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Institutional Investor (October Issue)

2013/ 10/ 23 by jd in Global News

“Atsushi Saito has reinvigorated the Japanese exchange world with a merger and a technology overhaul. Now comes the hard part: winning back market share in Asia.” Following the merger of the Tokyo and Osaka exchanges, the Japan Exchange Group ranks third behind only the NYSE Euronext and Nasdaq OMX. “JPX now controls more than 90 percent of all equity-and derivatives-trading volume in Japan.” Yet, “despite its lead in listed companies, JPX trails in foreign listings. It’s also weak in terms of options, futures contracts and exchange-traded funds (ETFs), compared with the big U.S. exchanges”

 

New York Times (December 23)

2012/ 12/ 25 by jd in Global News

The proposed acquisitions of NYSE Euronext by IntercontinentalExchange (ICE) and Knight Capital Group by Getco both “reflect the demise of traditional stock-exchange trading. The equities market has been eclipsed by the global market in derivatives, and human traders have been increasingly replaced by computers programmed to profit from split-second price anomalies.” Regulators have not kept pace with this change. “The mergers should remain on the drawing board unless and until regulators can reassure the public that the newly created companies will operate not only for private gain, but in the public interest as well.”

 

Wall Street Journal (December 22)

2012/ 12/ 23 by jd in Global News

“How is it that a derivatives trading platform younger than Justin Bieber is about to acquire the New York Stock Exchange, which traces its Wall Street lineage to 1792? Thursday’s announcement that Intercontinental Exchange (ICE) will buy NYSE Euronext for about $8 billion is in part the story of a tech-savvy upstart that quickly grew to eclipse established giants.”

 

New York Times (November 20)

2012/ 11/ 21 by jd in Global News

Last week, the Treasury Department decided to exempt “certain foreign exchange derivatives from rules under the Dodd-Frank reform law that are intended to reduce risk and increase transparency. The exempted derivatives—instruments known as foreign exchange swaps and forwards—represent a $4 trillion-a-day global market.” This “step back for derivatives regulation” invites new problems and could spur a future crisis.

Last week, the Treasury Department decided to exempt “certain foreign exchange derivatives from rules under the Dodd-Frank reform law that are intended to reduce risk and increase transparency. The exempted derivatives—instruments known as foreign exchange swaps and forwards—represent a $4 trillion-a-day global market.” This “step back for derivatives regulation” invites new problems and could spur a future crisis.

 

Euromoney (November issue)

2012/ 11/ 16 by jd in Global News

“Restrictions and outright bans on short-selling shares, government bonds and credit derivatives were applied across Europe on November 1…. If it is a victory of the European Commission, it is potentially a disaster for Europe’s financial markets. Instead of a positive force for good, as was seemingly intended, negative consequences abound.”

 

Financial Times (November 5)

2012/ 11/ 07 by jd in Global News

“In a landmark case that could pave the way for legal action in Europe,” an Australian judged ruled that “Standard & Poor’s misled investors by awarding its highest rating to a complex derivative product that collapsed in value less than two years after it was created by ABN Amro’s wholesale banking division.” The “damning verdict” marked “the first time a rating agency has stood a full trial over a structured finance product.” The court concluded that any “reasonably competent” rating agency would “not have given a triple A rating to the securities,” which were “grotesquely complicated.”“In a landmark case that could pave the way for legal action in Europe,” an Australian judged ruled that “Standard & Poor’s misled investors by awarding its highest rating to a complex derivative product that collapsed in value less than two years after it was created by ABN Amro’s wholesale banking division.” The “damning verdict” marked “the first time a rating agency has stood a full trial over a structured finance product.” The court concluded that any “reasonably competent” rating agency would “not have given a triple A rating to the securities,” which were “grotesquely complicated.”

 

Institutional Investor (June 8)

2012/ 06/ 13 by jd in Global News

Jamie Dimon “may well have signaled the end of an era for big global banks.” The JP Morgan Chase CEO admitted his bank had lost at least $2 billion in derivatives trades. “For three decades the fixed income, commodities and currencies business has been the cash cow of investment banks.” Demand for FICC, as this cash cow is commonly known, products has been slumping and banks have been struggling to comply with stricter capital requirements. “And now, thanks to JPMorgan’s losses, heightened demands for restrictions on virtually any proprietary trading or risky hedging, will impact the FICC business at most banks, hurting their profits and forcing them to rethink their strategies. Some business lines are likely to be closed or sold off.”

Jamie Dimon “may well have signaled the end of an era for big global banks.” The JP Morgan Chase CEO admitted his bank had lost at least $2 billion in derivatives trades. “For three decades the fixed income, commodities and currencies business has been the cash cow of investment banks.” Demand for FICC, as this cash cow is commonly known, products has been slumping and banks have been struggling to comply with stricter capital requirements. “And now, thanks to JPMorgan’s losses, heightened demands for restrictions on virtually any proprietary trading or risky hedging, will impact the FICC business at most banks, hurting their profits and forcing them to rethink their strategies. Some business lines are likely to be closed or sold off.”

 

Forbes (March 30)

2012/ 03/ 31 by jd in Global News

Derivatives contributed to the last financial crisis and “may still endanger the financial system.” Based on FDIC records, U.S. banks hold derivative instruments with “a nominal value of $250 trillion – or about 150 times the aggregate balance sheet equity of these same banks.”

 

The New York Times (June 23)

2010/ 06/ 25 by jd in Global News

Financial reform is entering “a crucial phase” in Congress and derivatives trading must be addressed. The NYT blames derivatives for much of the economic crisis. Derivatives “fed the bubble, intensified the bust and led to the bailouts.” Congress should require derivatives be “traded on transparent exchanges and processed through third-party clearinghouses to guarantee payment in case of default.” This will help avoid another financial crisis.

Financial reform is entering “a crucial phase” in Congress. The Times believes derivatives trading must be addressed. The NYT blames derivatives for much of the economic crisis. Derivatives “fed the bubble, intensified the bust and led to the bailouts.” Congress should require derivatives be traded on transparent exchanges and processed through third-party clearinghouses to guarantee payment in case of default. This will help avoid another financial crisis.

 

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