Posts Tagged ‘proprietary trading’

Goldman Faces “Near Record Fine” In London

Goldman Faces "Near Record Fine" In London

Courtesy of JESSE’S CAFÉ AMÉRICAIN

Even this ‘near record fine’ is likely to be little more than a wrist slap, a manageable cost of doing business compared to the massive profits and bonuses obtained from such dealings.

It appears that financial regulations such as the Volcker rule are getting some traction with Goldman and their ilk, compelling them to spin off their proprietary trading desks to institutions that do not drink so directly from the subsidies of the Federal Reserve.

Still, regulation is not a set of rules, but a mindset to enforcement and investigation for the many, with no favoritism shown to the powerful few.

Financial fraud has been a major export from the US for the past ten years. As we have noted elsewhere, New York financial firms may find themselves persona non grata in many of the overseas markets, especially the sovereign financial asset markets, which they have abused repeatedly from their US and London centers.
 

Financial Times
Goldman now faces large fine in UK
By Megan Murphy and Brooke Masters in London
and Francesco Guerrera and Henny Sender in New York
September 8 2010 20:05

Goldman Sachs is facing a near-record fine from the UK’s financial regulator following a five-month investigation into the investment bank’s international business initiated in the wake of fraud charges against the company in the US.

The fine, which could be announced by the Financial Services Authority as early as Thursday morning, will deal a blow to Goldman’s efforts to put the high-profile fraud case behind it following the bank’s settlement with the US Securities and Exchange Commission probe in July for $550m.

The largest fine handed down by the UK regulator came three months ago, when JPMorgan paid a £33.3m for failing to keep client money in separate accounts.

Goldman, the world’s best-known investment bank, has seen its reputation tarnished in recent months as questions continue to swirl over whether it favoured the interests of some clients at the expense of others during the financial crisis.

The bank’s business model is also under pressure amid volatile markets and regulatory reforms that have forced it to shut some of its highly profitable “proprietary” trading operations.

On Wednesday it emerged that KKR, the private equity firm, is in early talks with individuals in Goldman


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Quick Hits: Walking Away from Boats; Philadelphia Demands $300 Blogger License Fee; Birth Rate Lowest in Century; Tracks of Bizarre Robot Traders

Quick Hits: Walking Away from Boats; Philadelphia Demands $300 Blogger License Fee; Birth Rate Lowest in Century; Tracks of Bizarre Robot Traders

Courtesy of Mish 

I am traveling this morning will look at ISM and other data this afternoon. Meanwhile here a a few quick hits on propriety trading, bizarre charts of robo trader patterns, walking away from boats, Blogger fees in Philadelphia, birth rate demographics, and other potpourri.

JPMorgan to Shut Proprietary Trading Unit over Volcker Rule

Bloomberg Reports JPMorgan Said to Shut Proprietary Trading to Meet Volcker Rule

JPMorgan Chase & Co., the second- largest U.S. lender by assets, told traders who bet on commodities for the firm’s account that their unit will be closed as the company begins to shut down all its proprietary trading, according to a person briefed on the matter.

The bank eventually will end all proprietary trading to comply with new curbs on investment banks, said the person, who asked not to be identified because JPMorgan’s decision isn’t public. The New York-based bank will shut proprietary trading in fixed-income and equities later, the person said.

Closing the prop trading desk for commodities affects fewer than 20 traders, including one in the U.S. and the rest in the U.K., the person said.

This is a baby step in the right direction.

Developer Sells Zero of 141 Luxury Condos

The Press Enterprise reports Lack of sales spurs developer to lease

After two months of marketing his 141 luxury condos with not one sale, Mark Rubin said he has given up wooing buyers to the Raincross Promenade project in downtown Riverside that cost him $40 million to build.

Prospective buyers kept trying to beat down his prices, even after he shaved $30,000 off the initial list prices ranging from $240,000 for a one-bedroom, one-bath condominium to $475,000 for a two bedroom, 2 ½-bath townhouse. "There were no sales," Rubin said. "Everyone wants a bargain. They read about foreclosures and think they can buy for distress prices."

Rubin paid cash for the property and is now looking to lease units.

