CAPIS Insights

64 total posts

August Research Call RECAP: Fairlead Strategies Says Market Technicals Favor Bulls

News CAPIS Insights General

General

posted by CAPIS on 08/25/2021 at 8:50 am
by CAPIS on 08/25/2021

Last week we held our August research call, featuring Fairlead Strategies Co-Founder Katie Stockton. Fairlead Strategies, LLC is a Connecticut-based independent advisory service providing unbiased technical analysis, helping investors manage risk and discover opportunities. Click here for a video of the research call Our own David Choate, COO and Executive Director of Trading and Sales, updated attendees about CAPIS’ daily Morning Holdings email which provides information on certain symbols. The email software sweeps information services at 6:30 am and can be accessed through CAPIS’ sales team. CAPIS continues to provide other high-quality digital content such as The Morning Note and commentary on its website.  (2:00) Katie Stockton’s presentation addressed the following topics: SPX and NDX Hovering at All Time Highs: According to Stockton, the S&P 500 index (SPX is in a long-term uptrend. There is room for improvement in the daily stochastic indicators she watches, but the market could hit 4600 by year-end. (5:20) As for the Nasdaq 100 (NDX), there’s been a loss of strength in the FAANG complex and there have been rotational pullbacks in the high-growth and cyclical sectors. This, she said, makes it difficult for portfolios to outperform if not exposed to the sector in favor at…

Last week we held our August research call, featuring Fairlead Strategies Co-Founder Katie Stockton. Fairlead Strategies, LLC is a Connecticut-based independent advisory service providing unbiased technical analysis, helping investors manage risk and discover opportunities. Click here for a video of the research call Our own David Choate, COO and Executive Director of Trading and Sales, updated attendees about CAPIS’ daily Morning Holdings email which provides information on certain symbols. The email software sweeps information services at 6:30 am and can be accessed through CAPIS’ sales team. CAPIS continues to provide other high-quality digital content such as The Morning Note and commentary on its website.  (2:00) Katie Stockton’s presentation addressed the following topics: SPX and NDX Hovering at All Time Highs: According to Stockton, the S&P 500 index (SPX is in a long-term uptrend. There is room for improvement in the daily stochastic indicators she watches, but the market could hit 4600 by year-end. (5:20) As for the Nasdaq 100 (NDX), there’s been a loss of strength in the FAANG complex and there have been rotational pullbacks in the high-growth and cyclical sectors. This, she said, makes it difficult for portfolios to outperform if not exposed to the sector in favor at…

Eliminating Trade Rotation

CAPIS Insights

CAPIS Insights

posted by CAPIS on 08/18/2021 at 3:57 am
by CAPIS on 08/18/2021

Part Three of the Three Part Series (click here for Part One and Two)   In the previous two blog posts we examined the existence and resilience of trade rotation and how to quantify the impacts on performance.  Today’s question…”How can we eliminate rotation?” If you analyzed the impact of rotation and concluded that it makes sense to consider ways to eliminate the practice, what is the next step?   Step One Renegotiate trade away fees:  In many cases, we have seen custodians reduce and even eliminate trade away fees.  In a recent roundtable discussion, David Krebs,  provided his perspective and advice. “RIAs and Outsourced Trading: What You Need to Navigate the Markets.” Step Two Solve for the operational complexities:  While some advisers have been able to use internal staff and technology solutions, others have found third party middle office providers to be helpful, such as Archer IMS, SEI, and STP Investment Partners. Step Three Trade reporting and settlement:  Understanding that most wrap/custodial sponsors require a net price, step outs have routinely been used to report trades to the sponsors.  Unfortunately, most step outs will require the executing broker’s compensation to be in the form of a markup/down of which…

Part Three of the Three Part Series (click here for Part One and Two)   In the previous two blog posts we examined the existence and resilience of trade rotation and how to quantify the impacts on performance.  Today’s question…”How can we eliminate rotation?” If you analyzed the impact of rotation and concluded that it makes sense to consider ways to eliminate the practice, what is the next step?   Step One Renegotiate trade away fees:  In many cases, we have seen custodians reduce and even eliminate trade away fees.  In a recent roundtable discussion, David Krebs,  provided his perspective and advice. “RIAs and Outsourced Trading: What You Need to Navigate the Markets.” Step Two Solve for the operational complexities:  While some advisers have been able to use internal staff and technology solutions, others have found third party middle office providers to be helpful, such as Archer IMS, SEI, and STP Investment Partners. Step Three Trade reporting and settlement:  Understanding that most wrap/custodial sponsors require a net price, step outs have routinely been used to report trades to the sponsors.  Unfortunately, most step outs will require the executing broker’s compensation to be in the form of a markup/down of which…

Is Trade Rotation a Problem Worth Fixing?

