This day in 1912 marks the birth of Brooklyn, New York's leading conservative economist, Milton Friedman. Born in New York's largest borough, Friedman picked up a string of degrees from schools including Rutgers University and Columbia University, before taking up a post in the University of Chicago's mighty economics department. An ardent proponent of laissez-faire economics, Friedman readily articulated his faith in a fiscal system that depended less on policy than "natural" forces. Along the way, Friedman became the leading light of the "monetarist" school, which, in the laissez-faire tradition, dismissed the government's role as the supposed engine of business. Rather, Friedman and his fellow monetarists believed in stable interest rates and robust money supplies. Friedman used a number of his publications, including Capitalism and Freedom, (written with his wife, Rose) to further stump against "big Government." While Friedman's beliefs aroused considerable criticism from liberals, leftists and even a few government-centric voices on the right, he was honored with the Nobel Prize for Economics in 1976. The lofty award hardly slowed Friedman, who continued his battle against the perceived inanity of the Federal government's fiscal policy.
-Source: www.history.com
Thursday, July 31, 2008
Wednesday, July 30, 2008
How FDIC Insurance Works
Now is the time to examine your bank accounts to make sure that you
remain under the insurance limits, especially if you have multiple
accounts in one bank. Here's how the insurance works, using excerpts
from the FDIC Web site, where you can read the details.
Single Accounts: These are deposit accounts owned by one person and
titled in that person's name only. All of your single accounts at the
same insured bank are added together and the total is insured up to
$100,000. For example, if you have a checking account and a CD at the
same insured bank, and both accounts are in your name only, the two
accounts are added together and the total is insured up to $100,000.
Note: this category does not include retirement accounts, such as IRAs
and Keogh accounts.
Those accounts have a separate $250,000 insurance limit -- and that
limit is based on the total of all retirement accounts for that person
added together. (You cannot increase that insurance amount by adding
different beneficiaries for the retirement accounts.)
Joint Accounts: These are deposit accounts owned by two or more people.
If both owners have equal rights to withdraw money from a joint account,
each person's shares of all joint accounts at the same insured bank are
added together, and the total is insured up to $100,000.
If a couple has a joint checking account and a joint savings account at
the same insured bank, each co-owner's shares of the two accounts are
added together and insured up to $100,000, providing up to $200,000 in
coverage for the couple's joint accounts.
Under FDIC rules, each person's share of each joint account is
considered equal unless otherwise stated in the bank's records.
Revocable Living Trusts: These are formal revocable trusts created for
estate planning purposes. The owner of a living trust controls the
deposits in the trust during his or her lifetime.
Deposit insurance coverage for revocable trust accounts is based on each
owner's trust relationship with each qualifying beneficiary. While the
trust owner is the insured party, coverage is provided for the interests
of each beneficiary in the account. The FDIC insures the interests of
each beneficiary up to $100,000 for each owner, subject to certain
restrictions on how the account is titled and who is named as
beneficiary.
Coverage is provided for the interest of each qualifying beneficiary
named by each owner. Additional coverage is not provided to the owners
for naming themselves as owners.
Note: There are complex exceptions to this rule for certain trusts, so
if you are planning to keep large amounts on deposit for a trust, you
should speak with a bank officer to confirm your deposit insurance.
What Should You Do Now?
1. Make Sure Your Bank Accounts are Insured Deposits!
Banks offer many types of investments these days, and some of those look
like insured deposits, but may not be. Now is the time to make sure that
products purchased inside your bank are actually insured deposit
accounts. Ask that question directly, and ask your banker to show you
the language of your account agreement that confirms the deposit
insurance.
2. Check Your Insurance Limits
If you have amounts above $100,000 in your bank, you may want to move
money by wire transfer to another insured deposit institution. That
could mean having the interest earned on your jumbo CD sent to you each
month, instead of accruing to your account. Don't forget that balances
in your checking account will be added to your other deposit accounts.
3. Use Alternative, Safe Investments
You can purchase Treasury bills, the world's safest and most liquid
investments, directly from the government. The minimum investment is now
only $100, but you can purchase much larger amounts, in effect getting
the government's IOU for money that is far above the deposit insurance
limits.
The process of buying Treasuries online is simple, and transactions are
done by direct debit from your bank account. Interest is automatically
paid out to your bank account. For larger investments, you can stagger
maturity dates. Plan to hold those securities to maturity -- typically
13 or 26 weeks -- before getting access to your money by having it
deposited to your bank account.
