“Fairness!” shout the regulators! “Fairness in all things, which means equality in all things, regardless of marginal costs to the fair entity! So Barclay’s provides an example:
Click for Big
Financial market reporters covering U.S. stocks have known for a long time that before they speak to a research analyst they will, in all likelihood, be sent a bevy of disclosures by the analyst’s employer. What is less known is that new rules recently published by Finra and approved by the U.S. Securities and Exchange Commission require similar measures be put in place for debt research.
As law firm Shearman & Sterling LLP put it in a recent client note: “Firms that produce analysis falling within the rule’s definition of ‘debt research report’ may face significant new regulatory obligations depending on applicable exemptions.” Those include “requirements for policies and procedures imposing information barrier/institutional safeguards between persons producing fixed-income research reports and personnel in investment banking, sales and trading and principal trading functions,” as well as disclosures similar to those required for equity research.
So, OK, newspapers won’t be publishing much debt research any more. But if they did, it would be FAIR!
Speaking of fairness, it can be trumped in Canada when the government has picked its winners already:
Before 1987, the banks were banned from even owning dealers, but a federal rule change broke down the barriers and the banks have slowly crept in. Early on, their participation in investment banking was rather innocent. “There was a veiled attempt at tied selling,” he said, meaning banks would suggest that corporate and investment banking should be aligned, “but it was an inference. It wasn’t as caustic and as straightforward and as matter of fact as it is now.”
…
Under Canada’s Competition Act, tied selling is a serious offence, and publicly arguing the banks engage in it is something you don’t take lightly.
…
To really make their case, the independents need data, because the Competition Act demands it. The best chance these dealers have of making changes is filing a claim under Section 79 of the act, which covers abuse of dominance. The bar is high: The independents would have to prove the banks have market dominance, that they engage in anti-competitive acts (i.e. tied selling) and that there is a substantial lessening of competition.
…
Even more complicated, the competition issue butts up against the banking watchdog’s wishes. From a prudential standpoint, the Office of the Superintendent of Financial Institutions believes it is better to have banks that are as diversified as possible, because it helps them withstand crises. Personal loan losses in Alberta may spike during this downturn, but energy companies may eventually merge in the province, driving M&A fees.To my eyes, the merits of this framework is the bigger issue. Whether tied selling exists is incredibly difficult to prove, but it’s obvious that the banks keep pushing into new businesses. Most recently, they won the war on wealth management, vaulting to top spot in long-term mutual-fund sales.
At some point, we, as a country, have to debate whether the prudential tradeoff is used too often, and whether the status quo is excessively unfair to independent companies of all stripes.
Remember, we live in a country in which the regulators will not enforce the Competition Act provided extra payments are made to the regulators.
But cheer up! There’s some more drone news today:
The Chinese drone-maker DJI has an answer to concerns that amateur pilots will crash their aircraft into things. Its newest drone, the Phantom 4, uses multiple cameras and software to sense and avoid obstacles automatically. The autonomous features show DJI is already commercializing technology that only recently was being tested in university research labs.
…
DJI’s obstacle-sensing system closely resembles one laid out last year by robotics researchers at the Massachusetts Institute of Technology in a series of papers and videos (one is embedded below). Using commercially available hardware, the MIT team outfitted a fixed-wing drone with a two-camera system that flew around tree branches and other obstacles at speeds of about 30 miles per hour. The Phantom 4 can avoid obstacles while flying at 22 miles per hour when it is in autonomous mode, DJI says.
…
Obstacle avoidance is a particular problem for drone developers. Keeping weight down and extending battery life is crucial for these birds, but scanning a three-dimensional environment requires lots of computing power. So the MIT drones didn’t capture 3D images continuously. Instead they looked for obstacles a certain distance away and then remembered where they were as the drone flew toward them. The technology is good enough to prevent drones from running into trees and buildings; they can’t react to another flying object traveling at high speeds.Andy Barry, the lead author of the paper describing this research, later left to join Boston Dynamics, the robotics company whose demo videos have become must-watch material for tech geeks.
…
The Phantom 4 is a striking reminder of how far consumer drones have come. DJI’s latest bird can’t circle the skies for hours like military drones do; it can stay aloft for about half an hour on a fully charged battery. But for $1,400, you can get a self-flying aircraft—just months after the concept was hatched in a research lab.