CAPIS Insights

CAPIS Insights

posted by CAPIS on 08/10/2021 at 10:03 am
by CAPIS on 08/10/2021

Part Two of a Three Part Series (Click here for Part One:  “What are the Barriers to Eliminating Trade Rotation”) In this second blog on trade rotation, we ask the question…”Does it makes sense to overcome the barriers and eliminate trade rotation?” Step One:  Examine your specific situation.   This is a classic cost versus benefit analysis. Do your trades take minutes, hours or days? Do you notice a difference between execution venues, i.e. sponsors/custodians. Do you pay commissions to brokers that provide research? Do you have performance differences among your accounts?   Step Two:  Quantifying the Costs Market Impact, Information Leakage and Opportunity Costs:  As we all know, liquidity characteristics drive trading costs.  While S&P500 stocks trade like water, small and mid-cap stocks can be extremely difficult to trade.  According to a leading TCA vendor, the average cost of an institutional order is -19.3 bps from Arrival Price.  Assuming linear impact, the last fill will be ~38 bps worse than the first fill.  These numbers quickly increase as liquidity needs increase.  In a rotation format, the last challenge is to give everyone an equal opportunity to feel the pain of going last. Execution Venues:  Using the same data source, while…

Part Two of a Three Part Series (Click here for Part One:  “What are the Barriers to Eliminating Trade Rotation”) In this second blog on trade rotation, we ask the question…”Does it makes sense to overcome the barriers and eliminate trade rotation?” Step One:  Examine your specific situation.   This is a classic cost versus benefit analysis. Do your trades take minutes, hours or days? Do you notice a difference between execution venues, i.e. sponsors/custodians. Do you pay commissions to brokers that provide research? Do you have performance differences among your accounts?   Step Two:  Quantifying the Costs Market Impact, Information Leakage and Opportunity Costs:  As we all know, liquidity characteristics drive trading costs.  While S&P500 stocks trade like water, small and mid-cap stocks can be extremely difficult to trade.  According to a leading TCA vendor, the average cost of an institutional order is -19.3 bps from Arrival Price.  Assuming linear impact, the last fill will be ~38 bps worse than the first fill.  These numbers quickly increase as liquidity needs increase.  In a rotation format, the last challenge is to give everyone an equal opportunity to feel the pain of going last. Execution Venues:  Using the same data source, while…

Why Does Trade Rotation Still Persist?

CAPIS Insights

CAPIS Insights

posted by CAPIS on 08/02/2021 at 11:12 am
by CAPIS on 08/02/2021

Part One of a Three Part Series   In a recent online poll, we asked equity managers in the wrap/custodial space: “What is the biggest barrier to aggregating orders and trading away from these platforms?”  While 15% responded that they already traded away, a full 85% provided reasons for the continuation of the rotation process. For the uninitiated, trade rotation is the process whereby orders are executed in a set rotation or queue, rather than being executed in a single block. Trade rotation has historically been the default process employed by institutional managers sub-advising wrap/custodial assets.  However, most managers would agree that executing a single block would be preferred. Barriers solving the trade rotation issue: Operational complexities (45%):  The most common reason cited was operational complexities.  If you manage assets on wrap/custodial platforms, you know how time-consuming it can be to “work up” an order.  If you manage assets on multiple platforms this task can become a job in itself.  Now consider how you would consolidate these orders, trade away, report transaction details and provide the necessary disclosure…Operational complexities are real. Trades away fees (30%):  The fact is that some wrap/custodial platforms still charge fees to trade away.   While some…

Part One of a Three Part Series   In a recent online poll, we asked equity managers in the wrap/custodial space: “What is the biggest barrier to aggregating orders and trading away from these platforms?”  While 15% responded that they already traded away, a full 85% provided reasons for the continuation of the rotation process. For the uninitiated, trade rotation is the process whereby orders are executed in a set rotation or queue, rather than being executed in a single block. Trade rotation has historically been the default process employed by institutional managers sub-advising wrap/custodial assets.  However, most managers would agree that executing a single block would be preferred. Barriers solving the trade rotation issue: Operational complexities (45%):  The most common reason cited was operational complexities.  If you manage assets on wrap/custodial platforms, you know how time-consuming it can be to “work up” an order.  If you manage assets on multiple platforms this task can become a job in itself.  Now consider how you would consolidate these orders, trade away, report transaction details and provide the necessary disclosure…Operational complexities are real. Trades away fees (30%):  The fact is that some wrap/custodial platforms still charge fees to trade away.   While some…

VIDEO: The Morning Note Tutorial

CAPIS Insights

CAPIS Insights

posted by CAPIS on 07/21/2021 at 3:24 pm
by CAPIS on 07/21/2021

The CAPIS Morning Note provides daily professionally written, insightful and actionable commentary right to your email box. This brief video tutorial explains the various sections of the Note – highlighting key sections and items that can either assist in making trading decisions or just simply keep you informed.      

The CAPIS Morning Note provides daily professionally written, insightful and actionable commentary right to your email box. This brief video tutorial explains the various sections of the Note – highlighting key sections and items that can either assist in making trading decisions or just simply keep you informed.      

Bloomberg Virtual Panel RECAP featuring CAPIS: Trends in Asset Allocation and Transition Management

CAPIS Insights

CAPIS Insights

posted by CAPIS on 07/21/2021 at 2:32 pm
by CAPIS on 07/21/2021

Featuring Ben Jenkins, CAPIS, Jonathan Kowolik, RVK and Constantin Cosereanu, Bloomberg LLP Presentation Summary (with timestamps) Click here for the video presentation   Trends in Asset Allocation and Transition Management (1:45 – 10:05) Asset owners have lower expectations for global equity & fixed income with focus on style Maintaining one or more TM providers is a common ‘best practice’ The allocation shifts lead to increased usage and demand for transition management (TM) While Transition Management volumes declined in 2020, 2021 has seen a surge of activity   US Equity Rebalance Case Study (10:06 – 21:15) Asset owners generally know the high-level characteristics of their trade, but it’s hard to identify the risks Using a system like Bloomberg PORT can help identify risk contributions Top-down factors may not best identify the ‘real’ risk of a TM trade PORT can help identify individual risk elements which are not clearly identified by just looking at top-level elements (ex: Travel+Leisure only 2% of trade, but 16.5% of risk)   ETF/Portfolio Creation Case Study (21:16 – 33:48) PORT can help identify the ‘true’ and available liquidity for assets, especially ETFs which have hidden liquidity (due to creation/de-creation) Historic execution timing may be useful to understand…