Bottom Line: You can sleep well with "money in the bank," but only if
you know the FDIC-insurance status of those funds.
If you've been smart or lucky enough to accumulate savings above the
insured limits, you should take the time to evaluate your banking
situation and take appropriate steps to give your money maximum safety.
remain under the insurance limits, especially if you have multiple
accounts in one bank. Here's how the insurance works, using excerpts
from the FDIC Web site, where you can read the details.
Single Accounts: These are deposit accounts owned by one person and
titled in that person's name only. All of your single accounts at the
same insured bank are added together and the total is insured up to
$100,000. For example, if you have a checking account and a CD at the
same insured bank, and both accounts are in your name only, the two
accounts are added together and the total is insured up to $100,000.
Note: this category does not include retirement accounts, such as IRAs
and Keogh accounts.
Those accounts have a separate $250,000 insurance limit -- and that
limit is based on the total of all retirement accounts for that person
added together. (You cannot increase that insurance amount by adding
different beneficiaries for the retirement accounts.)
Joint Accounts: These are deposit accounts owned by two or more people.
If both owners have equal rights to withdraw money from a joint account,
each person's shares of all joint accounts at the same insured bank are
added together, and the total is insured up to $100,000.
If a couple has a joint checking account and a joint savings account at
the same insured bank, each co-owner's shares of the two accounts are
added together and insured up to $100,000, providing up to $200,000 in
coverage for the couple's joint accounts.
Under FDIC rules, each person's share of each joint account is
considered equal unless otherwise stated in the bank's records.
Revocable Living Trusts: These are formal revocable trusts created for
estate planning purposes. The owner of a living trust controls the
deposits in the trust during his or her lifetime.
Deposit insurance coverage for revocable trust accounts is based on each
owner's trust relationship with each qualifying beneficiary. While the
trust owner is the insured party, coverage is provided for the interests
of each beneficiary in the account. The FDIC insures the interests of
each beneficiary up to $100,000 for each owner, subject to certain
restrictions on how the account is titled and who is named as
beneficiary.
Coverage is provided for the interest of each qualifying beneficiary
named by each owner. Additional coverage is not provided to the owners
for naming themselves as owners.
Note: There are complex exceptions to this rule for certain trusts, so
if you are planning to keep large amounts on deposit for a trust, you
should speak with a bank officer to confirm your deposit insurance.
What Should You Do Now?
1. Make Sure Your Bank Accounts are Insured Deposits!
Banks offer many types of investments these days, and some of those look
like insured deposits, but may not be. Now is the time to make sure that
products purchased inside your bank are actually insured deposit
accounts. Ask that question directly, and ask your banker to show you
the language of your account agreement that confirms the deposit
insurance.
2. Check Your Insurance Limits
If you have amounts above $100,000 in your bank, you may want to move
money by wire transfer to another insured deposit institution. That
could mean having the interest earned on your jumbo CD sent to you each
month, instead of accruing to your account. Don't forget that balances
in your checking account will be added to your other deposit accounts.
3. Use Alternative, Safe Investments
You can purchase Treasury bills, the world's safest and most liquid
investments, directly from the government. The minimum investment is now
only $100, but you can purchase much larger amounts, in effect getting
the government's IOU for money that is far above the deposit insurance
limits.
The process of buying Treasuries online is simple, and transactions are
done by direct debit from your bank account. Interest is automatically
paid out to your bank account. For larger investments, you can stagger
maturity dates. Plan to hold those securities to maturity -- typically
13 or 26 weeks -- before getting access to your money by having it
deposited to your bank account.
Bottom Line: You can sleep well with "money in the bank," but only if
you know the FDIC-insurance status of those funds.
If you've been smart or lucky enough to accumulate savings above the
insured limits, you should take the time to evaluate your banking
situation and take appropriate steps to give your money maximum safety.
Monday, July 28, 2008
Health savings account (HSA)
A health savings account is designed to accumulate tax-free assets to pay current and future healthcare expenses. To open an HSA, you must have a qualifying high deductible health plan (HDHP) either through your employer or as an individual.
If you have an employer’s plan, your contributions to the HSA are made with pretax income, and your employer may contribute as well. If you have an individual plan, you may deduct your contributions in calculating your adjusted gross income (AGI).
