Greenwich Associates has hired Kevin McPartland, formerly a director at BlackRock Inc., as a principal in its market structure and technology advisory service.
McPartland, 35, will research derivatives and the financial technology sector and how regulatory changes around the globe are affecting those industries, he said in a telephone interview last week. Previously a senior analyst in New York at consultancy Tabb Group, McPartland said he wanted to get back to analyzing the challenges Wall Street faces.
“I really like being able to talk to everyone in the market to form an informed opinion,” he said. Greenwich undertakes thousands of interviews for one piece of research, while previously in his career he would talk to 40 or 50 people for a report, he said. “No one else has the scale to do the kind of interviews and research that Greenwich does.”
Firms from the world’s largest banks to small hedge funds and institutional money managers are relying more on consultancies and researchers such as Greenwich and Tabb to understand the effect of regulatory change in the U.S. and Europe as markets face new rules following the worst financial crisis since the Great Depression.
The Dodd-Frank Act, signed into law by President Barack Obama in July 2010, expanded the Federal Reserve’s power to oversee the largest financial institutions and gave regulators new tools aimed at preventing a repeat of the 2007-2009 financial crisis. It imposed new rules on derivatives, for mortgages and limits the ability of banks to trade on their own account.
Obama met with Federal Reserve Chairman Ben S. Bernanke and other financial regulators Aug. 19 to urge quicker progress on implementing Dodd-Frank. The closed-door meeting at the White House also included Treasury Secretary Jacob J. Lew and Gary Gensler, chairman of the Commodity Futures Trading Commission.
Regulators in Europe are also working to complete rules to move most swaps trading to regulated exchanges or similar systems and have the transactions backed by clearinghouses. The $633 trillion over-the-counter derivatives market complicated efforts to resolve the crisis when regulators couldn’t determine how interconnected banks had become by trading the unregulated contracts with each other.
Credit-default swaps were used to replicate pools of mortgages that banks created to sell to investors in what were known as synthetic collateralized debt obligations.
McPartland, who was a director in the electronic trading and market structure team at BlackRock from April 2012 until July, said Greenwich will attempt to sell its research to new companies such as exchanges and technology providers.
In the past, the firm would present the research it gathered from bank clients such as hedge funds and money managers to dealers and typically didn’t analyze the data for written reports. That’s changing, he said.
“It’s a whole new client base that we never targeted before,” he said.
Earlier this month, Greenwich released a report with McKinsey & Co. that said the corporate bond market is unsuitable for full electronic trading. The larger number of debt securities compared with listed stocks and the lower frequency with which they trade make the transition unlikely, the consultants said in the joint survey.