No Love Lost for U.S. Debt as Bond Dealers Share Fewer Treasuries With Fed
By Cordell Eddings and Liz Capo McCormick, Bloomberg
The world’s biggest bond dealers are finding fewer Treasuries to sell to the Federal Reserve as its $600 billion purchase program nears an end, a signal of rising demand even as the largest buyer steps away.
http://jlne.ws/iPdgfr
UK consumer recovery set to be slowest in 180 years
By Daniel Pimlott, FT.com
The UK economy is set to experience the slowest pick-up in consumer spending of any post-recession period since 1830, according to a Financial Times analysis of official forecasts. Families are expected to spend just slightly more by 2015 than they were before the financial crisis hit in 2008, as high inflation, tax rises and slow wage growth eat into disposable incomes.
http://jlne.ws/jQkRa4
President Obama Announces Intent to Nominate Bryson as U.S. Department of Commerce Secretary
Today, President Obama will announce his intent to nominate John Bryson as the Secretary of U.S. Department of Commerce. Mr. Bryson will play a key role as a member of the President’s economic team, bringing decades of knowledge and experience in the public and private sectors, and will provide valuable ideas and initiatives to strengthen America’s competiveness around the world.
http://jlne.ws/kotf5G
Is bond trading dying?
Reuters
Fixed income trading revenue is falling, and some of the best minds on Wall Street disagree on whether this is temporary weakness or slow death.
http://jlne.ws/jZ1omL
BlackRock’s Fink Says Europe’s Financial Problems Go ‘Way Beyond’ Greece
By Rishaad Salamat and Bei Hu, Bloomberg
Europe’s financial problems aren’t confined to Greece and a reorganization of the continent’s banking system is necessary, Laurence D. Fink, chief executive officer of BlackRock Inc. (BLK), said in a Bloomberg television interview today.
http://jlne.ws/m3YQU2
Trichet to Leave a Difficult Legacy at ECB
By JACK EWING, The New York Times
Since Europe’s debt crisis became acute last year, the European Central Bank has gone beyond its role as arbiter of monetary policy to become in effect the adult supervision for quarreling heads of government.
http://jlne.ws/mGzMSa
Chicago Business Barometer dropped to 56.6 from 67.6 in April. This was below consensus expectations of 62.3
The Chicago Purchasing Managers reported the CHICAGO BUSINESS BAROMETER dropped toward neutral, indicating decelerating expanding economic activity, but posted a twentieth month of growth.
http://jlne.ws/kQQNiK
John Bryson to Be Named Obama Commerce Secretary
By JACKIE CALMES, The New York Times
President Obama named a California utility and energy executive, John E. Bryson, as his second secretary of commerce at the White House on Tuesday afternoon, ending a search for an executive to add a business outlook to his economic team.
http://jlne.ws/mGe0Rw
US house prices below 2009 low, Case-Shiller indicates
US house prices fell in March, dipping below their 2009 low, as the housing market continued to be affected by weak demand, an index has shown.
http://jlne.ws/lcYKK8
Consumer confidence drops in May: Conference Board
Reuters
Consumer confidence slid in May as consumers turned more pessimistic on the outlook for the labor market and inflation worries rose, according to a private sector report released on Tuesday.
http://jlne.ws/l7Ya84
Dodd-Frank act drives tie-ups and innovation
By Telis Demo, FT.com
The world’s exchanges must be exhausted. It was scarcely a decade ago that many of the largest groups – including the New York Stock Exchange, the London Stock Exchange, the Chicago Mercantile Exchange – became public companies.http://jlne.ws/mdKLWL
Selasa, 31 Mei 2011
President Obama Announces Intent to Nominate John Bryson as U.S. Department of Commerce Secretary
Press Release
May 31, 2011
President Obama Announces Intent to Nominate John Bryson as U.S. Department of Commerce Secretary
Today, President Obama will announce his intent to nominate John Bryson as the Secretary of U.S. Department of Commerce. Mr. Bryson will play a key role as a member of the President’s economic team, bringing decades of knowledge and experience in the public and private sectors, and will provide valuable ideas and initiatives to strengthen America’s competitiveness around the world.
“I am pleased to nominate John Bryson to be our nation’s Secretary of Commerce, as he understands what it takes for America to succeed in a 21st century global economy,” said President Obama. “John will be an important part of my economic team, working with the business community, fostering growth, and helping open up new markets abroad to promote jobs and opportunities here at home.”
The President is confident in Mr. Bryson’s ability to lead the Department and promote job creation, economic growth, sustainable development and improved standards of living for all Americans by working in partnership with businesses, universities, communities and our nation’s workers.
Mr. Bryson will continue the Department’s mission to drive U.S. competitiveness in the global marketplace, strengthen the international economic position of the United States and facilitate global trade by opening up new markets for U.S. goods and services. Mr. Bryson will continue the ongoing effort to meet the President’s goal of doubling America’s exports to support millions of American jobs.
Previously, John Bryson was Chairman and Chief Executive Officer of Edison International, the parent company of Southern California Edison and Edison Mission Group, from 1990 to 2008.
He is a director of The Boeing Company, The Walt Disney Company and Coda Automotive, Inc., and is a senior advisor to KKR. He is chairman of the board of BrightSource Energy, the Public Policy Institute of California (PPIC), and the Keck School of Medicine of the University of Southern California (USC) Board of Overseers. He also serves as co-chairman of the Pacific Council on International Policy (PCIP).
Mr. Bryson is a trustee of the California Institute of Technology and a director of The California Endowment and the W. M. Keck Foundation. He serves on the Advisory Board of Deutsche Bank Americas. He also previously served on a number of educational and environmental boards, including as chairman of the California Business Roundtable, co-chairman of the Electric Drive Transportation Association (EDTA), trustee of Stanford University, and as a member of the U.N. Secretary-General’s Advisory Group on Energy and Climate Change (AGECC).
Bryson also served as president of the California Public Utilities Commission, chairman of the California State Water Resources Control Board, and on the board of the Council on Foreign Relations. At the start of his career, he was a co-founder and attorney for the Natural Resources Defense Council (NRDC), a national and international environmental group. He is a graduate of Stanford University and Yale Law School.
May 31, 2011
President Obama Announces Intent to Nominate John Bryson as U.S. Department of Commerce Secretary
Today, President Obama will announce his intent to nominate John Bryson as the Secretary of U.S. Department of Commerce. Mr. Bryson will play a key role as a member of the President’s economic team, bringing decades of knowledge and experience in the public and private sectors, and will provide valuable ideas and initiatives to strengthen America’s competitiveness around the world.
“I am pleased to nominate John Bryson to be our nation’s Secretary of Commerce, as he understands what it takes for America to succeed in a 21st century global economy,” said President Obama. “John will be an important part of my economic team, working with the business community, fostering growth, and helping open up new markets abroad to promote jobs and opportunities here at home.”
The President is confident in Mr. Bryson’s ability to lead the Department and promote job creation, economic growth, sustainable development and improved standards of living for all Americans by working in partnership with businesses, universities, communities and our nation’s workers.
Mr. Bryson will continue the Department’s mission to drive U.S. competitiveness in the global marketplace, strengthen the international economic position of the United States and facilitate global trade by opening up new markets for U.S. goods and services. Mr. Bryson will continue the ongoing effort to meet the President’s goal of doubling America’s exports to support millions of American jobs.
Previously, John Bryson was Chairman and Chief Executive Officer of Edison International, the parent company of Southern California Edison and Edison Mission Group, from 1990 to 2008.
He is a director of The Boeing Company, The Walt Disney Company and Coda Automotive, Inc., and is a senior advisor to KKR. He is chairman of the board of BrightSource Energy, the Public Policy Institute of California (PPIC), and the Keck School of Medicine of the University of Southern California (USC) Board of Overseers. He also serves as co-chairman of the Pacific Council on International Policy (PCIP).
Mr. Bryson is a trustee of the California Institute of Technology and a director of The California Endowment and the W. M. Keck Foundation. He serves on the Advisory Board of Deutsche Bank Americas. He also previously served on a number of educational and environmental boards, including as chairman of the California Business Roundtable, co-chairman of the Electric Drive Transportation Association (EDTA), trustee of Stanford University, and as a member of the U.N. Secretary-General’s Advisory Group on Energy and Climate Change (AGECC).
Bryson also served as president of the California Public Utilities Commission, chairman of the California State Water Resources Control Board, and on the board of the Council on Foreign Relations. At the start of his career, he was a co-founder and attorney for the Natural Resources Defense Council (NRDC), a national and international environmental group. He is a graduate of Stanford University and Yale Law School.
Jumat, 27 Mei 2011
Top Interest Rate Headlines 05-27-11: Geithner Says 'Ask The Women About IMF Culture'
Geithner Says 'Ask The Women About IMF Culture' (Video And Text)
The Daily Bail
This is a very impressive response. We give him credit. Tim likely wants the job as IMF chief - $500K per year tax free, he could stay in D.C., he could prove all of us wrong by not going directly to Goldman - you know he wants the job. And Christine Lagarde is not looking so good now that she's facing prosecution for financial sleaze in France. When asked by Politico's Mike Allen if he knew about IMF's notorious culture of harassment against women, Geithner said you should ask the women.
http://jlne.ws/l6qMSm
Economic Soft Patch Creates Political Problems
By Kathleen Madigan, WSJ.com
Washington politicians are discovering what has been evident to consumers and economy watchers. The U.S. economy is barely growing, and hiring isn’t strong enough to bring down the jobless rate.
http://jlne.ws/kLk8Df
Trimmed Mean PCE Inflation Rate - Economic Data - FRB Dallas
The trimmed mean PCE inflation rate is an alternative measure of core inflation in the price index for personal consumption expenditures (PCE). It is calculated by staff at the Dallas Fed, using data from the Bureau of Economic Analysis (BEA).
http://jlne.ws/fdBaqC
Greece Will Have To Restructure Its Debt - Roubini
WSJ.com
Greece will be forced to restructure its debt but this will happen in an orderly manner, Nouriel Roubini, professor of economics at New York University, said Friday.
http://jlne.ws/mvVUke
Japanese Sovereign Debt Outlook Cut
GFT Forex
The Japanese yen moved lower in currency trading on the FX market today, thanks to a debt outlook cut by Fitch. The ratings agency cut the sovereign debt outlook for Japan from stable to negative. The news had the yen sinking against the greenback, but things have changed.
http://jlne.ws/jyK1oI
Sarkozy Pledges to Defend Euro
By Christian Wienberg, Bloomberg
Greece was only able to join the euro through deception and the currency bloc’s leaders have been “too polite” ever since to deploy adequate sanctions that could have averted the region’s debt crisis, former European Central Bank Chief Economist Otmar Issing said.
http://jlne.ws/kGCygf
US consumer spending up 0.4% in April
By Michael Stothard, FT.com
US pending home sales plunged 11.6 per cent in April and consumer spending rose by less than expected, providing a further sign of the mixed and sluggish nature of the economic recovery.
http://jlne.ws/mQhMvD
U.S. Michigan Consumer Sentiment Index Rose to 74.3 in May
Alex Kowalski, Bloomberg/Businessweek
U.S. consumers grew more confident in May than a month earlier as declining gasoline prices helped lift Americans’ spirits.
http://jlne.ws/mIi9Yf
Greece ‘Cheated’ to Join Euro, Former ECB Economist Otmar Issing Says
By Christian Wienberg
Greece was only able to join the euro through deception and the currency bloc’s leaders have been “too polite” ever since to deploy adequate sanctions that could have averted the region’s debt crisis, former European Central Bank Chief Economist Otmar Issing said.
http://jlne.ws/kpq6ML
Ric Battellino: Recent financial developments
BIS: Address by Mr Ric Battellino, Deputy Governor of the Reserve Bank of Australia, at the
Annual Stockbrokers Conference, Sydney, 26 May 2011.
Introduction
My talk today is about some of the changes taking place in the financing of the Australian economy. As you know, after 15 years of rapid growth, credit has been growing at a much more subdued pace over the past couple of years. In fact, for the first time since the early 1990s, banks are finding that credit is growing more slowly than deposits, with the result that they are able to repay funds previously borrowed in wholesale markets, including from offshore. These developments have been associated with a noticeable increase in national saving and a marked reduction in the current account deficit.
I would like to spend some time today going through these developments.
http://jlne.ws/mMLDyE
Greece Strives for Consensus on New Austerity Package
The New York Times
Under mounting pressure from foreign creditors to show Greece is serious about repairing its finances, the president took the rare move Friday of bringing leaders of all political parties together to try to hammer out a consensus on new austerity measures.
http://jlne.ws/jxM4Yq
ISDA Releases 2011 Operations Benchmarking Survey Results
Identifies operational processing trends in the industry. Provides individual firms with a benchmark against which to measure the promptness and accuracy of their processing of trades, confirmation procedures and settlement. It is the first industry-sponsored survey to provide detailed quantitative information on the processing of privately negotiated derivatives
http://jlne.ws/iv59XF
U.K. Treasury Rebuked on Data Release
By AINSLEY THOMSON, WSJ
LONDON—The U.K. Treasury has been rebuked over its handling of official statistics after market-sensitive inflation data were sent to 400 lawmakers and government officials prior to the public release last week. In a letter to Chancellor of the Exchequer George Osborne, the head of the U.K. Statistics Authority Thursday said the Treasury had made a "serious lapse" in its handling of the consumer price index data.
http://jlne.ws/ir0sj9
Euroclear Bank To Provide Access To Chilean Domestic Debt Securities
Press Release
Euroclear Bank announces today the launch in June of settlement, custody and related services for cross-border Chilean domestic debt transactions. Simultaneously, Depósito Central de Valores S.A. (DCV), the Chilean Central Securities Depository (CSD), will offer similar services involving foreign securities transactions for its clients through Euroclear Bank.
http://jlne.ws/iQxLUd
David Prosser: So much for banks quitting the UK
Independent
Outlook For all the talk about Barclays or HSBC turning their backs on the UK, it would appear that London is more likely to acquire a major new bank than it is to lose one. The Wall Street Journal suggested yesterday that UBS plans to split is investment bank off from its retail operation and to relocate the former out of Switzerland. London is on the shortlist of destinations.
http://jlne.ws/jUMfn3
Jayne-Anne Gadhia: the woman who wants Virgin tied to a Rock
Guardian Unlimited
Jayne-Anne Gadhia's motto is "never give up". Just as well, perhaps, as the Virgin Money boss is accustomed to setbacks – but does not stop to think about them for too long. The imposing and gregarious Midlands-born banker tried and failed to buy Northern Rock before it was nationalised in February 2008 and then missed out on 318 Royal Bank of Scotland branches last year. She is now ready to do it all again, this time with simultaneous offers for 600 Lloyds Banking Group branches plus Northern Rock.
http://jlne.ws/k0rGSp
Forget the debt ceiling and focus on debt
By Glenn Hubbard, Financial Times
On May 15, the US hit its “debt ceiling” of $14,300bn, covering publicly owned debt held by the Federal Reserve and government trust funds, and Washington is in a furore. While budget debates are often more talk than action, this one needs more talk – but of a different kind. That the US has an unsustainable fiscal trajectory is clear, but the problem is not the debt ceiling per se. My wife and I don’t vote on whether we will pay our bills. Rather, we discuss whether our spending or income needs adjustment. So too must it be for our national “family”.
http://jlne.ws/mehPvu
The Daily Bail
This is a very impressive response. We give him credit. Tim likely wants the job as IMF chief - $500K per year tax free, he could stay in D.C., he could prove all of us wrong by not going directly to Goldman - you know he wants the job. And Christine Lagarde is not looking so good now that she's facing prosecution for financial sleaze in France. When asked by Politico's Mike Allen if he knew about IMF's notorious culture of harassment against women, Geithner said you should ask the women.
http://jlne.ws/l6qMSm
Economic Soft Patch Creates Political Problems
By Kathleen Madigan, WSJ.com
Washington politicians are discovering what has been evident to consumers and economy watchers. The U.S. economy is barely growing, and hiring isn’t strong enough to bring down the jobless rate.
http://jlne.ws/kLk8Df
Trimmed Mean PCE Inflation Rate - Economic Data - FRB Dallas
The trimmed mean PCE inflation rate is an alternative measure of core inflation in the price index for personal consumption expenditures (PCE). It is calculated by staff at the Dallas Fed, using data from the Bureau of Economic Analysis (BEA).
http://jlne.ws/fdBaqC
Greece Will Have To Restructure Its Debt - Roubini
WSJ.com
Greece will be forced to restructure its debt but this will happen in an orderly manner, Nouriel Roubini, professor of economics at New York University, said Friday.
http://jlne.ws/mvVUke
Japanese Sovereign Debt Outlook Cut
GFT Forex
The Japanese yen moved lower in currency trading on the FX market today, thanks to a debt outlook cut by Fitch. The ratings agency cut the sovereign debt outlook for Japan from stable to negative. The news had the yen sinking against the greenback, but things have changed.
http://jlne.ws/jyK1oI
Sarkozy Pledges to Defend Euro
By Christian Wienberg, Bloomberg
Greece was only able to join the euro through deception and the currency bloc’s leaders have been “too polite” ever since to deploy adequate sanctions that could have averted the region’s debt crisis, former European Central Bank Chief Economist Otmar Issing said.
http://jlne.ws/kGCygf
US consumer spending up 0.4% in April
By Michael Stothard, FT.com
US pending home sales plunged 11.6 per cent in April and consumer spending rose by less than expected, providing a further sign of the mixed and sluggish nature of the economic recovery.
http://jlne.ws/mQhMvD
U.S. Michigan Consumer Sentiment Index Rose to 74.3 in May
Alex Kowalski, Bloomberg/Businessweek
U.S. consumers grew more confident in May than a month earlier as declining gasoline prices helped lift Americans’ spirits.
http://jlne.ws/mIi9Yf
Greece ‘Cheated’ to Join Euro, Former ECB Economist Otmar Issing Says
By Christian Wienberg
Greece was only able to join the euro through deception and the currency bloc’s leaders have been “too polite” ever since to deploy adequate sanctions that could have averted the region’s debt crisis, former European Central Bank Chief Economist Otmar Issing said.
http://jlne.ws/kpq6ML
Ric Battellino: Recent financial developments
BIS: Address by Mr Ric Battellino, Deputy Governor of the Reserve Bank of Australia, at the
Annual Stockbrokers Conference, Sydney, 26 May 2011.
Introduction
My talk today is about some of the changes taking place in the financing of the Australian economy. As you know, after 15 years of rapid growth, credit has been growing at a much more subdued pace over the past couple of years. In fact, for the first time since the early 1990s, banks are finding that credit is growing more slowly than deposits, with the result that they are able to repay funds previously borrowed in wholesale markets, including from offshore. These developments have been associated with a noticeable increase in national saving and a marked reduction in the current account deficit.
I would like to spend some time today going through these developments.
http://jlne.ws/mMLDyE
Greece Strives for Consensus on New Austerity Package
The New York Times
Under mounting pressure from foreign creditors to show Greece is serious about repairing its finances, the president took the rare move Friday of bringing leaders of all political parties together to try to hammer out a consensus on new austerity measures.
http://jlne.ws/jxM4Yq
ISDA Releases 2011 Operations Benchmarking Survey Results
Identifies operational processing trends in the industry. Provides individual firms with a benchmark against which to measure the promptness and accuracy of their processing of trades, confirmation procedures and settlement. It is the first industry-sponsored survey to provide detailed quantitative information on the processing of privately negotiated derivatives
http://jlne.ws/iv59XF
U.K. Treasury Rebuked on Data Release
By AINSLEY THOMSON, WSJ
LONDON—The U.K. Treasury has been rebuked over its handling of official statistics after market-sensitive inflation data were sent to 400 lawmakers and government officials prior to the public release last week. In a letter to Chancellor of the Exchequer George Osborne, the head of the U.K. Statistics Authority Thursday said the Treasury had made a "serious lapse" in its handling of the consumer price index data.
http://jlne.ws/ir0sj9
Euroclear Bank To Provide Access To Chilean Domestic Debt Securities
Press Release
Euroclear Bank announces today the launch in June of settlement, custody and related services for cross-border Chilean domestic debt transactions. Simultaneously, Depósito Central de Valores S.A. (DCV), the Chilean Central Securities Depository (CSD), will offer similar services involving foreign securities transactions for its clients through Euroclear Bank.
http://jlne.ws/iQxLUd
David Prosser: So much for banks quitting the UK
Independent
Outlook For all the talk about Barclays or HSBC turning their backs on the UK, it would appear that London is more likely to acquire a major new bank than it is to lose one. The Wall Street Journal suggested yesterday that UBS plans to split is investment bank off from its retail operation and to relocate the former out of Switzerland. London is on the shortlist of destinations.
http://jlne.ws/jUMfn3
Jayne-Anne Gadhia: the woman who wants Virgin tied to a Rock
Guardian Unlimited
Jayne-Anne Gadhia's motto is "never give up". Just as well, perhaps, as the Virgin Money boss is accustomed to setbacks – but does not stop to think about them for too long. The imposing and gregarious Midlands-born banker tried and failed to buy Northern Rock before it was nationalised in February 2008 and then missed out on 318 Royal Bank of Scotland branches last year. She is now ready to do it all again, this time with simultaneous offers for 600 Lloyds Banking Group branches plus Northern Rock.
http://jlne.ws/k0rGSp
Forget the debt ceiling and focus on debt
By Glenn Hubbard, Financial Times
On May 15, the US hit its “debt ceiling” of $14,300bn, covering publicly owned debt held by the Federal Reserve and government trust funds, and Washington is in a furore. While budget debates are often more talk than action, this one needs more talk – but of a different kind. That the US has an unsustainable fiscal trajectory is clear, but the problem is not the debt ceiling per se. My wife and I don’t vote on whether we will pay our bills. Rather, we discuss whether our spending or income needs adjustment. So too must it be for our national “family”.
http://jlne.ws/mehPvu
Five Minutes with Ira Krulik, NYPC
Five Minutes with Ira Krulik, NYPC
Launched on March 21, 2011 with 10 clearing member firms, New York Portfolio Clearing (NYPC) - a joint venture of The Depository Trust & Clearing Corporation (DTCC) and NYSE Euronext - clears U.S. interest rate futures and cross-margins such positions against fixed income cash instruments through DTCC’s subsidiary, the Fixed Income Clearing Corporation (FICC). Ira J. Krulik, chief operating officer of NYPC spoke this week with JLN Managing Editor Christine Nielsen. He shared what he believes are the advantages of NYPC's risk management, “one-pot” cross-margining and clearance operations and its settlement efficiencies, in addition to his thoughts on where the NYPC may be headed from here.
