CAPIS Insights

106 total posts

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

News CAPIS Insights General

General

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…

CASE STUDY Part 3: Objections to Outsourcing

News CAPIS Insights General

General

posted by CAPIS on 03/15/2022 at 11:20 am
by CAPIS on 03/15/2022

This article was written by Martin Coughlan, CFA, CAIA. Martin has spent over twenty years working at asset management firms globally.    In part 2 of our series, we discussed the reasons why investment managers may wish to consider outsourced trading. In this paper, we will look at the common objections we hear from investment firms and the areas they should focus their due diligence on as they assess outsourced trading providers. Business structure conflicts of interest and execution capabilities We believe that it is imperative that investment managers investigate potential conflicts of interest fully. While there are a significant number of firms offering outsourced trading capabilities today, we believe managers should focus their due diligence on agency only firms that do not engage in proprietary trading or investment banking activities. It is critical that your outsourced partner is unconflicted in terms of flow. Attention should be paid to ensuring that there are no internally developed algorithms, ownership of any trading pools, or pledges to any pools that could introduce potential conflicts of interest. Strong consideration also needs to be given to the breath of trading venues utilized across algo suites, ECNs, ATS’, dark pools, and market makers   Best execution…

This article was written by Martin Coughlan, CFA, CAIA. Martin has spent over twenty years working at asset management firms globally.    In part 2 of our series, we discussed the reasons why investment managers may wish to consider outsourced trading. In this paper, we will look at the common objections we hear from investment firms and the areas they should focus their due diligence on as they assess outsourced trading providers. Business structure conflicts of interest and execution capabilities We believe that it is imperative that investment managers investigate potential conflicts of interest fully. While there are a significant number of firms offering outsourced trading capabilities today, we believe managers should focus their due diligence on agency only firms that do not engage in proprietary trading or investment banking activities. It is critical that your outsourced partner is unconflicted in terms of flow. Attention should be paid to ensuring that there are no internally developed algorithms, ownership of any trading pools, or pledges to any pools that could introduce potential conflicts of interest. Strong consideration also needs to be given to the breath of trading venues utilized across algo suites, ECNs, ATS’, dark pools, and market makers   Best execution…

Your Questions about Outsourced Trading, Answered by CAPIS

CAPIS Insights

CAPIS Insights

posted by CAPIS on 03/14/2022 at 10:20 am
by CAPIS on 03/14/2022

originally penned by Richey May Lately, our alternative investment team has been fielding more questions about outsourced trading. What is it? How does it work? What are the latest trends? So we went to an expert, Mark Viani, Director, Institutional Sales at CAPIS, to answer your most frequently asked questions. Here are the highlights of our conversation. What is outsourced trading and what types of funds would it most benefit? Outsourced trading can be defined in several ways. For some firms, it’s the simple outsourcing of the trading execution function to an external broker rather than employing in-house traders. To others, it may mean co-sourcing, where the asset manager relies on an outside trading desk to aid in the execution function but still maintains an in-house trading desk. Long gone are the days when only RIAs and hedge funds benefit from outsourcing their trading. Many firms find comfort in the depth, coverage and experience of their outsourced desk. And they no longer worry about desk coverage during vacations or illness, along with the sheer cost of staffing a trading desk. Is outsourced trading a better fit for funds of a certain size, type or strategy? Can you provide a real-world example?…

originally penned by Richey May Lately, our alternative investment team has been fielding more questions about outsourced trading. What is it? How does it work? What are the latest trends? So we went to an expert, Mark Viani, Director, Institutional Sales at CAPIS, to answer your most frequently asked questions. Here are the highlights of our conversation. What is outsourced trading and what types of funds would it most benefit? Outsourced trading can be defined in several ways. For some firms, it’s the simple outsourcing of the trading execution function to an external broker rather than employing in-house traders. To others, it may mean co-sourcing, where the asset manager relies on an outside trading desk to aid in the execution function but still maintains an in-house trading desk. Long gone are the days when only RIAs and hedge funds benefit from outsourcing their trading. Many firms find comfort in the depth, coverage and experience of their outsourced desk. And they no longer worry about desk coverage during vacations or illness, along with the sheer cost of staffing a trading desk. Is outsourced trading a better fit for funds of a certain size, type or strategy? Can you provide a real-world example?…

PODCAST: Foreside Financial Spotlight – CAPIS

CAPIS Insights

CAPIS Insights

posted by CAPIS on 03/11/2022 at 9:44 am
by CAPIS on 03/11/2022

CAPIS was recently featured during a Foreside Financial podcast where Mark Viani, Director, Institutional Sales (ARC Solutions) and Robert McHeffey, Institutional Sales, discussed Outsourced Trading and Wrap Trading technology, specifically our ARC solution. Please click on the embedded video to hear the conversation.    

CAPIS was recently featured during a Foreside Financial podcast where Mark Viani, Director, Institutional Sales (ARC Solutions) and Robert McHeffey, Institutional Sales, discussed Outsourced Trading and Wrap Trading technology, specifically our ARC solution. Please click on the embedded video to hear the conversation.    

