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12.04.2020 11 new Morning Note posts under Morning Note (9) and CAPIS Insights (2)

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CAPIS Hires Ben Jenkins as Director, Transition Management

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November 4, 2020 (DALLAS, TX) – Capital Institutional Services (CAPIS), a Dallas-based institutional broker-dealer, today announced Ben Jenkins rejoined the firm as a director in the firm’s transition management group. Jenkins comes to CAPIS with 18 years of experience in financial services with a background in trading, operations and project management. Previously, Jenkins was global head of transition management at Northern Trust where he expanded the reach of the product to both EMEA and APAC regions and grew the business to $100 billion in annual transitions. Before Northern Trust, Jenkins spent four years early in his career with CAPIS. “My original time with CAPIS provided me with a wide range of experiences and allowed me to grow my career beyond my wildest expectations,” Jenkins said. “To come back to my roots after nearly 15 years and help CAPIS in this latest chapter of the firm’s development is an opportunity few get and one I could not pass up.” Jenkins first joined CAPIS in 2002 as a research assistant and then joined the transition management team as a vice president in 2004. “We are thrilled to have Ben returning to CAPIS,” said CAPIS COO David Choate. “His return demonstrates our commitment…

November 4, 2020 (DALLAS, TX) – Capital Institutional Services (CAPIS), a Dallas-based institutional broker-dealer, today announced Ben Jenkins rejoined the firm as a director in the firm’s transition management group. Jenkins comes to CAPIS with 18 years of experience in financial services with a background in trading, operations and project management. Previously, Jenkins was global head of transition management at Northern Trust where he expanded the reach of the product to both EMEA and APAC regions and grew the business to $100 billion in annual transitions. Before Northern Trust, Jenkins spent four years early in his career with CAPIS. “My original time with CAPIS provided me with a wide range of experiences and allowed me to grow my career beyond my wildest expectations,” Jenkins said. “To come back to my roots after nearly 15 years and help CAPIS in this latest chapter of the firm’s development is an opportunity few get and one I could not pass up.” Jenkins first joined CAPIS in 2002 as a research assistant and then joined the transition management team as a vice president in 2004. “We are thrilled to have Ben returning to CAPIS,” said CAPIS COO David Choate. “His return demonstrates our commitment…

CAPIS/DataTrek Research Call Recap: The Election is Not a Binary Event

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Penned by CAPIS Staff Tuesday’s U.S. presidential election has dominated market narratives and headlines for the past few months — in tandem with those related to the resurgence of COVID-19. But the overall national elections i n sum do not represent a binary outcome. There are time (delayed vs. immediate results) and party (what makeup of Congress with what President) variables to contend with. To help better inform our clients of the potential ramifications of the election, CAPIS hosted a research call with DataTrek Research’s Co-Founder Nick Colas, with added market color from our own Forrest Hopper. Colas ran market return numbers from post-WWII to the present and found that a common assumption i s a fallacy: markets generally do not respond well to a single party having control of the presidency and both chambers of Congress. It was a myth that was started and perpetuated because of early ‘ 80s market returns under President Reagan. Instead, having a split legislature and some gridlock has historically been the most supportive of bullish environments. When i t comes to unemployment, DataTrek sees a likelihood that unemployment will remain around current levels of 7% – 8%. Entering 2020, some 20% of…

Penned by CAPIS Staff Tuesday’s U.S. presidential election has dominated market narratives and headlines for the past few months — in tandem with those related to the resurgence of COVID-19. But the overall national elections i n sum do not represent a binary outcome. There are time (delayed vs. immediate results) and party (what makeup of Congress with what President) variables to contend with. To help better inform our clients of the potential ramifications of the election, CAPIS hosted a research call with DataTrek Research’s Co-Founder Nick Colas, with added market color from our own Forrest Hopper. Colas ran market return numbers from post-WWII to the present and found that a common assumption i s a fallacy: markets generally do not respond well to a single party having control of the presidency and both chambers of Congress. It was a myth that was started and perpetuated because of early ‘ 80s market returns under President Reagan. Instead, having a split legislature and some gridlock has historically been the most supportive of bullish environments. When i t comes to unemployment, DataTrek sees a likelihood that unemployment will remain around current levels of 7% – 8%. Entering 2020, some 20% of…

The Arm-Wrestling Match Between Human Interaction and Tech Advancements in the Bank Trust Industry

