equity - Blog - Global Risk Community2024-03-19T06:22:35Zhttps://globalriskcommunity.com/profiles/blogs/feed/tag/equityMarket Risks and Alternative Assetshttps://globalriskcommunity.com/profiles/blogs/market-risks-and-alternative-assets2021-05-21T06:13:53.000Z2021-05-21T06:13:53.000ZEce Karelhttps://globalriskcommunity.com/members/EceKarel<div><p><a href="{{#staticFileLink}}8951652452,RESIZE_1200x{{/staticFileLink}}"><img class="align-full" src="{{#staticFileLink}}8951652452,RESIZE_710x{{/staticFileLink}}" alt="8951652452?profile=RESIZE_710x" width="710" /></a></p>
<p><span style="font-weight:400;">In today's post, we're inspired by our interview with Kevin Lester, co-founder and CEO of Validus Risk Management, a specialist financial risk advisory firm with offices in London and Toronto. With a focus on the alternative asset management sector, Kevin has pioneered the use of innovative financial hedging tools and techniques in the private equity, private credit, infrastructure and real estate markets, and is responsible for managing over $300 billion in market risk exposure via the Validus platform.</span></p>
<h2><span style="font-size:18pt;"><strong>Connecting Private Equity and Risk</strong></span></h2>
<p> </p>
<p><span style="font-weight:400;">About a decade ago market risk was a relatively unexplored space within risk management. </span><span style="font-weight:400;">At this time, risk management was seen as a cost center. It was certainly time to move it into becoming a revenue generator. One way was to the emergence of the private capital space as a market. It was still relatively large at that time, it was growing very rapidly and it has since grown a huge amount. </span><strong>As it was a bit of an unplowed field, there was no consensus as to what practice there was to some extent, a desire just to bury your head in the sand and not worry about it. </strong></p>
<p> </p>
<p><span style="font-weight:400;">Within the private equity world or the private capital world, hedging was not something that was well known. There was also a little bit of a reluctance to actually engage in a risk management activity as you would see in banks or hedge funds or even in the corporate world. Essentially, this field became what it is now with a lot of talks and discussions with the people in the industry, and involvement of academia - which up to this point was quite neglected. </span><strong>Interestingly, the private capital markets, it’s a $7.5 trillion market now, it’s still relatively underserved. And for that reason, it’s intellectually stimulating as well as a really great business opportunity.</strong></p>
<h2><span style="font-size:18pt;"><strong>Setting up a Successful Business in the Risk Industry</strong></span></h2>
<p><span style="font-weight:400;">Being an entrepreneur in the risk field can be a bit of an abstract concept. As an entrepreneur and someone trying to build a business in Risk, one of the struggles is sitting in front of the potential client and trying to sell a risk management service, one of the challenges you have is an abstract concept. Because if you put your risk management hat on, very few people are going to go on to start a business because you are taking on so much uncertainty, volatility and risk. Being a risk management entrepreneur might be a strange position to be in, but there are few important things to pay attention to.</span></p>
<p><span style="font-weight:400;"><br /> </span><span style="font-weight:400;">Practicality is a huge factor into success. </span><span style="font-weight:400;">Instead of becoming a typical consultant or advisory firm that will come in and cope with lots of great ideas and then walk away and allow the client to take it from there. Accordingly, </span><strong>going one step further than your competitors and what your client really wants is the most crucial step as with any other industry</strong><span style="font-weight:400;">. For example, </span><span style="font-weight:400;">In Kevin's case, </span><span style="font-weight:400;">also providing the technology for the client as well as monitoring and reporting on their hedging portfolio was their method and also long-term solution. There is no point in designing a strategy, which theoretically looks great, or it might look great on paper, but when you try and take it to the market, it either doesn’t work or has all kinds of unforeseen secondary or tertiary effects.</span></p>
<p><span style="font-weight:400;">Second step is </span><strong>focusing on a very specific and right target group</strong><span style="font-weight:400;">. In the case of (market) risks focusing on private capital managers, investors, private equity fund executives, pension funds and so on are various options. Once you pick your target group, your strategies and service must be designed uniquely and customized to the needs of them. Similar target groups will still present opportunities however, so you are not limited to a very small market in the end. For example, a typical private equity fund would not really be concerned about short-term volatility, as they don’t look at things like Sharp ratios. They have their own kind of lexicon of how they approach performance, including Risk. So you'd need to look at what’s the risk to your multiple or to your IRR, as opposed to just giving them a VAR number.</span><span style="font-weight:400;"><br /> <br /> </span></p>