“The Elephant in the Room” – Best-Ex Issues in Managed Accounts

CAPIS Insights

CAPIS Insights

posted by CAPIS on 03/07/2022 at 9:14 am
by CAPIS on 03/07/2022

penned by Chris Halverson, Senior Vice President, Sales  Despite the pandemic, the equity markets were very kind to the financial services industry.  Returns have been positive, and assets continue to flow in the right direction.  What’s gone relatively unnoticed, however, is the overall growth in “managed accounts”, specifically WRAP sponsors, custodial platforms (think Schwab, Fidelity, Pershing, etc.) and unified managed accounts (UMA).  According to the Money Management Institute, “managed account assets crossed $10 trillion for the first time during the third quarter of 2021.”  On the surface, this sounds great; but there’s an “elephant in the room” that’s been causing problems for years… best-ex issues with managed accounts. In the past, a registered investment advisor (RIA) might work with a couple of WRAP sponsors or custodial platforms, representing 10%-20% of their assets under management (AUM).  Now, that same RIA may work with multiple WRAP sponsors and custodial platforms, representing 30%-50% of their AUM.  This creates significant issues with respect to best-execution. To address various directives associated with managed accounts, investment managers often rely on a “tier system”, where trades are executed sequentially, based on an account’s respective tier.   Tier 1 – Free to Trade Accounts Clients that do not…

penned by Chris Halverson, Senior Vice President, Sales  Despite the pandemic, the equity markets were very kind to the financial services industry.  Returns have been positive, and assets continue to flow in the right direction.  What’s gone relatively unnoticed, however, is the overall growth in “managed accounts”, specifically WRAP sponsors, custodial platforms (think Schwab, Fidelity, Pershing, etc.) and unified managed accounts (UMA).  According to the Money Management Institute, “managed account assets crossed $10 trillion for the first time during the third quarter of 2021.”  On the surface, this sounds great; but there’s an “elephant in the room” that’s been causing problems for years… best-ex issues with managed accounts. In the past, a registered investment advisor (RIA) might work with a couple of WRAP sponsors or custodial platforms, representing 10%-20% of their assets under management (AUM).  Now, that same RIA may work with multiple WRAP sponsors and custodial platforms, representing 30%-50% of their AUM.  This creates significant issues with respect to best-execution. To address various directives associated with managed accounts, investment managers often rely on a “tier system”, where trades are executed sequentially, based on an account’s respective tier.   Tier 1 – Free to Trade Accounts Clients that do not…

CLIENT TRADING NOTICE – Russian American Depositary Receipts (ADRs)

CAPIS Insights

CAPIS Insights

posted by CAPIS on 03/03/2022 at 12:29 pm
by CAPIS on 03/03/2022

    Client Notice – Trading of Russian American Depositary Receipts (ADRs) Due to recent developments in the Ukraine multiple U.S. based market makers have restricted trading in certain Russian ADRs.  As a result of these trading restrictions Capital Institutional Services, Inc. may be unable to execute your buy/sell orders in these securities until the restrictions are lifted. Currently the restricted ADRs include, but may not be limited to, the following: Symbol Security Name AUCOY POLYMETAL INTL PLC ADR GZPFY GAZPROM NEFT PJSC S/ADR LUKOY PJSC LUKOIL S/ADR NILSY MMC NOR NICKEL PJSC S/ADR OAOFY PJSC TATNEFT S/ADR OGZPY PJSC GAZPROM S/ADR ROSYY PJSC ROSTELECOM S/ADR RSHYY RUSHYDRO PJSC S/ADR SBRCY SBERBANK OF RUSSIA S/ADR SGTPY SURGUTNEFTEGAS S/ADR PFD SGTZY SURGUTNEFTEGAS PJSC S/ADR   CAPIS will continue to monitor this situation.  Please contact your CAPIS representative if you have any additional questions or concerns.

    Client Notice – Trading of Russian American Depositary Receipts (ADRs) Due to recent developments in the Ukraine multiple U.S. based market makers have restricted trading in certain Russian ADRs.  As a result of these trading restrictions Capital Institutional Services, Inc. may be unable to execute your buy/sell orders in these securities until the restrictions are lifted. Currently the restricted ADRs include, but may not be limited to, the following: Symbol Security Name AUCOY POLYMETAL INTL PLC ADR GZPFY GAZPROM NEFT PJSC S/ADR LUKOY PJSC LUKOIL S/ADR NILSY MMC NOR NICKEL PJSC S/ADR OAOFY PJSC TATNEFT S/ADR OGZPY PJSC GAZPROM S/ADR ROSYY PJSC ROSTELECOM S/ADR RSHYY RUSHYDRO PJSC S/ADR SBRCY SBERBANK OF RUSSIA S/ADR SGTPY SURGUTNEFTEGAS S/ADR PFD SGTZY SURGUTNEFTEGAS PJSC S/ADR   CAPIS will continue to monitor this situation.  Please contact your CAPIS representative if you have any additional questions or concerns.

CASE STUDY Part 2: Outsourced Trading “Reasons to Outsource.”