Featuring Ben Jenkins, CAPIS, Jonathan Kowolik, RVK and Constantin Cosereanu, Bloomberg LLP Presentation Summary (with timestamps) Click here for the video presentation   Trends in Asset Allocation and Transition Management (1:45 – 10:05) Asset owners have lower expectations for global equity & fixed income with focus on style Maintaining one or more TM providers is a common ‘best practice’ The allocation shifts lead to increased usage and demand for transition management (TM) While Transition Management volumes declined in 2020, 2021 has seen a surge of activity   US Equity Rebalance Case Study (10:06 – 21:15) Asset owners generally know the high-level characteristics of their trade, but it’s hard to identify the risks Using a system like Bloomberg PORT can help identify risk contributions Top-down factors may not best identify the ‘real’ risk of a TM trade PORT can help identify individual risk elements which are not clearly identified by just looking at top-level elements (ex: Travel+Leisure only 2% of trade, but 16.5% of risk)   ETF/Portfolio Creation Case Study (21:16 – 33:48) PORT can help identify the ‘true’ and available liquidity for assets, especially ETFs which have hidden liquidity (due to creation/de-creation) Historic execution timing may be useful to understand…

July Research Call RECAP: Markets Policy Partners Says Doves Rule the Fed Roost – for Now

CAPIS Insights

CAPIS Insights

posted by CAPIS on 07/20/2021 at 9:09 am
by CAPIS on 07/20/2021

Featuring John Fagan and Brendan Walsh, co-founders of Markets Policy Partners (MPP). Presentation summary (with timestamps) Click here for the video presentation   Federal Reserve Policy Expectations No change in 2021, but tighter in 2022. (5:41) Powell could be replaced by Fed Governor Lael Brainard. (10:40) Rise in Economic Uncertainty Delta Variant and the Recovery Trade (12:05) Infrastructure chances (13:53) Inflation Inflation is abating (14:48) Upcoming U.S. Legislative Agenda Bipartisan Infrastructure Framework and American Jobs Plan (20:07) Cryptocurrency Expect legislation regulating crypto trading, derivative products, and taxation. (29:55)   Markets Policy Partners is a Washington D.C.-based independent advisory service, informing clients on matters at the intersection of markets and policy, and in the public sector.   For questions or to learn more about CAPIS, please reach out to webinquiry@capis.com and follow us on Twitter (@capisinc) and LinkedIn for more updates and insight from our team.  

Featuring John Fagan and Brendan Walsh, co-founders of Markets Policy Partners (MPP). Presentation summary (with timestamps) Click here for the video presentation   Federal Reserve Policy Expectations No change in 2021, but tighter in 2022. (5:41) Powell could be replaced by Fed Governor Lael Brainard. (10:40) Rise in Economic Uncertainty Delta Variant and the Recovery Trade (12:05) Infrastructure chances (13:53) Inflation Inflation is abating (14:48) Upcoming U.S. Legislative Agenda Bipartisan Infrastructure Framework and American Jobs Plan (20:07) Cryptocurrency Expect legislation regulating crypto trading, derivative products, and taxation. (29:55)   Markets Policy Partners is a Washington D.C.-based independent advisory service, informing clients on matters at the intersection of markets and policy, and in the public sector.   For questions or to learn more about CAPIS, please reach out to webinquiry@capis.com and follow us on Twitter (@capisinc) and LinkedIn for more updates and insight from our team.  

Test Your Knowledge: Agency Brokerage Commissions Universe

CAPIS Insights

CAPIS Insights

posted by CAPIS on 06/30/2021 at 12:08 pm
by CAPIS on 06/30/2021

At CAPIS, we have close relationships with our clients and pride ourselves on being receptive and available for feedback. Trading commissions in the retail world have been a part of national headline news this year, and we’ve been receiving some inquiries about trends we see across the universe of listed equities we trade.   Beginning Q1 2015, CAPIS analyzed over 15 million institutional equity transactions totalling $3.3 trillion traded. This dataset serves as the basis for benchmarking commission rates and brokerage allocation statistics. Based on our data, we put together a short quiz on commission rates in the U.S. and in developed markets, as well as the differences in the number of trades executed at full-service rates vs. execution-only rates.  So, test your knowledge below!     Comparing the two sets of charts, you can see dramatic differences between the U.S. rate trends versus developed markets. Whereas US rates have “drifted” lower, average developed market rates have been slashed 42%.  If you are curious about the trends we see in our data or would like to learn more about CAPIS’ agency-only brokerage services, please reach out to webinquiry@capis.com and follow us on Twitter (@capisinc) and LinkedIn for more updates and insight…

At CAPIS, we have close relationships with our clients and pride ourselves on being receptive and available for feedback. Trading commissions in the retail world have been a part of national headline news this year, and we’ve been receiving some inquiries about trends we see across the universe of listed equities we trade.   Beginning Q1 2015, CAPIS analyzed over 15 million institutional equity transactions totalling $3.3 trillion traded. This dataset serves as the basis for benchmarking commission rates and brokerage allocation statistics. Based on our data, we put together a short quiz on commission rates in the U.S. and in developed markets, as well as the differences in the number of trades executed at full-service rates vs. execution-only rates.  So, test your knowledge below!     Comparing the two sets of charts, you can see dramatic differences between the U.S. rate trends versus developed markets. Whereas US rates have “drifted” lower, average developed market rates have been slashed 42%.  If you are curious about the trends we see in our data or would like to learn more about CAPIS’ agency-only brokerage services, please reach out to webinquiry@capis.com and follow us on Twitter (@capisinc) and LinkedIn for more updates and insight…