Takeaways:
-Already, there are 11 approved clearing members, and several more in the pipeline.
-NYPC hopes to add options on futures by the end of this year.
-Locked-in delivery makes the process seamless.
1) How did you come to be at the NYPC?
Ira Krulik: After over 30 years in the futures industry, I was approached at the 2010 annual Futures Industry Association (FIA) conference about my interest in the new venture. Once I understood who the parent organizations were and what they were planning to do, the concept became more intriguing. They were giving clients additional choice in the marketplace with a real value-add attached. Upon returning from the conference, I had the opportunity to meet with Walt Lukken, who had recently been named CEO of NYPC; but I spoke with my most important counsel, Mrs. Krulik, about the opportunity and she said, ‘Go for it!’
2) You act as a direct link between NYPC and the banks and broker-dealers that are clearing through it. What type of feedback have you gotten so far from these market users?
Krulik: A lot is off-the-charts positive. Any competition in the marketplace is positive as it brings efficiencies … Clients now have real choice as to where to do business…and this drives innovation. This is evidenced by our open interest and clearing volumes, which are exceeding our initial expectations.
The entire delivery process is another thing that a lot of the firms are eager to get started with given the operational efficiencies it brings to the process, coupled with the cost savings it generates. The NYPC process mitigates the default risk associated with delivery by moving the physical delivery of the cash component of an interest rate futures transaction from NYPC over to FICC via the seamless “locked-in trade” process. Basically, once a short firm has advised of its intention to deliver securities, and once it has indicated the CUSIP that it will deliver, NYPC, on behalf of the firm, will pass a “locked-in trade” over to FICC. FICC will include the trade NYPC sends to it on behalf of the firm with all of the trades (for the same CUSIP) that the firm clears with FICC on that day. Thus, all of this activity is netted and the firm only needs to settle on the net exposure with FICC. By doing this, firms no longer need to “box” deliverable securities the night prior to delivery date to insure that actual delivery takes place, and, consequently, firms no longer need to absorb the financing costs for that day.
3) What do you feel is the biggest challenge for NYPC as a new derivatives clearing organization? What do you feel is the organization's biggest strength?
Krulik: The challenge is for the external world to find out who we are and what we do. Because the value proposition is in the “one-pot” margin process, we've been reaching out to firms that we believe are the biggest traders in the fixed income space and signing them up.
There are 11 approved clearing members with several more in the pipeline. It is our hope to be at 20 firms plus by the end of the summer.
In terms of strengths, clearly it's the efficiencies we are bringing to the marketplace. Being able to bring the cash positions and futures into one pot, and calculating a single margin call / exposure, is a win for the regulators and a win for the firms because it allows the clearinghouses and regulators to view common members’ positions cleared at NYPC and FICC in total and, therefore, it is a truer representation of the risk and thus the capital (margin) needed to maintain that risk. NYPC’s one-pot model also allows firms to settle with NYPC and FICC in a single call with a single cash movement, reducing the number of banking transactions to accomplish the same operational requirement.
4) Could you tell me a little about NYPC's locked-in delivery mechanism? This is something of an untold story of the NYPC?
Krulik: It's a much more seamless process than is currently in the marketplace.
[**CN: NYPC materials indicate that in today’s futures markets, only a very small percentage of the open interest actually goes to delivery, mainly as a result of the operational burdens placed on the clearing member responsible for making or taking delivery. Through the use of FICC’s Real Time Trade Matching system, NYPC eliminates these operational burdens and offers member firms an efficient, straight-through delivery process for U.S. Treasury futures. Contracts remaining open after the close of trading on the last trading day of the delivery month will be automatically submitted as FICC locked-in trades in the underlying U.S. Treasury securities eligible for settlement on a delivery vs. payment (DVP) basis on the next business day.]
5) You are a former president of the Futures Services division of the FIA and a current board director of the FIA's Chicago Operations division and its Futures Services division. What do you feel has been your greatest accomplishment as part of that organization?
Krulik: When I was president, many operational efficiencies were created that the entire industry was able to benefit from. For example, an upgrade to the eGAINS process was finalized, which including adding more regional exchanges to this process, and the eGUS application was created.
[**CN: In its simplest form, eGAINS is a system - created a little over 10 years ago - that nets the fees that broker-dealers have to share with each other when they split the clearing and execution functions of a derivatives trade. A trader can execute a trade with one firm and clear it with the other. The clearing firm collects all of the fees and then pays the executing firm for its role. At the end of a trading day, the firms will have lots of fees to exchange. eGAINS allows them to do this all at once (netting the trades) rather than individually. Although this process was initially created by one exchange/clearinghouse, we were able to take this process and expand it to other regional exchanges to foster the efficiencies it developed. Krulik was also involved with the implementation of eGUS, an electronic give-up documentation system.]
6) How do you feel the industry will evolve in coming years? How will NYPC fit into this landscape? As time goes on, what role might you play?
Krulik: Being a futures person for as long as I have been, cutting my teeth with the silver crisis of the early 80’s, I have been fortunate to witness - first hand - the innovations in futures execution and clearing, such as new products, i.e. options on futures which were launched in the early 80’s, to new asset classes, i.e. equity index futures, Eurodollar futures, etc., and new efficiency processes, i.e. eGAINS and eGUS as discussed above. It is clear to me that as needs continue to change, this industry will continue to evolve to meet those needs.
The concept of NYPC began in 2009, predating the Dodd-Frank legislation. Shortly after the 2008 financial crisis, NYSE Liffe US and DTCC began having many of the same risk management discussions that arose out of the Dodd-Frank legislative process, and those discussions became the seeds that created NYPC. NYPC fits into the ongoing evolution of the futures and derivatives industry with its innovative way of looking at risk. We will continue to add to this evolution as we continue to add products to the “one-pot” process. In particular, we hope to add options on futures by the end of this year.
I hope to continue to be instrumental in this effort by helping to direct NYPC’s efforts to add new products, new processes and be at the forefront of the regulatory changes that impact derivative clearing organizations.
Launched on March 21, 2011 with 10 clearing member firms, New York Portfolio Clearing (NYPC) - a joint venture of The Depository Trust & Clearing Corporation (DTCC) and NYSE Euronext - clears U.S. interest rate futures and cross-margins such positions against fixed income cash instruments through DTCC’s subsidiary, the Fixed Income Clearing Corporation (FICC). Ira J. Krulik, chief operating officer of NYPC spoke this week with JLN Managing Editor Christine Nielsen. He shared what he believes are the advantages of NYPC's risk management, “one-pot” cross-margining and clearance operations and its settlement efficiencies, in addition to his thoughts on where the NYPC may be headed from here.
Takeaways:
-Already, there are 11 approved clearing members, and several more in the pipeline.
-NYPC hopes to add options on futures by the end of this year.
-Locked-in delivery makes the process seamless.
1) How did you come to be at the NYPC?
Ira Krulik: After over 30 years in the futures industry, I was approached at the 2010 annual Futures Industry Association (FIA) conference about my interest in the new venture. Once I understood who the parent organizations were and what they were planning to do, the concept became more intriguing. They were giving clients additional choice in the marketplace with a real value-add attached. Upon returning from the conference, I had the opportunity to meet with Walt Lukken, who had recently been named CEO of NYPC; but I spoke with my most important counsel, Mrs. Krulik, about the opportunity and she said, ‘Go for it!’
2) You act as a direct link between NYPC and the banks and broker-dealers that are clearing through it. What type of feedback have you gotten so far from these market users?
Krulik: A lot is off-the-charts positive. Any competition in the marketplace is positive as it brings efficiencies … Clients now have real choice as to where to do business…and this drives innovation. This is evidenced by our open interest and clearing volumes, which are exceeding our initial expectations.
The entire delivery process is another thing that a lot of the firms are eager to get started with given the operational efficiencies it brings to the process, coupled with the cost savings it generates. The NYPC process mitigates the default risk associated with delivery by moving the physical delivery of the cash component of an interest rate futures transaction from NYPC over to FICC via the seamless “locked-in trade” process. Basically, once a short firm has advised of its intention to deliver securities, and once it has indicated the CUSIP that it will deliver, NYPC, on behalf of the firm, will pass a “locked-in trade” over to FICC. FICC will include the trade NYPC sends to it on behalf of the firm with all of the trades (for the same CUSIP) that the firm clears with FICC on that day. Thus, all of this activity is netted and the firm only needs to settle on the net exposure with FICC. By doing this, firms no longer need to “box” deliverable securities the night prior to delivery date to insure that actual delivery takes place, and, consequently, firms no longer need to absorb the financing costs for that day.
3) What do you feel is the biggest challenge for NYPC as a new derivatives clearing organization? What do you feel is the organization's biggest strength?
Krulik: The challenge is for the external world to find out who we are and what we do. Because the value proposition is in the “one-pot” margin process, we've been reaching out to firms that we believe are the biggest traders in the fixed income space and signing them up.
There are 11 approved clearing members with several more in the pipeline. It is our hope to be at 20 firms plus by the end of the summer.
In terms of strengths, clearly it's the efficiencies we are bringing to the marketplace. Being able to bring the cash positions and futures into one pot, and calculating a single margin call / exposure, is a win for the regulators and a win for the firms because it allows the clearinghouses and regulators to view common members’ positions cleared at NYPC and FICC in total and, therefore, it is a truer representation of the risk and thus the capital (margin) needed to maintain that risk. NYPC’s one-pot model also allows firms to settle with NYPC and FICC in a single call with a single cash movement, reducing the number of banking transactions to accomplish the same operational requirement.
4) Could you tell me a little about NYPC's locked-in delivery mechanism? This is something of an untold story of the NYPC?
Krulik: It's a much more seamless process than is currently in the marketplace.
[**CN: NYPC materials indicate that in today’s futures markets, only a very small percentage of the open interest actually goes to delivery, mainly as a result of the operational burdens placed on the clearing member responsible for making or taking delivery. Through the use of FICC’s Real Time Trade Matching system, NYPC eliminates these operational burdens and offers member firms an efficient, straight-through delivery process for U.S. Treasury futures. Contracts remaining open after the close of trading on the last trading day of the delivery month will be automatically submitted as FICC locked-in trades in the underlying U.S. Treasury securities eligible for settlement on a delivery vs. payment (DVP) basis on the next business day.]
5) You are a former president of the Futures Services division of the FIA and a current board director of the FIA's Chicago Operations division and its Futures Services division. What do you feel has been your greatest accomplishment as part of that organization?
Krulik: When I was president, many operational efficiencies were created that the entire industry was able to benefit from. For example, an upgrade to the eGAINS process was finalized, which including adding more regional exchanges to this process, and the eGUS application was created.
[**CN: In its simplest form, eGAINS is a system - created a little over 10 years ago - that nets the fees that broker-dealers have to share with each other when they split the clearing and execution functions of a derivatives trade. A trader can execute a trade with one firm and clear it with the other. The clearing firm collects all of the fees and then pays the executing firm for its role. At the end of a trading day, the firms will have lots of fees to exchange. eGAINS allows them to do this all at once (netting the trades) rather than individually. Although this process was initially created by one exchange/clearinghouse, we were able to take this process and expand it to other regional exchanges to foster the efficiencies it developed. Krulik was also involved with the implementation of eGUS, an electronic give-up documentation system.]
6) How do you feel the industry will evolve in coming years? How will NYPC fit into this landscape? As time goes on, what role might you play?
Krulik: Being a futures person for as long as I have been, cutting my teeth with the silver crisis of the early 80’s, I have been fortunate to witness - first hand - the innovations in futures execution and clearing, such as new products, i.e. options on futures which were launched in the early 80’s, to new asset classes, i.e. equity index futures, Eurodollar futures, etc., and new efficiency processes, i.e. eGAINS and eGUS as discussed above. It is clear to me that as needs continue to change, this industry will continue to evolve to meet those needs.
The concept of NYPC began in 2009, predating the Dodd-Frank legislation. Shortly after the 2008 financial crisis, NYSE Liffe US and DTCC began having many of the same risk management discussions that arose out of the Dodd-Frank legislative process, and those discussions became the seeds that created NYPC. NYPC fits into the ongoing evolution of the futures and derivatives industry with its innovative way of looking at risk. We will continue to add to this evolution as we continue to add products to the “one-pot” process. In particular, we hope to add options on futures by the end of this year.
I hope to continue to be instrumental in this effort by helping to direct NYPC’s efforts to add new products, new processes and be at the forefront of the regulatory changes that impact derivative clearing organizations.
Kamis, 26 Mei 2011
May 26, 2011: Treasury’s Regulatory Review: Reducing Costs and Minimizing Burdens [NEWSLETTER]
May 26, 2011
JLN Interest Rates - http://www.jlninterestrates.com
Conversation Starter
Five Minutes with Ira Krulik, NYPC
Launched on March 21, 2011 with 10 clearing member firms, New York Portfolio Clearing (NYPC) - a joint venture of The Depository Trust & Clearing Corporation (DTCC) and NYSE Euronext- clears U.S. interest rate futures and cross-margins such positions against fixed income cash instruments through DTCC’s subsidiary, the Fixed Income Clearing Corporation (FICC). Ira Krulik, chief operating officer of NYPC spoke this week with JLN Managing Editor Christine Nielsen. He shared what he believes are the advantages of NYPC's risk management, “one-pot” cross-margining and clearance operations and its settlement efficiencies, in addition to his thoughts on where the NYPC may be headed from here.
Takeaways:
-Already, there are 11 approved clearing members, and several more in the pipeline.
-NYPC hopes to add options on futures by the end of this year.
-Locked-in delivery makes the process seamless.
1) How did you come to be at the NYPC?
Ira Krulik: After over 30 years in the futures industry, I was approached at the 2010 annual Futures Industry Association (FIA) conference about my interest in the new venture. Once I understood who the parent organizations were and what they were planning to do, the concept became more intriguing. They were giving clients additional choice in the marketplace with a real value add attached. Upon returning from the conference, I had the opportunity to meet with Walt Lukken, who had recently been named CEO of NYPC; but I spoke with my most important counsel, Mrs. Krulik, about the opportunity and she said, ‘Go for it!’
2) What do you feel is the biggest challenge for NYPC as a new derivatives clearing organization? What do you feel is the organization's biggest strength?
Krulik: The challenge is for the external world to find out who we are and what we do. Because the value proposition is in the “one-pot” margin process, we've been reaching out to firms that we believe are the biggest traders in the fixed income space and signing them up.
There are 11 approved clearing members with several more in the pipeline. It is our hope to be at 20 firms plus by the end of the summer.
In terms of strengths, clearly it's the efficiencies we are bringing to the marketplace. Being able to bring the cash positions and futures into one pot, and calculating a single margin call / exposure, is a win for the regulators and a win for the firms because it allows the clearinghouses and regulators to view common members’ positions cleared at NYPC and FICC in total, and therefore, it is a truer representation of the risk and thus the capital (margin) needed to maintain that risk. NYPC’s one-pot model also allows firms to settle with NYPC and FICC in a single call with a single cash movement, reducing the number of banking transactions to accomplish the same operational requirement.
**CN: See the full MarketsWiki "Five Minutes" interview with Krulik here.
Lead Stories
Treasury’s Regulatory Review: Reducing Costs and Minimizing Burdens
By George W. Madison, U.S. Department Of The Treasury
In January, President Obama outlined his plan to create a 21st-century regulatory system that is simpler and smarter and that balances the obligation to protect public health and safety with the commitment to promote economic growth and job creation. As a key part of that plan, the President directed every agency to review the rules already on their books in order to remove those that are out-of-date, unnecessary, overly burdensome, or in conflict with other rules.
http://jlne.ws/lhJqTo
Fed Gave Banks Crisis Gains on Secretive Loans
By Bob Ivry, Bloomberg
Credit Suisse Group AG (CS), Goldman Sachs Group Inc. (GS) and Royal Bank of Scotland Group Plc (RBS) each borrowed at least $30 billion in 2008 from a Federal Reserve emergency lending program whose details weren’t revealed to shareholders, members of Congress or the public.
http://jlne.ws/m4u7rZ
US default ‘more likely than in Indonesia’
By James Mackintosh, FT.com
It sounds dotty to suggest the US is at imminent risk of default. A country that has rarely been able to borrow so cheaply, that issues debt in its own currency and has just demonstrated that it can print as much money as it likes need never miss a coupon payment. Yet in the past fortnight traders have come to the conclusion that America might breach its own constitutional clause that its debt “shall not be questioned”. According to Markit, the cost of one-year US credit default swaps, which insure against default, almost tripled in six trading days.
http://jlne.ws/iJIXlV
Major world banks handled Libya cash, report
Michael Peel and Sam Jones, The Globe And Mail
Libya lost billions of dollars on sophisticated financial products sold to Moammar Gadhafi’s sovereign wealth fund by some of the world’s leading financial institutions, according to a confidential Libyan government document.
http://jlne.ws/ljVNi7
ISDA Publishes OTC Derivatives Market Analysis
Press Release
The International Swaps and Derivatives Association, Inc. (ISDA) published today a new analysis of the over-the-counter (OTC) derivatives market based on year-end statistics published by the Bank for International Settlements (BIS) and LCH.Clearnet’s SwapClear. According to the analysis, the level of cleared interest rate swaps exceeded 50 percent of interest rate swap notional outstanding at the end of 2010, up from 21 percent at year-end 2007. Over the same time frame, the volume of uncleared interest rate swaps outstanding declined from $201 trillion to $116 trillion, a decrease of $85 trillion or 42 percent.
http://jlne.ws/hHMAsV
Lagarde Announces IMF Candidacy
BY DAVID GAUTHIER-VILLARS, WILLIAM HOROBIN AND DAVID PEARSON, WSJ.com
France's Finance Minister Christine Lagarde on Wednesday officially declared her candidacy to replace Dominique Strauss-Kahn as managing director of the International Monetary Fund, launching a global race for the prominent position.
http://jlne.ws/mezZN9
Lagarde is Front-Runner to Head IMF
By Gonzalo Vina and Andres R. Martinez, Bloomberg
Support mounted for French Finance Minister Christine Lagarde to head the International Monetary Fund as Mexico offered its central bank governor as an emerging- market candidate, challenging Europe’s 65-year hold on the job.
http://jlne.ws/keFwki
With The Backing Of Europe, French Fin Min Lagarde Announces IMF Bid
Forbes
French Finance Minister Christine Lagarde officially announced her candidacy for the top seat at the IMF. After much speculation, Lagarde has garnered the support of major European figures such as Germany’s Angela Merkel and appears poised to replace her former compatriot, Dominique Strauss-Kahn.
http://jlne.ws/jvokbo
Lagarde Warns on Greece's Public Finances
BY GEOFFREY T. SMITH, BRIAN BLACKSTONE AND GABRIELE PARUSSINI, WSJ.com
French Finance Minister Christine Lagarde signaled Paris might support a rescheduling of Greek debt, warning that Greece is at risk of default if it doesn't do more to bring its public finances into order. The comments mark a shift in France's position in a debate that has pitted Germany and other euro-zone governments against the European Central Bank, which opposes any form of restructuring of Greek debt.
http://jlne.ws/kauSrV
Europeans Focus on Retaining Leadership of IMF
By LIZ ALDERMAN, NY Times
As the International Monetary Fund prepared to accept nominations Monday to replace Dominique Strauss-Kahn at its helm, European officials rallied over the weekend around Christine Lagarde, France’s finance minister, as their top choice for the post, despite fresh warnings from leaders of emerging markets and other countries that simply handing the job to another European could undermine the fund’s legitimacy.
http://jlne.ws/laVbdh
France: China Backs Lagarde as IMF Head
By INTI LANDAURO And OWEN FLETCHER, WSJ
PARIS—China backs French Finance Minister Christine Lagarde as a candidate to head the International Monetary Fund, the French government's spokesman, Francois Baroin, said Tuesday.
