Singapore is trying to use bank capitalization as a competitive tool:
Singapore said it will set capital levels for local lenders above the global minimum to solidify the city’s reputation as a financial hub after regulators tightened norms for the world’s largest banks.
Lenders incorporated in Singapore will need to meet a minimum common equity Tier 1 capital adequacy ratio of 6.5 percent from Jan. 1, 2015, the Monetary Authority of Singapore said in a statement yesterday. That’s 2 percentage points more than the so-called Basel III rules announced last year.
…
The more stringent standard “underlines Singapore’s status as a very solid and prudently managed financial center,” Gupta said. “Nevertheless, we hope the global regulators will continue to monitor transition arrangements across countries to ensure a level playing field and avoid regulatory arbitrage.”
…
Singapore plans to raise the Tier 1 capital adequacy ratio to 8 percent from 6 percent and introduce a capital conservation buffer of 2.5 percentage points.“Each of the Singapore-incorporated banks is systemically important in Singapore and has a substantial retail presence,” the city-state’s central bank said in the statement. “The higher capital requirements will further strengthen their ability to operate under stress conditions.”
One wonders whether OSFI will deem the Canadian-incorporated banks to be systemically important in Canada.
Morgan Stanley has, apparently, lost some change on a TIPS / nominals box trade:
The bank’s interest-rates trading group lost at least tens of millions of dollars on the trade, which the firm has been unwinding, two of the people said, declining to be identified because the transaction isn’t public. Mary Claire Delaney, a Morgan Stanley spokeswoman, declined to comment.
Traders at the bank bet that inflation expectations for the next five years would rise in Treasury markets, while forecasts for the next 30 years would fall, according to two of the people. Such wagers on so-called breakeven rates involve paired purchases and short sales of Treasuries and Treasury Inflation Protected Securities, or TIPS, in both maturities.
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Declining crude oil prices disproportionately hurt the value of TIPS maturing within five years because they have fewer remaining interest payments that can benefit from a rebound in prices. The five-year breakeven rate dropped to 1.88 percent yesterday from 2.04 percent at the end of May, indicating underperformance by five-year TIPS relative to nominals.The 30-year breakeven rate climbed to 2.57 percent yesterday from 2.42 percent at the end of May, indicating outperformance by the 30-year TIPS relative to nominals.
Another unpleasant day for the Yellow preferreds, with the worst, YLO.PR.D, down 8.56% and the best, YLO.PR.A, down a mere 1.66%.
It was a mixed day for the Canadian preferred share market, with PerpetualDiscounts gaining 23bp, FixedResets down 10bp and DeemedRetractibles losing 13bp. Volatility picked up – but it was all on the downside. Volume was average.
| 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 | -0.4342 % | 2,445.6 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.4342 % | 3,678.2 |
| Floater | 2.48 % | 2.23 % | 42,181 | 21.70 | 4 | -0.4342 % | 2,640.6 |
| OpRet | 4.87 % | 2.53 % | 62,618 | 0.25 | 9 | -0.0386 % | 2,436.5 |
| SplitShare | 5.25 % | 1.96 % | 56,478 | 0.66 | 6 | 0.1236 % | 2,505.6 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0386 % | 2,227.9 |
| Perpetual-Premium | 5.69 % | 5.21 % | 140,346 | 0.90 | 12 | -0.0037 % | 2,076.5 |
| Perpetual-Discount | 5.46 % | 5.52 % | 121,641 | 14.61 | 18 | 0.2328 % | 2,187.2 |
| FixedReset | 5.18 % | 3.33 % | 208,451 | 2.71 | 57 | -0.0993 % | 2,305.4 |
| Deemed-Retractible | 5.09 % | 4.91 % | 279,230 | 8.16 | 47 | -0.1309 % | 2,149.3 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| GWO.PR.I | Deemed-Retractible | -1.23 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.40 Bid-YTW : 5.86 % |
| BMO.PR.H | Deemed-Retractible | -1.12 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2013-02-25 Maturity Price : 25.00 Evaluated at bid price : 25.50 Bid-YTW : 4.36 % |
| TRI.PR.B | Floater | -1.06 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-06-28 Maturity Price : 22.98 Evaluated at bid price : 23.25 Bid-YTW : 2.22 % |
| TD.PR.O | Deemed-Retractible | -1.06 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.13 Bid-YTW : 4.91 % |
| CIU.PR.C | FixedReset | -1.00 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-06-28 Maturity Price : 23.06 Evaluated at bid price : 24.70 Bid-YTW : 3.34 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| TD.PR.C | FixedReset | 51,356 | TD.PR.C crossed 40,000 at 26.70. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-01-31 Maturity Price : 25.00 Evaluated at bid price : 26.73 Bid-YTW : 3.18 % |
| TD.PR.I | FixedReset | 39,550 | TD crossed 35,000 at 27.45. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-31 Maturity Price : 25.00 Evaluated at bid price : 27.43 Bid-YTW : 3.29 % |
| HSB.PR.D | Deemed-Retractible | 39,279 | RBC crossed 24,500 at 24.85. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.79 Bid-YTW : 5.13 % |
| SLF.PR.B | Deemed-Retractible | 30,964 | Desjardins crossed 25,000 at 23.40. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.45 Bid-YTW : 5.61 % |
| TD.PR.Q | Deemed-Retractible | 28,918 | TD crossed 26,500 at 26.20. YTW SCENARIO Maturity Type : Call Maturity Date : 2015-01-31 Maturity Price : 25.50 Evaluated at bid price : 26.24 Bid-YTW : 4.90 % |
| HSE.PR.A | FixedReset | 27,019 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-06-28 Maturity Price : 23.36 Evaluated at bid price : 25.60 Bid-YTW : 3.61 % |
| There were 30 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| BNS.PR.Z | FixedReset | Quote: 25.00 – 25.50 Spot Rate : 0.5000 Average : 0.3390 YTW SCENARIO |
| BMO.PR.H | Deemed-Retractible | Quote: 25.50 – 25.86 Spot Rate : 0.3600 Average : 0.2151 YTW SCENARIO |
| TD.PR.O | Deemed-Retractible | Quote: 25.13 – 25.44 Spot Rate : 0.3100 Average : 0.1858 YTW SCENARIO |
| NA.PR.N | FixedReset | Quote: 26.35 – 26.65 Spot Rate : 0.3000 Average : 0.1964 YTW SCENARIO |
| GWO.PR.I | Deemed-Retractible | Quote: 22.40 – 22.75 Spot Rate : 0.3500 Average : 0.2479 YTW SCENARIO |
| POW.PR.B | Perpetual-Discount | Quote: 24.21 – 24.48 Spot Rate : 0.2700 Average : 0.1879 YTW SCENARIO |