June Research Call RECAP: Colas Says Higher Rates Point to More Activity

CAPIS Insights

CAPIS Insights

posted by CAPIS on 06/22/2021 at 9:12 am
by CAPIS on 06/22/2021

Last week we held our June research call, featuring Nicholas Colas, co-founder of DataTrek Research. Nick is a regular speaker on the CAPIS research call and renowned media participant. Click here for the research call video Our own Ed O’Dowd, Senior Vice President, Institutional Sales, started the call with an update on trading volume and the beginning of summer vacation season, where the latter is affecting the former,O’Dowd says. CAPIS is countering these summer doldrums with increased high-quality digital content. Check out our website at www.capis.com for more details and content.   Colas’ presentation addressed the following topics: Taper Tantrum Redux?  Colas said that last week’s Federal Reserve opening of the discussion to curtail their bond purchases in the current economic cycle and thus push interest rates higher bears scrutiny, but 2013’s event is not the same as the current phenomenon. The 2013 “taper tantrum” was precipitated by then Federal Reserve Chairman Bernanke’s “off the cuff” remarks on the economy, which caused the market to misinterpret when and how the FOMC would alter rates. Now, the market is being given a clear timeline as to when the FOMC will act and by how much. Colas points to the August Jackson Hole…

Last week we held our June research call, featuring Nicholas Colas, co-founder of DataTrek Research. Nick is a regular speaker on the CAPIS research call and renowned media participant. Click here for the research call video Our own Ed O’Dowd, Senior Vice President, Institutional Sales, started the call with an update on trading volume and the beginning of summer vacation season, where the latter is affecting the former,O’Dowd says. CAPIS is countering these summer doldrums with increased high-quality digital content. Check out our website at www.capis.com for more details and content.   Colas’ presentation addressed the following topics: Taper Tantrum Redux?  Colas said that last week’s Federal Reserve opening of the discussion to curtail their bond purchases in the current economic cycle and thus push interest rates higher bears scrutiny, but 2013’s event is not the same as the current phenomenon. The 2013 “taper tantrum” was precipitated by then Federal Reserve Chairman Bernanke’s “off the cuff” remarks on the economy, which caused the market to misinterpret when and how the FOMC would alter rates. Now, the market is being given a clear timeline as to when the FOMC will act and by how much. Colas points to the August Jackson Hole…

ADVISORY NOTICE: HKEX Announces Increase of Stamp Duty on Stock Transactions Aug 1

News CAPIS Insights General

General

posted by CAPIS on 06/21/2021 at 11:49 am
by CAPIS on 06/21/2021

Please see Trading Notice below from the Hong Kong Stock Exchange Contact our trading desk for further information on the proper booking of stamp duties, taxes, and fees in international stocks at 866.349.6216 or intl@capis.com   Subject: Increase of Stamp Duty on Stock Transactions Enquiry: Participant General Enquiry Hotline1 (Tel : 2840 3626 E-mail : trd@hkex.com.hk) Exchange Participants (EPs) are requested to note that the Government published in The Gazette the “Revenue (Stamp Duty) Bill 2021“ (the “Bill”) on 5 March 2021, and on 2 June 2021 second and third readings have been passed by the Legislative Council, confirming that the Bill, will come into effect on 1 August 2021. Under the Bill, along with other amendments, the rate of Stamp Duty payable on contract notes for the sale or purchase of Hong Kong stocks (not being jobbing business) will be increased from 0.1% to 0.13%, as a percentage of transaction value (“stamp duty increase”). For details, please refer to the Government Press Release and the Bill. EPs are reminded to take all necessary actions to prepare for the stamp duty increase including enhancing their Broker Supplied Systems, back office systems, relevant applications and operational facilities. Olivia Mak Senior Vice…

Please see Trading Notice below from the Hong Kong Stock Exchange Contact our trading desk for further information on the proper booking of stamp duties, taxes, and fees in international stocks at 866.349.6216 or intl@capis.com   Subject: Increase of Stamp Duty on Stock Transactions Enquiry: Participant General Enquiry Hotline1 (Tel : 2840 3626 E-mail : trd@hkex.com.hk) Exchange Participants (EPs) are requested to note that the Government published in The Gazette the “Revenue (Stamp Duty) Bill 2021“ (the “Bill”) on 5 March 2021, and on 2 June 2021 second and third readings have been passed by the Legislative Council, confirming that the Bill, will come into effect on 1 August 2021. Under the Bill, along with other amendments, the rate of Stamp Duty payable on contract notes for the sale or purchase of Hong Kong stocks (not being jobbing business) will be increased from 0.1% to 0.13%, as a percentage of transaction value (“stamp duty increase”). For details, please refer to the Government Press Release and the Bill. EPs are reminded to take all necessary actions to prepare for the stamp duty increase including enhancing their Broker Supplied Systems, back office systems, relevant applications and operational facilities. Olivia Mak Senior Vice…

