It’s still unclear, but MF Global may have been naughty as well as stupid:
MF Global Holdings Ltd. (MF), under investigation by U.S. regulators after filing for bankruptcy protection, violated requirements that it keep clients’ collateral separate from its own accounts, the head of the world’s largest futures exchange said.
…
MF Global, the holding company for the futures broker run by former New Jersey Governor and ex-Goldman Sachs Group Inc. Co-Chairman Jon Corzine, is being investigated by regulators for hundreds of millions of dollars that may be missing from client accounts, according to two people with knowledge of the matter.
…
The missing funds were reported yesterday by the New York Times. As much as $950 million was thought to be missing at first, and that figure fell to less than $700 million as the firm reviewed its accounting, the Times said today, citing people briefed on the matter. More funds may show up in coming days, the report said.
I’ll be cautious before condemning them. Regulators love to jump on accounting sloppiness and pump it up into something terrible, simply as a way of gaining a negotiating advantage. So we’ll just wait for more details to emerge.
I suspect that the whole thing was regulatory self-importance and hysteria:
“To the best knowledge of management, there is no shortfall,” [MF Global lawyer Kenneth] Ziman told U.S. Bankruptcy judge Martin Glenn in Manhattan, who inquired about whether a shortfall in customer accounts would affect the case, citing media reports that hundreds of millions of dollars were missing. Most of MF Global’s U.S. assets are held at its brokerage unit, Ziman said.
Europe’s new royalty are outraged that the Greek sans-culottes are being asked their opinion:
German Chancellor Angela Merkel and French President Nicolas Sarkozy held emergency talks on Greece today and called on Europe to implement the package of measures thrashed out in Brussels last week.
The plan, designed to aid Greece and stem the wider debt crisis, is “more necessary than ever today,” they said in a joint statement issued in Berlin and Paris. Germany and France “are convinced that this agreement allows Greece to return to lasting growth” and want to draw up a road map for locking in the second Greek bailout.
I don’t often agree with Lapdog Carney, but he got this one right:
Speaking to the House of Commons Finance Committee Tuesday morning, Mr. Carney notes that it is “imperative that there is widespread support” for tough decisions to implement major fiscal austerity measures, because they will unfold over a long period.
The referendum plan is being blamed for the equity hit today, but I don’t think the Greek government has a lot of real choice.
One way or another, Greeks have to get back to work – riots and national strikes don’t do any good for anybody. I suspect that the ability to vote on the deal will diminish the appeal of civil disobedience and, if the vote is affirmative, destroy the credibility of those who continue to push for it. And, of course, if the Greeks wish to cut their own throats and vote no, that’s their business.
So, presumably after discussing with aides the likely reaction of PrefBlog, Papandreou will press on.
A new charity scam has come to light:
A $22 billion disease-fighting fund backed by Microsoft Corp. (MSFT) founder Bill Gates found that money intended for people with life-threatening illnesses was used for home renovations in India and diverted to a person linked with money laundering and so-called blood diamonds in Nigeria.
The Global Fund to Fight AIDS, Tuberculosis and Malaria is seeking to recover as much as $19.2 million from grants in eight countries, the Geneva-based organization said in a set of reports today. As much as $1.3 million was misused by the head of a non-governmental AIDS organization in India to buy a car and renovate his apartment, one report said. In Nigeria, money was siphoned to a person arrested in 2003 for money-laundering and smuggling diamonds that are mined and sold to support war.
Golly, what a surprise!
