Today's E-Trading Market in Europe

During a three-day SIFMA conference in London this week, European market participants gathered to discuss the major trends, the benefits and the challenges of e-trading. Over the course of the three days, it was clear that there is much room for growth and adoption of e-trading, especially for the buy side. In Europe, MiFID has been a driver of e-trading insofar as it facilitates automated downstream processing that provides clear data on trades (i.e., transparency) and information useful for post-trade analytics. In polling the attendees, more than half indicated that they have increased the amount of trades done electronically over the last six months. AMG Steering Committee member, James Wallin of AllianceBernstein moderated a panel regarding developments in the CDS market, which was followed by a panel that addressed the evolution of the swaps market. It was made clear that in today's market, strong connectivity exists between the fixed-income markets and the OTC derivatives markets. One of the challenges for the industry is to ensure that operations technology keeps pace with electronic trading, in this regard, the discussion at the conference identified a need for stronger connectivity between e-trading platforms and order management systems. Whether it is trading electronically or by voice, best execution remains at the heart of trading and with the advent of MiFID and growth of derivatives, it is all the more relevant. The Asset Management Group, which developed SIFMA's Best Execution Guidelines for Fixed-Income, will expand its White Paper in light of MiFID and will account for OTC derivatives during the first half of 2008.

Recent Remarks by Treasury Department on Housing, Regulation and GSE Reform

Last week, officials from the U.S. Department of the Treasury have made public remarks on the housing markets, financial regulation in the U.S. and GSE reform.

Housing - On February 5, 2008, Under Secretary Robert Steel made an address regarding the U.S. housing situation and associated challenges facing the financial market, including stress on short-term funding markets, increase of spreads in inter-bank lending, a decrease securitization and challenges of valuing assets. In a policy response, Treasury Secretary Paulson has outlined a 3-point plan: (1) to better identify, reach and connect with servicers and counselors at-risk homeowners who can be helped, (2) to assist in developing additional products for homeowners, and (3) to increase the speed and efficiency of moving these at-risk borrowers into affordable solutions. In addition, the administration created a program, HOPE NOW, which was formed as an alliance among counselors, servicers, investors, and other mortgage market participants to maximize outreach efforts to at-risk homeowners and help them remain in their homes.

Click here to read Under Secretary Robert Steel's remarks on housing.

U.S. Financial Regulation - On February 7, 2008, Under Secretary Robert Steel addressed many issues that are relevant to AMG members including global competitiveness, the modernization of the current regulatory framework in the U.S. and the current conditions in the markets and the economy.

Click here to read Under Secretary Robert Steel's remarks on U.S. financial regulation.

GSE Reform - On February 7, 2008, Assistant Secretary David G. Nason testified before the Senate Banking Committee on GSE Regulation. In his remarks, Nason provided an overview of housing and mortgage market activities adn the role of GSEs. In his testimony, he called for the creation of a new regulatory agency to oversee GSE activities and that the new agency should have authorities comparable to other U.S. regulators.

Click here to read Assistant Secretary David Nason's testimony on reforming GSE regulation before the Senate Committee on Banking, Housing and Urban Affairs.

Derivatives Processing Workshop

The Asset Managers Forum will host a Derivatives Ops Workshop on Wednesday, February 27, 2008 in New York City, where attendees will learn about the most recent developments in the derivatives operations landscape. The Workshop will open with a summary of the reasons why asset managers are increasingly using derivatives in investment portfolios, and what type of operational hurdles are involved. Workshop panelists will:
-- look at the overall derivatives processing landscape;
-- discuss what service providers have to offer for derivatives operations;
-- examine issues associated with 3-way reconciliation, valuation and pricing practices; and collateral management.

The conference draws more than 100 asset management professionals who have primary responsibility over processing derivatives. Also, the Workshop will also have a vendor exhibit featuring technology leaders in the derivatives arena.

Click here to view the Workshop website, which includes the program agenda and registration information.

Important Publications: Washington Weekly
Weekly Report of the American Securitization Forum
SIFMA SmartBrief (past five issues)