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This was penned by CAPIS Staff On October 14, CAPIS hosted a virtual panel on the state of the bank and trust services industry, “Banking on Tech: Challenges and Innovations in Today’s Environment.” The virtual session, available to view in full here, was moderated by our own Jon Lantz, and featured as panelists Adam Unger, Accutech; Angie Gorman, Infovisa; Bill Martin III, INTRUST Bank; Jack Curran, GreenHill; and Stuart Allen, Association of Trust Organizations. One theme rang true throughout the conversation – for all of the importance of technological adaptation and innovation, an absence of the human element is a detriment in the bank trust sector. Everyone agreed that the logistical challenges presented by the onset of the COVID-19 pandemic were handled well, although they were acute. An at-the-office work standard and culture predominated the industry and preparedness exercises were predicated on a temporary interruption of normal operations, not a long-term reality shift. Now, the industry is in an optimization phase, figuring out what has been sorely missed. There was a tailwind behind disintermediating people even prior to COVID-19, and now that wind is gale-force. The trend is potentially troublesome given there is a valid reason why the wealth…

This was penned by CAPIS Staff On October 14, CAPIS hosted a virtual panel on the state of the bank and trust services industry, “Banking on Tech: Challenges and Innovations in Today’s Environment.” The virtual session, available to view in full here, was moderated by our own Jon Lantz, and featured as panelists Adam Unger, Accutech; Angie Gorman, Infovisa; Bill Martin III, INTRUST Bank; Jack Curran, GreenHill; and Stuart Allen, Association of Trust Organizations. One theme rang true throughout the conversation – for all of the importance of technological adaptation and innovation, an absence of the human element is a detriment in the bank trust sector. Everyone agreed that the logistical challenges presented by the onset of the COVID-19 pandemic were handled well, although they were acute. An at-the-office work standard and culture predominated the industry and preparedness exercises were predicated on a temporary interruption of normal operations, not a long-term reality shift. Now, the industry is in an optimization phase, figuring out what has been sorely missed. There was a tailwind behind disintermediating people even prior to COVID-19, and now that wind is gale-force. The trend is potentially troublesome given there is a valid reason why the wealth…

MiFID II: We Hardly Knew You…

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This was penned by CAPIS Staff Last week, CAPIS was fortunate to have the chance to participate in STA’s 87th Annual Market Structure Conference. CAPIS’ own Chris Halverson is STA’s current chairman (and helped emcee the event) while our COO Dave Choate moderated the panel, “The International Impact of MiFID II,” which featured Thompson, Siegel & Walmsley’s Director of Trading, Chip Coleman, and Integrity Research Associates’ Principal, Sandy Bragg. Given MiFID II’s tentacles have crept far beyond the confines of the European Union, and that there are changes afoot, we wanted to shed some light on the discussion if you were unable to attend. The key piece of collateral damage discussed is borne out by the data: research unbundling, one of the key provisions in MiFID II, is significantly hampering asset managers’ ability to achieve the same performance as they did prior to MiFID II’s implementation in 2018. Smaller managers are at a disadvantage compared to their larger counterparts as they are less likely to have internal analysts and economists to generate their own research to make up for the shortfall. And EU firms are falling short of their U.S. peers as research from Evercore ISI and Frost Consulting has…

This was penned by CAPIS Staff Last week, CAPIS was fortunate to have the chance to participate in STA’s 87th Annual Market Structure Conference. CAPIS’ own Chris Halverson is STA’s current chairman (and helped emcee the event) while our COO Dave Choate moderated the panel, “The International Impact of MiFID II,” which featured Thompson, Siegel & Walmsley’s Director of Trading, Chip Coleman, and Integrity Research Associates’ Principal, Sandy Bragg. Given MiFID II’s tentacles have crept far beyond the confines of the European Union, and that there are changes afoot, we wanted to shed some light on the discussion if you were unable to attend. The key piece of collateral damage discussed is borne out by the data: research unbundling, one of the key provisions in MiFID II, is significantly hampering asset managers’ ability to achieve the same performance as they did prior to MiFID II’s implementation in 2018. Smaller managers are at a disadvantage compared to their larger counterparts as they are less likely to have internal analysts and economists to generate their own research to make up for the shortfall. And EU firms are falling short of their U.S. peers as research from Evercore ISI and Frost Consulting has…

So, You Think You Can Trade Closed-End Funds, Eh?

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This article was penned by Russell Robinson In an age of technological advancements, there is at least one market where technology is yet to take hold. Trading closed-end funds on an institutional level. In the equity markets, it is fair to say that if you run institutional money, you have access to a wide array of trading algorithms to automate and manage your orders. Where this notion falls short, is with Closed-End Funds. How so, you may ask? Within ~500 Closed-End Funds that can be traded in the secondary markets, only about half have an average daily volume of greater than 50,000 shares. And much of the volume that is traded is crossed in blocks, rendering standard trading algorithms useless. So, where does one turn to effectively transact in this market? Ideally, you would find a firm that has the CEF experience and natural order flow to cross large blocks. Have you considered CAPIS? With 40 years’ experience and a trading desk that boasts an average tenure of over 20 years, CAPIS has the experience to bring institutional CEF clients together. Trading for some of the largest CEF managers on a daily basis, CAPIS provides access to natural liquidity. …