Walking Away From Boats

MIAMI - APRIL 22:  Officer Jorge Pino from the Florida Fish and Wildlife Conservation Commission checks on a derelict/abandoned boat on April 22, 2009 in Miami, Florida. Though it is hard for law enforcement officers to determine which boats have been abandoned unless they wash-up on shore or are a navigational hazard the downturn in the economy has shown that derelict/abandoned boats are becoming more of a problem from California to Maine.  (Photo by Joe Raedle/Getty Images)

 The USA Today reports Abandoned boats litter waters in tough economy

States across the USA are taking steps to deal with an armada of derelict boats abandoned by their owners in a tough economy:

In Massachusetts,Democratic Gov. Deval Patrick signed a bill this month that gave local governments the


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Bye Bye Blythe: JPM Shutting Down Their Proprietary Commodity Trading Operation

Bye Bye Blythe: JPM Shutting Down Their Proprietary Commodity Trading Operation

Courtesy of JESSE’S CAFÉ AMÉRICAIN

Breaking news from Bloomberg…

J. P. Morgan said today that they will be shutting down their proprietary commodity trading operations in reponse to the Volcker Rule in the Financial Reform legislation.

The JPM proprietary commodity trading group is headquartered in London with a few traders located in New York.

Within the past month trading head Blythe Masters had reassured her traders that things in the unit would continue on as they had been despite losses and layoffs.

Employees are being told that they may apply for other positions now.

Speculation is that this is also in response to position limits and other reforms in the Commodity Markets spearheaded by Commissioner Bart Chilton which will make it more difficult for large players to dominate the short term markets through sheer position size.

It is not clear if JPM will be exiting all markets at the same time including gold and silver in addition to other commodities.

We will look for clarification from their official statement which has not yet been issued.

According to a person who has been briefed, JPM will eventually be shutting down ALL proprietary trading in all markets in response to financial reform. This will include fixed income and equities which are much larger departments at the bank.

JPM recently suffered heavy losses in their proprietary commodity trading provoking a high level review by top executives.

JPM may continue to deal in these markets for commercial and private customers. They will cease trading for their own book.

It will be interesting to see what JPM does with RBS Sempra, a commodities company which they acquired earlier this year.

Bloomberg
JPMorgan Said to End Proprietary Trading to Meet Volcker Rule
By Dawn Kopecki and Chanyaporn Chanjaroen
Aug 31, 2010 4:45 PM ET

JPMorgan Chase & Co., the second- largest U.S. lender by assets, told traders who bet on commodities for the firm’s account that their unit will be closed as the company begins to shut down all of its proprietary trading, according to a person briefed on the matter.

The bank eventually will end all proprietary trading to comply with new U.S. curbs on investment banks, said the person, who asked not to be identified because


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Goldman’s Prop Trading and Reputational Risk

If you haven’t seen Larry Doyle’s website, Sense on Cents, it’s worth a visit and bookmark. Larry has over 20 years of experience on Wall Street, from trading mortgage-backed securities to serving as National Sales Manager for Securitized Products at JP Morgan Chase. Through his writing and radio program, Larry hopes to help his audience better understand the complexities of the economy, global finance and the markets.  

Larry’s internet radio show, Sense on Cents with Larry Doyle, is on "No Quarter Radio" every Sunday night from 8-9PM. There are links here to previous interviews by Larry with Michael Panzner, and Steve Megremis, founder of The Daily Bail, and many others. - Ilene 

Goldman’s Prop Trading and Reputational Risk

Courtesy of Larry Doyle at Sense on Cents

China Celebrates New Year

On Wall Street, information is everything.

Timely access to information as to who is buying/selling what, how much they are buying/selling, and why they are buying/selling is absolutely invaluable. The Wall Street banks fight tooth and nail to protect their information franchises.

That said, there are supposed to be rules as to how information is handled and processed so that trading complies with the rules of the road. Banks are not supposed to front run clients. Banks are not supposed to give up client names. Do the banks practice what the regulators preach?  

Given the fact that Wall Street banks run both customer operations and proprietary desks, there are supposed to be Chinese walls in place to make sure that information is handled properly between desks. At the firms where I worked, the proprietary desks were either on a different floor from the customer desk or in an entirely different building.

Thank you to a friend of Sense on Cents for sharing a recently released report which would seem to indicate that the Chinese walls at Goldman Sachs would appear to be neither tall nor long (said in jest), but virtually non-existent.

Asset-Backed Alert, a Wall Street trade publication, reports:

Data-Sharing Worries Grip Goldman Clients
Investors are accusing Goldman Sachs of violating Wall Street code by permitting information-sharing between two types of collateralized debt obligation traders: those who work on behalf of clients and those who handle proprietary capital.

