Category Archives: money

Volume of deal messages tests Europe exchanges


Volume of deal messages tests Europe exchanges – FT.com

Extreme market volatility on Friday exposed the vulnerability of electronic trading systems across Europe as record numbers of messages carrying dealing instructions and market data knocked out systems in Italy and the Nordic region and froze the provision of quotes retail brokers in the UK.

One senior trader said: “The amount of [trade] executions generated is absolutely huge. We are breaking all sorts of records today, like numbers of messages generated.”

Messaging is the lifeblood of the world’s trading systems. A message – whether market data or a trade – is sent across trading platforms and fibre optic cables.

We’re beginning to see the European market infrastructure, especially around some exchanges, start to creak. We are having a tough time with price discovery, that is a concern especially as the market is moving around so rapidly.”

For a second day the Milan bourse in Italy had problems with market data for its blue-chip FTSE MIB 30 index and forced BATS Europe, a pan-European trading platform that competes with the Milan bourse, to take Italian market data out of its feeds.

Nasdaq OMX also experienced problems at its derivatives market: “We have issues with pricing updates on the Nordic derivatives markets and are working hard now to troubleshoot the issue,” a spokesman said.

Retail stock brokers in the UK struggled to obtain electronic quotes from market makers as Proquote, the LSE-owned system, suffered problems in early morning trading between 8am and 9am.

“We were asking for a quote and getting nothing back,” said John Douthwaite, chief executive of SimplyStockbroking, estimating that the broker had been unable to obtain electronic quotes for 40 minutes. The firm had reverted to trying to obtain quotes from market makers by telephone, he said, with inevitable delays for clients.

US-based Options Price Reporting Authority, the world’s largest single largest data feed, has estimated messages per second had hit an all-time peak of 1.5m in September last year from virtually nothing in 2003, and projects the figures to mushroom further in coming years.

Read the whole story on the FT: Volume of deal messages tests Europe exchanges – FT.com

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Italian Treasury "Discovered" Larger Cash Pile Than Expected; Likely To Withdraw From More If Not All 2011 Bond Auctions | ZeroHedge


Italian Treasury “Discovered” Larger Cash Pile Than Expected; Likely To Withdraw From More If Not All 2011 Bond Auctions | ZeroHedge

you gotta love it when you find some cash in your pocket….
“And the news just gets uber-surreal. According to a Reuters report, the Italian Treasury has a ‘larger cash pile than generally perceived according to sources.’ As a reminder this is precisely the excuse that Italy used when it scrambled to cancel medium and long-term auctions for late August as was previously noted. Which can only mean one thing: in order to prevent more ongoing routs, Italy will likely now withdraw from all bond auctions for the ‘foreseeable future’ in order to not give the market a chance to do some real price discovery. Sure enough, the subsequent Reuters headline says that the ‘Italian Treasury’s cash pile is enough to last most of 2011.’ Translation: while Greece, Portugal and Ireland are unable to access capital markets, Italy, as we predicted, has just self-imposed a capital markets exile likely until the end of the year.”
Italian Treasury “Discovered” Larger Cash Pile Than Expected; Likely To Withdraw From More If Not All 2011 Bond Auctions | ZeroHedge:

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>Mongolia plans to issue first sovereign bonds


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The money has not yet come in, but the debt has already started…

Mineral-rich Mongolia plans to issue first sovereign bonds – FT.com

Mongolia plans to issue its first sovereign bonds this month, marking a milestone for capital markets in this resource-rich democracy.


The newly created Development Bank of Mongolia will issue $700m in sovereign bonds to fund lending programmesin areas that include infrastructure, industry, energy and roads. 

the issuance would take place in tranches beginning this month, with the first slice likely to be $100m.

The bond will be in tugrik, the Mongolian currency, which has appreciated by 1.6 per cent against the dollar since January.
investment in the mining sector has soared in the past two years along with global commodities prices.

Government revenues from the mining sector are set to jump next year as the Oyu Tolgoi copper and gold mine comes online, and politicians in Ulan Bator are looking for ways to manage the coming influx into state coffers.

The Development Bank is being set up with training from the Korean Development Bank and the Development Bank of Japan. 
yields on the bonds could be quite low, perhaps 6-8 per cent.


