Friday, November 1, 2024

Cboe to Launch Options on VIX Futures on Monday, October 14

Catherine Clay, Cboe Global Markets

  • New CFTC-regulated options on futures will physically settle into front-month Cboe Volatility Index (VIX) Futures
  • Designed to offer market participants the ability to more granularly manage volatility
  • Further expansion of Cboe’s volatility complex following launch of Cboe S&P 500 Variance (VA) futures

Chicago – October 9, 2024 – Cboe Global Markets, Inc. (Cboe: CBOE), the world’s leading derivatives and securities exchange network, today announced its new Options on Cboe Volatility Index (VIX) Futures (Ticker: UX) are planned to begin trading on Cboe Futures Exchange, LLC (CFE) on Monday, October 14.

The new Options on VIX Futures will provide investors an additional tool to help manage U.S. equity market volatility, complementing Cboe’s existing securities-based VIX Index options, which are designed to provide similar risk management and yield enhancement capabilities. Utilizing an option-on-future structure, the new product may allow more market participants, including those restricted from accessing securities-based options, to trade a VIX options product.

Cboe’s VIX Index options have seen record trading volumes during the last two years, with average daily volumes reaching over 851,000 contracts in 2024, up approximately 60% from 2022, as more investors have sought utility the options offer.

“Investors have long utilized VIX options and VIX futures to help hedge and manage volatility exposure, and Cboe is proud to expand our volatility product suite at such a critical time,” said Catherine Clay, Global Head of Derivatives at Cboe. “With its options-on-futures structure, the new Options on VIX Futures will look to meet growing customer demand as Cboe works to provide an efficient and seamless experience to both existing and new CFE market participants. The launch will complement our existing volatility offerings, including the recently launched Cboe S&P 500 Variance futures, and enable more investors with the ability to help manage volatility and risk through the election season and beyond.”

“20 years after Cboe launched VIX futures, followed by VIX options, and helped establish volatility as an asset class, we continue to prioritize product innovation, engage with our customers and bring new exchange-traded volatility derivatives to market,” said Rob Hocking, Head of Product Innovation at Cboe. “We believe there is a strong demand for risk management tools, especially as investors prepare for the upcoming election and the recent change in the Fed’s monetary policy. We’ve seen a shift in how investors are using options on a day-to-day basis, and with Options on VIX Futures having a mid-curve structure and the ability to offer short-term exposure, investors are expected to be able to manage short-term volatility with greater precision.”

Christine Hansen, CEO at IMC US, said: “We are proud to support the expansion of listed volatility offerings from Cboe to meet the varying needs of investors”

Tom Chlada, Chief Operating Officer at Prime Trading, said: “Prime’s investment philosophy is to protect and grow capital, and Cboe’s new Options on VIX Futures will be a very welcomed addition to our toolkit, enabling us to better express views on volatility and fine-tune our risk management approach. We believe the new options will help boost participation and trading opportunities in the volatility space, and we look forward to incorporating this tool in our portfolios.”

Keith DeCarlucci, Chief Investment Officer at Melqart KEAL Macro Fund, said: “VIX futures and options play an important role when managing portfolios, and we welcome Cboe’s further expansion of its exchange-traded volatility tools with Options on VIX Futures. Combined with the recent variance futures launch, we have two new products to leverage.”

Options on VIX futures will have European-style exercise, P.M. settlement and physically settle into front-month VIX future. At launch, CFE will list contract expirations for every day the week of October 21 with two additional Friday expirations. Each weekday beginning October 21, CFE plans to list a new contract for trading expiring on the same weekday in the week or weeks following.

The contracts will be regulated by the Commodity Futures Trading Commission (CFTC) and cleared by The Options Clearing Corporation (OCC).

The upcoming launch of Options on VIX Futures follows the recent launch of Cboe S&P 500 Variance (VA) futures, which are designed to offer a streamlined approach to trading the spread between implied and realized volatility. Both products add to Cboe’s existing volatility suite and provide investors with exchange-traded solutions to manage market volatility ahead of and following the U.S. election.