<h2><span style="font-size:18pt;"><strong>Volatility and Market Risk</strong></span></h2>
<p><strong>The role of volatility is a big misconception in the market risk industry</strong><span style="font-weight:400;">. In conventional financial risk management, there’s a tendency to equate Volatility and Risk as being almost the same thing. Whereas, not only that they are not the same at all, but in some cases they’re actually opposites and there’s a great quote by Nassim Taylor that </span><em><span style="font-weight:400;">you can’t have long-term stability without short-term volatility</span></em><strong>. </strong><span style="font-weight:400;"> Volatility has a lot of far reaching consequences, both in terms of the macro environment and micro-managing markets.</span></p>
<p><span style="font-weight:400;">In the currency world, you could even look at something like the Euro. The one of the main arguments in favor of the Euro was to minimize trading friction by minimizing currency volatility for trading within the Eurozone, but that had lots of unforeseen consequences. Although, for some countries that was a good decision, for others, it created certain obstacles to economic management and then on a micro level. You see the same thing in assets which are very stable, but what’s really happening as risk is just being compressed and compressed and compressed until it blows up and. A really good example would be Swiss Frank a few years ago, where for three years it barely moved around 1.20 and then in one day it declined by over 40%. Because all that risk was being compressed and it was being hidden in effect because if you looked at the volatility alone, you wouldn't see much risk whereas in reality there was a lot of risk and some firms blew up with real serious world consequences.</span></p>
<p><span style="font-weight:400;">This of course doesn't mean that volatility is useless as a measure. Risk managers use it every day when they are looking at measuring risk for their clients. But </span><strong>the key is to first of all to understand the weaknesses and second of all, to not look at it as an absolute measure of risk.</strong> <strong>It’s one input, it does provide some informational value, but if you’re not careful, it can be misleading.</strong></p>
<h2><span style="font-size:18pt;"><strong>Do's and Don't Do's of Risk Management on Market Risk Industry</strong></span></h2>
<p><span style="font-weight:400;">Particularly in market risk, </span><strong>risk managers should be thinking more strategically, in terms of business strategy of the investments.</strong><span style="font-weight:400;"> If you look at risk in a siloed way and you don’t try to relate it to the objectives of the business or to the objectives of the investor, risk management can go wrong or at least not add the value that it potentially could. Risk managers should think more like business owners or investors themselves and not get too compartmentalised in all of the technicalities of risk management.</span></p>
<p><span style="font-weight:400;">On the flip side, risk managers are focusing too much on the models, and not necessarily in the big picture. According to Kevin, risk management is an interesting blend of art and science. Within the broad risk management field, there’s too much focus on the science piece and not enough on the art. Risk managers are getting too focused on the models, getting the models right, getting the precision of the models and not enough focus on the bigger picture and contextualizing what they’re doing. Risk management is always in real time - and not in a vacuum. </span><strong>With the amount of unpredictability just applying the same techniques, the same approach is the same way of measuring risk and ignoring the background, ignoring the context is something risk managers should stop doing. </strong></p>
<h2><span style="font-size:18pt;"><strong>Thoughts on Current USA Market and Predictions</strong></span></h2>
<p><span style="font-weight:400;">It’s a huge factor as a risk manager to try and understand what’s happening and more importantly what could happen. From a monetary policy standpoint, we are in a very interesting time. Although we can't exactly know what is going to happen, we can make educated predictions. Currently, there are very interesting occurrences in markets, whether it’s crypto or things like SPACs. Just general valuations, in the private equity world we’re seeing multiples of 40% higher than they were a decade ago. So you’re paying 40% more for your EBITDA than you were a decade ago. Kevin mentions that on their market outlook discussions for 2021 they saw three possible scenarios for the markets:</span></p>
