In other news, Clearstream embraces Rcloud, MarketAxess buys Pragma, and FINRA lists a blockchain training course.
Investors Fled to Low-Cost Funds: Morningstar
Investors paid less in fund fees last year mostly because they went for low-cost funds, according to Morningstar’s U.S. Fund Fee Study, an annual review.
“Asset-weighted fund fees fell to 0.37 percent in 2022 from 0.40 percent in 2021. This might not sound like much, but it amounted to $9.8 billion in savings for fund investors,” according to an article about the study published by Morningstar, “Investors Piled Into the Cheapest Funds in 2022.”
“Fund investors themselves deserve much of the credit for this movement, as the shift toward low-cost funds has been the primary driver of this decline. While there’s plenty to celebrate, investors shouldn’t stop here. Although fund costs have come down, the total costs borne by investors haven’t necessarily followed in lockstep,” according to the story.
“In 2022, the asset-weighted average expense ratio across all mutual funds and exchange-traded funds (not including money market funds and funds of funds) was 0.37 percent. This is less than half of what investors paid in fund fees, on average, in 2002,” according to Morningstar
“These savings have disproportionately accrued to investors in passive funds. The asset-weighted fund fee across all passive funds has declined 60 percent since 1994, landing at 0.12 percent in 2022. Meanwhile, the asset-weighted fee paid by investors in active funds stood at 0.59 percent in 2022 — a 40 percent decline over the same period. The trend continued in 2022, as passive funds saw their asset-weighted average fees drop 10 percent from 2021 compared with 3 percent for active funds,” according to Morningstar.
More about the study’s findings can be found here: https://bit.ly/47ngBEN
Clearstream to Migrate Regulatory Reporting to ‘RCloud’
Clearstream Banking AG, central securities depository and provider of global post-trade services, will be using the Rcloud technology from Regnology, a regulatory reporting software solutions provider, officials say.
The Rcloud system works with Google Cloud Platform (GCP). Clearstream is Deutsche Börse Group’s post-trade business for the global markets.
The migration of Clearstream’s on-premise regulatory reporting to the cloud is subject to regulatory approval. “Being an international financial infrastructure provider, Clearstream abides by strict compliance requirements of German and Luxembourg authorities,” according to the announcement. Regnology launched its Rcloud solution in partnership with Google Cloud in November 2022.
“Clearstream’s decision to move to the Rcloud platform is a landmark moment because of the trust that Clearstream put in our technological partnership with Google Cloud,” says Antoine Moreau, chief technology officer (CTO), for Regnology, in a prepared statement.
Already a client of Regnology, Clearstream Banking AG has used the vendor’s “regulatory expertise and technology to support their reporting obligations for years,” says Maciej Piechocki, chief revenue officer, Regnology.
“We are very satisfied to be one of the first institutions to sign on to the Rcloud platform. In Regnology, we found an excellent partner for the next step on Clearstream’s cloud journey, supporting our clients with state-of-the-art regulatory reporting solutions,” says Volker Rriebesell, CTO at Clearstream Banking.
Clearstream operates the German and Luxembourg central securities depositories and an international central securities depository for the Eurobonds market, officials say.
Pragma Acquired by MarketAxess
MarketAxess, the operator of a leading electronic trading platform for fixed-income securities, will acquire Pragma, a quantitative trading technology provider specializing in algorithmic and analytical services in equities, FX and fixed-income, officials say.
Pragma’s multi-asset trading solutions are in use by asset managers, hedge funds, broker-dealers, banks, and exchanges around the world, officials say. “The company’s algorithmic trading platform and quantitative execution solutions provide equities and FX clients with automated, AI driven, multi-asset and multi-market execution solutions. Last year, Pragma handled over $2 trillion of algorithmic order flow in multiple asset classes on behalf of clients across over 50 venues,” according to the announcement.
MarketAxess officials say that earlier this year it facilitated the first “client algorithmic trade executed across multiple protocols in U.S. credit using Adaptive Auto-X, the company’s multi-protocol automated execution solution currently in pilot,” officials say.
Three years ago, Pragma launched what it calls “a deep neural network-based execution engine that controls the routing, sizing, pricing, and timing of orders, and has shown a robust improvement in execution quality,” officials say. “Pragma’s algorithmic platform and technology team will help MarketAxess accelerate development of execution algorithms and data-driven analytics across all fixed-income products.”
“In addition to accelerating our leadership in the fixed-income automation and algo space, Pragma’s years of expertise with FX algos provides a unique opportunity for FX hedging solutions for our Emerging Market clients,” says Chris Concannon, CEO of MarketAxess, in a prepared statement.
No details about the financial transaction were reported. The acquisition is expected to close in the fourth quarter of this year, subject to the satisfaction of customary closing conditions, officials say. Broadhaven is serving as financial advisor and WilmerHale LLP is serving as legal adviser to Pragma. Weil, Gotshal & Manges LLP is serving as legal advisor to MarketAxess.
FINRA Recognizes DACFP’s Certificate in Blockchain
The Financial Industry Regulatory Authority (FINRA), the self-regulatory organization (SRO) for U.S. broker-dealers, is listing the DACFP Certificate in Blockchain and Digital Assets from the Digital Assets Council of Financial Professionals as a professional designation, according to DACEP officials.
“Financial professionals who complete the 15 CE-credit course are now entitled to display the CBDA credential, for Certified in Blockchain and Digital Assets,” according to the council.
“DACFP’s certificate program debuted in 2021 and was completely revised earlier this year. The online self-study course has five tracks, with programs for advisors, back-office executives, investors, crypto professionals and ex-US professionals and investors,” according to DACFP officials. “The content is taught by a world-class faculty, including Scott Stornetta, co-inventor of blockchain technology, and Anders Brownworth of the Boston Federal Reserve. Thousands of financial professionals from 37 countries have completed the program, which is the oldest and largest of its kind.”
“Attaining FINRA listing as a professional designation reflects not only the quality of the course, but the importance of becoming fluent in this new asset class,” says Ric Edelman, founder of DACFP, in a prepared statement. DACFP’s flagship program is the Certificate in Blockchain and Digital Assets.
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