Source: Cboe Global Markets

Interactive Brokers, SNB Capital Enable Investors to Access Saudi Exchange

Milan Galik, Interactive Brokers

Foreign Investors Can Now Access the Largest Stock Exchange in the Middle East through Interactive Brokers

GREENWICH, CT – October 9th, 2024 – Interactive Brokers (Nasdaq: IBKR), an automated global electronic broker, and SNB Capital, the leading broker on the Saudi Exchange and largest investment bank in the Kingdom of Saudi Arabia, have announced a collaboration that will allow eligible international investors to access the Saudi Exchange through the Interactive Brokers platform.

With this landmark alliance, Interactive Brokers is the first global broker to allow foreign investors to directly own and trade securities listed on the Saudi Exchange. Clients of Interactive Brokers can now invest in Saudi equities alongside global stocks, options, futures, bonds, funds, and more from a single unified platform.

The collaboration was launched today during a bell-ringing ceremony at the Saudi Exchange, in Riyadh, with the presence of SNB Capital’s Head of Securities Loai Bafaqeeh and James Bradie, IBKR’s Senior Executive Officer for Interactive Brokers’ new office in Dubai International Finance Center.  

The Saudi Exchange is among the top ten largest stock markets within the 72 members of the World Federation of Exchanges and is the dominant market in the Gulf Cooperation Council (GCC), with over 415 listed securities across 22 sectors, offering a versatile and diverse landscape of listed securities. Clients of Interactive Brokers can diversify and expand their investment portfolios to include Saudi stocks, real estate investment trusts (REITs), and exchange-traded funds (ETFs) that trade on the Middle East’s largest stock exchange, broadening their investment prospects.

“We are pleased to work with SNB Capital and give investors the ability to trade Saudi equities in addition to our already vast array of global products and markets at low cost,” said Milan Galik, Chief Executive Officer of Interactive Brokers.

Saudi Arabia, the largest economy by GDP and leading capital market in the Middle East, is currently undergoing significant social and economic transformation under its overarching national strategy,

Saudi Vision 2030, which aims to further develop an already diversified, accessible, and competitive economy.

“Our collaboration with Interactive Brokers comes as an extension to our role as the Saudi national champion and perfectly aligns with our strategic objectives contributing to achieving the ambitious goals of Saudi Vision 2030’s Financial Sector Development Program (FSDP); to develop an advanced financial market and provide an effective investment platform with a diversified investor base,” said Rashed Sharif, Chief Executive Officer of SNB Capital. 

For more information about access to the Saudi Exchange through Interactive Brokers, please visit:

US – Saudi Arabia Stock Exchange (and countries served by IB LLC)
Canada – Saudi Arabia Stock Exchange
United Kingdom – Saudi Arabia Stock Exchange
Europe – Saudi Arabia Stock Exchange
India – Saudi Arabia Stock Exchange
Hong Kong – Saudi Arabia Stock Exchange
Singapore – Saudi Arabia Stock Exchange
Australia – Saudi Arabia Stock Exchange

The Best Informed Investors Choose Interactive Brokers 

About Interactive Brokers Group, Inc.:  

Interactive Brokers Group affiliates provide automated trade execution and custody of securities, commodities, and foreign exchange around the clock on over 150 markets in numerous countries and currencies, from a single unified platform to clients worldwide. We serve individual investors, hedge funds, proprietary trading groups, financial advisors and introducing brokers. Our four decades of focus on technology and automation has enabled us to equip our clients with a uniquely sophisticated platform to manage their investment portfolios. We strive to provide our clients with advantageous execution prices and trading, risk and portfolio management tools, research facilities and investment products, all at low or no cost, positioning them to achieve superior returns on investments. Interactive Brokers has consistently earned recognition as a top broker, garnering multiple awards and accolades from respected industry sources such as Barron’s, Investopedia, Stockbrokers.com, and many others.

Contact for Interactive Brokers Group, Inc. Media: Katherine Ewert, media@ibkr.com 

About SNB Capital:

SNB Capital Company, a licensed entity by Capital Market Authority (CMA), is a leading regional financial institution with deep industry expertise across five business lines: Asset Management, Wealth Management, Securities, Investment Banking, and Principal Investments. SNB Capital is the largest asset manager in Saudi Arabia with SAR 260 billion (USD 69.3 billion) of assets under management as of March 2024. SNB Capital (DIFC) Limited is established in the DIFC and regulated as a category 3A prudential financial institution by the DFSA specializing in the asset management of alternative assets.  