Employee Spotlight – Ben Jenkins, Director, Transition Management

News CAPIS Insights General

General

posted by CAPIS on 06/08/2021 at 10:02 am
by CAPIS on 06/08/2021

  At CAPIS, we put relationships first. We think of our team as a family, which is why it is important for us to not only get to know each member but also shine a spotlight on them. We spoke with Ben Jenkins, Director, Transition Management, who re-joined CAPIS at the end of 2020. Take a look at our conversation below to learn about why he returned to CAPIS after spending some time away, some of the biggest challenges and successes he’s experienced during his career and during the pandemic, as well as how he has learned to step out of his comfort zone. [Note: This conversation has been edited for length and clarity.] Q. How did you get interested in transition management and CAPIS? I first joined CAPIS in 2002 after working at a few start-ups. I found the job posting on www.Monster.com and was able to secure an interview. Transition management helps broaden my financial education through client engagement, which I really enjoy. The chance to help solve a problem drives my passion daily. Q. Why return to CAPIS after 16 years? CAPIS is where I started my career and my love of transition management. The opportunity to…

  At CAPIS, we put relationships first. We think of our team as a family, which is why it is important for us to not only get to know each member but also shine a spotlight on them. We spoke with Ben Jenkins, Director, Transition Management, who re-joined CAPIS at the end of 2020. Take a look at our conversation below to learn about why he returned to CAPIS after spending some time away, some of the biggest challenges and successes he’s experienced during his career and during the pandemic, as well as how he has learned to step out of his comfort zone. [Note: This conversation has been edited for length and clarity.] Q. How did you get interested in transition management and CAPIS? I first joined CAPIS in 2002 after working at a few start-ups. I found the job posting on www.Monster.com and was able to secure an interview. Transition management helps broaden my financial education through client engagement, which I really enjoy. The chance to help solve a problem drives my passion daily. Q. Why return to CAPIS after 16 years? CAPIS is where I started my career and my love of transition management. The opportunity to…

May Research Call RECAP: Katie Stockton on Market Momentum

CAPIS Insights

CAPIS Insights

posted by CAPIS on 05/26/2021 at 9:09 am
by CAPIS on 05/26/2021

  Last week we held our May research call featuring Katie Stockton, the co-founder of Fairlead Strategies, who provided specific capital markets and digital currency commentary. Katie is a regular speaker on CAPIS monthly research calls and is a renowned media participant. Click here for the research call video US Equities: There has been “lots of action,” but prices and risk bear scrutiny. Stockton said there was a lack of commitment to chase the market higher when valuations are getting uncomfortable to people. Her technical analysis of the U.S. equities universe showed: The market remains in an uptrend, but that would be in jeopardy should the S&P cross its 50-day moving average. Momentum has deteriorated, but long-term momentum is positive behind major indices. Steep uptrends often need to take a pause to refresh themselves, and that’s what investors are now facing. Large-cap tech stocks show overbought downturns, and the expectation is for more price pullbacks and some choppiness. Small-caps have lost momentum and relative strength. This year should be more about value than growth on a relative basis.   Commodity Prices Commodities’ outstanding upside momentum points to further rising prices Of note are lumber, copper, and corn. Keep an eye on commodities that…

  Last week we held our May research call featuring Katie Stockton, the co-founder of Fairlead Strategies, who provided specific capital markets and digital currency commentary. Katie is a regular speaker on CAPIS monthly research calls and is a renowned media participant. Click here for the research call video US Equities: There has been “lots of action,” but prices and risk bear scrutiny. Stockton said there was a lack of commitment to chase the market higher when valuations are getting uncomfortable to people. Her technical analysis of the U.S. equities universe showed: The market remains in an uptrend, but that would be in jeopardy should the S&P cross its 50-day moving average. Momentum has deteriorated, but long-term momentum is positive behind major indices. Steep uptrends often need to take a pause to refresh themselves, and that’s what investors are now facing. Large-cap tech stocks show overbought downturns, and the expectation is for more price pullbacks and some choppiness. Small-caps have lost momentum and relative strength. This year should be more about value than growth on a relative basis.   Commodity Prices Commodities’ outstanding upside momentum points to further rising prices Of note are lumber, copper, and corn. Keep an eye on commodities that…

How Many Solutions Do Your Transition Managers Provide?

News CAPIS Insights General

General

posted by CAPIS on 05/18/2021 at 10:12 am
by CAPIS on 05/18/2021

(hint: the correct answer is more than one) Asset allocation is an essential part of every institutional investor’s strategy. But it is also an occasional activity for most, with months if not years between events. So, when events arise, it is common practice to look to the transition management community for guidance and assistance on the best approach to implement the change while minimizing costs and risks to the portfolio. Given the infrequency between events, asset owners may not always be ready to ask the most pertinent questions for the event. And, to be fair, these questions change based upon the unique structure of each transition (or asset allocation) event. While the phrase can be overused, there is no “one size fits all” solution for transitions; there is rarely just one solution possible. Recently a client approached us with a transition to move from an active (separate) account to a passive (commingled) fund. They asked for guidance from at least one other provider and received a single solution. In comparison, our response included seven strategies, ranging from near-instant equitization to a more delayed trade implementation. In each strategy, we outlined the requirements, the risks, and the benefits. Some of you…

(hint: the correct answer is more than one) Asset allocation is an essential part of every institutional investor’s strategy. But it is also an occasional activity for most, with months if not years between events. So, when events arise, it is common practice to look to the transition management community for guidance and assistance on the best approach to implement the change while minimizing costs and risks to the portfolio. Given the infrequency between events, asset owners may not always be ready to ask the most pertinent questions for the event. And, to be fair, these questions change based upon the unique structure of each transition (or asset allocation) event. While the phrase can be overused, there is no “one size fits all” solution for transitions; there is rarely just one solution possible. Recently a client approached us with a transition to move from an active (separate) account to a passive (commingled) fund. They asked for guidance from at least one other provider and received a single solution. In comparison, our response included seven strategies, ranging from near-instant equitization to a more delayed trade implementation. In each strategy, we outlined the requirements, the risks, and the benefits. Some of you…

