Torys securities lawyer Joel Wiesenfeld says Securities officials should defend deals:
A principal rationale by a financial institution for settlement in the first place is to limit the reputational harm caused by long-term media exposure, such as is common if there is a contested hearing, no matter which party wins the hearing.
It is far more difficult to understand why securities regulators do not mount spirited defences of the settlements they enter into, including the purpose of the investigation, the decision to settle, and the terms of the settlement. Inasmuch as that analysis will likely not be forthcoming from the media, it is imperative that securities regulators learn that their job is not complete following the approval of a settlement, for it is in the public interest for the regulator to explain how and why its regulatory imperative in investigating and settling has been achieved. Until that begins to occur, all we will be left with is the usual rant.
I’ve got a better idea: no deals. If they’re guilty, nail ’em to the wall. If they’re not guilty, eschew extortion.
Meanwhile the SEC’s war on competition continues:
The SEC, the top U.S. securities regulator, must address the use of algorithms, the computer codes that power high-frequency trading and disrupt the marketplace, SEC Chairman Mary Schapiro told the Securities Industry and Financial Markets Association annual conference on Monday.
“We hope this will lead to a more stable marketplace,” she said.
…
“Some high-frequency traders are not registered or regulated at all,” Schapiro told reporters on the sidelines of the conference. “There’s an issue about the use of disruptive algorithms in the marketplace, that contribute dramatically to volatility and instability.”The SEC is considering “certain throttles” that would govern the way algorithms impact the marketplace, possibly slowing them down, she said.
…
Other SEC steps since the crash included adding circuit breakers that pause trading when stocks plunge or soar. Schapiro on Monday said one algorithm recently triggered a breaker when it “tried to sell 10 percent of the daily volume of a stock in two seconds.“That’s a huge volume disruption,” she said.
Golly! Can you imagine? Somebody trading stocks without being regulated! It’s a scandal!
It strikes me that the new circuit breakers are very prone to moral hazard … even if they’re not already written and in place, I bet a lot of programmers and developers are having a good think about how automatic circuit breakers and automatic trade busts can be used to their advantage. Moral hazard is profitable!
Allied Irish Bank was able to sell senior bonds earlier this year by making them retractible. Guess what’s happening?:
Ireland’s second-largest lender, which has a market capitalization of 418 million euros ($569 million), was able to raise debt this year by giving buyers the right to sell the notes back at face value at set dates prior to final maturity, according to data compiled by Bloomberg. Today the bank said an investor requested repayment of 120 million euros of its floating-rate bonds due in February at the Nov. 30 put date.
And the Europeans are bickering:
Greek 10-year bond yields surged 20 basis points to 11.62 percent amid concern that the nation, which received a 110 billion-euro bailout in May, won’t be able to cut its budget deficit fast enough. Austria is threatening to block its next transfer of funds to Greece unless the government gets back on track a deficit-cutting plan agreed just six months ago with the European Union and International Monetary Fund.
“We are getting indications that the Greeks can’t stick to their plan in a sufficient manner, in particular on the revenue side,” Finance Minister Josef Proell said according to a government e-mail that confirmed remarks made after a cabinet meeting today. “The data we have at the moment doesn’t give any reason to approve the December tranche from the Austrian point of view.”
Greece led a surge in the cost of insuring European government debt. Credit-default swaps on Greece soared 86 basis points to 944, the highest since June 29, according to data provider CMA. Contracts on Ireland rose 22 basis points to 515, Portugal climbed 13 to 426, Italy increased 7 to 188 and Spain was up 8 at 259.
The competitive position of European hedge funds vs. the banks is getting better:
Funds may have the option to explain to the Financial Services Authority why they are unable to comply with rules that require half of bonuses to be paid in shares, said the people, some of whom declined to be identified because negotiations are private. The regulator is reviewing whether the largest hedge funds must fully comply with the rules, according to the people.
The FSA in July proposed expanding the companies covered by its bonus rules from 27 banks to 2,500 firms, including building societies and hedge funds, to comply with European Union legislation on bank capital. The regulator proposed the possibility of giving firms a “comply or explain” exception and the Committee of European Banking Supervisors supported that position last month, said Darren Fox, a partner at Simmons & Simmons, who represents hedge funds.
This may be a good thing. It may be bad. I don’t think anybody’s really thought about it.
