Against the backdrop of the economic cloud gathering over the City in the early 1990s, an unknown stockbroking business was preparing to launch in suburbia. 

By the spring of 1991, The Share Centre had started life as a retail broker offering self-select share dealing services to personal investors.

Within 18 months, it had secured contracts to provide white-labelled share dealing services for readers of the Mail on Sunday, The Guardian and a large regional newspaper group.

Ten years later and it was operating its own share trading platform – Sharemark – and had established a holding company with more than 90,000 of its account customers entitled to shares by the turn of the millennium.

By 2008, the company floated with a share offer that was four times oversubscribed. Today it boasts more than 227,000 customers across the UK.

Barclays transition

In April of this year, Barclays Stockbrokers ceased offering certificated share dealing and transferred all customers requiring the service to the Buckinghamshire-based stockbroker.

It meant the addition of more than 11,000 clients overnight and presented The Share Centre with the challenge of handling a significant increase in the number of trades overnight, with the dealing team growing from 14 to 18.

Previously, the Barclays operation had been based in Glasgow, but when the bank decided that it no longer wanted to run the business, the decision was taken to hand operations to an outside provider.

Responsibility for the transition, fell to head of dealing, Jo Measure, a long-standing staffer who started her career in trading at the turn of the millennium.

The transition project to accommodate the Barclays clients from the 8 April 2015, started many months before and resulted in a notable change of service for the clients.

Measure explains: “We have a complete new team (looking after the legacy Barclays customers). We are running it quite differently from Barclays. Barclays had settled in the market T+10 whereas we are T+2.”

Barclays had previously stipulated that the settlement period of 10 working days from the day of the trade was something that was necessary because of “the administration involved in dealing with paper certificates,” but The Share Centre has, so far at least, proven that a two working day target is achievable.

While Barclays’ legacy customers may have witnessed quicker settlement, they have also had to endure a reregistration process as Barclays decided not to provide The Share Centre with its customer database at the time of transition.

Measure says this has meant having to explain to clients how the new service runs and ask for many of their personal details again to be added to the system.

She says: “Unfortunately, the database didn’t come over and it makes the conversations quite long but people seem understanding. Our average [initial] call for a Barclays customer is anything from 10 to 15 minutes whereas for a nominee you can whack a trade through in less than a minute.

“If you get a contract note from us, the commission is split between us and Barclays but, apart from that, there is no influence from Barclays as to how the service is now run.”

Staff across the dealing desk are now being trained so that eventually legacy Barclays clients will be able to be serviced by The Share Centre’s traditional dealing team.

Aside from the Barclays integration, Measure has been faced with the same regulatory headaches that face heads of dealing, whether operating in the retial or institutional market. 

The issue of best execution in the wake of the FCA’s Thematic Review has led to an overhaul of the business’s IT system which can better quantify the quality of execution from the company’s dealers.

The Share Centre’s new proprietary system produces a comprehensive audit trail of venues, times, prices and liquidity availability. It has been a labour of love for Measure and the company’s IT team which saw the system go live in March.

Like many of the projects she manages within the business, she is a picture of modesty saying that the true value in the system won’t be known until it is bedded in for longer period of time.

She says: “From what I have seen so far, it is great to see that we are performing at where we thought we were in terms of execution.  We have always said we endeavour to do our best for each trade.”

Measure’s importance in the business is significant. While she has responsibility for the trading function, she also has been keen to be a part of the various client service initiatives going on within the business. She jokes that she was reluctantly persuaded to take on responsibility for client complaints, but her enthusiasm for the role suggests otherwise.

Talent spotting

Her own route into trading offers some explanation as to why her team have such a wide range of educational backgrounds.  While some have financial and accounting experience, others have learnt on the job, taking the necessary industry exams as they went. Many have never worked in the City of London.

Measure’s route to head of the dealing desk is a surprising one.  Absent is the experience on the smoky London Stock Exchange floor, the Oxbridge economics degree or the computer science PHD.  Instead, she is armed with a fashion degree, which initially led her to working in the film industry.

Prior to the turn of the century, she worked designing costumes for big screen blockbusters.  But, after 15 years working in the arts, she had to make a decision when her industry took a turn for the worse.

She recalls: “The end of my (film industry) career came around 9/11. After that, the work in this country really dried up. I was sick of doing 80-90 hour weeks and getting up at the crack of dawn and leaving work late in the evening. I loved the work but the hours really started to get to me.

