Shining Star: SGX’s Ramaswami Says Asia Risk Mitigation Still In Early Stages
When exchanges look at growth areas, Asia gets top ranking. The Singapore Exchange, which has positioned itself as the Asian gateway for international traders over the past 30 years, now sees great potential in the decades ahead.
Muthukrishnan Ramaswami, president of SGX spoke with John Lothian News editor-in-chief Jim Kharouf at the FIA Boca conference, and said the exchange is ready to expand geographically through technology upgrades and by asset class as well, especially in FX and commodities.
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Quote of the Day
“The problem with the European quantitative easing program is that it comes so late, policymakers realize that it will not be what takes Europe out of low inflation.”
Steen Jakobsen, Saxo Bank A/S’s chief economist in the story, ” Economist: Sell Your Stocks and Take Six Months Off”.
2015 Men’s NCAA Basketball Championship: Who Will Win the Big Game?
Carlton Chin – Quant Facts
A portion of our research studies factors related to sports psychology, including: big game experience, focus on fundamentals, leadership, and consistency. Over the past several decades, the factors we quantified have been related to winning championships about 65%-70% of the time. Since our “Who Will Win the Big Game” book came out several years ago, our published “quant fact” predictions have picked the winner of major sporting events 62% of the time, regularly picking underdogs. We have fared particularly well in the Final Four, where our quant facts have swept all three games (two semifinals games and the title game) several years. Let’s look at the 2015 NCAA Men’s Basketball Championship “tale of the tape” between Duke and Wisconsin.
***DA: Carlton Chin is head of quantitative research and chief investment officer for commodity trading advisor Adamah Capital. A few years ago he was the Guinea pig for our CTA Profiles concept. I think Michael Lewis should step away from HFT and write “Moneyball 2” featuring Mr. Chin.
The Simple Reason Mohamed El-Erian Has Most of His Money in Cash
In an interview with the Orange County Register, Mohamed El-Erian was asked about everything from life after Pimco to where he is currently putting most of his money. Rather than putting most his money in stocks or bonds, El-Erian reveals that most of it is actually sitting in cash. And the reason is simple: pretty much everything else has gotten too elevated.
Another Shot Across the Bow for Proprietary Trading Groups, and By Association, HFTs and Algorithmic Trading Strategies
Thomas F. Cashman, Of Counsel and Michelle M. Comella, Partner at Ziliak Law, LLC
Banks have not been the only players in the regulators’ sights, however, when it comes to proprietary trading. This past week, on March 25th, the Securities Exchange Commission (“SEC”) held an open meeting under the Government in Sunshine Act to consider a proposed amendment to Rule 15b9-1 of the Exchange Act. Rule 15b9-1, as initially promulgated, was designed to allow floor brokers and specialists to do limited hedging or other off-exchange activities ancillary to their floor based business. The proposed amendment is designed to close a regulatory gap that currently allows certain broker-dealers to engage in significant off-exchange proprietary trading without becoming members of a national securities association like the Financial Industry Regulatory Authority (“FINRA”). The SEC’s position is that the proposed amendment to Rule 15b9-1 is needed to address certain consequences of an evolving market structure which has seen significant volume move away from floor based on- exchange trading to off-exchange venues.
***DA: For a summary of the rule, view the rule page on MarketsReformWiki. And be sure to read the above post by Cashman and Comella. HFT is in the regulatory cross-hairs. Tom is a member of the JJLCO Advisory Board.
Economist: Sell Your Stocks and Take Six Months Off
Investors should sell any equities bought over the past year, hold the proceeds as cash and take a holiday from the market for six months, according to Steen Jakobsen, Saxo Bank A/S’s chief economist.
A likely increase in U.S. interest rates will intensify market volatility and threatens to wipe out any gains investors may have made in the past two years, Jakobsen said in a March 29 interview in Dubai. Slower expansion in the economies of the U.S. and China will also hurt investors holding stocks, said Jakobsen, who last year predicted a drop in oil prices to below $80 a barrel.
U.S. agency wants brokers held to higher standards
By Becky Yerak Chicago Tribune
Would new standards have helped Crystal Lake couple that lost $109,000 on bad investments?
Crystal Lake couple lost more than $100,000. Would new rules have prevented it? In September 2008, as the financial crisis emerged, a retirement account of Al and Karin Betz slumped in value to $130,000 from about $160,000.