Further information is available at www.alahlicapital.com. Follow SNB Capital on Twitter @Capital_SNB

OSC Launches Trading Simulation Tool for Retail Investors

The Ontario Securities Commission (OSC) has launched a new trading simulation tool for investors to test how online gamification tactics can influence their investing behaviour.

The Get Smarter About Trading simulator provides retail investors with a chance to participate in a simulated stock market and practice online trading. 

It exposes users to gamification techniques to show them what could be influencing their investing behaviour, according to Leslie Byberg, Executive Vice President, Strategic Regulation at the OSC.

Leslie Byberg

As digital trading platforms have grown in popularity, regulators around the globe are alert to the usage of digital engagement practices (DEPs) within these platforms, according to the OSC.

“Digital investing platforms are increasingly popular and make it easier for retail investors to participate in financial markets, but there is growing regulatory concern over the use of gamification techniques on these platforms,” Byberg said.

In addition, the OSC has released a new report that studied the impact of gamification on investors.

The report, Gamification Revisited: New Experimental Findings in Retail Investing, looks at whether promoting certain assets on digital investing platforms presents a risk to investors.

“The research along with the GetSmarterAboutTrading tool will help people better understand the impact of gamification techniques on their trading behaviour and help investors make more informed decisions,” Byberg said.

The OSC conducted an experiment where participants received virtual “money” to invest in fictional stocks on a made-up trading platform. 

Participants took part in simulated trading where stocks were promoted in different ways. 

The research found two types of promotion had a significant impact on participants’ trading behaviours; those who saw promoted stocks featured on a social feed traded 12% more in those stocks, and those who had the option to copy the trades of a “high performing” user traded 18% more in the promoted stocks.

The findings suggest that these social engagement techniques can influence investor behaviours by encouraging trading in specific assets. 

This influence is likely to have a negative impact, potentially through under-diversification or excessive risk taking.

The new report builds on the work of an earlier OSC research report Digital Engagement Practices in Retail Investing: Gamification and Other Behavioural Techniques.

The 2022 report included the results of an online experiment showing the impact of “points” and “top-traded lists” on user trading.

The experiment found participants rewarded with points for buying and selling stocks made 39% more trades and those who saw a list of top traded stocks were 14% more likely to buy and sell those stocks. More frequent trading generally has a negative impact on investor returns.

This report also contains several recommendations for how regulators and authorities in Canada and abroad might respond to the ongoing use of digital engagement practices by online investing platforms. 

The OSC said that authorities in Canada and abroad should continue to consider whether updates to regulations and guidance for the usage of DEPs by investing platforms are required, with particular attention paid to techniques that, through high-quality research, have been demonstrated to harm investors.

“Regulators could also consider whether to limit digital trading platforms from using tactical applications of DEPs that our research indicates can compromise investor protection,” Byberg said.

“We encourage authorities to gather data from firms and registrants to continue to measure the impact of DEPs on investor behaviours and outcomes,” she added.

The OSC also encourages registrants and firms that operate digital trading platforms to conduct their own research to identify the effects of DEPs on the behaviour and outcomes of users.

Nasdaq Adds to Trajectory Crossing in Europe with PureStream

Henrik Husman, Nasdaq

Nasdaq plans to launch PureStream, a volume-based trajectory trading solution in Europe as Cboe Global Markets also intends to offer a service allowing participants to source and match liquidity at a forward benchmark price in the region.

In Europe Nasdaq owns and operates trading venues, or MTFs, in seven Nordic and Baltic countries. Henrik Husman, president of Nasdaq Helsinki & head of European equities at Nasdaq, told Markets Media that Nasdaq intends to launch PureStream on MTFs in Sweden, Finland and Denmark in the first quarter of 2025, subject to regulatory approval. At the same time Nasdaq will also expand coverage of European Union stocks to offer about 2,000 listed companies for trading .

Henrik Husman, Nasdaq

“It will be exciting for Nasdaq to have a pan-European scope and to offer this new way of trading,” said Husman. “I have been in the industry for 27 years and it is rare to launch new ways of trading in cash equities.”

Trajectory crossing has been available in the US and Canada for some years. PureStream matches indications of interest (IOIs) using volume-based trajectory trading logic. Traders can find counterparties to their interest and execute a specified percentage of market volume over time at volume-weighted average price (VWAP).

Nasdaq technology has been powering the PureStream alternative trading system (ATS) which launched in the US in 2021. In the following year Nasdaq Canada added a PureStream order type.

