CAPIS Insights

105 total posts

September Research Briefing RECAP: MPP Says 2022 Is Like a Game of Chutes and Ladders

CAPIS Insights

CAPIS Insights

posted by CAPIS on 09/16/2022 at 9:14 am
by CAPIS on 09/16/2022

September 15th, we held our September research briefing, featuring guest speakers John Fagan and Brendan Walsh, co-founders of Markets Policy Partners (MPP). MPP is a Washington, D.C.-based independent advisory service that informs clients on matters at the intersection of markets and policy, and in the public sector. Click here for a video of the research call MPP’s presentation addressed the following topics: A Less Reactionary Federal Reserve [5:15] MPP said the FOMC will hike short-term interest 75bps again at the upcoming September meeting. However, further hikes will be less reactionary to economic releases – such as CPI – and be of reduced magnitude. Look for a more balanced Fed. [6:14] Future Federal Reserve policy actions will not be 75bps. Expect lower increment hikes. [7:05] The Federal Reserve is not pivoting or changing the trajectory of interest rates but will provide steady messaging and possibly a “dovish surprise.” [7:30] The markets can expect interest rate hikes through the end of the year, but this will set the stage for improved upside for the US dollar, US Treasuries, and equities. [8:00] The FOMC expects slower growth, modest inflation, and engage in a “fighting retreat” policy. That is, MPP forecasts a 50bps hike…

September 15th, we held our September research briefing, featuring guest speakers John Fagan and Brendan Walsh, co-founders of Markets Policy Partners (MPP). MPP is a Washington, D.C.-based independent advisory service that informs clients on matters at the intersection of markets and policy, and in the public sector. Click here for a video of the research call MPP’s presentation addressed the following topics: A Less Reactionary Federal Reserve [5:15] MPP said the FOMC will hike short-term interest 75bps again at the upcoming September meeting. However, further hikes will be less reactionary to economic releases – such as CPI – and be of reduced magnitude. Look for a more balanced Fed. [6:14] Future Federal Reserve policy actions will not be 75bps. Expect lower increment hikes. [7:05] The Federal Reserve is not pivoting or changing the trajectory of interest rates but will provide steady messaging and possibly a “dovish surprise.” [7:30] The markets can expect interest rate hikes through the end of the year, but this will set the stage for improved upside for the US dollar, US Treasuries, and equities. [8:00] The FOMC expects slower growth, modest inflation, and engage in a “fighting retreat” policy. That is, MPP forecasts a 50bps hike…

July Research Briefing RECAP: Bear Market Firmly Established, AllStarCharts Says

CAPIS Insights

CAPIS Insights

posted by CAPIS on 07/22/2022 at 4:04 pm
by CAPIS on 07/22/2022

Last week CAPIS held its July research briefing, featuring JC Parets, Founder of AllStarCharts, a Pennsylvania-based technical analysis publication for hedge funds, mutual funds, financial advisors, family offices, and other investors. Click here for a video of the research call Paret’s presentation addressed the following topics: Bear Market Has Been with Us for Some Time (7:16) • JC Parets opened and pointed out that stocks have made fresh lows for the last 34 weeks. In his mind, this constitutes an ongoing bear market despite not meeting the traditional definition of a bear market – where the S&P index drops a minimum of 20%. “This is a relentless global bear market.” (7:42) • The current bull market has been in place for the last 17 months as evidenced by the 2022 YTD performance of the bond market and S&P. (8:15) • Bear markets take time and this one is “long in the tooth.” (9:28) • The US Dollar has been the safe haven trade as evidenced by the charts due to its negative correlation versus equities. Traditional inflation hedges such as Gold, the Japanese Yen, and Treasury bonds have not performed as well. “Gold is not a safe haven. “It’s the…

Last week CAPIS held its July research briefing, featuring JC Parets, Founder of AllStarCharts, a Pennsylvania-based technical analysis publication for hedge funds, mutual funds, financial advisors, family offices, and other investors. Click here for a video of the research call Paret’s presentation addressed the following topics: Bear Market Has Been with Us for Some Time (7:16) • JC Parets opened and pointed out that stocks have made fresh lows for the last 34 weeks. In his mind, this constitutes an ongoing bear market despite not meeting the traditional definition of a bear market – where the S&P index drops a minimum of 20%. “This is a relentless global bear market.” (7:42) • The current bull market has been in place for the last 17 months as evidenced by the 2022 YTD performance of the bond market and S&P. (8:15) • Bear markets take time and this one is “long in the tooth.” (9:28) • The US Dollar has been the safe haven trade as evidenced by the charts due to its negative correlation versus equities. Traditional inflation hedges such as Gold, the Japanese Yen, and Treasury bonds have not performed as well. “Gold is not a safe haven. “It’s the…

OASYS to CTM – One Step Forward, Two Steps Back?

