The technology may have advanced to HFT Trading, algorithmic trading but the rogue inside the human will always overpower the technology.
Let’s try to understand the case of Navinder Singh Sarao , Has he became the scapegoat ?
According to the justice department Mr Sarao and his firm is guilty of Nav Sarao Futures, made £26m ($40m) illegally over five years.
He has been accused of using an “automated trading program” to manipulate markets, and contributing to the flash crash of 6 May 2010. On that day, the Dow Jones index lost 700 points in a matter of minutes – wiping about $800bn off the value of US shares – before recovering just as quickly. Continue reading “The case of Flash Crash Trader”
Single Dealer platform a financial forum asked a very logical question to CFTC Has CFTC given too much power to SEFs ?
Last week the CFTC passed the key rules that will govern how OTC derivatives will trade under the new Dodd-Frank regulatory framework.
By so doing, the CFTC has in effect devolved/transferred many important decisions regarding ‘where, and when’ swaps will trade over to the new market infrastructure and trading venues themselves, but will this give too much power to new trading venues?
One of the major rules that was passed, govern when a swap is ‘made available to trade’, or (MAT). This rule will determine which swaps are required to trade on Swap Execution Facilities (SEFs) or Designated Contract Markets (DCM). Continue reading “SEF Swap Execution Facilities or SEFbitrage”
Yesterday CME shared a paper on the famous OTC derivatives and their treatment under Extraterritoriality. Due to the role of unregulated over-the-counter (OTC) financial derivatives in the 2008 financial crisis which began in the U.S. but whose influence was felt globally, the G-20 agreed in its Pittsburgh meeting in 2009 that “all standardised OTC derivative contracts should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties by end-2012, at the latest. OTC derivative contracts should be reported to trade repositories. Non-centrally cleared contracts should be subject to higher capital requirements.”
The members of the G-20, in varying degrees and at different speeds, have embarked in their own jurisdictions to reform the OTC derivatives market. Given the interconnected nature of these markets, international cooperation has very much been part of crafting derivatives financial regulation.
Continue reading “The Dodd Frank Act & Extraterritoriality”
A week before I did a story on the manipulation of the London Interbank Offered Rate “LIBOR Manipulation : ny thing for you Big Boyz ”
As the blood flows from the proverbial carcass of Former Barclays chief executive Bob Diamond and political pressure claims the scalp of COO Jerry del Miser, the key focus up to what extent Barclays is culpable for the Libor saga and just how much markets should fear litigation and rolling heads at other head institutions.
I have tried to put in the understanding and the importance of LIBOR.
LIBOR has been called “the highway of finance” because it serves as the universal interbank benchmark interest rate used to price cash instruments in the real economy (deposits and loans) and short Continue reading “The Barclays Saga and Libor”
Well ever thought or imagine of influencing the reference rate. Barcalys did that exactly the same in return the regulator FSA fined it with the largest fine in an attempted manipulation of and false reporting of LIBOR and Euribor Benchmark rates.
The LIBOR rate is a critical element of the financial system. Before I move further some basics on it to understand the scenario: LIBOR stands for ‘London InterBank Offered Rate‘. It is produced for ten currencies with 15 maturities Continue reading “LIBOR Manipulation : ny thing for you Big Boyz”