to work hard, but if you did the right things, you’d be rewarded financially in a totally merit-based way. That appealed to me.

So the real start of my career was with Rob Maine, who was wonderful to me and taught me the ethics of trading as well as trading itself. I traded for him for a year then he encouraged me to go out on my own. He was an incredibly generous guy. Trading went well until the early 1990s, when it got extremely slow. I was married with two small children and not making enough money. Fortunately I stood in a pit next to Jerry Steinborn, a partner at Susquehanna and a friend, and with the encouragement from my wife asked him if they needed any traders. He took me on and post Jerry’s retirement I ended up heading the office the last few years I was there, until late 2009. A great ride.

Briefly walk us through your career path after that, with Nasdaq, TD Ameritrade, and IMC?

Every place was important for me to learn and meet interesting people along the way. 

Eric Noll and I worked together at Susquehanna for years and we’re still close friends. He was at Nasdaq and asked if I would do a consulting job for them which I was happy to do, as it allowed me to meet retail firms and learn about an area that I knew little about. Unfortunately the new product that we introduced at Nasdaq wasn’t very successful, but it was good to meet a lot of people.

As that was winding down, JJ Kinahan and Steve Quirk, who were in leadership positions at TD Ameritrade’s Thinkorswim office in Chicago, suggested I apply for the recently vacated market structure and retail routing job. It was a uniquely entrepreneurial retail firm and as it turns out another great way to meet a new set of people in the industry.

While there Andrew Larson and Scott Knudsen at IMC were looking to get into wholesaling of equity options and approached me to help them start the project. Another very lucky find for me.

It was an amazing group of incredibly smart people at IMC – it reminded me of a young Susquehanna, but with more technology, being 20 years later. I remember they sat me down between two women who were in their mid- to late twenties, and I remember talking to them while thinking, “These are the smartest people I’ve been around in a long time.” They didn’t know the old business as well as some other people but I think that was part of their secret sauce. They weren’t stuck in outdated trading ideas, rather they were just looking for technological solutions. The reason I bring this up is the woman to my right is now IMC’s US CEO, and the one to my left is running trading.

Why did you stop trading and go down the other path?

I was a pretty good floor trader, but over time I recognized I wasn’t going to be a great screen trader. So at Susquehanna, I made the mental switch to put more energy into helping run the office and be on committees, and starting in the late nineties, I was on every committee I could find at the Cboe.

I understood my skill set. As a floor trader I was quick to react to requests for quotes, with the biggest wallet, Susquehanna’s money, and loud, but that doesn’t necessarily translate to the screen.

Looking back over your career, what would you cite as your biggest accomplishment? And when was the most challenging/difficult time?

The most difficult time was deciding to make the transition from an independent market maker to a big firm. Business and opportunity really dropped off in 1990 and 1991 – it zapped my finances. I wasn’t looking forward to another year of zero income. It was tough and gave me a lot to think about. Now at age 61, it’s hard to look back and believe I could sleep with all that uncertainty. But somehow it worked out.  

The biggest accomplishment was setting up the wholesaling business at IMC with DASH Financial. Dave Dooman and I ran around the country explaining how this combination will work and work well.  It created even more competition in a very competitive space where it is #2 by volume across the retail equity options.

When did you know it was time to step away? 

A couple of things gave me a nudge. One, I had circled this date for several years and once I mentally started down a path like that, it would have been tough to turn around. The second is, I wanted to leave with as much energy as I started. Before the pandemic I was on over 100 flights a year. Once we had hired an incredible backup, Shawn Cruz, I knew IMC would be just fine and arguably better without me. He is a better technologist than I am, has more energy, vision, and a lot of creative ideas. I know he’s the right guy to take the business to the next level. Shawn’s hiring and a series of back-to-back trips, led to a conversation where I mentioned to my wife that I was tired and getting sick of the grind, and for the first time ever she said, “So am I.” That was it, I knew the time was right. Everyone would be better off.

What’s your day-to-day like now? 