This article was penned by Russell Robinson In an age of technological advancements, there is at least one market where technology is yet to take hold. Trading closed-end funds on an institutional level. In the equity markets, it is fair to say that if you run institutional money, you have access to a wide array of trading algorithms to automate and manage your orders. Where this notion falls short, is with Closed-End Funds. How so, you may ask? Within ~500 Closed-End Funds that can be traded in the secondary markets, only about half have an average daily volume of greater than 50,000 shares. And much of the volume that is traded is crossed in blocks, rendering standard trading algorithms useless. So, where does one turn to effectively transact in this market? Ideally, you would find a firm that has the CEF experience and natural order flow to cross large blocks. Have you considered CAPIS? With 40 years’ experience and a trading desk that boasts an average tenure of over 20 years, CAPIS has the experience to bring institutional CEF clients together. Trading for some of the largest CEF managers on a daily basis, CAPIS provides access to natural liquidity. …

Can You See How Risk Was Managed?

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This is the third and final installment is our series on Transition Management Without intraday exposure charts, it would be impossible to confirm a risk management strategy. However, when equipped with those intraday sector exposure charts, you can see how the event was handled. The example below illustrates a clear effort to quickly reduce market and sector exposure imbalances. The dotted line represents market exposure, which became neutral to the target in the first few minutes. All other sectors were neutral by mid-day. Below is an example that lacked a risk management strategy. The most obvious risk is market exposure represented by the dotted line. The portfolio began overexposed by $50 mil and reached $60 mil underexposed to the market at 13:30. This is risk clearly illustrated. The CAPIS Difference: Since 1998, CAPIS has been a trusted independent provider for transition management services; Providing unique post-trade transparency. As a true independent agency broker, CAPIS does not have the conflicts associated with proprietary risk books, internal investment management or affiliated execution venues. Our focus is simple: provide clients with superior execution, complete transparency, and personal service. To learn more about CAPIS and how we can be a valuable…

This is the third and final installment is our series on Transition Management Without intraday exposure charts, it would be impossible to confirm a risk management strategy. However, when equipped with those intraday sector exposure charts, you can see how the event was handled. The example below illustrates a clear effort to quickly reduce market and sector exposure imbalances. The dotted line represents market exposure, which became neutral to the target in the first few minutes. All other sectors were neutral by mid-day. Below is an example that lacked a risk management strategy. The most obvious risk is market exposure represented by the dotted line. The portfolio began overexposed by $50 mil and reached $60 mil underexposed to the market at 13:30. This is risk clearly illustrated. The CAPIS Difference: Since 1998, CAPIS has been a trusted independent provider for transition management services; Providing unique post-trade transparency. As a true independent agency broker, CAPIS does not have the conflicts associated with proprietary risk books, internal investment management or affiliated execution venues. Our focus is simple: provide clients with superior execution, complete transparency, and personal service. To learn more about CAPIS and how we can be a valuable…

Can You Identify a Conflicted Crossing Trade?

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This is the second part in a three part series on Transition Management Without intra-day trading transparency, it would be impossible to see a conflicted crossing trade. However, when you combine intra-day volume with exposure imbalances, conflicted crosses jump off the page. In the example below, four conflicted crosses can easily be seen; all sells represented by the unusually high pink bars. Based on the consistent level of buys and sells (red and blue bars), the transition manager apparently put this event on a basic time-slicer (this should be your first clue that execution and risk management are not high on their list of priorities). How do we know these crosses were conflicted? Look at the sector exposure chart for this event. The dotted line represents market exposure. With each cross, the portfolio became less exposed to the market relative to its objective. Bottom line, each cross provided more revenue to the transition manager while increasing performance risk for the client. The conflict is clear. The CAPIS Difference: Since 1998, CAPIS has been a trusted independent provider for transition management services; executing every position as if it were our own. As a true independent agency broker, CAPIS does…

This is the second part in a three part series on Transition Management Without intra-day trading transparency, it would be impossible to see a conflicted crossing trade. However, when you combine intra-day volume with exposure imbalances, conflicted crosses jump off the page. In the example below, four conflicted crosses can easily be seen; all sells represented by the unusually high pink bars. Based on the consistent level of buys and sells (red and blue bars), the transition manager apparently put this event on a basic time-slicer (this should be your first clue that execution and risk management are not high on their list of priorities). How do we know these crosses were conflicted? Look at the sector exposure chart for this event. The dotted line represents market exposure. With each cross, the portfolio became less exposed to the market relative to its objective. Bottom line, each cross provided more revenue to the transition manager while increasing performance risk for the client. The conflict is clear. The CAPIS Difference: Since 1998, CAPIS has been a trusted independent provider for transition management services; executing every position as if it were our own. As a true independent agency broker, CAPIS does…

Can You Identify A Conflicted MOC Trade?

