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• do you have a comment or questions about one of the articles?

Please get in touchWeb www.tnsfinancial.com

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210mm207mm

280mm

210mmFOLD

FOLD

Inside:

…Foreword

…The Evolution of Global Trading Strategies

…Interview with Bank of America Merrill Lynch

…Top 10 Trading Implementations for 2011

…Trading Places

…News Round-Up

GLOBAL TRADING STRATEGIES

Transaction Network Services www.tnsfinancial.com Issue 12

…TNS NEWS ROUND-UP TOP 10 TRADING IMPLEMENTATIONS FOR 2011

• RetailsecuritiesfirmsthroughoutKoreacannowaccesslucrativeForeignExchange(FX)margintradingmarketsintheUS,thankstoanewagreementbetweenLeadingInvestmentandSecurities(Leading)andTNS.

The new agreement allows Leading, to improve the tradingcapabilitiesofitsretailsecuritiesbrokers,providingaccesstotheadvantageousUSFXmarketplace.

• RetailsecuritiesfirmsacrossJapancannowtradewithbrokersinHongKong thanks to anewagreementbetweenconnectivityproviderTNSandNomuraResearchInstitute(NRI).

The new agreement allows firms connected to NRI’s MarketBridgeplatform touseTNS’SecureTradingExtranet to accessthebuoyantHongKongmarkets.

• An industry roundtable hosted by TransactionNetworkServices(NYSE:TNS) has highlighted the uncertainty felt by brokersabout tradingwithdarkpoolsandsuggests thecause issimplyunfamiliaritywiththeserelativelynewtradingvenues.

Held in Stockholm, the eventwas supported by Turquoise, SEBandBurgundy,andbroughttogethermanydelegatesfromvariousfinancialinstitutions.

…Trading Places

XCH

AN

GE

2. Common Entity Identifier: The US Office ofFinancial Research will designate a utility orcompany to create standard identifiers, towhichotheridentifiersmaybecross-referenced.Additionally, there are other organizationsworking to establish a global directory forsecurityidentification.

3. Short Sale Price Restriction Circuit Breaker: Analysis will show that the new RegulationSHO amendments do not help stabilizemarketvolatility but implementation will be consistentacross all US markets. In Europe, proposedregulations will require certain disclosures onshortsalepositions.

4. Stock Circuit Breaker:TheruleswillbeexpandedtoapplytoallRegulationNationalMarketSystem(NMS)securities.

5. Sponsored Access:Stricterruleswillbeapplieduniformlyacrossmarkets.

6. Clearly Erroneous Execution Processing:Therewillbeconsistencyintherulesthatallowtradestobebroken;or,morelikely,ruleswillbeputinplace toprevent clearly erroneous trades frombeingexecuted.

7. Large Trader Reporting System:Largemarketparticipantswillbeidentifiedandtradingactivitywillbecapturedandanalyzedfromthebuyside.

8. Consolidated Audit Trail: TheOrderAudit TrailSystemwillbeusedasastartingpoint. Goingbeyonda“phaseone”willtakealongtime.

9. Accounting for Continuous Capacity Growth:The Options Price Reporting Authority isexpanding to 48 lines in 2011 and is raisingoptionsdatacapacitybyalmost50%bytheendof2011.TheConsolidatedQuotationSystemandthe Consolidated Tape System for equities areincreasingdatacapacityalmost70%in2011.

10. Standards Moving Main Stream:TheStandardsCo-ordinationGroup,madeupofvariousindustryorganizations, will make progress in furtheringtheuseofstandardsacrossthetradecycle.

Properly dealing with these regulatory/complianceinitiatives, to the extent that each of them canbe standardized and coordinated on an industry-wide basis, will expedite implementation to free upresourcesandcreateopportunitiesforotherrevenue-producinginitiatives.

TomJordonPresidentandCEO,Jordon&Jordon

21 October FPL Americas Trading Conference*

NewYorkContact:+12126524464www.fixprotocol.com/events

2 – 4 NovemberFIA Expo*Chicago

Contact:+12024665460www.futuresindustry.org/expo-2010

21 – 24 November 2010Private Equity World MENA

Dubai+97144402500www.terrapinn.com

16 – 17 November 2010Trade Tech Architecture

NewYorkCity+442079369334

www.fixprotocol.com/events

23 November 2010FPL Nordic Briefing

Stockholm+442079369334

www.fixprotocol.com/events

6-8 December 2010Hedge Funds World Australia

Sydney+61290218808www.terrapinn.com

1 March 2011EMEA Trading Conference

London+442079369651

*TNSExhibiting

TomJordon,PresidentandCEOatJordon&Jordonrecentlyattendedameetingonelectronictrading.Sevenofthelargesteightinvestmentbanksattendedandall agreed that regulatory and compliance initiatives always take priority anddominatesITprojectlists.BelowiswhatJordan&Jordanbelievewillbethetop10non-discretionaryimplementationsforthecapitalmarketsin2011.

1. MiFID – Consolidated Tape in Europe:Themodel Europe adopts must be different than the model intheUSduetodifferences in regulatory configuration and aggressive time frames.However,wecould see multiple consolidators in2011.

1802 Xchange-Issue 12.indd 1 7/10/10 13:08:13

FOLD

FOLD

210mm 210mm 207mm

The evolution of global trading strategies’

Welcome to the latest issue of Xchange. Greater

numbers of trading firms worldwide are deploying

global trading strategies’ but implementing the

correctstrategycanbethekeytoasuccessfultrade.

This editionexplores theevolutionof global trading

strategiesandtheimpactthesehavehadonfinancial

marketparticipants.

