Walter Mitty Does Wall Street

As an Englishman, born and bred in the south of the country, I don't handle heat with the aplomb that my colleagues from Italy, France, the United States and South Africa do. Indeed over the heat wave this week in London, it's been a struggle not to fixate on how my body will almost certainly lose molecular cohesion once the mercury hits the 30 degree mark (86 fahreinheit for our Imperial-using readers).

Indeed, when I first started working as a reporter, the summer months were known as the silly season. You've probably noticed this over the years, where newspaper headlines are more on the irreverent side than usual, and much of the C section is filled with (largely) pointless stories. But over the past few years, and particularly in this industry, the summer slow down seems largely to be a lie.

Granted, it's still a time where it's hard to get anything done quickly, given school holidays and personal vacations, but the level of news coming out hasn't shown any sign of stopping. From fines from the US authorities through to an eye on impending deadlines for European regulation, and continuing developments in the Asia-Pacific theater, there's a lot to take in and absorb as firms start positioning themselves for the back half of the year.

Back and Forward
I find this is probably a useful time to reflect on what's happened this year to date, and to look ahead at what's coming up. The big pieces have, of course, been the close focus on how swap execution facilities continue to bed in, the continuing scrutiny of high-speed trading thanks to Michael Lewis' Flash Boys, and the mandatory reporting of derivative trades in the EU.

Looking ahead, there are the additional reporting requirements taking in collateral in Europe, due to hit in August. And it doesn't seem as if official bodies are slowing down in their review of practices such as high-frequency trading, either. Meanwhile, discussions continue to take place over the role of clearing and the systemic risks of central counterparties.

Probably the biggest mis-step of the year, outside of these issues, came from BAE's announcement of a cyber attack on a hedge fund. The scenario was outlandish at first, given that the criminals supposedly found their way into the high-frequency engine and had positions reported externally, losing the fund millions of dollars thanks to a single spear phishing attack. It was a pretty stark reminder of the dangers that capital markets firms face today.

Except it wasn't real. Oops.

The scenario in question, presented as fact to a major North American news organization, was actually a training scenario used in BAE. The executive who discussed it is now reportedly taking some time away from the company. While the actual attack didn't exist, however, it highlights another front in cyber risk, that of misinformation. This might be something like I just described, or it could be something more pernicious, like when the AP's Twitter feed was hacked last year. Either way, cybersecurity is firmly on the agenda now, botched interviews aside.

Finally, I'd just like to say thank you to the firms and individuals involved with the Waters Rankings this year, whether that was through entering, sponsoring, organizing or voting. They were easily our most successful Rankings yet, with the widest participation we've ever had.