There are a few things. I’m consulting a bit with IMC, and I’m still on the board at MIAX. I also have a relationship with a software firm that touches our business and is starting to ramp up. So I’m still involved, but at a level that’s appropriate for the time that I want to spend. And my day-to-day is, to spend time at our house in the desert near Palm Springs, where I’ll be playing golf and hiking or biking every day. I’m trying to get back in shape after years of travel.

I have three daughters, hopefully I’ll have grandchildren at some point. I have three siblings who live within half a mile of me, in California and in Chicago area we are fortunate enough to have my wife’s three siblings and parents close by. Lots of family and I think that’s what it’s all about.

Any final thoughts?

I’ve had a great send-off from IMC, friends, and former colleagues which I really appreciate. Overall I’m just an incredibly fortunate person.

Buy Side Firms Gear Up to Integrate AI

By
Anna Lyudvig
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A significant 75% of buy-side leaders recognize the benefits of AI but need more guidance on its practical application for improving investment analysis, decision-making, risk management, data management and client engagement, according to SimCorp’s 2025 InvestOps Report.

“The results align with what we’re seeing in the market. What’s particularly interesting is that firms are taking a very practical approach – they’re focusing on areas like helping portfolio managers become more efficient with their existing processes, rather than trying to completely reinvent their investment approach,” Marc Schröter, Chief Product Officer at SimCorp, told Traders Magazine.

Marc Schröter

Based on a survey of 200 buy-side executives conducted by WBR Insights in Q4 of 2024, the report provides insights into the buy-side’s challenges and priorities entering into 2025. 

“While machine learning isn’t new to investment management, what has changed is the accessibility of large language models, such as ChatGPT,”  Schröter, commented.

He said that the real barriers are ensuring high-quality data, identifying valuable use cases, and establishing proper governance frameworks for data sharing and residency.

“We’re seeing widespread adoption of AI within the buy-side to improve productivity and operational efficiency,” he said.

“The most common use case is using large language models to query data and documents, but we’re also seeing other practical applications, such as standardizing unstructured data within private market investments and translating investment mandates into compliance constraints,” he added.

When asked how to measure the success of an AI tool in the investment process, the buy-side leaders prioritize increased efficiency in data cleaning (46%), followed by enhanced data visualization (42%) and accelerated time to insights (41%). 

The report also found that nearly half of respondents (47%) say their current data infrastructure is a combination of in-house and third-party solutions, leading to data challenges. 

The top three priorities for addressing these in the near term are building more standardized data models (67%), consolidating systems for a common data layer (65%), and utilizing AI tools for better insights and data predictability (65%). 

When asked about technology and operations, improving data and operations for multi-asset investment strategies (40%)ranked as the topinitiative that the buy-side organizations are planning to implement. 

The main challenge for front office teams is the inability to manage multi-assets in one view (60%), according to the findings. 

To effectively manage a multi-asset class portfolio — the primary challenge in supporting the front office – investment managers need a system architecture with a unified data layer that provides a total portfolio view in real time, with any changes made in one area of the business instantly reflected throughout the entire investment lifecycle for public and private markets. 

This is shown in the survey, where respondents plan to consolidate systems for a real time total portfolio view (64%) to address this challenge. 

“Data quality is absolutely fundamental to successful AI implementation,” Schröter stressed.

“Without clean, accurate data, AI can actually amplify flawed decisions rather than prevent them,” he added.

This is why buy-side firms need a centralized data strategy that creates a single source of truth across their organization, Schröter said. 

This foundation not only drives better decision-making but is essential for successfully using AI, he added.

While large language models are powerful at understanding questions, they still need to be connected to actual investment data and be able to translate a task into a concrete data query, according to Schröter.

For example, he said, when a portfolio manager asks about the duration of a portfolio, the large language model understands the concept, but it can’t calculate it directly. 

Instead, it needs to translate the request into a specific data query and call a function that knows how to perform these calculations, he added.

