Top Stories of 2014: Best of the Sell Side

For the banks, an eagle-eyed focus on cost has continued to provide challenges, while new market entrants such as fintech startups offer opportunities and new commercial realities for technology personnel.

But if anything, 2014 has been the year in which new threat vectors have presented themselves, primarily in cyberspace. JPMorgan found itself the target of a breach in recent months, and the problem has become so acute that central banks and trade bodies are now routinely running simulations that involve everyone from law enforcement through to vendors.

Next year, perhaps, it is indeed the vendors who will begin to face much more scrutiny over their defenses in the cyber arena. But for this year, efforts by firms such as the Depository Trust and Clearing Commission have continued unabated to both increase awareness of, and preparedness for, intrusions of a digital variety.

Market structure, also, has continued to be a real challenge for sell-side firms of all stripes, whether that's through regulatory efforts and the introduction of reporting elements in the European Market Infrastructure Regulation (EMIR), or through changes in the way that the markets operate. A continuing focus on high-frequency trading (HFT) is beginning to draw in both exchange and banks, while the uncertain future of dark pools and internal crossing networks is under more scrutiny than ever.

Meanwhile, fixed income has had a mixed year, with some banks drawing down their FI divisions, while other firms invest in venues. The new paradigm of swap execution facilities, too, continues to change the profile of the market, as sell-side firms step back from previous warehousing activities and the buy side is encouraged to take a more active role.

With that in mind, these are some of the highlights of the year's sell-side coverage.

BoE warns on Cyber Threat to Markets
While cybersecurity has always been a concern for financial institutions in the past, it's never had the same level of attention and prominence that it does these days. The fact that the UK's central bank was directly involved in exercises designed to test the readiness of institutions' responses demonstrates just how far up the agenda the issue has gone.

The Acquisition: JPX CIO Yoshinori Suzuki
One of the more curious aspects of the merger between the Tokyo and Osaka exchanges was perhaps how quiet it was. In Japan, obviously, it was huge news, but the rest of the world seemed to mark the formation of the Japan Exchange Group with a shrug. In this fascinating interview, we dug into how it happened, and the next steps.

Industry Hedges Opinion on Mifid II Agreement
While we were all treated to a 1,611-page draft regulatory standards release for the Markets in Financial Instruments Directive review (Mifid II) over the Christmas break, the first instalment came earlier this year, with the agreement of the text between various European bodies.

CFTC Certifies Javelin's MAT Submission
This was the moment that swap execution facilities (SEFs) went from being theory to reality, once Javelin toned down its initial monster submission for made-available-to-trade (MAT) and the US regulators approved a range of swaps as suitable for on-SEF execution. A number of other MAT approvals followed swiftly after.

Emerging Exchanges: Partnering for Power
There's been a lot written about emerging markets for years now, but few articles have gone into as much detail on how the market operators are managing to cope with the realities of operating on a sophisticated national, intranational and international basis. These require an often-complex series of agreements and alliances to function properly.

HFT Turns Sour for North American Exchanges
The continuing fallout over the public debate on HFT began solidifying into a series of announcements that some venue operators would begin specifically limiting aspects of the trading style. In Canada, with the regulatory approval of Aequitas's Neo exchange, TMX announced its own plans, while Flash Boys star IEX continued to grow slowly in the US.

BGC Further Extends GFI Offer Deadline
One of the stories that kept on giving after a fairly downtempo announcement during the summer was the acquisition of brokerage GFI by the Chicago Mercantile Exchange (CME) Group. Rival broker BGC Partners objected, kicking off a strange, exciting, and at turns exhausting story of the two firms duking it out through tender offers and special committees, which is still ongoing now.