IOSCO would like to protect incompetent traders from evil High Frequency players, but has not yet found a plausible excuse:
In a new consultation paper, the International Organization of Securities Commissions lays out what it knows about high frequency traders, and the upshot is not much — but the regulatory body is voicing some significant concerns. Chief among them is that the technological advantage of high-frequency traders gives them an unfair edge, causing other investors to drop out of markets, and whether their speed and sophistication make it too hard for regulators to ensure they aren’t gaming markets.
The full report notes that the comment period closes August 12, 2011.
In a similar vein, Europe is hoping to punish rating agencies for being independent:
The head of the European Commission says the practices of the three top credit rating agencies will come under scrutiny and that Europe could benefit from having its own agency.
Rating agencies have had a central role in warning about Europe’s debt crisis, though many politicians have criticized them for fanning fears.
Jose Manuel Barroso said the Commission “will come up with some proposals in the autumn” on regulating the agencies, but did not give any detail.
He said the agencies sometimes anticipate risks but can also “overrate” them.
There was a nice jobs number in the US … nice for bonds:
American employers added jobs at the slowest pace in nine months in June and the unemployment rate unexpectedly climbed to 9.2 percent, sending global stocks tumbling on concern the world’s biggest economy is faltering.
Employers increased payrolls by 18,000 workers, less than the most pessimistic forecast in a Bloomberg News survey of economists, which called for growth of 105,000. The increase followed a 25,000 gain that was less than half the initial estimate. Hiring by companies was the weakest since May 2010.
What a difference a day makes!
[Yesterday]
Treasuries ended a two-day rally as a private report said U.S. companies added more jobs than forecast and economists said government data tomorrow will show nonfarm payrolls gained, fueling bets economic growth is accelerating.
Ten-year yields rose from a one-week low as stocks climbed after the European Central Bank signaled it will ease Portugal’s access to emergency funds. ADP Employer Services said U.S. firms’ payrolls increased by 157,000 jobs in June, and unemployment claims fell for the first time in three weeks. The U.S. said it will sell $66 billion in notes and bonds next week.
Like its major peers, the Company is anchored by its Canadian operations which benefit from an oligopolistic industry structure which limits the worst of price competition. Increasing scale in the U.S. retirement saving administration and focused niches in Europe, primarily in the United Kingdom, represent stable sources of earnings contributions. The Company avoided the adverse reserve development which was experienced by a number of competitors on account of Guaranteed Minimum Withdrawal Benefits (GMWB) segregated funds inasmuch as GWO did not begin to offer the product until it had arrived at an efficient and effective hedging strategy which complemented its conservative product design.
…
Fixed charge coverage ratios at GWO nevertheless remain healthier than those of its peers, reflecting stronger profitability, albeit lower than historical. GWO also continues to employ a higher proportion of innovative/hybrid capital instruments which keep its adjusted debt ratio (giving equity treatment to certain capital instruments) relatively low. The Company is actively retiring capital instruments issued at its operating companies in order to have a higher proportion of capital issuance at the holding company level which will serve to reduce its double leverage ratio. In short, DBRS considers the Company’s financial leverage and capital position to be consistent with the current rating category as long as it continues to operate conservatively. However, financial flexibility is limited at this rating category.As an integral component of the Power Financial group of companies, GWO benefits from its parent’s financial support and its strong governance and risk management controls and procedures, which reinforce the conservative bottom-line focus of the Company.
BMO’s capital ratios were solid and the quality of capital was strong relative to its Canadian bank peers at the end of Q2 2011. However, the acquisition of M&I resulted in a reduction in the pro forma Basel II tangible common equity (TCE) and Tier 1 ratios to 9.4% and 11.9% (based on April 30, 2011), respectively, which are at the low end of BMO’s Canadian bank peer group, albeit still well in excess of regulatory requirements. On a Basel III basis (also based on April 30, 2011), the pro forma TCE and Tier 1 ratios were 6.9% and 9.2%, respectively.
BMO’s long-term Deposits & Senior Debt rating at AA is composed of an intrinsic assessment of AA (low) and a support assessment of SA2 (reflecting the expectation of systemic and timely external support by the government of Canada). The SA2 status results in a one-notch benefit to the senior debt and deposits and subordinated debt ratings.