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This is the first part in a three part series on Transition Management Frankly, most people would have to say, “No.” Identifying a conflicted Market-on-Close (MOC) trade can be difficult, but we can show you how. It simply requires a fill-level execution file from your transition manager and some advanced intraday charting capabilities. Tell-tale signs of a conflicted principal trade: Single stock identifiers: Fill-level prints that are larger than the market’s closing print For example, if your fund sold 120,000 shares of XYZ at the close, but the closing print in the market was only 80,000 shares, your trade was executed by a principal desk. Look for unusual price action prior to the close. Portfolio level indicators: Dramatic price disparity in the final hour of trading After charting the portfolio disparity between the target and legacy, look for an inflection point in the final hour. In the example below, the black line represents the implicit cost as measured by the difference between buys and sells. Note the inflection point at 15:40, 20 minutes before the close. This portfolio lost over 100 bps in the final 30 minutes. The CAPIS Difference: Since 1998, CAPIS has been a trusted independent provider…

This is the first part in a three part series on Transition Management Frankly, most people would have to say, “No.” Identifying a conflicted Market-on-Close (MOC) trade can be difficult, but we can show you how. It simply requires a fill-level execution file from your transition manager and some advanced intraday charting capabilities. Tell-tale signs of a conflicted principal trade: Single stock identifiers: Fill-level prints that are larger than the market’s closing print For example, if your fund sold 120,000 shares of XYZ at the close, but the closing print in the market was only 80,000 shares, your trade was executed by a principal desk. Look for unusual price action prior to the close. Portfolio level indicators: Dramatic price disparity in the final hour of trading After charting the portfolio disparity between the target and legacy, look for an inflection point in the final hour. In the example below, the black line represents the implicit cost as measured by the difference between buys and sells. Note the inflection point at 15:40, 20 minutes before the close. This portfolio lost over 100 bps in the final 30 minutes. The CAPIS Difference: Since 1998, CAPIS has been a trusted independent provider…

Why CAPIS? Why Now?

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Penned by Ann Sebert, CEO and President When I’m asked, “What is the biggest challenge for CAPIS?” My response has always been, “Recognition.” Throughout my career at CAPIS, I spent time on the financial side of the business, and while I knew the firm’s sizable footprint in the industry, I was not in a position to lead the effort promoting CAPIS. That all changed in January 2020, when I assumed the position of CEO. Since taking on this new role, my management team and I have made telling CAPIS’ story a priority as we enter the next chapter of our history as a leading broker for institutional asset managers. CAPIS has always been a trusted, compliance-driven partner to our clients, but for 40-plus years, our marketing efforts were solely word of mouth. Our client base is now over 1,000 strong, with many of those client relationships dating back to CAPIS’ founding in 1977, but still we’re asked, “What is CAPIS?” It’s time to tell our story and spread the word about CAPIS. As such, we have formalized our mission statement: CAPIS is a compliance-driven brokerage firm, transacting financial assets for institutional investors. Our mission is to be the standard for…

Penned by Ann Sebert, CEO and President When I’m asked, “What is the biggest challenge for CAPIS?” My response has always been, “Recognition.” Throughout my career at CAPIS, I spent time on the financial side of the business, and while I knew the firm’s sizable footprint in the industry, I was not in a position to lead the effort promoting CAPIS. That all changed in January 2020, when I assumed the position of CEO. Since taking on this new role, my management team and I have made telling CAPIS’ story a priority as we enter the next chapter of our history as a leading broker for institutional asset managers. CAPIS has always been a trusted, compliance-driven partner to our clients, but for 40-plus years, our marketing efforts were solely word of mouth. Our client base is now over 1,000 strong, with many of those client relationships dating back to CAPIS’ founding in 1977, but still we’re asked, “What is CAPIS?” It’s time to tell our story and spread the word about CAPIS. As such, we have formalized our mission statement: CAPIS is a compliance-driven brokerage firm, transacting financial assets for institutional investors. Our mission is to be the standard for…

Is CAPIS the Oldest Outsourced Trading Firm?