CAPIS Insights

CAPIS Insights

posted by CAPIS on 02/25/2022 at 11:34 am
by CAPIS on 02/25/2022

This article was written by Martin Coughlan, CFA, CAIA. Martin has spent over twenty years working at asset management firms globally.    In the second part of our series on Outsourced Trading, we will look at reasons why investment firms may wish to consider outsourced trading in the current environment. Investment managers need to optimize their operations As we discussed in our first paper, the macro environment for active management means that most investment firms need to better optimize their operations and focus their expenditures on core areas of the business. We would argue that the core areas for asset managers are where alpha is generated (the investment team), and where growth and client retention is the focus (the distribution team). While some will think that outsourcing a trader may only reduce salary spend, there are other areas of potential cost savings including: Bloomberg terminals SWIFT licensing and transactions OMS licenses Market data feeds Hardware Office furniture and space Business continuity Future technology investment in trading Question for CAPIS – do you provide third party Transaction Cost Analysis to your outsourced clients; are there any other things you do for your Outsourced Trading clients that would reduce a manager’s expenses? …

This article was written by Martin Coughlan, CFA, CAIA. Martin has spent over twenty years working at asset management firms globally.    In the second part of our series on Outsourced Trading, we will look at reasons why investment firms may wish to consider outsourced trading in the current environment. Investment managers need to optimize their operations As we discussed in our first paper, the macro environment for active management means that most investment firms need to better optimize their operations and focus their expenditures on core areas of the business. We would argue that the core areas for asset managers are where alpha is generated (the investment team), and where growth and client retention is the focus (the distribution team). While some will think that outsourcing a trader may only reduce salary spend, there are other areas of potential cost savings including: Bloomberg terminals SWIFT licensing and transactions OMS licenses Market data feeds Hardware Office furniture and space Business continuity Future technology investment in trading Question for CAPIS – do you provide third party Transaction Cost Analysis to your outsourced clients; are there any other things you do for your Outsourced Trading clients that would reduce a manager’s expenses? …

CAPIS Supports Young Women’s Preparatory Network 2022 STEAM Challenge

News CAPIS Insights General

General

posted by CAPIS on 02/25/2022 at 10:56 am
by CAPIS on 02/25/2022

At CAPIS, we understand the importance of giving back. For years, participating in philanthropic events has been a part of our core values, we are proud to support organizations who specifically target improving the lives of women and children. In keeping with this tradition, CAPIS again will be making a financial contribution to the Young Women’s Preparatory Network (YWPN) and is a proud sponsor of its STEAM Challenge, an event designed to develop and teach concepts in science, technology, engineering and math through interactive activities, encouraging competition and community awareness. The 2022 YWPN STEAM Challenge will take place virtually and will be a fun-filled and educational day of team presentations of innovative STEAM ideas, friendly competition and community awareness. It will take place on Saturday, February 26, 2022, NorthPark Center, Dallas, Tx. Between 1-4 p.m. “CAPIS is a proud supporter of the Young Women’s Preparatory Network,” Ann Sebert, Chief Executive Officer at CAPIS said. “The support that YWPN provides for young women in our community is unparalleled and we are thrilled to be a part of their success. It’s all part of the CAPIS Difference – committing to great relationships in our community and not just in the financial industry.”…

At CAPIS, we understand the importance of giving back. For years, participating in philanthropic events has been a part of our core values, we are proud to support organizations who specifically target improving the lives of women and children. In keeping with this tradition, CAPIS again will be making a financial contribution to the Young Women’s Preparatory Network (YWPN) and is a proud sponsor of its STEAM Challenge, an event designed to develop and teach concepts in science, technology, engineering and math through interactive activities, encouraging competition and community awareness. The 2022 YWPN STEAM Challenge will take place virtually and will be a fun-filled and educational day of team presentations of innovative STEAM ideas, friendly competition and community awareness. It will take place on Saturday, February 26, 2022, NorthPark Center, Dallas, Tx. Between 1-4 p.m. “CAPIS is a proud supporter of the Young Women’s Preparatory Network,” Ann Sebert, Chief Executive Officer at CAPIS said. “The support that YWPN provides for young women in our community is unparalleled and we are thrilled to be a part of their success. It’s all part of the CAPIS Difference – committing to great relationships in our community and not just in the financial industry.”…

December Research Call RECAP: Equities Face Tough Road Amid Higher Volatility

CAPIS Insights

CAPIS Insights

posted by CAPIS on 02/17/2022 at 5:31 pm
by CAPIS on 02/17/2022

This article was penned by CAPIS   Last week we held our February 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. Katie Stockton’s presentation addressed the following topics:   Market has Lost Upside Momentum Technical factors point to tougher year ahead; will be difficult to find value in stocks. After January turmoil, SPX points to long-term market exhaustion. FAANG mega-caps have entered a trading range and are showing downside leadership. MACD says market is not oversold just yet and potential for more corrective price action exists. Market Dynamic Resembles 2018 Experience Like in 2018, the market has re-entered a period of higher volatility with the VIX approaching the 50 level – right now holding around 40. Indicators point to weakened breath and created a challenging environment for stock trading. Hedging is advised with inverse ETFs and other esoteric instruments. Growth stocks are exhibiting downside leadership and point to an underweight recommendation. Value stocks will exhibit better performance moving ahead. Sectors to watch are Consumer Staples, Energy and Financials; all have broken to the upside. S. equities, while difficult to trade…