Schröter believes that the skillsets needed for buy-side professionals to work effectively with AI tools in their investment process go beyond just technical knowledge. 

Teams need to understand how to work with AI tools and generate effective prompts, but equally important are data modeling expertise and strong governance practices, he said.

“Professionals need the judgment to verify AI outputs, understand the underlying data models, and integrate these insights into existing investment processes while maintaining proper oversight,” he added.

When asked about the future of AI in the buy-side industry over the next 3-5 years, Schröter said that the evolution of AI can be seen in three primary steps. 

“The first is Conversational AI, where users ask questions via prompt and receive answers. Second comes AI Assistants, which can handle more complex tasks and learn from user interactions,” he said. 

“The third step is an autonomous copilot, where AI carries out tasks and suggests actions independent of user input. Looking ahead, we expect this will evolve into multiple autonomous copilots engaging with each other,” he concluded.

Broadridge Enhances Multi-Asset Post Trade Processing with GenAI-Powered Analytics

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Press Release
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NEW YORK, LONDON, TOYKO January 16, 2024 – To better streamline multi-asset post-trade processing and operational reporting, Broadridge Financial Solutions Inc. (NYSE: BR), a global Fintech leader, today announced it added an GenAI-powered advanced analytics feature to its platform. A key component of the Broadridge’s OpsGPT ® application, this new GenAI-powered functionality enables users to generate insights and visualizations directly from their trade data using natural language, eliminating the need for data migration.

“Integrating this AI advanced analytics feature into our post-trade platform delivers simplification and innovation, significantly improving risk management and operational efficiency, especially in response to growing regulatory demands,” said Danny Green, head of international post-trade at Broadridge. “The multilingual capabilities and seamless integration provide an accessible solution for broker-dealers and banks, allowing them to quickly access actionable insights without the complexity of traditional reporting tools.”

This new feature, part of Broadridge’s OpsGPT, leverages generative AI and natural language interactions to supply instant reports, data visualization and quickly generated summaries in an intuitive and user-friendly interface. A key benefit of the new feature is its ability to reduce reliance on manual reporting, replacing it with an AI-driven analytics tool that supports multiple languages, including English and Japanese, with plans for Chinese capability in the near future.

The advanced analytics feature is instrumental to international firms navigating evolving regulatory and market dynamics. By streamlining reporting tasks, the tool enables current and prospective post-trade platform users across EMEA and APAC to better manage their operations and maintain compliance, while addressing the challenges posed by faster settlement cycles and compressed margins.

The feature underscores Broadridge’s data and AI strategy and commitment to innovating to enhance user productivity, capabilities and compliance. With faster and deeper data analytics, users can swiftly identify and rectify anomalies, employing predictive analytics to anticipate and mitigate potential bottlenecks.

For more information on streamlining post-trade operations, please see here.

About Broadridge

Broadridge Financial Solutions (NYSE: BR), is a global technology leader with the trusted expertise and transformative technology to help clients and the financial services industry operate, innovate, and grow. We power investing, governance, and communications for our clients – driving operational resiliency, elevating business performance, and transforming investor experiences.  

Our technology and operations platforms underpin the daily trading of more than $10 trillion of equities, fixed income and other securities globally. A certified Great Place to Work®, Broadridge is part of the S&P 500® Index, employing over 14,000 associates in 21 countries. For more information about us, please visit www.broadridge.com.  

Russell US Indexes to Move to a Semi-Annual Reconstitution Frequency from 2026

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Press Release
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  • Reconstitution of Russell US Indexes will be held semi-annually in June and November from 2026
  • Decision based on data analysis and market consultation undertaken in response to the recent evolution of market dynamics and increased volatility
  • Moving Russell US Indexes to a semi-annual reconstitution frequency supports index goals of maintaining accurate representation of the US equity market and ensuring practical usability of the indexes

FTSE Russell, the global index provider, today announces that the Russell US Indexes reconstitution will move to a semi-annual frequency in 2026, with rebalancing continuing on the fourth Friday in June and with the additional implementation date of the second Friday in November.