Goldman currently has the two desks situated next to each other in its Lower Manhattan headquarters. They also have a common supervisor, managing director Jerry Ouderkirk. Such a lack of separation is


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An Ex–Goldman Partner Lets Loose on Wall Street

An Ex–Goldman Partner Lets Loose on Wall Street

TIMEBy Stephen Gandel, courtesy of TIME

Roy Smith, a finance professor at New York University and a former Goldman Sachs partner, argues in Paper Fortunes, his new history of Wall Street, that decades of financial innovation that seemed like positive evolutions at the time have turned our markets into scary places. In part, Smith says Wall Street is fixing its problems by reining in pay and lowering leverage ratios. But he believes Washington and regulators still need to intervene to make financial markets safer.

You’ve just completed an 80-year history of Wall Street. What did you learn?
There is now about $140 trillion in market capitalization in the word’s financial markets looking for investments. That money can now move around very easily. But even if a relatively small portion of that money goes after something — say, mortgages — it can quickly cause a bubble and a crisis. So all this good work we have done in the past few years to make our capital markets more efficient and open has also made them very hazardous, and we haven’t done anything yet to address that problem.

What should Washington be doing?
We need to do something about firms that are too big to fail. These firms have become loss transmitters and accelerators to the rest of the system. We need to distribute the risk, not concentrate it in a few very large players. There are a number of ways to do that.

Like what?
One approach is to lay on a heavy cost of being big. Too-big-to-fail banks should have a capital cost that will make it a disadvantage to compete in the riskiest parts of the financial-services market. I also like President Obama’s recent proposal, the so-called Volcker Rule, which would limit proprietary trading and investing. Combining these two regulatory changes ought to encourage big banks to figure out new business strategies, and that would involve selling off some of their riskier businesses.

A lot of people are saying that proprietary trading didn’t cause the financial crisis. So why focus on that?
Proprietary investing certainly played a big role in the financial crisis. Bear Stearns, Merrill Lynch, Lehman Brothers, UBS and Citigroup all had large amounts of mortgage bonds or real estate investments that they had parked on or off their balance sheets…
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The Banks Must Be Restrained, The Financial System Must Be Reformed

The Banks Must Be Restrained, The Financial System Must Be Reformed

Courtesy of Jesse’s Café Américain

Mass Protests Are Held During The G20 World Leaders Summit

There has been a loss of perspective with regard to the financial sector led by the Anglo-American banking interests.

This will have to change before there can be a sustainable economic recovery. This will be difficult to accomplish, because there exists a fusion of corporate and government desires to control the distribution of wealth and power that is opposed to any significant reforms.

"A certain type of person strives to become a master over all, and to extend his force, his will to power, and to subdue all that resists it. But he encounters the power of others, and comes to an arrangement, a union, with those that are like him: thus they work together to serve the will to power. And the process goes on." Friedrich Nietzsche, The Will to Power

Until then, the world will experience a series of asset bubbles and an increasing disparity in wealth between the productive and administrative sectors of the economy. This will continue until it becomes unsustainable, and unstable. And then it will change.

UK Telegraph
Ex-Fed chief Paul Volcker’s ‘telling’ words on derivatives industry
By Louise Armitstead
9:41PM GMT 08 Dec 2009

The former US Federal Reserve chairman told an audience that included some of the world’s most senior financiers that their industry’s "single most important" contribution in the last 25 years has been automatic telling machines, which he said had at least proved "useful".

Echoing FSA chairman Lord Turner’s comments that banks are "socially useless", Mr Volcker told delegates who had been discussing how to rebuild the financial system to "wake up". He said credit default swaps and collateralised debt obligations had taken the economy "right to the brink of disaster" and added that the economy had grown at "greater rates of speed" during the 1960s without such products.

When one stunned audience member suggested that Mr Volcker did not really mean bond markets and securitisations had contributed "nothing at all", he replied: "You can innovate as much as you like, but do it within a structure that doesn’t put the whole economy at risk."

He said he agreed with George Soros, the billionaire investor, who said investment banks must stick to serving clients and "proprietary trading should be pushed out
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Zero Hedge

Tiffany Plunges On Report LVMH Takeover "Uncertain"

Courtesy of ZeroHedge View original post here.

In what may be the highest profile failed M&A deal to emerge from the coronacrisis, moments ago Women's Wear Daily reported that the LVMH's $16.2 billion takeover of jewelry icon Tiffany appears "uncertain", adding that LVMH has called a meeting in Paris to discuss the deal.

From the report:

According to sources, members of the board of LVMH Moët Hennessy Louis Vuitton called a meeting in Paris Tuesday night specifically to discuss the matter amid a deterio...