Husman said trajectory crosses, based on multiple time points, have been popular in the US and Canada due to the increase in passive and index-based trading.

“We have a lot of interest from firms who are actively using PureStream in North America, so it will be very easy for them to embrace the European version,” he added. “This is another example of the automation of equities trading in Europe, but it also showcases the increasing amount of passive trading.”

Armando Diaz, PureStream

Armando Diaz, chief executive of PureStream, said in a statement that the firm is fully committed to advancing streaming globally. He added: “We are very excited about Nasdaq’s introduction of PureStream in Europe which marks a significant milestone.”

Cboe has also said it is launching Cboe BIDS VWAP-X, a trading service allowing participants to source and match liquidity at a forward benchmark price, in Europe before it is extended to other geographies. The service is scheduled to launch on 21 October 2024, subject to regulatory approvals.

Stephen Berte, president of BIDS Trading, the independent subsidiary of Cboe Global Markets, told Markets Media last month that the service is initially being launched in Europe due to the significant first-mover advantage, and the belief that  systematic trading will continue to grow in the region.

“In Europe we want to be the leading trading solutions provider for those going down that path,” Berte added. “The US is probably next in line and we have a lot of demand from our users and participants in Canada.”

PureStream

Husman said the PureStream order type collects trading interests for larger blocks of shares and then matches them based on a number of parameters.

“It becomes special as clients can choose a ‘liquidity transfer rate,’ (LTR) which can be anything from 1% to 500%, and this determines the share of volume from future trades that PureStream will execute,” he added.

Source: Nasdaq

Once the interests match, clients wait for trades done by others in the lit  books, and they take a percentage based on the LTR of the traded volume. Nasdaq collects all these trades over time and once a minimum threshold is reached, the exchange creates an on-exchange off-order book trade report with pricing based on VWAP (volume weighted average price).

For example, two IOIs are up in a stream with an LTR of 15% and volume of 20,000 shares. A PureStream trade is executed when the total volume executed on lit venues across at least two trades, multiplied by the LTR, reaches the minimum stream value threshold of €5,000. The stream continues until the full volume is traded, the limit price of one of the IOIs crosses the price of one of the benchmark trades, or one of the IOIs is cancelled.

Source: Nasdaq

“The fact that we are offering this mechanism on-exchange means users can interact with a different level of liquidity from internal solutions, so we believe this will be actively used and embraced by the buy side,“ added Husman.

PureStream does not take part in actual price formation, so market impact is very contained, according to Husman. Nasdaq will also introduce a reputational scoring mechanism to ensure that participants are really using the service to trade, and exclude a participant from the service if their behaviour does not meet the requirements. Husman believes Nasdaq has found a way to really improve execution quality in terms of minimizing market impact, and found a flexible way of executing trades based on the future VWAP prices.

“In contrast to Cboe BIDS VWAP-X, PureStream does not tie execution to a specific time frame,” Husman added. “Users have the flexibility to determine the time window depending on the liquidity of the stock and their urgency by setting a liquidity transfer rate.”

Deutsche Bank’s Women’s Rising Stars Conference Inspires Younger Generation

Last month, more than 400 people gathered at the Deutsche Bank Conference Center in New York, excited for the opportunity to network and hear from woman leaders from across the financial services industry and beyond.

Katie Flood

This September, Deutsche Bank hosted the inaugural industry-wide ‘Women’s Rising Stars Conference’ in the NYC office, dedicated to empowering the next generation of women in finance.

Katie Flood, Managing Director, Global Equity Sales, Deutsche Bank & Co-chair of the Women on Wall Street (WOWS) Employee Resource Group (ERG), said the event left people “feeling empowered and inspired” by the speakers they heard from many of whom shared deeply personal stories about their career journey. 

“From the highs and lows, the mistakes made, calculated risks taken, and the opportunities seized, and the opportunities missed, or so they thought,” she told Traders Magazine.

The keynote speakers included: Emily Yoder, Global Head of Strategic Relationships, Blackstone, who shared candid insights on cultivating relationships along with progressing and transitioning in your career; Erin Passan, Spencer Stuart, who led an executive coaching workshop and shared insights on communication, storytelling, and how to be impactful with words; Katie Fogertey, CFO of Shake Shack, who shared insights on the future of the restaurant industry, Shake Shack, and thoughts on leadership and culture.