<p><strong>The first one is a benign reflation</strong><span style="font-weight:400;">, which was pretty much the consensus view where there’s going to be in the back of the vaccines and the fiscal and monetary support, we might see a recovery in markets and the Central Banks would be able to control the inflation and keep a handle on that. </span></p>
<p><strong>The second outcome is what we call the market meltdown,</strong><span style="font-weight:400;"> which was a big correction against all of these valuations. This however, is not a likely outcome simply because of the degree of monetary and fiscal support that had already happened and it was almost certainly going to continue.</span></p>
<p><strong>And then the third scenario is the market melt up, which is similar to the benign reflation, except that the Central Bank isn’t able to control inflation. </strong><span style="font-weight:400;">This is where</span> <span style="font-weight:400;">you would start to see all kinds of side effects of monetary policy spilling over, ultimately into inflation, but also rates pushing higher. </span><strong>A quarter over of the year later, Kevin's probabilities have shifted a little bit more towards the market melt up scenario.</strong></p>
<p><strong>Crypto is also a really important factor to focus on from a macro perspective in terms of what it means for the monetary system.</strong><span style="font-weight:400;"> The crypto trade in some ways is a shortcoming of the current monetary system. It’s an expression of distrust. And if that distrust builds too far, it’s going to affect everything else. So, that's one important reason to focus on crypto and the other reason is that it has become, now a systemically important asset class in its own right. When we are looking at a market cap of crypto, well over a trillion, we see institutional investors starting to get into crypto as well. Although it’s very embryonic at this stage, in the foreseeable future it will highly affect the other assets.</span></p>
<p><span style="font-weight:400;">In any case whether you want to pick crypto, or other assets, there are big movements. For example, the lumber prices are up 400%, house prices in the US are up close to 20% year on year. Seeing these numbers, there's a probability that </span><strong>the Central Banking fraternity is going to struggle to control what they’ve unleashed. </strong><span style="font-weight:400;">And that is going to have knock on effects across the markets, whether it’s in our world, currencies, rates and commodities, but also equities and so on. This is not to say that</span> <span style="font-weight:400;">we’re going to see double digit inflation in the next year but we might see high numbers, and that’s going to have some knock on effect across the market.</span></p>
<h2><span style="font-size:18pt;"><strong>Closing Words</strong></span></h2>
<p><span style="font-weight:400;">For now, this sums up the key points of our interview. As the Global Risk Community team, we once again thank Kevin Lester for his insight on market risk and alternative assets. More information about this topic is available in our original interview, which is accessible </span><a href="https://globalriskcommunity.com/video/interview-with-kevin-lester-ceo-at-validus"><span style="font-weight:400;">here</span></a><span style="font-weight:400;">.</span><span style="font-weight:400;"><br /> </span><span style="font-weight:400;"><br /> </span><strong>#risk #market #finance #equity #investment</strong></p></div>marcus evans to Host the Interest Rate Risk in the Banking Book Conference on December 4-6, 2017 in New York, NYhttps://globalriskcommunity.com/profiles/blogs/marcus-evans-to-host-the-interest-rate-risk-in-the-banking-book2017-09-25T18:58:24.000Z2017-09-25T18:58:24.000ZAmanda Pinkhttps://globalriskcommunity.com/members/AmandaPink<div><p><b>marcus evans</b> will host the <b>Interest Rate Risk in the Banking Book Conference, December 4-6, 2017 in New York, NY</b>. By attending this conference you will take away insights on maximizing your interest rate risk strategies to enhance your efficiency and effectiveness. Banks will also gain a critical, last minute opportunity to enhance their understanding of the IRRBB regulation by gaining a clarification of the rule and benchmarking their compliance strategies</p><p> </p><p><b>Attending This Premier GFMI Conference Will Enable You To:</b></p><ul><li><b>Clarify</b> the supervisory priorities of the IRRBB rule</li><li><b>Benchmark</b> practical implementation techniques for the IRRBB</li><li><b>Maximize</b> modeling strategies to minimize interest rate risk</li><li><b>Advance</b> your understanding of customer behavior to maximize deposit forecasting</li><li><b>Examine</b> the relationship between interest rate risk and liquidity regulations</li><li><b>Develop</b> your understanding of ALM practices to control interest rate risk</li><li><b>Leverage</b> technology to maximize risk management</li></ul><p><b> </b></p><p><b>Speakers