“After that, I floated around doing some office work locally before I saw a job for a dealing assistant at The Share Centre. I had always liked figures and when I was doing my A Levels had thought maybe I’d become an accountant. I then became a team leader and did all of the exams required and I became the desk manager in 2008.”

Her varied career experiences means she often recruits those with a broad educational or career backgrounds and allow them to study and qualify for a more expanded role while in training.

She says: “I like to think that I can gauge someone’s character quite quickly. The interview is quite an artificial environment. Everybody on the team has taken exams on how the industry works and we encourage people to study.

“The normal progression [for more junior staff] is that they are required to do the CISI Introductory exams and if people want to progress, we ask them to do the Investment Operations Certificate, formerly the IAQ. For those doing more unit trust work, there is the CFA programme.”

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Net revenue jumped from €473 million to €545 million in the quarter, surpassing analyst predictions, which had estimated net revenues would be up around 13% compared to the final three months of 2013.

The conflict in Ukraine, currency problems in Russia and concerns about Greece’s appetite for maintaining debt repayments led to an increase in volatility and trading activity.

The VDAX – the new volatility index of the German Stock Exchange – rose by 33% in the last three months of 2014, according to data from Dax Indices.

Order book volumes at Xetra jumped by 27% from €278 billion for the last quarter of 2013 to €354 billion while net revenues in the division were up 14%.

Clearstream also saw net revenue growth of 6% over the same period, with a rise of 4% in assets under custody and a 10% rise in settlement transactions.

In the group’s Market Data & Services division, data subscriptions for derivatives and cash market data grew by 3% and net revenues were up 6%.

In a statement in its analyst presentation to market, the company said that the management is “firmly focused on growing the business, effective cost management and attractive capital management”.

The group has set a net revenue growth target of 20-40% between 2013 and 2017.

Deutsche Boerse is anticipating the European Central Bank’s Target 2 Securities initiative will drive further business to its Clearstream operation as a result of changes to settlement legislation.

Deutsche Boerse’s share price is up 18% from 59.22 at the start of 2015 to 69.66 as at 13:30 on 19 February 2015.

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Nasdaq OMX Group blamed unfavourable foreign exchange rate movements for impacting net revenues in three of its four major business lines in the fourth quarter of 2014, compared to a year earlier.

Net revenues for the fourth quarter of 2014 were down 1% year-on-year, the exchange operator said in its investor report today.

In its Market Services business line, the company said the Equity Derivatives, Cash Equities and Fixed Income Currency & Commodities (FICC) divisions were all hit by changes in forex rates.

The Market Services unit, which represents 39% of the group’s total revenues saw net revenues nudge up to $205 million, in the fourth quarter compared to $204 million during the same period a year earlier.

The group’s Equities Derivatives division saw a decline of $1 million as a result of forex movements, but the group said revenues were higher when the currency impact was stripped out due to higher European and US contract volumes.

The Cash Equities division was up 15.3% ($9 million) for the quarter compared to the previous year as a result of an increase in the market share traded on Nasdaq exchanges.

FICC net revenues were down 19.4% for the fourth quarter compared to the previous year from $36 million (Q4 2013) to $29 million (Q4 2014) as a result of a drop in volumes across the FICC division and a “scheduled reduction in payments” from a technology customer.

The group’s Technology Solutions business saw revenues fall from $151 million in 2013 to $138 million in the last quarter of 2014.  

The company’s Information Services division had a better last three months of the year, with revenues up from $107 million to $113 million.

Listing Services – the fourth major business line, saw revenues nudge upwards by $3 million year-on-year.

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The banking group said sales and trading revenue fell from US $3 billion in the fourth quarter of 2013 to US $2.4 billion in the same quarter of 2014.

Fixed Income, Currencies & Commodities (FICC) income dropped $600 million over the same period, which was attributed to a fall in credit income from lower client activity, albeit partially offset by FX and rates business which benefited from increased volatility.

The bank’s Global Markets division as a whole reported a net loss of US $72 million for the fourth quarter of 2014, wider than the US $25 million loss it declared for the same quarter a year ago.

It said the widening of the loss for the division over the quarter was the result of making funding valuation adjustments for uncollateralised derivatives in its sales and trading business.

The full year results showed a rosier picture, however, with income after tax for the Global Markets business rising from US $1.2 billion at the end of December 2013 to US $2.7 billion

In its statement to market, Brian Moynihan, chief executive officer, said the group’s focus on reducing expenses and resolving litigation matters had had a positive impact overall.

