From front to back August 28, 2008
Posted by James Webster in : finance , trackbackI have just finished reading Michael Simmons’ Securities Operations: A Guide to Trade and Position Management
Anyone wanting to do the same could do a lot worse than picking up this book. It is well written and clearly describes the processes involved in ensuring that the correct assets are exchanged… the primary goal of markets in the first place. It is also an engaging read which sets it apart from many of its peers on the financial services bookshelf which can be dryer than the Sahara.
My suggestions for a next edition would be to consider settlement conventions and processes for OTC derivatives, especially as the settlement & counterparty risks here have ballooned along with the volume of exotic derivative trades that are now made. This is a very topical issue, see ‘Wall Street group issues recommendations for market reform’ on Finextra. In fact it seems every week sees another press release from some trading software vendor, bank consortium or custodian about their efforts to enable quick matching and settlement for CDS and other exotic derivatives.
Back in the world of plain old bonds and shares, it would be good to see coverage of the increased number of trading venues and their associated central counterparties, for example the recently launched pan-European Turquoise and EuroCCP.
The book mentions the Market Data Definition Language, or MDDL, as a burgeoning initiative (at time of publication) to provide an industry standard data format for static data and corporate actions messages… at the moment however the website MDDL.org appears to be somewhat stagnant. It’s quite possible that the implementation of a standard format that reduces their customer’s switching costs isn’t high on the agenda of Thomson Reuters, Bloomberg, et al, hmmm?
Anyone building a settlement system might want to take a look at WIFE, an open-source Java SWIFT messaging library.
Finally, back office staff might take some comfort in the FSA’s latest warning;
The Financial Services Authority has warned UK investment banks to improve their risk pricing procedures and stop firing middle and back office staff involved in crucial valuation control functions.
Comments»
James,
Darrell here.
Engagement party 20 Sept Royal Automobile Club in Sydney.
let me know - 0414544206 or dkake@bigpond.com
Cheers.