Today we are proud to recognize the effort and success of our employees in 2011. The attached release highlights some of the successes for 2011. We’re looking forward to an even more exciting and interesting 2012 as we get ready to release new products in the Compliance and Reporting space, as well as team up with new strategic partners for future growth and possibilities for our clients.
Best wishes to all for a prosperous 2012!
We were excited to announce yesterday that Merlin Securities had selected Firm58 to automate and manage its CSA/Soft Dollar program. They went live several months ago and it’s been a terrific relationship with the Merlin team. The announcement can be read here.
One of the clues to our work with Merlin was the white paper we posted on our website this past October. In that paper, Ron Suber, Senior Partner & Head of Global Sales & Marketing shares Merlin’s views on Business Process Maturity and the optimal time to invest in automation. From their quote in the press release you can see it was “time” for automation. “Integrating Firm58’s software into our own proprietary systems will help us manage that process [CSA/Soft Dollars] effectively while maintaining close communication with clients and regulators,” said Aaron Vermut, COO at Merlin Securities.
There are two themes here we have seen take hold in 2011. The first is broker dealer clients now expect the management of a formal CSA/Soft Dollar program beyond the myriad of spreadsheets that have dominated this practice. At a minimum, broker dealers are trying to protect their commission revenues, if not grow their business. With trading volumes still below the ’07 and ’08 levels, firms are doing whatever they can to meet client demands while securing more business and protecting their existing commission dollars.
The second theme centers on transparency and regulation. It’s not enough to struggle through paper files and fragmented sources of trade data to try and answer regulator’s questions. Quick response times and accuracy of data is critical to avoiding any compliance headaches (or nightmares).
In both situations, Firm58 has been helping its clients to protect and grow it revenue base, as well as serve as a critical component in compliance and regulatory reporting for several years now. A comprehensive approach to commissions management (Billing, Profit Analysis, CSA/Soft Dollar, Compensation, and Regulatory Reporting) is a must have for any brokerage.
This past month our CEO Nick Fera was a guest speaker at John Lothian’s MarketsWiki Question event held at IIT’s Business School in Chicago. Nick touched on the topic of Billing as a strategic activity in the Broker-Dealer world. The format of the series was a TED talk. The result is this video. You can see Nick’s as well as the other 6 speakers comments at the MarketsWiki.TC site.
Ron Suber, Senior Partner & Head of Global Sales & Marketing at Merlin Securities (a recent subscriber to Firm58′s services) shared with Firm58 a white paper discussing Merlin’s views on Business Process Maturity and the right time to invest in automation when running a hedge fund. Ron and his co-authors present a compelling method (referred to as PASS, Process Automation Score Sheet) for businesses to review their process automation needs and “score” one’s readiness to invest in new technologies.
The Merlin team clearly outlines the issues with over and under investing in automation. The team succinctly describes what every firm is trying to understand with the following passage: ”A process that is tolerated by investors in the early stages of a fund’s lifecycle will likely not be acceptable to investors in later stage funds and will almost certainly be disallowed by the institutional investors who allocate mature, successful funds.” It’s a challenge we all face in business: when should we make the investment in process automation to support and encourage growth.
Anyone faced with these decisions to look at growth and the required investment would be well served to read this white paper.
This October our CEO Nick Fera will be speaking at the MarketsWiki event, “MarketsWiki Questions: Exploring Financial Technology.” The event takes place on October 5th and you can register at the link provided above. Here’s a preview of what’s to come. You can see more on the MarketsWiki home page.
Firm58 is pleased to once again co-sponsor the MarketsMedia Chicago Trading and Investing Summit 2011. The event takes place on Thursday, October 6 at The Conrad Hotel. MarketsMedia has a great program lined up for the afternoon and evening. If you are interested in attending, please contact MarketsMedia or contact us at marketing@firm58.com and we may be able to help. We look forward to seeing you there in October.