The Cleveland Fed has published the November, 2010 edition of Economic Trends:
This, in effect, is like the CPI asking the question, “What does it cost to maintain this fixed basket of goods and services?” while the PCE asks, “What does it cost to maintain this given level of satisfaction?” Because the CPI updates the expenditure weightings only every few years, it doesn’t allow for substitution effects. For example, if the price of coffee suddenly doubles, people may start to drink more tea. Thus, the CPI may tend to overstate the aggregate price level during periods of volatile relative price swings.
The last diff erence between the two series is called the “weight” effect. Due to the differences in the scope of the measures and in the source data for some items, the PCE and CPI have different weights on similar items. The largest difference comes from the shelter (housing) components, which in the CPI carry a relative importance value of roughly 32 percent, while in the PCE it is a little less than half of that. Such a huge difference in weights means that housing prices exert much more of an influence over the trajectory of the CPI than that of the PCE, leading to differences in their growth rates over time.
It was clobberin’ time on the Canadian preferred share market today, with PerpetualDiscounts losing 80bp and FixedResets down 43bp – taking the median weighted average yield on the latter index back above 3%. Volume continued at very high levels. This is great, just like the old days of two years ago! Still, on the theory that misery loves company, have a look at …
Click for Big
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1012 % | 2,238.3 |
| FixedFloater | 4.89 % | 3.51 % | 27,266 | 19.14 | 1 | -0.2242 % | 3,441.5 |
| Floater | 2.66 % | 2.33 % | 62,126 | 21.40 | 4 | -0.1012 % | 2,416.8 |
| OpRet | 4.74 % | 2.92 % | 61,076 | 2.44 | 8 | -0.3125 % | 2,399.0 |
| SplitShare | 5.36 % | -0.67 % | 122,599 | 1.06 | 3 | 0.0328 % | 2,486.3 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.3125 % | 2,193.7 |
| Perpetual-Premium | 5.65 % | 5.23 % | 160,159 | 3.06 | 24 | -0.3396 % | 2,020.3 |
| Perpetual-Discount | 5.35 % | 5.41 % | 259,589 | 14.73 | 53 | -0.8007 % | 2,039.5 |
| FixedReset | 5.23 % | 3.02 % | 335,198 | 3.19 | 50 | -0.4277 % | 2,282.4 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| CM.PR.J | Perpetual-Discount | -2.45 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 21.52 Evaluated at bid price : 21.86 Bid-YTW : 5.17 % |
| MFC.PR.B | Perpetual-Discount | -2.24 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 20.95 Evaluated at bid price : 20.95 Bid-YTW : 5.55 % |
| RY.PR.W | Perpetual-Discount | -2.09 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 23.67 Evaluated at bid price : 23.95 Bid-YTW : 5.12 % |
| CM.PR.H | Perpetual-Discount | -1.92 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 22.79 Evaluated at bid price : 23.00 Bid-YTW : 5.25 % |
| CM.PR.I | Perpetual-Discount | -1.91 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 22.45 Evaluated at bid price : 22.61 Bid-YTW : 5.24 % |
| NA.PR.N | FixedReset | -1.83 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2013-09-14 Maturity Price : 25.00 Evaluated at bid price : 26.31 Bid-YTW : 3.34 % |
| POW.PR.B | Perpetual-Discount | -1.81 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 23.59 Evaluated at bid price : 23.86 Bid-YTW : 5.66 % |
| RY.PR.C | Perpetual-Discount | -1.78 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 22.45 Evaluated at bid price : 22.61 Bid-YTW : 5.10 % |
| TRP.PR.C | FixedReset | -1.77 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 25.50 Evaluated at bid price : 25.55 Bid-YTW : 3.77 % |
| SLF.PR.D | Perpetual-Discount | -1.74 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 20.87 Evaluated at bid price : 20.87 Bid-YTW : 5.41 % |
| SLF.PR.G | FixedReset | -1.72 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 25.65 Evaluated at bid price : 25.70 Bid-YTW : 3.64 % |
| IAG.PR.E | Perpetual-Premium | -1.68 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2019-01-30 Maturity Price : 25.00 Evaluated at bid price : 25.80 Bid-YTW : 5.67 % |