CAPIS Insights

CAPIS Insights

posted by CAPIS on 07/08/2022 at 10:14 am
by CAPIS on 07/08/2022

If you clicked on this article, you’re likely a buy-side manager who’s used DTCC’s OASYS product for years.  It’s been the default system for sending trade allocations and step-out information on US equities since 1990.  Or you might find yourself on the sell–side, as a broker who’s trying to process client instructions and settle trades on time. This article hopes to shed some light on how firms are dealing with the migration from OASYS to CTM and offer some observations on ways we’ve addressed certain issues. Originally part of Thomson, OASYS merged with DTCC to form OMGEO in 2000.  They became wholly owned by DTCC in 2013. While antiquated, OASYS was an effective system that market participants relied heavily on for many years. As AUM continued to grow at some of the largest buy-side shops, the cost of using OASYS became an issue for many firms in the financial services community, leading some to look for more cost-effective solutions. To keep the competition at bay, DTCC decided to alter its pricing schedule and announced it would decommission OASYS in favor of Central Trade Matching (CTM), a system designed for global trading. At the time of that announcement, the 2021 target…

If you clicked on this article, you’re likely a buy-side manager who’s used DTCC’s OASYS product for years.  It’s been the default system for sending trade allocations and step-out information on US equities since 1990.  Or you might find yourself on the sell–side, as a broker who’s trying to process client instructions and settle trades on time. This article hopes to shed some light on how firms are dealing with the migration from OASYS to CTM and offer some observations on ways we’ve addressed certain issues. Originally part of Thomson, OASYS merged with DTCC to form OMGEO in 2000.  They became wholly owned by DTCC in 2013. While antiquated, OASYS was an effective system that market participants relied heavily on for many years. As AUM continued to grow at some of the largest buy-side shops, the cost of using OASYS became an issue for many firms in the financial services community, leading some to look for more cost-effective solutions. To keep the competition at bay, DTCC decided to alter its pricing schedule and announced it would decommission OASYS in favor of Central Trade Matching (CTM), a system designed for global trading. At the time of that announcement, the 2021 target…

CAPIS Concourse IT Update – Migrating from TLS 1.1

News CAPIS Insights General

General

posted by CAPIS on 07/07/2022 at 4:05 pm
by CAPIS on 07/07/2022

Effective Monday, August 29, 2022, the websites concourse.capis.com and capisapi.capis.com will no longer be accessible using the Transport Layer Security (TLS) 1.1 protocol. CAPIS will disable TLS 1.1, and firms using that protocol will not be able to establish connectivity to the CAPIS secure web servers. In order to continue accessing these CAPIS websites, firms must migrate to TLS version 1.2 (or greater) by August 29, 2022.

Effective Monday, August 29, 2022, the websites concourse.capis.com and capisapi.capis.com will no longer be accessible using the Transport Layer Security (TLS) 1.1 protocol. CAPIS will disable TLS 1.1, and firms using that protocol will not be able to establish connectivity to the CAPIS secure web servers. In order to continue accessing these CAPIS websites, firms must migrate to TLS version 1.2 (or greater) by August 29, 2022.

Open Letter to Buyside Head Traders – “Is Outsourcing Trading Being Discussed Behind Your Back?

CAPIS Insights

CAPIS Insights

posted by CAPIS on 07/07/2022 at 10:32 am
by CAPIS on 07/07/2022

As the Outsourced Trading trend gains momentum, you might be wondering if senior management is considering outsourcing trading and operations. Or worse, is your firm already making inquiries and interviewing outsourced trading solutions? According to some industry estimates, 20% of asset managers over $50 billion in AUM will outsource some aspect of trading in 2022. For smaller managers, this number is pro bably much higher. The question…Do you turn into the headwinds or duck and cover? My suggestion…Turn into the turbulent air. As the head trader, you are uniquely qualified to assess the value of outsourced trading alternatives. You have spent years understanding the complexities of our fragmented markets and the subtle differences in order routing solutions. You know the desk better than anyone else and should be part of any decision related to the desk. The first step is to understand why your firm might want to consider outsourcing some aspects of the trading desk. Is it to save money, add functionality and depth, or to serve as a business continuity solution? All of these are valid reasons to consider outsourced trading. Second, take an honest assessment of your trading capabilities and needs. ✓ What aspects of your desk…

As the Outsourced Trading trend gains momentum, you might be wondering if senior management is considering outsourcing trading and operations. Or worse, is your firm already making inquiries and interviewing outsourced trading solutions? According to some industry estimates, 20% of asset managers over $50 billion in AUM will outsource some aspect of trading in 2022. For smaller managers, this number is pro bably much higher. The question…Do you turn into the headwinds or duck and cover? My suggestion…Turn into the turbulent air. As the head trader, you are uniquely qualified to assess the value of outsourced trading alternatives. You have spent years understanding the complexities of our fragmented markets and the subtle differences in order routing solutions. You know the desk better than anyone else and should be part of any decision related to the desk. The first step is to understand why your firm might want to consider outsourcing some aspects of the trading desk. Is it to save money, add functionality and depth, or to serve as a business continuity solution? All of these are valid reasons to consider outsourced trading. Second, take an honest assessment of your trading capabilities and needs. ✓ What aspects of your desk…