Phil Albinus, freelance writer and former editor of

Watersmagazine discusses how the rise of global

trading has changed the face of high finance, and

explores how technology has played a key role in

how global trading strategies have evolved over

theyears.

I catch up with John Goeller, Managing Director

of Global Execution Services at Bank of America

Merrill Lynch (BofAMerrill) to findouthow trading

globallyhas impactedhisbusiness.Johndiscusses

howimportantglobaltradingisforBofAMerrilland

whathe feelsare themainchallenges for financial

institutionstradingglobally.

TomJordon,PresidentandCEOatJordon&Jordon

whorecentlyattendedanelectronictradingmeeting

with seven out of the eight largest investment

banksandgiveshisthoughtsonthetop10trading

implementationsforcapitalmarketsin2011.

Ifyouhaveanycommentsonanyoftheissuesraised

inthiseditionofXchange,orifthereisanythingyou

wouldliketoseeinafutureissue,pleasegetintouch

usingthecontactdetailsonthebackpage.

AlanSchwartzPresident,FinancialServicesDivision

FOREWORDXCH

AN

GE

BEYOND THE WATER’S EDGE BANK OF AMERICA MERRILL LYNCH

XCH

AN

GE

Ambitious investors have always lookedoverseasfornewopportunities.WhetheritwasexplorersfindingnewroutestotheEast for spices and gold or speculatorslooking for new commodities like sugarandcoffee,thelureofnewprofitsandvastfortunes was too powerful for investorsandtraderswhowerewearyoftradingintheirhumbletownsandstalecities.

Since the1990s, the rise of global trading has beenadvantageousforestablishedfinancialservicesfirmsintheUnitedStatesandEurope.Likewiseinthefirstdecadeofthenewmillennium,newmarketshaveemergedthatwere once sleepy backwaters: Southeast Asia, SouthAmericaandEasternEurope–morecommonlyknownasBRICforBrazil,Russia,India,andChina.Whereoncethese markets had underdeveloped market structureand immature ifnon-existenttechnology, theyarenowtheblossomingpowerhousesfortoday’sglobalinvestor.

According toKevinMcPartland,senioranalyst for themarketresearchfirmTabbGroup,theshiftoverthepast10 yearshas inspiredfirms toexpand theirhorizons.“Peoplearelookingattheworldasoneglobalmarket,”hesays.

Global tradingcomeswithasetofuniquechallenges.Investmentfirmsmusthavethepropertoolsinplaceforworkingoverseasandalthoughtechnologycanleveltheplayingfield,itisapriceyinvestmentforfirmslookingtoworkoutsideoftheirmarkets.Further,investorsmustassess their risk profiles and the maze of regulatorycompliancewhendealingwithanewmarket.Remember:Enteringanewcountrymeansthatyouarealsoenteringanewculturewheretherulesthatyoulivebymightbeillegaloraquaintnotion.

TheTechAdvantage

Akeyingredientforglobaltradingsuccessistechnology.Thanks to off-the-shelf solutions, firmsno longer havetobuildtheirowntradingsystemsthatmightnotevenworkwith platforms used in newermarkets. In someregions,suchasDubaiwheretechnologydollarsarefar

Bank of AmericaMerrill Lynch (BofAMerrill) is the global markets andbanking division of Bank of America. Their execution services businessprovideselectronictradingsolutionsforcashequities,futuresandoptionsto the US and overseasmarkets. Alan Schwartz catches up with JohnGoeller,ManagingDirector ofGlobal ExecutionServices, to findout howtradinggloballyhasimpacteditsbusiness.

How important is global trading for BofA Merrill?

Global trading is a key part of our strategy. ThemergerbetweenBankofAmericaandMerrillLynchhascertainlyinfluencedanincreasedproportionofour global trading infrastructure and has enabledus to develop a uniformed, single global tradingplatform.As a result of this,we can provide ourclientswithacombinedoffering,givingthemaccesstomultipletradingvenuesacrosstheglobe.Whenanemergingmarketbecomeselectronic,wenowhaveaplaninplacegoverninghowweconnecttoit.Thisisakeyrequirementfromourclients.

What do you feel are the main challenges for trading globally?

Whenglobalizingaplatformyouhavetokeepuptodatewithmarketinnovations.Itisnotnecessarytotradeonaglobalscalefromthebeginning,buttostartinoneregionandgraduallyexpand.However,latency plays an issue here. Financial institutionsneed to have the ability to measure latency andknow exactly how to deal with it. This can getcomplicatedwiththevarietyof localprovidersandinfrastructures, however, firms need to have thescalability inplacetodealwithbothdomesticandglobaltradingrequirements.

Withalargenumberofglobalelectronic market liquiditypointsavailable,itisimportantforBofAMerrill tobe locatedin regions where our clientsneed us to be. This meansstayingaheadofglobalmarketstructure and keeping up onregulatory requirements toensureweprioritizeourglobalinitiativescorrectlyfromregiontoregion.

In the current financial climate, should firms trading domestically keep to this strategy, or do you believe there is an opportunity for them to expand into overseas markets?

This is a function of resources and skill set. Alot of the major markets are reeling from thefinancialcrisis,however,inconversewehaveseena lotofopportunitiesarisefromseveralemergingmarkets which have managed to avoid some ofthe financial troubles. These markets arecharacterized by a great deal of technologicaladvancementsand firmswithin themareworkinghardtoimprovetheirelectronictradingcapabilities.Theseoffergoodopportunitiesforfirmslookingtodevelop their global trading strategies during thechallengingeconomicclimate.

How important is the role of technology when trading globally?