In addition, Leadership in Finance Panel featured senior leaders from Nuveen, TPG, Neo Ivy Capital, and Allspring. 

On stage, Emily Yoder, Global Head of Strategic Relationships at Blackstone recounted how she wished she had realized at a younger age that a career doesn’t always have to go in one direction – “a lot of influential professional experiences can result from a non-linear career path, and she implored attendees to not put too much pressure on themselves to stay on a particular path”.

Flood added that women have incredible value in the financial industry, and this conference further emphasized “the impact we have in driving innovation and success within this sector”. 

“Younger generations are prioritizing purpose-driven careers with opportunities for personal and professional growth, and it’s critical that financial services firms and their leadership recognize the importance of visibility at the senior level,” she stressed.

At the event, DB ran a survey aimed to understand: factors that are most important in women’ career advancement; how the financial services industry can better support younger generations in their career journey; and the biggest challenges those surveyed have faced in advancing their careers.

The survey findings and insights, were gathered from some of the over 200 conference attendees. Majority (73%) of attendees surveyed, were the ages of 25-44, (41% between 25-34 and 32% between 35-44), while 15% were between the ages of 45-54, 8% were between the ages of 18-24 and 4% between the ages of 55-64.

When asked what the most important factor is in advancing their career, more than half (61% ) said a strong manager and senior advocate with more than a quarter (27%) stating a mentor and receiving mentorship, while a combined 13% said external professional development (7%) and internal Employee Resource Group (6%) as important in their career advancement.

When younger generations think about their career journey and how financial services firms (their current and future employers) can best support them, 41% said more visible woman leaders within organizations and over a third (38%) said professional development opportunities, compared to only 15% that said cultivating a culture of inclusivity, and 6% who reported women-led Employee Resource Group (ERG).

When asked what the biggest challenge has been advancing their careers, 42% said leadership opportunities, just under one third (31%) reported work life balance, compared to only 16% that said manager and senior advocate, followed by 11% that said a mentor and receiving mentorship.

According to Flood, these survey findings demonstrate that there is a correlation between ‘leadership opportunities’ and ‘strong manager/senior advocate’ suggesting without the support of a strong manager/senior advocate’ less ‘leadership opportunities’ may be presented to women.

“They also said that financial services firms can better support younger generations in their career journey by having more ‘visible woman leaders within the firm.’ Increasing female representation in these leadership roles and advocating for women’s career advancement are key to building an environment where women can thrive in this industry,” she said.

Flood argued that empowering the next generation of women in finance is a multifaceted opportunity not only for Deutsche Bank, but for the broader financial services industry. 

“It would be great to see an industry-wide collaboration initiative designed to attract, retain, and foster best-in-class talent at all professional levels,” she said. 

“Through this and various other efforts, hopefully, we will see a greater number of more women ascend to more visible senior leadership positions within the industry paving the way for the next generation of women leaders,” she added.

Interactive Brokers Announces Trading in Election Forecast Contracts Surpasses 1 Million

Thomas Peterffy, Interactive Brokers

Interactive Brokers Announces Trading in Election Forecast Contracts Surpasses 1,000,000 on Successful Launch

GREENWICH, CT, October 7, 2024 —  Interactive Brokers (Nasdaq: IBKR), an automated global electronic broker, today announced significant investor interest in Forecast Contracts related to the 2024 US election. Since their launch on October 3, 2024, over 1,000,000 Election Forecast Contracts have been traded. These contracts allow eligible US investors to trade predictions on political outcomes, as well as economic data releases and climate indicators, via the ForecastEx exchange.

Thomas Peterffy, Founder and Chairman of Interactive Brokers, commented, “We’ve seen substantial demand for election-focused contracts on our platform in just a short time. This interest underscores the growing relevance of political prediction markets. As the elections approach, we are pleased to offer investors a straightforward way to hedge against political volatility and take positions on key political, economic, and environmental outcomes.”

Available Election Forecast Contracts:

Investors can trade on the following 2024 US election outcomes:

  • Will Kamala Harris win the US Presidential Election?
  • Will Donald Trump win the US Presidential Election?
  • Will the Democratic Party win a majority in the US House of Representatives?
  • Will the Democratic Party win a majority in the US Senate?
  • Key Senate races, including Arizona, Michigan, Montana, Nevada, Ohio, Pennsylvania, and Wisconsin.

