Europe is escalating the war on bankers, with proposed rules on fund manager bonuses and performance fees:
European Parliament lawmakers will delay voting on rules to curb fund manager bonuses as they continue to tussle over details of the plans.
Legislators are weighing changes to draft measures approved by the assembly’s economic and monetary affairs committee earlier this year that would ban managers of so-called UCITS funds from receiving bonuses worth more than their fixed pay and crack down on performance fees, Sven Giegold, the parliament’s lead lawmaker on the dossier, said today in an e-mail.
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UCITS, or Undertakings for Collective Investment in Transferable Securities, had more than 6 trillion euros ($7.8 trillion) under management as of April 2012, according to the European Commission. The funds are regulated at EU level and have the right to operate throughout the 27-nation bloc if they meet minimum oversight and investor-protection standards.
The big US exchanges can no longer compete in the marketplace, so they have come up with a bold, innovative strategy: outlaw competition:
Three large U.S. stock exchanges are lobbying for new limits on dark pools and other competitors, arguing that too much trading has become hidden on private venues that create more cost and volatility in public markets.
Chief executive officers of NYSE Euronext (NYX) Inc., Nasdaq OMX Group Inc (NDAQ) and Bats Global Markets Inc (BATS). have met in Washington over the past two months with lawmakers and the Securities and Exchange Commission. They’ve asked for a rule that could divert more orders to exchanges rather than trading in dark pools or within a broker’s inventory.
The exchanges say that more than a third of all stock transactions now occur without pre-trade prices being made public, up from 16 percent in January 2008. They are pressing the SEC to make market restructuring a priority as the agency resets under its new chairman, Mary Jo White.
“We are protecting the sanctity of the public quote, and you can expect us to continue to protect it with meetings we’ll be having and raising awareness of the issue in a very public way,” NYSE CEO Duncan Niederauer said in an interview.
I think it’s very noble of Niederauer to protect the sanctity of his fat salary.
DBRS has submitted a pugnacious comment letter to the SEC:
Section 939F of the Dodd-Frank Act directs the Commission, by rule, to establish a new system for the assignment of NRSROs to rate structured finance products as the Commission determines is necessary or appropriate in the public interest or for the protection of investors. In other words, the Commission must make a threshold determination regarding the public interest and the protection of investors before engaging in any new rulemaking on assigned credit ratings.[Footnote] If the threshold determination is made, the SEC must implement the system described in Exchange Act Section 15E(w) — a Dodd-Frank provision that was never enacted — unless the SEC determines that another system would better serve the public interest and the protection of investors.
While panelists at the Roundtable discussed many of the ways in which a Section 15E(w) system would not serve the public interest or the protection of investors, scant attention was paid to the threshold question as to whether any rulemaking is necessary and appropriate in this situation. DBRS continues to believe that the answer to this question is a resounding no.
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In order to cross the threshold to permissible rulemaking here, the Commission must find that the panoply of recently adopted and still-to-be-adopted NRSRO requirements is insufficient to protect investors, and that even with all of the publicly available information about rating methodologies and performance history, investors are incapable of evaluating the relative quality of NRSROs and their credit ratings and therefore, need the government to do it for them.
Since the last batch of proposed Dodd-Frank rules has yet to be implemented, DBRS submits that the Commission cannot make the required “necessary and appropriate” findings at this time.Footnote reads: The consequences of neglecting threshold determinations in Dodd-Frank rulemaking are illustrated by International Swaps & Derivatives Ass’n. v. U.S. Commodity Futures Trading Commission, 887 F. Supp. 2d 259 (D.D.C. 2012). In this case, the court vacated and remanded to the CFTC for further proceedings a derivatives position limits rule that the CFTC had adopted pursuant to the Dodd-Frank Act. In so doing, the court rejected the CFTC’s contention that its rulemaking was mandated by the statute without regard to whether such rulemaking was necessary or appropriate. Although the court found the phrasing of the Dodd-Frank amendment to the Commodity Exchange Act to be ambiguous (hence the reason for the remand), no such ambiguity exists in Section 939F. It is clear that the SEC is to adopt a rule establishing a system for the assignment of credit ratings only upon a determination that such a system is necessary and appropriate in the public interest or for the protection of investors.