He said: “There’s more work and tremendous opportunity ahead as we improve on the platform we’ve built to serve our customers and clients and we enter 2015 in good shape to manage the opportunities and the challenges the markets and the economy will offer.” 

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Chris Jackson joined Citi in September 2009 from Merrill Lynch and held responsibility for all buy side sales for the bank’s trading and execution platform.

The news follows a restructure of Citi’s markets division at the end of 2014, which affected some 40 people across all asset classes.

Jackson’s responsibilities have been absorbed by Salvador Rodriguez who has stepped into an enlarged role, a colleague familiar with the situation said.

A spokeswoman for Citi declined to comment. Jackson was unreachable for comment at the time of writing.

Jackson has also played a major role in developing industry standards at FIX Trading Community. FIX announced Jackson’s appointment as co-chair of the EMEA regional committee in July 2008 while he was director of equity markets for Merrill Lynch. 

At the time of his appointment to the FIX committee, he had worked with the then head of equity trading at JP Morgan Asset Management – Daemon Bear – who is now at State Street Global Markets.

Before his career at Citi, Jackson was responsible for the European sales of the electronic, portfolio and transition trading product at Merrill Lynch. 

He worked at Merrill Lynch for 12 years, working both in New York and London in a variety of roles.  He originally started his career at SBC Warburg.

Separately, Citi confirmed Ireti Samuel-Ogbu as TTS EMEA payments and receivables head in an internal memo last week.

Samuel-Ogbu has been with Citi for some 26 years, having previously worked in London, Nigeria and South Africa for the group.  She was most recently the EMEA Transaction Services Leader for the public sector banking team in London.

In her new role, Samuel-Ogbu will report to Ebru Pakcan, the TTS global payments and receivables head.

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Michael Coscia was fined US$903,176 for the deliberate manipulation of commodities markets after he designed and deployed an algorithmic trading programme that distorted liquidity in Brent Crude, Gas Oil and Western Texas Intermediate futures.

This allowed Coscia to net US$279,920 over a six-week period on the IntercontinentalExchange’s ICE Futures Europe venue, which he accessed from the US via a DMA provider.

Although the FCA could not confirm whether it was still pursuing the DMA provider in question, a spokesperson for the Authority said under FCA regulation, the broker offering DMA may not be responsible for the client’s actions, depending on the specific risk issue.

Coscia was an experienced commodities trader, so the know-your-customer and due diligence requirements placed on DMA providers may well have been met by the broker.

Coscia’s ‘layering’ algorithm placed small orders which he intended to trade on one side of the order book followed by a series of large orders on the opposite side of the order book which were not genuine – typically 20 times the average size placed by other market participants.

The execution of the small order would trigger the immediate cancellation of the large order, a pattern, which would repeat on the opposite side of the order book, which allowed Coscia to benefit from the price movements.

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Global trading technology provider RTS Realtime Systems has boosted its Asian operations, permanently relocating its CEO to Singapore and launching two data centres in the region.

RTS CEO Steffen Gemuenden will move from Chicago to Singapore, signalling the company’s designs to grow its business in the Asia-Pacific. The firm has quadrupled staff numbers in the Singapore office from 15 at the start of 2011 to 60 today.

The company will go live with its first China-based data centre in a few days, in Shanghai, where it will also open a sales and support office in January.

Another data centre will open in Tokyo by the end of the year, expanding its proximity hosting services and direct market access to some 135 venues internationally.

The data centre expansion will also boost the Frankfurt-based company’s low latency access to more than 80 marketplaces including Chicago, New York London and Tokyo.

RTS CEO Steffen Gemuenden said expanding the firm’s Asia presence would help clients identify new trading opportunities.

“We have global clients who want our help in quickly establishing a presence in Asian markets, and Asia-based clients who want to build on their sophistication locally or expand to new markets internationally,” Gemuenden said.

“Our team is seeing strong demand here for everything from front-end click trading solutions, to our new Tango OnDemand fixed-price algorithmic trading package, to risk management, hosting and FIX API exchange connectivity services based on our global trading network,” Gemuenden said.

RTS managing director for Asia-Pacific Andy Woodhouse will also move from firm’s regional base of Singapore to Hong Kong, to further exploit opportunities in China and North Asia.

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Morgan Stanley’s Australian arm will now offer direct market access (DMA) connectivity to the Australian Stock Exchange’s (ASX) Centre Point Block.