How It Works:

Forecast Contracts provide an easy way to take a position on political events. For example, if an investor believes the US Senate will be under Democratic control in 2025, they can buy a “yes” contract. If they expect a different outcome, they can purchase a “no” contract. Prices range from $0.02 to $0.99, reflecting market consensus on the likelihood of each event. A correct prediction settles at $1, while an incorrect one settles at $0.

Additionally, investors earn a 4.33% APY incentive coupon on the daily closing value of their positions.

Who Can Participate:

Forecast Contracts on election events are available only to eligible US residents. ForecastEx LLC, the operator of these contracts, is a CFTC-regulated, wholly-owned subsidiary of Interactive Brokers.

For live market prices and additional information, visit IBKR ForecastTrader.

About Interactive Brokers Group, Inc.:
Interactive Brokers Group affiliates provide automated trade execution and custody of securities, commodities, and foreign exchange around the clock on over 150 markets in numerous countries and currencies, from a single unified platform to clients worldwide. We serve individual investors, hedge funds, proprietary trading groups, financial advisors and introducing brokers. Our four decades of focus on technology and automation has enabled us to equip our clients with a uniquely sophisticated platform to manage their investment portfolios. We strive to provide our clients with advantageous execution prices and trading, risk and portfolio management tools, research facilities and investment products, all at low or no cost, positioning them to achieve superior returns on investments. Interactive Brokers has consistently earned recognition as a top broker, garnering multiple awards and accolades from respected industry sources such as Barron’s, Investopedia, Stockbrokers.com, and many others.

The Hidden Challenges with Secondaries Market Growth

Michael Aldridge, Accelex

Michael Aldridge, President of Accelex, looks at the exponential growth of private market secondaries and the role technology can play to enhance data quality and support investment decisions.

Private secondaries are growing at pace as investors look for liquidity solutions in an increasingly volatile market.

In the first half of 2024 market value reached USD 68 billion, reflecting a significant shift in investor strategy towards more flexible, liquid options in private markets.

The sector is looking at a potentially record-breaking finish to 2024, according to mid-year advisory reports from Campbell LutyensJefferiesEvercore and PJT Partners.

Despite this growth, the sheer volume and complexity of unstructured data, often trapped within PDFs and other document formats, poses a significant challenge for secondary market investors.

What’s behind the growth?

Over the past couple of years, public markets have been underperforming and IPO activity has been volatile. This has put pressure on investors as they look to other avenues for liquidity, and to rebalance their portfolios.

The availability of better data and transparency in private markets have made secondary investments more attractive and accessible. They also offer tailored and flexible solutions for GPs and LPs such as structured liquidity and continuation funds.

Secondaries provide investors with a place to buy assets years into their performance cycle, usually at a discount, which means the average holding time of the fund’s underlying assets will typically be shorter.

Compared with traditional private investments executed at fund inception, buyers have significantly more asset-level information available to them for the basis of their decisions.

However, carrying out independent valuation of all assets quickly and efficiently is key to capitalising on this data-rich deal environment.

Data is the lifeblood of decision-making

In secondaries, data is the lifeblood of informed decision-making and as more investors enter the space, the sheer volume of data associated with these transactions has skyrocketed.

What buyers are up against is how to access valuable content within a vast amount of unstructured data that is provided by the seller.

The three main challenges facing buyers include:

  • Unstructured data – secondaries data lacks standardisation and can be found in multiple different formats, making it difficult to automate collection and analysis 
  • Multiple sources – data is spread among disparate sources, making it challenging to aggregate 
  • Resourcing – gathering, cleaning and analysing this data can be resource-intensive, requiring significant investment in tech and expertise 

These challenges are creating a bottleneck in the due diligence process, which is paramount in secondary deals. With the volume of assets being exchanged, investors require deeper insights into risk factors, financial performance and potential future returns – which must be delivered quickly.

These manual processes are slowing them down while being costly, inefficient, time-consuming and often error-prone.

With the secondaries market forecasted to exceed $140 billion by the end of the year, these manual processes are making it seemingly impossible for buyers to strike the right balance between speed, scalability and accuracy without the occasional mis-valuation or missed opportunity.

The role of technology

To get the most out of this fast-moving market, technology must advance at the same rate.