Congress sets an annual limit on the amount you can contribute to an HSA, which you set up with a financial institution such as a bank, brokerage firm, insurance company, or mutual fund company that offers these accounts.
No tax is due on money you withdraw from the HSA to pay qualified medical expenses such as doctor’s visits, hospital care, eyeglasses, dental care, and medications for yourself, your spouse, and your dependants.
Any money that’s left over in your HSA at the end of the year is rolled over and continues to accumulate tax-free earnings, which you can use for future healthcare costs.
Once you’re 65, you can use the money in the HSA for non-medical expenses without paying a penalty, but you’ll owe income taxes on those withdrawals. If you are younger than 65, you can also spend from your HSA on non-medical expenses, but you’ll owe income taxes plus a 10% tax penalty on the amount you take out.
If you have an employer’s plan, your contributions to the HSA are made with pretax income, and your employer may contribute as well. If you have an individual plan, you may deduct your contributions in calculating your adjusted gross income (AGI).
Congress sets an annual limit on the amount you can contribute to an HSA, which you set up with a financial institution such as a bank, brokerage firm, insurance company, or mutual fund company that offers these accounts.
No tax is due on money you withdraw from the HSA to pay qualified medical expenses such as doctor’s visits, hospital care, eyeglasses, dental care, and medications for yourself, your spouse, and your dependants.
Any money that’s left over in your HSA at the end of the year is rolled over and continues to accumulate tax-free earnings, which you can use for future healthcare costs.
Once you’re 65, you can use the money in the HSA for non-medical expenses without paying a penalty, but you’ll owe income taxes on those withdrawals. If you are younger than 65, you can also spend from your HSA on non-medical expenses, but you’ll owe income taxes plus a 10% tax penalty on the amount you take out.
Sunday, July 27, 2008
1944: Farewell to Bretton Woods
During the summer of 1944, representatives from forty-four nations gathered at a resort hotel in Bretton Woods, New Hampshire, to hash out the global finances for the remaining half of the twentieth century. Cast against the backdrop of World War II, the three-week conference was a striking display of the United States' swelling political and fiscal might. For one, the U.S. used Bretton Woods as a stage to promote the dollar as the standard currency for international transactions. Though some European leaders initially blanched at the idea, American officials stood their ground and the dollar eventually won the day. But, the United States' victories at Bretton Woods didn't end there: by the time the conference closed on July 22, the delegates had voted to create both the World Bank and International Monetary Fund (IMF), institutions which, in the minds of some historians, sealed America's role as the leader of the post-war economic order. Though U.S. leaders positioned the World Bank and IMF as "financial institutions" shorn of political entanglements, both bodies bore the traces of American influence. The brainchild of American officials, the IMF was charged with stabilizing exchange rates and enforcing the dollar-centric currency standard. Likewise, the World Bank, which was devised to dole out international loans, received good chunks of its fiscal resources from the United States. -Source: www.history.com
Saturday, July 26, 2008
KEY BISCAYNE: Hedge Fund Millions Reduced to Nothing
Several hedge funds run by flamboyant Key Biscayne trader John Devaney that were worth more than half a billion dollars last year have been wiped out, leaving wealthy investors with nothing.
About 150 investors -- some of them his Key Biscayne neighbors -- have lost roughly $510 million, said Devaney, chief executive officer and senior portfolio manager for United Capital Asset Management. ''Most of the investors were institutions.'' Devaney said in an interview Wednesday. "There were a few high-net-worth individuals who had losses. I was the second biggest investor in the fund.'' The collapsed hedge funds -- Horizon Fund, Horizon ABS Fund, Horizon Fund III and Horizon ABS Master Fund -- invested in junk bonds.
About 150 investors -- some of them his Key Biscayne neighbors -- have lost roughly $510 million, said Devaney, chief executive officer and senior portfolio manager for United Capital Asset Management. ''Most of the investors were institutions.'' Devaney said in an interview Wednesday. "There were a few high-net-worth individuals who had losses. I was the second biggest investor in the fund.'' The collapsed hedge funds -- Horizon Fund, Horizon ABS Fund, Horizon Fund III and Horizon ABS Master Fund -- invested in junk bonds.
Devaney, 38, a prominent bon vivant, put his personal losses at more than $100 million. Before his funds began to sour, he owned multiple homes, yachts, a $35 million Gulfstream jet and a collection of Impressionist art.