Just a few months from lab to shelf! You snooze – you lose!
EML.PR.A has had its full greenshoe option exercised. I have updated the PrefBlog report of the issue’s settlement.
Global Champions Split Corp., proud issuer of GCS.PR.A, was confirmed at Pfd-2 by DBRS:
The Company makes quarterly fixed cumulative distributions of $0.25 per Preferred Share, yielding 4.00% per annum on the issue price. Distributions to holders of the Preferred Shares are denominated in Canadian dollars and are hedged back to U.S. dollars unless the net asset value (NAV) of the Company is less than the aggregate original issue price of the Class A Preferred Shares. Based on the dividend yields on the Portfolio and foreign exchange rates as of February 24, 2016, the current dividend coverage ratio is approximately 1.3 times. Holders of the Capital Shares are expected to receive all excess income after the Company’s expenses and Class A Preferred Share distributions have been paid.
As of February 24, 2016, the downside protection available to the Preferred Shares is 61.4% based on the NAV of $64.75 after considering the exchange rate adjustment.
Some particular strengths of the Company are adequate diversification of the Portfolio with strong credit quality of the underlying companies and consistency of dividend distributions of the companies in the Portfolio.
The stability of the downside protection and strong portfolio metrics are supportive of the rating of Pfd-2 on the Preferred Shares issued by the Company.
It was a strong day for the Canadian preferred share market, with PerpetualDiscounts gaining 28bp, FixedResets winning 70bp and DeemedRetractibles up 31bp. The Performance Highlights table is suitably dominated by winning FixedResets. 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 | 5.55 % | 6.73 % | 13,011 | 15.82 | 1 | 0.0000 % | 1,412.8 |
| FixedFloater | 7.82 % | 6.85 % | 22,237 | 15.32 | 1 | 1.1657 % | 2,542.7 |
| Floater | 4.87 % | 5.07 % | 80,663 | 15.29 | 4 | 1.7834 % | 1,574.5 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0543 % | 2,732.1 |
| SplitShare | 4.87 % | 5.99 % | 81,934 | 2.66 | 7 | -0.0543 % | 3,197.1 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0543 % | 2,494.5 |
| Perpetual-Premium | 5.83 % | 4.96 % | 79,334 | 0.08 | 6 | 0.0996 % | 2,532.0 |
| Perpetual-Discount | 5.79 % | 5.84 % | 97,832 | 14.09 | 33 | 0.2812 % | 2,500.4 |
| FixedReset | 5.79 % | 5.28 % | 202,260 | 14.14 | 85 | 0.6991 % | 1,755.9 |
| Deemed-Retractible | 5.37 % | 6.02 % | 118,626 | 5.14 | 34 | 0.3098 % | 2,534.1 |
| FloatingReset | 3.19 % | 5.62 % | 44,917 | 5.46 | 16 | 0.1936 % | 1,914.3 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| TRP.PR.I | FloatingReset | -4.90 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 9.51 Evaluated at bid price : 9.51 Bid-YTW : 5.24 % |
| CIU.PR.C | FixedReset | -3.42 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 9.88 Evaluated at bid price : 9.88 Bid-YTW : 5.16 % |
| PWF.PR.Q | FloatingReset | -3.32 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 10.20 Evaluated at bid price : 10.20 Bid-YTW : 5.03 % |
| SLF.PR.H | FixedReset | -2.40 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 14.25 Bid-YTW : 10.39 % |
| TD.PR.Z | FloatingReset | -1.90 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.60 Bid-YTW : 5.62 % |
| FTS.PR.G | FixedReset | -1.67 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 14.16 Evaluated at bid price : 14.16 Bid-YTW : 5.23 % |
| W.PR.K | FixedReset | -1.63 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 22.83 Evaluated at bid price : 24.10 Bid-YTW : 5.49 % |
| BNS.PR.D | FloatingReset | -1.48 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 17.25 Bid-YTW : 8.12 % |
| FTS.PR.K | FixedReset | -1.37 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 14.40 Evaluated at bid price : 14.40 Bid-YTW : 5.12 % |