What’s The Best Trading Benchmark – Part 2 – “When to Start”

CAPIS Insights

CAPIS Insights

posted by CAPIS on 06/27/2022 at 10:52 am
by CAPIS on 06/27/2022

In our last post, we talked about the challenges of selecting an optimal trading benchmark. If you didn’t read it, no worries. The 10-second recap is Arrival is usually (but not always) the optimal benchmark for transition management (or TM) events. It is both unbiased and more reflective of the TM execution performance. The next logic question is when do you start? Sorry, but there is no hard and fast answer to the question of when to start a TM or portfolio trade. Every event is different – this is where portfolio analysis, market expertise, and back-tested models come into play. We must understand the assets we are trading and how their volume and volatility change daily. As in part 1 of this series, we used the S&P 500 as a proxy. In this example, we look at the underlying securities for the 12 months ending April 2022. We don’t believe starting at the market open is optimal in many situations. Instead, the CAPIS transition management team analyzes market data to estimate a better starting point. While there is no firm answer, generally we start 5-10 minutes after market opening. By doing this, we allow the markets to settle, see…

In our last post, we talked about the challenges of selecting an optimal trading benchmark. If you didn’t read it, no worries. The 10-second recap is Arrival is usually (but not always) the optimal benchmark for transition management (or TM) events. It is both unbiased and more reflective of the TM execution performance. The next logic question is when do you start? Sorry, but there is no hard and fast answer to the question of when to start a TM or portfolio trade. Every event is different – this is where portfolio analysis, market expertise, and back-tested models come into play. We must understand the assets we are trading and how their volume and volatility change daily. As in part 1 of this series, we used the S&P 500 as a proxy. In this example, we look at the underlying securities for the 12 months ending April 2022. We don’t believe starting at the market open is optimal in many situations. Instead, the CAPIS transition management team analyzes market data to estimate a better starting point. While there is no firm answer, generally we start 5-10 minutes after market opening. By doing this, we allow the markets to settle, see…

June Research Briefing RECAP: DataTrek’s Colas Looks for Market Bottom

CAPIS Insights

CAPIS Insights

posted by CAPIS on 06/16/2022 at 4:55 pm
by CAPIS on 06/16/2022

Today, CAPIS held its June research briefing, featuring Nicholas Colas and Jessica Rabe, Co-Founders of DataTrek Research. DataTrek is a New York-based independent research advisory service providing unbiased data analysis, helping investors make the investment process more profitable, robust, and efficient.   Click here for a video of the research call   Colas and Rabe’s presentation addressed the following topics: Inflation Is Top Priority for FOMC (4:45) Colas opened by saying Chairman Powell and FOMC are committed to taming inflation and they have gone into “hyperdrive. ” The current market environment resembles the 1970s when inflation and rising oil prices rocked and roiled the US economy. (5:00) The strong labor markets and consumer spending are issues to watch and understand as the FOMC steers the economy towards recession to combat inflationary pressures. (6:40) Atlanta Fed GDP model points to a negative trend through Q2, Q1 is currently at 2 and could post a negative indicator signaling a “technical recession. (7:21)   Wall Street Earnings Expectations are Too High  (7:54) Colas said Wall Street has not reduced its lofty earnings expectations yet. This is unrealistic as current valuations ($54 per share) show the S&P 500 cannot achieve $60 per share projected…

Today, CAPIS held its June research briefing, featuring Nicholas Colas and Jessica Rabe, Co-Founders of DataTrek Research. DataTrek is a New York-based independent research advisory service providing unbiased data analysis, helping investors make the investment process more profitable, robust, and efficient.   Click here for a video of the research call   Colas and Rabe’s presentation addressed the following topics: Inflation Is Top Priority for FOMC (4:45) Colas opened by saying Chairman Powell and FOMC are committed to taming inflation and they have gone into “hyperdrive. ” The current market environment resembles the 1970s when inflation and rising oil prices rocked and roiled the US economy. (5:00) The strong labor markets and consumer spending are issues to watch and understand as the FOMC steers the economy towards recession to combat inflationary pressures. (6:40) Atlanta Fed GDP model points to a negative trend through Q2, Q1 is currently at 2 and could post a negative indicator signaling a “technical recession. (7:21)   Wall Street Earnings Expectations are Too High  (7:54) Colas said Wall Street has not reduced its lofty earnings expectations yet. This is unrealistic as current valuations ($54 per share) show the S&P 500 cannot achieve $60 per share projected…