EMPLOYEE SPOTLIGHT: David Lee, Director of Fixed Income Trading

CAPIS Insights

CAPIS Insights

posted by CAPIS on 05/11/2021 at 10:00 am
by CAPIS on 05/11/2021

At CAPIS, we put relationships first. We think of our team as a family, which is why we not only get to know each member but find it important to shine a spotlight on them as individuals. In this installment of our Employee Spotlight series, we spoke with David Lee, our Director of Fixed-Income Trading, who has worked at CAPIS for 12 years. Take a look at our conversation below to learn about how he came to work at CAPIS, his start in fixed-income trading, some of the biggest challenges and successes he’s experienced, and his desire to enjoy live sports again. [Note: This conversation has been edited for length and clarity.]   How did you get your start in finance or the capital markets? Did you go to school for this or something else? I have an undergraduate degree in Accounting and worked in the Corporate Finance and Treasury departments at FedEx. After that, I was hired to join the bond division of First Tennessee Bank by the head of the division, Jimmy Hughes. How has fixed income trading changed during the pandemic? How is it changed over the course of your career? I have found communication with clients…

At CAPIS, we put relationships first. We think of our team as a family, which is why we not only get to know each member but find it important to shine a spotlight on them as individuals. In this installment of our Employee Spotlight series, we spoke with David Lee, our Director of Fixed-Income Trading, who has worked at CAPIS for 12 years. Take a look at our conversation below to learn about how he came to work at CAPIS, his start in fixed-income trading, some of the biggest challenges and successes he’s experienced, and his desire to enjoy live sports again. [Note: This conversation has been edited for length and clarity.]   How did you get your start in finance or the capital markets? Did you go to school for this or something else? I have an undergraduate degree in Accounting and worked in the Corporate Finance and Treasury departments at FedEx. After that, I was hired to join the bond division of First Tennessee Bank by the head of the division, Jimmy Hughes. How has fixed income trading changed during the pandemic? How is it changed over the course of your career? I have found communication with clients…

Bank Trust Roundtable RECAP: Risk Surrounds Low-Priced Stock Trading 

CAPIS Insights

CAPIS Insights

posted by CAPIS on 05/10/2021 at 4:26 pm
by CAPIS on 05/10/2021

  Last week, CAPIS held a virtual panel event “Bank Trust: Trading in Low-Priced Stocks,” featuring Steve McCabe, Bill Stone, and CAPIS’ own Jason Christian and Michael Aguilera. The roundtable, moderated by Jon Lantz, examined the confluence of events that have led to an increase in low-priced stock trading and the consequent challenges faced by broker-dealers, custodians, and compliance departments. Click here for the full virtual panel video   The lively discussion began with CAPIS CCO and General Counsel Jason Christian, who built upon the traditional definition of low-priced stocks — those that trade under $5/share. Christian explained his view that this definition leaves much to be desired, as recent lower-priced stock trading trends and subsequent regulatory scrutiny has centered on securities priced at $1 dollar or less, micro-cap stocks, and Pink Sheet/OTC securities. From a broker-dealer perspective and from the regulatory point of view, these stocks warrant a closer review due to surrounding fraud and anti-money laundering concerns. From a custodial vantage point, Steve McCabe, Vice President and Senior Product Manager at Fifth Third Bank, said he receives myriad inquiries from clients, regulators, depository institutions, and broker-dealers on these types of securities. They have programs in place to monitor the…

  Last week, CAPIS held a virtual panel event “Bank Trust: Trading in Low-Priced Stocks,” featuring Steve McCabe, Bill Stone, and CAPIS’ own Jason Christian and Michael Aguilera. The roundtable, moderated by Jon Lantz, examined the confluence of events that have led to an increase in low-priced stock trading and the consequent challenges faced by broker-dealers, custodians, and compliance departments. Click here for the full virtual panel video   The lively discussion began with CAPIS CCO and General Counsel Jason Christian, who built upon the traditional definition of low-priced stocks — those that trade under $5/share. Christian explained his view that this definition leaves much to be desired, as recent lower-priced stock trading trends and subsequent regulatory scrutiny has centered on securities priced at $1 dollar or less, micro-cap stocks, and Pink Sheet/OTC securities. From a broker-dealer perspective and from the regulatory point of view, these stocks warrant a closer review due to surrounding fraud and anti-money laundering concerns. From a custodial vantage point, Steve McCabe, Vice President and Senior Product Manager at Fifth Third Bank, said he receives myriad inquiries from clients, regulators, depository institutions, and broker-dealers on these types of securities. They have programs in place to monitor the…

