{"id":14956,"date":"2011-05-05T22:42:19","date_gmt":"2011-05-06T02:42:19","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=14956"},"modified":"2011-05-05T22:42:19","modified_gmt":"2011-05-06T02:42:19","slug":"may-5-2011","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=14956","title":{"rendered":"May 5, 2011"},"content":{"rendered":"

Surprise! Increased regulation lead to migration to non-regulated channels<\/a>:<\/p>\n

For Goldman Sachs Group Inc. (GS) and Morgan Stanley, two of Wall Street\u2019s biggest commodities-trading firms, the year\u2019s largest initial public offering represents a nightmare come true: the rise of unregulated rivals.<\/p>\n

Glencore International AG\u2019s IPO probably will catapult the Baar, Switzerland-based commodities firm from relative obscurity onto London\u2019s FTSE 100 list of most valuable stocks this month. Chief Executive Officer Ivan Glasenberg, 54, a former coal trader, owns a 16 percent stake in Glencore worth $9.6 billion if the sale assigns the firm a mid-range value of $61 billion.
…<\/b>
Glencore, like rivals such as Hong Kong-based Noble Group Ltd. (NOBL) and Amsterdam-based Trafigura Beheer BV, can take bigger trading risks in the commodities markets, helping to make them more profitable and more appealing as employers for top traders.<\/p>\n

\u201cProp trading remains as a potent incentive to join Glencore, Noble, Trafigura and any of the major trading firms not restricted by banking rules,\u201d said George H. Stein, managing director of Commodity Talent LLC, a recruitment firm in New York.<\/p>\n

Glencore\u2019s average 2010 value-at-risk, a measure of how much the firm\u2019s traders could lose in a single day, jumped to $43 million from $27 million in 2009, according to the firm\u2019s annual report. Goldman Sachs\u2019s commodity price value-at-risk dropped to $33 million in 2010 from $36 million in 2009, company data show.<\/p><\/blockquote>\n

I don’t think that’s the end of the story, however. I suspect that the regulators will find a way to go after Glencore if there’s the slightest possibility of villainizing them. The end-game, I suspect, is a system with a multitude of small shops, each having $0.5-1.0-billion under management. This won’t do anything for financial stability because, by and large, all these guys will be making the same bets; but it will make everybody feel better that Something Was Done, and that’s what counts, isn’t it?<\/p>\n

On cue, Bernanke delivered a warning<\/a>:<\/p>\n

Federal Reserve Chairman Ben S. Bernanke said the government must avoid imposing burdensome rules on financial companies as it carries out the biggest regulatory overhaul in seven decades.<\/p>\n

\u201cNo one\u2019s interests are served by the imposition of ineffective or burdensome rules that lead to excessive increases in costs or unnecessary restrictions in the supply of credit,\u201d Bernanke said today in a speech in Chicago. \u201cRegulators must aim to avoid stifling reasonable risk-taking and innovation in financial markets, as these factors play an important role in fostering broader productivity gains, economic growth, and job creation.\u201d<\/p><\/blockquote>\n

But the immediate issues du jour are not directly related to Glencore et al:<\/p>\n

U.S. banks have mounted a campaign against one Fed regulation under Dodd-Frank to cap \u201cswipe\u201d fees on debit cards. Bernanke said in March that the Fed would miss an April deadline for the rule, telling lawmakers the issues raised in more than 11,000 comment letters are \u201ccomplex and difficult.\u201d<\/p>\n

Last week, the Treasury Department proposed exempting foreign-exchange swaps and forwards from most of the derivatives rules required under the Dodd-Frank Act, saying the market already meets many of the law\u2019s objectives.<\/p>\n

A coalition of 20 firms, including Deutsche Bank AG, Bank of New York Mellon Corp. and UBS AG, asked Treasury Secretary Timothy F. Geithner to grant an exemption in a November letter.<\/p><\/blockquote>\n

The TMX \/ LSE deal is getting more interesting<\/a>:<\/p>\n

:Banks opposed to the planned combination of TMX Group Inc. (X-T39.53-0.01-0.03%) and London Stock Exchange Group PLC are looking for ways to thwart the deal, and are seeking the backing of Canada\u2019s biggest pension funds.<\/p>\n

Talks among large Canadian financial institutions searching for an alternative to the merger of the Toronto and London stock market operators have been going on for weeks. Options under consideration include a potential counterbid for TMX, which is valued at almost $3-billion.<\/p><\/blockquote>\n