Currently, there is a lack of automation technology in the market which would bolster secondaries buying.

But the appetite is there for a more sophisticated approach to minimise time spent acquiring, condensing and analysing various data points in a dynamic and responsive manner.

Advancements in technology mean that by adopting AI and machine-learning techniques, processes for these can now be automated.

This allows buyersto simplify the demanding workflow of secondaries and deliver tangible rewards including scalability, auditability, time and cost savings.

AI and automation can tackle and automate most pain points in the secondary due diligence process including:

  • Manual investor portal access and document classification – by embracing AI and automation, this time-consuming process can become a thing of the past as documents can now be sourced and categorised
  • Complex master-entity data management processes – the nature of these processes means that important data can be missed. By using the right tools,the process for identifying funds, assets and investors can be automated
  • Manual data rekeying – by embracing a pre-trained intelligence engine, users can ensure accurate and dynamic data extraction
  • Error-prone extraction and often inaccurate reporting – these limitations can be replaced by validating information with pre-built systematic checks and business rules
  • Accessing and updating, or even duplicating, previously completed work – AI and automation advancements allow for previously and newly extracted data to be delivered directly into valuation models

Looking ahead

The huge growth of the private secondaries market has opened a lot of new doors for investors seeking liquidity in an unpredictable market.

However, this growth is also creating headaches for investors, particularly around managing and analysing the vast volumes of unstructured and disparate data.

To navigate this complex environment efficiently, secondary buyers must increasingly turn to technology.

By embracing AI and automation solutions, they can streamline workflows, reduce manual errors, and enhance scalability.

As the market continues to evolve, leveraging these tools will be essential for staying competitive and unlocking the full potential of secondaries.

Those who can harness the power of data and technology in this fast-paced, dynamic market will reap the rewards.

OCC Solicits Research on AI in Banking and Finance

Artificial intelligence AI research of robot and cyborg development for future of people living. Digital data mining and machine learning technology design for computer brain communication.

The Office of the Comptroller of the Currency (OCC) is soliciting academic research papers on the use of artificial intelligence in banking and finance for submission by December 15, 2024.

The OCC will invite authors of selected papers to present to OCC staff and invited academic and government researchers at OCC Headquarters in Washington, D.C., on June 6, 2025. Authors of selected papers will be notified by April 1, 2025, and will have the option of presenting their papers virtually.

Interested parties are invited to submit papers to EconomicsSymposium@occ.treas.gov. Submitted papers must represent original and unpublished research. Those interested in acting as a discussant may express their interest in doing so in their submission email.

Additional information about submitting a research paper and participating in the June meeting as a discussant, is available below and on the OCC’s website.

Related Link

Source: OCC

TECH TUESDAY: Move to Cloud was ‘Moment of Truth’ for Nasdaq

TECH TUESDAY is a weekly content series covering all aspects of capital markets technology. TECH TUESDAY is produced in collaboration with Nasdaq.

A moment of truth is defined as an important time when a decision must be made quickly, and that decision will have significant impact on the future.

For Nasdaq, a moment of truth happened when the exchange group decided to move its market infrastructure technology to the cloud with Amazon Web Services (AWS).  

Adena Friedman, Nasdaq
Adena Friedman

“It was about recognizing we don’t just provide technology for our own markets, but we provide technology for 130 other markets around the world,” Nasdaq CEO Adena Friedman said in a recent Boston Consulting Group (BCG) CEO Moments of Truth interview. “To make the determination to rewrite the entire trade lifecycle technology to be cloud-native, and to move our markets into the cloud was a huge moment of truth for our organization.”

By way of background, Friedman shared that Nasdaq’s foundational business has been a market operator, and over time, a provider of infrastructure technology solutions to marketplaces globally. The aim of moving to cloud technology is to help trading and technology clients better navigate markets and bring more integrity, liquidity and transparency to the industry.  

In moving to the cloud, Friedman said a key step was to get employees on board with the vision and believe in the future of the cloud. “They have to understand that technology is an unstoppable force, and cloud is the future of technology that will underpin everything,” she said. “If we don’t start moving, we will fall behind. You have to create that urgency.”

Educating people about the cloud and its capabilities was critical, as this enabled people to gain comfort with emerging technology and then discuss it confidently with clients. “It was super interesting to see how the mindset shifted once they saw what was possible,” Friedman said.