Simplify Wrap/Custodial Platform Trade-Aways and Step-outs

CAPIS Insights

CAPIS Insights

posted by CAPIS on 06/16/2022 at 12:06 pm
by CAPIS on 06/16/2022

Since 1977, CAPIS has been committed to helping investment advisors with their best execution initiatives. Through CAPIS ARC (Allocation, Reconciliation, and Clearing), managers address their best execution obligations, eliminate sponsor rotation, and simplify their operations processing. Here are some Frequently Asked Questions concerning trading away from Wrap and Custodial Platforms using ARC: 1) Operationally, is there a difference when trading away from Wrap Sponsors (i.e., Raymond James, Baird, RBC, etc.) or Custodial Platforms (i.e., Schwab, Fidelity, etc.)? The step-out process through ACT is identical for both. Each firm has a distinct Market Participant Identifier (MPID) and a specific process to notify them of step-out activity. 2) How do I know if we are allowed to trade-away from our Wrap Sponsors and Custodial platforms? Typically, asset managers are allowed to trade-away from most Wrap Sponsor and Custodial Platforms. First, check the contract your firm has with the Wrap Sponsor and Custodial Platform. Almost all have a clause that permits trading away for “Best Execution”. Second, contact your relationship manager at the Wrap Sponsor and Custodial Platform to discuss their trade-away procedures. 3) What do I do when my sponsor or custodian tells us we are not allowed to trade-away, but our…

Since 1977, CAPIS has been committed to helping investment advisors with their best execution initiatives. Through CAPIS ARC (Allocation, Reconciliation, and Clearing), managers address their best execution obligations, eliminate sponsor rotation, and simplify their operations processing. Here are some Frequently Asked Questions concerning trading away from Wrap and Custodial Platforms using ARC: 1) Operationally, is there a difference when trading away from Wrap Sponsors (i.e., Raymond James, Baird, RBC, etc.) or Custodial Platforms (i.e., Schwab, Fidelity, etc.)? The step-out process through ACT is identical for both. Each firm has a distinct Market Participant Identifier (MPID) and a specific process to notify them of step-out activity. 2) How do I know if we are allowed to trade-away from our Wrap Sponsors and Custodial platforms? Typically, asset managers are allowed to trade-away from most Wrap Sponsor and Custodial Platforms. First, check the contract your firm has with the Wrap Sponsor and Custodial Platform. Almost all have a clause that permits trading away for “Best Execution”. Second, contact your relationship manager at the Wrap Sponsor and Custodial Platform to discuss their trade-away procedures. 3) What do I do when my sponsor or custodian tells us we are not allowed to trade-away, but our…

Open Letter to Buyside Head Traders: Is Outsourcing Trading Being Discussed Behind Your Back?

CAPIS Insights

CAPIS Insights

posted by CAPIS on 06/15/2022 at 5:46 pm
by CAPIS on 06/15/2022

  As the Outsourced Trading trend gains momentum, you might be wondering if senior management is considering outsourcing trading and operations. Or worse, is your firm already making inquiries and interviewing outsourced trading solutions? According to some industry estimates, 20% of asset managers over $50 billion in AUM will outsource some aspect of trading in 2022.  For smaller managers, this number is probably much higher. The question…Do you turn into the headwinds or duck and cover? My suggestion…Turn into the turbulent air. As the head trader, you are uniquely qualified to assess the value of outsourced trading alternatives.  You have spent years understanding the complexities of our fragmented markets and the subtle differences in order routing solutions.  You know the desk better than anyone else and should be part of any decision related to the desk. The first step is to understand why your firm might want to consider outsourcing some aspects of the trading desk.  Is it to save money, add functionality and depth, or serve as a business continuity solution?  All of these are valid reasons to consider outsourced trading. Second, take an honest assessment of your trading capabilities and needs. What aspects of your desk could be…

  As the Outsourced Trading trend gains momentum, you might be wondering if senior management is considering outsourcing trading and operations. Or worse, is your firm already making inquiries and interviewing outsourced trading solutions? According to some industry estimates, 20% of asset managers over $50 billion in AUM will outsource some aspect of trading in 2022.  For smaller managers, this number is probably much higher. The question…Do you turn into the headwinds or duck and cover? My suggestion…Turn into the turbulent air. As the head trader, you are uniquely qualified to assess the value of outsourced trading alternatives.  You have spent years understanding the complexities of our fragmented markets and the subtle differences in order routing solutions.  You know the desk better than anyone else and should be part of any decision related to the desk. The first step is to understand why your firm might want to consider outsourcing some aspects of the trading desk.  Is it to save money, add functionality and depth, or serve as a business continuity solution?  All of these are valid reasons to consider outsourced trading. Second, take an honest assessment of your trading capabilities and needs. What aspects of your desk could be…

What’s the Best Trading Benchmark? Part 1

CAPIS Insights

CAPIS Insights

posted by CAPIS on 06/14/2022 at 10:17 am
by CAPIS on 06/14/2022

One of the great challenges when executing a transition management event (or any portfolio-based trade) is when to start. Several issues are intertwined here, including benchmarking, volume, cost, and volatility and how those factors can impact overall performance. Choosing when to start is not a new phenomenon. Performance measurement has been around since the inception of the markets. But, as a community, we still struggle with its complexities and determining the best benchmark for each trade. Now, I’m not saying I have the solution – the simple answer is there is no one best benchmark. It all depends. However, some benchmarks are better for certain types of trades. Please do not mistake this for an academic paper (as I am surely not an academic). However, my perspective as someone who has traded and managed transition events for more than 17 years may be helpful. Historically, transition (or TM) events were almost always benchmarked versus Prior Day’s Close (PDC). PDC was seen as an unbiased measure of the TM event. Since this benchmark could include overnight risk (including news or macroeconomic events), TM providers had to be active at the market open. It was the first opportunity to trade and the…