Russell US Indexes are currently reconstituted annually in June and based on more recent market dynamics and increased volatility, FTSE Russell explored the impact of reconstituting the Russell US Indexes semi-annually. Based on this evaluation, FTSE Russell announces the decision to add a semi-annual Russell US Indexes reconstitution on the second Friday of November, beginning November 2026, contingent on a successful parallel test run in November 2025.

Commenting on moving the Russell US Indexes to a semi-annual reconstitution, Catherine Yoshimoto, Director, Product Management of FTSE Russell, said:

“Since their inception, regular reconstitutions have been a critical part of maintaining the Russell US Indexes by accurately reflecting the ever-changing US equity market. With increased volatility within US equity markets over the past five years, compared to the prior fifteen years, moving to a semi-annual Russell reconstitution frequency to update membership changes earlier will enable greater alignment with the dynamic changes in the current market environment.”

Proposed semi-annual reconstitution methodology overview:

  • The November semi-annual reconstitution will apply the Russell US Indexes construction rules across the size indexes such as the Russell 1000® and Russell 2000® Indexes, however Russell US Style Index changes will be made only to new additions or membership movements (such as for a stock moving from the Russell 1000 Index to the Russell 2000 Index and vice versa) due to the higher projected turnover of Growth and Value Style changes (Russell US Style Indexes will continue to be rebalanced completely in June).
  • The quarterly December IPO inclusion and float/share changes will be incorporated into the November semi-annual Russell reconstitution.
  • Derived indices, e.g. Russell factor indices, which currently rebalance in December, will also be rebalanced in November.
  • The non-Russell, FTSE equity indices will continue with their quarterly December reviews, however cut-off dates will be aligned with those of the Russell US Indexes semi-annual reconstitution in November.

Fiona Bassett, CEO of FTSE Russell, said:

“The annual Russell reconstitution in June is a major event within the US equity market, however, it is important to ensure the Russell US Indexes – which recently celebrated its 41st anniversary – continue to evolve to reflect the dynamic US economy. One of the most attractive features of the Russell US Indexes is that they are designed to represent the US equity market objectively in terms of capitalization and style. Moving to a semi-annual reconstitution frequency will ensure that the Russell US Indexes continue to represent the market, while maintaining the fundamental purpose of the index as a practical portfolio benchmark.”

As adoption of the Russell US Indexes has grown, so has the size of the trade at the annual Russell reconstitution. Since 2019, the dollar amount traded at the close of Russell reconstitution day across Nasdaq and NYSE exchanges has exceeded $100 billion; at market close of the June 2024 reconstitution $219.6 billion was traded.

Approximately $10.6 trillion in assets were benchmarked (by both active and passive funds) to the Russell US Indexes (including growth and value) as of the end of December 2023. Of this total AUM, approximately $2 trillion of the assets were passive, and ETF assets tracking a Russell US index (including styles, sectors, factors, etc.) stood at $658 billion as of the end of September 2024.

At launch in 1984, the Russell US Indexes were reconstituted quarterly, then semi-annually from 1987, and then annually from June 1989 onwards. Balancing representation and turnover have always been key considerations in determining the appropriate frequency of the Russell US Indexes reconstitution.

View the technical notice here.

View the research paper here.

About FTSE Russell, an LSEG business: 

FTSE Russell is a global index leader that provides innovative benchmarking, analytics and data solutions for investors worldwide. FTSE Russell calculates thousands of indexes that measure and benchmark markets and asset classes in more than 70 countries, covering 98% of the investable market globally. 

FTSE Russell index expertise and products are used extensively by institutional and retail investors globally. Approximately $15.9 trillion is benchmarked to FTSE Russell indexes. Leading asset owners, asset managers, ETF providers and investment banks choose FTSE Russell indexes to benchmark their investment performance and create ETFs, structured products and index-based derivatives. 

