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Bringing Sexy Back…to FIX

By the time I entered capital markets more than a decade ago, FIX had already become mundane, boring. FIX is essential, but so are eating vegetables, drinking water and exercise. None of those are things I really want to do, and they certainly aren’t worth blogging about.

But for the first time in my career, I’m actually excited to talk about FIX. By leveraging the hybrid architecture of TT®, we are putting a modern twist on the boring service of FIX, which we are calling FIX-as-a-service, or FaaS.

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What Lies Ahead…?

As I pore through my emails trying to catch up for the new year, I am still reminded of the whirlwind that was 2016. Certainly it was a year of many amazing, shocking, happy and sad events. In my world I am reminded by the Brexit vote, the U.S. election, the DOW approaching 20K, cyber threats, a Cubs World Series win and many, many passings of individuals who left too soon.

So starting in 2017, my thoughts are a precarious balance of optimism and uncertainty. I think it is fair to say with the major events of Brexit and the outcome of the U.S. election, “volatility” will be the buzz word. The impact will clearly be on the financial markets, but the implications will reverberate across geopolitics to mainstreet. Closer to the derivatives world, compliance and regulation will be a major focus. With the recent and expected changes to the CFTC (and continued other U.S. government changes), RegAT and MiFID will be jockeying for the mindshare and workshare of vendors and execution firms alike.

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Conquering Chaos: Trump’s Longer Term Effect on Interest Rates and Trading in Swap Futures

The following is a guest post by Christopher Rodriguez, chief marketing and relationship management officer of Eris Exchange, and Geoffrey Sharp, Eris’ managing director and head of sales. Eris is a U.S. futures exchange that offers listed interest rate swap futures. Trading Technologies offers connectivity to Eris through both the TT® and X_TRADER® platforms.

Some traders were more prepared than others for the results of the U.S. presidential election in November. Higher implied volatility, changes in risk premium and increases in interest rates resulted from Donald Trump’s surprise victory. Equity markets plunged then rallied. All told, the month of November was remarkable for traders.

Heading into Thanksgiving, 10-year Treasury Note Yields reached highs not seen since the middle of 2015. The bond sell-off tapered toward month-end, but the forwards predicted a more aggressively rising rate environment. (more…)

The Coming Platform Revolution in Financial Markets

The following is a guest post authored by Geoffrey Parker. He is a professor of engineering at Dartmouth College and a visiting scholar and research fellow at the MIT Initiative for the Digital Economy. Before joining academia, he held positions in engineering and finance at General Electric. He has made significant contributions to the economics of network effects as co-developer of the theory of two-sided networks. He received his BS from Princeton and his MS and PhD from MIT. You can follow Geoff on Twitter at @g2parker.

Given the dramatic change now underway in financial markets and exchanges, it’s tempting to believe that the industry is in uncharted territory. And, as we’ll see below, there is some truth to this view. However, it’s worth remembering that the industry went through a similar phase of change when exchanges such as the CME became electronic instead of physical markets. Floor traders gave way to traders sitting at computer terminals and, increasingly, to algorithmic trading machines. Electronic completion offered a number of immediate advantages that included better price discovery, improved access to markets and a better ability to create customized products that better fit needs. For example, firms that wished to smooth the value of assets such as power plants or pipelines against commodity price volatility were able to tailor their hedging strategies to their exact needs.

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