http://jlne.ws/kr0mhY
IMF Executive Board Initiates Selection Process For Next IMF Managing Director
Press Release
http://jlne.ws/ltFkaa
U.S. Treasury Department Statement Regarding Leadership Of The International Monetary Fund
Press Release
http://jlne.ws/iqZtrv
IMF Announces New Ethics Code And Standards
By Ian Talley, MarketWatch
The International Monetary Fund said Thursday it recently changed its ethics code, now censuring staff for personal relationships between supervisors and subordinates. The new ethics code was approved on May 6.
http://jlne.ws/koELuL
**CN: Time to reevaluate.
Morgan Stanley Plans to Let Retail Brokers Use LinkedIn, Twitter
By Michael J. Moore, Bloomberg
Morgan Stanley (MS) Smith Barney, the world’s largest brokerage, will let financial advisers market themselves and share ideas with clients through social- networking websites LinkedIn and Twitter.
http://jlne.ws/kkuHYV
Treasury set to make small profit in sale of AIG stock
By Justin Baer and Telis Demos in New York and Tom Braithwaite in Washington, Financial Times
American International Group and its largest investor, the US Treasury, are poised to raise at least $8.7bn through a sale of stock on Tuesday, handing the federal government a small profit on the deal, people familiar with the matter said.
http://jlne.ws/j99zwa
Vickers to insist on bond-funded debt buffer
By Patrick Jenkins and Sharlene Goff, Financial Times
Britain’s banks could be forced to hold capital equivalent to half as much again of their minimum equity requirements, under plans being considered by the Independent Commission on Banking.
http://jlne.ws/jOJFqo
Community Banks Lobby to Limit New Regulations
By BEN PROTESS, NY Times
Network television ads appearing in the Washington area feature an anxious woman who cautions that “community banks and credit unions will be squeezed” by “bad” regulation.
http://jlne.ws/mmZ7Ap
Ex-Fed Official to Join Barclays as Senior Policy Advisor
Wall Street Journal Blogs
Brian Madigan, who ran the Federal Reserves powerful monetary affairs group, is joining Barclays Capital as a senior policy adviser, according to an internal memo announcing the hire.
http://jlne.ws/issULs
European Firms Shun Euro Bonds
BY ELENA MOYA, WSJ.com
European companies have shunned the euro in the bond markets this year and have instead piled into dollar, sterling and even ruble-denominated bonds, data from Dealogic show. For the first time since 2000, bonds denominated in euros account for less than half of all European corporate bond issuance.
http://jlne.ws/kXvbSg
JPMorgan’s Dimon Was Tempted To Remind Geithner Where Treasury’s Bread Is Buttered
Forbes
The Associated Press had an interesting tidbit last week in a story on JPMorgan Chase CEO Jamie Dimon’s May 19 appearance at a dinner for the University of Colorado’s Denver Business School, aside from the headlines generated when the banker said a U.S. debt default would be a “moral disaster.” While the AP led with that morsel, later in the story came an interesting anecdote from the period when Dimon’s bank paid back taxpayer dollars it received under the TARP program, and a reminder that some banks believed they could skate through the 2008 crisis just fine on their own.
http://jlne.ws/iRdJTO
U.S. Commercial Property Prices Drop to Post-Recession Low
By Brian Louis and David M. Levitt, Bloomberg
U.S. commercial property prices fell to a new post-recession low in March as sales of financially distressed assets weighed on the market, according to Moody’s Investors Service.
http://jlne.ws/jeEtd4
ISDA Publishes "The Economics of Central Clearing: Theory and Practice," A Discussion Paper on Clearing Issues
Barron's
The International Swaps and Derivatives Association, Inc. (ISDA) today announced the publication of an in-depth discussion and analysis of the purposes, function and issues associated with central clearing of over-the-counter (OTC) derivatives.
http://jlne.ws/lrz9Pi
NY senators bat with banks on rule change
New York Post
New York lawmakers are coming to the rescue of some major US banks. The Senate agricultural committee is set to host hearings as early as mid-June to discuss new derivatives rules, which have become a hot-button issue on Wall Street, The Post has learned. US legislators, including Sens. Chuck Schumer...
http://jlne.ws/iPS2FC
Emerging market bond fund flows signal shift
By Robin Wigglesworth in London, Financial Times
Money is continuing to pour into emerging market bond funds, subduing the cost of borrowing for developing countries and underlining the shift in economic power away from the western heavyweights of the financial system. Eight consecutive weeks of net inflows have taken the total invested in these funds this year to $7.9bn, according to EPFR, the fund data provider.
http://jlne.ws/iYRWzY
Financial regulation: A shield asunder
By Tom Braithwaite, Brooke Masters and Jeremy Grant, FT.com
On a late January day in a discreet basement room of the Grischa Hotel by the ski lifts of Davos, Tim Geithner listened to grievances from 14 executives from some of the biggest financial groups in the world.
http://jlne.ws/mBTg5E
Legal trouble mounting for biggest mortgage lenders. How much will it cost to buy peace with govt?
By Abigail Field, CNNMoney
The trouble for America's largest mortgage lenders just keeps mounting. How much will it cost them to make it all go away? Bank of America, JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C) and Ally Financial violated the federal False Claims Act, according to officials briefed on federal investigations who spoke to the Huffington Post. The unnamed officials say the banks submitted faulty documents in seeking federal reimbursement from the Federal Housing Administration homes they'd foreclosed on.
http://bit.ly/lE8TNm
EU told to repair banks before Greek restructuring
By Dan McCrum, FT.com
The European Union should repair its banks before attempting to restructure Greek debt, Peter Fisher, head of fixed income for BlackRock, the largest asset manager, has warned. The European authorities “keep confronting this dilemma of the need to restructure debt for the debtors’ sake, and then the consequences for the European financial system if they do,” said Mr Fisher in a video interview for FT.com.
http://jlne.ws/mP1t34
Events
2011 Morningstar Investment Conference
June 8-10, 2011
Morningstar's Conference For Leaders From Across The Investment Industry - Chicago
http://jlne.ws/gD5nJ1
Introduction to Treasury Futures: Factoring the Risks
June 16, 2011
IFM's Course On Cash And Futures Treasury Trade - New York City
http://jlne.ws/kdOeSQ
Treasury Futures Basis: Beyond the Risks
June 16, 2011
IFM's Course On the Treasury Futures Basis - New York City
http://jlne.ws/kdOeSQ
Treasury Futures: Using International Fixed-Income and Money Market Spreads
June 16, 2011
IFM's Course On Using International Fixed-Income and Money Market Spreads - New York City
http://jlne.ws/kdOeSQ
Making Sense of Credit Default Swaps
June 22, 2011
IFM's Course On Credit Default Swaps - Chicago
http://jlne.ws/kdOeSQ
FIA Treasury & Rates Forum
September 14, 2011
FIA Program On Growing Role Of Treasury Futures - New York City
http://jlne.ws/fQFQXP
Economic News
Economy Grew at 1.8% Rate in First Quarter
Associated Press/ The New York Times
High gasoline prices, government budget cuts and weaker-than-expected consumer spending caused the economy to grow only weakly in the first three months of the year.
http://jlne.ws/l2MjSL
While the top line GDP number was essentially unchanged, there were some interesting revisions to the major components
Federal Reserve Bank of Cleveland
Real GDP was unchanged during the second estimate, rising at an annualized rate of 1.8 percent (coming in at the low end of expectations), compared to a 3.1 percent gain in the fourth quarter. While the top line number was essentially unchanged, there were some interesting revisions to the major components. Importantly, real personal consumption growth was (somewhat unexpectedly) revised down from 2.7 percent to 2.2 percent, subtracting 0.4 percentage point from growth. All three major components of consumption (durables, nondurables, and services) were knocked down during the revision. Upward revisions to nonresidential investment and private inventories offset the downward adjustment to consumption.
http://jlne.ws/jwi0cn
U.S. Home Prices Fell 5.5%, Most in Almost Two Years
By Kathleen M. Howley, Bloomberg
U.S. home prices dropped 5.5 percent in the first quarter from a year earlier, the biggest decline in almost two years, as sales of discounted foreclosures undermined real estate values.
http://jlne.ws/kWxvMR
Revenue Slide Dents Banks' Recovery
BY VICTORIA MCGRANE AND MICHAEL R. CRITTENDEN, WSJ.com
U.S. bank profits soared in the first three months of 2011, but revenue coming in the door fell for only the second time in almost 30 years, casting a shadow on the industry's continued recovery from the 2008 financial crisis.
http://jlne.ws/jvLmv5
Chicago Fed Index: Index shows economic activity weakened in April
Led by declines in production-related indicators, the Chicago Fed National Activity Index fell to –0.45 in April from +0.32 in March. April marked the lowest reading of the index since August 2010. Three of the four broad categories of indicators that make up the index deteriorated from March, but two of those three categories made positive contributions to the index in April.
http://jlne.ws/jkM4vL
Exchanges, Clearing Houses & MTFs
DTCC: Indemnification Provision In Dodd-Frank Could Create Unintended Negative Consequences
Press Release/Reuters
The Depository Trust and Clearing Corporation (DTCC) today cautioned in testimony before a House Agriculture subcommittee that the indemnification provision of Dodd-Frank could create unintended negative consequences, including undermining efforts to enhance transparency and mitigate systemic risk in the over-the-counter (OTC) derivatives market. The hearing was called to discuss global harmonization, extra-territoriality issues and technical concerns with the implementation of the Dodd-Frank Act.
http://jlne.ws/kB2eT7
LCH.Clearnet has revised risk parameters for Irish gov bonds. Additional margin will change from 55% to 65% for longs
In accordance with the Sovereign Credit Risk Framework and in response to the yield differential of 10 year Irish government debt against a AAA benchmark, LCH.Clearnet Ltd has revised the risk parameters for Irish government bonds cleared through the RepoClear service. The additional margin required for positions of Irish government bonds will consequently be increased from 55% to 65% for long positions; this amount will be adjusted for the current bond price*. Short positions will pay a proportionately lower margin.
http://jlne.ws/msJphG
CME To Rework Financial Safeguards For CDS Clearing Platform
By Katy Burne, Of DOW JONES NEWSWIRES/Nasdaq
CME Group Inc. (CME) is planning to rework financial safeguards for its derivatives clearing platform for credit default swaps over the next quarter or two, establishing a separate default fund for CDS clearing, the company said Tuesday.
http://jlne.ws/lMC7aJ
June 17, 2011: NYSE Liffe U.S. Becomes the Sole U.S. Exchange for MSCI Index-based Futures
Launched in September of 2008, NYSE Liffe U.S. is the U.S.-based and CFTC-registered futures exchange of NYSE Euronext. NYSE Liffe U.S. offers trading in precious metals futures and options, MSCI index-based equity futures and U.S. interest rate futures including Eurodollar and U.S. Treasury futures.
http://jlne.ws/kWIMCh
CME eyes move into swaps in Europe expansion drive
Luke Jeffs, Reuters
U.S. exchange giant CME Group is eying a move into Europe's lucrative swap clearing business by early 2012 as part of its rapid expansion plans in the region, where it has only just gained a foothold.
http://jlne.ws/mz5ieq
Firms & Banks
UBS Plans to Distance Key Investment Banking Unit
BY DAVID ENRICH AND GINA CHON, WSJ.com
Swiss financial giant UBS AG is planning to separate its investment bank and incorporate it outside of Switzerland in an effort to placate regulators there who want to prevent another bailout should the bank fall on hard times as it did in 2008, said people familiar with the matter.
http://jlne.ws/lTGJpj
Goldman Bankers React to Subpoena News
CNBC
At an fashionable hotel bar on a recent night in New York, a trio of Goldman Sachs investment bankers were discussing the news that federal prosecutors are expected to issuing subpoenas for documents related to Goldmans mortgage business.
http://jlne.ws/kJvpnD
More banks targeted in New York probe
By Kara Scannell and Justin Baer in New York, Financial Times
The New York state attorney-general’s probe into mortgage practices at large banks has expanded to include Royal Bank of Scotland, UBS, JPMorgan Chase and Deutsche Bank, bringing the number of banks under scrutiny to seven, people familiar with the matter say.
http://jlne.ws/jBtJYn
JPMorgan, UBS, Deutsche Bank Said to Face N.Y. Mortgage Probe
BusinessWeek
JPMorgan Chase and Co., UBS AG and Deutsche Bank AG are being investigated as part of New York Attorney General Eric Schneiderman's expanded probe of mortgage securitization, according to a person familiar with the matter.
http://jlne.ws/khiVux
How an Inquiry of Goldman Sachs Might Play Out
By PETER J. HENNING, NY Times
Goldman Sachs has already received subpoenas from unnamed regulators investigating its mortgage securities operations. Now, federal prosecutors appear to be interested in those operations as well, and subpoenas could follow. If so, this would signal a new — and potentially more threatening — inquiry into its conduct during the financial crisis.
http://jlne.ws/iqHUHx
Goldman Banker Hired by VTB Capital to Lead Overseas Unit
BusinessWeek
VTB Capital Plc, the investment- banking arm of Russia's second-largest lender, hired Atanas Bostandjiev from Goldman Sachs Group Inc. as its U.K. and international head.
http://jlne.ws/m59mlM
Citi hires ex-CEO of PricewaterhouseCoopers
Reuters via Yahoo! Canada News
Citigroup Inc has hired Samuel Di Piazza, Jr, the former chief executive of PricewaterhouseCoopers , to help its faltering investment bank rebuild after the financial crisis.
http://jlne.ws/m65R1X
Bank of America to Settle Overdrafts Suit for $410 Million
By ANDREW MARTIN, NY Times
Bank of America would pay $410 million to settle its piece of a broad lawsuit involving excessive overdraft fees on debit cards in a deal tentatively approved by a federal judge in Miami on Monday.
http://jlne.ws/lHeK6S
In Reputation Ranking, Some Banks Break from the Pack
By Heather Landy, American Banker
Public perceptions of bank brands remain a long way from rosy, but they are becoming more nuanced. The 30 banks included in American Banker's second annual survey of bank reputation, conducted by the Reputation Institute, scored higher with consumers on average, and with a much wider distribution, than last year. The results suggest that reputation, in recent years an albatross for the financial sector as a whole, is starting to look more like a point of differentiation, with several large institutions able to break away from the pack more convincingly as they moved to the top of the ranking.
http://jlne.ws/jLtNP5
Goldman execs expect subpoenas, WSJ says
Market Watch
Goldman Sachs Group Inc. executives expect to receive subpoenas soon from U.S. prosecutors seeking more information about the firm's mortgage-related business, the Wall Street Journal reported Friday, citing unidentified people familiar with the situation. Officials at the investment bank reckon the Department of Justice will ask for certain documents and other ...
http://jlne.ws/moF2ac
UBS Chief Sends Memo to I-Bankers
CNBC
UBS Chief Executive Officer Oswald Gruebel admitted in an email this morning that some of the high level departures from the Swiss banks investment banking have been regrettable.
http://jlne.ws/lRzXsF
JPMorgan Traders Are Taking Market Share, O'Connor Says
BusinessWeek
JPMorgan Chase & Co., the most profitable U.S. bank, is taking trading revenue from Goldman Sachs Group Inc. and Bank of America Corp. as investments including its $1.7 billion purchase of RBS Sempra's commodities business begin paying off, Deutsche Bank AG analysts said.
http://jlne.ws/kt8ObV
ING Can Be More With Less, Says the Reluctant Banker
BY MAARTEN VAN TARTWIJK AND ARCHIE VAN RIEMSDIJK, WSJ
When Jan Hommen was approached to run ING Groep NV, the timing couldn't have been worse. The Dutchman was just planning to move to the U.S. and spend more time with his children and grandchildren. And, having little experience in banking and insurance, he was far from the obvious choice to guide the Dutch bancassurer through the biggest crisis in its history.
http://jlne.ws/lj2yMm
RBS sees opportunity in crisis
The Nation, Thailand's English news
Many banks across the world seem to have hit the alarm button. The sharp swings in global oil prices since the start of the wave of unrest in the Middle East and North Africa, the fragile US economic recovery, Europe's prolonged sovereign-debt crisis and Japan's tremendous disaster have created uncertainty for them. But not for the Royal Bank of Scotland.
http://jlne.ws/lJN8q8
UBS's McCann Denies Speculation of Talks With Wells Fargo
Bloomberg
UBS AG (UBSN) denied speculation it may sell its U.S. wealth management unit to Wells Fargo & Co. (WFC) , saying it remains an "important part" of the Swiss bank.
http://jlne.ws/l1DLhO
Morgan Stanley CEO Frets Over Capital Rules
Finance Technology Network
Morgan Stanley Chief Executive James Gorman is concerned that regulators may force large banks to hold too much capital, a move that banks worry would crimp profits.
http://jlne.ws/l6Iroo
Deutsche Bank chairman denies Kirch conspiracy
Reuters via Yahoo! India News
The legal battle between Deutsche Bank and media mogul Leo Kirch looked no closer to being resolved after a day of hearings in a Munich court which saw Chief Executive Josef Ackermann in the witness stand.
http://jlne.ws/k2W33v
Regulators
Thomas M Hoenig: Back to the business of banking
Speech by Mr Thomas M Hoenig, President of the Federal Reserve Bank of Kansas City, at the 29th Annual Monetary and Trade Conference, Global Interdependence Center and Drexel University LeBow College of Business, Philadelphia, Pennsylvania, 24 May 2011.
Introduction Today’s meeting and sessions are about financial reform, and I congratulate the organizers of this conference for keeping this important topic in the mainstream of discussion. Much remains to be done around reform if we are to ensure a more stable financial system. Topics today will focus on housing, the Dodd-Frank Act, governmentsponsored enterprises (GSEs), the safety net and other reform efforts that necessarily follow the recent financial crisis that has so devastated our national economy.
http://jlne.ws/iCVcSs
Paul Fisher: The economic outlook - some remarks on monetary policy
Speech by Mr Paul Fisher, Executive Director for Markets of the Bank of England, to the Agency for Scotland, London, 23 May 2011. (I would like to thank Ronnie Driver for his help in preparing this speech.)
For most of us, the current outlook for the UK economy is not a very attractive prospect. After experiencing a precipitous fall in demand during 2008/09, the latest estimates suggest that
UK output in 2011 Q1 remained around 4% below its peak pre-crisis level. The Monetary Policy Committee’s (MPC) central projection published in its May Inflation Report, is for
output to grow at around its historical trend rate, such that it would be mid-2012 before that previous peak level is regained.
http://jlne.ws/lpeoax
Fed’s Kocherlakota Lowers Forecast for Economic Growth, Urges Tightening
By Steve Matthews, Bloomberg
Federal Reserve Bank of Minneapolis President Narayana Kocherlakota trimmed his forecast for U.S. economic growth and raised his outlook for unemployment slightly while reiterating his call for higher interest rates this year.
http://jlne.ws/myz60r
OECD urges Fed and BoE to raise rates
By Chris Giles in Paris, Financial Times
The Federal Reserve and the Bank of England should follow the European Central Bank and implement “early” rises in interest rates, the Organisation for Economic Co-operation and Development said on Wednesday, as it urged central banks to respond to evidence of self-sustaining growth.
http://jlne.ws/iJ9nAC
OECD looks to measure the ‘better life’
By Chris Giles in Paris, Financial Times
It is time to move beyond gross domestic product when measuring the success of societies, the Organisation for Economic Co-operation and Development, has concluded in a change of mission for the international organisation. Known for most of its 50 years as an establishment of orthodox economics, promoting structural reforms to boost GDP growth, it launched a “better life initiative” on Tuesday to measure the quality of life in the Organisation’s 34 member countries.
http://jlne.ws/lUtL0K
City of London concerned by Mifid poll
By Jeremy Grant, Financial Times
The City of London has expressed concern after a poll of brokers and asset managers based in continental Europe showed some believed that rules allowing large blocks of trades to be done without prices displayed beforehand could undermine market transparency.
http://jlne.ws/kKPCWM
IMF Executive Board Concludes 2011 Article IV Consultation with United Arab Emirates
Public Information Notice (PIN) No. 11/57
May 23, 2011
On April 21, 2001, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with the United Arab Emirates (U.A.E.), and considered and endorsed the staff appraisal without a meeting.