This article was penned by CAPIS   Last week we held our February 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. Katie Stockton’s presentation addressed the following topics:   Market has Lost Upside Momentum Technical factors point to tougher year ahead; will be difficult to find value in stocks. After January turmoil, SPX points to long-term market exhaustion. FAANG mega-caps have entered a trading range and are showing downside leadership. MACD says market is not oversold just yet and potential for more corrective price action exists. Market Dynamic Resembles 2018 Experience Like in 2018, the market has re-entered a period of higher volatility with the VIX approaching the 50 level – right now holding around 40. Indicators point to weakened breath and created a challenging environment for stock trading. Hedging is advised with inverse ETFs and other esoteric instruments. Growth stocks are exhibiting downside leadership and point to an underweight recommendation. Value stocks will exhibit better performance moving ahead. Sectors to watch are Consumer Staples, Energy and Financials; all have broken to the upside. S. equities, while difficult to trade…

CASE STUDY Part 1: Outsourced Trading “Why Now? And Why One Size Does Not Fit All.”

CAPIS Insights

CAPIS Insights

posted by CAPIS on 02/02/2022 at 8:25 am
by CAPIS on 02/02/2022

This article was written by Martin Coughlan, CFA, CAIA. Martin has spent over twenty years working at asset management firms globally.    The investment management industry has benefited from a period of above average returns for over a decade. Period S&P 500 (Annualized Returns through 12/31/21) 3 Years 26.07% 5 Years 18.47% 7 Years 14.93% 10 Years 16.55%   This has counteracted the impact of negative net asset flows for many active managers. With central bank action, inflation and the broader impacts of the pandemic dominating the headlines from a macro perspective, most market commentators view more volatility and lower returns as the most probable scenario we will face in the coming years. In such an environment, most investment managers will need to analyze their business even more closely and ensure they are operating at maximum efficiency levels. While the concept of outsourcing functions is not new within the industry, historically the idea of outsourcing trading is something that managers have viewed as suitable for start-ups, and not for established firms. This view is now being challenged as there are examples of small, mid-sized and larger managers (up to $50bn) that have successfully transitioned to an outsourced trading model in…

This article was written by Martin Coughlan, CFA, CAIA. Martin has spent over twenty years working at asset management firms globally.    The investment management industry has benefited from a period of above average returns for over a decade. Period S&P 500 (Annualized Returns through 12/31/21) 3 Years 26.07% 5 Years 18.47% 7 Years 14.93% 10 Years 16.55%   This has counteracted the impact of negative net asset flows for many active managers. With central bank action, inflation and the broader impacts of the pandemic dominating the headlines from a macro perspective, most market commentators view more volatility and lower returns as the most probable scenario we will face in the coming years. In such an environment, most investment managers will need to analyze their business even more closely and ensure they are operating at maximum efficiency levels. While the concept of outsourcing functions is not new within the industry, historically the idea of outsourcing trading is something that managers have viewed as suitable for start-ups, and not for established firms. This view is now being challenged as there are examples of small, mid-sized and larger managers (up to $50bn) that have successfully transitioned to an outsourced trading model in…

Employee Spotlight – Eric Burt, Vice President, Outsourced Trading

CAPIS Insights

CAPIS Insights

posted by CAPIS on 01/31/2022 at 1:27 pm
by CAPIS on 01/31/2022

At CAPIS, we put relationships first. We think of our team as a family, which is why it is important for us to not only get to know each member but also shine a spotlight on them. We spoke with Eric Burt, Vice President, Outsourced Trading, who joined CAPIS in 2021. Take a look at our conversation below to learn about why he chose CAPIS after spending time on the buy-side as a trader with Fiera Capital and Ell Capital Management. He discusses some of the biggest challenges and successes he experienced during his career and the pandemic. [Note: This conversation has been edited for length and clarity. How did you get involved in trading and CAPIS? I broke into the business on the operations team at Glickenhaus and Company [a value manager in NYC].  My goal from day one was to move over to the trading desk as I felt that was where the action was, and I wanted desperately to obtain a ticket to the show. I worked towards my licenses and transitioned to the desk, ultimately earning the honor of trading for Seth Glickenhaus himself. I then transitioned to EII Capital Management. EII was a REIT firm that…

At CAPIS, we put relationships first. We think of our team as a family, which is why it is important for us to not only get to know each member but also shine a spotlight on them. We spoke with Eric Burt, Vice President, Outsourced Trading, who joined CAPIS in 2021. Take a look at our conversation below to learn about why he chose CAPIS after spending time on the buy-side as a trader with Fiera Capital and Ell Capital Management. He discusses some of the biggest challenges and successes he experienced during his career and the pandemic. [Note: This conversation has been edited for length and clarity. How did you get involved in trading and CAPIS? I broke into the business on the operations team at Glickenhaus and Company [a value manager in NYC].  My goal from day one was to move over to the trading desk as I felt that was where the action was, and I wanted desperately to obtain a ticket to the show. I worked towards my licenses and transitioned to the desk, ultimately earning the honor of trading for Seth Glickenhaus himself. I then transitioned to EII Capital Management. EII was a REIT firm that…