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ValueWalk

ICCR "Investment Group" On A Re-commitment to "Racial Justice"

By Anna Peel. Originally published at ValueWalk.

As our country collectively shudders at this most recent in a series of racial flash points – the very public and cruel execution by Minneapolis police of yet another black person, George Floyd – it is easy to turn away and surrender to a feeling of hopelessness and the belief that the cycle of systemic oppression and discrimination followed by public protests and promises of reform, is destined to repeat. This would be a mistake.

Q1 2020 hedge fund letters, conferences and more

Fighting Systemic Racism

In his last book, “Where Do We Go From Here: Chaos or Community?...



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Phil's Favorites

Momentum Monday - Rioting, Looting and Froth

 

Momentum Monday – Rioting, Looting and Froth

Courtesy of Howard Lindzon

[Originally published on June 1.]

I joked on Saturday on Twitter that ‘The FED would do an emergency rate cut on Sunday to stoop the riots'.

Combine riots and looting with some of the frothy sentiment signals I am seeing in the streams I would not be surprised at a strong pullback.

This weekend there were hundreds of peaceful protests and too many scenes of violence. It was heartbreaking to see videos and pictures including the Coronado bridge being closed down for the day as police stood guard. [Below.]...



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Kimble Charting Solutions

Aussie Dollar Suggesting Much Higher Commodities And Yields On The Way???

Courtesy of Chris Kimble

Is the Aussie Dollar about to jump higher and signal that Commodities and interest rates are about to do the same? Possible!

This chart looks at the Aussie Dollar on a monthly basis over the past 16-years.

The AU$ created a bottoming pattern over several months in late 2008/early 2009 at (1). While creating the bottom, a couple of monthly bullish reversal patterns formed. What did commodities and yields do following the bottoming process in the AU$? Both were creating bottoms as well!

The 9-year decline in the AU$ has it testing triple support a...



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The Technical Traders

Comparing Bitcoin and Ether During the Coronavirus Pandemic

Courtesy of Technical Traders

You don’t need a crystal ball — or an economics degree — to notice the pandemic is having a historic impact on the stock market and commodities.

Gold initially went down (like all assets) in the mid-March meltdown, but is up 14% YTD. Oil bid negative, for the first time ever, as May futures traders dumped contracts to avoid taking delivery amid a lack of storage. It has since rebounded partially due to production cuts and the lifting of lockdowns. Orange juice is up over 26% YTD on adverse weather than impacted Brazil’s crop and increased consumer demand.

The most surpris...



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Biotech/COVID-19

Antibody injections could fight COVID-19 infections - an infectious disease expert explains the prospects

 

Antibody injections could fight COVID-19 infections – an infectious disease expert explains the prospects

Antibodies (pink) attacking a virus particle (blue). STEVEN MCDOWELL/SCIENCE PHOTO LIBRARY

Courtesy of Dimiter Stanchev Dimitrov, University of Pittsburgh

Antibodies are part of us – literally.

We have billions of them in our bodies with a combined weight of about 100 grams, or about the weight of a bar of soap. If there are so many antibodies inside our b...



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Chart School

Silver volume says something is near boiling point

Courtesy of Read the Ticker

Fundamentals are important, but they must show up in the chart. And when they do and if they may matter, it is a good sign if price and volume waves show a change of character.

The Point and Figure chart below is readtheticker.com version of PnF chart format, it is designed to highlight price and volume waves clearly (notice the Volume Hills chart).

Silver ETF volume is screaming at us! The price volatility along with volume tells us those who have not cared, are starting to, those who are wrong are adjusting, and those who are correct are loading up. Soon the kettle will blow and the price of silver will be over $20. 

Normally silver suffers in a recession, maybe this time with trillions of paper money being creat...

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Lee's Free Thinking

US Southern States COVID19 Cases - Let's Give Credit Where Due

 

US Southern States COVID19 Cases – Let’s Give Credit Where Due

Courtesy of  

The number of new COVID 19 cases has been falling in the Northeast, but the South is not having the same experience. The number of new cases per day in each Southern state has been rangebound for the past month.

And that’s assuming that the numbers haven’t been manipulated. We know that in Georgia’s case at least, they have been. And there are suspicions about Florida as well, as the State now engages in a smear campaign against the fired employee who built its much praised COVID19 database and dashboar...



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Digital Currencies

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

 

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

App-etising? LDprod

Courtesy of Michael Rogerson, University of Bath and Glenn Parry, University of Surrey

Food supply chains were vulnerable long before the coronavirus pandemic. Recent scandals have ranged from modern slavery ...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.