Ten untruths about central clearing

Central clearing and CCPs have been much in the news recently, thanks to their prominent role in US regulatory reform and Basel 3. Some commentators remain skeptical, and I commend both the Streetwise Professor (see for instance here or here) and Jon Gregory (see here) to your attention. Here I am not going to address […]

Hurry up and wait (for Basel)

It is definitely make the banks better capitalised but not yet. From the FT today: …the G20 has watered down the previous target of achieving the new capital standards by the end of 2012. That date is now downgraded to an “aim”. But to keep individual countries with weak banks happy, the phase-in of the […]

Summer at last

Enjoy it while you can – with a budget like George’s, sunshine is about the only thing you will be able to enjoy soon.

Being honest about performance

Anyone who has worked in the capital markets for a while will have become used to routine dishonesty about performance. It is both psychologically and sociologically difficult to admit that you lost money because you made the wrong call. Of course, the best traders are those that can admit their mistakes and learn from them, […]

Basel bluster and the bank

The latest Bank of England financial stability review contains the following interesting passage: Finalisation of the Basel III package will take place this year. This should provide banks and other market participants with a clearer view on future regulatory requirements, thereby reducing uncertainty. But it is important that policymakers also provide clarity over the implementation […]

Free lunches and other constraints

It’s funny how things change. Ten years ago if you had suggested that a sophisticated investment bank did not know how to value a plain vanilla interest rate swap, people would have laughed at you. But that isn’t too far from the case today. Things were fine until the crunch. But during 2008 and 2009, […]

European MBS

An interesting data point here. This is the spread history of European 3-5y AAA CMBS spreads and RMBS in various countries. Clearly the AAAs, well, aren’t, but confidence is returning to some extent. The RMBS have always been better, and in somewhere like the Netherlands, where default rates have historically been rather low (partly because […]

Making a market in sovereign CDS

A couple of thoughts about sovereign CDS. I’ll kick off with an article from Derivatives Week. They say (from behind a firewall): Increased hedging by banks has been an influential factor behind moves in sovereign credit default swap spreads, according to the Bank of England. In its quarterly bulletin, the central bank said that according […]

Tiered gamble

Bloomberg reports: HSBC Holdings Plc’s $3.4 billion issue of undated 8 percent notes marks the first sale of debt securities designed to qualify as capital under current and proposed bank regulations. The bonds count as so-called Tier 1 capital under current rules by permitting HSBC to defer coupons in some circumstances and benefit the bank […]

Holiday Hiatus

We will be back shortly.

Did we miss a trick?

Larry Elliott has a thought provoking article in today’s Guardian. He quotes Roubini, who says … that it is precisely because the downturn has been handled more deftly this time that the impetus for deep, structural reform has faltered. “Had policymakers failed to arrest the crisis, as they failed during the Depression, the calls for […]