Monday, January 23, 2012

News: Demographics, Interoperability, Margining, G-SIFIs....and off to the shakey Isles.




Demographics and share prices
This chart shows the price earnings earnings ratio of shares and the ratio of middle aged to old aged people – old people sell shares, middle aged people buy them. As the number of old people rises, the valuation of shares fall – and that’s what lies ahead of us.


HNY everyone!

Time to dash to NZ and Ch. Ch.
We’re (father and son) off for a bike ride, the Otago rail trail.
This site shows 126 quakes in the past week.

A lot of people have gone for forecasts for 2012:

What will the world be like in 2012?


I think we’ll see further industry consolidation, but I also think we’ll see the industry groaning and creaking with the winds of change. Primarily though regulatory reform with some less enduring reforms being those simply inspired by political grandstanding or some flash in the pan shareholder activism (once healthy dividends resume, all sins of excess will be forgotten).

I also think we’ll see a sideways year for equities and commodities (caveat China). Residential real estate will also trend sideways but there will be opportunities for those getting set in commercial real estate for the recovery. The great deleveraging will continue....and inflation is coming.

Ohh, and the Euro will be OK. There will be no break up and the ECB will issue some Euro bonds.
That said, I thought the Jean-Claude Trichet piece outlining his call for a federalised Europe was particularly poor. It reads more like a call to arms than a reasoned basis for policy and financial integration.

I think the wind is out of the sails of the NYSE / DB deal.
EMCF publish new rules relating to interoperability.
Meanwhile in Aust we move closer to margining equities in 2012.
I think the SEC has taken the side of inertia and indifference with the Lehman / Barclays position.
A link to the G-SIFIs and an interesting unintended consequence....the too big to fail brand means the tax payer guarantee is implied anyway.

Marsal takes 500myn in fees to manage bankruptcy. Bleurrrgh. Tell that to the face of a creditor.

Have a happy, healthy and fun new year.

S



Trading

AMSTERDAM -(Dow Jones)- The Dutch government is threatening to block a possible sale of the derivative business in Amsterdam, The Dutch government is concerned that a sale of the business could hurt the position of the Netherlands as a financial hub,

In a regulatory filing, Deutsche Boerse and NYSE Euronext said they have decided to push back the deadline for completing their merger until March 31.

NYSE shareholders lose enthusiasm for Deutsche Boerse deal
Prospects for the proposed merger of Deutsche Boerse and NYSE Euronext continue to dim as regulatory negotiations continue. Some NYSE Euronext shareholders are losing interest or becoming increasingly pessimistic that the deal won't be approved. "The smoke signals are reasonably obvious at this point that this deal will not happen," said Brian Barish, president and chief investment officer of Cambiar Investors, the 10th-biggest shareholder of NYSE Euronext.

BATS Global Markets has set April 30 as the date when Chi-X Europe will begin operating live on BATS technology. Separate order books though will be kept for Chi-X Europe and BATS Europe.

Direct Edge Adds a Pricing Tier, Lowers 2 Rebates
Direct Edge said it plans to start a new tier of pricing, while maintaining the top rate on a tier that rewards active market participants. The operator of two national exchanges also plans to lower rebates on two tiers.
LSE might start trade-data service for OTC derivatives
The London Stock Exchange is considering expanding its trade-data service to include over-the-counter derivatives. "We are in very early discussions with UK regulators about the possibility of using the UnaVista TRS as a registered trade repository for OTC derivatives," said Mark Husler, head of business development in the exchange's data division. Reuters (15 Dec.)


Clearing

EMCF Interoperability Rule Changes
EMCF updated Clearing Rulebook (interoperability)
EMCF Interoperability Fund

LCH.Clearnet Interoperability FAQ

ASX Equities Margining: Q2, ’12 Margin reports, Q4, ’12 EoD margin calls, Q1, ’13 Intraday margining.
Derivatives Notices: ATTACHMENT A TO CLM139/11: CASH MARKET MARGINING PROJECT - DECEMBER 2011 MARKET COMMUNICATION
CHESS Bulletins: BATCH SETTLEMENT - PARTIAL WAIVER OF ASX SETTLEMENT OPERATING RULE 10.4.5


Policy

Jean-Claude Trichet, the former ECB President, has just published an op-ed outlining his call for a federalised Europe
A centralized Europe is a globalized Europe

NYSE Euronext sub-penny proposal proves controversial
NYSE Euronext has proposed allowing its members to quote in sub-pennies. Some industry insiders want NYSE to slow the plan. SIFMA told the Securities and Exchange Commission that it raised "significant market structure implications that require additional time to be considered."