It was an unevenly good day for the Canadian preferred share market, with PerpetualDiscounts winning 32bp, FixedResets gaining 12bp, and DeemedRetractibles up 3bp. Good volatility, with all issues on the Performance Highlights table being in the black. Volume was a shade on the light side of 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 | 0.7649 % | 2,076.2 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 1 | 0.7649 % | 3,122.6 |
| Floater | 3.47 % | 3.47 % | 156,308 | 18.58 | 2 | 0.7649 % | 2,241.8 |
| OpRet | 4.98 % | 3.06 % | 51,642 | 1.52 | 7 | 0.0129 % | 2,461.0 |
| SplitShare | 5.78 % | 6.48 % | 62,117 | 5.16 | 3 | 0.0704 % | 2,501.3 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0129 % | 2,250.4 |
| Perpetual-Premium | 5.59 % | 3.60 % | 108,546 | 0.49 | 13 | 0.0738 % | 2,139.1 |
| Perpetual-Discount | 5.37 % | 5.44 % | 109,762 | 14.76 | 17 | 0.3186 % | 2,269.1 |
| FixedReset | 5.13 % | 3.10 % | 212,200 | 2.45 | 61 | 0.1241 % | 2,341.6 |
| Deemed-Retractible | 5.06 % | 4.45 % | 217,488 | 4.04 | 46 | 0.0332 % | 2,210.2 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| GWO.PR.I | Deemed-Retractible | 1.20 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.85 Bid-YTW : 5.70 % |
| BMO.PR.H | Deemed-Retractible | 1.22 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2013-02-25 Maturity Price : 25.00 Evaluated at bid price : 25.63 Bid-YTW : 3.08 % |
| BMO.PR.J | Deemed-Retractible | 1.27 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2015-02-25 Maturity Price : 25.25 Evaluated at bid price : 25.57 Bid-YTW : 3.97 % |
| BAM.PR.T | FixedReset | 1.40 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-01 Maturity Price : 23.03 Evaluated at bid price : 24.70 Bid-YTW : 4.08 % |
| BAM.PR.R | FixedReset | 1.40 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-01 Maturity Price : 23.48 Evaluated at bid price : 26.00 Bid-YTW : 3.99 % |
| BAM.PR.K | Floater | 1.55 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-01 Maturity Price : 15.05 Evaluated at bid price : 15.05 Bid-YTW : 3.51 % |
| CIU.PR.A | Perpetual-Discount | 2.54 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-01 Maturity Price : 24.51 Evaluated at bid price : 25.01 Bid-YTW : 4.64 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| NA.PR.M | Deemed-Retractible | 103,004 | Desjardins crossed blocks of 25,000 and 75,000, both at 26.65. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-05-15 Maturity Price : 26.00 Evaluated at bid price : 26.64 Bid-YTW : 3.97 % |
| IAG.PR.C | FixedReset | 60,814 | Nesbitt sold 10,000 to Desjardin at 26.50, then 25,000 to RBC at the same price. RBC crossed 24,900 at the same price again. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-12-31 Maturity Price : 25.00 Evaluated at bid price : 26.53 Bid-YTW : 3.53 % |
| RY.PR.A | Deemed-Retractible | 59,106 | RBC crossed 38,200 at 25.00. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.98 Bid-YTW : 4.45 % |
| CM.PR.G | Perpetual-Discount | 49,107 | RBC crossed two blocks of 10,000 each, both at 24.94. Desjardins crossed 16,400 at the same price. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-01 Maturity Price : 24.58 Evaluated at bid price : 24.90 Bid-YTW : 5.44 % |
| TD.PR.E | FixedReset | 46,569 | Nesbitt bought 35,900 from TD at 27.14. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-30 Maturity Price : 25.00 Evaluated at bid price : 27.10 Bid-YTW : 2.76 % |
| BNS.PR.P | FixedReset | 40,915 | TD crossed 17,500 at 25.75. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-04-25 Maturity Price : 25.00 Evaluated at bid price : 25.77 Bid-YTW : 2.87 % |
| There were 29 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| CIU.PR.A | Perpetual-Discount | Quote: 25.01 – 25.89 Spot Rate : 0.8800 Average : 0.6672 YTW SCENARIO |
| SLF.PR.G | FixedReset | Quote: 25.05 – 25.40 Spot Rate : 0.3500 Average : 0.2471 YTW SCENARIO |
| GWO.PR.L | Deemed-Retractible | Quote: 25.20 – 25.50 Spot Rate : 0.3000 Average : 0.1977 YTW SCENARIO |
| SLF.PR.F | FixedReset | Quote: 26.85 – 27.33 Spot Rate : 0.4800 Average : 0.3837 YTW SCENARIO |
| FTS.PR.C | OpRet | Quote: 26.05 – 26.28 Spot Rate : 0.2300 Average : 0.1459 YTW SCENARIO |
| TD.PR.P | Deemed-Retractible | Quote: 26.34 – 26.69 Spot Rate : 0.3500 Average : 0.2707 YTW SCENARIO |