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Penned by Chris Hurley, Director, Institutional Sales Although Outsourced Trading is a relatively new term for the industry, CAPIS has been providing this service for over 30 years. Let that sink in – 30 years. For decades smaller managers have foregone the expense of building a trading desk and instead have relied on CAPIS to represent them in the market. Once the old exchange model morphed into the plethora of execution venues we have today, having a broker that is not conflicted with proprietary trading became a top criterion. CAPIS has never had to “brand” itself as an Outsourced Trading desk. Acting solely in the client’s best interest is something CAPIS has done since the beginning. CAPIS has no internal risk book or market making business, nor are we beholden to any affiliated trading venues. While others must segregate their Outsourced desk to minimize internal conflicts, CAPIS has not changed a thing; we have been trading our client’s assets as if they were our own since our inception in 1977. Our clients who traffic in small and mid-cap names greatly appreciate that they can show CAPIS their entire order. They know that we have their best interest at heart,…

Penned by Chris Hurley, Director, Institutional Sales Although Outsourced Trading is a relatively new term for the industry, CAPIS has been providing this service for over 30 years. Let that sink in – 30 years. For decades smaller managers have foregone the expense of building a trading desk and instead have relied on CAPIS to represent them in the market. Once the old exchange model morphed into the plethora of execution venues we have today, having a broker that is not conflicted with proprietary trading became a top criterion. CAPIS has never had to “brand” itself as an Outsourced Trading desk. Acting solely in the client’s best interest is something CAPIS has done since the beginning. CAPIS has no internal risk book or market making business, nor are we beholden to any affiliated trading venues. While others must segregate their Outsourced desk to minimize internal conflicts, CAPIS has not changed a thing; we have been trading our client’s assets as if they were our own since our inception in 1977. Our clients who traffic in small and mid-cap names greatly appreciate that they can show CAPIS their entire order. They know that we have their best interest at heart,…

Employee Spotlight: Kelly Eskildsen

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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. To that end, we sat down with one of our senior equity traders, Kelly Eskildsen , to discuss how she got started in the trading industry, some of the best moments during her 17 years at CAPIS, and her hobbies and interests outside of work. What piqued your interest in the financial services industry? I first became interested in this industry because a really good family friend was working as a market maker at Southwest Securities, which is where I eventually had my first job. She would tell me stories about trading while I was in college at Iowa State. Until that time, I thought I’d always be working on my family’s farm in Iowa. The conversations that I had with her are what first piqued my interest. What was your first role at CAPIS? I was working at the agency-only call desk at Southwest Securities and, from watching market makers, I became interested in the trading side. When I found out there was an opening…

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. To that end, we sat down with one of our senior equity traders, Kelly Eskildsen , to discuss how she got started in the trading industry, some of the best moments during her 17 years at CAPIS, and her hobbies and interests outside of work. What piqued your interest in the financial services industry? I first became interested in this industry because a really good family friend was working as a market maker at Southwest Securities, which is where I eventually had my first job. She would tell me stories about trading while I was in college at Iowa State. Until that time, I thought I’d always be working on my family’s farm in Iowa. The conversations that I had with her are what first piqued my interest. What was your first role at CAPIS? I was working at the agency-only call desk at Southwest Securities and, from watching market makers, I became interested in the trading side. When I found out there was an opening…

Equity Access Through Closed-End Funds

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Panel hosted by Russell Robinson at the AICA Summer Summit on August 13, 2020

Panel hosted by Russell Robinson at the AICA Summer Summit on August 13, 2020

TRADING UPDATE: Bond Trading “Concierge Style”

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Penned by David Lee, Director, Fixed Income Trading Have you ever executed a bond trade and wondered if you got the best price? How could you know? The solution is simple: Use your own personal shopper. At CAPIS, we will search a network of more than 70 broker dealers, including all primaries to find you the best price. Think of us as your own personal shopper. Need to liquidate a portfolio or find matching corporates? CAPIS can help. Looking for a specific bond(s) to build or adjust a portfolio or fill out a maturity ladder? CAPIS can help. The CAPIS Difference? • Trade execution where the only bias is on execution performance without the conflict a risk position brings • Access to broker-dealer networks, electronic platforms (broker-to-broker and all-to-all), and international counterparties • Single contact point that will complement and expand existing coverage • Client anonymity • Woman owned – Women’s Business Enterprise National Council certified At CAPIS, we provide unparalleled concierge service among fixed income trading desks. Every time. That’s the CAPIS Difference. Let us be your personal bond shopper. To take advantage of our services, call David Lee, Ray Prisco, or Aaron Bernstein at (800) 247-8888 or reach…

Penned by David Lee, Director, Fixed Income Trading Have you ever executed a bond trade and wondered if you got the best price? How could you know? The solution is simple: Use your own personal shopper. At CAPIS, we will search a network of more than 70 broker dealers, including all primaries to find you the best price. Think of us as your own personal shopper. Need to liquidate a portfolio or find matching corporates? CAPIS can help. Looking for a specific bond(s) to build or adjust a portfolio or fill out a maturity ladder? CAPIS can help. The CAPIS Difference? • Trade execution where the only bias is on execution performance without the conflict a risk position brings • Access to broker-dealer networks, electronic platforms (broker-to-broker and all-to-all), and international counterparties • Single contact point that will complement and expand existing coverage • Client anonymity • Woman owned – Women’s Business Enterprise National Council certified At CAPIS, we provide unparalleled concierge service among fixed income trading desks. Every time. That’s the CAPIS Difference. Let us be your personal bond shopper. To take advantage of our services, call David Lee, Ray Prisco, or Aaron Bernstein at (800) 247-8888 or reach…

