PrefBlog

The latest controversy is Flash Trading:

Charles Schumer, the third-ranking Democrat in the U.S. Senate, asked the Securities and Exchange Commission to ban so-called flash orders for stocks, saying they give high-speed traders an unfair advantage.

Schumer’s letter to SEC Chairman Mary Schapiro yesterday raised the stakes in a debate over the practice offered by Nasdaq OMX Group Inc., Bats Global Markets and Direct Edge Holdings LLC, which handle more than two-thirds of the shares traded in the U.S. With flash orders, exchanges wait up to half a second before they publish bids and offers on competing platforms, giving their own customers an opportunity to gauge demand before other traders.

The NYSE letter to the SEC has more details, but I must say I just don’t get it. As far as I can make out, the NYSE believes that Flash Trading will put traders who don’t work hard enough at a disadvantage. To which I say: So?

The Globe had a story on Saturday claiming regulators are seeking record settlements with respect to the ABCP fiasco:

Much of the regulatory attention is being paid to banks that sold the commercial paper. On July 24, 2007, dealers received an e-mail from Coventree disclosing some of its trusts’ exposures to U.S. subprime mortgage assets. Regulators have been focused on when institutions learned that ABCP had become infected by the troubled mortgages, and whether they profited by selling the notes from their own inventories to clients.

Settlements, eh? Regarding disclosure? Now, I’m certainly not going to take a stand in favour of incomplete disclosure, but I have a really hard time comprehending why that is the major issue. The way I see it, the major issues are:

• Portfolio Concentration, particularly with respect to retail clients putting an enormous chunk of their portfolios into a single name
• Portfolio Manager independence, as discussed on August 20, 2007
• Related to the above, the question of whether investment recommendations and actions were genuinely distinct from decisions in other parts of firms to invest in packagers of ABCP
• Why implicit bank guarantees are not included in their Risk-Weighted Assets (a matter of bank regulation rather than securities regulation, but I’ll put it in the list anyway)
• Why are there cash settlements? I’m sick and bloody tired of charlatans buying ‘their way out of trouble. If any advisor put any client into ABCP to the extent of more than 10% of net worth, that advisor should be in serious jeopordy of losing his license. His firm should be fined, certainly, for it’s dim-bulb supervision, but the advisor should be gone … and those responsible for compliance should be pretty damn nervous. But watch. It will just be fines, the only question being whether it’s one day’s profit, or two.

There shouldn’t be much surprise regarding hedge fund mobility news:

— David Butler, who advises hedge funds on tax issues, says he helped 23 firms leave London in the past 18 months, most of them for Switzerland.

“Managers do not feel there is a good relationship with politicians,” said Butler, founder of Kinetic Partners LLP in London. “When it is announced that taxes will go up, without any consultations, people understand there may be more on the way and they think the lifestyle they can have somewhere else is better than in London.”

Nova Scotia Power, proud issuers of NSI.PR.D, announced a 30-year bond issue today:

Nova Scotia Power Inc. completed the issue of $200 million Series W Medium Term Notes. The Series W Notes bear interest at the rate of 5.95% and yield 5.974% per annum until July 27, 2039.

The Offering was made to the public through a syndicate of agents co-led by TD Securities Inc. and RBC Dominion Securities Inc., and included CIBC World Markets Inc., Scotia Capital Inc., BMO Nesbitt Burns Inc., Merrill Lynch Canada Inc. and National Bank Financial Inc.

The net proceeds of the Offering will be used to repay short term borrowings.

Another good trading day for Canadian preferred shares, with high volume, not much direction (PerpetualDiscounts were off just a tad; FixedResets up very slightly) and a fair amount of price volatility.

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	-0.2730 %	1,178.0
FixedFloater	7.25 %	5.43 %	36,031	16.73	1	0.0000 %	2,118.3
Floater	3.23 %	3.84 %	76,103	17.75	3	-0.2730 %	1,471.7
OpRet	4.94 %	-5.08 %	138,814	0.09	15	0.2340 %	2,233.6
SplitShare	6.04 %	6.70 %	89,340	4.12	4	0.1613 %	1,940.6
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	0.2340 %	2,042.4
Perpetual-Premium	0.00 %	0.00 %	0	0.00	0	-0.0499 %	1,817.4
Perpetual-Discount	6.11 %	6.15 %	160,145	13.68	71	-0.0499 %	1,673.8
FixedReset	5.51 %	4.07 %	582,083	4.20	40	0.0750 %	2,094.1