One of the great challenges when executing a transition management event (or any portfolio-based trade) is when to start. Several issues are intertwined here, including benchmarking, volume, cost, and volatility and how those factors can impact overall performance. Choosing when to start is not a new phenomenon. Performance measurement has been around since the inception of the markets. But, as a community, we still struggle with its complexities and determining the best benchmark for each trade. Now, I’m not saying I have the solution – the simple answer is there is no one best benchmark. It all depends. However, some benchmarks are better for certain types of trades. Please do not mistake this for an academic paper (as I am surely not an academic). However, my perspective as someone who has traded and managed transition events for more than 17 years may be helpful. Historically, transition (or TM) events were almost always benchmarked versus Prior Day’s Close (PDC). PDC was seen as an unbiased measure of the TM event. Since this benchmark could include overnight risk (including news or macroeconomic events), TM providers had to be active at the market open. It was the first opportunity to trade and the…

PODCAST: “Consider Your Options” Ep.1

CAPIS Insights

CAPIS Insights

posted by CAPIS on 06/08/2022 at 9:26 am
by CAPIS on 06/08/2022

CAPIS and Gyroscope Capital Management recently sat down to examine the use of options in investment strategies. The podcast series, starting here with Episode One, features moderator Mark Viani, Director, Institutional Sales (ARC Solutions), and Michael Egan and Sarah Wolf, Gyroscope Capital Management, discussing how options have been traditionally used and how there might be alternative uses.  Please click on the embedded video to hear the conversation.

CAPIS and Gyroscope Capital Management recently sat down to examine the use of options in investment strategies. The podcast series, starting here with Episode One, features moderator Mark Viani, Director, Institutional Sales (ARC Solutions), and Michael Egan and Sarah Wolf, Gyroscope Capital Management, discussing how options have been traditionally used and how there might be alternative uses.  Please click on the embedded video to hear the conversation.

The Great Equity Spread of 2022

CAPIS Insights

CAPIS Insights

posted by CAPIS on 05/25/2022 at 9:34 am
by CAPIS on 05/25/2022

When you first look at this chart, I think people have two thoughts. First, “wow, I didn’t realize how much spreads have widened in a few years,” and second, “wait…this is in cents per share. Haven’t stock prices gone through the roof since 2018?.” You’d be right on both points. Since 2018, the average stock price in the S&P 500 has increased 60%. It’s a significant increase, but it doesn’t fully explain the spread increases. As spreads widen, the NBBO is a less accurate measure because it’s widened out by default. Historically, NBBO is often seen as the most precise measure of “true” spread (at the time of execution) and is extensively used for TCA and cost analysis work. As a refresher, the National Best Bid and Offer (NBBO) reports the highest bid (price to buy) and the lowest ask (price to sell) for a security. Since bids are lower than asks, the concept is to show the tightest price range. The example above shows how the NBBO gathers data from multiple exchanges. It also highlights a mid-point of 25.28 (half of the NBBO spread). But, how do we know or value a “good” trade if more volume is occurring…

When you first look at this chart, I think people have two thoughts. First, “wow, I didn’t realize how much spreads have widened in a few years,” and second, “wait…this is in cents per share. Haven’t stock prices gone through the roof since 2018?.” You’d be right on both points. Since 2018, the average stock price in the S&P 500 has increased 60%. It’s a significant increase, but it doesn’t fully explain the spread increases. As spreads widen, the NBBO is a less accurate measure because it’s widened out by default. Historically, NBBO is often seen as the most precise measure of “true” spread (at the time of execution) and is extensively used for TCA and cost analysis work. As a refresher, the National Best Bid and Offer (NBBO) reports the highest bid (price to buy) and the lowest ask (price to sell) for a security. Since bids are lower than asks, the concept is to show the tightest price range. The example above shows how the NBBO gathers data from multiple exchanges. It also highlights a mid-point of 25.28 (half of the NBBO spread). But, how do we know or value a “good” trade if more volume is occurring…

Research Briefing RECAP: Stockton Says We’re in Cyclical Bear Cycle Within Secular Bull Market