Corporate traders aren’t exactly saints, either
Brooke Masters, FT
Wheat allegations suggest corporates are no more immune to the thrill of rate-rigging than banks
Every few months now, it seems, another price manipulation scandal emerges. First, it was bank traders fixing Libor, the interbank lending rate, in exchange for steak dinners and bottles of Bollinger. Then, many of the same banks were accused of doing much the same thing to foreign exchange rates. From there, the investigations have spread to traders of precious metals. Critics say the burgeoning probes are proof positive that banks have a cultural problem.
Bank of America accused of ‘tarnishing’ Merrill Lynch
By John Aidan Byrne, NY Post
Merrill Lynch’s Thundering Herd is having a huge crisis of confidence. Bank of America’s integration of the prized brokerage empire is spooking many Merrill financial advisers, who are balking at CEO Brian Moynihan’s arm-twisting, corporate culture, people familiar with the company say.
Big-Bank Board Game Puts Shareholders in Second Place; As regulators pressure bank boards to take a broader view, shareholder interests may take a back seat
By John Carney
Banks are indeed different corporate creatures. Now, their boards are discovering that firsthand.
Pressure in Repo Market Spreads; Stresses amplify price swings in government bonds
By Katy Burne, WSJ
A shortage of high-quality bonds is disrupting the $2.6 trillion U.S. market for short-term loans known as repurchase agreements, or “repos,” creating bottlenecks for a key source of liquidity in the financial system and sending ripples through short-term debt markets.
Investors expect European banks to outperform, key survey finds
Laura Noonan, FT
European banks will beat other financial sector investments this year but valuations will not catch up to international peers until regulatory uncertainty fades and loan growth picks up, a survey of investors by Morgan Stanley has found.
U.S. Weighs Whether to Act or Wait on Insider Trading
Dealbook – NY Times
Last week’s decision by the United States Court of Appeals for the Second Circuit to reject the Justice Department’s request to reconsider its ruling in United States v. Newman, which makes insider trading harder to prove, leaves the government with three choices. It can ask the Supreme Court to review the decision, push Congress to adopt a law to define insider trading or live with the outcome and figure out how to minimize its effect.
India’s Private Equity Industry Shakes Off Its Doldrums
Dealbook – NY Times
Hanging on the wall in the modest office of Nitin Deshmukh, the chief executive of the Kotak Private Equity Group, is a photograph of a tiny man scaling a tall sand dune. “Take pride in how far you have come,” the inscription says. “Have faith in how far you can go.”
For investors in Indian private equity, it’s a maxim that is well understood. Indian private equity exploded a decade ago when global firms like Blackstone, 3i Group and Apax Partners flocked to India, drawn by the spectacular returns produced by local funds.
Bank of America Merrill Lynch Hires Banker for Equity Capital Markets
Dealbook – NY Times
Bank of America Merrill Lynch has hired Michael Wise, a banker specializing in equity sales for financial institutions, as a vice chairman of global equity capital markets, the firm announced in an internal memorandum on Monday.
Barclays Ordered to Pay Ex-Trader About $9 Million, Lawyer Says
Barclays Plc must release millions of dollars in deferred pay to former derivatives trader Mayank Chamadia who claimed the bank unfairly withheld compensation after he left the firm.
Financial Industry Regulatory Authority arbitrators awarded Chamadia $3.7 million in compensation that already would have vested, and said there is “no basis” to withhold or reduce payouts yet to vest, according to their ruling on the regulator’s website. That would release a total of about $9 million, according to Jonathan Sack, Chamadia’s lawyer.
Broken Bond Market Complicates Fed’s Plan to Raise Rates
By MICHAEL J. CASEY, WSJ
The bond market is broken. Whether it is banks’ reluctance to commit to buying and selling bonds, shortages in the securities used as collateral in short-term money markets, or the disproportionate role of heavyweight issuers in the supply of U.S. corporate bonds, dysfunction is everywhere. As the Federal Reserve prepares to raise rates, this is raising questions about how well it can manage the credit creation process, the transmission mechanism through which it pursues its economic goals. It might also mean it is risking financial turmoil.
In Greenspan Conundrum Redux, the Odds Are on Bond Traders’ Side
by Susanne Walker, Alexandra Scaggs, Bloomberg
The Federal Reserve faces another bond-market conundrum as it prepares to raise interest rates.
Once Over $12 Trillion, the World’s Reserves Are Now Shrinking
by Ye Xie, Andrea Wong, Bloomberg
The decade-long surge in foreign-currency reserves held by the world’s central banks is coming to an end.