Itisextremelyimportant.GoodlevelsofautomationhaveplayedakeypartinourglobaltradingstrategyandBofAMerrillwouldnotbewherewearetodaywithout it. Therewill alwaysbea requirement forsecureandreliableconnectivitywhentradingbothdomesticallyandglobally.Theremustbearobustnetwork in place which can handle high volumesofmarketdata,so it isvitaltoharnessthe latesttechnologytodeliverthis.

Which regions are reaping the benefits of global trading?

Asia and LatinAmerica are definitely thriving andBrazilinparticularisheadandshouldersabovetherest.Canadaalsocontinuestoshowpromise.

fromscarce,exchangesoftenhavestate-of-the-arttradingsystems,marketdataandriskmeasurementtools.

“Technology has certainly levelled the playing field. Thebarrierofentryismuchlowerthanitwasjustafewyearsago,”sayMcPartland.

Rightnow,thereisasharpfocusfortheexchangesandtheassetmanagerstoleveragetradingtechnologiesandtheleadingchallengeisconnectivity.“Whetherthatmeansgainingaccesstoco-locationspacesinaparticularregionor to fast fiber optic connectivity between the marketsand exchanges, once you start going across oceans itbecomes increasingly complicated,” says McPartland.“Andexpensive.”

ACulturalExchange

Financial services firmsmust also treaddelicatelywhendealing overseas. Forget just knowinghowanexchangeworks, it’s important to rememberhowpeople interact.In spite of the “electronification” of the capitalmarkets,investment firms need to understand who is the biglocalbroker,hedgefundandassetmanagerinthearea.Unfortunately, this is knowledge you cannot acquire inbooks. You have to do your homework and understandwhatitmeansinordertoimplementyourstrategy.

“IntheUS,wetendtolookatEurope,AsiaandAfricaassingleregionswhenactuallythesearemultiplecountrieswithmultiplemarkets,”saysonemarketanalyst.

McPartlandrecallsspeakingwithatraderwhoworks inVietnam where front running is an accepted practice.Also, some societies keep tight lids on the amounts offoreigncurrencythatentertheirmarketsandothers,likeChina, have strict policies in place to keep themarketsrelatively closed. This allows other markets, such asthoseinEasternEuropeandSoutheastAsia,thechancetoabsorb liquidity fromoutside investors. IntheUSandEurope, investorsmust also look at risk and specificallyhoweasyitistogetinandoutoftradingpositions.Ifit’shardtogetoutofaposition, itraisestheriskprofileofthatstrategy.Iftheycannotexitatwill,investorswilllookforopportunityelsewhere.

Rightnow,investorsarelookingatChinabutentryintothatnation iscomplicatedby itsarrayofregulations.Marketobserversnotethat India isgrowingquicklyasamarketleaderastheycontinuetomodernizeandofferco-locationservicestotheBombayStockExchange.McPartlandpointsoutthatSingaporeisalsoinvestinginitstechnologyandthe Tokyo Stock Exchange has seen increased businessthankstoitsnewtradingplatform.

That said, emerging markets can be vulnerable tochanging market forces. Some US buy side firms whoweretradinginAsiabackedoffinthewakeofthecreditcrisis in2007 inaneffort tokeepmorecashonhand.In tougher times, when the potential returns weresmaller than the costs, people started to slow downtheirinvestments.

Despite a global recession, traders have shown fewsignsofretreatingtotheir localregionsandexchanges.As always, commerce leads the way in exploring thenewworld.

ByPhilAlbinus,freelancewriterand formereditorofWatersmagazine

JohnGoellerManagingDirector,GlobalExecutionServices,BofAMerrillLynch

1802 Xchange-Issue 12.indd 2 7/10/10 13:08:24

FOLD

FOLD

210mm 210mm 207mm

The evolution of global trading strategies’

Welcome to the latest issue of Xchange. Greater

numbers of trading firms worldwide are deploying

global trading strategies’ but implementing the

correctstrategycanbethekeytoasuccessfultrade.

This editionexplores theevolutionof global trading

strategiesandtheimpactthesehavehadonfinancial

marketparticipants.

Phil Albinus, freelance writer and former editor of

Watersmagazine discusses how the rise of global

trading has changed the face of high finance, and

explores how technology has played a key role in

how global trading strategies have evolved over

theyears.

I catch up with John Goeller, Managing Director

of Global Execution Services at Bank of America

Merrill Lynch (BofAMerrill) to findouthow trading

globallyhas impactedhisbusiness.Johndiscusses

howimportantglobaltradingisforBofAMerrilland

whathe feelsare themainchallenges for financial

institutionstradingglobally.

TomJordon,PresidentandCEOatJordon&Jordon

whorecentlyattendedanelectronictradingmeeting

with seven out of the eight largest investment

banksandgiveshisthoughtsonthetop10trading

implementationsforcapitalmarketsin2011.

Ifyouhaveanycommentsonanyoftheissuesraised

inthiseditionofXchange,orifthereisanythingyou

wouldliketoseeinafutureissue,pleasegetintouch

usingthecontactdetailsonthebackpage.

AlanSchwartzPresident,FinancialServicesDivision

FOREWORD

XCH

AN

GE

BEYOND THE WATER’S EDGE BANK OF AMERICA MERRILL LYNCH

XCH

AN

GE

Ambitious investors have always lookedoverseasfornewopportunities.WhetheritwasexplorersfindingnewroutestotheEast for spices and gold or speculatorslooking for new commodities like sugarandcoffee,thelureofnewprofitsandvastfortunes was too powerful for investorsandtraderswhowerewearyoftradingintheirhumbletownsandstalecities.

