Algorithm traders abroad could probably make money out of the event but in the UAE such high frequency does not really exist as markets are not as liquid as those in New York and London. Ben Stansall / ImageForum
Algorithm traders abroad could probably make money out of the event but in the UAE such high frequency does not really exist as markets are not as liquid as those in New York and London. Ben Stansall Show more

Markets

Blink and you’ll miss it: high frequency traders brace for July’s extra second

While precautions are being taken around the world to avoid any glitches, there is a measure of uncertainty for high-frequency traders who are used to making bundles or losing just as much in the space of milliseconds.

Mahmoud Kassem

June 29, 2015

The world is approaching another Y2K moment and preparing for an extra second being added to the clocks in the early hours of tomorrow.

While precautions are being taken around the world to avoid any glitches, there is a measure of uncertainty for high-frequency traders who are used to making bundles or losing just as much in the space of milliseconds.

The extra second is being added because the rotation of the Earth is gradually slowing, scientists say. “It is indeed true that time stamp is the bigger issue in protocol,” said an investment banker.

Steen Jakobsen, the chief investment officer of Saxo Bank, the Danish investment bank, said: “The industry should be prepared and I’m sure some high-frequency traders will stop trading due to this ‘prepared glitch. “It also shows how dependent we are on ‘internet time’ and I remain of the opinion that IT security constitutes the biggest risk overall for the financial system.”

The Emirates Metrology Institute (EMI) yesterday said that a leap second will be added to UAE standard time just before 4am on July 1 when clocks will read 03:59:60.

The move aims to conform with other timing centres around the world, which will also add a leap second at the same time, 11:59:60pm Greenwhich Mean Time tonight.

The extra second is being added to adjust for the slight differences in time between highly accurate atomic clocks and the rotation of the globe, EMI said.

The Abu Dhabi Stock Exchange, Nasdaq Dubai and a number of banks were not immediately to comment on the matter. ADS Securities, the forex broker, declined to comment.

Tariq Qaqish, the head of asset management at Al Mal Capital, said algorithm traders abroad could probably make money out of the event but in the UAE such high frequency does not really exist as markets are not as liquid as those in New York and London.

mkassem@thenational.ae

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Essentials

The flights

Emirates and Etihad fly direct from the UAE to Geneva from Dh2,845 return, including taxes. The flight takes 6 hours. 

The package

Clinique La Prairie offers a variety of programmes. A six-night Master Detox costs from 14,900 Swiss francs (Dh57,655), including all food, accommodation and a set schedule of medical consultations and spa treatments.

Other workplace saving schemes
  • The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
  • Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
  • National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
  • In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
  • Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
 
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
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Killing of Qassem Suleimani

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How to avoid crypto fraud
  • Use unique usernames and passwords while enabling multi-factor authentication.
  • Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
  • Avoid suspicious social media ads promoting fraudulent schemes.
  • Only invest in crypto projects that you fully understand.
  • Critically assess whether a project’s promises or returns seem too good to be true.
  • Only use reputable platforms that have a track record of strong regulatory compliance.
  • Store funds in hardware wallets as opposed to online exchanges.
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Based: Dubai, UAE
 
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