Include:</b></p><ul><li>Stephen Meili, Managing Director, Risk Management, <b>Citi</b></li><li>Sundeep Kumar, Executive Director, Global Technology, <b>JPMorgan Chase</b></li><li>Yujush Saksena, Head of Interest Rate Risk, <b>GE Capital</b></li><li>Gregg Silver, Chief Financial Officer, <b>1<sup>st</sup> Financial Bank</b></li><li>Jeff Deajan, Senior Director, Treasury, Capital Management and Balance Sheet Strategy, <b>CIBC</b></li><li>Christopher Dunn, Senior Vice President, Director of Capital and Risk Management, <b>Associated Bank</b></li><li>Lindsay Steedman, Senior Supervisory Financial Analyst, <b>Federal Reserve Board</b></li></ul><p> </p><p>For more information, please visit: <a href="http://bit.ly/2xBefDA">http://bit.ly/2xBefDA</a> or you can contact Amanda Pink at <a href="mailto:amandap@marcusevansch.com?subject=Agenda%20Request:%2012th%20Annual%20Liquidity%20Management%20(Supply%20Chain%20Brain)">amandap@marcusevansch.com</a></p><p> </p><p><b><i>marcus evans</i></b> <i>conferences annually produce over 2,000 high quality events designed to provide key strategic business information, best practice and networking opportunities for senior industry decision-makers. </i></p></div>Crown Equity Holdings CRWE-PR Network Reaches Milestone of 400 U.S. Community Websiteshttps://globalriskcommunity.com/profiles/blogs/crown-equity-holdings-crwe-pr-network-reaches-milestone-of-400-u2014-04-13T05:35:54.000Z2014-04-13T05:35:54.000ZArnold Sabahttps://globalriskcommunity.com/members/ArnoldSaba<div><p><object width="560" height="315" codebase="http://download.macromedia.com/pub/shockwave/cabs/flash/swflash.cab#version=6,0,40,0" data="//www.youtube.com/v/TlmfyW8s3pI?version=3&hl=en_US" type="application/x-shockwave-flash"><param name="allowScriptAccess" value="never" ></param><param name="allowNetworking" value="internal" ></param><param name="allowFullScreen" value="false" ></param><param name="movie" value="//www.youtube.com/v/TlmfyW8s3pI?version=3&hl=en_US" ></param><embed wmode="opaque" width="560" height="315" type="application/x-shockwave-flash" src="//www.youtube.com/v/TlmfyW8s3pI?version=3&hl=en_US" allowscriptaccess="never" allownetworking="internal"></embed> <param name="wmode" value="opaque" ></param></object></p><p></p><p>Crown Equity Holdings Inc. (OTCQB: CRWE) has been experiencing momentum that coincides with the development of the CRWE-PR Network<br /><br />The network is a portal for local news, city data and content of interest within the community. Communities are searchable by name and zip code.<br /><br />National, world, sports and general topics are also covered with up to the minute updates across all sites. The CRWE PR Network offers - local business listings, restaurant deals, coupon deals, classified ads, real estate listings, rentals, foreclosures, auctions, a jobs board, hotel specials, travel specials, airline information plus more. Regional and national ad revenue will be a main stay in the business model.<br /><br />In April of 2014, the CRWE network reached a major milestone by finishing it's 400th local community website - the company's expectation is to complete the entire state of California by the end of the month.<br /><br />CRWE-PR's website community includes coverage of the greater state of California, Nevada and 9 provinces in Canada. In the future, the company is continuing their development with the addition of the Eastern United States upon completion of California. The long term goal is to achieve complete coverage of the United States and Canada as well as establish a presence across the globe <br /><br />Visit <a href="http://www.CRWE-PR.com">www.CRWE-PR.com</a><br /><br />The CRWE Network’s business model is based on selling advertising to local businesses.<br /><br />Crown Equity Holdings Inc. (OTCQB: CRWE) provides marketing solutions that boost customer awareness and merchant visibility on the Internet.<br /><br />Disclaimer at <a href="http://www.crownequityholdings.com/disclaimer.html">www.crownequityholdings.com/disclaimer.html</a></p></div>Crown Equity Holdings Opening the Door to Multi-Billion Dollar B2B Markets with iB2B Globalhttps://globalriskcommunity.com/profiles/blogs/crown-equity-holdings-opening-the-door-to-multi-billion-dollar2013-10-21T03:29:02.000Z2013-10-21T03:29:02.000ZArnold Sabahttps://globalriskcommunity.com/members/ArnoldSaba<div><p> <object width="420" height="315" codebase="http://download.macromedia.com/pub/shockwave/cabs/flash/swflash.cab#version=6,0,40,0" data="//www.youtube.com/v/9WnN3eBp3Fo?version=3&hl=en_US" type="application/x-shockwave-flash"><param name="allowScriptAccess" value="never" ></param><param name="allowNetworking" value="internal" ></param><param name="allowFullScreen" value="false" ></param><param name="movie" value="//www.youtube.com/v/9WnN3eBp3Fo?version=3&hl=en_US" ></param><embed wmode="opaque" width="420" height="315" type="application/x-shockwave-flash" src="//www.youtube.com/v/9WnN3eBp3Fo?version=3&hl=en_US" allowscriptaccess="never" allownetworking="internal"></embed> <param name="wmode" value="opaque" ></param></object></p><p><font color="#000000"><img class="decoded" alt="http://pennyomega.com/img/crwe_logo.jpg" src="http://pennyomega.com/img/crwe_logo.jpg" /></font><font color="#000000"><strong>Crown Equity Holdings Inc. (CRWE)</strong></font></p><p>Looking to deliver value for its stockholders in both the near and long term, <strong>CRWE</strong> is refocusing its strategic plan for future growth and services with its original online business-to-business (B2B) marketplace platform for manufacturers and small to large businesses on a global basis to sell and acquire various types of merchandise. <strong>CRWE</strong> has started updating its B2B business plan and strategies to move forward.