Mongolian sovereign debt has a B1 non-investment grade rating from Moody’s


Read the full article here: FT.com / Capital Markets – Mineral-rich Mongolia plans to issue first sovereign bonds

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>Higher Rates Likely to Keep Euro Rising – WSJ.com


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Higher Rates Likely to Keep Euro Rising – WSJ.com 
NEW YORK—Currency investors’ scramble for yield is likely to lift the euro against the dollar this week, but rising concerns about the euro-zone’s sovereign-debt crisis could curb the common currency’s gains.

Zuma Press

The European Central Bank, headed by President Jean-Claude Trichet, right, is expected to keep raising interest rates in the months ahead as the Federal Reserve leaves rates near zero.
The European Central Bank is expected to continue raising rates in the months ahead while the Federal Reserve leaves U.S. rates near zero for the rest of this year, a prospect that is boosting the euro.
The euro hurdled $1.45 for the first time since January 2010 last week, before pulling back slightly, while some big foreign-exchange banks have raised their forecasts for the common currency. Deutsche Bank and Citigroup now both expect the euro to rise toward $1.50 in coming months.
“The biggest driver for two months now has really been interest rates, interest rates and, of course the third thing being, interest rates,” said Jonathan Wetreich, a currency strategist with Brown Brothers Harriman.
As worries grew last week that Greece will eventually need to restructure its debt, and as Moody’s Investors Service downgraded Ireland’s credit rating on Friday, the euro retreated against the dollar, but only to the $1.44 area, still among the strongest levels it has seen this year.
Late Friday, the euro was at $1.4427 from $1.4494 late Thursday. The dollar was at ¥83.08 from ¥83.45.
Interest-rate differentials will likely push the euro even higher in the week ahead, analysts said.
“It’s really a question of whether the euro is getting to a valuation where it’s harder to keep going, but I think it will keep going,” said Adnan Akant, head of foreign exchange and managing director at money manager Fischer Francis Trees & Watts, a New York unit of BNP Paribas. The money manager is still betting on the euro to rise, though it’s not an “overemphasized” position, he said.
“If you clear your head and think about what’s going on, it’s still an interest-rates story,” he said.
The spread between the euro and dollar two-year swap rate touched its highest level since 2008 on Friday, and if it continues to widen, it will be euro-supportive, said Ron Leven, a strategist with Morgan Stanley.
Deutsche Bank raised its euro forecast Friday, projecting the euro will rise to near $1.50 in the next three to six months. The bank had previously expected the euro to trade within a $1.25 to $1.40 range against the dollar throughout 2011. Citigroup now expects the common currency at $1.50 over six to 12 months, up from a previous forecast of $1.45.
Meanwhile, J.P. Morgan Asset Management, one of the world’s biggest asset-management firms, has abandoned its bet on a decline in the euro against the dollar, said Robert Michele, global chief investment officer for the New York, London and Asia investment teams of J.P. Morgan Asset Management’s Global Fixed Income Group, in a phone interview Friday.
However, the euro-zone debt crisis still poses a risk for the euro, analysts said.
If Greece is forced to restructure its debt, it “is likely to send a shockwave” through the euro zone and its currency, said Brian Dolan, chief currency strategist at Forex.com.
In addition, Finland, which is the only euro-zone country that requires bailouts to be approved by parliament, held parliamentary elections Sunday. The anti-bailout True Finns Party appeared to make a strong showing, according to exit polls, and that could raise fears about whether the results will undermine a planned rescue for Portugal.
Investors continue to view Spain as the real tipping point, though it seems to be on solid ground for now because of headway on reforms and fiscal austerity measures. But market analysts are keeping a close eye on the shaky Spanish housing market, the country’s high jobless rate and its vulnerable savings banks.
If such sovereign-debt jitters still weigh on the currency this week, it could mean a mild rebound for the U.S. dollar, Mr. Dolan said.

—Min Zeng contributed to this article

>Sovereign Wealth Funds to reach over $5.5 trillion by the end of 2012


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SWFs to reach over $5.5 trillion by the end of 2012

Opalesque Sovereign Wealth Funds Briefing

Sovereign Wealth Funds (SWFs) gradually regained their appetite for foreign investments in 2010 having cut−back on cross−border spending for much of 2009. Assets under management of SWFs increased 11% in 2010 to $4.2 trillion. There was a further $6.8 trillion held in other sovereign investment vehicles, such as pension reserve funds, development funds and state−owned corporations’ funds and also $7.7 trillion in other official foreign exchange reserves.