Fed watching recent U.S. weakness; rate-hike timing unclear: Dudley
The timing of the Federal Reserve’s interest rate hike, which would be its first in nearly a decade, is unclear and for now policymakers must watch that the U.S. economy’s surprising recent weakness does not signal a more substantial slowdown, a top Fed official said on Monday.
New York Fed President William Dudley’s comments were the latest sign that a string of disappointing economic data, including a sharp drop in jobs growth last month, is derailing a Fed plan to tighten monetary policy around mid-year after more than six years of rock-bottom rates.
The European Central Bank is Printing Money, Again!
If you’re like most, the European Central Bank’s (ECB) data release last week was of little to no importance. Simply another statistical survey from another government institution.
The ECB’s report, though, had one piece of interesting information.
It’s printing money again, with the most recent figure at 93 billion euros.
Vexed questions on currency hedging
Stephen Foley, FT
Is it better to suffer the slings and arrows of short-term money moves?
To hedge or not to hedge? That is not the only question regarding the currency risks that come with investing across borders.
Battered by currency swings, European firms unpick global production model
A dramatic fall in the euro has created an opportunity for European manufacturers to enjoy cheap production costs at the bases from which they can supply world markets.
But after months of sharp shifts in foreign currencies, many of these companies are simultaneously reworking strategy in the hope that by the time of the next sudden tilt they will be operating in more diverse local markets around the world.
UK Treasury urges BoE to consider time stamps for forex trades
The Bank of England is being urged by the UK Treasury to consider requiring time stamps for all foreign exchange trades as part of reforms that proponents say would help prevent banks from defrauding clients, according to people familiar with the issue.
But the central bank has been tepid about the proposal, sparking questions about how exhaustive the BoE will be in its efforts to rehabilitate the City of London’s tarnished reputation following several scandals.
Indexes & Index Products
Variety is the spice of life – and it’s essential for indices, too
S&P Dow Jones Indices
There are multiple markets globally, with regional preferences and different rules and standards governing each one. However, there are some common classifications that can be used to create comparable indices across regions. For example, every market does classify its components into large-cap, mid-cap and small-cap companies. While the market itself could comprise various sizes based on regional capabilities, there seems to be standardization and a clear trend on how this classification is done.
5 Reasons Investors Should Favor Index Funds, ETFs
Investors seem to have made up their collective minds in deciding that passive investing — index funds and exchange-traded fund that track the market benchmarks like the S&P 500 (^GSPC) — is preferable to actively managed funds, where stock pickers try to outperform the market averages.
The FX Disruptors: Why Russell Investments Built a Buyside FX Platform
With the foreign exchange markets shaken by the fallout from the 2013 FX rate fixing scandal, Russell Investments saw an opportunity to shake them up even further. While the industry explored ways to restructure the WM/Reuters daily FIX calculation window to minimize the possibility of manipulation by sellside brokers, Seattle-based Russell Investments began exploring a different model altogether.
China taking steps to open capital markets ahead of MSCI decision
Pensions & Investments
China’s regulators are taking more aggressive steps to open the country’s capital markets to foreign investors in the run-up to a midyear decision by MSCI Inc. on whether to begin adding China’s A shares to the firm’s benchmark equity indexes.
Goldcorp to sell 40% stake in Nevada project to Premier Gold
VANCOUVER — The Canadian Press
Goldcorp Inc. has a preliminary agreement to sell its 40 per cent interest in a Nevada project to Premier Gold Mines Ltd.
Barrick Gold Corp. owns the other 60 per cent interest in the South Arturo mine project, which is eight kilometres from Barrick’s Goldstrike mining operation, and has right of first refusal.
Barrick chairman aims to put shine back in gold miner
James Wilson, The Financial Times
When John Thornton came to Barrick Gold, he found what he calls a “contaminated” culture that meant the world’s biggest and most valuable gold miner had well and truly lost its shine.
For the former Goldman Sachs banker, the evidence was in deals such as Equinox, the copper miner that Barrick bought for C$7.3bn in 2011 and has now written off mostly.
Deccan Gold seeks Sebi nod to raise Rs 44 cr from rights issue
The Economic Times
MUMBAI: Mineral exploration firm Deccan Gold Mines Ltd has sought market regulator Sebi’s approval to raise more than Rs 44 crore through a rights issue.
As per the draft letter of offer of Deccan Gold filed with Sebi, the company would issue nearly 3 crore shares of face value of Re 1 “for an aggregate amount of Rs 444.14 million to the eligible shareholders on rights basis”.