French President Nicolas Sarkozy says he’s tired of waiting for the European Commission to act, so late last night he said he’d implement the Commission’s proposed transaction tax of 0.1% on equity transactions by August. It’s not clear if he’ll push through the 0.1% on derivatives that the Commission is proposing, but he did say that if the European Commission does implement the tax, France will synchronize it to the pan-European one. (more…)
When the Indian government implemented a ban on sugar futures last May, BC Khatua let it happen without a fight.
That seemed out of character for Khatua, who heads India’s Forward Markets Commission (FMC) and has long criticized the 2007 decision to ban futures on three staple food products (rice, tur, which is a type of pea, and urad, which is a type of black bean), so we asked him about this at the 31st annual Burgenstock Meeting here in Interlaken. (more…)
The 31st Burgenstock Meeting has kicked off in the resort village of Interlaken, and the halls this year are full of new faces representing new exchanges – much as they were in the 1990s, when exchanges were proliferating across Europe.
That proliferation eventually gave way to deal-making and consolidation, resulting in Euronext, Eurex, and NASDAQ OMX, with a smattering of outliers.
The proliferation now is in Asia – apropos, since we’ll be featuring Asia in our November edition, which I’m working on now – and comes as the once-separate emerging-markets program integrates more and more into the main body of talks. (more…)
On the heels of the Commodity Futures Trading Commisions’s (CFTC) release of the long awaited regulations that will govern the spot forex market, today we see this is a beast that seems to only grow. Earlier, the Bank of International Settlements (BIS) released the results of their triennial survey of the forex market. The study found that the average daily turnover in forex had grown by 20% in just the last three years to an astonishing $4 trillion. No other market can even come close. What’s more, that growth happened in the midst of a global recession, in case anybody forgot.
Gold futures hit an all time record high of $1,045 on Tuesday spurred on by a story in the London based Independent. The story stated that a cabal of Middle East oil producing nations along with China, Russia, Japan and France where conspiring to replace the dollar as the currency for crude oil.
Clearing and settlement of over-the-counter derivatives remained a hot topic at the Swiss Futures and Options Association’s 30th Burgenstock meeting last week, withseveral participants outlining a future with higher transaction costs but lower systemic risk as more and more OTC players move their business into arenas with central clearing.
Several exchange execs – including those from NYSE.Liffe, Eurex, and Nasdaq-OMX – made it clear they no longer believe that move will lead to a proliferation of new exchange-traded products that replace OTC instruments. Instead, it will reinforce the rise of clearinghouses – leaving established exchanges to expand their product base by moving into emerging markets.
As if to highlight that trend, a leader from the Mexican exchange MICEX announced it was contemplating the sale of an equity stake to CME Group, which already has a cross-holding in Brazil’s thriving BM&F BOVESPA. Spanish exchange MEFF has a stake the Mexican Derivatives Exchange (MexDer), leaving Argentina’s two futures exchanges – Buenos Aires’s Mercado a Termino de Buenos Aires and the Rosario Futures Exchange (ROFEX) – the only major Latin American players not affiliated with a big-brother exchange in the North.
The plunge that whacked markets in Europe and Asia as Societe Generale unwound the massive position built up by alleged “rogue” trader Jerome Kerviel has been officially ascribed to coincidence by the French government — which says that only 8% of the drop can be attributed to SocGen’s selling of a position larger than the GDP of Morocco.
But London traders have a different take.
The City is abuzz with talk of what happened in SocGen’s Paris offices over the weekend of January 19 and 20 — just after the bank had discovered Kerviel’s massive position.
“Basically, they called all of their traders into the office to let them know what had happened,” says one London trader. “By Monday, all of Paris knew that SocGen had a massive overhang and was going to be selling — although I don’t think anyone knew how big it really was.”
It’s tradition in markets to squeeze the weak longs and weak shorts, but there is also precedent for competitors declining the temptation if it presents systemic risk. That was the case with Barings, when competing banks agreed to let the British bank unwind its position alone and hold their own positions — although many also said they would be forced to bail if the market moved too far against them.
With SocGen, it is still not clear what other banks were made aware of the situation, but it is clear that enough well-heeled individuals knew something was up, and a growing consensus in London is that their Paris counterparts simply helped themselves to the carnage on offer.
Not necessarily anything wrong with that, of course. It’s what traders do.
But it means that SocGen’s contribution to the turmoil of those three days far exceeds the 8% officially ascribed to it.
It seems Jerome Kerviel, the Societe Generale trader who lost $7.2 billion, had been IMing a broker with Fimat, SocGen’s brokerage arm. Below are transcriptions of those IMs, reported by the Nouvel Observteur , a French magazine. (blog by Irene Frat in Paris)
Written in the sort of short hand used to quickly convey a message (over the Reuters instant messaging system), Jérôme Kerviel seemed to have an on going dialogue with a broker at Fimat, recently renamed Newedge, called Moussa Bakir. Here are some excerpts, translated and put in understandable English :
Swedish exchange and technology group OMX has launched a volley of mud against Borse Dubai, which last month launched an unsolicited $4 billion all-cash bid for OMX, challenging Nasdaq’s $3.7 billion cash-and-share offer, and now former LME boss and current head of Middle East business development for HSBC David King has defended not only the Dubai Borse but the Dubai regulatory regime.
