Wednesday, February 1, 2012

News: Justify your rant, deleveraging, IMF, WFE, EGMI, Auctions....Barbie Girl & Aust Day

An interesting report by McKinsey on how far we have come on deleveraging.
The deleveraging process is in its early stages in most countries. Total debt has actually grown across the world’s ten largest mature economies since the 2008–09 financial crisis, due mainly to rising government debt. Moreover, the ratio of total debt to GDP has declined in only three countries in our sample: the United States, South Korea, and Australia

There were a couple of comments on last weeks photo of the start of the Warriewood to Mona Vale swim.
I would just like to re-assure everyone that:
a) The week-end weather here is just as poorly calibrated as in Europe. Saturdee in bucketed down most of the day and Sundee was greeted with light showers. Monday was of course, glorious.
b) I am more likely to be the guy getting dumped in the wave than the kewl dude riding the wave.

The swim itself went well. The organisers claimed the conditions were tough but I thought they were OK. Mind you, at one stage I was just swimming along (as one does!) and a huge swell just picked me up and flipped me onto my back. Doing freestyle on your back just does not work! I came 24/42 in age, 204/371 in gender and 277/538 overall. A solid average performance at 34.03 mins (12mins slower than the fastest and 12mins faster than the slowest!).

This’s time again for The Big Swim.
(based on the forecast I think it’s going to be a long big swim).

..and for those looking for an insight into Australia Day...Sam’s the man.
I recommend his version of what every “Barbie” girl wants...

Last week I got pulled up on a couple of rants.

1. The meeja (or Media for those un-Australians).
My rant was more against sloppy media (inaccuracies and misleading) rather than the media itself. I fully support the importance of the freedom of the press.

2. On interoperability I ranted about disclosure and vested interests. E.g. X-Clear and UBS 17% ownership, EuroCCP and DTCC direct subsidy and LCH equity clear cross subsidy. I did not disclose that my day job is for ABN and ABN own 78% of EMCF.
You can see information about the EMCF ‘carve out’ from ABN on page 8 of the annual report and full details of ownership on page 15 of the annual report. All available on the EMCF web site at: I don’t have any personal responsibilities or capacities with or for EMCF.
(For good orders sake, I must re-iterate any views are my own and not necessarily those of my employer blah de blah...)

WFE report including transaction sizes released.
Financial news identifies falling brokerage revenues.
BAML to aim for 8byn savings. That is simply an enormous figure.
Tabb comments on the changing trend of execution patterns and how ‘intra-day’ liquidity is also shifting.
Reformed broker is a refreshing renewal story.
And this site was also recommended:

And as for Australia Day....Ahhh, the good old Aerogaurd aftershave...maybe that’s why Aussie chicks prefer those foreign blokes?

Have a great week-end all.
Swim forecast for me is 1.1 meter swell, 17 knot wind and rain.
The rain is a worry as I’m informed sharks only bite wet people.



2011 WFE Market Highlights
Average size of transaction USD 8 700  (+1.8% )
*** There is a nice piccie of this on page 3 but it doesn’t lend itself to cut and paste.

SWISS Bank Stakes in SIX Group
Six Group Equity Structure. p47.
The shareholdings are buried in the Financial reports, note 10, p31.
UBS 17.3%, CS 12.8%

BETa, the European Multilateral Trading Facility (MTF) launched by the Budapest Stock Exchange (BSE)
BETa uses the BSE equity trading platform, and offers trading in foreign shares, with market makers supplying continuous liquidity. The BETa product range, initially restricted to Finnish, French, German and Spanish shares, is expected to be broadened in early 2012, with additional products to become available for trading.

NSX and Paritech Announce Strategic Partnership

Market Model Typology (MMT)
A broad spectrum of the industry (exchanges, BATS Chi-X Europe, Markit Boat and the main data vendors: Thomson Reuters, Bloomberg, Fidessa, NYSE Technologies and SIX Telekurs) have been working for most of this year to achieve a practical and common solution for standards on post-trade equity data.

Omega ATS Enhances Offering to Boost Appeal
Omega ATS is looking to offer a faster matching engine with more market data in a bid to bolster its overall appeal to investors and further its pursuit to be Canada’s speediest ATS


I take some hope from the EC Expert Group on Market Infrastructures, (see page 31)
But even here, I see it is either EACH (of questionable commercial leverage) or EMIR (long lead times) that has taken up the mantle, or even worse, does the industry have to wait for MiFIR? At one stage, the industry had the tools within their grasp.
*** At the end of the day my sentiment is for a sustainable business model, for Europe, that stands on its own merits.

 EuroCCP gets fresh capital injection -

You +1'd this publicly. Undo
5 Oct 2011 – EuroCCP, the European cash equities clearing house, received a cash injection of nearly €5m ($6.7m) in April from its US parent The ...

 DTCC makes €30m in capital injections to Euro CCP -

You +1'd this publicly. Undo
7 Oct 2010 – Euro CCP has received four separate capital injections this year totalling nearly €30m from the Depository Trust & Clearing Corporation, its US ...


