Tag Archives: Michael Wallach

Agency BrokerDealer Enhances Offering for ETF Multi-Basket Trading

Below courtesy of Aug 6 edition of Wall Street Letter, article written by staff reporter Sean Creamer 

wslWallachBeth to enhance multi-basket trading


WallachBeth Capital, a New York City-based agency brokerage, will enhance its existing portfolio and multi-basket trading in exchange-traded funds and other equities to make greater use of OMEX Systems, according to executive members of both companies.

The firm currently uses OMEX for trading in equities, including ETFs, and options, as well as critical middle and back office functionality but it will take on additional functionality from the vendor in order to propel the firm even further into multi-basket trading, according to Michael Wallach, CEO.

“What we are doing with OMEX is attempting to customize the trading technology so that we can have enhanced pre-and post-trade abilities and analytics for multiple basket orders and portfolio management,” said Wallach.

David Beth, President, WallachBeth Capital
David Beth, President, WallachBeth Capital

David Beth, President and Chief Operating Officer at WallachBeth, noted that add-ons would bolster the current system used for trading baskets.

“We are looking for state of the art analytics, coupled and bolted to the [execution management system] for pre- and post-trade analytics, as well as including the ability for traders to quickly be able to change strategies or algos during and after executing an order,” said Beth.

In preparation for this change, last month the firm hired Matthew Rowley as its chief technology officer, a veteran of Crédit Agricole and Fidessa, who will oversee the firm’s technology push and to enhance existing applications.

Wallach noted that adding this functionality won’t be burdensome, but will involve a re-routing of some client network connections.

For the full coverage, please visit the Wall Street Letter website (subscription required, but FREE TRIAL is available)

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Trade Execution 101: High-Touch is NOT Out-of-Touch-Those Who Disagree Are..

Below courtesy of excerpt from front page article by Dan Strumpf “Markets Keeping Faith in Humanity” in July 29 WSJ Money & Investing section.

wsjlogo“After years of ceding ground to trading via computer programs, buying and selling stock the old-fashioned way—over the phone or its modern equivalent of instant messaging—is holding its own…

“…Last year, about 55% of stock trading by dollar volume took place in a “high-touch” fashion, among human beings communicating one on one and agreeing on the price, according to consulting firm Greenwich Associates, which surveys hundreds of large investors every year. That is still down from the past two years, but only slightly. The figure was 57% in 2012 and 56% in 2011. In 2004, before the introduction of new trading technologies and the proliferation of high-speed trading, the number was 71%….

“…Big money managers cite several reasons for continuing to keep human trading in their tool kits, even though it costs more than computer trading. They include the bewildering spider web of stock exchanges, concerns about aggressive high-frequency traders, and the downturn in volumes that has made it challenging to complete larger trades. And, in many cases, investors say they value the color on how, where and why a stock is trading that only human traders can provide…”

Michael Wallach, CEO WallachBeth Capital
Michael Wallach, CEO WallachBeth Capital

Noted Michael Wallach, CEO of agency-only execution firm WallachBeth Capital, the institutional brokerage specializing in ETFs, institutional options and a provider of independent equity research within the healthcare sector, “The WSJ article underscored important talking points voiced by a broad universe of investment managers who we speak with, most notably their recognition that while screen-based markets provide context, those markets are not only fragmented, but are 1-dimensional when considering the trading landscape is always 3-dimensional.”

Added Wallach, “Managers who position themselves as fiduciaries should require their brokers to conform to best practices, which includes providing both color and navigation skills away from the screen in order to source true liquidity at the best available prices.” Continue reading

ETF and Options Execution Firm Expands Global Footprint: More Hiring In Store

wall-street-letter-logo  Courtesy of Wall Street Letter reporter Sean Creamer

Institutional brokerage WallachBeth Capital LLC will expand its staff to bolster electronic trading across exchange-traded funds and options over the next two years, according to Michael Wallach, CEO.

The agency broker-dealer aims to bring on 15-20 people, some of whom may be college interns who transition to permanent employment with the company, according to Wallach.  He added “this strategy ensures the staff has a rounded experience in the firm before taking up a permanent role.”