CAPIS Ownership Succession Transition Plan

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General

posted by CAPIS on 05/04/2021 at 10:01 am
by CAPIS on 05/04/2021

May 4. 2021   Ownership Changes/Succession Strategy   To all CAPIS Employees/Clients: In a move designed to ensure our long-term success and stability, Capital Institutional Services, Inc. (CAPIS) is proud to announce the initiation of a two-step succession strategy.  It is important to note that the Potts family will retain control of the firm and that these changes will only serve to improve our core businesses: global execution services, commission management, outsourced trading, and transition management. Step One, characterized by the shift of majority ownership to Cullen Potts, was effective May 1, 2021.  Cullen has worked with CAPIS for over 20 years and brings a wealth of outside business experience to the table.  “Cullen’s enthusiastic, hands-on approach is well known within the CAPIS family.  We are excited to have Cullen taking the reins,” Ann Sebert, CEO. Step Two is Employee Ownership.  Targeting year end, CAPIS intends to implement employee ownership opportunities.  “While the structure and timing have not been finalized, it is my intent to provide ownership opportunities to those that have helped me build this wonderful organization,” Don Potts, Founder and Chairman of the Board. As a result of these exciting changes, CAPIS will be withdrawing our Women’s Business…

May 4. 2021   Ownership Changes/Succession Strategy   To all CAPIS Employees/Clients: In a move designed to ensure our long-term success and stability, Capital Institutional Services, Inc. (CAPIS) is proud to announce the initiation of a two-step succession strategy.  It is important to note that the Potts family will retain control of the firm and that these changes will only serve to improve our core businesses: global execution services, commission management, outsourced trading, and transition management. Step One, characterized by the shift of majority ownership to Cullen Potts, was effective May 1, 2021.  Cullen has worked with CAPIS for over 20 years and brings a wealth of outside business experience to the table.  “Cullen’s enthusiastic, hands-on approach is well known within the CAPIS family.  We are excited to have Cullen taking the reins,” Ann Sebert, CEO. Step Two is Employee Ownership.  Targeting year end, CAPIS intends to implement employee ownership opportunities.  “While the structure and timing have not been finalized, it is my intent to provide ownership opportunities to those that have helped me build this wonderful organization,” Don Potts, Founder and Chairman of the Board. As a result of these exciting changes, CAPIS will be withdrawing our Women’s Business…

April Research Call RECAP: Nick Colas Says US Will Lead Recovery

CAPIS Insights

CAPIS Insights

posted by CAPIS on 04/21/2021 at 10:11 am
by CAPIS on 04/21/2021

  Last week we held our April research call, featuring Nicholas Colas, co-founder of DataTrek Research. Nick was joined by his co-founder Jessica Rabe as they both provided specific capital markets commentary. Nick is a regular speaker on CAPIS monthly research calls, and is a renowned media participant. Click here for the research call video Our own Dave Choate, COO & Executive Director of Sales and Trading, started the call with an update on commissions from CAPIS’ Q1 data and experiences. Choate explained that in analyzing over $600 billion in stock trading and custody data from CAPIS clients, he found that commission rates (full-service rates paid for bundled research) were up to their highest since 2017. Citing the data, Choate said over 75% of trades were executed at full-service rates, higher than the 73% seen in 2020 and up from 68% in 2019. Choate also spoke briefly about the upcoming May 6th virtual roundtable hosted by CAPIS, a discussion that will focus on low-priced stocks and how to avoid AML compliance issues. Stay tuned for details. Colas’ presentation provided the following insights: U.S. Geopolitics Investors have demonstrated that they are focused predominantly on the size and longevity of fiscal and…

  Last week we held our April research call, featuring Nicholas Colas, co-founder of DataTrek Research. Nick was joined by his co-founder Jessica Rabe as they both provided specific capital markets commentary. Nick is a regular speaker on CAPIS monthly research calls, and is a renowned media participant. Click here for the research call video Our own Dave Choate, COO & Executive Director of Sales and Trading, started the call with an update on commissions from CAPIS’ Q1 data and experiences. Choate explained that in analyzing over $600 billion in stock trading and custody data from CAPIS clients, he found that commission rates (full-service rates paid for bundled research) were up to their highest since 2017. Citing the data, Choate said over 75% of trades were executed at full-service rates, higher than the 73% seen in 2020 and up from 68% in 2019. Choate also spoke briefly about the upcoming May 6th virtual roundtable hosted by CAPIS, a discussion that will focus on low-priced stocks and how to avoid AML compliance issues. Stay tuned for details. Colas’ presentation provided the following insights: U.S. Geopolitics Investors have demonstrated that they are focused predominantly on the size and longevity of fiscal and…

Employee Spotlight – Jannette Vasquez, Manager of Client Services

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General

posted by CAPIS on 03/31/2021 at 9:20 am
by CAPIS on 03/31/2021

  At CAPIS, we put relationships first. We think of our team as a family, which is why it is important for us to get to know each member and shine a spotlight on them. We spoke with Jannette Vasquez, VP, Manager of Client Services, who has worked at CAPIS for 20 years. Take a look at our conversation below to learn about how she came to work at CAPIS, and some of the biggest challenges and successes she’s experienced over the past two decades, as well as her long-standing desire to keep the record straight.  [Note: This conversation has been edited for length and clarity.] Q: What piqued your interest in finance? How did you find yourself at CAPIS?  I didn’t have a large market background before CAPIS. Accounting-type work interested me, not so much finance and trading. The company I had been working for went through layoffs — I was an event planner for a property management company, and they weren’t doing great. A friend of mine worked at CAPIS in the trading group at the time and they were able to help make the connection.  I expressed to CAPIS’ CFO that when I used to balance my…