Call me paranoid, but I’m convinced there’s more to this than meets the eye. It may have something to do with power … with the present situation, the banks can quite reasonably expect the TMX to kowtow to them on demand, since all employees, from the CEO on down, have to worry about their future career prospects. This will not be the case if the TMX is part of a pugnacious international group. But who knows?<\/p>\n

And anyway, commodities aren’t fashionable this week<\/a>:<\/p>\n

Commodities plunged the most since 2008, stocks worldwide posted the biggest three-day drop since March and the dollar rallied after American jobless claims unexpectedly rose and the European Central Bank signaled it will wait until after June to raise interest rates.<\/p>\n

The Standard & Poor\u2019s GSCI index of 24 commodities sank 7.3 percent at 3:19 p.m. in New York and has lost 11 percent this week. Silver tumbled 11 percent, extending its decline since April 29 to 28 percent. Oil sank 9.7 percent, falling below $100 a barrel for the first time since March 17. The MSCI All-Country World Index of shares in 45 nations fell 1.4 percent. The dollar gained 2.2 percent against the euro, making commodities quoted in the greenback more expensive for holders of other currencies.<\/p><\/blockquote>\n

Desjardins is raining all over the Maple parade<\/a>:<\/p>\n

There\u2019s chatter in the bond world that the maple market is coming back, driven by increased issuance over the past four weeks.<\/p>\n

However, at this point, the perceived strength is all hype. The numbers prove otherwise.<\/p>\n

In 2011 maple issuers — which are foreign entities that raise debt issued in Canadian dollars — have financed $2.2-billion here in Canada. That\u2019s just a fraction of the $17-billion raised in 2007 when the maple market was hot.<\/p>\n

\u201cNot only does this clearly put things into perspective, but also shows how far we are from a true ‘renaissance’ of the maple bond market,\u201d Jean-Fran\u00e7ois Godin of Desjardins Securities notes.<\/p><\/blockquote>\n

It was a restful day in the Canadian preferred share market, with PerpetualDiscounts losing 5bp, FixedResets down 3bp and DeemedRetractibles gaining 4bp. Volatility remained low, and volume was light.<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices<\/strong>
Values are provisional and are finalized monthly<\/td>\n<\/tr>\n
Index<\/td>\nMean
Current
Yield
(at bid)<\/td>\n		Median
YTW<\/td>\n		Median
Average
Trading
Value<\/td>\n		Median
Mod Dur
(YTW)<\/td>\n		Issues<\/td>\nDay’s Perf.<\/td>\nIndex Value<\/td>\n<\/tr>\n
Ratchet<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.1648 %<\/td>\n2,441.1<\/td>\n<\/tr>\n
FixedFloater<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.1648 %<\/td>\n3,671.3<\/td>\n<\/tr>\n
Floater<\/td>\n2.47 %<\/td>\n2.25 %<\/td>\n38,833<\/td>\n21.64<\/td>\n4<\/td>\n0.1648 %<\/td>\n2,635.7<\/td>\n<\/tr>\n
OpRet<\/td>\n4.86 %<\/td>\n3.67 %<\/td>\n62,297<\/td>\n1.18<\/td>\n9<\/td>\n-0.0770 %<\/td>\n2,417.6<\/td>\n<\/tr>\n
SplitShare<\/td>\n5.20 %<\/td>\n-1.48 %<\/td>\n72,409<\/td>\n0.61<\/td>\n6<\/td>\n0.0662 %<\/td>\n2,500.8<\/td>\n<\/tr>\n
Interest-Bearing<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n-0.0770 %<\/td>\n2,210.7<\/td>\n<\/tr>\n
Perpetual-Premium<\/td>\n5.73 %<\/td>\n5.53 %<\/td>\n143,406<\/td>\n2.34<\/td>\n9<\/td>\n0.1168 %<\/td>\n2,057.8<\/td>\n<\/tr>\n
Perpetual-Discount<\/td>\n5.56 %<\/td>\n5.62 %<\/td>\n120,556<\/td>\n14.46<\/td>\n15<\/td>\n-0.0482 %<\/td>\n2,132.5<\/td>\n<\/tr>\n
FixedReset<\/td>\n5.16 %<\/td>\n3.37 %<\/td>\n207,709<\/td>\n2.88<\/td>\n57<\/td>\n-0.0305 %<\/td>\n2,299.8<\/td>\n<\/tr>\n
Deemed-Retractible<\/td>\n5.21 %<\/td>\n5.02 %<\/td>\n312,934<\/td>\n8.13<\/td>\n53<\/td>\n0.0397 %<\/td>\n2,104.7<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n
Performance Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nChange<\/td>\nNotes<\/td>\n<\/tr>\n
PWF.PR.P<\/td>\nFixedReset<\/td>\n-1.05 %<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2016-03-01
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.43
\nBid-YTW : 4.04 %<\/td>\n<\/tr>\n
HSB.PR.D<\/td>\nDeemed-Retractible<\/td>\n1.03 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.60
\nBid-YTW : 5.29 %<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\n\n\n\n\n
Volume Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nShares
Traded<\/td>\n		Notes<\/td>\n<\/tr>\n
RY.PR.A<\/td>\nDeemed-Retractible<\/td>\n158,930<\/td>\nRBC crossed 30,000 at 23.90; Desjardins crossed 40,000 at the same price; TD crossed 75,000 at the same price again.
\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 23.90
\nBid-YTW : 4.98 %<\/td>\n<\/tr>\n
BMO.PR.H<\/td>\nDeemed-Retractible<\/td>\n132,865<\/td>\nTD crossed blocks of 83,000 and 40,000, both at 25.15.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2013-03-27
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.20
\nBid-YTW : 4.70 %<\/td>\n<\/tr>\n
MFC.PR.D<\/td>\nFixedReset<\/td>\n110,819<\/td>\nRBC crossed 100,000 at 27.50.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-07-19
\nMaturity Price : 25.00
\nEvaluated at bid price : 27.46
\nBid-YTW : 3.66 %<\/td>\n<\/tr>\n
CM.PR.I<\/td>\nDeemed-Retractible<\/td>\n57,885<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.59
\nBid-YTW : 4.93 %<\/td>\n<\/tr>\n
PWF.PR.M<\/td>\nFixedReset<\/td>\n55,000<\/td>\nRBC crossed 50,000 at 26.92.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-03-02
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.80
\nBid-YTW : 3.36 %<\/td>\n<\/tr>\n
BNS.PR.R<\/td>\nFixedReset<\/td>\n53,100<\/td>\nDesjardins crossed 48,900 at 26.10.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-02-25
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.04
\nBid-YTW : 3.43 %<\/td>\n<\/tr>\n
There were 26 other index-included issues trading in excess of 10,000 shares.<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\n\n\n\n
Wide Spread Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nQuote Data and Yield Notes<\/td>\n<\/tr>\n
FTS.PR.H<\/td>\nFixedReset<\/td>\nQuote: 25.45 – 25.94
\nSpot Rate : 0.4900
\nAverage : 0.3018<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2020-07-01
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.45
\nBid-YTW : 3.96 %<\/td>\n<\/tr>\n