WB CEO Michael Wallach (r), Pres/COO David Beth (l)
WB CEO Michael Wallach (r), Pres/COO David Beth (l)

Beyond staff expansion, the brokerage, whose headquarters is based in the heart of Wall Street and maintains a footprint in the UK, is aiming to expand its ETF execution presence to South America to serve pension fund managers in these regions, Wallach noted. “ Many money managers throughout the world now trade US ETFs. We want to introduce our model to any region whose managers want and need real best execution services.”   To view the full article from WSL, please click here.

Trading Market Pros Do a 360; Looking Back and Forward 5 Yrs

                  Extracts courtesy of a special year-end story from Terry Flanagan at MarketsMedia

marketsmedia mag

The Standard & Poor’s 500 Index stood at 1,380 in mid-November, down about 5% from 1,450 five years earlier. To a visitor from Mars, the similarity of the numbers could suggest that it was a quiet period for financial-market participants.

But in reality, it has been the opposite, as the past five years has been perhaps the most tumultuous half-decade period in the history of global markets.

The fragile, end-of-rally market of late 2007 gave way to a full-blown financial crisis by September 2008, the nadir of which which lasted into 2009. Massive interventions on the part of governments worldwide staved off a doomsday scenario, setting the stage for some stabilization and a market rebound in 2009-2010. But the recovery has yet to sustain itself, and 2011 and 2012 have proved largely disappointing.

“The past five years will likely be viewed as a landmark period of timeless case studies within the history of financial markets,” said Karim Taleb, principal of investment manager Robust Methods.

“For institutional trading this was one of the most challenging market environments that I have witnessed in my career,” said Steve Hedger, head of equity trading at Fifth Third Asset Management. “Lack of liquidity, extreme volatility, and a disappearance of several venerable brokerage firms made seasoned traders earn their keep.”

The challenges for institutional traders such as Hedger revolve around liquidity sourcing-that is, finding sellers for buy orders and buyers for sell orders. Aside from the demise of Lehman Brothers and Bear Stearns, other liquidity sappers include tightening regulation of Wall Street, which has prompted surviving big banks such as Goldman Sachs and Morgan Stanley to pull in their trading horns, and a more general malaise and mistrust among buy-side investors, both retail and institutional.

Michael Wallach, CEO WallachBeth Capital
Michael Wallach, CEO WallachBeth Capital

Aside from regulation, the most noteworthy topics from a broker-dealer perspective are the evolution and impact of trading technology and the exponential growth of institutions using both exchange-traded-products and option-centric hedging tools, according to Michael Wallach, chief executive of agency-only broker-dealer WallachBeth Capital.

Even with the proliferation of electronic trading, it has its limitations, and voice and floor will continue to offer liquidity, at least for some trades. “What hasn’t changed is the fact that trading screens remain notoriously one-dimensional despite the three-dimensional nature of financial markets,” Wallach said.

Additionally, market disruptions, geopolitically driven volatility spikes, and diminished investor confidence have sharpened focus on broker-dealers’ fiduciary obligations, Wallach said.

“What has struck me over the past five years is the level of innovation that we have seen in the market,” said John Kelly, chief operating officer at Liquidnet. “This has provided the means for investors to seek out growth, yield, diversity, or safety to a degree that was never before achievable.”

One market veteran’s perspective trumped the CNBC survey by a factor of five. “We enter the next five years with a significantly higher degree of uncertainty than any time I can recall in more than 30 years,” said Kelly of Liquidnet.

For the entire article (its a great read!) please visit MarketsMedia online platform


European Platform to offer best price for ETFs


An exchange-traded fund platform service has been launched into the UK and European market to help IFAs and wealth managers ensure best execution when recommending clients invest in ETFs.

Laurie Pinto, chief executive of London-based securities research firm NSBO, said the service is being offered through a joint venture between NSBO and WallachBeth, a US inter-market broker.

Mr Pinto said the service, already popular in America, was important for the post-retail distribution review world as it aims to get the best price for ETFs.

He said: “In America each tranche of an ETF has to be put on an exchange, so you can track the price more easily. This does not happen in Europe.

“This puts the end investor at a major disadvantage. This service will aim to educate investors on getting the right price. The service of best execution is a big part of managing money.” Continue reading