The Bright Side

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The following was penned by Chris Halverson, STA Chairman and Senior Vice President, Institutional Sales at CAPIS I think we can all agree that 2020 hasn’t played out how we thought. It’s mid-August — ‘Back to School’ season for those of us with younger children — but instead of shopping for new clothes, backpacks and other supplies, we’re making sure that we have enough bandwidth to accommodate our kids’ virtual learning platforms. In many ways, this year has been a complete blindside as we continue to deal with COVID-19. Regardless of who you are, what you do or where you live, you’ve felt the impact. Chances are, it hasn’t been good. There is a bright side, however, that is starting to appear. Businesses and society have adapted, albeit at a pace that many would consider breakneck speed. We are all doing things and behaving differently than we were just a few short months ago, and hopefully, we are noticing some positive results. Some are small, like the simple pleasure of playing Monopoly with my girls during lunch break. Even though I lost, it was a wonderful moment. Some are more meaningful, like discovering the need for a better work/life balance and reinvesting in relationships.…

The following was penned by Chris Halverson, STA Chairman and Senior Vice President, Institutional Sales at CAPIS I think we can all agree that 2020 hasn’t played out how we thought. It’s mid-August — ‘Back to School’ season for those of us with younger children — but instead of shopping for new clothes, backpacks and other supplies, we’re making sure that we have enough bandwidth to accommodate our kids’ virtual learning platforms. In many ways, this year has been a complete blindside as we continue to deal with COVID-19. Regardless of who you are, what you do or where you live, you’ve felt the impact. Chances are, it hasn’t been good. There is a bright side, however, that is starting to appear. Businesses and society have adapted, albeit at a pace that many would consider breakneck speed. We are all doing things and behaving differently than we were just a few short months ago, and hopefully, we are noticing some positive results. Some are small, like the simple pleasure of playing Monopoly with my girls during lunch break. Even though I lost, it was a wonderful moment. Some are more meaningful, like discovering the need for a better work/life balance and reinvesting in relationships.…

Trading Update: One-Touch = No Delay

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Penned by Jason Gatewood, Executive Director, Global Trading As sell-side desks have been forced to work remotely, you may have noticed communication and routing delays associated with the built-in layers of sales traders, execution desks, and position traders. At CAPIS, your trading contact directly accesses the market and controls all order-routing decisions without delay: our “one-touch” approach. When an order comes into our desk, it is handled directly by our trader – either manually or algorithmically. The order is not sent to other traders or another desk. Throughout the pandemic, CAPIS has been able to maintain a safe office presence for equity trading. This footprint allows us to maintain the speed and efficiency that clients have come to expect from CAPIS’ “one-touch” approach. Today, each equity trading team has at least one trader in the office and every trader working remotely has home-based systems that mirror those in the office. All execution venues and client connectivity features, including direct ring-downs, have been replicated. In addition, our remote trading systems are all running on universal power supplies. At CAPIS, we work every order as if it were our very own. That is service you can trust. Every time. For trading inquiries…

Penned by Jason Gatewood, Executive Director, Global Trading As sell-side desks have been forced to work remotely, you may have noticed communication and routing delays associated with the built-in layers of sales traders, execution desks, and position traders. At CAPIS, your trading contact directly accesses the market and controls all order-routing decisions without delay: our “one-touch” approach. When an order comes into our desk, it is handled directly by our trader – either manually or algorithmically. The order is not sent to other traders or another desk. Throughout the pandemic, CAPIS has been able to maintain a safe office presence for equity trading. This footprint allows us to maintain the speed and efficiency that clients have come to expect from CAPIS’ “one-touch” approach. Today, each equity trading team has at least one trader in the office and every trader working remotely has home-based systems that mirror those in the office. All execution venues and client connectivity features, including direct ring-downs, have been replicated. In addition, our remote trading systems are all running on universal power supplies. At CAPIS, we work every order as if it were our very own. That is service you can trust. Every time. For trading inquiries…

