Volume 1; No. 2 March 2008

Dear Buy-Side Colleague,

Welcome to the second edition of The Buy-Siders Club, an e-newsletter for the buy-side trading community covering both domestic and international trading issues. We focus on the most current issues faced by the buy-side trader and this month we look beyond equities to examine what’s available and challenging in other asset classes. By examining other algorithmic and trading issues for asset classes from foreign exchange to options and beyond, we can uncover untapped opportunities for today’s trader.

Buy-Siders, FX and Algorithmic Trading: Leaps in Volume
Auto and algo trading techniques are being deployed by a wide range of buy-side firms in the increasingly crowded, but not always transparent, waters of the FX market. The resultant leap in volumes and, therefore, liquidity stands to benefit all. Total FX turnover reached USD 3.2 trillion in April 2007, according to the Bank for International Settlements’ Triennial Survey, a 71 per cent increase on 2004. Much of this is attributed to a huge rise in buy-side participation. Why now and what’s available for the trader? More >>

Trading Futures: Opportunities and Competition on a New Exchange
A new futures exchange ELX Electronic Liquidity Exchange backed by 12 banks and trading firms has been formed to compete with the Chicago Mercantile Exchange. The ELX promises to be a fully electronic futures exchange that delivers deep liquidity, fast and reliable execution at a cost-effective price point for all participants. More >>

US Equity Options Trading is Increasing Dramatically Providing Significant Opportunities to the Buy-Side
The market for U.S. equity options is increasing dramatically and trading levels are reaching record levels on a monthly basis. The size of the equity options markets soared to 2.8 billion contracts in 2007, a 41% jump from 2006. This market will provide significant opportunities as the number of institutional accounts that will begin trading options to double in the years ahead. More >>

How This Year the Myth of Multi-Asset Trading Becomes a Reality for the Masses
US investment banks, brokers and exchanges are squaring up to trading and technology challenges, including unprecedented volumes and volatility, the need to trade more diverse asset types through a single system and the advent of complex trading algorithms. Trading platforms will continue to evolve with a single account structure giving access to multiple markets and asset classes. More funds are looking at new asset classes to find alpha and the buy-side is becoming more adventurous in direct market access and algorithmic trading and as such there will be a trickle-down effect on technology and more cross-asset trading systems. More >>

Why Brokers are Coding Dark Pool Routing into All Algorithmic Trading Strategies
It doesn’t matter which asset class you’re in, brokers today are increasingly routing algorithmic trading orders to multiple dark pools as they begin building code into all of their algorithms to search dark pools for liquidity. Dark pool access is a highly significant part of algorithmic trading and traders want easy access – they want the best liquidity pools and the fastest way to routing the order there. More >>

Jumping Fences: A Journalist’s Move from TV to Hedge Funds
And how’s this for a change: With business news volatile right now (perhaps an understatement?) and goliaths of financial institutions and hedge funds merging or shutting down, it’s interesting to view someone known for reporting the business news becoming news with the creation of Ron Insana’s fund. Is success in the cards and what does he have that the average trader can learn from? More >>

Our next issue is scheduled for June 2008. If you have a story, abstract or white paper that you would like to share with your fellow buy-siders, please email me at Stacey.mankoff@worldrg.com.

Thanks for your input and I look forward to next quarter’s issues.

Sincerely,

Stacey Mankoff
Director
The Buy-Siders Club