Europe finally has agreed on the terms of MiFID II, extending its regulatory reach into fixed income, FX, OTC trading and commodity speculation. Here are seven details you need to know as implementation begins.
We still have technical meetings to go through to finalize details, so the complete text is unlikely to be available until won or close to January 27, but here is what we understand so far:
1. HFT will be restricted through greater testing of algorithms, but there will be no 500 m/s rule.
Recently attended a town-hall on the operational risk, the topics shared by the host was not new but it was all about awareness in the organisation. Lot of people asked why rogue traders still exist. But, that seems as if it’s an easy one to answer. Fool-proof risk management doesn’t exist and never will. At, least it won’t while the rogue traders are being covered by rogue managers.
You see, the definitions at the beginning had one thing wrong. They are definitions of solitary, lone-wolves. But, even lone-wolves belong to a group. They just prefer to avoid the assistance of others in certain matters. The rogue trader’s pack is the howling, fierce management for which he works. Lone-wolves always have alpha members they take orders from, don’t they? Lone-wolves are sometimes excluded from the pack to protect that alpha-male, thus preventing ‘in-breeding’ in the pack. It’s exactly the same in the trading world of finance. Continue reading “The Famous Rogue Traders”
I do not know why but somebody wanted me to define some basics on Yield spreads, that whether Yield spreads can judge the risk environment in an economy ?
Yield spreads are good tools to judge the risk environment in an economy a lower yield spread means that the issuer of debt is in a situation to demand loans at a lower spread above the yield of government security which in turn shows the presence of ample liquidity.
As far as economic growth is concerned a lower yield spread indicates greater amount of liquidity available for growth Continue reading “Yield Curve Basics”
Takings from my last post A Prop Trader or Rogue Trader and my past posts on the same topic The Rogue Trader or The Rogue Banks and TO BE A ROGUE TRADER would like to share few more views over them. As I reveled in the past that prop trader don’t trade on behalf of clients but they use institution own money to trade.They speculate and their focus are is emerging markets.
The two principles on which they work :
- You need to be dispassionate about your trade, to control your internal hurdles that may attach you to it emotionally.
To start with yesterday western markets tumbled and today morning Asia trading in the red. The ghost of greek debt default could wreak $1-trillion damage on euro-zone.
Stocks down, gold down, oil down, copper down, EU periphery debt down. The day is shaping up to be the worst for risk thus far in 2012.
The deal is turning on the screws, my last post on where ISDA Under criticism on GREECE indicates that Investors are under pressure to sign up to the deal, which will see them lose almost three-quarters of the value of their bonds.
Greece wants creditors who hold 90% or more of the debt to agree. If take-up falls below that but exceeds 75%, it is expected to force losses on those who do not willingly sign up, known as collective action clauses (CACs). Continue reading “Greece Again “Default already and get it over with. God this is tiring.””