POW.PR.B<\/td>\nPerpetual-Discount<\/td>\nQuote: 23.52 – 23.89
\nSpot Rate : 0.3700
\nAverage : 0.2433<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2041-05-05
\nMaturity Price : 23.22
\nEvaluated at bid price : 23.52
\nBid-YTW : 5.73 %<\/td>\n<\/tr>\n

BMO.PR.M<\/td>\nFixedReset<\/td>\nQuote: 26.12 – 26.46
\nSpot Rate : 0.3400
\nAverage : 0.2391<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2013-09-24
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.12
\nBid-YTW : 2.85 %<\/td>\n<\/tr>\n

GWO.PR.N<\/td>\nFixedReset<\/td>\nQuote: 24.60 – 24.90
\nSpot Rate : 0.3000
\nAverage : 0.1996<\/p>\n

YTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.60
\nBid-YTW : 3.96 %<\/td>\n<\/tr>\n

W.PR.J<\/td>\nPerpetual-Discount<\/td>\nQuote: 24.05 – 24.30
\nSpot Rate : 0.2500
\nAverage : 0.1871<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2041-05-05
\nMaturity Price : 23.74
\nEvaluated at bid price : 24.05
\nBid-YTW : 5.87 %<\/td>\n<\/tr>\n

BAM.PR.M<\/td>\nPerpetual-Discount<\/td>\nQuote: 21.43 – 21.62
\nSpot Rate : 0.1900
\nAverage : 0.1360<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2041-05-05
\nMaturity Price : 21.43
\nEvaluated at bid price : 21.43
\nBid-YTW : 5.62 %<\/td>\n<\/tr>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

Surprise! Increased regulation lead to migration to non-regulated channels: For Goldman Sachs Group Inc. (GS) and Morgan Stanley, two of Wall Street\u2019s biggest commodities-trading firms, the year\u2019s largest initial public offering represents a nightmare come …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[],"class_list":["post-14956","post","type-post","status-publish","format-standard","hentry","category-market-action"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/14956","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14956"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/14956\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14956"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14956"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14956"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}