What happened to Yellow this week? TD Newcrest doesn’t like the common any more, which is important to some:
TD Newcrest analyst Scott Cuthbertson threw in the towel on Yellow Media Inc. (YLO-T2.40-0.29-10.78%), slashing his price target by half to $2 and downgrading it to “sell” after having recommended investors hold it since the beginning of March 2010, when the stock traded around $6.
| YLO Issues, 2011-7-8 | |||||
| Ticker | Quote 6/30 |
Quote 7/8 |
Bid YTW 7/8 |
YTW Scenario 7/8 |
Performance 6/30 – 7/8 (bid/bid) |
| YLO.PR.A | 22.55-69 | 22.03-38 | 13.50% | Soft Maturity 2012-12-30 |
-2.31% |
| YLO.PR.B | 15.14-15 | 15.00-70 | 15.68% | Soft Maturity 2017-06-29 |
-0.92% |
| YLO.PR.C | 15.21-48 | 15.02-11 | 10.83% | Limit Maturity | -1.24% |
| YLO.PR.D | 15.50-77 | 15.22-45 | 10.92% | Limit Maturity | -1.81% |
It was an uneven day in the Canadian Preferred Share Market, with PerpetualDiscounts flat (exactly!), FixedResets up 1bp and DeemedRetractibles winning 16bp. Volatility was muted. Volume was low.
| 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 | -0.0473 % | 2,438.7 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0473 % | 3,667.8 |
| Floater | 2.48 % | 2.30 % | 43,552 | 21.49 | 4 | -0.0473 % | 2,633.1 |
| OpRet | 4.87 % | 2.40 % | 62,729 | 0.23 | 9 | -0.1286 % | 2,441.2 |
| SplitShare | 5.23 % | 1.33 % | 53,553 | 0.63 | 6 | 0.0540 % | 2,515.3 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1286 % | 2,232.2 |
| Perpetual-Premium | 5.70 % | 5.11 % | 135,961 | 0.79 | 13 | 0.0031 % | 2,086.5 |
| Perpetual-Discount | 5.47 % | 5.45 % | 116,606 | 14.73 | 17 | 0.0000 % | 2,188.2 |
| FixedReset | 5.17 % | 3.16 % | 217,908 | 2.68 | 57 | 0.0113 % | 2,319.0 |
| Deemed-Retractible | 5.09 % | 4.82 % | 268,911 | 8.12 | 47 | 0.1596 % | 2,159.0 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| PWF.PR.A | Floater | -3.19 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-07-08 Maturity Price : 22.49 Evaluated at bid price : 22.75 Bid-YTW : 2.30 % |
| HSB.PR.D | Deemed-Retractible | -1.13 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.50 Bid-YTW : 5.29 % |
| NA.PR.L | Deemed-Retractible | 1.01 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.10 Bid-YTW : 4.77 % |
| TRI.PR.B | Floater | 2.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-07-08 Maturity Price : 23.48 Evaluated at bid price : 23.75 Bid-YTW : 2.19 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| TD.PR.S | FixedReset | 119,100 | RBC crossed 116,100 at 25.82. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-07-31 Maturity Price : 25.00 Evaluated at bid price : 25.81 Bid-YTW : 3.22 % |
| TD.PR.E | FixedReset | 43,150 | Scotia crossd 23,600 at 27.10. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-30 Maturity Price : 25.00 Evaluated at bid price : 27.19 Bid-YTW : 2.85 % |
| RY.PR.E | Deemed-Retractible | 34,770 | RBC crossed 25,000 at 24.40. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.42 Bid-YTW : 4.88 % |
| CM.PR.J | Deemed-Retractible | 33,600 | Desjardins crossed 25,000 at 24.50. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.55 Bid-YTW : 4.71 % |
| BNS.PR.Y | FixedReset | 27,100 | Scotia crossed 19,000 at 25.30. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.19 Bid-YTW : 3.29 % |
| FTS.PR.C | OpRet | 26,050 | RBC bought 12,500 from Nesbitt at 26.00. YTW SCENARIO Maturity Type : Call Maturity Date : 2011-08-07 Maturity Price : 25.50 Evaluated at bid price : 25.85 Bid-YTW : -4.67 % |
| There were 23 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| PWF.PR.A | Floater | Quote: 22.75 – 23.60 Spot Rate : 0.8500 Average : 0.5635 YTW SCENARIO |
| SLF.PR.G | FixedReset | Quote: 25.30 – 26.00 Spot Rate : 0.7000 Average : 0.4363 YTW SCENARIO |
| HSB.PR.D | Deemed-Retractible | Quote: 24.50 – 24.90 Spot Rate : 0.4000 Average : 0.2599 YTW SCENARIO |
| PWF.PR.O | Perpetual-Premium | Quote: 25.30 – 25.68 Spot Rate : 0.3800 Average : 0.2549 YTW SCENARIO |
| ELF.PR.F | Perpetual-Discount | Quote: 22.47 – 22.90 Spot Rate : 0.4300 Average : 0.3065 YTW SCENARIO |
| PWF.PR.L | Perpetual-Discount | Quote: 23.61 – 24.07 Spot Rate : 0.4600 Average : 0.3459 YTW SCENARIO |
[…] Note that Mr. Cuthbertson changed his views on the company on July 8. […]