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Tag Archive: REGULATORY PROVISIONS


Greece crisis contagion on the cards

Filed under: Financial Crisis — 1 Comment
May 16, 2012

Well it is official the political party leaders in Greece failed to reach on the agreement and the re-election is on the cards. The jeopardy conditions calls for the lenders withdrawing $898 million from greek banks. What will happen if Greek exits Euro ? Who will pay their debt in-case if they exit Euro and the future of Euro lot of dilemma needs to be addressed.

The ripple effect of the above is that the parties who oppose the austerity measures upon which Greece’s bailout is conditional, such as Syriza, will gain support in new elections. View full article »

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The Great Indian commodities market

Filed under: Commodities Markets, Economies — 14 Comments
April 22, 2012

I have been writing over commodities from the last 2 years and the potential of it and the hurdles it faces, In one of my recent post I raised the concerns for cotton & gold and indeed for the cotton too.

Off late the retail investors allowed entering in the Indian commodities market, which has been dominated by the big corporate, trading houses and industries by large. Commodities as a separate asset class has immense potential for the market savvy investors, arbitrageurs and speculators. Out of the three the market is more of speculation and arbitrage, View full article »

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OTC derivative series CDS, Bonds and Basis Trade :

Filed under: Economies, Financial Crisis — 2 Comments
April 20, 2012
As I wrote about central clearing some catastrophic bonds like to continue the series as lot of terminologies yet to be explored in this mammoth market of OTC derivatives. I had tried to accumulate few of them from various sources:
  • [h]ypothecation is when a borrower pledges collateral to secure a debt. The borrower retains ownership of the collateral but is “hypothetically” controlled by the creditor, who has a right to seize possession if the borrower defaults.
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A Prop Trader or Rogue Trader

Filed under: Commodities Markets, Economies, Trending Brokers — 5 Comments
April 4, 2012

People talk a lot about prop traders but many of them know and many don’t know about them. Last night I was reading an article in The Guardian an interview by Quant trader recalled my short experience that I lived as a Prop Trader.

We play with the money that’s the shortest version what a prop trader do.There are two kinds of traders in the financial institutions.
1)  Market-makers use their client’s money to make money for those clients, taking a commission.
2) Then there are prop traders like me beg you pardon I was. We use cash given to us by the bank to make money for the firm. View full article »

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Derivatives and on …

Filed under: Economies, Financial Crisis, Trending Brokers — 1 Comment
March 28, 2012

Recalling a chapter from Traders Guns and money Beautiful lies on sale side how derivatives are misinterpreted or mis-sold, It’s very simple trying to figure out the hierarchy of the trading floor. There are Sales people – they lie to clients. Traders lie to sales and to risk managers. Risk managers ? they lie to people who run the place – a small correction they think they run the place. The people who run the place lie to shareholders and regulators :)

The last post that I did Derivatives derivatives soooo many, resembles outstanding derivatives with the top 5 banks of the world, here is some basic background for my non financial market friends about derivatives. View full article »

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Structured Products Complexity & Greed

Filed under: Economies, Efficient Markets, Finance Awareness, Financial Jargons — 4 Comments
March 24, 2012

With the continuation of my last post  some book rules for investments  trying to reveal some of the structured products offered in the open economies of world amaze to see that more than 10 billions of structured products are sold every year :

  • Reverse convertibles : They are unsecured short-term notes that are linked to the price of an underlying stock (typically not the stock of the issuer). The security comes with a high coupon rate (from 7 to as much as 25 percent). At maturity, the investor will receive the interest payment plus either 100 percent of his original investment amount or a predetermined number of shares of the underlying stock.
  • An accumulator : This is one of the famous product in Asia. An accumulator is essentially a contract that obliges investors to purchase a security, currency or commodity at regular intervals at a fixed price. View full article »
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Credit Default Swaps & Greece Default Event

Filed under: Economies, Financial Crisis, Trending Brokers — 3 Comments
March 12, 2012

This weekend  financial media was concentrating on the credit event of Greece.Greece has officially defaulted on its debt to private lenders. It was an “orderly” default, negotiated rather than simply announced. This formal default on about $100 billion triggered payment of $3 billion in credit-default swaps.

One of the washington post tried to revealed that Insurance and CDS are different, CDS should never be treated like insurance, as its Mandatory for the insurance company to make reserve against insurance that it has issued on the other hand Credit Default swaps (CDS) is naked gambling. View full article »

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ISDA Under criticism on GREECE

Filed under: Economies, Financial Crisis, Financial media articles — 7 Comments
March 2, 2012

International Swaps and Derivatives Association is the body corporate to make over the counter (OTC) derivatives market safe and efficient.

It has 815 members from 58 countries including global, international and regional banks, asset managers, energy and commodities firms, government and supranational entities, insurers and diversified financial institutions, corporations, law firms, exchanges, clearinghouse and other service providers.

The Key areas of ISDA are
* Reducing counterparty risk
* Increasing the Transparency
* Improve the OTC operational infrastructure.

The details are provided on the ISDA Brochure

Recently ISDA came under criticism on its decision that based on current evidence the Greek bailout would not prompt payments on the (CDS)credit default swaps. View full article »

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GREAT INDIAN EXCHANGE OFFER – Multi Commodity Exchange of India (MCX)

Filed under: Commodities Markets, Economies, Trending Brokers — 49 Comments
February 17, 2012

What is common between the IPOs of Facebook and MCX ?They both have the Morgan Stanley as a  lead manager for the IPO.
Both of them in the market since 8 years.
Both the IPO’s will try to revive their moribund IPO respective market.

Well not more things should be compared since the nature of both the entities is
different and there functioning is different. As always IPO’s has more critics as well
as well wishers. Valuations are always on the upper side and the initial investors
(promoters) are set to become millionaires, as India’s first ever share sale by an
exchange opens the next week. Crisil the rating agency graded MCX IPO  5/5 .

MCX has not left no stone – unturned as they failed to launch the IPO 2 times in the past.

MCX is valued at 24.8 times its year-end earnings as on March 31, 2011 at 860 and at29.8 times at 1,032. Its counterparts, the US-based CME and ICE, are valued comparatively cheap at around 16 times their estimated earnings for 2012, (source Blomberg)

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Facebook’s Mysterious Valuations

Filed under: Economies, Financial media articles, Merchant Banking, Trending Brokers — 9 Comments
February 15, 2012

Continuing where I left in my last post Face book all set to fire . As on Feb 1st the social network confirmed its plans for an Initial Public Offerings (IPO) confirming its valuations between $75 billion and $100 billion. The valuation reflect an extraordinary belief that a start-up hardly 8-year-old firm is more valuable than Boeing , the world largest airraftmaker. Are they nuts ??

$100 Billion? 100:1 PE ratio?
I like Facebook but hard to imagine an upside there.
$100B is the same value as Verizon, Cisco, Pepsi or McDonald’s.

Would like to share three things that leaped out at me from Facebook’s financial filing. They involve marketing, hypocrisy and arrogance — in other words, standard Wall Street fair.

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