CAPIS Insights

CAPIS Insights

posted by CAPIS on 05/20/2022 at 11:10 am
by CAPIS on 05/20/2022

On Thursday, May 19th we held our May research briefing, 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 the video presentation Katie Stockton’s presentation addressed the following topics:   Market Has Weak Long-Term Momentum (2:50) Market will not reward great stock picking. (3:39) Notable loss of long-term momentum has the market flashing a “sell” signal that could last for approximately 9 months. We are currently in month 4 of this “sell” signal range. (4:35) SPX’s current support is at 3815, but if the market drifts lower, the next support level will be at 3500. (6:32) Growth and Tech stocks are providing downside leadership while large-cap stocks have more downside. Example: AAPL is now exhibiting downside leadership which is a negative development for the tech sector. (7:17) Internal Market Indicators Point to “Oversold” (9:01) Market breadth has been deteriorating for several months now. (10:20) The current market contraction has yet to bring a “long-term” oversold reading.  (11:00)  Higher Volatility – No Kidding (11:26) Just one look at the VIX, reveals the new high volatility environment. (11:35) The VIX is establishing…

On Thursday, May 19th we held our May research briefing, 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 the video presentation Katie Stockton’s presentation addressed the following topics:   Market Has Weak Long-Term Momentum (2:50) Market will not reward great stock picking. (3:39) Notable loss of long-term momentum has the market flashing a “sell” signal that could last for approximately 9 months. We are currently in month 4 of this “sell” signal range. (4:35) SPX’s current support is at 3815, but if the market drifts lower, the next support level will be at 3500. (6:32) Growth and Tech stocks are providing downside leadership while large-cap stocks have more downside. Example: AAPL is now exhibiting downside leadership which is a negative development for the tech sector. (7:17) Internal Market Indicators Point to “Oversold” (9:01) Market breadth has been deteriorating for several months now. (10:20) The current market contraction has yet to bring a “long-term” oversold reading.  (11:00)  Higher Volatility – No Kidding (11:26) Just one look at the VIX, reveals the new high volatility environment. (11:35) The VIX is establishing…

April Research Briefing RECAP: MPP Says 2022 Is A Tale of Two Halves  

News CAPIS Insights General

General

posted by CAPIS on 04/22/2022 at 2:05 pm
by CAPIS on 04/22/2022

Last week, we held our April research briefing, featuring guest speakers John Fagan and Brendan Walsh, co-founders of Markets Policy Partners (MPP). MPP is a Washington, D.C.-based independent advisory service that informs clients on matters at the intersection of markets and policy, and in the public sector.   Click here for a video of the research call   MPP’s presentation addressed the following topics:   Tectonic Shift by the Federal Reserve [2:57] MPP said the FOMC has moved definitively towards draining liquidity from the economy amid the current supply-driven shock in the production chain. [3:35] While the markets and growth surge in the first half of the year, expect the second half to be challenging growth-wise and will be choppy. [6:05] The Federal Reserve will “take every rate hike” the markets will allow – meaning the FOMC might tighten monetary policy even faster and more aggressively than originally forecast. [6:35] Core inflation may be hitting its peak for the year and supply-side bottlenecks will get worse – spurred in part by China’s “zero-COVID” tolerance policy. [8:10] Stagflation is the new buzzword amid slower growth expectations. [9:05] The FOMC could raise rates by more than 50bps at a time, possibly 75bps,…

Last week, we held our April research briefing, featuring guest speakers John Fagan and Brendan Walsh, co-founders of Markets Policy Partners (MPP). MPP is a Washington, D.C.-based independent advisory service that informs clients on matters at the intersection of markets and policy, and in the public sector.   Click here for a video of the research call   MPP’s presentation addressed the following topics:   Tectonic Shift by the Federal Reserve [2:57] MPP said the FOMC has moved definitively towards draining liquidity from the economy amid the current supply-driven shock in the production chain. [3:35] While the markets and growth surge in the first half of the year, expect the second half to be challenging growth-wise and will be choppy. [6:05] The Federal Reserve will “take every rate hike” the markets will allow – meaning the FOMC might tighten monetary policy even faster and more aggressively than originally forecast. [6:35] Core inflation may be hitting its peak for the year and supply-side bottlenecks will get worse – spurred in part by China’s “zero-COVID” tolerance policy. [8:10] Stagflation is the new buzzword amid slower growth expectations. [9:05] The FOMC could raise rates by more than 50bps at a time, possibly 75bps,…

CLIENT TRADING NOTICE: SEC Fee Rate Advisory for Fiscal Year 2022

CAPIS Insights

CAPIS Insights

posted by CAPIS on 04/12/2022 at 3:11 pm
by CAPIS on 04/12/2022

Please be advised that the SEC announced on Friday, April 8, that the SEC FEE Rate will increase from $5.10 per million to $22.90 per million.  The new rate will apply to eligible transactions settling on May 14th ,2022, and later. See below the official release from the Securities and Exchange Commission: FOR IMMEDIATE RELEASE 2022-60 Washington D.C., April 8, 2022 — The Securities and Exchange Commission today announced that starting on May 14, 2022, the fee rates applicable to most securities transactions will be set at $22.90 per $1 million. Consequently, each SRO will continue to pay the Commission a rate of $5.10 per million for covered sales occurring on charge dates through May 13, 2022, and a rate of $22.90 per million for covered sales occurring on charge dates on or after May 14, 2022. The substantial increase in the fee rate is primarily due to the very low fee rate of $5.10 per million for fiscal year 2021. The current fee rate represents a return to levels similar to those prior to 2021 i.e. $22.10 in 2020 and $20.70 in 2019. The fiscal year 2021 fee rate was set at this low rate because of unprecedented covered…

