Such Changes Would Bring MBS Closer to Corporate Bond Market --Kroszner
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Kroszner: Data Suggest Home Mortgage Debt Hasn't Risen at All Since Spring '08
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Kroszner: New Infrastructure for MBS Could Increase Transparency, Promote Indepndent Credit Analysis
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Data Suggest Near-Term Challenges for Housing Mkt Stabilization --Kroszner
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Kroszner: Investors Will Remain Skeptical of 2-Layer Securitized Products in Foreseeable Future
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Kroszner: MBS Securitization Contracts Should be More Homogenous, Cash Flow Structures Less Complex
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Securitization of MBS Still Worthy for Cost-Lowering Effects on Home Loans --FED's Kroszner
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Securitizations Should Involve Fewer, Larger MBS Tranches --Kroszner
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Correction: BOC Injects C$3bln in Term Repos
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Six Gunmen Shot By Indian Security at New Dehli Airport --BBC
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Of The Major Parties at Auto Hearing, Only UAW Has Done Something --Dodd
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BOC to Buy Back Up to C$500mln of Bonds on Wednesday
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Congresss Will Try Passing Auto Bailout Bill Before Leaving
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Senate Banking Committee Hearing On Auto Bailout Ends
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30yr Yield Drops to Record Low for 4th Day -- 3.0532%
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Stocks Off New Lows - S&Ps Down 4% at 833, Dow Down 3.5% at 8270
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'Not Persuaded' on Auto Bailout --Shelby on Bloomberg TV
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S&P Just Off Lows, Down 3.2% to 843
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Chrysler "More" Than Happy to Provide Assurances Taxpayers Will Get Money Back
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Citadel down 47% YTD - WSJ
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Tabb Group publishes new research on automated algorithms

Tabb Group has released a new report by analyst Adam Sussman that highlights probable new developments in algorithmic trading. Sussman?s view is that as trading-oriented algorithms begin to automate more of the execution process, more inefficiency will be removed and the cost of finding and taking advantage of inefficiency will increase.

Therefore, the report predicts that the next generation of equity-oriented trading algorithms will be more flexible, react to unexpected events, handle complex relationships, and begin to manage part of the investment process. Algorithms will automatically adjust an execution strategy if the target benchmark is not being met. More complex relationships will also be incorporated into the models, linking related stocks, indices and derivatives and adjusting the strategy based on relative performance. However, as the algorithms become more complex, there is a danger that the interfaces will become cluttered and indecipherable.

However, Sussman?s view is that the new wave of algorithms is about more than just human communication, but also about the convergence of data. Information across multiple disciplines will have to come together to take trading-oriented algorithms to the next level, including: real-time market data, technical analysis, quantitative research, transaction cost research (TCR), and risk management. The algorithm development group that can seamlessly integrate data will have the best chance at success as we march towards a holistic approach to trading that incorporates concepts across many disciplines to design and implement an execution strategy.

The report suggests a two way squeeze between declining commission revenues/ compressing spreads and rising research and development costs. The volume, as well as other products, required to make an algorithmic platform profitable will be difficult for all but the largest firms to attract. Meanwhile, low-cost algorithmic platforms are available to the buy side, making it even harder for the mid-tier broker/dealers to effectively distribute their products.

Sussman?s anticipates that this changing environment will have a particular effect on hedge funds and their brokers. Over the last few years, hedge funds have been rapidly expanding the instruments they trade because of the rapidly diminishing amount of opportunity in U.S. equity markets. The kind of hedge fund that is likely to dive into multi-asset class trading is also the kind of investment manager that will be quick to adopt advanced trading tools. As hedge funds move into these asset classes, brokers are working on a number of electronic products to capture this new order flow.

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