Is your country falling apart? Blame the short sellers!
Italy’s financial-market regulator moved to curb short selling after the country’s benchmark stock index fell the most in almost five months and bonds tumbled on investor concern Italy would be the next victim of the region’s debt crisis.
The regulator known as Consob ordered last night that short sellers must reveal their positions when they reach 0.2 percent or more of a company’s capital and then make additional filings for each additional 0.1 percent. The measure takes effect today and lasts until Sept. 9.
Another good technique is to bury the critics in paperwork:
Credit-ratings companies may be forced to disclose the internal analyses they use when they decide to cut a European Union government’s rating, the region’s financial services commissioner said.
Nations may win the right to check the data used by the companies in advance of downgrades of their sovereign ratings, Michel Barnier said in the text of a speech in Paris speech today. The measures may be included in legislation to rein in the ratings firms, he said.
But life is tough when you’re squaring the circle:
European finance chiefs clashed over how to dig Greece out of its financial hole just as markets battered the bonds of Spain and Italy, opening a new front in the debt crisis.
Finance ministers weighed how to get private bondholders to maintain their exposure to Greek debt in a way that doesn’t prompt credit-rating companies to declare a formal default.
Forcing bondholders to chip in would be “fatal,” Austrian Finance Minister Maria Fekter told reporters before a crisis meeting in Brussels today.
Late news is that maybe the taxpayers will foot the bill:
European finance ministers revived the prospect of bond buybacks to ease Greece’s plight and declined to rule out a temporary default, struggling to contain the debt crisis as investors pounded Italy, the continent’s third-largest economy.
Prodded by investors and the European Central Bank, the euro’s guardians said a bailout fund set up last year may be used to buy bonds in the secondary market or enable Greece to retire its debt at a discount. They offered another cut in rates on its emergency loans.
For all their recent problems, US brokerages have always been a far better and far more profitable place to work than those in Canada. Here’s why:
A headhunter put Muller in touch with Morgan Stanley, which was then looking for a quant strategist to drum up business. Muller had bigger aspirations and cut a deal with Derek Bandeen, a prop-trading executive. Muller had two years to get a profitable trading system running. If he failed, he would perform the strategist’s job. PDT was born.
The CSA has released a staff notice titled MARKETING PRACTICES OF PORTFOLIO MANAGERS:
We identified a number of deficiencies in the preparation, review and use of marketing materials by the PMs we reviewed.
Generally, the deficiencies were grouped into one of the following areas:
1. Preparation and use of hypothetical performance data
2. Exaggerated and unsubstantiated claims
3. Policies, procedures and internal controls
4. Use of benchmarks
5. Performance composites
6. Holding out and use of names
7. Other performance return issues
8. Disclosure related issues
Interesting piece on ETFs:
Using Deutsche Bank’s numbers, and then comparing them to a recent McKinsey & Co. analysis of Europe’s fund management industry, the Financial Times found that ETF’s likely account for 13 per cent of the Europe’s €9-billion in fund profits. More importantly, the profit margins on ETFs are sky high — 55.5 basis points of assets under management for ETFs versus 12.5 basis points for traditional funds.
And within ETFs, there’s a difference in profit margins between synthetic ETFs and physically replicated ETFs. The first type posts profit margins of 69 per cent, while the latter has profit margins of 64 per cent.
…
Past studies have found that over 50 per cent of assets under management in European ETFs are now placed in synthetic ETFs.
Makes sense. All the MER on funds goes to the salesman.