January Research Briefing RECAP: MPP Says FOMC Hawks Rule Roost  

CAPIS Insights

CAPIS Insights

posted by CAPIS on 01/25/2022 at 8:24 am
by CAPIS on 01/25/2022

Last week, we held our January research briefing, featuring special 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: Federal Reserve Firmly Hawkish [3:08] MPP said the hawkish members of the Federal Open Market Committee are overly committed to fighting inflation. Fear of future supply shocks and rising consumer prices linger as concerns about the impact of Omicron remain. [3:20] Interest rate hikes are imminent, with discussions ranging from four to six hikes. The market, MPP says, is “way too hawkish” at the moment, and the March meeting and its subsequent policy statement bear close scrutiny. [6:25] Investors should not “fade the Fed” just yet and wait until the March policy meeting to make a call. [7:10] Energy as a Weapon [8:54]            Geopolitical risk remains at very high levels with there being tremendous uncertainty regarding oil-producing countries – like Nigeria, Khazakstan, and Russia. The first half of the year will see countries use oil as…

Last week, we held our January research briefing, featuring special 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: Federal Reserve Firmly Hawkish [3:08] MPP said the hawkish members of the Federal Open Market Committee are overly committed to fighting inflation. Fear of future supply shocks and rising consumer prices linger as concerns about the impact of Omicron remain. [3:20] Interest rate hikes are imminent, with discussions ranging from four to six hikes. The market, MPP says, is “way too hawkish” at the moment, and the March meeting and its subsequent policy statement bear close scrutiny. [6:25] Investors should not “fade the Fed” just yet and wait until the March policy meeting to make a call. [7:10] Energy as a Weapon [8:54]            Geopolitical risk remains at very high levels with there being tremendous uncertainty regarding oil-producing countries – like Nigeria, Khazakstan, and Russia. The first half of the year will see countries use oil as…

ADVISORY NOTICE: HKEX Announces Change in FRC Transaction Fees Effective Jan 1, 2022

News CAPIS Insights General

General

posted by CAPIS on 12/24/2021 at 11:05 am
by CAPIS on 12/24/2021

Please see Trading Notice Below from the Hong Kong Stock Exchange Contact our trading desk for further information on the proper booking of stamp duties, taxes, and fees in international stocks at 866.349.6216 or intl@capis.com Subject: FRC Transaction Levy of .00015% for a new combined rate of .13785%. General The following fees apply to each security transaction1: Brokerage2 Effective 1 April 2003, the brokerage of security transactions becomes freely negotiable between brokers and their clients. SFC Transaction Levy Effective 1 November 2014, a SFC Transaction Levy of 0.0027% (rounded to the nearest cent) is charged per side of the consideration of a transaction, and the amount is collected for the SFC. There is no SFC Transaction Levy on Securities Market Maker (SMM) transactions. To simplify operations with a unified basis for fee calculation for transactions in non-Hong Kong dollar currencies, the Exchange will adopt the same exchange rates as for stamp duty calculation purpose for calculating SFC Transaction Levy if applicable. Investor Compensation Levy Effective 19 December 2005, the payment of Investor Compensation Levy (i.e. 0.002% per side of the consideration of a transaction, rounded to the nearest cent) has been suspended by the SFC. To simplify operations with a…

Please see Trading Notice Below from the Hong Kong Stock Exchange Contact our trading desk for further information on the proper booking of stamp duties, taxes, and fees in international stocks at 866.349.6216 or intl@capis.com Subject: FRC Transaction Levy of .00015% for a new combined rate of .13785%. General The following fees apply to each security transaction1: Brokerage2 Effective 1 April 2003, the brokerage of security transactions becomes freely negotiable between brokers and their clients. SFC Transaction Levy Effective 1 November 2014, a SFC Transaction Levy of 0.0027% (rounded to the nearest cent) is charged per side of the consideration of a transaction, and the amount is collected for the SFC. There is no SFC Transaction Levy on Securities Market Maker (SMM) transactions. To simplify operations with a unified basis for fee calculation for transactions in non-Hong Kong dollar currencies, the Exchange will adopt the same exchange rates as for stamp duty calculation purpose for calculating SFC Transaction Levy if applicable. Investor Compensation Levy Effective 19 December 2005, the payment of Investor Compensation Levy (i.e. 0.002% per side of the consideration of a transaction, rounded to the nearest cent) has been suspended by the SFC. To simplify operations with a…

December Research Call RECAP: Long Term Technicals Says Market is Overbought, Expect Defensive Rotation

