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Big Data’s Big Opportunity in the Bleak Economy of 2013

“Companies that have embraced the future have been rewarded,” CNBC’s Jim Cramer said on Mad Money, highlighting SAP’s forward-thinking mindset — and rising stock price. “The company’s last quarter — it was fabulous — it was the best third quarter in its history.”

Predictions 2013 Big Data 12-26-2012-AThe 40-year-old enterprise software provider is also poised for a bright 2013 thanks to the past year’s initiatives, including:

  • SAP HANA’s market blitz
  • Focus on mobility with integrating Sybase
  • Acquisition of cloud computing powerhouse Ariba.

Walldorf-based SAP does not even seem to be weighed down by faltering European economies.

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Dodd-Frank Stands Technically Corrected and Small Banks Lose

“People got a bit lax,” Queen Elizabeth II said last week of the time leading up to the financial crisis. “Perhaps it was difficult to foresee.”

Regulation with Teeth 12-17-2012The U.K.’s monarch also lamented that her nation’s Financial Services Authority “didn’t have the teeth” to curb risky business through 2008. And dental enhancements for global banking regulators continue to be a favorite topic from Brussels to Washington, D.C.

Mario Draghi, president of the European Central Bank and The Financial Times’ recently-named Person of the Year for 2012, advocated broader authority for the European Union following a breakthrough arrangement on Thursday. Eurozone finance ministers hammered out a deal to make the ECB the region’s central banking overseer.

“The ‘single supervisory mechanism’ (SSM) is just the first, and easiest, step in a banking union plan designed to prevent a repeat of the financial contagion that dragged down banks and sovereigns in the debt crisis,” The Financial Times said. “The next phase – agreeing on a common resolution authority to oversee the orderly winding down of insolvent lenders — is likely to be even more fraught.”

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Too Big To Fail Makes a “Fine” Mess for British Banks

Solving the too-big-to-fail problem in banking just got international. Authorities could seize a Global Systematically Important Financial Institution (GSIFI) — and dismantle it as appropriate — under a joint plan by the Federal Deposit Insurance Corporation (FDIC) and the Bank of England released Monday.

Too Big To Fail 12-13-2012“For many GSIFIs, this strategy holds the best possibility of preserving stability while removing taxpayer support,” wrote FDIC chairman Martin Gruenberg and BoE deputy governor Paul Tucker in The Financial Times. “It holds shareholders, creditors and management in a failed GSIFI accountable for its losses.”

Strong economic growth in in the U.S. and U.K. may provide strong positions to enact these reforms. Each country’s average long-term economic performance is on the rise, according to a study by Paris-based economic forum Organisation for Economic Co-operation and Development, also released on Monday.

This may make it sound as if all is well in trans-Atlantic finance. But it came to light this week that two of the U.K.’s biggest banks will pay record fines of more than $2.5 billion to U.S. regulators.

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Spending Wisely on a Big Data Strategy

Capital markets firms are falling behind in Big Data as industries from utilities to manufacturing successfully employ enterprise-class solutions to improve operations. But capital markets firms aren’t keeping up either because they’re too new on the block or because compliance drains their coffers, according to TABB Group’s Paul Rowady.

Big Data Strategy 11-28-2012“Investing in new technologies and solutions is counter-intuitive during a downturn (and capital investment statistics of late support this claim),” Rowady said Monday. “Capital markets firms need to selectively strive against this urge.”

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Lighting Up Dark Pools and Dissing Dodd-Frank

Shadow banking may sound like the demon brainchild of Dr. Evil and Gordon Gekko, but about half of the banking system’s assets are in this mostly unregulated realm of finance. And global regulators at the Financial Stability Board recently looked at taming that realm.

Shadow Banking and Dark Pools 11-21-2012Liquidity buffers, leverage limits and standards on how to make calculations were among the FSB’s suggestions, AFP reported Sunday. The largest shadow banking sectors are in the U.S. and the Eurozone, but systems in other geographies are about five times the size of GDP, as with Hong Kong and the Netherlands.