Background
The economic recovery in the U.A.E. is gaining strength, supported by a favorable global environment but subject to increased regional uncertainty. Real nonhydrocarbon GDP growth is projected to accelerate to 3.3 percent in 2011 from 2.1 percent in 2010, reflecting stronger tourism, logistics, and trade in the emirate of Dubai; and large public investment spending in the emirate of Abu Dhabi, including through Government-Related Entities (GREs)...
http://jlne.ws/lSSQwE
IMF Executive Board Approves An E26 Billion Extended Arrangement For Portugal
Press Release
The Executive Board of the International Monetary Fund (IMF) today approved a three-year SDR 23.742 billion (about E26 billion) arrangement under the Extended Fund Facility for Portugal in support of the authorities’ economic adjustment and growth program. This front-loaded program makes SDR 5.6 billion (about E6.1 billion) immediately available to Portugal from the IMF. In 2011, total IMF financing will amount to about E12.6 billion and will be partnered with about E25.2 billion committed by the European Union.
http://jlne.ws/jEvM6v
Remarks By Deputy US Treasury Secretary Neal S. Wolin At The Singapore Exchange
Press Release
http://jlne.ws/jJfASE
Basel Methodology, EU Stress, Resona Pledge, Privacy Hearings: Compliance
Bloomberg
Bank of Canada Governor Mark Carney said global regulators intend to release criteria for identifying systemically important financial institutions in July.
http://jlne.ws/inSXiF
Financial regulation: A shield asunder
By Tom Braithwaite, Brooke Masters and Jeremy Grant, Financial Times
On a late January day in a discreet basement room of the Grischa Hotel by the ski lifts of Davos, Tim Geithner listened to grievances from 14 executives from some of the biggest financial groups in the world.
http://jlne.ws/jlMCRV
IMF: Wider Plan Needed to Address Ireland's Problems
IMF Survey Online
The Irish government has been making good progress in addressing the country’s deep-seated economic problems since it took office March 9. But without comprehensive action from the European Union, Ireland and other euro area countries with programs will struggle to restore their access to the markets.
http://bit.ly/l6jBOL
OTC
Swaps Users Urge CFTC to Drop Quote System to Get Better Prices
Bloomberg/BusinessWeek
Swaps users including Dow Corning Corp., Eastman Kodak Corp. and U.S. Steel Corp. want regulators to require prices be made public prior to trading, overturning a proposed rule that would limit distribution of the data.
http://jlne.ws/mLnjj1
Swaps Group Warns of 'Too Big to Fail' in Clearinghouses
BY KATY BURNE, WSJ.com
Derivatives clearinghouses can and do fail, and policy makers should be concerned that they could be the next "too big to fail" beneficiaries of federal bailouts, according to a discussion paper released by the International Swaps and Derivatives Association.
http://jlne.ws/mehi4g
Rate swap volumes set to surge on new system
By Jeremy Grant, Financial Times
Volumes in the interest rate swaps market are set to surge as regulatory reforms push the bulk of contracts currently traded over-the-counter onto electronic platforms. Icap, the world’s largest interdealer broker, and Tabb Group, a consultancy, predicted the Dodd-Frank act in the US and similar reforms of OTC derivatives in Europe would transform the interest rate swaps market – largely voice-brokered – into one with a far broader range of investors.
http://jlne.ws/m42Pvb
Analysis: OTC swaps face legal void as CFTC misses deadline
By Christopher Doering, Reuters
Billions of dollars in derivatives will be headed into legal limbo if U.S. regulators don't create a short-term fix to the market chaos that could be unleashed by missing a July financial reform deadline. The Commodity Futures Trading Commission, in the midst of writing dozens of new rules, has said it will miss the July 16 deadline for implementing rules that give it oversight of the $600-trillion global over-the-counter derivatives market.
http://jlne.ws/j318tR
ICAP Exceeds $300 Billion In US Electronic CDS Trades
By Katy Burne, Dow Jones
ICAP PLC (IAP.LN IAPLY), the world's largest interdealer broker, announced Thursday it has surpassed $300 billion in electronically traded U.S. credit default swaps on its BrokerTec platform. That cumulative tally since the broker launched electronic CDS trading in October 2007 signals that dealers are increasingly comfortable trading on-screen without human interaction with a broker.
http://jlne.ws/l8lP6V
Global News
Ireland says won't yield on corporate tax
Reuters
Ireland will not raise its ultra-low corporate tax rate despite pressure from France and Germany, even if that means paying higher interest rates on EU bailout loans, Finance Minister Michael Noonan said on Thursday.
http://jlne.ws/k5jkvh
Euroclear Bank To Provide Access To Chilean Domestic Debt Securities
ISS Mag
Euroclear Bank announces today the launch in June of settlement, custody and related services for cross-border Chilean domestic debt transactions. Simultaneously, Depósito Central de Valores S.A. (DCV), the Chilean Central Securities Depository (CSD), will offer similar services involving foreign securities transactions for its clients through Euroclear Bank. A bilateral transaction-processing link between DCV and Euroclear Bank is nearing completion. At the same time, the Chilean peso will become one of 54 settlement currencies in Euroclear Bank.
http://jlne.ws/mjexHh
EU's Damanaki tells Greece euro membership at risk
Reuters
Greece must take tough measures to deal with its debt crisis or it will have to return to the drachma, the EU's Fisheries Commissioner Maria Damanaki said on Wednesday.
http://jlne.ws/iLewa1
German bank exposure to Greece 'manageable:'
By William L. Watts, MarketWatch
German banks' exposure to Greece is "manageable," but contagion risks are high, Fitch Ratings said in a report released Wednesday. "The worst consequence of any Greek sovereign default for German and other European banks would be in a sharp increase in general capital market and creditor risk aversion at a time when many banks are still in rehabilitation mode," said Michael Dawson-Kropf, senior director in Fitch's EMEA financial institutions group. The ratings company said it "does not currently envisage" any rating action on German banks as a result of their direct exposure to Greece., but warned of "high potential contagion risks" if there were any restructuring of Greek sovereign debt
http://jlne.ws/kkm3Lr
Europe backs restricted clearing house reforms
By Nikki Tait in Brussels, Financial Times
European parliamentarians have given their backing to stricter regulation of derivatives but have restricted new rules designed to ensure that deals are cleared centrally to those contracts traded on a bilateral “over-the-counter” (OTC) basis. The move is a blow to those who had wanted to extend the scope of the regulation, known as the European Markets Infrastructure Regulation (Emir), to fast-growing exchange-traded derivatives as a way of spurring competition in the market
http://jlne.ws/k2DjE5
Moody's places 14 UK banks on watch
Brisbane Times
Moody's Investors Service on Tuesday placed 14 British banks including Lloyds TSB and Royal Bank of Scotland on review for possible downgrades, citing reduced chances of future government support.
http://jlne.ws/mBOW15
Goldman Sachs Hires ECB's Huw Pill as Chief European Economist
BusinessWeek
Goldman Sachs Group Inc. hired Huw Pill of the European Central Bank to replace Erik Nielsen as its chief European economist.
http://jlne.ws/mtbjbV
Malaysia mandates banks for global sukuk
The Malaysian Insider
KUALA LUMPUR, May 25 - Malaysia has picked four banks including CIMB, Citigroup and HSBC to arrange its upcoming US dollar global Islamic bond sale, IFR reported. The fourth bank could be Maybank, Thomson Reuters' unit IFR reported, adding that the sukuk offering was expected to be completed in June or July. Proceeds from the sale would be used to ...
http://jlne.ws/ixj8yA
Fitch revises Belgium’s outlook to negative from stable
By Gerry Davies, ForexLive
* Political risk is higher in Belgium than in other euro area peers
* Belgium will likely be downgraded if it misses official deficit targets
http://jlne.ws/j6mzTj
China's economy may face inflation, sluggish growth
People's Daily Online
China's National Economic Accounting and Economic Growth Research Center under Peking University released the "China Economic Growth Report 2011" on May 21. The report said that judging from the current macroeconomic imbalance in China, China is faced with both inflationary pressure and the risk of sluggish growth. China needs to prevent stagflation by controlling the gross unbalance in the current stage.
http://jlne.ws/lDciHx
Italy Shocked, Shocked by S and P Move
By Francesco Guerrera, WSJ.com
Judging from the reaction from local media and financial executives, Standard & Poor’s decision late on Friday to revise Italy’s sovereign debt outlook from “stable” to “negative” went down like a plate of overcooked pasta.
http://jlne.ws/mJwZ8i
Mizuho president to step down
TAIGA URANAKA, Reuters
Mizuho Financial Group’s (MFG-N3.08-0.03-0.96%) president will step down and its corporate banking chief will take the helm, Japan’s second-largest bank said on Monday, as it grapples with persistent system troubles including a breakdown in ATMs after the devastating March earthquake.
http://jlne.ws/knfu2n
Banks battle for $1bn Puerto Rican road
By Helen Thomas in New York, Financial Times
Goldman Sachs and Morgan Stanley are squaring off in the bidding to finance and operate one of Puerto Rico’s busiest roads as a 10-month-long privatisation process approaches its conclusion.
http://jlne.ws/jtefvh
Greece Downgraded by Fitch, Norway Cuts Funding
Greece’s troubles escalated further on Friday, as Fitch downgraded the country’s sovereign debt rating and Norway was one of three nations that froze a payment of 235 million kroner ($42 million) in European Economic Area grants to Athens.
http://jlne.ws/ilijtC
Spain Vote Threatens to Uncover Debt
By JONATHAN HOUSE And SARA SCHAEFER MUñOZ, WSJ
Weekend elections that threaten to drive Spain's ruling Socialist party from power in several regions and cities also promise a potentially nasty surprise: the revelation of piles of undisclosed debt in local governments that could undercut the country's drive to avoid an international bailout.
http://jlne.ws/mdekuL
Debt Calculations Weigh on Restructuring Decisions
By STEPHEN FIDLER, WSJ
For the first time this week, a taboo was lifted. European officials can now use the "R" word— restructuring—in sentences that don't also have "not" in them. Restructuring Greece's government debt—changing the conditions attached to its bonds to lessen the burden—is now something that can be talked about in polite company. (With the proviso that it will be the nicest, gentlest, most-investor-friendly restructuring possible.)
http://jlne.ws/j0LDoK
Disclaimer: The John Lothian, Environmental Markets, JLN Metals, JLN Managed Futures, JLN Interest Rates, JLN Options and JLN FX newsletters and blogs and MarketsWiki are products of John J. Lothian & Company, Inc. The opinions expressed in these publications are strictly those of their respective editors. They are intended solely for informative purposes and are not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Information is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Security futures are not suitable for all customers.
Futures and options trading involve risk. Past results are no indication of future performance.
Nothing on any John J. Lothian & Company site should be considered an endorsement by any sponsor of any web site or newsletter content.
Copyright 2011 John J. Lothian & Company, Inc. All Rights Reserved.
JLN Interest Rates - http://www.jlninterestrates.com
Conversation Starter
Five Minutes with Ira Krulik, NYPC
Launched on March 21, 2011 with 10 clearing member firms, New York Portfolio Clearing (NYPC) - a joint venture of The Depository Trust & Clearing Corporation (DTCC) and NYSE Euronext- clears U.S. interest rate futures and cross-margins such positions against fixed income cash instruments through DTCC’s subsidiary, the Fixed Income Clearing Corporation (FICC). Ira Krulik, chief operating officer of NYPC spoke this week with JLN Managing Editor Christine Nielsen. He shared what he believes are the advantages of NYPC's risk management, “one-pot” cross-margining and clearance operations and its settlement efficiencies, in addition to his thoughts on where the NYPC may be headed from here.
Takeaways:
-Already, there are 11 approved clearing members, and several more in the pipeline.
-NYPC hopes to add options on futures by the end of this year.
-Locked-in delivery makes the process seamless.
1) How did you come to be at the NYPC?
Ira Krulik: After over 30 years in the futures industry, I was approached at the 2010 annual Futures Industry Association (FIA) conference about my interest in the new venture. Once I understood who the parent organizations were and what they were planning to do, the concept became more intriguing. They were giving clients additional choice in the marketplace with a real value add attached. Upon returning from the conference, I had the opportunity to meet with Walt Lukken, who had recently been named CEO of NYPC; but I spoke with my most important counsel, Mrs. Krulik, about the opportunity and she said, ‘Go for it!’
2) What do you feel is the biggest challenge for NYPC as a new derivatives clearing organization? What do you feel is the organization's biggest strength?
Krulik: The challenge is for the external world to find out who we are and what we do. Because the value proposition is in the “one-pot” margin process, we've been reaching out to firms that we believe are the biggest traders in the fixed income space and signing them up.
There are 11 approved clearing members with several more in the pipeline. It is our hope to be at 20 firms plus by the end of the summer.
In terms of strengths, clearly it's the efficiencies we are bringing to the marketplace. Being able to bring the cash positions and futures into one pot, and calculating a single margin call / exposure, is a win for the regulators and a win for the firms because it allows the clearinghouses and regulators to view common members’ positions cleared at NYPC and FICC in total, and therefore, it is a truer representation of the risk and thus the capital (margin) needed to maintain that risk. NYPC’s one-pot model also allows firms to settle with NYPC and FICC in a single call with a single cash movement, reducing the number of banking transactions to accomplish the same operational requirement.
**CN: See the full MarketsWiki "Five Minutes" interview with Krulik here.
Lead Stories
Treasury’s Regulatory Review: Reducing Costs and Minimizing Burdens
By George W. Madison, U.S. Department Of The Treasury
In January, President Obama outlined his plan to create a 21st-century regulatory system that is simpler and smarter and that balances the obligation to protect public health and safety with the commitment to promote economic growth and job creation. As a key part of that plan, the President directed every agency to review the rules already on their books in order to remove those that are out-of-date, unnecessary, overly burdensome, or in conflict with other rules.
http://jlne.ws/lhJqTo
Fed Gave Banks Crisis Gains on Secretive Loans
By Bob Ivry, Bloomberg
Credit Suisse Group AG (CS), Goldman Sachs Group Inc. (GS) and Royal Bank of Scotland Group Plc (RBS) each borrowed at least $30 billion in 2008 from a Federal Reserve emergency lending program whose details weren’t revealed to shareholders, members of Congress or the public.
http://jlne.ws/m4u7rZ
US default ‘more likely than in Indonesia’
By James Mackintosh, FT.com
It sounds dotty to suggest the US is at imminent risk of default. A country that has rarely been able to borrow so cheaply, that issues debt in its own currency and has just demonstrated that it can print as much money as it likes need never miss a coupon payment. Yet in the past fortnight traders have come to the conclusion that America might breach its own constitutional clause that its debt “shall not be questioned”. According to Markit, the cost of one-year US credit default swaps, which insure against default, almost tripled in six trading days.
http://jlne.ws/iJIXlV
Major world banks handled Libya cash, report
Michael Peel and Sam Jones, The Globe And Mail
Libya lost billions of dollars on sophisticated financial products sold to Moammar Gadhafi’s sovereign wealth fund by some of the world’s leading financial institutions, according to a confidential Libyan government document.
http://jlne.ws/ljVNi7
ISDA Publishes OTC Derivatives Market Analysis
Press Release
The International Swaps and Derivatives Association, Inc. (ISDA) published today a new analysis of the over-the-counter (OTC) derivatives market based on year-end statistics published by the Bank for International Settlements (BIS) and LCH.Clearnet’s SwapClear. According to the analysis, the level of cleared interest rate swaps exceeded 50 percent of interest rate swap notional outstanding at the end of 2010, up from 21 percent at year-end 2007. Over the same time frame, the volume of uncleared interest rate swaps outstanding declined from $201 trillion to $116 trillion, a decrease of $85 trillion or 42 percent.
http://jlne.ws/hHMAsV
Lagarde Announces IMF Candidacy
BY DAVID GAUTHIER-VILLARS, WILLIAM HOROBIN AND DAVID PEARSON, WSJ.com
France's Finance Minister Christine Lagarde on Wednesday officially declared her candidacy to replace Dominique Strauss-Kahn as managing director of the International Monetary Fund, launching a global race for the prominent position.
http://jlne.ws/mezZN9
Lagarde is Front-Runner to Head IMF
By Gonzalo Vina and Andres R. Martinez, Bloomberg
Support mounted for French Finance Minister Christine Lagarde to head the International Monetary Fund as Mexico offered its central bank governor as an emerging- market candidate, challenging Europe’s 65-year hold on the job.
http://jlne.ws/keFwki
With The Backing Of Europe, French Fin Min Lagarde Announces IMF Bid
Forbes
French Finance Minister Christine Lagarde officially announced her candidacy for the top seat at the IMF. After much speculation, Lagarde has garnered the support of major European figures such as Germany’s Angela Merkel and appears poised to replace her former compatriot, Dominique Strauss-Kahn.
http://jlne.ws/jvokbo
Lagarde Warns on Greece's Public Finances
BY GEOFFREY T. SMITH, BRIAN BLACKSTONE AND GABRIELE PARUSSINI, WSJ.com
French Finance Minister Christine Lagarde signaled Paris might support a rescheduling of Greek debt, warning that Greece is at risk of default if it doesn't do more to bring its public finances into order. The comments mark a shift in France's position in a debate that has pitted Germany and other euro-zone governments against the European Central Bank, which opposes any form of restructuring of Greek debt.
http://jlne.ws/kauSrV
Europeans Focus on Retaining Leadership of IMF
By LIZ ALDERMAN, NY Times
As the International Monetary Fund prepared to accept nominations Monday to replace Dominique Strauss-Kahn at its helm, European officials rallied over the weekend around Christine Lagarde, France’s finance minister, as their top choice for the post, despite fresh warnings from leaders of emerging markets and other countries that simply handing the job to another European could undermine the fund’s legitimacy.
http://jlne.ws/laVbdh
France: China Backs Lagarde as IMF Head
By INTI LANDAURO And OWEN FLETCHER, WSJ
PARIS—China backs French Finance Minister Christine Lagarde as a candidate to head the International Monetary Fund, the French government's spokesman, Francois Baroin, said Tuesday.
http://jlne.ws/kr0mhY
IMF Executive Board Initiates Selection Process For Next IMF Managing Director
Press Release
http://jlne.ws/ltFkaa
U.S. Treasury Department Statement Regarding Leadership Of The International Monetary Fund
Press Release
http://jlne.ws/iqZtrv
IMF Announces New Ethics Code And Standards
By Ian Talley, MarketWatch
The International Monetary Fund said Thursday it recently changed its ethics code, now censuring staff for personal relationships between supervisors and subordinates. The new ethics code was approved on May 6.
http://jlne.ws/koELuL
**CN: Time to reevaluate.
Morgan Stanley Plans to Let Retail Brokers Use LinkedIn, Twitter
By Michael J. Moore, Bloomberg
Morgan Stanley (MS) Smith Barney, the world’s largest brokerage, will let financial advisers market themselves and share ideas with clients through social- networking websites LinkedIn and Twitter.
http://jlne.ws/kkuHYV
Treasury set to make small profit in sale of AIG stock
By Justin Baer and Telis Demos in New York and Tom Braithwaite in Washington, Financial Times
American International Group and its largest investor, the US Treasury, are poised to raise at least $8.7bn through a sale of stock on Tuesday, handing the federal government a small profit on the deal, people familiar with the matter said.
http://jlne.ws/j99zwa
Vickers to insist on bond-funded debt buffer
By Patrick Jenkins and Sharlene Goff, Financial Times
Britain’s banks could be forced to hold capital equivalent to half as much again of their minimum equity requirements, under plans being considered by the Independent Commission on Banking.
http://jlne.ws/jOJFqo
Community Banks Lobby to Limit New Regulations
By BEN PROTESS, NY Times
Network television ads appearing in the Washington area feature an anxious woman who cautions that “community banks and credit unions will be squeezed” by “bad” regulation.
http://jlne.ws/mmZ7Ap
Ex-Fed Official to Join Barclays as Senior Policy Advisor
Wall Street Journal Blogs
Brian Madigan, who ran the Federal Reserves powerful monetary affairs group, is joining Barclays Capital as a senior policy adviser, according to an internal memo announcing the hire.
http://jlne.ws/issULs
European Firms Shun Euro Bonds
BY ELENA MOYA, WSJ.com
European companies have shunned the euro in the bond markets this year and have instead piled into dollar, sterling and even ruble-denominated bonds, data from Dealogic show. For the first time since 2000, bonds denominated in euros account for less than half of all European corporate bond issuance.
http://jlne.ws/kXvbSg
JPMorgan’s Dimon Was Tempted To Remind Geithner Where Treasury’s Bread Is Buttered
Forbes
The Associated Press had an interesting tidbit last week in a story on JPMorgan Chase CEO Jamie Dimon’s May 19 appearance at a dinner for the University of Colorado’s Denver Business School, aside from the headlines generated when the banker said a U.S. debt default would be a “moral disaster.” While the AP led with that morsel, later in the story came an interesting anecdote from the period when Dimon’s bank paid back taxpayer dollars it received under the TARP program, and a reminder that some banks believed they could skate through the 2008 crisis just fine on their own.
http://jlne.ws/iRdJTO
U.S. Commercial Property Prices Drop to Post-Recession Low
By Brian Louis and David M. Levitt, Bloomberg
U.S. commercial property prices fell to a new post-recession low in March as sales of financially distressed assets weighed on the market, according to Moody’s Investors Service.
http://jlne.ws/jeEtd4
ISDA Publishes "The Economics of Central Clearing: Theory and Practice," A Discussion Paper on Clearing Issues
Barron's
The International Swaps and Derivatives Association, Inc. (ISDA) today announced the publication of an in-depth discussion and analysis of the purposes, function and issues associated with central clearing of over-the-counter (OTC) derivatives.
http://jlne.ws/lrz9Pi
NY senators bat with banks on rule change
New York Post
New York lawmakers are coming to the rescue of some major US banks. The Senate agricultural committee is set to host hearings as early as mid-June to discuss new derivatives rules, which have become a hot-button issue on Wall Street, The Post has learned. US legislators, including Sens. Chuck Schumer...
http://jlne.ws/iPS2FC
Emerging market bond fund flows signal shift
By Robin Wigglesworth in London, Financial Times
Money is continuing to pour into emerging market bond funds, subduing the cost of borrowing for developing countries and underlining the shift in economic power away from the western heavyweights of the financial system. Eight consecutive weeks of net inflows have taken the total invested in these funds this year to $7.9bn, according to EPFR, the fund data provider.
http://jlne.ws/iYRWzY
Financial regulation: A shield asunder
By Tom Braithwaite, Brooke Masters and Jeremy Grant, FT.com
On a late January day in a discreet basement room of the Grischa Hotel by the ski lifts of Davos, Tim Geithner listened to grievances from 14 executives from some of the biggest financial groups in the world.
http://jlne.ws/mBTg5E
Legal trouble mounting for biggest mortgage lenders. How much will it cost to buy peace with govt?