  At CAPIS, we put relationships first. We think of our team as a family, which is why it is important for us to get to know each member and shine a spotlight on them. We spoke with Jannette Vasquez, VP, Manager of Client Services, who has worked at CAPIS for 20 years. Take a look at our conversation below to learn about how she came to work at CAPIS, and some of the biggest challenges and successes she’s experienced over the past two decades, as well as her long-standing desire to keep the record straight.  [Note: This conversation has been edited for length and clarity.] Q: What piqued your interest in finance? How did you find yourself at CAPIS?  I didn’t have a large market background before CAPIS. Accounting-type work interested me, not so much finance and trading. The company I had been working for went through layoffs — I was an event planner for a property management company, and they weren’t doing great. A friend of mine worked at CAPIS in the trading group at the time and they were able to help make the connection.  I expressed to CAPIS’ CFO that when I used to balance my…

March Research Call Recap: Fairlead Strategies’ Katie Stockton on Long-Term Momentum

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General

posted by CAPIS on 03/23/2021 at 9:09 am
by CAPIS on 03/23/2021

This article was penned by CAPIS Last week we held our March research call, featuring Katie Stockton, founder of Fairlead Strategies. Stockton, a regular speaker on CAPIS research calls, is a renowned technical analyst who appears frequently on media outlets like CNBC. Click here for the research call video Our own Ed O’Dowd, Senior Vice President, Institutional Sales, started the call with an update on the day’s market activity – noting that despite pressure on the equities market, investors were still eager to purchase stocks (but with an eye to specific sectors). Furthermore, O’Dowd said that the Federal Reserve’s recent two-day meeting was now in the market’s rearview mirror without interest rate policy change, and that was a positive for stocks. Fairlead’s Stockton began her presentation by examining the market’s bearish moves in light of the spike in U.S. Treasury yields, saying that despite stocks suffering from a short-term oversold bias, the market remains solid moving forward. “We see long-term momentum to the upside continuing” for stocks, she said. This forecast for long-term strength, she added, will be supported by a continued decline in volatility (as measured by the VIX). “The market can avoid a ‘big’ correction in a lower…

This article was penned by CAPIS Last week we held our March research call, featuring Katie Stockton, founder of Fairlead Strategies. Stockton, a regular speaker on CAPIS research calls, is a renowned technical analyst who appears frequently on media outlets like CNBC. Click here for the research call video Our own Ed O’Dowd, Senior Vice President, Institutional Sales, started the call with an update on the day’s market activity – noting that despite pressure on the equities market, investors were still eager to purchase stocks (but with an eye to specific sectors). Furthermore, O’Dowd said that the Federal Reserve’s recent two-day meeting was now in the market’s rearview mirror without interest rate policy change, and that was a positive for stocks. Fairlead’s Stockton began her presentation by examining the market’s bearish moves in light of the spike in U.S. Treasury yields, saying that despite stocks suffering from a short-term oversold bias, the market remains solid moving forward. “We see long-term momentum to the upside continuing” for stocks, she said. This forecast for long-term strength, she added, will be supported by a continued decline in volatility (as measured by the VIX). “The market can avoid a ‘big’ correction in a lower…

Recapping “RIAs and Outsourced Trading: What You Need to Know To Navigate the Markets” 

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General

posted by CAPIS on 03/11/2021 at 9:09 am
by CAPIS on 03/11/2021

This article was penned by CAPIS On February 25th, CAPIS hosted the second of its virtual panels, “RIAs and Outsourced Trading: What You Need to Know To Navigate the Markets.” View the full recording here.  The panel featured: Mark Viani (Moderator), Director of Institutional Sales, ARC Product Manager, CAPIS  Matt Krebs, Director of Outsourced Trading, CAPIS  Chris Hurley, Director of Institutional Sales, CAPIS  David Krebs, Principal & COO at Signia Capital Management  Marc Van Rijssen, Director of Operations, UX Wealth Partners  The discussion centered on the operational processes and intricate requirements for when registered investment advisors (RIAs) consider outsourcing, either in whole or part, the aggregation of their institutional and wrap/custodial platform orders. On the subject of outsourced trading, Hurley said that clients are choosing to divert their attention from costly and time consuming operational and execution processes to focus on portfolio management and increased alpha generation. David Krebs estimated that the migration  of his prior  labor and capital intensive process to a complete outsourced trading solution saves his firm ~$150,000/year.  Other topics covered included: Operational complexities RIAs encounter when contemplating outsourcing. The aggregation and execution of institutional and wrap/custodial platform orders. Negotiating the elimination of “trade-away” penalties. Payment for…

This article was penned by CAPIS On February 25th, CAPIS hosted the second of its virtual panels, “RIAs and Outsourced Trading: What You Need to Know To Navigate the Markets.” View the full recording here.  The panel featured: Mark Viani (Moderator), Director of Institutional Sales, ARC Product Manager, CAPIS  Matt Krebs, Director of Outsourced Trading, CAPIS  Chris Hurley, Director of Institutional Sales, CAPIS  David Krebs, Principal & COO at Signia Capital Management  Marc Van Rijssen, Director of Operations, UX Wealth Partners  The discussion centered on the operational processes and intricate requirements for when registered investment advisors (RIAs) consider outsourcing, either in whole or part, the aggregation of their institutional and wrap/custodial platform orders. On the subject of outsourced trading, Hurley said that clients are choosing to divert their attention from costly and time consuming operational and execution processes to focus on portfolio management and increased alpha generation. David Krebs estimated that the migration  of his prior  labor and capital intensive process to a complete outsourced trading solution saves his firm ~$150,000/year.  Other topics covered included: Operational complexities RIAs encounter when contemplating outsourcing. The aggregation and execution of institutional and wrap/custodial platform orders. Negotiating the elimination of “trade-away” penalties. Payment for…

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