Since the1990s, the rise of global trading has beenadvantageousforestablishedfinancialservicesfirmsintheUnitedStatesandEurope.Likewiseinthefirstdecadeofthenewmillennium,newmarketshaveemergedthatwere once sleepy backwaters: Southeast Asia, SouthAmericaandEasternEurope–morecommonlyknownasBRICforBrazil,Russia,India,andChina.Whereoncethese markets had underdeveloped market structureand immature ifnon-existenttechnology, theyarenowtheblossomingpowerhousesfortoday’sglobalinvestor.

According toKevinMcPartland,senioranalyst for themarketresearchfirmTabbGroup,theshiftoverthepast10 yearshas inspiredfirms toexpand theirhorizons.“Peoplearelookingattheworldasoneglobalmarket,”hesays.

Global tradingcomeswithasetofuniquechallenges.Investmentfirmsmusthavethepropertoolsinplaceforworkingoverseasandalthoughtechnologycanleveltheplayingfield,itisapriceyinvestmentforfirmslookingtoworkoutsideoftheirmarkets.Further,investorsmustassess their risk profiles and the maze of regulatorycompliancewhendealingwithanewmarket.Remember:Enteringanewcountrymeansthatyouarealsoenteringanewculturewheretherulesthatyoulivebymightbeillegaloraquaintnotion.

TheTechAdvantage

Akeyingredientforglobaltradingsuccessistechnology.Thanks to off-the-shelf solutions, firmsno longer havetobuildtheirowntradingsystemsthatmightnotevenworkwith platforms used in newermarkets. In someregions,suchasDubaiwheretechnologydollarsarefar

Bank of AmericaMerrill Lynch (BofAMerrill) is the global markets andbanking division of Bank of America. Their execution services businessprovideselectronictradingsolutionsforcashequities,futuresandoptionsto the US and overseasmarkets. Alan Schwartz catches up with JohnGoeller,ManagingDirector ofGlobal ExecutionServices, to findout howtradinggloballyhasimpacteditsbusiness.

How important is global trading for BofA Merrill?

Global trading is a key part of our strategy. ThemergerbetweenBankofAmericaandMerrillLynchhascertainlyinfluencedanincreasedproportionofour global trading infrastructure and has enabledus to develop a uniformed, single global tradingplatform.As a result of this,we can provide ourclientswithacombinedoffering,givingthemaccesstomultipletradingvenuesacrosstheglobe.Whenanemergingmarketbecomeselectronic,wenowhaveaplaninplacegoverninghowweconnecttoit.Thisisakeyrequirementfromourclients.

What do you feel are the main challenges for trading globally?

Whenglobalizingaplatformyouhavetokeepuptodatewithmarketinnovations.Itisnotnecessarytotradeonaglobalscalefromthebeginning,buttostartinoneregionandgraduallyexpand.However,latency plays an issue here. Financial institutionsneed to have the ability to measure latency andknow exactly how to deal with it. This can getcomplicatedwiththevarietyof localprovidersandinfrastructures, however, firms need to have thescalability inplacetodealwithbothdomesticandglobaltradingrequirements.

Withalargenumberofglobalelectronic market liquiditypointsavailable,itisimportantforBofAMerrill tobe locatedin regions where our clientsneed us to be. This meansstayingaheadofglobalmarketstructure and keeping up onregulatory requirements toensureweprioritizeourglobalinitiativescorrectlyfromregiontoregion.

In the current financial climate, should firms trading domestically keep to this strategy, or do you believe there is an opportunity for them to expand into overseas markets?

This is a function of resources and skill set. Alot of the major markets are reeling from thefinancialcrisis,however,inconversewehaveseena lotofopportunitiesarisefromseveralemergingmarkets which have managed to avoid some ofthe financial troubles. These markets arecharacterized by a great deal of technologicaladvancementsand firmswithin themareworkinghardtoimprovetheirelectronictradingcapabilities.Theseoffergoodopportunitiesforfirmslookingtodevelop their global trading strategies during thechallengingeconomicclimate.

How important is the role of technology when trading globally?

Itisextremelyimportant.GoodlevelsofautomationhaveplayedakeypartinourglobaltradingstrategyandBofAMerrillwouldnotbewherewearetodaywithout it. Therewill alwaysbea requirement forsecureandreliableconnectivitywhentradingbothdomesticallyandglobally.Theremustbearobustnetwork in place which can handle high volumesofmarketdata,so it isvitaltoharnessthe latesttechnologytodeliverthis.

Which regions are reaping the benefits of global trading?

Asia and LatinAmerica are definitely thriving andBrazilinparticularisheadandshouldersabovetherest.Canadaalsocontinuestoshowpromise.

fromscarce,exchangesoftenhavestate-of-the-arttradingsystems,marketdataandriskmeasurementtools.

“Technology has certainly levelled the playing field. Thebarrierofentryismuchlowerthanitwasjustafewyearsago,”sayMcPartland.

Rightnow,thereisasharpfocusfortheexchangesandtheassetmanagerstoleveragetradingtechnologiesandtheleadingchallengeisconnectivity.“Whetherthatmeansgainingaccesstoco-locationspacesinaparticularregionor to fast fiber optic connectivity between the marketsand exchanges, once you start going across oceans itbecomes increasingly complicated,” says McPartland.“Andexpensive.”

ACulturalExchange

Financial services firmsmust also treaddelicatelywhendealing overseas. Forget just knowinghowanexchangeworks, it’s important to rememberhowpeople interact.In spite of the “electronification” of the capitalmarkets,investment firms need to understand who is the biglocalbroker,hedgefundandassetmanagerinthearea.Unfortunately, this is knowledge you cannot acquire inbooks. You have to do your homework and understandwhatitmeansinordertoimplementyourstrategy.