By Abigail Field, CNNMoney
The trouble for America's largest mortgage lenders just keeps mounting. How much will it cost them to make it all go away? Bank of America, JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C) and Ally Financial violated the federal False Claims Act, according to officials briefed on federal investigations who spoke to the Huffington Post. The unnamed officials say the banks submitted faulty documents in seeking federal reimbursement from the Federal Housing Administration homes they'd foreclosed on.
http://bit.ly/lE8TNm
EU told to repair banks before Greek restructuring
By Dan McCrum, FT.com
The European Union should repair its banks before attempting to restructure Greek debt, Peter Fisher, head of fixed income for BlackRock, the largest asset manager, has warned. The European authorities “keep confronting this dilemma of the need to restructure debt for the debtors’ sake, and then the consequences for the European financial system if they do,” said Mr Fisher in a video interview for FT.com.
http://jlne.ws/mP1t34
Events
2011 Morningstar Investment Conference
June 8-10, 2011
Morningstar's Conference For Leaders From Across The Investment Industry - Chicago
http://jlne.ws/gD5nJ1
Introduction to Treasury Futures: Factoring the Risks
June 16, 2011
IFM's Course On Cash And Futures Treasury Trade - New York City
http://jlne.ws/kdOeSQ
Treasury Futures Basis: Beyond the Risks
June 16, 2011
IFM's Course On the Treasury Futures Basis - New York City
http://jlne.ws/kdOeSQ
Treasury Futures: Using International Fixed-Income and Money Market Spreads
June 16, 2011
IFM's Course On Using International Fixed-Income and Money Market Spreads - New York City
http://jlne.ws/kdOeSQ
Making Sense of Credit Default Swaps
June 22, 2011
IFM's Course On Credit Default Swaps - Chicago
http://jlne.ws/kdOeSQ
FIA Treasury & Rates Forum
September 14, 2011
FIA Program On Growing Role Of Treasury Futures - New York City
http://jlne.ws/fQFQXP
Economic News
Economy Grew at 1.8% Rate in First Quarter
Associated Press/ The New York Times
High gasoline prices, government budget cuts and weaker-than-expected consumer spending caused the economy to grow only weakly in the first three months of the year.
http://jlne.ws/l2MjSL
While the top line GDP number was essentially unchanged, there were some interesting revisions to the major components
Federal Reserve Bank of Cleveland
Real GDP was unchanged during the second estimate, rising at an annualized rate of 1.8 percent (coming in at the low end of expectations), compared to a 3.1 percent gain in the fourth quarter. While the top line number was essentially unchanged, there were some interesting revisions to the major components. Importantly, real personal consumption growth was (somewhat unexpectedly) revised down from 2.7 percent to 2.2 percent, subtracting 0.4 percentage point from growth. All three major components of consumption (durables, nondurables, and services) were knocked down during the revision. Upward revisions to nonresidential investment and private inventories offset the downward adjustment to consumption.
http://jlne.ws/jwi0cn
U.S. Home Prices Fell 5.5%, Most in Almost Two Years
By Kathleen M. Howley, Bloomberg
U.S. home prices dropped 5.5 percent in the first quarter from a year earlier, the biggest decline in almost two years, as sales of discounted foreclosures undermined real estate values.
http://jlne.ws/kWxvMR
Revenue Slide Dents Banks' Recovery
BY VICTORIA MCGRANE AND MICHAEL R. CRITTENDEN, WSJ.com
U.S. bank profits soared in the first three months of 2011, but revenue coming in the door fell for only the second time in almost 30 years, casting a shadow on the industry's continued recovery from the 2008 financial crisis.
http://jlne.ws/jvLmv5
Chicago Fed Index: Index shows economic activity weakened in April
Led by declines in production-related indicators, the Chicago Fed National Activity Index fell to –0.45 in April from +0.32 in March. April marked the lowest reading of the index since August 2010. Three of the four broad categories of indicators that make up the index deteriorated from March, but two of those three categories made positive contributions to the index in April.
http://jlne.ws/jkM4vL
Exchanges, Clearing Houses & MTFs
DTCC: Indemnification Provision In Dodd-Frank Could Create Unintended Negative Consequences
Press Release/Reuters
The Depository Trust and Clearing Corporation (DTCC) today cautioned in testimony before a House Agriculture subcommittee that the indemnification provision of Dodd-Frank could create unintended negative consequences, including undermining efforts to enhance transparency and mitigate systemic risk in the over-the-counter (OTC) derivatives market. The hearing was called to discuss global harmonization, extra-territoriality issues and technical concerns with the implementation of the Dodd-Frank Act.
http://jlne.ws/kB2eT7
LCH.Clearnet has revised risk parameters for Irish gov bonds. Additional margin will change from 55% to 65% for longs
In accordance with the Sovereign Credit Risk Framework and in response to the yield differential of 10 year Irish government debt against a AAA benchmark, LCH.Clearnet Ltd has revised the risk parameters for Irish government bonds cleared through the RepoClear service. The additional margin required for positions of Irish government bonds will consequently be increased from 55% to 65% for long positions; this amount will be adjusted for the current bond price*. Short positions will pay a proportionately lower margin.
http://jlne.ws/msJphG
CME To Rework Financial Safeguards For CDS Clearing Platform
By Katy Burne, Of DOW JONES NEWSWIRES/Nasdaq
CME Group Inc. (CME) is planning to rework financial safeguards for its derivatives clearing platform for credit default swaps over the next quarter or two, establishing a separate default fund for CDS clearing, the company said Tuesday.
http://jlne.ws/lMC7aJ
June 17, 2011: NYSE Liffe U.S. Becomes the Sole U.S. Exchange for MSCI Index-based Futures
Launched in September of 2008, NYSE Liffe U.S. is the U.S.-based and CFTC-registered futures exchange of NYSE Euronext. NYSE Liffe U.S. offers trading in precious metals futures and options, MSCI index-based equity futures and U.S. interest rate futures including Eurodollar and U.S. Treasury futures.
http://jlne.ws/kWIMCh
CME eyes move into swaps in Europe expansion drive
Luke Jeffs, Reuters
U.S. exchange giant CME Group is eying a move into Europe's lucrative swap clearing business by early 2012 as part of its rapid expansion plans in the region, where it has only just gained a foothold.
http://jlne.ws/mz5ieq
Firms & Banks
UBS Plans to Distance Key Investment Banking Unit
BY DAVID ENRICH AND GINA CHON, WSJ.com
Swiss financial giant UBS AG is planning to separate its investment bank and incorporate it outside of Switzerland in an effort to placate regulators there who want to prevent another bailout should the bank fall on hard times as it did in 2008, said people familiar with the matter.
http://jlne.ws/lTGJpj
Goldman Bankers React to Subpoena News
CNBC
At an fashionable hotel bar on a recent night in New York, a trio of Goldman Sachs investment bankers were discussing the news that federal prosecutors are expected to issuing subpoenas for documents related to Goldmans mortgage business.
http://jlne.ws/kJvpnD
More banks targeted in New York probe
By Kara Scannell and Justin Baer in New York, Financial Times
The New York state attorney-general’s probe into mortgage practices at large banks has expanded to include Royal Bank of Scotland, UBS, JPMorgan Chase and Deutsche Bank, bringing the number of banks under scrutiny to seven, people familiar with the matter say.
http://jlne.ws/jBtJYn
JPMorgan, UBS, Deutsche Bank Said to Face N.Y. Mortgage Probe
BusinessWeek
JPMorgan Chase and Co., UBS AG and Deutsche Bank AG are being investigated as part of New York Attorney General Eric Schneiderman's expanded probe of mortgage securitization, according to a person familiar with the matter.
http://jlne.ws/khiVux
How an Inquiry of Goldman Sachs Might Play Out
By PETER J. HENNING, NY Times
Goldman Sachs has already received subpoenas from unnamed regulators investigating its mortgage securities operations. Now, federal prosecutors appear to be interested in those operations as well, and subpoenas could follow. If so, this would signal a new — and potentially more threatening — inquiry into its conduct during the financial crisis.
http://jlne.ws/iqHUHx
Goldman Banker Hired by VTB Capital to Lead Overseas Unit
BusinessWeek
VTB Capital Plc, the investment- banking arm of Russia's second-largest lender, hired Atanas Bostandjiev from Goldman Sachs Group Inc. as its U.K. and international head.
http://jlne.ws/m59mlM
Citi hires ex-CEO of PricewaterhouseCoopers
Reuters via Yahoo! Canada News
Citigroup Inc has hired Samuel Di Piazza, Jr, the former chief executive of PricewaterhouseCoopers , to help its faltering investment bank rebuild after the financial crisis.
http://jlne.ws/m65R1X
Bank of America to Settle Overdrafts Suit for $410 Million
By ANDREW MARTIN, NY Times
Bank of America would pay $410 million to settle its piece of a broad lawsuit involving excessive overdraft fees on debit cards in a deal tentatively approved by a federal judge in Miami on Monday.
http://jlne.ws/lHeK6S
In Reputation Ranking, Some Banks Break from the Pack
By Heather Landy, American Banker
Public perceptions of bank brands remain a long way from rosy, but they are becoming more nuanced. The 30 banks included in American Banker's second annual survey of bank reputation, conducted by the Reputation Institute, scored higher with consumers on average, and with a much wider distribution, than last year. The results suggest that reputation, in recent years an albatross for the financial sector as a whole, is starting to look more like a point of differentiation, with several large institutions able to break away from the pack more convincingly as they moved to the top of the ranking.
http://jlne.ws/jLtNP5
Goldman execs expect subpoenas, WSJ says
Market Watch
Goldman Sachs Group Inc. executives expect to receive subpoenas soon from U.S. prosecutors seeking more information about the firm's mortgage-related business, the Wall Street Journal reported Friday, citing unidentified people familiar with the situation. Officials at the investment bank reckon the Department of Justice will ask for certain documents and other ...
http://jlne.ws/moF2ac
UBS Chief Sends Memo to I-Bankers
CNBC
UBS Chief Executive Officer Oswald Gruebel admitted in an email this morning that some of the high level departures from the Swiss banks investment banking have been regrettable.
http://jlne.ws/lRzXsF
JPMorgan Traders Are Taking Market Share, O'Connor Says
BusinessWeek
JPMorgan Chase & Co., the most profitable U.S. bank, is taking trading revenue from Goldman Sachs Group Inc. and Bank of America Corp. as investments including its $1.7 billion purchase of RBS Sempra's commodities business begin paying off, Deutsche Bank AG analysts said.
http://jlne.ws/kt8ObV
ING Can Be More With Less, Says the Reluctant Banker
BY MAARTEN VAN TARTWIJK AND ARCHIE VAN RIEMSDIJK, WSJ
When Jan Hommen was approached to run ING Groep NV, the timing couldn't have been worse. The Dutchman was just planning to move to the U.S. and spend more time with his children and grandchildren. And, having little experience in banking and insurance, he was far from the obvious choice to guide the Dutch bancassurer through the biggest crisis in its history.
http://jlne.ws/lj2yMm
RBS sees opportunity in crisis
The Nation, Thailand's English news
Many banks across the world seem to have hit the alarm button. The sharp swings in global oil prices since the start of the wave of unrest in the Middle East and North Africa, the fragile US economic recovery, Europe's prolonged sovereign-debt crisis and Japan's tremendous disaster have created uncertainty for them. But not for the Royal Bank of Scotland.
http://jlne.ws/lJN8q8
UBS's McCann Denies Speculation of Talks With Wells Fargo
Bloomberg
UBS AG (UBSN) denied speculation it may sell its U.S. wealth management unit to Wells Fargo & Co. (WFC) , saying it remains an "important part" of the Swiss bank.
http://jlne.ws/l1DLhO
Morgan Stanley CEO Frets Over Capital Rules
Finance Technology Network
Morgan Stanley Chief Executive James Gorman is concerned that regulators may force large banks to hold too much capital, a move that banks worry would crimp profits.
http://jlne.ws/l6Iroo
Deutsche Bank chairman denies Kirch conspiracy
Reuters via Yahoo! India News
The legal battle between Deutsche Bank and media mogul Leo Kirch looked no closer to being resolved after a day of hearings in a Munich court which saw Chief Executive Josef Ackermann in the witness stand.
http://jlne.ws/k2W33v
Regulators
Thomas M Hoenig: Back to the business of banking
Speech by Mr Thomas M Hoenig, President of the Federal Reserve Bank of Kansas City, at the 29th Annual Monetary and Trade Conference, Global Interdependence Center and Drexel University LeBow College of Business, Philadelphia, Pennsylvania, 24 May 2011.
Introduction Today’s meeting and sessions are about financial reform, and I congratulate the organizers of this conference for keeping this important topic in the mainstream of discussion. Much remains to be done around reform if we are to ensure a more stable financial system. Topics today will focus on housing, the Dodd-Frank Act, governmentsponsored enterprises (GSEs), the safety net and other reform efforts that necessarily follow the recent financial crisis that has so devastated our national economy.
http://jlne.ws/iCVcSs
Paul Fisher: The economic outlook - some remarks on monetary policy
Speech by Mr Paul Fisher, Executive Director for Markets of the Bank of England, to the Agency for Scotland, London, 23 May 2011. (I would like to thank Ronnie Driver for his help in preparing this speech.)
For most of us, the current outlook for the UK economy is not a very attractive prospect. After experiencing a precipitous fall in demand during 2008/09, the latest estimates suggest that
UK output in 2011 Q1 remained around 4% below its peak pre-crisis level. The Monetary Policy Committee’s (MPC) central projection published in its May Inflation Report, is for
output to grow at around its historical trend rate, such that it would be mid-2012 before that previous peak level is regained.
http://jlne.ws/lpeoax
Fed’s Kocherlakota Lowers Forecast for Economic Growth, Urges Tightening
By Steve Matthews, Bloomberg
Federal Reserve Bank of Minneapolis President Narayana Kocherlakota trimmed his forecast for U.S. economic growth and raised his outlook for unemployment slightly while reiterating his call for higher interest rates this year.
http://jlne.ws/myz60r
OECD urges Fed and BoE to raise rates
By Chris Giles in Paris, Financial Times
The Federal Reserve and the Bank of England should follow the European Central Bank and implement “early” rises in interest rates, the Organisation for Economic Co-operation and Development said on Wednesday, as it urged central banks to respond to evidence of self-sustaining growth.
http://jlne.ws/iJ9nAC
OECD looks to measure the ‘better life’
By Chris Giles in Paris, Financial Times
It is time to move beyond gross domestic product when measuring the success of societies, the Organisation for Economic Co-operation and Development, has concluded in a change of mission for the international organisation. Known for most of its 50 years as an establishment of orthodox economics, promoting structural reforms to boost GDP growth, it launched a “better life initiative” on Tuesday to measure the quality of life in the Organisation’s 34 member countries.
http://jlne.ws/lUtL0K
City of London concerned by Mifid poll
By Jeremy Grant, Financial Times
The City of London has expressed concern after a poll of brokers and asset managers based in continental Europe showed some believed that rules allowing large blocks of trades to be done without prices displayed beforehand could undermine market transparency.
http://jlne.ws/kKPCWM
IMF Executive Board Concludes 2011 Article IV Consultation with United Arab Emirates
Public Information Notice (PIN) No. 11/57
May 23, 2011
On April 21, 2001, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with the United Arab Emirates (U.A.E.), and considered and endorsed the staff appraisal without a meeting.
Background
The economic recovery in the U.A.E. is gaining strength, supported by a favorable global environment but subject to increased regional uncertainty. Real nonhydrocarbon GDP growth is projected to accelerate to 3.3 percent in 2011 from 2.1 percent in 2010, reflecting stronger tourism, logistics, and trade in the emirate of Dubai; and large public investment spending in the emirate of Abu Dhabi, including through Government-Related Entities (GREs)...
http://jlne.ws/lSSQwE
IMF Executive Board Approves An E26 Billion Extended Arrangement For Portugal
Press Release
The Executive Board of the International Monetary Fund (IMF) today approved a three-year SDR 23.742 billion (about E26 billion) arrangement under the Extended Fund Facility for Portugal in support of the authorities’ economic adjustment and growth program. This front-loaded program makes SDR 5.6 billion (about E6.1 billion) immediately available to Portugal from the IMF. In 2011, total IMF financing will amount to about E12.6 billion and will be partnered with about E25.2 billion committed by the European Union.
http://jlne.ws/jEvM6v
Remarks By Deputy US Treasury Secretary Neal S. Wolin At The Singapore Exchange
Press Release
http://jlne.ws/jJfASE
Basel Methodology, EU Stress, Resona Pledge, Privacy Hearings: Compliance
Bloomberg
Bank of Canada Governor Mark Carney said global regulators intend to release criteria for identifying systemically important financial institutions in July.
http://jlne.ws/inSXiF
Financial regulation: A shield asunder
By Tom Braithwaite, Brooke Masters and Jeremy Grant, Financial Times
On a late January day in a discreet basement room of the Grischa Hotel by the ski lifts of Davos, Tim Geithner listened to grievances from 14 executives from some of the biggest financial groups in the world.
http://jlne.ws/jlMCRV
IMF: Wider Plan Needed to Address Ireland's Problems
IMF Survey Online
The Irish government has been making good progress in addressing the country’s deep-seated economic problems since it took office March 9. But without comprehensive action from the European Union, Ireland and other euro area countries with programs will struggle to restore their access to the markets.
http://bit.ly/l6jBOL
OTC
Swaps Users Urge CFTC to Drop Quote System to Get Better Prices
Bloomberg/BusinessWeek
Swaps users including Dow Corning Corp., Eastman Kodak Corp. and U.S. Steel Corp. want regulators to require prices be made public prior to trading, overturning a proposed rule that would limit distribution of the data.
http://jlne.ws/mLnjj1
Swaps Group Warns of 'Too Big to Fail' in Clearinghouses
BY KATY BURNE, WSJ.com
Derivatives clearinghouses can and do fail, and policy makers should be concerned that they could be the next "too big to fail" beneficiaries of federal bailouts, according to a discussion paper released by the International Swaps and Derivatives Association.
http://jlne.ws/mehi4g
Rate swap volumes set to surge on new system
By Jeremy Grant, Financial Times
Volumes in the interest rate swaps market are set to surge as regulatory reforms push the bulk of contracts currently traded over-the-counter onto electronic platforms. Icap, the world’s largest interdealer broker, and Tabb Group, a consultancy, predicted the Dodd-Frank act in the US and similar reforms of OTC derivatives in Europe would transform the interest rate swaps market – largely voice-brokered – into one with a far broader range of investors.
http://jlne.ws/m42Pvb
Analysis: OTC swaps face legal void as CFTC misses deadline
By Christopher Doering, Reuters
Billions of dollars in derivatives will be headed into legal limbo if U.S. regulators don't create a short-term fix to the market chaos that could be unleashed by missing a July financial reform deadline. The Commodity Futures Trading Commission, in the midst of writing dozens of new rules, has said it will miss the July 16 deadline for implementing rules that give it oversight of the $600-trillion global over-the-counter derivatives market.
http://jlne.ws/j318tR
ICAP Exceeds $300 Billion In US Electronic CDS Trades
By Katy Burne, Dow Jones
ICAP PLC (IAP.LN IAPLY), the world's largest interdealer broker, announced Thursday it has surpassed $300 billion in electronically traded U.S. credit default swaps on its BrokerTec platform. That cumulative tally since the broker launched electronic CDS trading in October 2007 signals that dealers are increasingly comfortable trading on-screen without human interaction with a broker.
http://jlne.ws/l8lP6V
Global News
Ireland says won't yield on corporate tax
Reuters
Ireland will not raise its ultra-low corporate tax rate despite pressure from France and Germany, even if that means paying higher interest rates on EU bailout loans, Finance Minister Michael Noonan said on Thursday.
http://jlne.ws/k5jkvh
Euroclear Bank To Provide Access To Chilean Domestic Debt Securities
ISS Mag
Euroclear Bank announces today the launch in June of settlement, custody and related services for cross-border Chilean domestic debt transactions. Simultaneously, Depósito Central de Valores S.A. (DCV), the Chilean Central Securities Depository (CSD), will offer similar services involving foreign securities transactions for its clients through Euroclear Bank. A bilateral transaction-processing link between DCV and Euroclear Bank is nearing completion. At the same time, the Chilean peso will become one of 54 settlement currencies in Euroclear Bank.
http://jlne.ws/mjexHh
EU's Damanaki tells Greece euro membership at risk
Reuters
Greece must take tough measures to deal with its debt crisis or it will have to return to the drachma, the EU's Fisheries Commissioner Maria Damanaki said on Wednesday.