When asked about the critical moments in Nasdaq’s cloud journey, Friedman cited two moments.

“One was when I stood up in front of tens of thousands of people at AWS re:Invent [in November 2021] and announced that we were going to be moving our first market to cloud in 12 months,” she said. “That was a moment of truth. And I had the technology team that was going to be building that in the front, so they were there along with me as I was announcing this to the world.”

“The second moment of the truth was the day the market went live” in December 2022. “It was one of our options markets. We generate billions of messages per day in each of our options markets, and to see it operate flawlessly and with improved latency was a great moment of truth.” 

Since then, the exchange group has moved three exchanges to AWS.

The BCG interview then looked ahead to another major emerging technology – generative artificial intelligence – which Nasdaq’s tech clients are learning is complementary to the cloud.

“As they realize that the future of technology is in unlocking their data, how do they make sure they are positioned to do that?” Friedman said. Gen AI “has completely accelerated our conversations on moving their markets to cloud infrastructure.”

For example, Nasdaq has integrated AI functionality, leveraging Amazon Bedrock, into its Market Surveillance and Nasdaq Verafin technology.

Friedman stressed that with any technological change, whether evolution or revolution, it’s critical to communicate, even over-communicate, with team members. “Once you get everyone on board, you run a lot faster,” she said.

Also, education is important, as is having an “outside-in” mindset to keep complacency at bay. “You need to always be on the forefront of what’s next,” Friedman said. “We were born as a disruptor, and we want to continue to take that culture and live it and breathe it every day.” 

To learn more about Nasdaq’s journey to the cloud, visit https://www.nasdaq.com/cloud

BlackRock Launches eFront Provider

Tarek Chouman, BlackRock

BlackRock announces the launch of eFront Provider, designed to enable asset servicers to offer asset managers a modern fund servicing experience, complete with real-time views into their private markets investor, fund and investment data.

eFront Provider complements BlackRock’s widely used fund administration, investor servicing and data management capabilities for private markets asset servicers.

Global financial service provider Apex Group (“Apex”) has been onboarded as the first eFront Provider client. The eFront Provider product establishes an interconnected, two-way data flow between Apex and its private markets clients. Through a single solution, Apex provides an expansive range of services to asset managers, financial institutions, private clients, and family offices. With over $3.1tn assets on platform serviced across custody, administration and depositary worldwide, Apex were looking for a solution that advanced client collaboration and data sharing, giving their asset manager clients direct access to their data.

Asset managers and asset servicers have faced technology and data challenges when collaborating across different participants within the private markets ecosystem. Legacy private markets systems are often characterised by manual processes, which can lead to inefficiencies and delays when exchanging information.

With a view to solving these challenges, BlackRock has created eFront Provider, an innovative solution to enable asset servicers to collaborate efficiently and effectively, reduce operational risk, and differentiate their service offerings, while giving asset managers better access, transparency, and control over their data.

eFront Provider streamlines processes for Apex by digitizing highly manual tasks, freeing up valuable resources, and allowing users to focus on business growth. By providing a single, integrated view of documents and data, the platform enhances transparency across all parties involved in the fund administration process and improve the end-client experience as they conduct their oversight duty.

Tarek Chouman, BlackRock’s Global Head of Aladdin Client Business said, “Within private markets, access to streamlined shared workflows based on a consistent data set is a key challenge for asset servicers and asset managers. With eFront Provider, we are helping asset servicers navigate the complexities—and empowering them to scale, reduce operational risk, and collaborate seamlessly with their general partner clients.”

eFront is a recognized technology platform for alternative investment management, covering the needs of alternative investment professionals end-to-end, and used by over 850 clients worldwide across all major alternative asset classes. As a part of BlackRock, the eFront® and Aladdin® investment management technology platforms unify public and private asset classes to create a multi-asset technology solution for investment professionals globally.

Peter Hughes, founder and CEO of Apex Group, said: “We are pleased to collaborate with BlackRock on the launch of this product. Their strong track record of delivering for clients mirrors our dedication to ensuring a seamless and continually innovative client experience. Through this great offering, clients will have enhanced access to data between private market fund stakeholders and can use technology to unlock scale and improve service levels. We look forward to continuing our relationship with BlackRock – furthering innovation together.”

Source: BlackRock

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