| FTS.PR.J | Perpetual-Discount | 1.01 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 20.90 Evaluated at bid price : 20.90 Bid-YTW : 5.72 % |
| BAM.PF.F | FixedReset | 1.02 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 16.80 Evaluated at bid price : 16.80 Bid-YTW : 5.66 % |
| CU.PR.G | Perpetual-Discount | 1.03 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 19.70 Evaluated at bid price : 19.70 Bid-YTW : 5.75 % |
| CU.PR.F | Perpetual-Discount | 1.03 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 19.70 Evaluated at bid price : 19.70 Bid-YTW : 5.75 % |
| CU.PR.D | Perpetual-Discount | 1.03 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 21.50 Evaluated at bid price : 21.50 Bid-YTW : 5.74 % |
| GWO.PR.M | Deemed-Retractible | 1.05 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.95 Bid-YTW : 5.80 % |
| BIP.PR.B | FixedReset | 1.06 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 22.72 Evaluated at bid price : 23.85 Bid-YTW : 5.71 % |
| HSE.PR.C | FixedReset | 1.07 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 14.15 Evaluated at bid price : 14.15 Bid-YTW : 7.19 % |
| BAM.PR.G | FixedFloater | 1.17 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 25.00 Evaluated at bid price : 12.15 Bid-YTW : 6.85 % |
| SLF.PR.J | FloatingReset | 1.17 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 11.25 Bid-YTW : 12.06 % |
| MFC.PR.F | FixedReset | 1.21 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 12.50 Bid-YTW : 11.05 % |
| CM.PR.Q | FixedReset | 1.22 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 17.45 Evaluated at bid price : 17.45 Bid-YTW : 5.06 % |
| BMO.PR.S | FixedReset | 1.28 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 16.67 Evaluated at bid price : 16.67 Bid-YTW : 4.78 % |
| NA.PR.S | FixedReset | 1.43 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 15.65 Evaluated at bid price : 15.65 Bid-YTW : 5.24 % |
| BAM.PF.B | FixedReset | 1.43 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 15.62 Evaluated at bid price : 15.62 Bid-YTW : 5.65 % |
| TRP.PR.G | FixedReset | 1.43 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 17.00 Evaluated at bid price : 17.00 Bid-YTW : 5.43 % |
| PWF.PR.T | FixedReset | 1.47 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 19.30 Evaluated at bid price : 19.30 Bid-YTW : 4.20 % |
| BAM.PF.G | FixedReset | 1.47 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 17.20 Evaluated at bid price : 17.20 Bid-YTW : 5.56 % |
| BAM.PF.E | FixedReset | 1.55 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 16.40 Evaluated at bid price : 16.40 Bid-YTW : 5.43 % |
| MFC.PR.N | FixedReset | 1.56 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 16.25 Bid-YTW : 9.27 % |
| RY.PR.Z | FixedReset | 1.61 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 16.41 Evaluated at bid price : 16.41 Bid-YTW : 4.70 % |
| BAM.PR.B | Floater | 1.62 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 9.40 Evaluated at bid price : 9.40 Bid-YTW : 5.10 % |
| SLF.PR.G | FixedReset | 1.63 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 13.08 Bid-YTW : 10.57 % |
| GWO.PR.N | FixedReset | 1.73 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 12.60 Bid-YTW : 10.94 % |
| BMO.PR.W | FixedReset | 1.75 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 16.28 Evaluated at bid price : 16.28 Bid-YTW : 4.74 % |
| TRP.PR.B | FixedReset | 1.84 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 9.96 Evaluated at bid price : 9.96 Bid-YTW : 5.00 % |
| TRP.PR.F | FloatingReset | 1.84 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 10.50 Evaluated at bid price : 10.50 Bid-YTW : 5.59 % |
| TD.PF.A | FixedReset | 1.86 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 16.40 Evaluated at bid price : 16.40 Bid-YTW : 4.78 % |
| TRP.PR.H | FloatingReset | 1.89 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 8.63 Evaluated at bid price : 8.63 Bid-YTW : 4.95 % |