http://jlne.ws/iLewa1
German bank exposure to Greece 'manageable:'
By William L. Watts, MarketWatch
German banks' exposure to Greece is "manageable," but contagion risks are high, Fitch Ratings said in a report released Wednesday. "The worst consequence of any Greek sovereign default for German and other European banks would be in a sharp increase in general capital market and creditor risk aversion at a time when many banks are still in rehabilitation mode," said Michael Dawson-Kropf, senior director in Fitch's EMEA financial institutions group. The ratings company said it "does not currently envisage" any rating action on German banks as a result of their direct exposure to Greece., but warned of "high potential contagion risks" if there were any restructuring of Greek sovereign debt
http://jlne.ws/kkm3Lr
Europe backs restricted clearing house reforms
By Nikki Tait in Brussels, Financial Times
European parliamentarians have given their backing to stricter regulation of derivatives but have restricted new rules designed to ensure that deals are cleared centrally to those contracts traded on a bilateral “over-the-counter” (OTC) basis. The move is a blow to those who had wanted to extend the scope of the regulation, known as the European Markets Infrastructure Regulation (Emir), to fast-growing exchange-traded derivatives as a way of spurring competition in the market
http://jlne.ws/k2DjE5
Moody's places 14 UK banks on watch
Brisbane Times
Moody's Investors Service on Tuesday placed 14 British banks including Lloyds TSB and Royal Bank of Scotland on review for possible downgrades, citing reduced chances of future government support.
http://jlne.ws/mBOW15
Goldman Sachs Hires ECB's Huw Pill as Chief European Economist
BusinessWeek
Goldman Sachs Group Inc. hired Huw Pill of the European Central Bank to replace Erik Nielsen as its chief European economist.
http://jlne.ws/mtbjbV
Malaysia mandates banks for global sukuk
The Malaysian Insider
KUALA LUMPUR, May 25 - Malaysia has picked four banks including CIMB, Citigroup and HSBC to arrange its upcoming US dollar global Islamic bond sale, IFR reported. The fourth bank could be Maybank, Thomson Reuters' unit IFR reported, adding that the sukuk offering was expected to be completed in June or July. Proceeds from the sale would be used to ...
http://jlne.ws/ixj8yA
Fitch revises Belgium’s outlook to negative from stable
By Gerry Davies, ForexLive
* Political risk is higher in Belgium than in other euro area peers
* Belgium will likely be downgraded if it misses official deficit targets
http://jlne.ws/j6mzTj
China's economy may face inflation, sluggish growth
People's Daily Online
China's National Economic Accounting and Economic Growth Research Center under Peking University released the "China Economic Growth Report 2011" on May 21. The report said that judging from the current macroeconomic imbalance in China, China is faced with both inflationary pressure and the risk of sluggish growth. China needs to prevent stagflation by controlling the gross unbalance in the current stage.
http://jlne.ws/lDciHx
Italy Shocked, Shocked by S and P Move
By Francesco Guerrera, WSJ.com
Judging from the reaction from local media and financial executives, Standard & Poor’s decision late on Friday to revise Italy’s sovereign debt outlook from “stable” to “negative” went down like a plate of overcooked pasta.
http://jlne.ws/mJwZ8i
Mizuho president to step down
TAIGA URANAKA, Reuters
Mizuho Financial Group’s (MFG-N3.08-0.03-0.96%) president will step down and its corporate banking chief will take the helm, Japan’s second-largest bank said on Monday, as it grapples with persistent system troubles including a breakdown in ATMs after the devastating March earthquake.
http://jlne.ws/knfu2n
Banks battle for $1bn Puerto Rican road
By Helen Thomas in New York, Financial Times
Goldman Sachs and Morgan Stanley are squaring off in the bidding to finance and operate one of Puerto Rico’s busiest roads as a 10-month-long privatisation process approaches its conclusion.
http://jlne.ws/jtefvh
Greece Downgraded by Fitch, Norway Cuts Funding
Greece’s troubles escalated further on Friday, as Fitch downgraded the country’s sovereign debt rating and Norway was one of three nations that froze a payment of 235 million kroner ($42 million) in European Economic Area grants to Athens.
http://jlne.ws/ilijtC
Spain Vote Threatens to Uncover Debt
By JONATHAN HOUSE And SARA SCHAEFER MUñOZ, WSJ
Weekend elections that threaten to drive Spain's ruling Socialist party from power in several regions and cities also promise a potentially nasty surprise: the revelation of piles of undisclosed debt in local governments that could undercut the country's drive to avoid an international bailout.
http://jlne.ws/mdekuL
Debt Calculations Weigh on Restructuring Decisions
By STEPHEN FIDLER, WSJ
For the first time this week, a taboo was lifted. European officials can now use the "R" word— restructuring—in sentences that don't also have "not" in them. Restructuring Greece's government debt—changing the conditions attached to its bonds to lessen the burden—is now something that can be talked about in polite company. (With the proviso that it will be the nicest, gentlest, most-investor-friendly restructuring possible.)
http://jlne.ws/j0LDoK
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Rabu, 25 Mei 2011
Top Interest Rate Headlines 05-25-11: Fed’s Kocherlakota Lowers Forecast for Economic Growth, Urges Tightening
Fed’s Kocherlakota Lowers Forecast for Economic Growth, Urges Tightening
By Steve Matthews, Bloomberg
Federal Reserve Bank of Minneapolis President Narayana Kocherlakota trimmed his forecast for U.S. economic growth and raised his outlook for unemployment slightly while reiterating his call for higher interest rates this year.
http://jlne.ws/myz60r
Lagarde Announces IMF Candidacy
BY DAVID GAUTHIER-VILLARS , WILLIAM HOROBIN AND DAVID PEARSON, WSJ.com
France's Finance Minister Christine Lagarde on Wednesday officially declared her candidacy to replace Dominique Strauss-Kahn as managing director of the International Monetary Fund, launching a global race for the prominent position.
http://jlne.ws/mezZN9
DTCC: Indemnification Provision In Dodd-Frank Could Create Unintended Negative Consequences
Press Release/Reuters
The Depository Trust & Clearing Corporation (DTCC) today cautioned in testimony before a House Agriculture subcommittee that the indemnification provision of Dodd-Frank could create unintended negative consequences, including undermining efforts to enhance transparency and mitigate systemic risk in the over-the-counter (OTC) derivatives market. The hearing was called to discuss global harmonization, extra-territoriality issues and technical concerns with the implementation of the Dodd-Frank Act.
http://jlne.ws/kB2eT7
LCH.Clearnet has revised risk parameters for Irish gov bonds. Additional margin will change from 55% to 65% for longs
In accordance with the Sovereign Credit Risk Framework and in response to the yield differential of 10 year Irish government debt against a AAA benchmark, LCH.Clearnet Ltd has revised the risk parameters for Irish government bonds cleared through the RepoClear service. The additional margin required for positions of Irish government bonds will consequently be increased from 55% to 65% for long positions; this amount will be adjusted for the current bond price*. Short positions will pay a proportionately lower margin.
http://jlne.ws/msJphG
EU's Damanaki tells Greece euro membership at risk
Reuters
Greece must take tough measures to deal with its debt crisis or it will have to return to the drachma, the EU's Fisheries Commissioner Maria Damanaki said on Wednesday.
http://jlne.ws/iLewa1
CME To Rework Financial Safeguards For CDS Clearing Platform
By Katy Burne, Of DOW JONES NEWSWIRES/Nasdaq
CME Group Inc. (CME) is planning to rework financial safeguards for its derivatives clearing platform for credit default swaps over the next quarter or two, establishing a separate default fund for CDS clearing, the company said Tuesday.
http://jlne.ws/lMC7aJ
June 17, 2011: NYSE Liffe U.S. Becomes the Sole U.S. Exchange for MSCI Index-based Futures
Launched in September of 2008, NYSE Liffe U.S. is the U.S.-based and CFTC-registered futures exchange of NYSE Euronext. NYSE Liffe U.S. offers trading in precious metals futures and options, MSCI index-based equity futures and U.S. interest rate futures including Eurodollar and U.S. Treasury futures.
http://jlne.ws/kWIMCh
German bank exposure to Greece 'manageable:'
By William L. Watts, MarketWatch
German banks' exposure to Greece is "manageable," but contagion risks are high, Fitch Ratings said in a report released Wednesday. "The worst consequence of any Greek sovereign default for German and other European banks would be in a sharp increase in general capital market and creditor risk aversion at a time when many banks are still in rehabilitation mode," said Michael Dawson-Kropf, senior director in Fitch's EMEA financial institutions group. The ratings company said it "does not currently envisage" any rating action on German banks as a result of their direct exposure to Greece., but warned of "high potential contagion risks" if there were any restructuring of Greek sovereign debt
http://jlne.ws/kkm3Lr
With The Backing Of Europe, French Fin Min Lagarde Announces IMF Bid
Forbes
French Finance Minister Christine Lagarde officially announced her candidacy for the top seat at the IMF. After much speculation, Lagarde has garnered the support of major European figures such as Germany’s Angela Merkel and appears poised to replace her former compatriot, Dominique Strauss-Kahn.
http://jlne.ws/jvokbo
U.S. Home Prices Fell 5.5%, Most in Almost Two Years
By Kathleen M. Howley, Bloomberg
U.S. home prices dropped 5.5 percent in the first quarter from a year earlier, the biggest decline in almost two years, as sales of discounted foreclosures undermined real estate values.
http://jlne.ws/kWxvMR
Revenue Slide Dents Banks' Recovery
BY VICTORIA MCGRANE AND MICHAEL R. CRITTENDEN, WSJ.com
U.S. bank profits soared in the first three months of 2011, but revenue coming in the door fell for only the second time in almost 30 years, casting a shadow on the industry's continued recovery from the 2008 financial crisis.
http://jlne.ws/jvLmv5
Europe backs restricted clearing house reforms
By Nikki Tait in Brussels, Financial Times
European parliamentarians have given their backing to stricter regulation of derivatives but have restricted new rules designed to ensure that deals are cleared centrally to those contracts traded on a bilateral “over-the-counter” (OTC) basis. The move is a blow to those who had wanted to extend the scope of the regulation, known as the European Markets Infrastructure Regulation (Emir), to fast-growing exchange-traded derivatives as a way of spurring competition in the market
http://jlne.ws/k2DjE5
Moody's places 14 UK banks on watch
Brisbane Times
Moody's Investors Service on Tuesday placed 14 British banks including Lloyds TSB and Royal Bank of Scotland on review for possible downgrades, citing reduced chances of future government support.
http://jlne.ws/mBOW15
Goldman Sachs Hires ECB's Huw Pill as Chief European Economist
BusinessWeek
Goldman Sachs Group Inc. hired Huw Pill of the European Central Bank to replace Erik Nielsen as its chief European economist.
http://jlne.ws/mtbjbV
Goldman Bankers React to Subpoena News
CNBC
At an fashionable hotel bar on a recent night in New York, a trio of Goldman Sachs investment bankers were discussing the news that federal prosecutors are expected to issuing subpoenas for documents related to Goldmans mortgage business.
http://jlne.ws/kJvpnD
OECD urges Fed and BoE to raise rates
By Chris Giles in Paris - Financial Times
The Federal Reserve and the Bank of England should follow the European Central Bank and implement “early” rises in interest rates, the Organisation for Economic Co-operation and Development said on Wednesday, as it urged central banks to respond to evidence of self-sustaining growth.
http://jlne.ws/iJ9nAC
Malaysia mandates banks for global sukuk
The Malaysian Insider
KUALA LUMPUR, May 25 - Malaysia has picked four banks including CIMB, Citigroup and HSBC to arrange its upcoming US dollar global Islamic bond sale, IFR reported. The fourth bank could be Maybank, Thomson Reuters' unit IFR reported, adding that the sukuk offering was expected to be completed in June or July. Proceeds from the sale would be used to ...
http://jlne.ws/ixj8yA
By Steve Matthews, Bloomberg
Federal Reserve Bank of Minneapolis President Narayana Kocherlakota trimmed his forecast for U.S. economic growth and raised his outlook for unemployment slightly while reiterating his call for higher interest rates this year.
http://jlne.ws/myz60r
Lagarde Announces IMF Candidacy
BY DAVID GAUTHIER-VILLARS , WILLIAM HOROBIN AND DAVID PEARSON, WSJ.com
France's Finance Minister Christine Lagarde on Wednesday officially declared her candidacy to replace Dominique Strauss-Kahn as managing director of the International Monetary Fund, launching a global race for the prominent position.
http://jlne.ws/mezZN9
DTCC: Indemnification Provision In Dodd-Frank Could Create Unintended Negative Consequences
Press Release/Reuters
The Depository Trust & Clearing Corporation (DTCC) today cautioned in testimony before a House Agriculture subcommittee that the indemnification provision of Dodd-Frank could create unintended negative consequences, including undermining efforts to enhance transparency and mitigate systemic risk in the over-the-counter (OTC) derivatives market. The hearing was called to discuss global harmonization, extra-territoriality issues and technical concerns with the implementation of the Dodd-Frank Act.
http://jlne.ws/kB2eT7
LCH.Clearnet has revised risk parameters for Irish gov bonds. Additional margin will change from 55% to 65% for longs
In accordance with the Sovereign Credit Risk Framework and in response to the yield differential of 10 year Irish government debt against a AAA benchmark, LCH.Clearnet Ltd has revised the risk parameters for Irish government bonds cleared through the RepoClear service. The additional margin required for positions of Irish government bonds will consequently be increased from 55% to 65% for long positions; this amount will be adjusted for the current bond price*. Short positions will pay a proportionately lower margin.
http://jlne.ws/msJphG
EU's Damanaki tells Greece euro membership at risk
Reuters
Greece must take tough measures to deal with its debt crisis or it will have to return to the drachma, the EU's Fisheries Commissioner Maria Damanaki said on Wednesday.
http://jlne.ws/iLewa1
CME To Rework Financial Safeguards For CDS Clearing Platform
By Katy Burne, Of DOW JONES NEWSWIRES/Nasdaq
CME Group Inc. (CME) is planning to rework financial safeguards for its derivatives clearing platform for credit default swaps over the next quarter or two, establishing a separate default fund for CDS clearing, the company said Tuesday.
http://jlne.ws/lMC7aJ
June 17, 2011: NYSE Liffe U.S. Becomes the Sole U.S. Exchange for MSCI Index-based Futures
Launched in September of 2008, NYSE Liffe U.S. is the U.S.-based and CFTC-registered futures exchange of NYSE Euronext. NYSE Liffe U.S. offers trading in precious metals futures and options, MSCI index-based equity futures and U.S. interest rate futures including Eurodollar and U.S. Treasury futures.
http://jlne.ws/kWIMCh
German bank exposure to Greece 'manageable:'
By William L. Watts, MarketWatch
German banks' exposure to Greece is "manageable," but contagion risks are high, Fitch Ratings said in a report released Wednesday. "The worst consequence of any Greek sovereign default for German and other European banks would be in a sharp increase in general capital market and creditor risk aversion at a time when many banks are still in rehabilitation mode," said Michael Dawson-Kropf, senior director in Fitch's EMEA financial institutions group. The ratings company said it "does not currently envisage" any rating action on German banks as a result of their direct exposure to Greece., but warned of "high potential contagion risks" if there were any restructuring of Greek sovereign debt
http://jlne.ws/kkm3Lr
With The Backing Of Europe, French Fin Min Lagarde Announces IMF Bid
Forbes
French Finance Minister Christine Lagarde officially announced her candidacy for the top seat at the IMF. After much speculation, Lagarde has garnered the support of major European figures such as Germany’s Angela Merkel and appears poised to replace her former compatriot, Dominique Strauss-Kahn.
http://jlne.ws/jvokbo
U.S. Home Prices Fell 5.5%, Most in Almost Two Years
By Kathleen M. Howley, Bloomberg
U.S. home prices dropped 5.5 percent in the first quarter from a year earlier, the biggest decline in almost two years, as sales of discounted foreclosures undermined real estate values.
http://jlne.ws/kWxvMR
Revenue Slide Dents Banks' Recovery
BY VICTORIA MCGRANE AND MICHAEL R. CRITTENDEN, WSJ.com
U.S. bank profits soared in the first three months of 2011, but revenue coming in the door fell for only the second time in almost 30 years, casting a shadow on the industry's continued recovery from the 2008 financial crisis.
http://jlne.ws/jvLmv5
Europe backs restricted clearing house reforms
By Nikki Tait in Brussels, Financial Times
European parliamentarians have given their backing to stricter regulation of derivatives but have restricted new rules designed to ensure that deals are cleared centrally to those contracts traded on a bilateral “over-the-counter” (OTC) basis. The move is a blow to those who had wanted to extend the scope of the regulation, known as the European Markets Infrastructure Regulation (Emir), to fast-growing exchange-traded derivatives as a way of spurring competition in the market
http://jlne.ws/k2DjE5
Moody's places 14 UK banks on watch
Brisbane Times
Moody's Investors Service on Tuesday placed 14 British banks including Lloyds TSB and Royal Bank of Scotland on review for possible downgrades, citing reduced chances of future government support.
http://jlne.ws/mBOW15
Goldman Sachs Hires ECB's Huw Pill as Chief European Economist
BusinessWeek
Goldman Sachs Group Inc. hired Huw Pill of the European Central Bank to replace Erik Nielsen as its chief European economist.
http://jlne.ws/mtbjbV
Goldman Bankers React to Subpoena News
CNBC
At an fashionable hotel bar on a recent night in New York, a trio of Goldman Sachs investment bankers were discussing the news that federal prosecutors are expected to issuing subpoenas for documents related to Goldmans mortgage business.
http://jlne.ws/kJvpnD
OECD urges Fed and BoE to raise rates
By Chris Giles in Paris - Financial Times
The Federal Reserve and the Bank of England should follow the European Central Bank and implement “early” rises in interest rates, the Organisation for Economic Co-operation and Development said on Wednesday, as it urged central banks to respond to evidence of self-sustaining growth.
http://jlne.ws/iJ9nAC
Malaysia mandates banks for global sukuk
The Malaysian Insider
KUALA LUMPUR, May 25 - Malaysia has picked four banks including CIMB, Citigroup and HSBC to arrange its upcoming US dollar global Islamic bond sale, IFR reported. The fourth bank could be Maybank, Thomson Reuters' unit IFR reported, adding that the sukuk offering was expected to be completed in June or July. Proceeds from the sale would be used to ...
http://jlne.ws/ixj8yA
DTCC: INDEMNIFICATION PROVISION IN DODD-FRANK COULD CREATE UNINTENDED NEGATIVE CONSEQUENCES
-- Provision Could Undermine Regulators’ Ability to See Unfragmented View of Market Data
Washington, D.C., May 25, 2011 – The Depository Trust & Clearing Corporation (DTCC) today cautioned in testimony before a House Agriculture subcommittee that the indemnification provision of Dodd-Frank could create unintended negative consequences, including undermining efforts to enhance transparency and mitigate systemic risk in the over-the-counter (OTC) derivatives market. The hearing was called to discuss global harmonization, extra-territoriality issues and technical concerns with the implementation of the Dodd-Frank Act.
“The underlying legislative intent of the Dodd-Frank Act could be subverted by the legislative language, preventing the exchange of information between regulators and frustrating efforts to identify and mitigate international financial risk and fragment regulatory oversight on a jurisdiction-by-jurisdiction basis,” said Larry Thompson, DTCC managing director and general counsel, in testimony before the Subcommittee on General Farm Commodities and Risk Management.
Thompson said that foreign regulators are unlikely to grant US-based swap data repositories (SDRs) indemnification in exchange for access to data as required by the Dodd-Frank Act. Without an indemnity agreement, SDRs may be legally precluded from providing critical market data to regulators overseas. As a result, foreign jurisdictions could be incentivized to create their own local repositories to avoid indemnification—a move that would lead to data fragmentation.
“A proliferation of local repositories around the world would make it very difficult to obtain aggregated data for any particular asset class, impair market and regulatory oversight, create inconsistencies in data, frustrate data analysis and increase systemic risk,” Thompson said. “There was no legislative history behind this provision, which was incorporated very late in the legislative process, nor was the indemnification requirement considered in the hearing process. DTCC believes the indemnification provision will significantly impede global regulatory cooperation.”
Thompson noted that while “technical correction” legislation would address the issue, he urged the Subcommittee to consider interim measures as well, including recognizing regulators who operate in a manner consistent with international agreements or regulatory forums, such as the OTC Derivatives Regulators Forum (ODRF), which includes maintaining the confidentiality of data. In addition, Thompson said modifications to the Dodd-Frank Act could also include provisions that deem compliance with those international agreements or regulatory forums as consistent with the indemnification requirement.
The ODRF is comprised of nearly 50 regulators and other authorities worldwide, including all of the major regulators and central banks in the U.S. and Europe.
DTCC currently operates a global Trade Information Warehouse, a centralized, comprehensive global electronic data repository containing detailed trade information for the global CDS markets. The TIW database currently represents about 98% of all credit derivative transactions in the global marketplace. It holds approximately 2.3 million separate contracts with a gross total notional value of $29 trillion and has operations in both the U.S. and the European Union.
DTCC recently launched an automated portal to provide regulators worldwide with direct, on-line access to global CDS data registered in the TIW -- the first such global regulatory service of its kind in the financial market place. Over 25 regulators around the world have registered and are active on the portal. The portal allows for each registered regulator to access reports tailored to their specific entitlements as a market regulator, prudential or primary supervisor, or central bank. These detailed reports are created for each regulator to show only the CDS data relevant to the individual regulator’s jurisdiction, regulated entities or currency.