</p><p>B2B is the term for transactions between businesses for example a manufacturer and a wholesaler, or between a wholesaler and a retailer.</p><p>While the sheer number of retail transactions throughout the globe on a daily basis is of course larger, the money flow created in B2B is formidable due to the size of the transactions.</p><p>The B2B industry generates billions of dollars and thousands of jobs worldwide.</p><p><strong>CRWE</strong> is targeting the multi-billion dollar B2B Industry with its iB2B Global project.</p><p align="center"><a title="Crown Equity Holdings Opening the Door to Multi-Billion Dollar B2B Markets with iB2B Global" href="http://www.crwenewswire.com/153968/stock-alerts/crown-equity-holdings-opening-the-door-to-multi-billion-dollar-b2b-markets-with-ib2b-global/" target="_blank"><img class="decoded" alt="http://pennyomega.com/img/ib2b_v.jpg" src="http://pennyomega.com/img/ib2b_v.jpg" /></a></p><p>Social media marketing works for B2B companies. This concept has become fact. Over the last few years we have seen a rise in B2B social media marketing, and now it has become an accepted and valued digital marketing tactic. Once thought of as only successful for large businesses, small and medium sized organizations are showing measurable return on their social media programs.</p><p>Social media has become a necessary piece of the online marketing strategy puzzle. Statistics show B2B organizations of all sizes are seeing positive return from these activities:</p><p>- One-third of global B2B buyers use social media to engage with their vendors</p><p>- 75% expect to use social media in future purchases processes</p><p align="center"><img class="decoded" alt="http://pennyomega.com/img/crwechart21.png" src="http://pennyomega.com/img/crwechart21.png" /></p><p>Together with its digital network of Websites, <strong>CRWE</strong> offers advertising branding and marketing services as a worldwide online multi-media publisher. <strong>CRWE</strong> focuses on the distribution of information for the purpose of bringing together a targeted audience and the advertisers that want to reach them. <strong>CRWE</strong> launches, invests and manages select businesses, projects and real estate endeavors.</p><p><strong>More about Crown Equity Holdings Inc. (CRWE) at</strong> <a href="http://www.crownequityholdings.com"><strong>www.crownequityholdings.com</strong></a><strong>.</strong></p><p align="center"><font color="#000000">********************************</font></p><p>Read Full Disclaimer at <a href="http://www.pennyomega.com/disclaimer">www.pennyomega.com/disclaimer</a></p></div>The name of this organization suggests an interest in Risk Reductionhttps://globalriskcommunity.com/profiles/blogs/the-name-of-this-organization-suggests-an-interest-in-risk2012-10-15T11:41:15.000Z2012-10-15T11:41:15.000ZJohn Olagueshttps://globalriskcommunity.com/members/JohnOlagues<div><p></p><p>I am a former Stock Options Market Maker on the CBOE and the Pacific Stock Exchange. I and some others used a strategy of identifying mis-priced calls and puts. We sold the over-priced and bought the under-priced and then hedged to reduce risk.</p><p></p><p>After noticing that the millions of employees who have been granted equity compensation by their employer/company and their advisers have little understanding of the value that these employees have, the risks of losing that value and how to manage those positions to maximize that value, I decided to enter that arena using my understanding of traded puts and calls and techniques to reduce risk and maximize the value.</p><p></p><p>The equity compensation industry is completely lacking in informing grantees of equity compensation concepts other than the tax consequences of making early exercises. This lack of communications is deliberate because a well informed grantee managing his grants maximally raises the costs and reduces the benefits to the company and their wealth managers.</p><p></p><p>My question is "Are there any members in this forum who have an interest in how to manage equity compensation grants to executives and employees with the object of maximizing their value and reducing risk? "</p><p></p><p>John Olagues</p><p>olagues@gmail.com</p><p></p></div>Transparency for High Frequency Trading Regulators, an Introduction. Contributed by Walter Hendrikshttps://globalriskcommunity.com/profiles/blogs/transparency-for-high2011-02-01T15:30:00.000Z2011-02-01T15:30:00.000ZBoris Agranovichhttps://globalriskcommunity.com/members/BorisAgranovich<div><p></p>