According to the May issue of Wall Street & Technology magazine, 2011 is the Year of Compliance and the Cloud. We’ve all heard the hype around cloud computing, and not a day goes by where you don’t hear about looming regulation and the impact it will have on the capital markets industry.
What is missing from the headlines is that client reporting is now a top priority among financial firms, with technology budget behind it. According to a recent survey by Aite Group, client reporting ranked at the top of the list in terms of capital markets firms’ IT priorities this year.
For those of us at Firm58 who spend our days working with institutional brokerages, bulge bracket firms, stock exchanges and execution venues, we are in the unique position to see how transformative client reporting can be to the business of trading.
Client reporting is no longer a simple report showing client trades or a client statement showing balances and positions that is distributed once a month via paper or – at best – a static report emailed monthly.
Today, client reporting has to be real-time because changes to rates need to happen quickly, adjustments about where to direct order flow must be timely, and everyone charged with the responsibility of revenue needs to see cost drivers on a daily basis. Whether it’s a high-level trend report or detailed trade data, this detailed information must be streamed in real-time to clients.
Firm58 clients use reporting to show more than just what they traded and when, but who they traded with and the total cost of the trade. Powerful search capabilities enable our clients to find data faster. Information aggregated in multiple ways by group, by asset, by contra party, by time, etc, provides unique perspectives and deeper insight. Trending analysis is then available to easily identify patterns and provide a high-level data perspective and easy access to details.
The competitive advantage our customers realize by way of client reporting is truly transformative. These firms have automated their access to critical information including the identification of their the top customers by revenue, volume, and cost.
Much has been written about the urgency of automating middle and back office processes, but we are now seeing that it’s no longer optional if a firm is serious about competing in today’s global economy. In a recent Firm58 survey of capital markets firms, 91% said their buy-side clients demand more transparency into the post-trade process than they did three years ago.
With increased competition driven by a poor economic environment, firms can no longer sit on the sidelines and rely on spreadsheets and slow manual processes. To keep existing clients and fight for new business, they have to do more. Understanding venue/exchanges costs changing daily and weekly by way of automated reporting is a good place to start.
TiE50 is TiE Silicon Valley’s premier annual awards program founded by TiE Silicon Valley, the world’s largest not-for-profit network of entrepreneurs and professionals dedicated to the advancement of entrepreneurship. Each year, TiE recognizes promising technology companies as part of its TiE50 award program.
We were informed that Firm58 has been shortlisted as a TiE50 finalist from a pool of over 1,600 technology companies. The saying goes, it’s an honor just to be nominated.
But, who are we kidding? We want to win!
Following up on my last blog about commission sharing arrangements and client commission agreements (CSA credits), I wanted to talk about some of the unexpected consequences (or requirements) that fall out of offering these arrangements. Nothing here is bad or problematic, unless you don’t understand it or are ill-prepared to address some additional client needs.
Based on recent news in the trade press and feedback from recent meetings, it appears that commission dollars and volumes for some agency broker dealers are starting to grow again. That’s good news. We think it’s driven in part by the use of Commission Sharing, CSA agreements and the access to new research.
However, this also has another consequence. Clients want to view their unbundled execution costs, seeing how much they are paying for this research as well as having greater transparency into their execution costs. In fact, it’s clear that clients are asking for cost-plus arrangements.
What does this mean? Well, in order to maintain that client, you’ll need to systematically calculate the specific costs of each trade, including maker/taker fees, complex exchange fees, SEC fees and other charges. Clients now expect you to charge them these explicit fees with an agreed upon mark-up. No longer can you charge the typical $0.04-$0.05 all-in commission fee.
The moment you fail to show these explicit costs and verify the mark-up, you’ll lose those clients and commission dollars to the next broker-dealer who can. You’ll have lost a client and wasted the resources that acquired in the first place. Even as commission dollars begin to rise, no one wants to take for granted a client relationship and lose it simply due to their inability to provide transparency and cost-plus billing.
Are you prepared?
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