Washington, D.C., May 25, 2011 – The Depository Trust & Clearing Corporation (DTCC) today cautioned in testimony before a House Agriculture subcommittee that the indemnification provision of Dodd-Frank could create unintended negative consequences, including undermining efforts to enhance transparency and mitigate systemic risk in the over-the-counter (OTC) derivatives market. The hearing was called to discuss global harmonization, extra-territoriality issues and technical concerns with the implementation of the Dodd-Frank Act.
“The underlying legislative intent of the Dodd-Frank Act could be subverted by the legislative language, preventing the exchange of information between regulators and frustrating efforts to identify and mitigate international financial risk and fragment regulatory oversight on a jurisdiction-by-jurisdiction basis,” said Larry Thompson, DTCC managing director and general counsel, in testimony before the Subcommittee on General Farm Commodities and Risk Management.
Thompson said that foreign regulators are unlikely to grant US-based swap data repositories (SDRs) indemnification in exchange for access to data as required by the Dodd-Frank Act. Without an indemnity agreement, SDRs may be legally precluded from providing critical market data to regulators overseas. As a result, foreign jurisdictions could be incentivized to create their own local repositories to avoid indemnification—a move that would lead to data fragmentation.
“A proliferation of local repositories around the world would make it very difficult to obtain aggregated data for any particular asset class, impair market and regulatory oversight, create inconsistencies in data, frustrate data analysis and increase systemic risk,” Thompson said. “There was no legislative history behind this provision, which was incorporated very late in the legislative process, nor was the indemnification requirement considered in the hearing process. DTCC believes the indemnification provision will significantly impede global regulatory cooperation.”
Thompson noted that while “technical correction” legislation would address the issue, he urged the Subcommittee to consider interim measures as well, including recognizing regulators who operate in a manner consistent with international agreements or regulatory forums, such as the OTC Derivatives Regulators Forum (ODRF), which includes maintaining the confidentiality of data. In addition, Thompson said modifications to the Dodd-Frank Act could also include provisions that deem compliance with those international agreements or regulatory forums as consistent with the indemnification requirement.
The ODRF is comprised of nearly 50 regulators and other authorities worldwide, including all of the major regulators and central banks in the U.S. and Europe.
DTCC currently operates a global Trade Information Warehouse, a centralized, comprehensive global electronic data repository containing detailed trade information for the global CDS markets. The TIW database currently represents about 98% of all credit derivative transactions in the global marketplace. It holds approximately 2.3 million separate contracts with a gross total notional value of $29 trillion and has operations in both the U.S. and the European Union.
DTCC recently launched an automated portal to provide regulators worldwide with direct, on-line access to global CDS data registered in the TIW -- the first such global regulatory service of its kind in the financial market place. Over 25 regulators around the world have registered and are active on the portal. The portal allows for each registered regulator to access reports tailored to their specific entitlements as a market regulator, prudential or primary supervisor, or central bank. These detailed reports are created for each regulator to show only the CDS data relevant to the individual regulator’s jurisdiction, regulated entities or currency.
Selasa, 24 Mei 2011
Top Interest Rate Headlines 05-24-11: More Banks Targeted In New York Probe
More banks targeted in New York probe
By Kara Scannell and Justin Baer in New York, Financial Times
The New York state attorney-general’s probe into mortgage practices at large banks has expanded to include Royal Bank of Scotland, UBS, JPMorgan Chase and Deutsche Bank, bringing the number of banks under scrutiny to seven, people familiar with the matter say.
http://jlne.ws/jBtJYn
Swaps Users Urge CFTC to Drop Quote System to Get Better Prices
http://jlne.ws/mLnjj1
OECD looks to measure the ‘better life’
By Chris Giles in Paris - Financial Times
It is time to move beyond gross domestic product when measuring the success of societies, the Organisation for Economic Co-operation and Development, has concluded in a change of mission for the international organisation. Known for most of its 50 years as an establishment of orthodox economics, promoting structural reforms to boost GDP growth, it launched a “better life initiative” on Tuesday to measure the quality of life in the Organisation’s 34 member countries.
http://jlne.ws/lUtL0K
City of London concerned by Mifid poll
By Jeremy Grant, Financial Times
The City of London has expressed concern after a poll of brokers and asset managers based in continental Europe showed some believed that rules allowing large blocks of trades to be done without prices displayed beforehand could undermine market transparency.
http://jlne.ws/kKPCWM
France: China Backs Lagarde as IMF Head
By INTI LANDAURO And OWEN FLETCHER, WSJ
PARIS—China backs French Finance Minister Christine Lagarde as a candidate to head the International Monetary Fund, the French government's spokesman, Francois Baroin, said Tuesday.
http://jlne.ws/kr0mhY
JPMorgan, UBS, Deutsche Bank Said to Face N.Y. Mortgage Probe
BusinessWeek
JPMorgan Chase & Co., UBS AG and Deutsche Bank AG are being investigated as part of New York Attorney General Eric Schneiderman's expanded probe of mortgage securitization, according to a person familiar with the matter.
http://jlne.ws/khiVux
How an Inquiry of Goldman Sachs Might Play Out
By PETER J. HENNING, NY Times
Goldman Sachs has already received subpoenas from unnamed regulators investigating its mortgage securities operations. Now, federal prosecutors appear to be interested in those operations as well, and subpoenas could follow. If so, this would signal a new — and potentially more threatening — inquiry into its conduct during the financial crisis.
http://jlne.ws/iqHUHx
Treasury set to make small profit in sale of AIG stock
By Justin Baer and Telis Demos in New York and Tom Braithwaite in Washington - Financial Times
American International Group and its largest investor, the US Treasury, are poised to raise at least $8.7bn through a sale of stock on Tuesday, handing the federal government a small profit on the deal, people familiar with the matter said.
http://jlne.ws/j99zwa
Vickers to insist on bond-funded debt buffer
By Patrick Jenkins and Sharlene Goff, Financial Times
Britain’s banks could be forced to hold capital equivalent to half as much again of their minimum equity requirements, under plans being considered by the Independent Commission on Banking.
http://jlne.ws/jOJFqo
Community Banks Lobby to Limit New Regulations
By BEN PROTESS, NY Times
Network television ads appearing in the Washington area feature an anxious woman who cautions that “community banks and credit unions will be squeezed” by “bad” regulation.
http://jlne.ws/mmZ7Ap
Goldman Banker Hired by VTB Capital to Lead Overseas Unit
BusinessWeek
VTB Capital Plc, the investment- banking arm of Russia's second-largest lender, hired Atanas Bostandjiev from Goldman Sachs Group Inc. as its U.K. and international head.
http://jlne.ws/m59mlM
Citi hires ex-CEO of PricewaterhouseCoopers
Reuters via Yahoo! Canada News
Citigroup Inc has hired Samuel Di Piazza, Jr, the former chief executive of PricewaterhouseCoopers , to help its faltering investment bank rebuild after the financial crisis.
http://jlne.ws/m65R1X
Ex-Fed Official to Join Barclays as Senior Policy Advisor
Wall Street Journal Blogs
Brian Madigan, who ran the Federal Reserves powerful monetary affairs group, is joining Barclays Capital as a senior policy adviser, according to an internal memo announcing the hire.
http://jlne.ws/issULs
Bank of America to Settle Overdrafts Suit for $410 Million
By ANDREW MARTIN, NY Times
Bank of America would pay $410 million to settle its piece of a broad lawsuit involving excessive overdraft fees on debit cards in a deal tentatively approved by a federal judge in Miami on Monday.
http://jlne.ws/lHeK6S
By Kara Scannell and Justin Baer in New York, Financial Times
The New York state attorney-general’s probe into mortgage practices at large banks has expanded to include Royal Bank of Scotland, UBS, JPMorgan Chase and Deutsche Bank, bringing the number of banks under scrutiny to seven, people familiar with the matter say.
http://jlne.ws/jBtJYn
Swaps Users Urge CFTC to Drop Quote System to Get Better Prices
http://jlne.ws/mLnjj1
OECD looks to measure the ‘better life’
By Chris Giles in Paris - Financial Times
It is time to move beyond gross domestic product when measuring the success of societies, the Organisation for Economic Co-operation and Development, has concluded in a change of mission for the international organisation. Known for most of its 50 years as an establishment of orthodox economics, promoting structural reforms to boost GDP growth, it launched a “better life initiative” on Tuesday to measure the quality of life in the Organisation’s 34 member countries.
http://jlne.ws/lUtL0K
City of London concerned by Mifid poll
By Jeremy Grant, Financial Times
The City of London has expressed concern after a poll of brokers and asset managers based in continental Europe showed some believed that rules allowing large blocks of trades to be done without prices displayed beforehand could undermine market transparency.
http://jlne.ws/kKPCWM
France: China Backs Lagarde as IMF Head
By INTI LANDAURO And OWEN FLETCHER, WSJ
PARIS—China backs French Finance Minister Christine Lagarde as a candidate to head the International Monetary Fund, the French government's spokesman, Francois Baroin, said Tuesday.
http://jlne.ws/kr0mhY
JPMorgan, UBS, Deutsche Bank Said to Face N.Y. Mortgage Probe
BusinessWeek
JPMorgan Chase & Co., UBS AG and Deutsche Bank AG are being investigated as part of New York Attorney General Eric Schneiderman's expanded probe of mortgage securitization, according to a person familiar with the matter.
http://jlne.ws/khiVux
How an Inquiry of Goldman Sachs Might Play Out
By PETER J. HENNING, NY Times
Goldman Sachs has already received subpoenas from unnamed regulators investigating its mortgage securities operations. Now, federal prosecutors appear to be interested in those operations as well, and subpoenas could follow. If so, this would signal a new — and potentially more threatening — inquiry into its conduct during the financial crisis.
http://jlne.ws/iqHUHx
Treasury set to make small profit in sale of AIG stock
By Justin Baer and Telis Demos in New York and Tom Braithwaite in Washington - Financial Times
American International Group and its largest investor, the US Treasury, are poised to raise at least $8.7bn through a sale of stock on Tuesday, handing the federal government a small profit on the deal, people familiar with the matter said.
http://jlne.ws/j99zwa
Vickers to insist on bond-funded debt buffer
By Patrick Jenkins and Sharlene Goff, Financial Times
Britain’s banks could be forced to hold capital equivalent to half as much again of their minimum equity requirements, under plans being considered by the Independent Commission on Banking.
http://jlne.ws/jOJFqo
Community Banks Lobby to Limit New Regulations
By BEN PROTESS, NY Times
Network television ads appearing in the Washington area feature an anxious woman who cautions that “community banks and credit unions will be squeezed” by “bad” regulation.
http://jlne.ws/mmZ7Ap
Goldman Banker Hired by VTB Capital to Lead Overseas Unit
BusinessWeek
VTB Capital Plc, the investment- banking arm of Russia's second-largest lender, hired Atanas Bostandjiev from Goldman Sachs Group Inc. as its U.K. and international head.
http://jlne.ws/m59mlM
Citi hires ex-CEO of PricewaterhouseCoopers
Reuters via Yahoo! Canada News
Citigroup Inc has hired Samuel Di Piazza, Jr, the former chief executive of PricewaterhouseCoopers , to help its faltering investment bank rebuild after the financial crisis.
http://jlne.ws/m65R1X
Ex-Fed Official to Join Barclays as Senior Policy Advisor
Wall Street Journal Blogs
Brian Madigan, who ran the Federal Reserves powerful monetary affairs group, is joining Barclays Capital as a senior policy adviser, according to an internal memo announcing the hire.
http://jlne.ws/issULs
Bank of America to Settle Overdrafts Suit for $410 Million
By ANDREW MARTIN, NY Times
Bank of America would pay $410 million to settle its piece of a broad lawsuit involving excessive overdraft fees on debit cards in a deal tentatively approved by a federal judge in Miami on Monday.
http://jlne.ws/lHeK6S
FDIC-Insured Institutions Earned $29 Billion In The First Quarter Of 2011; Profits Up 66.5%
Press Release
Profits Up 66.5 Percent, Driven by Reduced Loss Provisions
Deposit Insurance Fund Balance Nears Positive Territory
FOR IMMEDIATE RELEASE
May 24, 2011
Media Contact:
Andrew Gray (202) 898-7192
angray@fdic.gov
Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported an aggregate profit of $29 billion in the first quarter of 2011, an $11.6 billion improvement (66.5 percent) from the $17.4 billion in net income the industry reported in the first quarter of 2010. This is the seventh consecutive quarter that earnings registered a year-over-year increase. For the sixth consecutive quarter, reduced provisions for loan losses drove the improvement in earnings.
"The industry shows continuing signs of improvement," said FDIC Chairman Sheila C. Bair. She added, "though there is a limit to how far reductions in loan-loss provisions can boost industry earnings."
More than half of all institutions (56 percent) reported better quarterly net income from a year ago, and only 15 percent had a net loss for the quarter. The average return on assets (ROA), a basic yardstick of profitability, rose to 0.87 percent from 0.53 percent a year ago.
First-quarter loss provisions totaled $20.7 billion, less than half the $51.6 billion that insured institutions set aside a year ago. However, some of the benefits from lower provisions were offset by reduced revenues. Net operating revenue (net interest income plus total noninterest income) was $5.5 billion (3.2 percent) lower than a year earlier, and realized gains on securities fell by $1.7 billion.
Asset quality continued to improve as noncurrent loans and leases (those 90 days or more past due or in nonaccrual status) fell for a fourth consecutive quarter. Insured banks and thrifts charged off $33.3 billion in uncollectible loans during the quarter, down $19.9 billion (37.5 percent) from a year earlier.
"The process of repairing bank balance sheets is well along, but is not yet complete," Chairman Bair said. "In addition, housing markets remain weak, in part because of continued questions about mortgage servicing problems. The economic recovery, along with borrower demand, remain sluggish. Longer term, banks may be exposed to interest rate risk when we emerge from this prolonged stretch of unusually low rates."
Financial results for the first quarter are contained in the FDIC's latest Quarterly Banking Profile, which was released today. Also among the findings:
Quarterly net income rose to a three-year high. Net income was the best for the industry since the $36.8 billion earned in the second quarter of 2007. More than half of all institutions (56 percent) reported higher net income than a year earlier. Fifteen percent reported negative net income, down from 19 percent in the first quarter of 2010.
Loan balances continued to decline. Total loans and leases fell for the tenth time in the past eleven quarters (the one exception in first quarter of 2010 resulted from changes in reporting rules, not from actual loan growth). More than 70 percent of all insured institutions reported declines in loan balances in the first quarter. The net decline in balances in the first quarter totaled $126.6 billion (1.7 percent). The largest reductions in loan portfolios occurred in one-to-four family residential mortgages (down $63.8 billion, or 3.4 percent), credit card balances (down $38.9 billion, or 5.5 percent), and real estate construction and development loans (down $25.9 billion, or 8.1 percent). Balances in loans to commercial and industrial (C&I) borrowers increased for a third consecutive quarter, rising by $18.1 billion (1.5 percent), but nearly half of this growth represented loans to foreign borrowers. Small loans to businesses and farms declined by 2.8 percent.
The number of institutions on the "Problem List" flattened. The net increase of four, to 888, is the smallest in three-and-a-half years. The number of "problem" institutions is the highest since March 31, 1993, when there were 928. Total assets of "problem" institutions increased from $390 billion to $397 billion. Twenty-six insured institutions failed during the first quarter, the smallest number in the last seven quarters.
The Deposit Insurance Fund (DIF) balance neared positive territory. The DIF balance — the net worth of the fund — rose from negative $7.4 billion to negative $1.0 billion during the first quarter. Assessment income and continued improvement in the outlook for anticipated bank failures were primarily responsible for the growth in the fund balance. The contingent loss reserve, which covers the cost of expected failures, fell from $17.7 billion at year-end 2010 to $13.8 billion at March 31, the lowest reserve since the third quarter of 2008. The DIF's liquid resources — cash and marketable securities — remained strong at $45.5 billion at the end of the first quarter, about the same as the year-end 2010 level.
"Barring unforeseen circumstances, the reported DIF balance at June 30 should turn positive, after seven quarters in the red," said Chairman Bair.
Total estimated insured deposits increased by 1.4 percent in the first quarter. Over the past four quarters, insured deposits increased by 16.7 percent, reflecting the inclusion of temporarily insured deposits in large noninterest-bearing transaction accounts.
Chairman Bair concluded, "I am proud of all that the FDIC has accomplished during the past five years. We have maintained the FDIC's 78-year record of no losses to any insured depositor, and we did it without borrowing a penny from taxpayers."
The complete Quarterly Banking Profile is available at http://www2.fdic.gov/qbp on the FDIC Web site.
# # #
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 7,575 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-91-2011
Profits Up 66.5 Percent, Driven by Reduced Loss Provisions
Deposit Insurance Fund Balance Nears Positive Territory
FOR IMMEDIATE RELEASE
May 24, 2011
Media Contact:
Andrew Gray (202) 898-7192
angray@fdic.gov
Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported an aggregate profit of $29 billion in the first quarter of 2011, an $11.6 billion improvement (66.5 percent) from the $17.4 billion in net income the industry reported in the first quarter of 2010. This is the seventh consecutive quarter that earnings registered a year-over-year increase. For the sixth consecutive quarter, reduced provisions for loan losses drove the improvement in earnings.
"The industry shows continuing signs of improvement," said FDIC Chairman Sheila C. Bair. She added, "though there is a limit to how far reductions in loan-loss provisions can boost industry earnings."
More than half of all institutions (56 percent) reported better quarterly net income from a year ago, and only 15 percent had a net loss for the quarter. The average return on assets (ROA), a basic yardstick of profitability, rose to 0.87 percent from 0.53 percent a year ago.
First-quarter loss provisions totaled $20.7 billion, less than half the $51.6 billion that insured institutions set aside a year ago. However, some of the benefits from lower provisions were offset by reduced revenues. Net operating revenue (net interest income plus total noninterest income) was $5.5 billion (3.2 percent) lower than a year earlier, and realized gains on securities fell by $1.7 billion.
Asset quality continued to improve as noncurrent loans and leases (those 90 days or more past due or in nonaccrual status) fell for a fourth consecutive quarter. Insured banks and thrifts charged off $33.3 billion in uncollectible loans during the quarter, down $19.9 billion (37.5 percent) from a year earlier.
"The process of repairing bank balance sheets is well along, but is not yet complete," Chairman Bair said. "In addition, housing markets remain weak, in part because of continued questions about mortgage servicing problems. The economic recovery, along with borrower demand, remain sluggish. Longer term, banks may be exposed to interest rate risk when we emerge from this prolonged stretch of unusually low rates."
Financial results for the first quarter are contained in the FDIC's latest Quarterly Banking Profile, which was released today. Also among the findings:
Quarterly net income rose to a three-year high. Net income was the best for the industry since the $36.8 billion earned in the second quarter of 2007. More than half of all institutions (56 percent) reported higher net income than a year earlier. Fifteen percent reported negative net income, down from 19 percent in the first quarter of 2010.
Loan balances continued to decline. Total loans and leases fell for the tenth time in the past eleven quarters (the one exception in first quarter of 2010 resulted from changes in reporting rules, not from actual loan growth). More than 70 percent of all insured institutions reported declines in loan balances in the first quarter. The net decline in balances in the first quarter totaled $126.6 billion (1.7 percent). The largest reductions in loan portfolios occurred in one-to-four family residential mortgages (down $63.8 billion, or 3.4 percent), credit card balances (down $38.9 billion, or 5.5 percent), and real estate construction and development loans (down $25.9 billion, or 8.1 percent). Balances in loans to commercial and industrial (C&I) borrowers increased for a third consecutive quarter, rising by $18.1 billion (1.5 percent), but nearly half of this growth represented loans to foreign borrowers. Small loans to businesses and farms declined by 2.8 percent.
The number of institutions on the "Problem List" flattened. The net increase of four, to 888, is the smallest in three-and-a-half years. The number of "problem" institutions is the highest since March 31, 1993, when there were 928. Total assets of "problem" institutions increased from $390 billion to $397 billion. Twenty-six insured institutions failed during the first quarter, the smallest number in the last seven quarters.
The Deposit Insurance Fund (DIF) balance neared positive territory. The DIF balance — the net worth of the fund — rose from negative $7.4 billion to negative $1.0 billion during the first quarter. Assessment income and continued improvement in the outlook for anticipated bank failures were primarily responsible for the growth in the fund balance. The contingent loss reserve, which covers the cost of expected failures, fell from $17.7 billion at year-end 2010 to $13.8 billion at March 31, the lowest reserve since the third quarter of 2008. The DIF's liquid resources — cash and marketable securities — remained strong at $45.5 billion at the end of the first quarter, about the same as the year-end 2010 level.
"Barring unforeseen circumstances, the reported DIF balance at June 30 should turn positive, after seven quarters in the red," said Chairman Bair.
Total estimated insured deposits increased by 1.4 percent in the first quarter. Over the past four quarters, insured deposits increased by 16.7 percent, reflecting the inclusion of temporarily insured deposits in large noninterest-bearing transaction accounts.
Chairman Bair concluded, "I am proud of all that the FDIC has accomplished during the past five years. We have maintained the FDIC's 78-year record of no losses to any insured depositor, and we did it without borrowing a penny from taxpayers."
The complete Quarterly Banking Profile is available at http://www2.fdic.gov/qbp on the FDIC Web site.