“IntheUS,wetendtolookatEurope,AsiaandAfricaassingleregionswhenactuallythesearemultiplecountrieswithmultiplemarkets,”saysonemarketanalyst.

McPartlandrecallsspeakingwithatraderwhoworks inVietnam where front running is an accepted practice.Also, some societies keep tight lids on the amounts offoreigncurrencythatentertheirmarketsandothers,likeChina, have strict policies in place to keep themarketsrelatively closed. This allows other markets, such asthoseinEasternEuropeandSoutheastAsia,thechancetoabsorb liquidity fromoutside investors. IntheUSandEurope, investorsmust also look at risk and specificallyhoweasyitistogetinandoutoftradingpositions.Ifit’shardtogetoutofaposition, itraisestheriskprofileofthatstrategy.Iftheycannotexitatwill,investorswilllookforopportunityelsewhere.

Rightnow,investorsarelookingatChinabutentryintothatnation iscomplicatedby itsarrayofregulations.Marketobserversnotethat India isgrowingquicklyasamarketleaderastheycontinuetomodernizeandofferco-locationservicestotheBombayStockExchange.McPartlandpointsoutthatSingaporeisalsoinvestinginitstechnologyandthe Tokyo Stock Exchange has seen increased businessthankstoitsnewtradingplatform.

That said, emerging markets can be vulnerable tochanging market forces. Some US buy side firms whoweretradinginAsiabackedoffinthewakeofthecreditcrisis in2007 inaneffort tokeepmorecashonhand.In tougher times, when the potential returns weresmaller than the costs, people started to slow downtheirinvestments.

Despite a global recession, traders have shown fewsignsofretreatingtotheir localregionsandexchanges.As always, commerce leads the way in exploring thenewworld.

ByPhilAlbinus,freelancewriterand formereditorofWatersmagazine

JohnGoellerManagingDirector,GlobalExecutionServices,BofAMerrillLynch

1802 Xchange-Issue 12.indd 2 7/10/10 13:08:24

FOLD

FOLD

210mm 210mm 207mm

The evolution of global trading strategies’

Welcome to the latest issue of Xchange. Greater

numbers of trading firms worldwide are deploying

global trading strategies’ but implementing the

correctstrategycanbethekeytoasuccessfultrade.

This editionexplores theevolutionof global trading

strategiesandtheimpactthesehavehadonfinancial

marketparticipants.

Phil Albinus, freelance writer and former editor of

Watersmagazine discusses how the rise of global

trading has changed the face of high finance, and

explores how technology has played a key role in

how global trading strategies have evolved over

theyears.

I catch up with John Goeller, Managing Director

of Global Execution Services at Bank of America

Merrill Lynch (BofAMerrill) to findouthow trading

globallyhas impactedhisbusiness.Johndiscusses

howimportantglobaltradingisforBofAMerrilland

whathe feelsare themainchallenges for financial

institutionstradingglobally.

TomJordon,PresidentandCEOatJordon&Jordon

whorecentlyattendedanelectronictradingmeeting

with seven out of the eight largest investment

banksandgiveshisthoughtsonthetop10trading

implementationsforcapitalmarketsin2011.

Ifyouhaveanycommentsonanyoftheissuesraised

inthiseditionofXchange,orifthereisanythingyou

wouldliketoseeinafutureissue,pleasegetintouch

usingthecontactdetailsonthebackpage.

AlanSchwartzPresident,FinancialServicesDivision

FOREWORD

XCH

AN

GE

BEYOND THE WATER’S EDGE BANK OF AMERICA MERRILL LYNCHXCH

AN

GE

Ambitious investors have always lookedoverseasfornewopportunities.WhetheritwasexplorersfindingnewroutestotheEast for spices and gold or speculatorslooking for new commodities like sugarandcoffee,thelureofnewprofitsandvastfortunes was too powerful for investorsandtraderswhowerewearyoftradingintheirhumbletownsandstalecities.

Since the1990s, the rise of global trading has beenadvantageousforestablishedfinancialservicesfirmsintheUnitedStatesandEurope.Likewiseinthefirstdecadeofthenewmillennium,newmarketshaveemergedthatwere once sleepy backwaters: Southeast Asia, SouthAmericaandEasternEurope–morecommonlyknownasBRICforBrazil,Russia,India,andChina.Whereoncethese markets had underdeveloped market structureand immature ifnon-existenttechnology, theyarenowtheblossomingpowerhousesfortoday’sglobalinvestor.

According toKevinMcPartland,senioranalyst for themarketresearchfirmTabbGroup,theshiftoverthepast10 yearshas inspiredfirms toexpand theirhorizons.“Peoplearelookingattheworldasoneglobalmarket,”hesays.

Global tradingcomeswithasetofuniquechallenges.Investmentfirmsmusthavethepropertoolsinplaceforworkingoverseasandalthoughtechnologycanleveltheplayingfield,itisapriceyinvestmentforfirmslookingtoworkoutsideoftheirmarkets.Further,investorsmustassess their risk profiles and the maze of regulatorycompliancewhendealingwithanewmarket.Remember:Enteringanewcountrymeansthatyouarealsoenteringanewculturewheretherulesthatyoulivebymightbeillegaloraquaintnotion.