It was a violently mixed day for the Canadian preferred share market, with PerpetualPremiums losing 17bp, FixedResets gaining 3bp and DeemedRetractibles down 13bp. Volatility was low. Volume was high.
| 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 | 0.0398 % | 2,550.1 |
| FixedFloater | 4.04 % | 3.37 % | 42,033 | 18.58 | 1 | -0.3390 % | 4,067.7 |
| Floater | 2.61 % | 2.96 % | 76,184 | 19.77 | 5 | 0.0398 % | 2,753.4 |
| OpRet | 4.83 % | 1.12 % | 65,768 | 0.08 | 5 | 0.0156 % | 2,612.3 |
| SplitShare | 4.63 % | 4.18 % | 100,279 | 4.05 | 6 | -0.0785 % | 2,986.0 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0156 % | 2,388.7 |
| Perpetual-Premium | 5.25 % | 3.90 % | 88,559 | 0.71 | 32 | -0.1719 % | 2,363.7 |
| Perpetual-Discount | 4.84 % | 4.99 % | 385,650 | 15.44 | 6 | -0.8802 % | 2,622.4 |
| FixedReset | 4.91 % | 2.85 % | 244,420 | 3.29 | 81 | 0.0307 % | 2,508.7 |
| Deemed-Retractible | 4.92 % | 3.71 % | 138,381 | 1.65 | 44 | -0.1344 % | 2,447.1 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BAM.PR.M | Perpetual-Discount | -1.40 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-06-04 Maturity Price : 23.50 Evaluated at bid price : 23.98 Bid-YTW : 5.01 % |
| CU.PR.G | Perpetual-Discount | -1.29 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-06-04 Maturity Price : 24.14 Evaluated at bid price : 24.51 Bid-YTW : 4.61 % |
| BNS.PR.Y | FixedReset | 1.02 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.75 Bid-YTW : 2.85 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| PWF.PR.S | Perpetual-Premium | 155,475 | RBC crossed blocks of 10,000 and 75,000 at 24.90. Nesbitt bought 10,000 from TD at the same price. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-06-04 Maturity Price : 24.48 Evaluated at bid price : 24.87 Bid-YTW : 4.86 % |
| TD.PR.I | FixedReset | 102,170 | RBC crossed 100,000 at 26.30. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-31 Maturity Price : 25.00 Evaluated at bid price : 26.29 Bid-YTW : 2.25 % |
| TD.PR.K | FixedReset | 91,100 | TD crossed 75,000 at 26.30. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-31 Maturity Price : 25.00 Evaluated at bid price : 26.30 Bid-YTW : 2.22 % |
| SLF.PR.A | Deemed-Retractible | 54,100 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.64 Bid-YTW : 4.90 % |
| SLF.PR.D | Deemed-Retractible | 50,486 | Nesbitt crossed 30,000 at 23.75. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.75 Bid-YTW : 5.01 % |
| BAM.PR.R | FixedReset | 42,800 | Scotia crossed 40,000 at 26.65. YTW SCENARIO Maturity Type : Call Maturity Date : 2016-06-30 Maturity Price : 25.00 Evaluated at bid price : 26.61 Bid-YTW : 3.52 % |
| There were 47 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| PWF.PR.R | Perpetual-Premium | Quote: 26.50 – 26.88 Spot Rate : 0.3800 Average : 0.2599 YTW SCENARIO |
| BAM.PR.M | Perpetual-Discount | Quote: 23.98 – 24.20 Spot Rate : 0.2200 Average : 0.1370 YTW SCENARIO |
| ENB.PR.A | Perpetual-Premium | Quote: 25.55 – 25.90 Spot Rate : 0.3500 Average : 0.2670 YTW SCENARIO |
| CU.PR.G | Perpetual-Discount | Quote: 24.51 – 24.74 Spot Rate : 0.2300 Average : 0.1473 YTW SCENARIO |
| TCA.PR.X | Perpetual-Premium | Quote: 50.56 – 50.86 Spot Rate : 0.3000 Average : 0.2208 YTW SCENARIO |
| FTS.PR.F | Perpetual-Premium | Quote: 25.12 – 25.35 Spot Rate : 0.2300 Average : 0.1550 YTW SCENARIO |