Specifically, the NYSE will be providing selective access via a RLI, a flag that indicates that a better price exists on the exchange, which will be distributed through proprietary market data feeds and not through the Consolidated Quote Stream.  Market participants that do not pay for this proprietary data feed, which often may be smaller firms, will not have access to this liquidity information.  Also, even if market participants can access the proprietary data feeds, they will be unable to access the quote unless they can
attest that the request is to fill an order for a retail customer.  This requirement thus precludes institutional investors from accessing that quote.  SIFMA believes that this Program therefore raises selective access concerns and appears to run contrary to the mandate in Regulation NMS for open, non-discriminatory access to quotes.

SEC sides with Lehman in dispute with Barclays
Lehman Brothers Holdings won support from the Securities and Exchange Commission in its asset dispute with Barclays. The agency said Lehman doesn't have enough money to repay customers, and that Barclays has a conditional claim on money held in reserve. "The commission wishes to ensure that assets held in the special reserve bank account for the exclusive benefit of customers, as well as other assets required to be held for the benefit of customers, are properly administered in the event a broker-dealer is liquidated," the SEC said.

Financial Stability Board: Policy Measures to Address Systemically Important Financial Institutions
G-SIFIs list
...And Capital surcharge requirements...

Commentary: G-SIFI designation might be backfiring
Global regulators are implementing rules to battle the concept that some financial institutions have become too big to fail, but those rules appear poised to backfire, CNBC.com Senior Editor John Carney writes. From "what I'm hearing from people at smaller Wall Street firms, [systemically important financial institution] is already becoming a code word for 'ultra-safe counterparty' against whom minimal collateral requirements may be charged", Carney writes. CNBC/NetNet blog (21 Dec.)

SIFMA seeks to broaden discussion of high-frequency trading
SIFMA today will release a white paper that calls for more discussion about high-frequency trading and how it affects the broader market structure and other investing. The paper also notes that high-frequency trading has yet to be accurately defined. "It's a characterization that's undefined," said Randy Snook, executive vice president at SIFMA. "We think there are a range of computer-based trading strategies and our objective with this paper is to focus on behaviors that are disruptive, and not necessarily focus on the speed of trading." SIFMA SmartBrief readers can get their first look at SIFMA's statement and white paper.


Participants

Lehman Pays Marsal Firm Almost $500 Million to Manage Bankruptcy
BusinessWeek
Lehman Brothers Holdings Inc. has paid almost half a billion dollars in fees to restructuring firm Alvarez & Marsal LLC during its bankruptcy, according to a court filing.
Lehman, which has spent more than $1.5 billion on fees since filing the biggest bankruptcy in U.S. history in September 2008
Marsal, who bills Lehman hourly, has said he will start distributing some cash to the defunct firm’s creditors by next year, more than three years after the bankruptcy filing. He has court approval for a $65 billion liquidation plan that would pay the average Lehman creditor less than 18 cents on the dollar in the next few years, according to court papers
http://www.businessweek.com/news/2011-12-27/lehman-pays-marsal-firm-almost-500-million-to-manage-bankruptcy.html


JPMorgan leads ranking of global investment banks
JPMorgan Chase collected 8.1% of the $68 billion in total revenue of investment banks around the world this year, according to Dealogic. Bank of America Merrill Lynch's share was 7.4% and Goldman Sachs Group had 5.8%. Meanwhile, Freeman & Co., a New York-based research firm, said that as of Dec. 19, the global, year-to-date investment banking fee pool was $78.6 billion. Bloomberg (12/20)

The mysterious millionaires factory

Macquarie is a global financial services company with over 15,000 employers, just over half of whom are based outside Australia.  It acts primarily as an intermediary for institutional, corporate and retail clients around the world, with a particularly strong presence in the Asia-Pacific region.  Macquarie services include (but are not limited to)


Stuff

How Australia (or Western Australia at least) digs itself out of a GFC.

Create & Collaborate

"If you're unhappy, nine times out of ten it's because you're clinging onto something.
Nine times out of ten, happiness and letting go are synonymous."

Better keep yourself clean and bright; you are the window through which you must see the world."
--George Bernard Shaw, Irish playwright
Whatever you can do or dream you can, begin it.
Boldness has genius, power and magic in it!”
Johann Wolfgang von Goethe

“The moment one definitely commits oneself, then Providence moves, too.”
― W.H. Murray in The Scottish Himalaya Expedition, 1951

Act boldly and unseen forces will come to your aid."
--Dorothea Brande, American writer and editor

It is a fair, even-handed, noble adjustment of things, that while there is infection in disease and sorrow, there is nothing in the world so irresistibly contagious as laughter and good-humour."
--Charles Dickens, British author

I think making mistakes and discovering them for yourself is of great value, but to have someone else to point out your mistakes is a shortcut of the process."
--Shelby Foote, American historian and novelist

Ability will never catch up with the demand for it."
--Confucius, Chinese philosopher

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