TheTechAdvantage

Akeyingredientforglobaltradingsuccessistechnology.Thanks to off-the-shelf solutions, firmsno longer havetobuildtheirowntradingsystemsthatmightnotevenworkwith platforms used in newermarkets. In someregions,suchasDubaiwheretechnologydollarsarefar

Bank of AmericaMerrill Lynch (BofAMerrill) is the global markets andbanking division of Bank of America. Their execution services businessprovideselectronictradingsolutionsforcashequities,futuresandoptionsto the US and overseasmarkets. Alan Schwartz catches up with JohnGoeller,ManagingDirector ofGlobal ExecutionServices, to findout howtradinggloballyhasimpacteditsbusiness.

How important is global trading for BofA Merrill?

Global trading is a key part of our strategy. ThemergerbetweenBankofAmericaandMerrillLynchhascertainlyinfluencedanincreasedproportionofour global trading infrastructure and has enabledus to develop a uniformed, single global tradingplatform.As a result of this,we can provide ourclientswithacombinedoffering,givingthemaccesstomultipletradingvenuesacrosstheglobe.Whenanemergingmarketbecomeselectronic,wenowhaveaplaninplacegoverninghowweconnecttoit.Thisisakeyrequirementfromourclients.

What do you feel are the main challenges for trading globally?

Whenglobalizingaplatformyouhavetokeepuptodatewithmarketinnovations.Itisnotnecessarytotradeonaglobalscalefromthebeginning,buttostartinoneregionandgraduallyexpand.However,latency plays an issue here. Financial institutionsneed to have the ability to measure latency andknow exactly how to deal with it. This can getcomplicatedwiththevarietyof localprovidersandinfrastructures, however, firms need to have thescalability inplacetodealwithbothdomesticandglobaltradingrequirements.

Withalargenumberofglobalelectronic market liquiditypointsavailable,itisimportantforBofAMerrill tobe locatedin regions where our clientsneed us to be. This meansstayingaheadofglobalmarketstructure and keeping up onregulatory requirements toensureweprioritizeourglobalinitiativescorrectlyfromregiontoregion.

In the current financial climate, should firms trading domestically keep to this strategy, or do you believe there is an opportunity for them to expand into overseas markets?

This is a function of resources and skill set. Alot of the major markets are reeling from thefinancialcrisis,however,inconversewehaveseena lotofopportunitiesarisefromseveralemergingmarkets which have managed to avoid some ofthe financial troubles. These markets arecharacterized by a great deal of technologicaladvancementsand firmswithin themareworkinghardtoimprovetheirelectronictradingcapabilities.Theseoffergoodopportunitiesforfirmslookingtodevelop their global trading strategies during thechallengingeconomicclimate.

How important is the role of technology when trading globally?

Itisextremelyimportant.GoodlevelsofautomationhaveplayedakeypartinourglobaltradingstrategyandBofAMerrillwouldnotbewherewearetodaywithout it. Therewill alwaysbea requirement forsecureandreliableconnectivitywhentradingbothdomesticallyandglobally.Theremustbearobustnetwork in place which can handle high volumesofmarketdata,so it isvitaltoharnessthe latesttechnologytodeliverthis.

Which regions are reaping the benefits of global trading?

Asia and LatinAmerica are definitely thriving andBrazilinparticularisheadandshouldersabovetherest.Canadaalsocontinuestoshowpromise.

fromscarce,exchangesoftenhavestate-of-the-arttradingsystems,marketdataandriskmeasurementtools.

“Technology has certainly levelled the playing field. Thebarrierofentryismuchlowerthanitwasjustafewyearsago,”sayMcPartland.

Rightnow,thereisasharpfocusfortheexchangesandtheassetmanagerstoleveragetradingtechnologiesandtheleadingchallengeisconnectivity.“Whetherthatmeansgainingaccesstoco-locationspacesinaparticularregionor to fast fiber optic connectivity between the marketsand exchanges, once you start going across oceans itbecomes increasingly complicated,” says McPartland.“Andexpensive.”

ACulturalExchange

Financial services firmsmust also treaddelicatelywhendealing overseas. Forget just knowinghowanexchangeworks, it’s important to rememberhowpeople interact.In spite of the “electronification” of the capitalmarkets,investment firms need to understand who is the biglocalbroker,hedgefundandassetmanagerinthearea.Unfortunately, this is knowledge you cannot acquire inbooks. You have to do your homework and understandwhatitmeansinordertoimplementyourstrategy.

“IntheUS,wetendtolookatEurope,AsiaandAfricaassingleregionswhenactuallythesearemultiplecountrieswithmultiplemarkets,”saysonemarketanalyst.

McPartlandrecallsspeakingwithatraderwhoworks inVietnam where front running is an accepted practice.Also, some societies keep tight lids on the amounts offoreigncurrencythatentertheirmarketsandothers,likeChina, have strict policies in place to keep themarketsrelatively closed. This allows other markets, such asthoseinEasternEuropeandSoutheastAsia,thechancetoabsorb liquidity fromoutside investors. IntheUSandEurope, investorsmust also look at risk and specificallyhoweasyitistogetinandoutoftradingpositions.Ifit’shardtogetoutofaposition, itraisestheriskprofileofthatstrategy.Iftheycannotexitatwill,investorswilllookforopportunityelsewhere.

Rightnow,investorsarelookingatChinabutentryintothatnation iscomplicatedby itsarrayofregulations.Marketobserversnotethat India isgrowingquicklyasamarketleaderastheycontinuetomodernizeandofferco-locationservicestotheBombayStockExchange.McPartlandpointsoutthatSingaporeisalsoinvestinginitstechnologyandthe Tokyo Stock Exchange has seen increased businessthankstoitsnewtradingplatform.