CAPIS Insights

CAPIS Insights

posted by CAPIS on 12/20/2021 at 11:12 am
by CAPIS on 12/20/2021

  Last week we held our December research call, featuring Fairlead Strategies Co-Founder Katie Stockton. Fairlead Strategies, LLC is a Connecticut-based independent advisory service providing unbiased technical analysis, helping investors manage risk and discover opportunities.     Katie Stockton’s presentation addressed the following topics:   SPX is in Final Resistance after Positive FOMC Reaction:  Long-term momentum remains positive since 2020, but expect resistance according to MACD indicators. (4:55) Despite some improvement in short-term gauges, a January correction could be coming. (6:00) The market may be moving out of a relatively low-volatility cycle during first quarter 2022. (6:29) Large-cap growth has been a source of outperformance compared to a small-cap slump. (6:44) Market Appears Exhausted While the “Santa Claus” rally is in play, stocks appear “tired” and are overbought, according to DeMark Stockton is waiting until January to hedge and reduce exposures ahead of expected Q1 volatility. (7:34) Expect further corrective price action in January. (8:00) The VIX is stuck in a 20-28 range, but a move through 28 would indicate a volatility breakout and heightened risk. (9:35) Market breadth has contracted. (10:41)   Sector Rotation Afoot Sector rotation has indicated a shift from technology & discretionary stocks to defensive securities –…

  Last week we held our December research call, featuring Fairlead Strategies Co-Founder Katie Stockton. Fairlead Strategies, LLC is a Connecticut-based independent advisory service providing unbiased technical analysis, helping investors manage risk and discover opportunities.     Katie Stockton’s presentation addressed the following topics:   SPX is in Final Resistance after Positive FOMC Reaction:  Long-term momentum remains positive since 2020, but expect resistance according to MACD indicators. (4:55) Despite some improvement in short-term gauges, a January correction could be coming. (6:00) The market may be moving out of a relatively low-volatility cycle during first quarter 2022. (6:29) Large-cap growth has been a source of outperformance compared to a small-cap slump. (6:44) Market Appears Exhausted While the “Santa Claus” rally is in play, stocks appear “tired” and are overbought, according to DeMark Stockton is waiting until January to hedge and reduce exposures ahead of expected Q1 volatility. (7:34) Expect further corrective price action in January. (8:00) The VIX is stuck in a 20-28 range, but a move through 28 would indicate a volatility breakout and heightened risk. (9:35) Market breadth has contracted. (10:41)   Sector Rotation Afoot Sector rotation has indicated a shift from technology & discretionary stocks to defensive securities –…

Commission Recapture for CITs – Does it Still Work?

CAPIS Insights

CAPIS Insights

posted by CAPIS on 12/10/2021 at 11:31 am
by CAPIS on 12/10/2021

This article was penned by CAPIS Answer:  Maybe   With commission rates at historic lows, it seems reasonable to believe that commission recapture is no longer viable.  However, most investment managers rely on commissions to acquire research, providing the basis for the commission recapture discussion. At its core, Commission Recapture is a discounting mechanism for full-service/research rates and can be an effective strategy for reducing commission costs.  In 2004, the SEC recognized the value of commission recapture programs stating, “Foregoing an opportunity to seek lower commission rates, to use brokerage to pay custodial, transfer agency and other fund expenses, or to obtain any available cash rebates, is a real and meaningful cost to fund shareholders.” SEC Release No. IC-26356.  But do recapture programs still work today? To find the answer, one must analyze the brokerage statistics for each sub-advised CIT.  Funds that trade at sub-penny rates are generally not viable candidates for recapture and internally managed CITs tend to avoid directing themselves.  Using a standard commission management template, we can identify the average cents per share (cps) and the percentage of “full-service” commissions, identified below using 2.0 cps or greater. Based on the data above, the Sector Rotation and the…

This article was penned by CAPIS Answer:  Maybe   With commission rates at historic lows, it seems reasonable to believe that commission recapture is no longer viable.  However, most investment managers rely on commissions to acquire research, providing the basis for the commission recapture discussion. At its core, Commission Recapture is a discounting mechanism for full-service/research rates and can be an effective strategy for reducing commission costs.  In 2004, the SEC recognized the value of commission recapture programs stating, “Foregoing an opportunity to seek lower commission rates, to use brokerage to pay custodial, transfer agency and other fund expenses, or to obtain any available cash rebates, is a real and meaningful cost to fund shareholders.” SEC Release No. IC-26356.  But do recapture programs still work today? To find the answer, one must analyze the brokerage statistics for each sub-advised CIT.  Funds that trade at sub-penny rates are generally not viable candidates for recapture and internally managed CITs tend to avoid directing themselves.  Using a standard commission management template, we can identify the average cents per share (cps) and the percentage of “full-service” commissions, identified below using 2.0 cps or greater. Based on the data above, the Sector Rotation and the…

November Research Call RECAP: DataTrek Delves Into Expensive U.S. Equity Valuations

