Latest Commentary

Board must ponder Dimon's tenure at JPMorgan

A more entertaining look at the issue comes from Breakingviews, which published a mock memo from the bank's lead independent director to the two newest members of the board. 

Massive data scientist shortage looms

A lack of financial IT talent has long been an issue in the financial services industry, which has high standards. The latest concern: data scientists.  At this year's SIBOS, this emerged as a big theme. Speakers "repeatedly mentioned that finding workers with big data skills was difficult and that finding data scientists — quants who can manipulate vast amounts of data — was even harder," noted Wall Street & Technology.

NYSE considers rule change to mitigate glitch effect

When asked about recent industry glitches while speaking at a Barclays Global conference in New York earlier this month, NASDAQ CFO Lee Shavel basically called them an unwanted side effect of today's frenetic market. "These situations, I don't think we will ever eliminate them, but we can make sure systems are resilient enough to recover from them," he said.

So what is the JPMorgan board to do?

The New York Times recounts a recent JPMorgan board meeting to approve more than $1 billion in settlements. "High above Park Avenue, in a 50th-floor conference room overlooking Central Park, JPMorgan's board members had a pressing question about regulatory problems that have dogged the bank for more than a year: are we done yet?"  The answer unfortunately was no, and that presents some tricky issues for the 10-person board, which can ill afford to remain on the sidelines as all this plays out.

The future of kill switches

The SEC generated lots of favorable news when it asked that exchanges provide rule amendments to implement kill switches, which would shut down trading in the face of technological problems. That was a can't-miss sort of recommendation, one that goes down well with the public and politicians as well as the industry. The kill switch concept is hardly new, and exchanges likely have a good idea how to do this.

Unintended consequences of the post-Lehman landscape

There has been a lot of analysis of the post-Lehman world this week as we passed the five year anniversary of that firm's demise. I completely understand the party-poopers who complain that Lehman wasn't the lynchpin of the financial crisis and shouldn't be celebrated as such. Fannie Mae and Freddie Mac were in receivership. Subprime mortgage lenders were imploding. There was a lot going on.

New-era bank consultants in harsh spotlight

The financial crisis and its regulatory aftermath proved to be a solid business opportunity for a group of consulting firms that have risen to help banks with their compliance needs. The like of Promontory Financial Group, Rust Consulting, PricewaterhouseCoopers, Deloitte & Touche and others flew under the radar for many years. But just recently, they have found themselves in a harsh spotlight, as more people awoke to some big issues involving these "shadow regulators." 

Latency arbitrage: Return of SOES bandits?

If you are of certain age in this business, you might remember the glory days of the SOES bandits. They had figured out a way to tap into the Nasdaq's small order execution system to trade in ways that took full advantage of the enormous spreads that characterized the era. Early on anyway, it was easy to make money. But that gave rise to an explosion of retail day traders that made it much harder to profit via SOES. Many bandits flamed out, in deep debt to their broker-dealers. It wasn't long before the entire industry flamed out.

Competition + Fragmentation = Regulation

A new regulation requiring  dark pools to disclose their trading volumes is rumored to be about to be released, and  it seems almost welcome. The two traders quoted in the article basically say there will be some questions about the specifics of disclosures (frequency, etc.) but the rule "will pass."

New era looms for exchanges

It's no secret that the exchange industry has undergone a radical transformation as of late. New players have emerged, volume has declined and the technical complexity of the business has intensified. These days, the risks have never been higher. A single technical glitch could easily spell catastrophe.