A core set of universal principles guides FTSE Russell index design and management: a transparent rules-based methodology is informed by independent committees of leading market participants. FTSE Russell is focused on applying the highest industry standards in index design and governance and embraces the IOSCO Principles. FTSE Russell is also focused on index innovation and customer partnerships as it seeks to enhance the breadth, depth and reach of its offering. 

FTSE Russell is wholly owned by London Stock Exchange Group. 

For more information, visit  FTSE Russell. 

EXECUTION MATTERS: Assessing Trading Speed

By
Editorial Staff
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(EXECUTION MATTERS is a Traders Magazine content series focused on the topics most important to traders and technologists in US equities and options markets. EXECUTION MATTERS is produced in collaboration with Lime Trading Corp.)

It’s well known that trading speed has taken giant leaps over the past generation, as markets transitioned from humans buying and selling on trading floors to screen-based electronic systems. 

But as the so-called race to zero moves closer to its notional endpoint, where does trading speed stand as a differentiation strategy for market makers, proprietary trading firms, hedge funds and other active market participants?

The short answer: being fastest is still an effective trading strategy, but for a smaller universe of firms. For everyone else, being “smarter and fast enough” makes a viable business, according to Crisil Coalition Greenwich, which cited trading speed as one of its 10 market structure trends to watch in 2025.

“If you are the fastest and first to market, your trading logic doesn’t need to be unique to make money,” the consultancy stated in a January 6 report. “But the number of such firms has dwindled dramatically over the past five years, as data and trading links bump up against the laws of physics.”

A speed-first strategy can be likened to a football receiver who runs a 40-yard dash in 4.3 seconds; that’s eye-popping, but the prospect’s speed alone may not be enough to carve out a successful career. Teams may wish to instead draft a 4.4 guy – still wicked fast – who also has precise route-running and sure hands.

“Combining the most creative people with as much compute power you can get your hands on is where principal trading firms and hedge funds are now finding their alpha,” Crisil Coalition Greenwich stated. “Speed still matters, and the bar keeps getting higher. But running a successful quantitative strategy is now about unearthing unique correlations and market anomalies via predictive AI operated by a hyperscaler and capturing the profits before anyone else has a chance to figure out what it is you’ve done.”

In a May 2024 report entitled Trading as Fast as Lightning, Nasdaq Chief Economist Phil Mackintosh noted how quotes and trades travel over microwaves, lasers, and fiber optics, with speed and reliability tradeoffs to each. 

The Nasdaq report cited an example of a trading route that would take 162 microseconds, or millionths of a second, via fiber, versus 89 microseconds via wireless. “That might not seem like much,” Mackintosh wrote. “But even in an Olympic race, a split second can be the difference between winning and second place – here, it might mean completing an arbitrage or being legged and exposed to losses.”

“In short, microseconds can matter,” Mackintosh added. “Just like for the past hundreds of years, it’s likely that the race for lower latency will continue.” 

In a recent X thread entitled From Chaos to Code: The Evolution of Trading, financial technology company Algocipher Quantitative chronicled the industry’s journey from open outcry to high-frequency trading.

“Trading today is faster, more precise, and far more scalable than the days of open outcry,” Algocipher wrote, citing quantum computing and artificial intelligence as possible market disruptors going forward. 

BlackRock Foundation, Commonwealth Partner on Retail Investor Research

By
Press Release
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The BlackRock Foundation and Commonwealth Launch National Research Effort to Understand First-Time Investors Who Entered Capital Markets Since 2020

Supported by a $1MM grant from The BlackRock Foundation, “The Investor Diaries” will shed light on investors earning low to moderate incomes; pave the way for more sustainable wealth-building

January 14, 2025 (Boston, MA) – The BlackRock Foundation and national nonprofit Commonwealth launched “The Investor Diaries,” a research initiative designed to better understand the millions of new investors who entered retail capital markets in the U.S. since 2020, particularly those earning low to moderate incomes (LMI). By following these investors through voice diary entries, a national survey, and analysis of large transaction data sets representing millions of investment decisions by people earning LMI, the project shines a light on their unique financial circumstances, motivations, behaviors, needs, and the role that capital market investing plays in the overall financial wellness of LMI households.  The initiative aims to equip the investing industry, financial platforms, and policymakers with important insights to support and sustain this and future generations of new investors. 