That said, emerging markets can be vulnerable tochanging market forces. Some US buy side firms whoweretradinginAsiabackedoffinthewakeofthecreditcrisis in2007 inaneffort tokeepmorecashonhand.In tougher times, when the potential returns weresmaller than the costs, people started to slow downtheirinvestments.

Despite a global recession, traders have shown fewsignsofretreatingtotheir localregionsandexchanges.As always, commerce leads the way in exploring thenewworld.

ByPhilAlbinus,freelancewriterand formereditorofWatersmagazine

JohnGoellerManagingDirector,GlobalExecutionServices,BofAMerrillLynch

1802 Xchange-Issue 12.indd 2 7/10/10 13:08:24

• would you like further information on any services or applications available over our Extranet?

• do you have a comment or questions about one of the articles?

Please get in touchWeb www.tnsfinancial.com

Contact us

210mm207mm280mm

210mmFOLD

FOLD

Inside:

…Foreword

…The Evolution of Global Trading Strategies

…Interview with Bank of America Merrill Lynch

…Top 10 Trading Implementations for 2011

…Trading Places

…News Round-Up

GLOBAL TRADING STRATEGIES

Transaction Network Services www.tnsfinancial.com Issue 12

…TNS NEWS ROUND-UP TOP 10 TRADING IMPLEMENTATIONS FOR 2011

• RetailsecuritiesfirmsthroughoutKoreacannowaccesslucrativeForeignExchange(FX)margintradingmarketsintheUS,thankstoanewagreementbetweenLeadingInvestmentandSecurities(Leading)andTNS.

The new agreement allows Leading, to improve the tradingcapabilitiesofitsretailsecuritiesbrokers,providingaccesstotheadvantageousUSFXmarketplace.

• RetailsecuritiesfirmsacrossJapancannowtradewithbrokersinHongKong thanks to anewagreementbetweenconnectivityproviderTNSandNomuraResearchInstitute(NRI).

The new agreement allows firms connected to NRI’s MarketBridgeplatform touseTNS’SecureTradingExtranet to accessthebuoyantHongKongmarkets.

• An industry roundtable hosted by TransactionNetworkServices(NYSE:TNS) has highlighted the uncertainty felt by brokersabout tradingwithdarkpoolsandsuggests thecause issimplyunfamiliaritywiththeserelativelynewtradingvenues.

Held in Stockholm, the eventwas supported by Turquoise, SEBandBurgundy,andbroughttogethermanydelegatesfromvariousfinancialinstitutions.

…Trading Places

XCH

AN

GE

2. Common Entity Identifier: The US Office ofFinancial Research will designate a utility orcompany to create standard identifiers, towhichotheridentifiersmaybecross-referenced.Additionally, there are other organizationsworking to establish a global directory forsecurityidentification.

3. Short Sale Price Restriction Circuit Breaker: Analysis will show that the new RegulationSHO amendments do not help stabilizemarketvolatility but implementation will be consistentacross all US markets. In Europe, proposedregulations will require certain disclosures onshortsalepositions.

4. Stock Circuit Breaker:TheruleswillbeexpandedtoapplytoallRegulationNationalMarketSystem(NMS)securities.

5. Sponsored Access:Stricterruleswillbeapplieduniformlyacrossmarkets.

6. Clearly Erroneous Execution Processing:Therewillbeconsistencyintherulesthatallowtradestobebroken;or,morelikely,ruleswillbeputinplace toprevent clearly erroneous trades frombeingexecuted.

7. Large Trader Reporting System:Largemarketparticipantswillbeidentifiedandtradingactivitywillbecapturedandanalyzedfromthebuyside.

8. Consolidated Audit Trail: TheOrderAudit TrailSystemwillbeusedasastartingpoint. Goingbeyonda“phaseone”willtakealongtime.

9. Accounting for Continuous Capacity Growth:The Options Price Reporting Authority isexpanding to 48 lines in 2011 and is raisingoptionsdatacapacitybyalmost50%bytheendof2011.TheConsolidatedQuotationSystemandthe Consolidated Tape System for equities areincreasingdatacapacityalmost70%in2011.

10. Standards Moving Main Stream:TheStandardsCo-ordinationGroup,madeupofvariousindustryorganizations, will make progress in furtheringtheuseofstandardsacrossthetradecycle.

Properly dealing with these regulatory/complianceinitiatives, to the extent that each of them canbe standardized and coordinated on an industry-wide basis, will expedite implementation to free upresourcesandcreateopportunitiesforotherrevenue-producinginitiatives.

TomJordonPresidentandCEO,Jordon&Jordon

21 October FPL Americas Trading Conference*

NewYorkContact:+12126524464www.fixprotocol.com/events

2 – 4 NovemberFIA Expo*Chicago

Contact:+12024665460www.futuresindustry.org/expo-2010

21 – 24 November 2010Private Equity World MENA

Dubai+97144402500www.terrapinn.com

16 – 17 November 2010Trade Tech Architecture

NewYorkCity+442079369334

www.fixprotocol.com/events

23 November 2010FPL Nordic Briefing

Stockholm+442079369334

www.fixprotocol.com/events

6-8 December 2010Hedge Funds World Australia

Sydney+61290218808www.terrapinn.com

1 March 2011EMEA Trading Conference

London+442079369651

*TNSExhibiting

TomJordon,PresidentandCEOatJordon&Jordonrecentlyattendedameetingonelectronictrading.Sevenofthelargesteightinvestmentbanksattendedandall agreed that regulatory and compliance initiatives always take priority anddominatesITprojectlists.BelowiswhatJordan&Jordanbelievewillbethetop10non-discretionaryimplementationsforthecapitalmarketsin2011.

