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’American swap regulation: a class apart
Take a moment to imagine what it must be like to be an American regulator. There are plenty to imagine being: the OCC, the Fed, the CFTC, SEC, FDIC, and that thrift one, until it subsumed into the OCC. Got one?
So there you are,
MF Global 2010: Save us from MF Global 2011
What complications might the alleged commingling of accounts have for the bankruptcy of MF Global?
Well, let’s ask… MF Global!
Back in February 2010, then under the leadership of Bernie Dan, the broker wrote the following in a letter to the CFTC (our emphasis):
“The protection of its customers’ funds is MF Global’s paramount concern”
MF Global used client money to trade from its own accounts in violation of government rules, reports the AP citing a “federal official”.
The discovery of a reported $700m hole in MF Global client accounts
Those commodities positions… revealed
The mystery seems to have been solved, for now.
The Scooby Doo of the day is Vermont Senator Bernie Sanders, who posted two “confidential” CFTC documents on his website on Friday.
First, a pdf version of a CFTC spreadsheet earlier posted by Reuters showing the total long and short positions taken on WTI crude oil,
A name and shame policy from the CFTC? [Updated]
(* Please see comment at end of post.)
The Wall Street Journal is out with a very interesting commodities story on Thursday.
And it’s interesting on two fronts.
First, due to the information it carries and second,
Goldman’s on top of the Dodd-Frank talks
A list of financial entities most panicked about upcoming Dodd-Frank rules.
Whoops! We mean a list of financial entities who are most concerned about educating regulators.
Goldman Sachs tops the list,
Speculators, slapped
The US doesn’t like high oil prices. Neither does it like the speculators it thinks exacerbates them.
So why not take aim at both?
On Thursday the International Energy Agency announced it would release 60m barrels of oil from emergency stockpiles in response to the Libyan crisis (which,
Et in Cushing ego
Wow. Turns out that in 2008 (into the mega rally time period) someone may have been “squeezing” oil after all.
As the FT reports:
The US commodities regulator has charged a trading house and two individuals with manipulating oil prices in 2008 by amassing dominant positions in the physical market that created the impression of a shortage.
It wasn’t the ‘froth’ that caused the commodities rout
Contrary to popular belief, analysis of the latest CFTC position data is beginning to show that it wasn’t so much the ‘froth’ in the market that was responsible for this month’s run-up and subsequent commodity price collapse,
Agency shutdown slowdown
Looks like the SEC and CFTC will be on skeleton crew if the government shuts down, according to their contingency plans.
First the CFTC:
Of the 675 employees, 25 have been identified as excepted from the restrictions of the Antideficiency Act,
Where is Charlie Sheen’s CFTC comment?
The FT’s Jeremy Grant flagged up an interesting development in the CFTC position limit story via a video interview with Adam Sussman, head of research at Tabb Group.
According to the latter the actor Charlie Sheen — or at least someone calling himself Charlie Sheen –submitted in March a meticulously worded comment to the CFTC on the subject of silver market position limits.
More for less, regulatory edition
A late (for Congress) night on Thursday left the Obama administration’s budget request for the SEC in tatters. According to Politico’s David Rogers:
Democrats failed to restore $131 million for the Securities and Exchange Commission,
User fees and CFTC funding
On page 1202 of 1364 in the appendix to the White House’s FY 2012 Budget is a Valentine offering to the CFTC (H/T Bloomberg):
Additionally, the Budget proposes to fund CFTC non-enforcement activities through user fees.
Why JP Morgan’s new copper ETF may have a scouse exposure
JP Morgan threw its name into the physically backed commodity ETF race on Monday with the filing of a preliminary prospectus for a copper-backed product.
The SEC document, the first from a major new player preparing anticipating an entry into the market,
SEC: ‘quote-stuffing’ not responsible for the flash crash
A grateful tip of the hat to David Merkel of the excellent Aleph Blog, who left a comment in a previous post directing us to page 79 of the flash crash report.
We previously reported the findings of Nanex,
Guest post: Michael Stumm on FX trading leverage
The chief executive of OANDA, Michael Stumm, discusses the recent US regulatory crackdown on outlandish leverage ratios offered to currency speculators.
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The Dodd-Frank Wall Street Reform and Consumer Protection Act as signed into law on July 21st of this year,
50:1 leverage lives!
A big H/T to Alea for this story, plus the title.
Late on Monday, the US Commodity Futures Trading Commission released its final foreign exchange market rule. The centrepiece is the limit on leverage for firms dealing in retail forex — the decision itself,
[MoneyTech] Data-feed arbitrage
The joint CFTC-SEC hearing into the ‘flash crash’ has attempted to shed a light on what may have brought about the infamous sell-off on May 6.
One area probed on Wednesday, in the regulators’ first session,
Is ‘cash for commodity’ the biggest trade in town?
FT Alphaville has speculated before about the chances that the financial credit crunch led a number of commodity players to turn to the term-structure of their markets to access an alternative type of funding.
Regulators acting at the speed of fax
Hat tip to @carlcarrie via Twitter for the following priceless nugget of information regarding some of the regulatory processes governing the increasingly fast-paced world of high frequency trading across non-equity based asset classes.
Regulators decline to blame terrorists, fat fingers or hackers for ‘flash crash’
The joint SEC-CFTC taskforce commissioned by the freshly-minted ‘advisory committee on emerging regulatory issues’ on Tuesday released a 151-page report of its preliminary findings regarding the ‘flash crash’ of May 6 2010.
Because one panel on the flash crash wasn’t enough…
SEC chair Mary Schapiro’s testimony to the congressional hearing convened on the flash crash is less than 24 hours old, but already there’s talk of hosting another talking shop on the matter.
Politico reported on Wednesday that the first item on the agenda of the freshly-announced joint SEC-CFTC committee on “emerging regulatory issues”
SEC/CFTC: ‘Yes, yes, we’re on the case…’
Joint statement out of US regulators on Friday regarding Thursday’s Flash Crash. Operative pars:
…We are devoting significant resources and expertise to this effort.
As we determine the cause and contributing factors,
Retail FX hustlers await their fate
On Monday, the CFTC will issue its decision on leverage caps in the forex punting business. It’s a make or break moment for all those firms that offer margin trading to those wanting to play currency pairs.
What does the Dodd bill mean for commodities regulation?
If you were wondering how Senate Banking Committee chairman Chris Dodd’s proposed bill on financial regulation might affect commodity trading, John Kemp at Reuters has done much of the hard work for us.
Gensler on CDS regulation: many a mixed metaphor
CFTC Chairman Gary Gensler is no fan of derivatives in general, and credit default swaps in particular.
As he told attendees of a Markit conference on derivatives (via Risk magazine):
“I really do think CDSs directly contributed to the financial crisis of the past year-and-a-half,” commented Gensler,
No, it’s true – everyone is shorting the euro
We cautioned a few weeks ago that a little perspective was probably needed when discussing the “everyone is shorting the euro” story.
The CFTC data on which the stories were based, we argued, only reflected of a small sliver of the OTC forex market.
The “Eddie Murphy” rule
Paul Volcker step aside.
The CFTC’s latest trading ruling will be named “Eddie Murphy” in homage to the actor’s famous role in the film “Trading Places”.
Which is apt, because the rule is not about proprietary trading at all,