Why 28(e) Works

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Once again, MiFID II is at the regulatory forefront. Late last month, the European Commission proposed changes to help their capital markets weather COVID-19 and curb the regulations’ unintended consequences. Designed to address various conflicts of interest and improve transparency in European markets, MiFID II was implemented in 2018. One of the key provisions was the unbundling of payment for investment research from execution costs. While these changes directly impacted EU nations, the SEC opted not to alter U.S. regulations in response to MiFID II. The “safe harbor” provisions of Section 28(e), implemented in 1975, remain the law of the land. With that said, MiFID II has had an impact on U.S. markets. It has shined a light on how much buy-side firms pay for research, and more importantly, the impact of research on returns. Over the past two years, it is clear that investment managers subject to MiFID II have trimmed their research budgets dramatically. In 2019, the FCA reported that research budgets had fallen, on average, 20-30%. As a result, the sell-side has adjusted, trimming staff and reducing the amount of research that is available, a trend compounded by related pressure on independent research providers. While CAPIS applauds…

Once again, MiFID II is at the regulatory forefront. Late last month, the European Commission proposed changes to help their capital markets weather COVID-19 and curb the regulations’ unintended consequences. Designed to address various conflicts of interest and improve transparency in European markets, MiFID II was implemented in 2018. One of the key provisions was the unbundling of payment for investment research from execution costs. While these changes directly impacted EU nations, the SEC opted not to alter U.S. regulations in response to MiFID II. The “safe harbor” provisions of Section 28(e), implemented in 1975, remain the law of the land. With that said, MiFID II has had an impact on U.S. markets. It has shined a light on how much buy-side firms pay for research, and more importantly, the impact of research on returns. Over the past two years, it is clear that investment managers subject to MiFID II have trimmed their research budgets dramatically. In 2019, the FCA reported that research budgets had fallen, on average, 20-30%. As a result, the sell-side has adjusted, trimming staff and reducing the amount of research that is available, a trend compounded by related pressure on independent research providers. While CAPIS applauds…

The Post-Floor Closure Debrief

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General

Turbulent Markets Were Navigable Seas, Despite Overlapping Currents The initial impact of COVID-19 and the ensuing implementation of shelter-in-place policies on the trading world has been widely reported, with a number of items getting heavy airplay. Some are obvious: extreme market volatility in March that saw the VIX breach 80, the increase in average daily moves across assets, and, now, the ensuing speed of the market’s recovery in a still elevated volatility regime. The Nasdaq has hit all-time highs and the S&P 500 has almost erased March’s losses. The other item that received much attention — attention only heightened by the history and symbolism ingrained in the institution — was the closure of the New York Stock Exchange’s trading floor. (Note: The closure of the remaining American derivatives pits was notable as well, but those exchanges are less applicable to this equity-centric piece.) While the shutdown was indeed notable and historic, with all of the remaining floor broker trading volume (D-Orders) needing to port to some electronic workflow (MOC/LOC orders), from our perspective at CAPIS and given the feedback of our clients, it was a manageable and orderly shift. We were proactive across the board in communicating these developments…

Turbulent Markets Were Navigable Seas, Despite Overlapping Currents The initial impact of COVID-19 and the ensuing implementation of shelter-in-place policies on the trading world has been widely reported, with a number of items getting heavy airplay. Some are obvious: extreme market volatility in March that saw the VIX breach 80, the increase in average daily moves across assets, and, now, the ensuing speed of the market’s recovery in a still elevated volatility regime. The Nasdaq has hit all-time highs and the S&P 500 has almost erased March’s losses. The other item that received much attention — attention only heightened by the history and symbolism ingrained in the institution — was the closure of the New York Stock Exchange’s trading floor. (Note: The closure of the remaining American derivatives pits was notable as well, but those exchanges are less applicable to this equity-centric piece.) While the shutdown was indeed notable and historic, with all of the remaining floor broker trading volume (D-Orders) needing to port to some electronic workflow (MOC/LOC orders), from our perspective at CAPIS and given the feedback of our clients, it was a manageable and orderly shift. We were proactive across the board in communicating these developments…

CAPIS Views from Quarantine 4

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General

Since March 16, CAPIS has transitioned to almost every employee working remotely, so we thought we’d share our home-office views and how our employees have kept busy. We’ll continue to share more “CAPIS Views” in the coming days, so be sure to check back for updates here on the website or on our LinkedIn. Previous “Views from Quarantine” posts: 1 | 2 | 3 Ray Prisco, Fixed Income Trader | Dallas, TX What’s the best part about the new working situation? A relaxed dress code and the significantly reduced commute time. What do you miss about working in the office? I miss overhearing the witty banter and market color among the fellow traders and the computer set up on the trading floor. How are you keeping yourself busy? I have been refining my culinary skills, spending time with my son, and Facetime/Zoom with family and friends. Best tip for working remotely? Avoid opening any potential malicious emails and having a strong wifi password! What would you say to those working on the COVID-19 front lines? We are trying to do our part to stay away and stay home so we don’t make a bad situation worse for all of you,…