1. MiFID – Consolidated Tape in Europe:Themodel Europe adopts must be different than the model intheUSduetodifferences in regulatory configuration and aggressive time frames.However,wecould see multiple consolidators in2011.

1802 Xchange-Issue 12.indd 1 7/10/10 13:08:13

• would you like further information on any services or applications available over our Extranet?

• do you have a comment or questions about one of the articles?

Please get in touchWeb www.tnsfinancial.com

Contact us

210mm207mm

280mm

210mmFOLD

FOLD

Inside:

…Foreword

…The Evolution of Global Trading Strategies

…Interview with Bank of America Merrill Lynch

…Top 10 Trading Implementations for 2011

…Trading Places

…News Round-Up

GLOBAL TRADING STRATEGIES

Transaction Network Services www.tnsfinancial.com Issue 12

…TNS NEWS ROUND-UP TOP 10 TRADING IMPLEMENTATIONS FOR 2011

• RetailsecuritiesfirmsthroughoutKoreacannowaccesslucrativeForeignExchange(FX)margintradingmarketsintheUS,thankstoanewagreementbetweenLeadingInvestmentandSecurities(Leading)andTNS.

The new agreement allows Leading, to improve the tradingcapabilitiesofitsretailsecuritiesbrokers,providingaccesstotheadvantageousUSFXmarketplace.

• RetailsecuritiesfirmsacrossJapancannowtradewithbrokersinHongKong thanks to anewagreementbetweenconnectivityproviderTNSandNomuraResearchInstitute(NRI).

The new agreement allows firms connected to NRI’s MarketBridgeplatform touseTNS’SecureTradingExtranet to accessthebuoyantHongKongmarkets.

• An industry roundtable hosted by TransactionNetworkServices(NYSE:TNS) has highlighted the uncertainty felt by brokersabout tradingwithdarkpoolsandsuggests thecause issimplyunfamiliaritywiththeserelativelynewtradingvenues.

Held in Stockholm, the eventwas supported by Turquoise, SEBandBurgundy,andbroughttogethermanydelegatesfromvariousfinancialinstitutions.

…Trading Places

XCH

AN

GE

2. Common Entity Identifier: The US Office ofFinancial Research will designate a utility orcompany to create standard identifiers, towhichotheridentifiersmaybecross-referenced.Additionally, there are other organizationsworking to establish a global directory forsecurityidentification.

3. Short Sale Price Restriction Circuit Breaker: Analysis will show that the new RegulationSHO amendments do not help stabilizemarketvolatility but implementation will be consistentacross all US markets. In Europe, proposedregulations will require certain disclosures onshortsalepositions.

4. Stock Circuit Breaker:TheruleswillbeexpandedtoapplytoallRegulationNationalMarketSystem(NMS)securities.

5. Sponsored Access:Stricterruleswillbeapplieduniformlyacrossmarkets.

6. Clearly Erroneous Execution Processing:Therewillbeconsistencyintherulesthatallowtradestobebroken;or,morelikely,ruleswillbeputinplace toprevent clearly erroneous trades frombeingexecuted.

7. Large Trader Reporting System:Largemarketparticipantswillbeidentifiedandtradingactivitywillbecapturedandanalyzedfromthebuyside.

8. Consolidated Audit Trail: TheOrderAudit TrailSystemwillbeusedasastartingpoint. Goingbeyonda“phaseone”willtakealongtime.

9. Accounting for Continuous Capacity Growth:The Options Price Reporting Authority isexpanding to 48 lines in 2011 and is raisingoptionsdatacapacitybyalmost50%bytheendof2011.TheConsolidatedQuotationSystemandthe Consolidated Tape System for equities areincreasingdatacapacityalmost70%in2011.

10. Standards Moving Main Stream:TheStandardsCo-ordinationGroup,madeupofvariousindustryorganizations, will make progress in furtheringtheuseofstandardsacrossthetradecycle.

Properly dealing with these regulatory/complianceinitiatives, to the extent that each of them canbe standardized and coordinated on an industry-wide basis, will expedite implementation to free upresourcesandcreateopportunitiesforotherrevenue-producinginitiatives.

TomJordonPresidentandCEO,Jordon&Jordon

21 October FPL Americas Trading Conference*

NewYorkContact:+12126524464www.fixprotocol.com/events

2 – 4 NovemberFIA Expo*Chicago

Contact:+12024665460www.futuresindustry.org/expo-2010

21 – 24 November 2010Private Equity World MENA

Dubai+97144402500www.terrapinn.com

16 – 17 November 2010Trade Tech Architecture

NewYorkCity+442079369334

www.fixprotocol.com/events

23 November 2010FPL Nordic Briefing

Stockholm+442079369334

www.fixprotocol.com/events

6-8 December 2010Hedge Funds World Australia

Sydney+61290218808www.terrapinn.com

1 March 2011EMEA Trading Conference

London+442079369651

*TNSExhibiting

TomJordon,PresidentandCEOatJordon&Jordonrecentlyattendedameetingonelectronictrading.Sevenofthelargesteightinvestmentbanksattendedandall agreed that regulatory and compliance initiatives always take priority anddominatesITprojectlists.BelowiswhatJordan&Jordanbelievewillbethetop10non-discretionaryimplementationsforthecapitalmarketsin2011.

1. MiFID – Consolidated Tape in Europe:Themodel Europe adopts must be different than the model intheUSduetodifferences in regulatory configuration and aggressive time frames.However,wecould see multiple consolidators in2011.

1802 Xchange-Issue 12.indd 1 7/10/10 13:08:13