TheCityUK expects assets of SWFs to reach over $5.5 trillion by the end of 2012. The UK and London in particular is an important centre in the SWFs market as a clearing house and location from where some of these funds are managed………………………………………Full Article: Source
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>David Sokol: How Much Money Did He Make?


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David Sokol: How Much Money Did He Make?
March 31, 2011, 12:11 PM ET
WSJ

By Shira Ovide and Ronald Barusch

Some executives resign to “spend more time with their families.” David Sokol, the Berkshire Hathaway executive who resigned under a cloud, is decamping to make more money for his family. Which leads to the inevitable question: How much money does Sokol have, anyway?

Sokol said he wants to put together his own “mini-Berkshire,” he told CNBC today. He also expressed a wish to invest his money to create an “enterprise which will provide opportunity for my descendents and funding for my philanthropic interests,” according to Sokol’s resignation letter quoted by Warren Buffett.

In his decade-long role as a Berkshire official, and as the unofficial fix-it man for troubled Buffett businesses such as NetJets, Sokol has no doubt collected a tidy sum to funnel into philanthropic interests.

The scale of his compensation and wealth are not known. Berkshire does not disclose Sokol’s total annual compensation, nor his options or stock holdings in Berkshire Hathaway.

However, Sokol also serves as chairman of MidAmerican Energy Holdings Co., an energy company in which Berkshire owns an 89.8% stake. A piece of MidAmerican trades shares on an over-the-counter exchange, and the company discloses compensation information for Sokol as part of its SEC disclosures.

Here is a look at what Sokol has pulled down just from MidAmerican.

In the past three years, MidAmerican has disclosed total compensation for Sokol of $24.2 million. The figure include his salary, bonuses, the changing value of his pension, company contributions to his 401(k) and other items, according to MidAmerican’s recent annual report.

Sokol also has pension benefits that MidAmerican valued at $7.8 million as of Dec. 31, according to the annual filing.

Sokol’s employment contract with MidAmerican entitles him to an estimated cash payment of $1.7 million if he loses his job involuntary “without cause.” It’s unclear if Sokol’s resignation will entitle him to the payout. (He doesn’t collect the severance if his departure is considered a retirement.) In any case, Sokol can walk away with with a pension value of $8.1 million, MidAmerican disclosed in the annual report. (Read Sokol’s employment contract HERE.)

Sokol also made a paper and real gain of roughly $3 million on his now controversial purchases of stock in Lubrizol, the specialty-chemicals company Berkshire later agreed to buy for $9 billion.

We don’t know how fat Sokol’s brokerage account is, but over three days in early January – before Sokol began to talk to Buffett about acquiring Lubrizol – Sokol bought roughly $10 million of Lubrizol shares. On CNBC today, Sokol said the purchases were part of his normal investments.

Sokol said in the interview that he doesn’t trade a lot, pegging the number of annual investment decisions at around three or four. After Berkshire agreed earlier this month to buy Lubrizol for $135 a share, Sokol’s paper gain on the shares is roughly $3 million.

Sokol also owns more than 1.4 million shares – or 20.24% — of a small bank, Middleburg Financial Corp. The company’s price is shooting up more than 9% today, giving Sokol a paper gain of roughly $1.9 million from yesterday.

 David Sokol: How Much Money Did He Make?

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>CBOE Futures Exchange: Trading Volume Tops One Million for First Time


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Thank you QE2!!!

Trading Volume Tops One Million Contracts for the First Time at CBOE Futures Exchange

http://etfdailynews.com/blog/2011/04/03/trading-volume-tops-one-million-contracts-for-the-first-time-at-cboe-futures-exchange/

April 4, 2011
The CBOE Futures Exchange, LLC (CFE) today announced that March 2011 was the most active trading month in CFE history as volume surpassed the one-million-contracts milestone for the first time ever.  The 1,066,367 contracts that changed hands during March was a new all-time high and the third consecutive record month at CFE, following the previous highs of 789,734 contracts in February and 778,157 contracts in January.  When including November 2010’s volume of 751,481 contracts, the four busiest months in CFE history have occurred during the last five months.  
March 2011 volume exceeded the 217,429 contracts traded in March 2010 by 390 percent.  March 2011 was the most active month of March on record at CFE and marked the eighteenth consecutive month in which total volume registered an increase when comparing year-over-year trading activity.
Average daily volume (ADV) of 46,363 contracts during March 2011, which was also a new record, topped the March 2010 ADV of 9,453 contracts by 390 percent.  When compared to 41,565 contracts per day during February 2011, which was the previous high, ADV in March rose 12 percent.  This was the second consecutive month in which CFE daily volume averaged over 40,000 contracts, a first for CFE.  
CBOE FUTURES EXCHANGE VOLUME SUMMARY
Current Month
Year-To-Date
March
2011
March
2010
%
Chg
Feb.
2011
%

