The buy side doesn’t want to commit to clearing targets, nor should they have to. This is about reducing systemic risk, and arguably that comes from the interconnectedness of the dealers. My comments in the article:
Now, some firms may be having second thoughts, said Kevin McPartland, a senior analyst at Tabb Group in New York. “They want the ability, but on the other hand, they don’t want to be forced” to clear credit swaps, he said.
Trade directly with your broker or look to a system that consolidates multiple quotes? There are benefits to each approach, but as things get more electronic in the OTC markets (with or without new derivatives regulations) this question will be front and center for many. My comments:
“It is important to have an individual brand and storefront that keeps active customers engaged,” says Kevin McPartland, senior analyst at Tabb Group. Because “sometimes if I know I want a Mac rather than a PC, it’s easier to go to the Apple store.” The latter is analogous to a buy-side customer seeking a specific trade or pricing online from one longtime or trusted bank counterparty.
The guys from Exegy who run the Market Data Peaks website say market data rates will only continue to increase. I agree – although I’m not sure doubling in 2010 is necessarily in the cards. Either way everyone needs to be ready. An excerpt:
Data rates will certainly continue to grow with trading firms keeping considerable excess capacity on hand to handle unexpected market events,” noted Kevin McPartland, a TABB Group senior analyst specializing in OTC derivatives as well as technology issues. “We must also look to OTC markets such as FX and US Treasuries that are seeing huge growth in automated trading – where automated trading goes, increased data rates follow.
I got a demo and this is pretty cool stuff. I’m sure we’ll continue to see initiatives like this from financial services focused software firms:
“CEP and open source have both seen major adoption in financial services over the past few years,” said Kevin McPartland, senior analyst at TABB Group. “CEP has helped the industry to deal with ever-increasing data volumes and complexity while open source has helped many firms to find software development efficiencies. Bringing these two ideas together into open-edge model could help drive collaborative innovation in the event processing space.”