During 2020-21 alone, 46 million(opens in a new tab) new brokerage accounts were opened by individual investors in the U.S., an 80% increase over a two-year period. Despite the prediction that this might be a temporary surge, more than 75% of these new investors(opens in a new tab) remain invested today. 

Partnering with Investing Platforms

The Investor Diaries will feature real-time research with people earning LMI ($30,000 to $80,000) who are currently investing, capturing their unique stories through their experiences and transaction data. The longitudinal research study will follow dozens of individual investors over 18 months, conducting observational diary-style interviews and tracking their transactional behavior on an ongoing basis. Many are among the first in their families to invest. 

Commonwealth has partnered with investment platforms Betterment and moomoo to capture participants’ experiences with both robo-advised and self-directed platforms: 

  • Betterment – For investors who don’t want to pick their own stocks, Betterment’s easy-to-use, automated investment technology offers diversified, expert-built portfolios and continually monitors the investments, rebalances the portfolios, and reinvests the dividends.
  • moomoo – Moomoo offers an accessible platform for self-directed investors of all levels to confidently make their own investment decisions with advanced tools and features to help guide their trades.

The Investor Diaries will also include a large National Perceptions and Habits Survey and a parallel study of macro-level investor transaction data to better understand the broad investing behaviors of this population.  

“The Investor Diaries will provide a groundbreaking holistic view of those living on modest incomes who are new to investing in the past five years,” says Timothy Flacke, CEO, Commonwealth. “Understanding the choices and actions of these new market participants, and where existing platforms and tools are serving these new investors well—and falling short—will inform the next wave of investing innovations and help ensure broader capital market participation is a sustainable, productive source of wealth creation.” 

Commonwealth’s past research has demonstrated an unmet appetite for investing among LMI households and the early positive impact of this type of market participation on financial stability and mobility.

“Measuring household investing behavior will help determine how supported these new market participants feel in their investing experience,” says Claire Chamberlain, President, The BlackRock Foundation. “The insights derived from The Investor Diaries can help inform product solutions, investor education, and outreach strategies to optimally support LMI households in building and sustaining wealth via the capital markets.”

For more information about The Investor Diaries, please visit  https://buildcommonwealth.org/research/investordiaries

About Commonwealth

Commonwealth is a national nonprofit building financial security and opportunity for people earning low- to moderate-income through innovation and partnerships. For over two decades, Commonwealth has designed effective innovations, products, and policies enabling over 2 million people to save nearly $8 billion. Commonwealth collaborates with consumers, the financial services industry, employers, and policymakers. Because Black, Latin, and women-led households disproportionately experience financial insecurity, we focus especially on these populations. The solutions we build are grounded in real life, based on our deep understanding of people who are financially vulnerable and how businesses can best serve them. To learn more, visit us at www.buildcommonwealth.org. 

About The BlackRock Foundation

Helping people earn, save, and invest – earlier, more often and for their futures. Guided by BlackRock’s history of making saving and investing more accessible and affordable, The BlackRock Foundation funds and partners with organizations that elevate the voices and experiences of LMI households. With our partners, we aim to 1) support individuals in their efforts to build a financial safety net to protect against shocks that widen disparities and 2) make it easier to build wealth and support upward mobility. With Commonwealth and partners, BlackRock’s Emergency Savings Initiative(opens in a new tab) has provided access to more than 10 million people and led to $2 billion in new liquid savings between 2019 and 2022.