Chg
March
2011
March
2010
%
Chg
Trad
-ing
Days
23 23 19 62 61
Total 
CFE
1,066,367 217,429 +390 789,734 +35 2,634,258 626,690 +320
Total 
CFE
ADV
46,363 9,453 +390 41,565 +12 42,488 10,274 +314
On Tuesday, March 15, Wednesday, March 16 and Friday, March 11, CFE experienced the three busiest single days in its history when 97,385, 97,254 and 77,619 contracts traded, respectively.  CFE also set back-to-back weekly volume records during the month: a total of 282,287 contracts traded March 7 through 11, which was then surpassed when a total of 334,692 contracts traded March 14 through 18.  Additionally, exchange open interest reached a new high of 210,495 contracts on Wednesday, March 16.    
Total trading volume for the first quarter of 2011 was 2,634,258 contracts, which now ranks as the busiest quarter in CFE history.  The trading volume during the first three months of 2011 surpassed the volume of 1,787,035 contracts during the previous quarter (4Q 2010) and the 626,690 contracts during the first three months of 2010 (1Q 2010) by 47 percent and 320 percent, respectively.  ADV during the quarter was 42,488 contracts, compared with 27,922 contracts in the fourth quarter of 2010 and the 10,274 contracts in the first quarter of 2010.  
March 2011 volume in VIX futures, based on the CBOE Volatility Index (ticker VX), totaled a new record of 1,065,374 contracts, exceeding the 216,800 contracts traded last March by 391 percent and the 788,908 contracts in February 2011, which was the previous high, by 35 percent.  March was the first month ever for VIX futures volume to surpass the one-million-contracts milestone.  
Average daily volume in VIX futures also reached a new high of 46,320 contracts during March.  This ADV surpassed the 9,426 contracts per day a year ago and topped the 41,521 contracts per day in February 2011 by 12 percent.  VIX futures experienced the top three most active single trading days in CFE history during the month:  97,337 contracts on Tuesday, March 15; 97,113 contracts on Wednesday, March 16; and 77,556 contracts on Friday, March 11.    
CFE currently offers futures on six different contracts, including: the CBOE Volatility Index (VIX), Weekly options on VIX futures (VOW), CBOE mini-VIX (VM), CBOE Gold ETF Volatility Index (GVZ), CBOE S&P 500 3-Month Variance (VT) and CBOE S&P 500 12-Month Variance (VA).  
On March 25, CFE launched security futures on the CBOE Gold ETF Volatility Index (GVZ), further expanding tradable CFE volatility products into a new asset class.  The calculation of the CBOE Gold ETF Volatility Index (“Gold VIX”) is based on the well-known CBOE VIX methodology applied to options on the SPDR Gold Trust (NYSE:GLD).  The Gold VIX is an up-to-the-minute market estimate of the expected 30-day volatility of GLD, calculated using real-time bid/ask quotes of GLD options that are listed on CBOE.  For more information on CBOE Gold ETF Volatility Index futures and options, see http://www.cboe.com/GVZ.
CFE, a wholly owned subsidiary of CBOE Holdings, Inc. (NASDAQ:CBOE), offers an all-electronic, open-access market model, with traders providing liquidity and making markets.  CFE trades are cleared by the AAA-rated Options Clearing Corporation (OCC). CBOE Futures Exchange is regulated by the Commodity Futures Trading Commission (CFTC).  
More information on CFE and its products, including contract specifications, can be found at: http://cfe.cboe.com/.  
CBOE®, Chicago Board Options Exchange®, CFE®, CBOE Volatility Index® and VIX® are registered trademarks, and CBOE Futures Exchange(SM) , GVZ(SM) and Weeklys(SM) are servicemarks of Chicago Board Options Exchange, Incorporated (CBOE).  Standard & Poor’s®, S&P® and S&P 500® are registered trademarks of Standard & Poor’s Financial Services, LLC,. and have been licensed for use by CBOE.  
SOURCE CBOE Futures Exchange, LLC