CAPIS Insights

CAPIS Insights

posted by CAPIS on 11/22/2021 at 12:25 pm
by CAPIS on 11/22/2021

This article was penned by CAPIS   Last week CAPIS held its November research call, featuring Nicholas Colas and Jessica Rabe, Co-Founders of DataTrek Research. DataTrek is a New York-based independent research 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:   U.S. Equity Valuations (3:22) Colas opened saying U.S. equities are “super expensive,” explaining U.S. equities are trading at 19 times earnings. (3:58) Currently, the Case Shiller Price/Earnings ratio is at 40 times earnings – extraordinarily high compared to its average of 17. The last time the CS ratio hit 40 times earnings was in 1999 during the dot-com bubble.  (4:25) Valuations, while high, make sense. S&P 500 net margins are holding around 13%, above the average of 10% to 11% — “wildly higher than any other point in history.” The normal range is between 7% and 9%. These levels are sustainable. (6:25) Part of the reason is the heavy weighting of Big Tech companies (FAANG, Tesla, Microsoft, etc.) and their higher profitability and reinvestment in their core businesses. (9:22) Given this cash surplus…

This article was penned by CAPIS   Last week CAPIS held its November research call, featuring Nicholas Colas and Jessica Rabe, Co-Founders of DataTrek Research. DataTrek is a New York-based independent research 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:   U.S. Equity Valuations (3:22) Colas opened saying U.S. equities are “super expensive,” explaining U.S. equities are trading at 19 times earnings. (3:58) Currently, the Case Shiller Price/Earnings ratio is at 40 times earnings – extraordinarily high compared to its average of 17. The last time the CS ratio hit 40 times earnings was in 1999 during the dot-com bubble.  (4:25) Valuations, while high, make sense. S&P 500 net margins are holding around 13%, above the average of 10% to 11% — “wildly higher than any other point in history.” The normal range is between 7% and 9%. These levels are sustainable. (6:25) Part of the reason is the heavy weighting of Big Tech companies (FAANG, Tesla, Microsoft, etc.) and their higher profitability and reinvestment in their core businesses. (9:22) Given this cash surplus…

October Research Call RECAP: MPP Sees China Economic Slog While U.S. Makes Progress 

CAPIS Insights

CAPIS Insights

posted by CAPIS on 10/26/2021 at 11:56 am
by CAPIS on 10/26/2021

This article was penned by CAPIS   Last week, we held our October research call, featuring special 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:   China Malaise Continues MPP said China will continue its common prosperity theme and the government will continue to take more control of data and technology. [5:40] On the Evergrande fiasco, the government will continue to protect retail property investors and quell unrest. [8:25] Equities in China are “dead money” and better value is to be had elsewhere right now. Chinese markets will start their recovery in 2022 but the journey will not be an easy or pretty process. Overall, the consultancy is not positive on China, however, MPP did note that there are no systemic worries like the 2007 US financial crisis and an implosion of its economy shouldn’t happen. [10:40] U.S. Inflation Outlook Recent FOMC minutes are encouraging and support the beginning of the tapering process.…

This article was penned by CAPIS   Last week, we held our October research call, featuring special 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:   China Malaise Continues MPP said China will continue its common prosperity theme and the government will continue to take more control of data and technology. [5:40] On the Evergrande fiasco, the government will continue to protect retail property investors and quell unrest. [8:25] Equities in China are “dead money” and better value is to be had elsewhere right now. Chinese markets will start their recovery in 2022 but the journey will not be an easy or pretty process. Overall, the consultancy is not positive on China, however, MPP did note that there are no systemic worries like the 2007 US financial crisis and an implosion of its economy shouldn’t happen. [10:40] U.S. Inflation Outlook Recent FOMC minutes are encouraging and support the beginning of the tapering process.…

CAPIS RECAP – Select Highlights from the 88th Annual STA Conference

CAPIS Insights

CAPIS Insights

posted by CAPIS on 10/13/2021 at 9:22 am
by CAPIS on 10/13/2021

  This article was penned by CAPIS   Were you able to attend last week’s 88th Annual Security Traders Association Annual Conference in Washington D.C.? Curious about the topics and discussions that took place? CAPIS was there for the first in-person industry-wide STA confab since 2019 and presents a collection of select highlights and tidbits from the event.   Panel: Competitive Landscape between Brokers & Exchanges Panelists: Joe Mecane, Citadel Securities & Jonathan Kellner, MEMX Moderator: Kimberly Russell, SSGA SSGA’s Russell – this year we saw days with levels of off exchange trading rising over 50 percent. MEMX’s Kellner said he would like to see more trading flow come on exchange. He noted the importance of the public quote. Mecane said Citadel wants Rule 605 reform but there are a number of issues “in the weeds” which results in Rule 605 underestimated price improvement.   Panel: Industry Update on T+1 Settlement Panelists: John Abel, DTCC & Bob Walley, Deloitte Moderator: Tom Price, SIFMA DTCC’s Abel said T+0 means either real time gross settlement or end of day settlement – and there is scant interest for real time gross settlement.   Interview: Doug Cifu, CEO, Virtu Financial Moderator: Tim Mahoney, Former…

  This article was penned by CAPIS   Were you able to attend last week’s 88th Annual Security Traders Association Annual Conference in Washington D.C.? Curious about the topics and discussions that took place? CAPIS was there for the first in-person industry-wide STA confab since 2019 and presents a collection of select highlights and tidbits from the event.   Panel: Competitive Landscape between Brokers & Exchanges Panelists: Joe Mecane, Citadel Securities & Jonathan Kellner, MEMX Moderator: Kimberly Russell, SSGA SSGA’s Russell – this year we saw days with levels of off exchange trading rising over 50 percent. MEMX’s Kellner said he would like to see more trading flow come on exchange. He noted the importance of the public quote. Mecane said Citadel wants Rule 605 reform but there are a number of issues “in the weeds” which results in Rule 605 underestimated price improvement.   Panel: Industry Update on T+1 Settlement Panelists: John Abel, DTCC & Bob Walley, Deloitte Moderator: Tom Price, SIFMA DTCC’s Abel said T+0 means either real time gross settlement or end of day settlement – and there is scant interest for real time gross settlement.   Interview: Doug Cifu, CEO, Virtu Financial Moderator: Tim Mahoney, Former…

Virtual Panel RECAP: Transition Management Analytics – What Really Matters?