About Betterment

Betterment LLC (“Betterment”) is the largest independent digital financial advisor(opens in a new tab), using automated technology powered by human expertise to fulfill a singular mission: making people’s lives better. With easy-to-use saving, investing, and retirement solutions, Betterment is built to help people optimize their money, no matter their level of experience or how the market is doing. Launched in 2010, Betterment helps more than 900,000 customers manage over $50 billion with curated selections of low-cost, expert-built investing portfolios; personalized guidance; and tax-smart tools. The company has received multiple awards for its investing app, including Buy Side from WSJ (2024). Learn more and for additional disclosure on these awards, visit https://www.betterment.com/#award-disclosure(opens in a new tab).

About moomoo 

Moomoo is an investment and trading platform that empowers global investors with pro-grade, easy-to-use tools, data, and insights. It provides users with the necessary information and technology to make more informed investment decisions. Investors have access to advanced charting tools, technical analytics, and in-depth data. Moomoo grows with its users, cultivating a community where investors share, learn, and grow together in one place. Moomoo provides free access to investment courses, educational materials, and interactive events that any investor, at any level, can gain from. Users can join forum discussions, trending topics, and seminars to better their investment knowledge and insights. The moomoo app is offered by Moomoo Technologies Inc. (“MTI”) a company that is based in Jersey City, New Jersey. The app is used globally in countries including the U.S., Singapore, Australia, Japan, Malaysia and Canada. MTI is not a broker-dealer and does not provide investment advice or recommendations. In the U.S., securities products and services are offered by Moomoo Financial Inc. (“MFI”), an SEC-registered broker-dealer and member FINRA/SIPC. MTI and MFI are indirect, wholly-owned subsidiaries of Futu Holdings Limited (Nasdaq: FUTU). For more information, please visit Moomoo’s official website at www.moomoo.com/us(opens in a new tab).

U.S. Equity Trading Commissions Rebounded in 2024

By
Press Release
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After two years of decline, U.S. equity trading commissions rebounded in 2024, reaching $6.2 billion.

This follows a drop from $7.4 billion in 2021 to $5.4 billion in 2023. The increase is attributed to strong equity market performance, according to annual research from Crisil Coalition Greenwich with hundreds of U.S. institutional equity investors.

“The buy side is cautiously optimistic about the future,” says Jesse Forster, Senior Analyst at Crisil Coalition Greenwich Market Structure & Technology and author of U.S. equity market trends hold steady in 2024. “The recent SEC reforms and the new SEC Chair’s focus on cooperation between regulators and market participants have created a sense of renewed possibility.”

Migration Toward Electronic Trading and Automation

The U.S. equity market continued its migration toward electronic trading last year, with 44% of overall trading volume executed electronically (including algorithmic strategies and crossing networks). Managers expect electronic trading to increase to nearly half of their flow within three years, at the expense of high-touch trading, which they anticipate will account for only 39% of their flow by then.

Across the market, traders are looking for a delicate balance between technology and human touch, with high-touch sales traders still playing a crucial role in finding hard-to-find liquidity and working complex orders.

“Buy-side traders remain resolute in their dual mandate of finding liquidity for their clients while exploring opportunities for automation within their firms,” says Jesse Forster.

What’s Driving Buy-Side Commission Allocation Among Brokers?

Buy-side traders prioritize sourcing natural liquidity when selecting a broker, with 29% of the buy side and 34% of hedge funds citing it as their top consideration. For electronic trading providers, ease of use, reliability and technical support are key, with over two-thirds of buy-side traders naming these as their primary criteria.

“The buy side has long said they wish to reward brokers who consistently add real value to their day,” says Jesse Forster. “Now that the commission pool is growing again, they may finally have the means to do so.”

Source: Crisil Coalition Greenwich

Outlook 2025: Chris Isaacson, Cboe Global Markets

By
Anna Lyudvig
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Chris Isaacson is Chief Operating Officer at Cboe Global Markets.

Chris Isaacson

What were the key theme(s) for your business in 2024?

