With yesterday's announcement that the Financial Services Authority (FSA) has approved the launch of Turquoise, it seems that the pan-European trading platform will launch on-time in early September. Getting the FSA's blessing is no easy task, but obviously an absolute necessity and the greatest hurdle to launching a trading facility. Some FSA approvals are rumoured to have taken up to six months in the past, though the regulator must surely be getting used to signing these things off, given the proliferation of MTFs and dark pools in Europe.

It's been a long gestation period for Turquoise. First announced by 7 investment banks in late 2006 and operating very much in the shadows until it hired CEO Eli Lederman late last year, Turquoise was often criticised for its reticence and lack of a public face. This year the project has been seen to gather momentum with regular announcements and appearances at conferences. I heard someone ask recently how it is that Lederman and Peter Randall (Chi-X CEO) ever get any work done, given that they spend most of their time facing off against each other at trade shows and conferences. The power of delegation.

While the champagne may have been flowing at Turquoise's city office when the FSA approval came through, the team still has its work cut out if they are to pull it all off successfully. They've made a courageous plan to launch the MTF over a three-week period, rolling out to all European markets at once. If it works, it will be impressive. But according to those who have done it in the past, a soft launch is better. Look back at the Chi-X archives and you won't find many pre-launch press releases. People knew it was happening but the real noise was only made a few months in, when the platform was already gathering volume. Even now, Chi-X is only active in nine European markets, with five more still under development. The Turquoise team must have done their homework, but it will be interesting to see how their "all guns blazing" launch is met by the market.

Amidst all this buzz and speculation around European liquidity fragmentation, an interesting issue came up last week. Talking to another financial journalist who covers the same markets, I was asked how it is that, given MiFID's focus on improving transparency and raising the quality of service for the end investor, how is it that the directive has spurned a whole set of new trading venues, many of which operate in the dark without displaying their order books? Surely that is against the grain of MiFID? An interesting question. Despite the ranting and raving about dark pools, I haven't heard many people criticize their lack of transparency. Perhaps that is because, even though they are non-transparent, dark pools potentially offer better execution by not revealing pre-trade information and so limiting market impact.

So, European Commission, FSA, please look away now. But could it be that transparency and best execution - two central tenets of MiFID - are actually incompatible in the context of non-displayed liquidity?

Fascinating column by David Brooks in today's New York Times. He deflates somewhat the myth that Barak Obama's war chest comes primarily from small donors. He is beating John McCain steadily with large contributions from individuals who work for large corporations.

This graff caught my eye:

When you break it out by individual companies, you find that employees of Goldman Sachs gave more to Obama than workers of any other employer. The Goldman Sachs geniuses are followed by employees of the University of California, UBS, JPMorgan Chase, Citigroup, National Amusements, Lehman Brothers, Harvard and Google. At many of these workplaces, Obama has a three- or four-to-one fund-raising advantage over McCain.

And then Brooks, the op-ed page’s mild conservative commentator, finishes with this eye-raiser:

Over the past few years, people from Goldman Sachs have assumed control over large parts of the federal government. Over the next few they might just take over the whole darn thing.

Anyone have any examples? I’m curious.

Happy Independence Day! Incisive Media's London office is eerily quiet on those rare days that America is on holiday but the UK is not. The phone rings less, the inbox is strangely bereft of emails and yet we still must work. Perhaps that is right for a day that celebrates the USA's indepencence from Britain. But the lull does provide some time to look back at what has been grabbing the headlines in the financial world this week.

The story of Samuel Israel, former CEO of the collapsed Bayou hedge fund, seems more suited to an action movie than the financial press. But Israel has made an international name for himself in the last month, albeit for the wrong reasons. Convicted for defrauding his investors of $450 million, Israel was sentenced to a 20-year prison sentence but faked his own death last month and went on the run. Police found his abandoned car on a bridge in upstate New York, with the words "Suicide is Painless" scrawled on the bonnet, but no body was found. Earlier this week Israel showed up at a Massachusetts police station on a Yamaha scooter, having been persuaded by his mother to return. Now he is languishing in jail, having been refused bail, and may face an extra ten years added to his sentence for fleeing. So not much of an Independence Day for the fraudster.

But despite the gripping story, it's hard to feel sorry for Samuel Israel. How many more cases will there be, I wonder, before rogue traders and dodgy hedge funds can be consigned to the dustbin of history? For all their glamour, the likes of Nick Leeson, Jerome Kerviel and Samuel Israel do very little to help the reputation of the financial services industry. And to add insult to injury, some of them serve their time and then make even more money on the after-dinner speaking circuit than they ever cheated out of their investors.