CAPIS Insights

CAPIS Insights

posted by CAPIS on 10/05/2021 at 12:57 pm
by CAPIS on 10/05/2021

This article was penned by CAPIS Last week CAPIS held its latest virtual panel, featuring panelists Tom Schoenbeck (Aon Investments), Phil Jandora (Willis Towers Watson), and CAPIS’ own Bryan Gibbs and Ben Jenkins. The discussion focused on the value and purpose of Transition Management reporting at the post-trade and pre-trade levels. Click here for a video of the virtual panel   The presentation addressed the following topics: Post Trade (4:50 – 17:10) Strategy and implementation are important, but equally is the transparency of reporting. (5:14) When looking at a Transition event start at the 30,000 foot level and drill down as needed (6:05) Highlight trade execution and quality (ex: avoid “lazy trading”) (7:10) From a consultant’s perspective, post-trades are used to validate costs and the TM provider’s execution and strategy (8:27) Tendency to focus on total execution (e.g., close to mean cost estimate), but consultants’ job is to really understand what drove performance (“good” or “bad”). (8:50) Time spent on a post-trade is important – validate performance and align or confirm expectations amongst all parties (client, consultant, TM provider). (10:50)   Pre Trade (18:10 – 26:10) Sometimes seeing multiple strategies can be overwhelming. Usually the best (maybe, two) strategies make…

This article was penned by CAPIS Last week CAPIS held its latest virtual panel, featuring panelists Tom Schoenbeck (Aon Investments), Phil Jandora (Willis Towers Watson), and CAPIS’ own Bryan Gibbs and Ben Jenkins. The discussion focused on the value and purpose of Transition Management reporting at the post-trade and pre-trade levels. Click here for a video of the virtual panel   The presentation addressed the following topics: Post Trade (4:50 – 17:10) Strategy and implementation are important, but equally is the transparency of reporting. (5:14) When looking at a Transition event start at the 30,000 foot level and drill down as needed (6:05) Highlight trade execution and quality (ex: avoid “lazy trading”) (7:10) From a consultant’s perspective, post-trades are used to validate costs and the TM provider’s execution and strategy (8:27) Tendency to focus on total execution (e.g., close to mean cost estimate), but consultants’ job is to really understand what drove performance (“good” or “bad”). (8:50) Time spent on a post-trade is important – validate performance and align or confirm expectations amongst all parties (client, consultant, TM provider). (10:50)   Pre Trade (18:10 – 26:10) Sometimes seeing multiple strategies can be overwhelming. Usually the best (maybe, two) strategies make…

September Research Call RECAP: DataTrek Says Market Recovery Steady as Few Disruptions Seen

News CAPIS Insights General

General

posted by CAPIS on 09/21/2021 at 10:26 am
by CAPIS on 09/21/2021

This article was penned by CAPIS Last week CAPIS held its September 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: Millennial Investors Resemble Day Traders and Are Here to Stay (3:11) Colas opened with a statistic from Robinhood: the favored trading app for younger investors has reached 18 million funded user accounts but has not grown further since its peak in January 2021. (4:06) The retail trader nowadays buys market dips — rather than a more traditional buy-and-hold strategy. (6:05) These newer investors’ trading behavior isn’t novel as it resembles the day traders of yore – buying at the open and selling at the close. On the macro level, these types of traders will not disrupt the capital markets. (6:22) These nascent market participants favor environmental, social, and governance (ESG) investing, causing firms like BlackRock to ramp up product offerings to address the shift in investor priorities. (7:37) They also favor companies they can understand…

This article was penned by CAPIS Last week CAPIS held its September 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: Millennial Investors Resemble Day Traders and Are Here to Stay (3:11) Colas opened with a statistic from Robinhood: the favored trading app for younger investors has reached 18 million funded user accounts but has not grown further since its peak in January 2021. (4:06) The retail trader nowadays buys market dips — rather than a more traditional buy-and-hold strategy. (6:05) These newer investors’ trading behavior isn’t novel as it resembles the day traders of yore – buying at the open and selling at the close. On the macro level, these types of traders will not disrupt the capital markets. (6:22) These nascent market participants favor environmental, social, and governance (ESG) investing, causing firms like BlackRock to ramp up product offerings to address the shift in investor priorities. (7:37) They also favor companies they can understand…

Subscribe to Stay Informed

Stay informed by subscribing to information that matters to you. We'll email you when we post new content you want to see.