In 2024, Cboe was well-positioned to capture several long-term secular growth trends that we believe will continue well into 2025. Chief among these was the sustained growth in U.S. options trading, with the industry achieving record volumes for the fifth consecutive year in 2024. Simultaneously, we saw an increasing appetite for exposure to the U.S. markets from investors globally. In response to this demand, Cboe continued to grow its footprint across the U.S., Europe and APAC to better meet our customers where they are. We also continued to innovate and expanded our proprietary S&P 500 Index (SPX) and Cboe Volatility Index (VIX) product suites with new product launches, further enhancing the functionality and accessibility of our offerings for a wider range of customers.

As Cboe executed its business strategy throughout 2024, our leading-edge technology remained key to our success. Cboe’s technology powers every facet of our business, as evidenced by the incredible work delivered by our team this year – whether enhancing our market infrastructure to support the seamless rollout of multiple new products, features, and services, optimizing connectivity to facilitate greater access to our markets for investors outside the U.S., or strengthening the resiliency of our platforms to provide stable and efficient trading environments throughout all types of market conditions. Technology is key to how we meet customer demand and deliver on our business objectives.

What was the highlight of 2024?

One of the year’s achievements was our ability to navigate a volatile market environment while delivering record-breaking performance. Amid heightened volatility driven by ongoing geopolitical tensions, elections around the globe, and macroeconomic uncertainty, all Cboe’s markets continued to operate smoothly, maintaining greater than 99.9% uptime (with 25 of 27 markets at 100% uptime) while handling elevated trading volumes and record levels of message traffic. The resiliency of our markets, especially during the most volatile periods, is testament to the work and planning Cboe puts into business continuity.

At the same time, we executed a comprehensive slate of initiatives to further enhance the performance, resiliency, scalability and telemetry of our exchanges. In equities, we began deploying Dedicated Cores, beginning with our U.S. markets. Dedicated Cores was a standout success and exceeded even our own high expectations in improving performance for customers. In derivatives, we introduced a new architecture to access our options markets and deployed it one of our four options exchanges. This has given our customers a more consistent experience when quoting and accessing liquidity. On any given day, Cboe processes 100 billion quotes and orders across its four options markets, and this new enhancement has made messaging much more efficient. It’s also worth noting we improved the insights our customers have into their trading on our markets with the introduction of a new timestamping service which has been rolled out in our U.S. equity markets and is coming to our other global markets soon.

Expectations for 2025?

A key milestone in early 2025 will be our final technology migration in Canada, with Cboe Canada transitioning to Cboe’s proprietary technology platform. This migration marks the culmination of a multi-year effort to unify our markets under a single, globally consistent, yet locally optimized technology stack. Cboe is well-known for its capacity to release new software updates every week across our global exchanges – a capability we view as a major competitive differentiator. This capability, combined with having all of our equity, options, and futures exchanges now on a common tech platform, significantly benefits Cboe and our customers. We can develop and deploy changes with greater speed and flexibility, while maximizing opportunities for our clients to utilize new capabilities.

Beyond this, we will continue to harness our technology to expand the reach of our products, data and services into new markets, while delivering a state-of-the-art trading environment for our customers. This includes powering the newly rebranded Cboe Data Vantage business to new heights by delivering our data, access, analytics, and insights closer to customers. We’re also excited to introduce a new brand identity for our exchange technology platform: Cboe Titanium, or Cboe Ti for short. Much like its namesake, Cboe Ti represents lightweight strength, durability and exceptional resilience, offering a robust and future-proof foundation for our markets.

Trends underway that will be important?

We expect several emerging trends will continue to reshape the industry. The evolution of technology, increasingly globalized markets, 24-hour trading, and shifting investor behaviors will demand continuous innovation from exchanges. We see significant new opportunities with the democratization of data, continued smart adoption of cloud services, clearing, and data and analytics. Artificial intelligence will also play an increasingly transformative role in our business and operations. After numerous successful AI use cases were rolled out in 2024, we plan to launch even more new initiatives in 2025, empowered by our AI Center of Excellence, which fosters Cboe’s adoption of emerging technologies like generative AI. Cboe is extremely well-positioned to capitalize on many trends and we will continue to strengthen our global technology, team and capabilities to meet the evolving needs of our customers around the world.

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