Performance Highlights
Issue	Index	Change	Notes
W.PR.H	Perpetual-Discount	-4.21 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-07-27 Maturity Price : 20.50 Evaluated at bid price : 20.50 Bid-YTW : 6.78 %
PWF.PR.G	Perpetual-Discount	-3.57 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-07-27 Maturity Price : 22.37 Evaluated at bid price : 22.66 Bid-YTW : 6.54 %
W.PR.J	Perpetual-Discount	-2.53 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-07-27 Maturity Price : 21.69 Evaluated at bid price : 21.94 Bid-YTW : 6.43 %
TRI.PR.B	Floater	-2.15 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-07-27 Maturity Price : 15.90 Evaluated at bid price : 15.90 Bid-YTW : 2.49 %
IAG.PR.A	Perpetual-Discount	-1.30 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-07-27 Maturity Price : 17.52 Evaluated at bid price : 17.52 Bid-YTW : 6.65 %
PWF.PR.H	Perpetual-Discount	-1.26 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-07-27 Maturity Price : 22.35 Evaluated at bid price : 22.76 Bid-YTW : 6.34 %
MFC.PR.C	Perpetual-Discount	-1.20 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-07-27 Maturity Price : 18.15 Evaluated at bid price : 18.15 Bid-YTW : 6.29 %
IAG.PR.C	FixedReset	-1.19 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2014-01-30 Maturity Price : 25.00 Evaluated at bid price : 26.60 Bid-YTW : 4.76 %
PWF.PR.I	Perpetual-Discount	-1.13 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-07-27 Maturity Price : 23.25 Evaluated at bid price : 23.53 Bid-YTW : 6.41 %
BAM.PR.P	FixedReset	-1.04 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2014-10-30 Maturity Price : 25.00 Evaluated at bid price : 26.69 Bid-YTW : 5.77 %
CM.PR.M	FixedReset	1.09 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-30 Maturity Price : 25.00 Evaluated at bid price : 27.76 Bid-YTW : 4.11 %
TD.PR.O	Perpetual-Discount	1.21 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-07-27 Maturity Price : 20.93 Evaluated at bid price : 20.93 Bid-YTW : 5.83 %
RY.PR.C	Perpetual-Discount	1.27 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-07-27 Maturity Price : 20.00 Evaluated at bid price : 20.00 Bid-YTW : 5.76 %
BAM.PR.I	OpRet	1.61 %	YTW SCENARIO Maturity Type : Soft Maturity Maturity Date : 2013-12-30 Maturity Price : 25.00 Evaluated at bid price : 25.30 Bid-YTW : 5.33 %
BAM.PR.B	Floater	1.88 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-07-27 Maturity Price : 10.32 Evaluated at bid price : 10.32 Bid-YTW : 3.84 %
GWO.PR.J	FixedReset	1.98 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2014-01-30 Maturity Price : 25.00 Evaluated at bid price : 27.25 Bid-YTW : 3.94 %
BAM.PR.O	OpRet	2.14 %	YTW SCENARIO Maturity Type : Option Certainty Maturity Date : 2013-06-30 Maturity Price : 25.00 Evaluated at bid price : 24.86 Bid-YTW : 5.30 %
CIU.PR.A	Perpetual-Discount	3.73 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-07-27 Maturity Price : 20.00 Evaluated at bid price : 20.00 Bid-YTW : 5.85 %

Volume Highlights
Issue	Index	Shares Traded	Notes
SLF.PR.A	Perpetual-Discount	197,978	Somebody’s selling a bucketful of these; they have been a fixture on the volume chart for over a week, with yields way over the other SunLifes. National crossed two blocks of 21,000, both at 18.73, and bought 20,000 from anonymous at the same price. National bought another 10,000 from anonymous at 18.74. Nesbitt crossed 15,000 at 18.73. RBC crossed 50,000 at 18.74. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-07-27 Maturity Price : 18.71 Evaluated at bid price : 18.71 Bid-YTW : 6.43 %
BNS.PR.N	Perpetual-Discount	117,300	Scotia bought 50,000 from Nesbitt at 22.15; Nesbitt crossed 40,000 and Desjardins crossed 10,000 at the same price. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-07-27 Maturity Price : 22.06 Evaluated at bid price : 22.16 Bid-YTW : 5.96 %
TD.PR.O	Perpetual-Discount	66,908	National bought 25,000 from anonymous at 20.74, then crossed the same amount at the same price. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-07-27 Maturity Price : 20.93 Evaluated at bid price : 20.93 Bid-YTW : 5.83 %
CM.PR.H	Perpetual-Discount	48,492	RBC crossed 30,000 at 19.50. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-07-27 Maturity Price : 19.44 Evaluated at bid price : 19.44 Bid-YTW : 6.21 %
RY.PR.B	Perpetual-Discount	39,005	Anonymous crossed (?) 23,000 at 19.99. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-07-27 Maturity Price : 20.00 Evaluated at bid price : 20.00 Bid-YTW : 5.89 %
BNA.PR.D	SplitShare	36,275	Recent new issue. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2014-07-09 Maturity Price : 25.00 Evaluated at bid price : 25.20 Bid-YTW : 7.18 %
There were 47 other index-included issues trading in excess of 10,000 shares.

This entry was posted on Monday, July 27th, 2009 at 8:46 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.