<p>A couple of weeks back I was approached by a HFT magazine editor and he asked me whether I would be interested to write down some of my experiences in HFT. As I am not directly participating in the midst of HFT at this point, I had to give it quite some consideration. Why would I do this? Placing myself in a vulnerable and visible position is not my first nature. Still I strongly believe in taking away the mystique or even – allow me – hysteria regarding this type of Capital Markets business. In my opinion the world of low-latency/hi-freq trading has to try and get rid of the negative image. It deserves some consideration to explain in a bit more detail what HFT is all about. What techniques are being used and – more generally – what the business reasoning behind HFT is. </p>
<p><br /> So why does HFT need more transparency? Very simple. EU lawmakers in Brussels and national regulators have very little knowledge regarding the business and technological concepts driving HFT.</p>
<p>This can automatically lead to potential actions that can harm the trading firms directly.</p>
<p> </p>
<p>Secondary effects can be envisaged impacting liquidity and widening spreads on multiple platforms. I will get back to you regarding the implications of losing liquidity and widening spreads some other time.</p>
<p> </p>
<p>First the negative effects of lawmakers and regulators not having any clue what HFT is all about.<br /> About a year ago I was invited to be part of a speakers panel at one of the first professional Hi-Freq conferences in London. At the time I was MD at an Algo/HFT market making firm primarily participating in quantified dispersion of volatility and equity arbitrage across multiple venues. We spoke about market access, risk and regulatory influences. I became very enthusiastic recognising attendees from the FSA and the Dutch and French regulators at this conference. On the podium I invited the Hi-Freq world to open up towards each other and break down the barriers. At the same time I invited regulators to step into my office and literally have a look at what we exactly did. It took another couple of phone calls and emails on my initiative before representatives from the Dutch and UK regulator actually did visit the office. I’ll point out two very important remarks they made that will paint us a picture still waking me up in the middle of the night...</p>
<p><br /> Looking at the order books and depth of Nokia quoted on OMX Helsinki and Nokia quoted on Chi-X one of them asked the following: “The order book on OMX we believe, but we are under the impression the order book on Chi-X is not real...”. The other remark was one regarding liquidity providing on multiple platforms: “We consider demanding liquidity providers and arbitrage traders to keep their quotes in the market for a minimum time, for example one second”.</p>
<p> </p>
<p>I won’t disclose which regulator came up with what question and to be honest, I am happy with the fact they put their questions forward. At the same time it clearly tells us where they are in understanding the business they have to regulate.</p>
<p><br /> Obviously I spend a bit of time explaining how a multilateral trading platform like Chi-X works and what would happen if arbitrage traders have to keep their quotes in the order book for a minimum time frame. It just goes to show that although MTF’s came to live due to the implementation of MiFID in 2007, the lawmakers and regulators still had to do their homework. On the other hand this is fact of live the Capital Markets business and more specifically the HFT world needs to take into account.</p>
<p> </p>
<p>I can already hear you think: “Do we have to educate those regulating us?” And the answer is ‘Yes’, I am afraid. If we would like to continue trading with algorithms on a low-latency infrastructure connecting multiple exchanges to trade extremely tight spreads, we have no choice.</p>
<p><br /> Nobody needs new EU regulations based on a lack of understanding what this business is all about. Fortunately some of the top tier market making firms in Europe and the US understand this difficult situation. They have started to write down specifics regarding the trading techniques used and the ball is definitely moving towards the corner of the regulator. Now it’s up to the national regulators and the European Securities and Markets Authority (ESMA) to pick up from here and start communicating with the HFT world to get a better understanding.</p>
<p><br /> As promised next time I’ll discuss a bit what liquidity means to the financial markets. Don’t hesitate to let me know what you think!</p>
<p><br /> Best regards,<br /> Walter Hendriks<br /> Principal Advisor<br /> Financial Markets Advisory - fm-advisory.com<br /> wh@fm-advisory.com<br /> 17th of January 2011</p>
<p></p>
<p> </p></div>