It was a mixed day on the Canadian preferred share market, with PerpetualDiscounts up 13bp, FixedResets ahead 1bp and DeemedRetractibles losing 9bp. Volatility was good. Volume was extremely light.
| 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 | -1.4539 % | 2,403.2 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -1.4539 % | 3,614.4 |
| Floater | 2.52 % | 2.47 % | 43,153 | 21.09 | 4 | -1.4539 % | 2,594.9 |
| OpRet | 4.87 % | 2.33 % | 62,558 | 0.22 | 9 | 0.1116 % | 2,443.9 |
| SplitShare | 5.24 % | 1.35 % | 55,283 | 0.63 | 6 | -0.2567 % | 2,508.8 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1116 % | 2,234.7 |
| Perpetual-Premium | 5.69 % | 5.21 % | 135,384 | 0.86 | 13 | 0.0657 % | 2,087.8 |
| Perpetual-Discount | 5.46 % | 5.46 % | 115,635 | 14.70 | 17 | 0.1274 % | 2,191.0 |
| FixedReset | 5.17 % | 3.16 % | 211,446 | 2.68 | 57 | 0.0126 % | 2,319.3 |
| Deemed-Retractible | 5.09 % | 4.87 % | 265,887 | 8.10 | 47 | -0.0939 % | 2,157.0 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| PWF.PR.A | Floater | -5.89 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-07-11 Maturity Price : 21.41 Evaluated at bid price : 21.41 Bid-YTW : 2.47 % |
| GWO.PR.I | Deemed-Retractible | -1.44 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.52 Bid-YTW : 5.82 % |
| GWO.PR.M | Deemed-Retractible | -1.01 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.39 Bid-YTW : 5.66 % |
| FTS.PR.H | FixedReset | 1.03 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-07-11 Maturity Price : 23.41 Evaluated at bid price : 25.47 Bid-YTW : 3.50 % |
| BMO.PR.P | FixedReset | 1.05 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2015-02-25 Maturity Price : 25.00 Evaluated at bid price : 27.05 Bid-YTW : 3.21 % |
| HSB.PR.D | Deemed-Retractible | 1.71 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.92 Bid-YTW : 5.09 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| CM.PR.H | Deemed-Retractible | 60,576 | Called for redemption. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-04-30 Maturity Price : 25.50 Evaluated at bid price : 25.71 Bid-YTW : 3.32 % |
| RY.PR.I | FixedReset | 53,400 | Nesbitt crossed 50,000 at 26.20. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-02-24 Maturity Price : 25.00 Evaluated at bid price : 26.16 Bid-YTW : 3.41 % |
| RY.PR.X | FixedReset | 51,710 | Nesbitt crossed 50,000 at 27.50. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-24 Maturity Price : 25.00 Evaluated at bid price : 27.46 Bid-YTW : 3.21 % |
| RY.PR.B | Deemed-Retractible | 30,760 | Nesbitt crossed 12,000 at 24.94. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.81 Bid-YTW : 4.89 % |
| CM.PR.G | Perpetual-Premium | 29,090 | RBC crossed 25,000 at 25.09. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-05-01 Maturity Price : 25.00 Evaluated at bid price : 24.96 Bid-YTW : 5.37 % |
| GWO.PR.F | Deemed-Retractible | 25,228 | Nesbitt crossed 25,000 at 25.30. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-09-30 Maturity Price : 25.00 Evaluated at bid price : 25.27 Bid-YTW : 5.16 % |
| There were 16 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: 21.41 – 23.20 Spot Rate : 1.7900 Average : 1.2050 YTW SCENARIO |
| IAG.PR.C | FixedReset | Quote: 26.55 – 27.24 Spot Rate : 0.6900 Average : 0.4677 YTW SCENARIO |
| GWO.PR.M | Deemed-Retractible | Quote: 25.39 – 25.92 Spot Rate : 0.5300 Average : 0.3299 YTW SCENARIO |
| SLF.PR.G | FixedReset | Quote: 25.30 – 26.00 Spot Rate : 0.7000 Average : 0.5742 YTW SCENARIO |
| PWF.PR.K | Perpetual-Discount | Quote: 23.31 – 23.75 Spot Rate : 0.4400 Average : 0.3226 YTW SCENARIO |
| BAM.PR.O | OpRet | Quote: 25.85 – 26.29 Spot Rate : 0.4400 Average : 0.3227 YTW SCENARIO |
[…] Kiladze of the Globe noted that, in contrast to the European ETFs discussed on July 11, Canadian ETFs are less risky, and less profitable: Because most Canadian ETFs are more vanilla, […]