| RY.PR.G | Perpetual-Discount | -1.63 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 22.13 Evaluated at bid price : 22.26 Bid-YTW : 5.07 % |
| BNS.PR.K | Perpetual-Discount | -1.55 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 23.29 Evaluated at bid price : 23.54 Bid-YTW : 5.13 % |
| RY.PR.D | Perpetual-Discount | -1.55 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 22.17 Evaluated at bid price : 22.30 Bid-YTW : 5.06 % |
| BNS.PR.L | Perpetual-Discount | -1.55 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 22.17 Evaluated at bid price : 22.30 Bid-YTW : 5.08 % |
| SLF.PR.E | Perpetual-Discount | -1.50 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 20.96 Evaluated at bid price : 20.96 Bid-YTW : 5.45 % |
| CIU.PR.B | FixedReset | -1.41 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-01 Maturity Price : 25.00 Evaluated at bid price : 27.90 Bid-YTW : 3.24 % |
| RY.PR.E | Perpetual-Discount | -1.29 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 22.04 Evaluated at bid price : 22.17 Bid-YTW : 5.09 % |
| BAM.PR.H | OpRet | -1.28 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2010-12-16 Maturity Price : 25.25 Evaluated at bid price : 25.52 Bid-YTW : 1.58 % |
| TD.PR.O | Perpetual-Discount | -1.23 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 23.92 Evaluated at bid price : 24.18 Bid-YTW : 5.04 % |
| MFC.PR.E | FixedReset | -1.19 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-10-19 Maturity Price : 25.00 Evaluated at bid price : 26.47 Bid-YTW : 3.84 % |
| RY.PR.A | Perpetual-Discount | -1.19 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 22.26 Evaluated at bid price : 22.41 Bid-YTW : 4.98 % |
| SLF.PR.A | Perpetual-Discount | -1.16 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 21.87 Evaluated at bid price : 22.21 Bid-YTW : 5.41 % |
| BNS.PR.M | Perpetual-Discount | -1.11 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 22.24 Evaluated at bid price : 22.37 Bid-YTW : 5.07 % |
| RY.PR.B | Perpetual-Discount | -1.07 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 23.01 Evaluated at bid price : 23.21 Bid-YTW : 5.07 % |
| PWF.PR.F | Perpetual-Discount | -1.04 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 23.52 Evaluated at bid price : 23.80 Bid-YTW : 5.55 % |
| RY.PR.Y | FixedReset | -1.04 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-12-24 Maturity Price : 25.00 Evaluated at bid price : 27.71 Bid-YTW : 3.25 % |
| IAG.PR.C | FixedReset | -1.03 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-01-30 Maturity Price : 25.00 Evaluated at bid price : 27.01 Bid-YTW : 3.81 % |
| ELF.PR.G | Perpetual-Discount | 2.17 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2040-11-16 Maturity Price : 20.69 Evaluated at bid price : 20.69 Bid-YTW : 5.81 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| GWO.PR.F | Perpetual-Premium | 302,334 | RBC crossed 300,000 at 25.45. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-10-30 Maturity Price : 25.00 Evaluated at bid price : 25.44 Bid-YTW : 5.39 % |
| CM.PR.E | Perpetual-Premium | 250,941 | RBC crossed three blocks, of 210,000 shares, 18,700 and 15,000, all at 25.35. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-11-30 Maturity Price : 25.00 Evaluated at bid price : 25.25 Bid-YTW : 5.23 % |
| TD.PR.M | OpRet | 168,800 | RBC crossed blocks of 99,000 and 67,700, both at 25.86. YTW SCENARIO Maturity Type : Call Maturity Date : 2010-12-16 Maturity Price : 25.75 Evaluated at bid price : 25.86 Bid-YTW : 1.79 % |
| IAG.PR.F | Perpetual-Premium | 155,060 | Desjardins crossed 150,000 at 25.65. YTW SCENARIO Maturity Type : Call Maturity Date : 2019-04-30 Maturity Price : 25.00 Evaluated at bid price : 25.55 Bid-YTW : 5.73 % |
| PWF.PR.M | FixedReset | 150,900 | Nesbitt bought two blocks from National, 25,000 and 18,400 shares, both at 27.65, then crossed 100,000 at the same price. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-02 Maturity Price : 25.00 Evaluated at bid price : 27.60 Bid-YTW : 2.72 % |
| BMO.PR.P | FixedReset | 83,530 | Scotia crossed 74,700 at 27.40. YTW SCENARIO Maturity Type : Call Maturity Date : 2015-03-27 Maturity Price : 25.00 Evaluated at bid price : 27.32 Bid-YTW : 3.05 % |
| There were 53 other index-included issues trading in excess of 10,000 shares. | |||