If it wasn't for the sluggish pace of change that comes from the FSA, SEC et al, my weight would be fully behind their initiatives whose aim is to improve transparency and eliminate rogue trading for good.

But I suppose nothing ever happens overnight.

I was wrong.

In the fallout of the mortgage crisis and the subsequent layoffs on Wall Street and beyond, I predicted a new wave of stiff regulatory initiatives. Like a typical doomsayer, I expected Sarbanes Oxley II: The Return.

So far -- nothing.

There have been a few congressional hearings and today the Fed announced new rules for handing out loans for mortgages, but other diversions have taken center stage. With a fierce presidential contest under way, an unsteady stock market and insanely high gas prices, politicians are hesitant to place new regulations on the securities industry. The last thing this shaky economy needs, you can hear them mutter to themselves, is more restrictions.

The mortgage meltdown had plenty of victims and bad actors. Questionable companies sold mortgages to people who didn’t understand them. The investment firms collected these foul-smelling mortgages and wheeled and dealt them en masse. It seems only Goldman Sachs bit the bullet and offloaded the bad risk just in time. That said, there are still plenty of layoffs happening inside the most secretive investment firm on the planet -- add one part Mafia, two parts Kremlin and a splash of Nixon White House.

One colleague at Waters thinks that people are waiting for the presidential election to be over before deciding what to do next. This makes sense. Presidential elections have a huge psychological impact in this country. No matter who the winner is, some will think it is either four years of the same or a gamble on a new administration. But all in all, voters will be relieved and will want to get back to work in restoring one of the strongest economies on the planet.

In a tight race -- be it presidential or economic -- handing out speeding tickets might not be the best idea.

Note: This first appeared in Waters News, a weekly newsletter for the financial IT community. Subscribe today.

If it's true that misery loves company, then it also must require a great soundtrack.

According to research from a U.K. entertainment Web site TheFilter.com, the number of people listening to snippets of gloomy music or rating the tracks as positive has soared in the last month. In fact, the site has seen well-known downbeat bands like The Smiths climbing its popularity charts 32 percent faster than happier types of music.

More people are willingly listening to depressing music, and who can blame them? The down-and-out greenback, the astronomical price of crude and worsening global food crisis can make anyone whistle a less-happy tune. With no end in sight to the current economic state, I wonder how long it’ll be before all happy beats are wiped off the radio waves.

Now I don’t know if there's research that shows whether listening to cheerless tunes helps people whose mood is marred by monetary woes, but realizing that your discretionary income allows no way to buy the sad songs because the price of food staples has nearly doubled will not help.

Below is the Ten Most Popular Depressing Songs, as rated by The Filter users in order. What do you like to listen to when you’re in the financial dumps?

1. Amy Winehouse - Tears Dry On Their Own
2. The Beatles - Eleanor Rigby
3. The Smiths - Heaven Knows I'm Miserable Now
4. Coldplay - Trouble
5. The Verve - The Drugs Don't Work
6. Pink Floyd - Comfortably Numb
7. Blur - No Distance Left To Run
8. Radiohead - How to Disappear Completely
9. R.E.M. - Everybody Hurts
10. Joy Division - Love Will Tear Us Apart

-- Oksana Poltavets, US Reporter, Dealing with Technology

Anyone that has not been living under a very large rock for the last year will be painfully aware that these are difficult times -- despite what US presidential hopeful John McCain's advisors might say.

Baby boomers are wondering if they can retire as early as they wanted to, some individuals are getting into debt just to buy groceries and other essentials, and the current oil-price crisis has achieved what once seemed impossible -- more and more Americans are considering buying smaller, more energy-efficient cars. (So the recession might at least prove good for the environment...)

The current economic climate sucks. Badly. So what, apart from laying off their employees left right and center, are financial services firms doing to cut costs and make themselves leaner, now that the sovereign wealth funds that were initially so generous have turned their attention to landmark buildings in New York?

It seems that some overseas operations are finding themselves superfluous. Citi just sold its German consumer banking business to French bank Credit Mutuel in a deal that will earn Citi around $4 billion after tax. Considering the firm's new CEO Vikram Pandit has pledged to sell off $400 billion of assets, you can't help thinking there is still a long way to go... And wondering how much will be left of the banking giant in the end?