Please be advised that the SEC announced on Friday, April 8, that the SEC FEE Rate will increase from $5.10 per million to $22.90 per million.  The new rate will apply to eligible transactions settling on May 14th ,2022, and later. See below the official release from the Securities and Exchange Commission: FOR IMMEDIATE RELEASE 2022-60 Washington D.C., April 8, 2022 — The Securities and Exchange Commission today announced that starting on May 14, 2022, the fee rates applicable to most securities transactions will be set at $22.90 per $1 million. Consequently, each SRO will continue to pay the Commission a rate of $5.10 per million for covered sales occurring on charge dates through May 13, 2022, and a rate of $22.90 per million for covered sales occurring on charge dates on or after May 14, 2022. The substantial increase in the fee rate is primarily due to the very low fee rate of $5.10 per million for fiscal year 2021. The current fee rate represents a return to levels similar to those prior to 2021 i.e. $22.10 in 2020 and $20.70 in 2019. The fiscal year 2021 fee rate was set at this low rate because of unprecedented covered…

Q1 Market Trends – Part 2

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posted by CAPIS on 04/06/2022 at 10:13 am
by CAPIS on 04/06/2022

There is a lot to discuss when we look back at the first quarter. In the second part of our video series, we look at significant factors that impacted the US market. And we share some multi-year analyses of trade data, including commissions, trade volumes, and shares. Click here to see the first video in the series.     For reference, we used the CAPIS Ally universe for our analysis. The data represents $609.7MM in commissions, $2.2T in trades, and 41.7MM shares across more than 9.6MM trades for the period reviewed.

There is a lot to discuss when we look back at the first quarter. In the second part of our video series, we look at significant factors that impacted the US market. And we share some multi-year analyses of trade data, including commissions, trade volumes, and shares. Click here to see the first video in the series.     For reference, we used the CAPIS Ally universe for our analysis. The data represents $609.7MM in commissions, $2.2T in trades, and 41.7MM shares across more than 9.6MM trades for the period reviewed.

Highlights From the 2022 STA DC Spring Update

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posted by CAPIS on 04/04/2022 at 9:20 am
by CAPIS on 04/04/2022

At CAPIS, we’re striving to engage market debate, promote critical thinking and be objective. To that end, the Security Traders Association recently held its Virtual Washington DC Spring 2022 Update via webinar and CAPIS was in attendance. We are pleased to provide select speaker highlights from the day-long event. (Editor’s Note: CAPIS has shortened some quotes and added context when applicable.) Market Structure “The sub-penny trading has been a driver of trading activity on dark pools. Market makers and participants in dark pools can step ahead of the exchanges and trade in sub-pennies. I believe it is time to revisit this rule.” “The old diversity rule did little to define diversity, so companies had little guidance & disclosures were of little value to investors. The Nasdaq Rule on board diversity is critical b/c it spells out what is required of companies, holding firms accountable.” Representative Gregory Meeks “Not terribly valuable in fostering competition is changes to the order protection rule. The SEC should focus on addressing the costs directly, not changing the rules around to require an exchange have a certain market share in order to enjoy order protection.” “Most valuable would be changes in tick size rules.” “The commissioner…

At CAPIS, we’re striving to engage market debate, promote critical thinking and be objective. To that end, the Security Traders Association recently held its Virtual Washington DC Spring 2022 Update via webinar and CAPIS was in attendance. We are pleased to provide select speaker highlights from the day-long event. (Editor’s Note: CAPIS has shortened some quotes and added context when applicable.) Market Structure “The sub-penny trading has been a driver of trading activity on dark pools. Market makers and participants in dark pools can step ahead of the exchanges and trade in sub-pennies. I believe it is time to revisit this rule.” “The old diversity rule did little to define diversity, so companies had little guidance & disclosures were of little value to investors. The Nasdaq Rule on board diversity is critical b/c it spells out what is required of companies, holding firms accountable.” Representative Gregory Meeks “Not terribly valuable in fostering competition is changes to the order protection rule. The SEC should focus on addressing the costs directly, not changing the rules around to require an exchange have a certain market share in order to enjoy order protection.” “Most valuable would be changes in tick size rules.” “The commissioner…

CASE STUDY Part 4: Outsourced Trading for Wrap and Separately Managed Accounts (SMA)

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posted by CAPIS on 03/30/2022 at 9:07 am
by CAPIS on 03/30/2022