# # #
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 7,575 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-91-2011
Senin, 23 Mei 2011
Top Interest Rate Headlines 05-23-11: European Firms Shun Euro Bonds
European Firms Shun Euro Bonds
BY ELENA MOYA, WSJ.com
European companies have shunned the euro in the bond markets this year and have instead piled into dollar, sterling and even ruble-denominated bonds, data from Dealogic show. For the first time since 2000, bonds denominated in euros account for less than half of all European corporate bond issuance.
http://jlne.ws/kXvbSg
JPMorgan’s Dimon Was Tempted To Remind Geithner Where Treasury’s Bread Is Buttered
Forbes
The Associated Press had an interesting tidbit last week in a story on JPMorgan Chase CEO Jamie Dimon’s May 19 appearance at a dinner for the University of Colorado’s Denver Business School, aside from the headlines generated when the banker said a U.S. debt default would be a “moral disaster.” While the AP led with that morsel, later in the story came an interesting anecdote from the period when Dimon’s bank paid back taxpayer dollars it received under the TARP program, and a reminder that some banks believed they could skate through the 2008 crisis just fine on their own.
http://jlne.ws/iRdJTO
In Reputation Ranking, Some Banks Break from the Pack
By Heather Landy, American Banker
Public perceptions of bank brands remain a long way from rosy, but they are becoming more nuanced. The 30 banks included in American Banker's second annual survey of bank reputation, conducted by the Reputation Institute, scored higher with consumers on average, and with a much wider distribution, than last year. The results suggest that reputation, in recent years an albatross for the financial sector as a whole, is starting to look more like a point of differentiation, with several large institutions able to break away from the pack more convincingly as they moved to the top of the ranking.
http://jlne.ws/jLtNP5
U.S. Commercial Property Prices Drop to Post-Recession Low
By Brian Louis and David M. Levitt, Bloomberg
U.S. commercial property prices fell to a new post-recession low in March as sales of financially distressed assets weighed on the market, according to Moody’s Investors Service.
http://jlne.ws/jeEtd4
Fitch revises Belgium’s outlook to negative from stable
By Gerry Davies, ForexLive
* Political risk is higher in Belgium than in other euro area peers
* Belgium will likely be downgraded if it misses official deficit targets
http://jlne.ws/j6mzTj
China's economy may face inflation, sluggish growth
People's Daily Online
China's National Economic Accounting and Economic Growth Research Center under Peking University released the "China Economic Growth Report 2011" on May 21. The report said that judging from the current macroeconomic imbalance in China, China is faced with both inflationary pressure and the risk of sluggish growth. China needs to prevent stagflation by controlling the gross unbalance in the current stage.
http://jlne.ws/lDciHx
Chicago Fed Index: Index shows economic activity weakened in April
Led by declines in production-related indicators, the Chicago Fed National Activity Index fell to –0.45 in April from +0.32 in March. April marked the lowest reading of the index since August 2010. Three of the four broad categories of indicators that make up the index deteriorated from March, but two of those three categories made positive contributions to the index in April.
http://jlne.ws/jkM4vL
ISDA Publishes "The Economics of Central Clearing: Theory and Practice," A Discussion Paper on Clearing Issues
Barron's
The International Swaps and Derivatives Association, Inc. (ISDA) today announced the publication of an in-depth discussion and analysis of the purposes, function and issues associated with central clearing of over-the-counter (OTC) derivatives.
http://jlne.ws/lrz9Pi
Lagarde is Front-Runner to Head IMF
By Gonzalo Vina and Andres R. Martinez, Bloomberg
Support mounted for French Finance Minister Christine Lagarde to head the International Monetary Fund as Mexico offered its central bank governor as an emerging- market candidate, challenging Europe’s 65-year hold on the job.
http://jlne.ws/keFwki
IMF Executive Board Concludes 2011 Article IV Consultation with United Arab Emirates
Public Information Notice (PIN) No. 11/57
May 23, 2011
On April 21, 2001, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with the United Arab Emirates (U.A.E.), and considered and endorsed the staff appraisal without a meeting.
Background
The economic recovery in the U.A.E. is gaining strength, supported by a favorable global environment but subject to increased regional uncertainty. Real nonhydrocarbon GDP growth is projected to accelerate to 3.3 percent in 2011 from 2.1 percent in 2010, reflecting stronger tourism, logistics, and trade in the emirate of Dubai; and large public investment spending in the emirate of Abu Dhabi, including through Government-Related Entities (GREs)...
http://jlne.ws/lSSQwE
Italy Shocked, Shocked by S&P Move
By Francesco Guerrera, WSJ.com
Judging from the reaction from local media and financial executives, Standard & Poor’s decision late on Friday to revise Italy’s sovereign debt outlook from “stable” to “negative” went down like a plate of overcooked pasta.
http://jlne.ws/mJwZ8i
Mizuho president to step down
TAIGA URANAKA, Reuters
Mizuho Financial Group’s (MFG-N3.08-0.03-0.96%) president will step down and its corporate banking chief will take the helm, Japan’s second-largest bank said on Monday, as it grapples with persistent system troubles including a breakdown in ATMs after the devastating March earthquake.
http://jlne.ws/knfu2n
CME eyes move into swaps in Europe expansion drive
Luke Jeffs, Reuters
U.S. exchange giant CME Group is eying a move into Europe's lucrative swap clearing business by early 2012 as part of its rapid expansion plans in the region, where it has only just gained a foothold.
http://jlne.ws/mz5ieq
IMF Executive Board Initiates Selection Process For Next IMF Managing Director
Press Release
http://jlne.ws/ltFkaa
Europeans Focus on Retaining Leadership of IMF
By LIZ ALDERMAN, NY Times
PARIS — As the International Monetary Fund prepared to accept nominations Monday to replace Dominique Strauss-Kahn at its helm, European officials rallied over the weekend around Christine Lagarde, France’s finance minister, as their top choice for the post, despite fresh warnings from leaders of emerging markets and other countries that simply handing the job to another European could undermine the fund’s legitimacy.
http://jlne.ws/laVbdh
U.S. Treasury Department Statement Regarding Leadership Of The International Monetary Fund
Press Release
http://jlne.ws/iqZtrv
IMF Executive Board Approves An E26 Billion Extended Arrangement For Portugal
Press Release
The Executive Board of the International Monetary Fund (IMF) today approved a three-year SDR 23.742 billion (about E26 billion) arrangement under the Extended Fund Facility for Portugal in support of the authorities’ economic adjustment and growth program. This front-loaded program makes SDR 5.6 billion (about E6.1 billion) immediately available to Portugal from the IMF. In 2011, total IMF financing will amount to about E12.6 billion and will be partnered with about E25.2 billion committed by the European Union.
http://jlne.ws/jEvM6v
S&P To Assess The Credit Impact On Italian LRGs And Poste Italiane Of Its Outlook Change To Neg On Italy
Press Release
Standard & Poor's Ratings Services revised its outlook on the Republic of Italy today to negative from stable, and affirmed its unsolicited 'A+/A-1+' credit ratings on the Italian sovereign
http://jlne.ws/jZYwq5
Banks 'set to miss lending targets'
Press Association via Yahoo! UK & Ireland News
The UK's top banks are on course to miss Project Merlin lending targets for small businesses, according to figures revealed by the Bank of England.
http://jlne.ws/k76lDZ
UK News: Banks face fury over lending target failure
Edinburgh Evening News
THE UK's top banks were facing further public outrage today as the Bank of England was set to reveal they are on course to miss crucial Project Merlin lending targets.
http://jlne.ws/ljb2qy
NY senators bat with banks on rule change
New York Post
New York lawmakers are coming to the rescue of some major US banks. The Senate agricultural committee is set to host hearings as early as mid-June to discuss new derivatives rules, which have become a hot-button issue on Wall Street, The Post has learned. US legislators, including Sens. Chuck Schumer...
http://jlne.ws/iPS2FC
Goldman execs expect subpoenas, WSJ says
Market Watch
SAN FRANCISCO (MarketWatch) -- Goldman Sachs Group Inc. executives expect to receive subpoenas soon from U.S. prosecutors seeking more information about the firm's mortgage-related business, the Wall Street Journal reported Friday, citing unidentified people familiar with the situation. Officials at the investment bank reckon the Department of Justice will ask for certain documents and other ...
http://jlne.ws/moF2ac
UBS Chief Sends Memo to I-Bankers
CNBC
UBS Chief Executive Officer Oswald Gruebel admitted in an email this morning that some of the high level departures from the Swiss banks investment banking have been regrettable.
http://jlne.ws/lRzXsF
JPMorgan Traders Are Taking Market Share, O'Connor Says
BusinessWeek
JPMorgan Chase & Co., the most profitable U.S. bank, is taking trading revenue from Goldman Sachs Group Inc. and Bank of America Corp. as investments including its $1.7 billion purchase of RBS Sempra's commodities business begin paying off, Deutsche Bank AG analysts said.
http://jlne.ws/kt8ObV
Banks battle for $1bn Puerto Rican road
By Helen Thomas in New York, Financial Times
Goldman Sachs and Morgan Stanley are squaring off in the bidding to finance and operate one of Puerto Rico’s busiest roads as a 10-month-long privatisation process approaches its conclusion.
http://jlne.ws/jtefvh
ING Can Be More With Less, Says the Reluctant Banker
BY MAARTEN VAN TARTWIJK AND ARCHIE VAN RIEMSDIJK, WSJ
When Jan Hommen was approached to run ING Groep NV, the timing couldn't have been worse. The Dutchman was just planning to move to the U.S. and spend more time with his children and grandchildren. And, having little experience in banking and insurance, he was far from the obvious choice to guide the Dutch bancassurer through the biggest crisis in its history.
http://jlne.ws/lj2yMm
RBS sees opportunity in crisis
The Nation, Thailand's English news
Many banks across the world seem to have hit the alarm button. The sharp swings in global oil prices since the start of the wave of unrest in the Middle East and North Africa, the fragile US economic recovery, Europe's prolonged sovereign-debt crisis and Japan's tremendous disaster have created uncertainty for them. But not for the Royal Bank of Scotland.
http://jlne.ws/lJN8q8
Emerging market bond fund flows signal shift
By Robin Wigglesworth in London, Financial Times
Money is continuing to pour into emerging market bond funds, subduing the cost of borrowing for developing countries and underlining the shift in economic power away from the western heavyweights of the financial system. Eight consecutive weeks of net inflows have taken the total invested in these funds this year to $7.9bn, according to EPFR, the fund data provider.
http://jlne.ws/iYRWzY
Swaps Group Warns of 'Too Big to Fail' in Clearinghouses
BY KATY BURNE, WSJ.com
Derivatives clearinghouses can and do fail, and policy makers should be concerned that they could be the next "too big to fail" beneficiaries of federal bailouts, according to a discussion paper released by the International Swaps and Derivatives Association.
http://jlne.ws/mehi4g
BY ELENA MOYA, WSJ.com
European companies have shunned the euro in the bond markets this year and have instead piled into dollar, sterling and even ruble-denominated bonds, data from Dealogic show. For the first time since 2000, bonds denominated in euros account for less than half of all European corporate bond issuance.
http://jlne.ws/kXvbSg
JPMorgan’s Dimon Was Tempted To Remind Geithner Where Treasury’s Bread Is Buttered
Forbes
The Associated Press had an interesting tidbit last week in a story on JPMorgan Chase CEO Jamie Dimon’s May 19 appearance at a dinner for the University of Colorado’s Denver Business School, aside from the headlines generated when the banker said a U.S. debt default would be a “moral disaster.” While the AP led with that morsel, later in the story came an interesting anecdote from the period when Dimon’s bank paid back taxpayer dollars it received under the TARP program, and a reminder that some banks believed they could skate through the 2008 crisis just fine on their own.
http://jlne.ws/iRdJTO
In Reputation Ranking, Some Banks Break from the Pack
By Heather Landy, American Banker
Public perceptions of bank brands remain a long way from rosy, but they are becoming more nuanced. The 30 banks included in American Banker's second annual survey of bank reputation, conducted by the Reputation Institute, scored higher with consumers on average, and with a much wider distribution, than last year. The results suggest that reputation, in recent years an albatross for the financial sector as a whole, is starting to look more like a point of differentiation, with several large institutions able to break away from the pack more convincingly as they moved to the top of the ranking.
http://jlne.ws/jLtNP5
U.S. Commercial Property Prices Drop to Post-Recession Low
By Brian Louis and David M. Levitt, Bloomberg
U.S. commercial property prices fell to a new post-recession low in March as sales of financially distressed assets weighed on the market, according to Moody’s Investors Service.
http://jlne.ws/jeEtd4
Fitch revises Belgium’s outlook to negative from stable
By Gerry Davies, ForexLive
* Political risk is higher in Belgium than in other euro area peers
* Belgium will likely be downgraded if it misses official deficit targets
http://jlne.ws/j6mzTj
China's economy may face inflation, sluggish growth
People's Daily Online
China's National Economic Accounting and Economic Growth Research Center under Peking University released the "China Economic Growth Report 2011" on May 21. The report said that judging from the current macroeconomic imbalance in China, China is faced with both inflationary pressure and the risk of sluggish growth. China needs to prevent stagflation by controlling the gross unbalance in the current stage.
http://jlne.ws/lDciHx
Chicago Fed Index: Index shows economic activity weakened in April
Led by declines in production-related indicators, the Chicago Fed National Activity Index fell to –0.45 in April from +0.32 in March. April marked the lowest reading of the index since August 2010. Three of the four broad categories of indicators that make up the index deteriorated from March, but two of those three categories made positive contributions to the index in April.
http://jlne.ws/jkM4vL
ISDA Publishes "The Economics of Central Clearing: Theory and Practice," A Discussion Paper on Clearing Issues
Barron's
The International Swaps and Derivatives Association, Inc. (ISDA) today announced the publication of an in-depth discussion and analysis of the purposes, function and issues associated with central clearing of over-the-counter (OTC) derivatives.
http://jlne.ws/lrz9Pi
Lagarde is Front-Runner to Head IMF
By Gonzalo Vina and Andres R. Martinez, Bloomberg
Support mounted for French Finance Minister Christine Lagarde to head the International Monetary Fund as Mexico offered its central bank governor as an emerging- market candidate, challenging Europe’s 65-year hold on the job.
http://jlne.ws/keFwki
IMF Executive Board Concludes 2011 Article IV Consultation with United Arab Emirates
Public Information Notice (PIN) No. 11/57
May 23, 2011
On April 21, 2001, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with the United Arab Emirates (U.A.E.), and considered and endorsed the staff appraisal without a meeting.
Background
The economic recovery in the U.A.E. is gaining strength, supported by a favorable global environment but subject to increased regional uncertainty. Real nonhydrocarbon GDP growth is projected to accelerate to 3.3 percent in 2011 from 2.1 percent in 2010, reflecting stronger tourism, logistics, and trade in the emirate of Dubai; and large public investment spending in the emirate of Abu Dhabi, including through Government-Related Entities (GREs)...
http://jlne.ws/lSSQwE
Italy Shocked, Shocked by S&P Move
By Francesco Guerrera, WSJ.com
Judging from the reaction from local media and financial executives, Standard & Poor’s decision late on Friday to revise Italy’s sovereign debt outlook from “stable” to “negative” went down like a plate of overcooked pasta.
http://jlne.ws/mJwZ8i
Mizuho president to step down
TAIGA URANAKA, Reuters
Mizuho Financial Group’s (MFG-N3.08-0.03-0.96%) president will step down and its corporate banking chief will take the helm, Japan’s second-largest bank said on Monday, as it grapples with persistent system troubles including a breakdown in ATMs after the devastating March earthquake.
http://jlne.ws/knfu2n
CME eyes move into swaps in Europe expansion drive
Luke Jeffs, Reuters
U.S. exchange giant CME Group is eying a move into Europe's lucrative swap clearing business by early 2012 as part of its rapid expansion plans in the region, where it has only just gained a foothold.
http://jlne.ws/mz5ieq
IMF Executive Board Initiates Selection Process For Next IMF Managing Director
Press Release
http://jlne.ws/ltFkaa
Europeans Focus on Retaining Leadership of IMF
By LIZ ALDERMAN, NY Times
PARIS — As the International Monetary Fund prepared to accept nominations Monday to replace Dominique Strauss-Kahn at its helm, European officials rallied over the weekend around Christine Lagarde, France’s finance minister, as their top choice for the post, despite fresh warnings from leaders of emerging markets and other countries that simply handing the job to another European could undermine the fund’s legitimacy.
http://jlne.ws/laVbdh
U.S. Treasury Department Statement Regarding Leadership Of The International Monetary Fund
Press Release
http://jlne.ws/iqZtrv
IMF Executive Board Approves An E26 Billion Extended Arrangement For Portugal
Press Release
The Executive Board of the International Monetary Fund (IMF) today approved a three-year SDR 23.742 billion (about E26 billion) arrangement under the Extended Fund Facility for Portugal in support of the authorities’ economic adjustment and growth program. This front-loaded program makes SDR 5.6 billion (about E6.1 billion) immediately available to Portugal from the IMF. In 2011, total IMF financing will amount to about E12.6 billion and will be partnered with about E25.2 billion committed by the European Union.
http://jlne.ws/jEvM6v
S&P To Assess The Credit Impact On Italian LRGs And Poste Italiane Of Its Outlook Change To Neg On Italy
Press Release
Standard & Poor's Ratings Services revised its outlook on the Republic of Italy today to negative from stable, and affirmed its unsolicited 'A+/A-1+' credit ratings on the Italian sovereign
http://jlne.ws/jZYwq5
Banks 'set to miss lending targets'
Press Association via Yahoo! UK & Ireland News
The UK's top banks are on course to miss Project Merlin lending targets for small businesses, according to figures revealed by the Bank of England.
http://jlne.ws/k76lDZ
UK News: Banks face fury over lending target failure
Edinburgh Evening News
THE UK's top banks were facing further public outrage today as the Bank of England was set to reveal they are on course to miss crucial Project Merlin lending targets.
http://jlne.ws/ljb2qy
NY senators bat with banks on rule change
New York Post
New York lawmakers are coming to the rescue of some major US banks. The Senate agricultural committee is set to host hearings as early as mid-June to discuss new derivatives rules, which have become a hot-button issue on Wall Street, The Post has learned. US legislators, including Sens. Chuck Schumer...
http://jlne.ws/iPS2FC
Goldman execs expect subpoenas, WSJ says
Market Watch
SAN FRANCISCO (MarketWatch) -- Goldman Sachs Group Inc. executives expect to receive subpoenas soon from U.S. prosecutors seeking more information about the firm's mortgage-related business, the Wall Street Journal reported Friday, citing unidentified people familiar with the situation. Officials at the investment bank reckon the Department of Justice will ask for certain documents and other ...
http://jlne.ws/moF2ac
UBS Chief Sends Memo to I-Bankers
CNBC
UBS Chief Executive Officer Oswald Gruebel admitted in an email this morning that some of the high level departures from the Swiss banks investment banking have been regrettable.
http://jlne.ws/lRzXsF
JPMorgan Traders Are Taking Market Share, O'Connor Says
BusinessWeek
JPMorgan Chase & Co., the most profitable U.S. bank, is taking trading revenue from Goldman Sachs Group Inc. and Bank of America Corp. as investments including its $1.7 billion purchase of RBS Sempra's commodities business begin paying off, Deutsche Bank AG analysts said.
http://jlne.ws/kt8ObV
Banks battle for $1bn Puerto Rican road
By Helen Thomas in New York, Financial Times
Goldman Sachs and Morgan Stanley are squaring off in the bidding to finance and operate one of Puerto Rico’s busiest roads as a 10-month-long privatisation process approaches its conclusion.
http://jlne.ws/jtefvh
ING Can Be More With Less, Says the Reluctant Banker
BY MAARTEN VAN TARTWIJK AND ARCHIE VAN RIEMSDIJK, WSJ
When Jan Hommen was approached to run ING Groep NV, the timing couldn't have been worse. The Dutchman was just planning to move to the U.S. and spend more time with his children and grandchildren. And, having little experience in banking and insurance, he was far from the obvious choice to guide the Dutch bancassurer through the biggest crisis in its history.
http://jlne.ws/lj2yMm
RBS sees opportunity in crisis
The Nation, Thailand's English news
Many banks across the world seem to have hit the alarm button. The sharp swings in global oil prices since the start of the wave of unrest in the Middle East and North Africa, the fragile US economic recovery, Europe's prolonged sovereign-debt crisis and Japan's tremendous disaster have created uncertainty for them. But not for the Royal Bank of Scotland.
http://jlne.ws/lJN8q8
Emerging market bond fund flows signal shift
By Robin Wigglesworth in London, Financial Times
Money is continuing to pour into emerging market bond funds, subduing the cost of borrowing for developing countries and underlining the shift in economic power away from the western heavyweights of the financial system. Eight consecutive weeks of net inflows have taken the total invested in these funds this year to $7.9bn, according to EPFR, the fund data provider.
http://jlne.ws/iYRWzY
Swaps Group Warns of 'Too Big to Fail' in Clearinghouses
BY KATY BURNE, WSJ.com
Derivatives clearinghouses can and do fail, and policy makers should be concerned that they could be the next "too big to fail" beneficiaries of federal bailouts, according to a discussion paper released by the International Swaps and Derivatives Association.
http://jlne.ws/mehi4g
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