One industry source told me that some banks are looking to outsource yet more functions that they have always done in-house. Many global banks for example that have built proprietary FIX networks are now turning to third-party network providers in a bid to remove unnecessary costs from their balance sheets. And proving that it is not just traders that have been affected by job cuts, Barclays recently announced it would axe 1800 UK IT jobs in favor of offshoring the work to centers of excellence around the world.

What else are firms doing to trim themselves down? What extra weight are they throwing overboard to keep their ships afloat? And how far can they take this strategy before they find themselves jettisoning the mast and sails and are forced to abandon ship?

Where have all the good times gone?

Just ask the people who render The Wall Street Journal's iconic stiple drawings of political leaders and CEOs. The Journal has drafted its artist(s) for new portraits of business leaders that are more, er, economically appropriate. Just in time for Citigroup's announcement of a $2.5 billion shortfall, we now have a new image of a seriously baffled CEO Vikram Pandit. In his new dot depiction, Treasury Secretary Henry Paulson looks like he and only he can stare down this recession.

Check out the Columbia Journalism Review's writeup on the new face of seriousness.

All politics is local. And so is the impact of bonuses. New York Governor David Paterson predicts that Wall Street firms will cut bonuses by 20 percent this year. What's it to him? A lot, apparently. The governor predicts that each 10 percent reduction in bonuses costs the state $350 million in tax revenues.

Reuters reports that the Gov also predicted that the Empire State could lose nearly $1.7 billion in taxes due to the sluggish profits for Wall Street's financial firms.

According to Reuters:

Paterson said he was considering lobbying federal officials for aid to entities like Bear Stearns, Lehman Brothers and federally-sponsored organizations, referring to mortgage finance giants Fannie Mae and Freddie Mac.

Bear Stearns this spring was forced into the arms of JPMorgan Chase after investors lost confidence in its ability to cope with subprime losses. Lehman Brothers was later rattled by similar concerns, but remained independent.

Last week, Paterson called on Congress to enact a second economic stimulus package that would give states funds for job-creating projects, like building roads and bridges, and boost its share of Medicaid, the federal-state health insurance program for the poor, disabled and elderly.

With Wall Street on the rocks, more than over-paid traders suffer.

If weeks had labels in this industry then this week might well come to be called the "Week of the OTC derivative". Sounds enticing, right? Just like buses, announcements about particular niches in the broader financial world tend to come all at once. Regulations, trading venues, order management systems. Chances are if you see one announcement, two more will follow on its coat tails.

No sooner had trade processing specialist Markit gathered the UK's financial press corps together on Monday to make its DTCC partnership announcement than noises started coming from Frankfurt about Eurex's plans to build a European platform for the clearing of OTC derivatives. In the same week that CME Group announced the September launch of CME Cleared Swaps, a facility for OTC interest-rate swaps that will include central clearing; part of its move into the OTC market that was well-documented in the July issue of Waters.

These three announcements all target separate niches and perhaps most intriguing is Markit's marriage to DTCC and the pair's ambition to create "a single gateway for confirming OTC derivative transactions globally". No small ambition, but if anyone can do it then Markit and DTCC seems to be a pretty solid partnership.

It will be interesting to see how the coming months and years pan out in the arena of trade processing. Affirmations and confirmations are hardly the most glamorous part of the investment process, but there seems to be a steady recognition that if these things aren't sorted out and sorted out effectively, the whole industry will suffer. In novations for example, the process by which derivative contracts are transferred to a different counterparty, major banks have reaped the benefits of moving away from email and phone towards automated platforms. Where large numbers of staff formerly had to spend hours picking through emails and responding to post-trade problems, the whole lot can now be managed by an automated platform, with only the anomalies being flagged up. If such automation spreads across asset classes and filters beyond the top-tier banks, then maybe the conversation will soon shift away from trade processing which is certainly now seen to be the bane of the back office.

So good luck to Eurex, CME and Markit/DTCC. The hats are in the ring and the race is on.

Are Wall Street firms doing the unthinkable: Actually returning to Wall Street? The New York Post and New York magazine's web site report that HSBC might move into the new 7 World Trade Center. Not only is the global bank set to leave midtown and lease 300,000 square feet of office space in the newly completed building, HSBC has reportedly put its 452 Fifth Avenue offices on the market.

In other financial giant news: Waters and its sibling publications -- Dealing with Technology and Inside Market Data -- will move down to 120 Broadway in the financial district in the next three weeks. So long, SoHo, we'll miss you.

Hat tip: New York Mag