This article was written by Martin Coughlan, CFA, CAIA. Martin has spent over twenty years working at asset management firms globally.    Outsourced Trading for Wrap and Separately Managed Accounts (SMA) In Part 3 of our series, we discussed some of the common concerns investment managers have in terms of outsourced trading and how those concerns can be allayed. In this final part of our series, we will look at one specific challenge that managers face when considering outsourced trading – how outsourced trading can be effectively implemented for Wrap and SMAs.   An overview of Wrap and SMAs Wrap and SMA accounts continue to be a very important offering in the marketplace with combined Q3 AUM in the United States of approximately $10 plus trillion from the Money Management Institute. Both vehicles facilitate individuals that require a more customized approach and those that wish to solely own securities rather than units of a mutual fund or other fund vehicle. They can also be used to allow more effective tax management for High-Net-Worth investors. While the terms are often used interchangeably, there is a difference. With a Wrap account, a financial advisor may serve as the account’s investment manager, selecting individual…

This article was written by Martin Coughlan, CFA, CAIA. Martin has spent over twenty years working at asset management firms globally.    Outsourced Trading for Wrap and Separately Managed Accounts (SMA) In Part 3 of our series, we discussed some of the common concerns investment managers have in terms of outsourced trading and how those concerns can be allayed. In this final part of our series, we will look at one specific challenge that managers face when considering outsourced trading – how outsourced trading can be effectively implemented for Wrap and SMAs.   An overview of Wrap and SMAs Wrap and SMA accounts continue to be a very important offering in the marketplace with combined Q3 AUM in the United States of approximately $10 plus trillion from the Money Management Institute. Both vehicles facilitate individuals that require a more customized approach and those that wish to solely own securities rather than units of a mutual fund or other fund vehicle. They can also be used to allow more effective tax management for High-Net-Worth investors. While the terms are often used interchangeably, there is a difference. With a Wrap account, a financial advisor may serve as the account’s investment manager, selecting individual…

Q1 Market Trends – Part 1

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General

posted by CAPIS on 03/29/2022 at 10:13 am
by CAPIS on 03/29/2022

There is a lot to discuss when we look back at the first quarter. In the first part of our video series, we look at significant factors that impacted the US market. And we share some multi-year analyses of trade data, including commissions, trade volumes, and shares.   For reference, we used the CAPIS Ally universe for our analysis. The data represents $609.7MM in commissions, $2.2T in trades, and 41.7MM shares across more than 9.6MM trades for the period reviewed.

There is a lot to discuss when we look back at the first quarter. In the first part of our video series, we look at significant factors that impacted the US market. And we share some multi-year analyses of trade data, including commissions, trade volumes, and shares.   For reference, we used the CAPIS Ally universe for our analysis. The data represents $609.7MM in commissions, $2.2T in trades, and 41.7MM shares across more than 9.6MM trades for the period reviewed.

March Research Briefing RECAP: Inflation Takes Center Stage Despite Extraneous Events

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posted by CAPIS on 03/17/2022 at 4:49 pm
by CAPIS on 03/17/2022

This article was penned by CAPIS   CAPIS held its March research call, featuring Nicholas Colas and Jessica Rabe, Co-Founders of DataTrek Research. DataTrek is a New York-based independent research advisory service providing unbiased data analysis, helping investors make the investment process more profitable, robust, and efficient. Click here for a video of the research call Colas and Rabe’s presentation addressed the following topics: Russia/Ukraine Crisis Will Not Result in WWIII Colas opened with a statistic citing the VIX stands at 27 now, higher than in previous rising rate environments due to the conflict in Europe. The Federal Reserve since 1990 has never begun raising rates when the VIX was over 22. (3:37) Equities are certainly more volatile now but that is due to the confluence of rising oil prices, the Russia/Ukraine conflict, higher inflation overall and China. (5:05) We are currently in an economic environment dominated by uncertainty. (5:15) Despite the negative humanitarian effects of the current Russia/Ukraine, the stock markets don’t believe there will be a “WWW III-type” event and this crisis is not existential and can be resolved. (6:18) Europe not the U.S. Faces Real Risk of Recession Colas said that economic slowdowns could hit globally, Europe…

This article was penned by CAPIS   CAPIS held its March research call, featuring Nicholas Colas and Jessica Rabe, Co-Founders of DataTrek Research. DataTrek is a New York-based independent research advisory service providing unbiased data analysis, helping investors make the investment process more profitable, robust, and efficient. Click here for a video of the research call Colas and Rabe’s presentation addressed the following topics: Russia/Ukraine Crisis Will Not Result in WWIII Colas opened with a statistic citing the VIX stands at 27 now, higher than in previous rising rate environments due to the conflict in Europe. The Federal Reserve since 1990 has never begun raising rates when the VIX was over 22. (3:37) Equities are certainly more volatile now but that is due to the confluence of rising oil prices, the Russia/Ukraine conflict, higher inflation overall and China. (5:05) We are currently in an economic environment dominated by uncertainty. (5:15) Despite the negative humanitarian effects of the current Russia/Ukraine, the stock markets don’t believe there will be a “WWW III-type” event and this crisis is not existential and can be resolved. (6:18) Europe not the U.S. Faces Real Risk of Recession Colas said that economic slowdowns could hit globally, Europe…

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