| NA.PR.W | FixedReset | 1.98 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 14.90 Evaluated at bid price : 14.90 Bid-YTW : 5.31 % |
| BAM.PR.T | FixedReset | 2.07 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 13.80 Evaluated at bid price : 13.80 Bid-YTW : 5.68 % |
| BMO.PR.T | FixedReset | 2.10 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 16.50 Evaluated at bid price : 16.50 Bid-YTW : 4.71 % |
| MFC.PR.M | FixedReset | 2.12 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 16.39 Bid-YTW : 9.22 % |
| IFC.PR.C | FixedReset | 2.14 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 15.73 Bid-YTW : 9.88 % |
| HSE.PR.G | FixedReset | 2.23 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 16.05 Evaluated at bid price : 16.05 Bid-YTW : 6.84 % |
| MFC.PR.L | FixedReset | 2.24 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 15.08 Bid-YTW : 10.20 % |
| FTS.PR.I | FloatingReset | 2.25 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 9.10 Evaluated at bid price : 9.10 Bid-YTW : 5.18 % |
| IAG.PR.A | Deemed-Retractible | 2.28 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.23 Bid-YTW : 7.77 % |
| BNS.PR.P | FixedReset | 2.43 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.57 Bid-YTW : 4.12 % |
| BAM.PR.C | Floater | 2.52 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 9.35 Evaluated at bid price : 9.35 Bid-YTW : 5.13 % |
| RY.PR.H | FixedReset | 2.59 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 16.64 Evaluated at bid price : 16.64 Bid-YTW : 4.69 % |
| BAM.PR.K | Floater | 2.61 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 9.45 Evaluated at bid price : 9.45 Bid-YTW : 5.07 % |
| MFC.PR.K | FixedReset | 2.79 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 14.75 Bid-YTW : 10.37 % |
| TD.PF.C | FixedReset | 2.80 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 16.55 Evaluated at bid price : 16.55 Bid-YTW : 4.72 % |
| BNS.PR.F | FloatingReset | 3.77 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 18.17 Bid-YTW : 7.65 % |
| TRP.PR.A | FixedReset | 5.52 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 13.00 Evaluated at bid price : 13.00 Bid-YTW : 5.25 % |
| PWF.PR.P | FixedReset | 5.55 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 11.98 Evaluated at bid price : 11.98 Bid-YTW : 4.80 % |
| GWO.PR.O | FloatingReset | 8.82 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 11.10 Bid-YTW : 12.07 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| CU.PR.I | FixedReset | 153,287 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 23.18 Evaluated at bid price : 24.99 Bid-YTW : 4.41 % |
| MFC.PR.O | FixedReset | 148,448 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-06-19 Maturity Price : 25.00 Evaluated at bid price : 25.07 Bid-YTW : 5.60 % |
| RY.PR.J | FixedReset | 106,096 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 17.01 Evaluated at bid price : 17.01 Bid-YTW : 5.10 % |
| RY.PR.I | FixedReset | 62,890 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.40 Bid-YTW : 5.17 % |
| HSE.PR.A | FixedReset | 52,890 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-03-01 Maturity Price : 8.47 Evaluated at bid price : 8.47 Bid-YTW : 7.22 % |
| MFC.PR.J | FixedReset | 41,510 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 16.06 Bid-YTW : 9.52 % |
| There were 34 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| HSE.PR.G | FixedReset | Quote: 16.05 – 17.10 Spot Rate : 1.0500 Average : 0.7426 YTW SCENARIO |
| CCS.PR.C | Deemed-Retractible | Quote: 20.70 – 21.97 Spot Rate : 1.2700 Average : 0.9645 YTW SCENARIO |
| RY.PR.M | FixedReset | Quote: 16.85 – 17.80 Spot Rate : 0.9500 Average : 0.6643 YTW SCENARIO |
| TD.PR.Y | FixedReset | Quote: 22.50 – 23.45 Spot Rate : 0.9500 Average : 0.6988 YTW SCENARIO |
| CIU.PR.C | FixedReset | Quote: 9.88 – 10.58 Spot Rate : 0.7000 Average : 0.5116 YTW SCENARIO |
| TD.PR.T | FloatingReset | Quote: 20.36 – 21.58 Spot Rate : 1.2200 Average : 1.0323 YTW SCENARIO |