The investment bank has extended its service offering to accommodate customers seeking larger block execution in the ASX Centre Point service, which was launched in July. Clients can nominate a minimum acceptable fill size to guarantee a meaningful fill for anonymous block orders.

DMA access to the service will be available through Morgan Stanley’s Night Vision algorithm.

Steve Davis, head of electronic execution at Morgan Stanley Australia, said the service extension would ultimately improve client execution.

“We believe it’s crucial to offer our clients access to the full suite of execution venues in Australia, so we’re pleased to add direct market access to ASX Centre Point Block, to complement our existing product offering,” Davis said.

A Centre Point order enables execution at the prevailing midpoint of the best bid and offer on ASX TradeMatch, and trades are instantly published with a condition code CX.

Morgan Stanley is the seventh ASX participant to offer clients DMA routing to this service, joining BTIG, CSLA, ITG, JP Morgan, Merrill Lynch and UBS.

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Broker ITG will offer futures execution and routing as part of an expansion to meet a spike in futures trading.

The futures execution capabilities will include functionality enabling rolling of futures contracts at expiration dates, while traders will be able to use direct market access and ITG’s futures algorithms.

The routing capabilities for futures will be available on ITG’s trading platforms through an agreement with investment bank Morgan Stanley. ITG’s Triton execution management system and ITG XIP order management system will provide routing services and the firm’s Net FIX connection will offer the service to third party platforms.

In addition, broker-neutral routing will access venues in North America, Europe and the Asia-Pacific region.

Jamie Selway, head of liquidity management at ITG, said the new offering would target clients looking to grow their business in new instruments.

“These expanded futures capabilities demonstrate our commitment to access liquidity across asset classes and around the globe for our clients,” Selway said.

Futures trading activity has spiked since 15 October when US regulator, the Commodity Futures Trading Commission, amended new rules on derivatives trading, resulting in a migration of flow from swaps to futures. The new rules are mandated by the Dodd-Frank Act and are expected to come into force in the first half of next year.

New futures products created by CME Group and IntercontinentalExchange have been designed to mimic swaps that will come under increased regulatory demands, potentially forcing up trading costs.

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Equity market participants believe planned new rules restricting high-frequency trading (HFT) are the biggest threat to liquidity across European markets, according to the latest poll results from theTRADEnews.com showing traders’ continued concern of impending regulation.

The October poll gauged readers’ opinions on the factors most likely to limit equity market growth in Europe, with results suggesting closer attention than ever is focused on rule-makers in Brussels.

While new rules limiting HFT topped the list with 44.58%, reduced portfolio turnover before year-end came a close second with 42.17%, and reduction in choice of dark pools trailed third at 13.25%.

Paul Squires, head of trading at AXA Investment Managers, believes the results may indicate a skewed reality, driven by the increasing hype both regulators and the media have given to HFT.

“I can understand why risks to HFT have led the results, but I would suggest this is due to the amount of attention HFT is getting at the moment, rather than 

the likelihood that it is really the biggest threat to liquidity,” said Squires, although he concedes cracking down on the practice will inevitably hurt liquidity.

“I welcome more governance being applied to HFT, but there is a risk you penalise it too arbitrarily, and squeeze some of that liquidity out of the market, which is a problem to long only investors,” Squires said.

According to Squires, the uncertain macro-economic environment in Europe is the single biggest threat to liquidity and the problem for institutional turnover right now. 

“The absence of any kind of continuity or momentum which would provide confidence to invest cash and in turn drive turnover,” Squires said.

Tony Whalley, head of dealing and derivatives at Scottish Widows Investment Partnership, believes the results show the industry finally concedes the benefits HFT provides in a low-liquidity environment.

“There are a number of market participants who want to get rid of HFT traders because apparently they don’t believe that they add to liquidity, and these results show that those who responded to the survey realise that if there’s less HFT activity, it will damage liquidity,” Whalley said.

While Whalley sees a possibility that changes to the fee structure of  exchanges and multilateral trading facilities may occur next year, which may alter the destination chosen by the market participants, he doesn’t think a reduction in dark pools is likely, but registered lower turnover as the chief factor concerning buy-siders in Europe.

“Historically, there has tended to  be reduced portfolio turnover before the year’s end, because trading is quiet before Christmas. The rationale behind this is that either you’ve not made your targets and you’ve got nothing left, or you’ve made them and you’re not likely to trade aggressively and risk damaging performance that has been achieved year to date,” Whalley said.

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