February 2005

FROM THE EDITOR
12 Months, 12 Issues


UP FRONT
--Hail to The Chiefs
--Security Spotlight
--Procedures Key To E-Doc Compliance
--It's Back

Dear CIO...
Question: What projects or issues should be on every CIO's priority list for 2005? Why?


VISION 2005

The 12 Critical Issues Of 2005
Wall Street & Technology outlines the 12 issues that will keep CIOs up at night in 2005


THE BIG 3
>>>REG NMS:
Reg NMS Tops The CIO Agenda
The SEC's dramatic plan for revising the market structure may require CIOs to increase bandwidth for depth-of-book data. And, Wall Street will have to modify its trading systems, as well.

>>>HEDGE-FUND ORDER FLOW:
Bringing in Business
As hedge funds increase their presence on the Street, sell-side firms are turning to technology to capture their order flow and take in profits.

>>>DATA LATENCY:
Lamenting Latency
Investment managers and hedge funds are starting to shop for faster data for their traders.

REG NMS Cheat Sheet
A synopsis of the 371-page SEC document outlining the Regulation National Market System proposal

EMERGING ISSUE
Setting Sights on China
As China emerges as a land of opportunity, U.S. firms are flocking there to set up shop. The first step is to assist Chinese broker-dealers and exchanges with governance issues and trading technology.

PERSPECTIVES
Risk in a Real-Time World
The history of the financial markets has revolved around community. The Buttonwood Tree, the Stock Exchange, the delivery zone and the talent pool - all were very New York, Lower Manhattan-centric.


12 MONTH / 12 ISSUES:
Algorithmic Trading
The Issue Defined: Buy-side firms are gravitating toward rules-based systems that are often supplied by brokers.

Direct-Market-Access Trading
The buy side is taking more control of its trading decisions while looking for faster, lower-cost and anonymous executions. Direct market access (DMA) tools permit buy-side traders to access liquidity pools and multiple execution venues directly, without intervention from a broker's trading desk.

Alternative Investment Tools
As hedge funds gain wider acceptance in the wealth-management space, investment advisers struggle to determine how they fit into their clients' portfolios. And, without the appropriate tools to support retail clients' investment decisions, the confusion likely will continue.

Integration
The Issue Defined: After decades of technology development, Wall Street firms find themselves with multiple business lines running dozens of applications that don't speak the same language.

Outsourcing: Captive Sites
The newest outsourcing trend is the building of captive sites, in which brokerage firms essentially expand their operations, taking on their own space and employees in a foreign country rather than using the services of a third-party service provider.

Compliance
As the Securities and Exchange Commission steps up its efforts to regulate the industry and protect investors, financial institutions must take proactive measures to comply with current and possible future rules before the SEC takes action against them.

Shared Data Services
Several consulting firms and one vendor are looking to build separate utilities that would allow broker-dealers and investment managers to outsource their data services to achieve cost savings.

Pre-Trade Analysis
Brokers are developing pre-trade analytics in connection with their algorithms to help buy-side customers determine the best algorithms to use.

Data Latency
Market-data latency has gotten much attention on the sell side, but like so many other industry issues, the buy side is just now playing catch-up.

Attracting Order Flow
Given the amount of trading activity hedge funds generate, competition for their order flow is heating up.

Reg NMS
As part of the extreme makeover of the National Market System, the SEC's Reg NMS proposes that market centers route orders to the venue that offers the best price.

Managing Technology
Chief information officers are embracing a new way of managing the projects that take place throughout their vast domains: viewing them as if they are part of a financial portfolio, with each project representing an investment that has its own goals and risks.