Top Interest Rate Headlines 11-18-11: Greek Bond Losses Put Role Of CDS In Doubt

Greek bond losses put role of CDS in doubt
By Gillian Tett - Financial Times
Earlier this year, Deutsche Bank quietly decided to reduce its exposure to Italian government bonds. But it did not do that by simply selling debt; instead it achieved this partly by buying protection against sovereign default with credit derivatives contracts. That duly enabled the doughty German giant to report that its exposure to Italian sovereign bonds had dropped an impressive 88 per cent during the first half of the year – at least, when measured on a net basis – from E8bn to less than E1bn.
http://jlne.ws/rIs5FB

Judge Approves Transfer Of 22,000+ MF Global Accounts To New Firms
By Joseph Checkler Of DOW JONES DAILY BANKRUPTCY REVIEW
NEW YORK (Dow Jones)--A judge approved on Thursday the transfer of more than 22,000 MF Global Holdings Ltd. (MFGLQ) brokerage accounts to new dealers, granting an emergency request from the trustee unwinding the company's brokerage.
http://jlne.ws/vrXZkD

MF Global Is Said to Have Used Customer Cash Improperly
New York Times
MF Global borrowed against customer funds without putting up collateral, a serious violation of Wall Street rules, said people briefed on an investigation into the firm's collapse.
http://jlne.ws/vJiYkY

CFTC’s Chilton supports voice broking
By Jeremy Grant in London - Financial Times
Bart Chilton, a commissioner at the Commodity Futures Trading Commission, has thrown his weight behind preserving voice broking as a way of executing derivatives deals within the definition of how “swap execution facilities” (SEFs) are to function. Mr Chilton’s stance places the commissioner, a Democrat, at odds with Gary Gensler, the CFTC chairman, who wants to ensure that prices on SEFs be quoted and disseminated to a wide variety of market participants in the interest of greater transparency.
http://jlne.ws/vOVtql

Crisis Ensnares Central Bank in Desperate Bid to Save Euro
BY BRIAN BLACKSTONE AND MATTHEW KARNITSCHNIG - WSJ
FRANKFURT—At a mid-July meeting of the European Central Bank's governing board, the bank's longtime president, Jean-Claude Trichet, was summoned from a conference room to take an urgent call from Berlin. It was Angela Merkel. The German chancellor and French President Nicolas Sarkozy were about to meet in Berlin to deal with Greece's debt crisis and were at odds over what losses investors might be forced to take. They hoped the ECB could broker a compromise.
http://jlne.ws/swE4QY

Draghi turns tables on eurozone leaders
By Ralph Atkins in Frankfurt - Financial Times
Mario Draghi has turned the tables on eurozone leaders by demanding they implement urgently measures to combat the escalating debt crisis, and warned of massive economic and social costs if instead the European Central Bank’s credibility was put at stake.
http://jlne.ws/t2nPGR

CME May Face ‘Liability’ In MF Global Disclosure, Goldman Says
By Matthew Leising and Silla Brush - Bloomberg
Nov. 17 (Bloomberg) -- CME Group Inc., the world’s largest futures exchange that’s fallen 8.5 percent this week, may face liability related to concerns it misled regulators over what it knew about MF Global Holdings Ltd., according to Goldman Sachs Group Inc.
http://jlne.ws/su2iN0

Banks in Italy Find an Unusual Liquidity Lifeline
By MARK SCOTT - NY Times
LONDON — The London Stock Exchange is becoming the lender of last resort for many banks in Italy as concerns over the country’s debt levels squeeze liquidity out of the Italian financial market.
http://jlne.ws/tKdZDO

Swiss Central Bank Forces MegaBanks UBS and Credit Suisse to Shrink and De-Risk
Naked Capitalism
The Financial Times gives prominent play to a story that I suspect will go largely unnoticed in the US, that of the way that the Switzerland's bank regulator, the Swiss National Bank, has forced its two biggest banks, UBS and Credit Suisse, to shed risk in a serious way and shrink.
http://jlne.ws/tuDAqo

Banks Face On-Site Capital, Liquidity Checks by Basel Group
BusinessWeek
Global regulators will carry out on- site inspections of banks to ensure they have enough capital and liquidity under rules designed to prevent another financial crisis.
http://jlne.ws/sUR2gK

UBS to take axe to investment banking
By Haig Simonian in Zurich and Megan Murphy in New York - Financial Times
UBS has outlined long-awaited plans to shrink its business dramatically and refocus on its core wealth management operations, making deep cuts to its investment bank.
http://jlne.ws/v1zZ3Z

Sovereign CDS Concerns Shift To Counterparty Risk
By Katy Burne Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Investors and policy makers scrambling to determine how banks may be hurt by losses on risky European sovereign debt are looking beyond the hedges those banks have on and are trying to determine how reliable the banks' trading partners are. Banks have tried to reduce their exposures to sovereign debt by entering into credit-default swaps, an insurance-like contract designed to pay out if the issuer of the underlying bond fails to make repayments or forces a change in terms, such as reducing the amount of principal it will pay when the debt matures.

Deutsche Bank Denies Two Top Managers Called For Early CEO Exit
Dow Jones
FRANKFURT -(Dow Jones)- Germany'sDeutsche Bank AG (DB) Friday denied that two unnamed executive board members have called for Chief Executive Josef Ackermann to leave his position earlier than planned, as reported in Friday's edition of Handelsblatt newspaper.
http://jlne.ws/vm4Y4M