Policymakers around the world are trying to shine lights on shadier parts of the financial services industry. But authorities are finding transparency in surprising places — and hope in some unlikely places.

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Regulatory Reform: It’s The System, Not The Software

Trading stood still on more than 200 companies Monday, as a server kept the New York Stock Exchange from publishing quotes for most of the day. Taken alone, this seems like a technical glitch.

Regulatory Reorm 11-16-12But combined with earlier problems, such as Knight Capital in August, Facebook in May, BATS in March and other issues this year, the glitch begins to look like a SNAFU. And U.S. regulators taking note.

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Dodd-Frank and the Global Culture Change

Author’s Note: Happy Veterans Day!

“The impact of Dodd-Frank for foreign banks is going to be widespread and long-lasting,” according to a recent report by Boston-based research and consulting firm Celent. “The new rules would alter the trading strategies and operations of most of the large swap trading firms globally.”

Dodd-Frank Global Culture Change 11-12-2012U.S. firms would see less international business if those foreign banks dodge new compliance costs by curtailing their American trading activities. Celent released its report last week, as foreign regulators warned the U.S. Commodity Futures Trading Commission (CFTC) that its proposed new derivatives rules could brutalize global markets.

The Dodd-Frank Wall Street Reform and Consumer Protection Act is a complex beast, and its potential impact on international transactions made it the hottest topic at last week’s Sibos Osaka 2012, according to Ruth Wandhöfer of Citi’s Global Transaction Services. Yet much of Dodd-Frank is behind schedule, with the bulk of it still unwritten.

The ever-nebulous implications of such a far-reaching regulatory scheme is a source of concern for many financial institutions in the U.S. and abroad.

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Not-Ready-for-Real-Time Players Handicap Themselves

Three in five financial institutions cannot perform real-time reconciliation because they haven’t started working on it for any of their asset classes, according to a recent survey. And they don’t think they’ll be ready to start work on this regulation-essential project before the end of next year, stated the survey by London-based software solutions provider Gresham Computing.

Ready for Real-Time 11-05-2012Impending regulatory regimes, such as the Dodd-Frank Act and Basel III, could soon require different systems to adopt new reconciliation requirements, assuring that proper collateral amounts get delivered. But almost half of the survey respondents in New York and London indicated that they expect delays to inter-system reconciliation.

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Romney’s Devil in Dodd-Frank’s Details

If any publicity is good publicity, the Dodd-Frank Act got a healthy shot in the arm from the two candidates for U.S. president during their first debate on Wednesday, with each contender discussing financial regulation at length.

Romney Dodd-Frank 10-04-2012“You have to have regulation, and there are some parts of Dodd-Frank that make all the sense in the world,” former Massachusetts Gov. Mitt Romney said. “You have to have transparency, leverage limits.”

But Romney was mostly critical of the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed under President Barack Obama’s first term. A key criticism was that parts of the act are vague and undefined, leaving the markets to decipher what it means to be compliant. Yet Romney didn’t offer much detail about his own plans for financial reform.

A federal court was much more specific when striking down part of Dodd-Frank last week.

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Europe Takes Control of High-Speed Trading

The European Parliament’s financial committee decided last week to rein in the velocity of high-frequency trading. The Economic and Monetary Affairs Committee’s unanimous vote paves the way for a half-second speed limit on those using computers to execute lightning-fast stock deals.

Europe Reins In HFT 10-02-2012“All market players and trading venue operators would be required to lay down clear rules and procedures for fair and orderly trading, objective criteria for executing orders efficiently and transparent criteria for determining which financial instruments may be traded via their systems,” the committee stated.

The speed limit would be part of Europe’s new financial driver’s manual, the Market in Financial Instruments Directive. True, MiFID still requires ratification by national governments, but that’s not so far-fetched.

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