IMF’s Lagarde on 2012

In the lead up to the World Economic Forum in Davos, Switzerland the Managing Director of the International Monetary Fund, Christine Lagarde, gave a speech in Berlin yesterday in which she discussed “the economic challenges in 2012, and a possible policy path for global cooperation to restore confidence and growth”

....The original speech is available here, but I prefer the above link for the added insights.
Global Challenges in 2012
By Christine Lagarde, Managing Director, International Monetary Fund

In an update of its world economic outlook, the IMF said it expects global output to grow by 3.3% in 2012, down from 3.8% in 2011 and from a September forecast of 4%.
the IMF said that despite a substantial downward revision of three quarters of a percentage point, "developing Asia is still projected to grow most rapidly at 7.5% on average in 2012–13."
China is now expected to see growth slow from 9.2% in 2011 to 8.2% in 2012, re-accelerating to 8.8% in 2013.
The IMF previously forecast growth of 9% in 2012 and 9.5% in 2013.
China grew at an annual 9.2% in 2011, according to figures issued last week, with December quarter growth hitting 8.9%.
(That's good news for Australia and its surprising that many commentators in Australian papers missed that news of failed to appreciate their meaning)

7 page report here:

12-08MR ASIC welcomes international endorsement of Australia’s regulatory regime on credit rating agencies
ASIC has welcomed the announcement by the European Securities and Markets Authority (ESMA) that it has endorsed Australia’s regulatory regime on credit rating agencies (CRAs).

The Australian Securities & Investment Commission (ASIC) has given market participants an extra three weeks to respond to its second-phase consultation paper on equity market structure following a large amount of input from the industry.
The deadline for feedback on CP 168, issued 20 October last year, has been extended from 20 January to 20 February.


FINANCIAL NEWS: The Great Brokerage Shake-out
In what is likely to become a common theme, two of the world’s largest global flow dealers, Citigroup and UBS, announced plans to launch new client platforms this year, CitiVelocity2.0 and UBS Neo respectively.
The platforms are designed to bring together multi-asset electronic trading, research and analytics on to one platform, in a bid to leverage technology across the businesses and reduce spend.
Brokers’ equity commissions, European major markets, long-only clients
2008 €5.317bn
2009 €3.044bn
2010 €3.359bn

BofA aims for annual savings of up to $8 billion
Bank of America has targeted expense cuts of $5 billion from its back-office and retail operations, and might lower annual costs $3 billion more under CEO Brian T. Moynihan's efficiency plan. "What is the right fixed-cost structure given what we see in the market conditions and opportunities?" Moynihan said. "We need that business to come back or we’ve got to do more in expenses."


TABB FORUM: The 60-Minute Market
Traditionally, volume has always been weighted evenly toward the beginning and end of the trading day. Morning flow was comprised of retail orders entered the night before while closing flow was index-driven and tied to a benchmark. Volume charts looked like a smile with the ends curved higher than the mid-day flow. Today, that smile has turned into a sort of demented, Jokeresque smile with the right side at eye level and the left side flat.
So why is as much as 20 percent of the volume transpiring in just 1.2 percent of the trading day? What’s wrong with the continuous market that forces so much of the trading volume to transpire at the close?

Dutch show how not to run housing policy

The Reformed Broker
So for new or smaller investors the name of the game is to stay in, do smart things while you're in and avoid blowing up.

Sydney Salary Guide
Report here:

From Pete’s blog:
Ineptocracy (in-ep-toc'-ra-cy) - A system of government where the least capable to lead are elected by the least capable of producing,
and where the members of society least likely to sustain themselves or succeed are rewarded with goods and services paid for by the
confiscated wealth of a diminishing number of producers.
You know you're Australian if ...
* You believe that stubbies can be either drunk or worn. 
* You've made a bong out of your garden hose rather than use it for something illegal such as watering the  garden.
* You understand that the phrase 'a group of women wearing  black thongs' refers to footwear and may be less alluring than it sounds. 
* You  believe it makes perfect sense for a nation to decorate its highways with  large fibreglass bananas, prawns and sheep.
* You pronounce Melbourne as  'Mel-bin'.
* You think 'Woolloomooloo' is a perfectly reasonable name for a  place.
* You understand that 'Wagga Wagga' can be  abbreviated to 'Wagga' but 'Woy Woy' can't be called 'Woy'. 
* You know that there is a universal  place called "woop woop" located in the middle of matter  where you actually are.
* You're secretly proud of our  killer wildlife.
* You believe that cooked-down axle grease makes a good breakfast  spread. You've also squeezed it through Vita Wheats to make little  Vegemite worms.
* You believe all  famous Kiwis are actually Australian, until they stuff up, at which point  they again become Kiwis.
* Beetroot with your Hamburger...  Of course.
* You know that certain  words must, by law, be shouted out during any rendition of the Angels'  song 'Am I Ever Gonna See Your Face Again' ....and "Living next door to  Alice".
* You believe that the more you shorten  someone's name the more you like them.
* You know how to abbreviate  every word, all of which usually end in -o: arvo, combo, garbo, kero,  lezzo, metho, milko, muso, rego, servo, smoko, speedo, righto, goodo etc. 
* You've only ever used the words - tops,  ripper, sick, mad, rad, sweet - to mean good. And then you place  'bloody' in front of it when you really mean it.
* You  understand that 'excuse me' can sound rude, While 'scuse me' is always  polite.
* You say 'no worries' quite often,  whether you realise it or not.
* You believe the 'l' in the word 'Australia' is  optional.
* You know that some  people pronounce Australia like "Straya" and that's ok.
* You believe that the confectionery known as the  Wagon Wheel has become smaller with every passing year.
* You wear ugg boots outside the house. 
* You know what it's like to swallow a fly, on  occasion via your nose.
* You know  it's not summer until the steering wheel is too hot to handle and a seat  belt buckle becomes a pretty good branding iron.
* Your  biggest family argument over the summer concerned the rules for beach  cricket.
* You still think of Kylie as 'that girl off Neighbours'. 
* When working on a bar, you  understand male customers will feel the need to offer an excuse whenever  they order low-alcohol beer.
* You  have some time in your life slept with Aeroguard on in the summer. Maybe even as perfume.
* You own a Bond's chesty. In several different  colours.

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