Since March 16, CAPIS has transitioned to almost every employee working remotely, so we thought we’d share our home-office views and how our employees have kept busy. We’ll continue to share more “CAPIS Views” in the coming days, so be sure to check back for updates here on the website or on our LinkedIn. Previous “Views from Quarantine” posts: 1 | 2 | 3 Ray Prisco, Fixed Income Trader | Dallas, TX What’s the best part about the new working situation? A relaxed dress code and the significantly reduced commute time. What do you miss about working in the office? I miss overhearing the witty banter and market color among the fellow traders and the computer set up on the trading floor. How are you keeping yourself busy? I have been refining my culinary skills, spending time with my son, and Facetime/Zoom with family and friends. Best tip for working remotely? Avoid opening any potential malicious emails and having a strong wifi password! What would you say to those working on the COVID-19 front lines? We are trying to do our part to stay away and stay home so we don’t make a bad situation worse for all of you,…

CAPIS Views from Quarantine 3

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General

Since March 16, CAPIS has transitioned to almost every employee working remotely, so we thought we’d share our home-office views and how our employees have kept busy. We’ll continue to share more “CAPIS Views” in the coming days, so be sure to check back for updates here on the website or on our LinkedIn. Previous “Views from Quarantine” posts: 1 | 2 Kelly Eskildsen, Equity Trading | Dallas, TX What’s the best part about the new working situation? My favorite part of working from home is the extra time I get to spend with my family. I get to have breakfast with the kids! What do you miss about working in the office? I miss the conversations with my team and coworkers. How are you keeping yourself busy? (TV shows, hobbies, projects, etc.) With all of the elearning, I have become a substitute teacher for our 3 kids. Thankfully my Algebra skills are still sharp. Best tip for working remotely? Wake up at the usual time. I traded my commute in the car for a walk or yoga! What would you say to those working on the COVID-19 front lines? Thank you for your dedication to helping others! Chris…

Since March 16, CAPIS has transitioned to almost every employee working remotely, so we thought we’d share our home-office views and how our employees have kept busy. We’ll continue to share more “CAPIS Views” in the coming days, so be sure to check back for updates here on the website or on our LinkedIn. Previous “Views from Quarantine” posts: 1 | 2 Kelly Eskildsen, Equity Trading | Dallas, TX What’s the best part about the new working situation? My favorite part of working from home is the extra time I get to spend with my family. I get to have breakfast with the kids! What do you miss about working in the office? I miss the conversations with my team and coworkers. How are you keeping yourself busy? (TV shows, hobbies, projects, etc.) With all of the elearning, I have become a substitute teacher for our 3 kids. Thankfully my Algebra skills are still sharp. Best tip for working remotely? Wake up at the usual time. I traded my commute in the car for a walk or yoga! What would you say to those working on the COVID-19 front lines? Thank you for your dedication to helping others! Chris…

CAPIS Views from Quarantine 2

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General

Since March 16, CAPIS has transitioned to almost every employee working remotely, so we thought we’d share our home-office views and how our employees have kept busy. We’ll continue to share more “CAPIS Views” in the coming days, so be sure to check back for updates here on the website or on our LinkedIn. To view the previous “Views from Quarantine” post, click here. David Choate, COO, Executive Director of Global Sales | Dallas, TX What’s the best part about the new working situation? The 1-minute commute from kitchen to office What do you miss about working in the office? Meetings at the Crafty Irishman (pub) after the Close. Does that count? How are you keeping yourself busy during shelter-in-place? (TV shows, hobbies, projects, etc.) Fishing! There is a pond behind my house and it is easy to social distance while fishing. Best tip for working remotely? Use video conferencing. Actually seeing another person is helpful What would you say to those working on the COVID-19 front lines? Thank you and stay safe! Corey Ware, Equity Trading | Dallas, TX What’s the best part about the new working situation? The best parts about working from home are the commute,…

Since March 16, CAPIS has transitioned to almost every employee working remotely, so we thought we’d share our home-office views and how our employees have kept busy. We’ll continue to share more “CAPIS Views” in the coming days, so be sure to check back for updates here on the website or on our LinkedIn. To view the previous “Views from Quarantine” post, click here. David Choate, COO, Executive Director of Global Sales | Dallas, TX What’s the best part about the new working situation? The 1-minute commute from kitchen to office What do you miss about working in the office? Meetings at the Crafty Irishman (pub) after the Close. Does that count? How are you keeping yourself busy during shelter-in-place? (TV shows, hobbies, projects, etc.) Fishing! There is a pond behind my house and it is easy to social distance while fishing. Best tip for working remotely? Use video conferencing. Actually seeing another person is helpful What would you say to those working on the COVID-19 front lines? Thank you and stay safe! Corey Ware, Equity Trading | Dallas, TX What’s the best part about the new working situation? The best parts about working from home are the commute,…