According to a letter Devaney sent to investors Wednesday, the ultimate blow came at the end of June when Deutsche Bank, the funds' key lender, issued a margin call -- or demand for additional collateral -- after deciding the existing securities had declined in value.
When his funds could not ante up the additional collateral, the bank declared the loans in default and auctioned the bonds. Devaney said the funds' other lender, Pershing -- a unit of Bank of New York -- then cut off lending to the funds.
''The recent actions of our lenders have now permanently ended any recovery that might have been available to the funds,'' he wrote.
Troubles first surfaced last July when Devaney took the extraordinary step of halting withdrawals, citing a rush to the exits by investors amid subprime mortgage woes.
At that time, Devaney told investors he wanted to avoid selling off the investments at fire-sale prices in hopes they would rebound as the bond market normalized. But the bond market hasn't come back.
Devaney, the son of a local lawyer, started his brokerage firm, United Capital Markets, in the Florida room of his Key Biscayne home in 1999. The business blossomed quickly, making $110 million in profit in 2003 and almost $100 million in 2004, according to Devaney. He added the asset management unit in 2005.
At first, the hedge funds also proved highly profitable, making more than a 40 percent annual return during 2005 and 2006, Devaney said.
GENEROSITY
He also became a philanthropist, funding a host of causes, including the Key Biscayne Community Foundation, which put him in close touch with movers and shakers on the island.
''He was extremely generous with the community, often requesting that he remain anonymous,'' said Patricia Weinman, a village council member.
``He contributed to practically everything.''
In a fundraiser for the Key Biscayne Community Foundation, Devaney donated a free ride on his private jet to the highest bidder. He and his wife Selene also pledged to match donations to the foundation -- up to $1 million.
When his hedge funds ran into trouble last year, it was among the first signs the subprime-mortgage debacle was wreaking havoc on the funds, largely unregulated entities that invest money for institutions and wealthy clients.
After freezing the funds last July, Devaney began selling off personal assets, including a 142-foot yacht called the Positive Carry, and the jet.
He also put up for sale a 16-bedroom Aspen, Colo., vacation property and listed for sale a number of waterfront residential properties on the key.
''We put a lot of properties on the market -- my father-in-law's, my mother-in-law's, my sister-in-law's, my mother's,'' Devaney said.
``My home is not for sale.''
He said he spent millions of dollars of his own money over the past year in a bid to keep the funds afloat in hopes that the bond market would recover.
Friday, July 25, 2008
Influence of Shariah banking growing in Western finance
For the consortium led by U.K. racing entrepreneur David Richards to acquire Aston Martin from Ford Motor, the consortium's partners, Investment Dar and Adeem Investment, both of Kuwait, required the deal to be done according to Islamic principles. The $848 million deal highlights the growing influence of Islamic finance in the Western world. A new wave of Islamic banks is looking to the West while Western banks are offering Islamic finance services.
Read more at http://www.reportonbusiness.com/servlet/story/RTGAM.20080707.r-noorbank08/BNStory/Business/home
Read more at http://www.reportonbusiness.com/servlet/story/RTGAM.20080707.r-noorbank08/BNStory/Business/home
Thursday, July 24, 2008
Investor fears drag down shares of exchange operators
As investors worry that troubled financial institutions will scale back on trading, which would hit exchanges' revenues, shares of exchange operators are dropping. The value of CME Group, for example, has fallen 43% this year. Nymex Holdings and IntercontinentalExchange are down 36% and 51%, respectively. The sell-offs, however, appear to be excessive compared with those of brokerages, which seem to announce massive write-downs each quarter.
1998: Merger mania continues
Merger mania seeped into international waters on this day in 1998, as Enron Corporation inked a lavish deal to acquire British-based Wessex Water, PLC. For the sum of $2.2 billion--which was reportedly paid in cash--Enron, an electricity and gas titan from Houston, Texas, made a splashy entrance on to world water utility stage. According to company officials, the deal signaled Enron's first move towards creating a global water subsidiary; Wessex Water was slated to be the crowning jewel of the new concern, which would focus on developing water distribution systems and treatment plants in Asia, Europe and Latin America. In the wake of the deal, Enron's eyes were clearly fixed on a handsome payday in the not-too distant future. As company chief Kenneth Lay noted, the "worldwide water market" was quite lucrative (company figures pegged the field's worth at $300 billion), but sparsely populated; the situation presented "tremendous opportunities for future growth as the...industry moved toward privatization and consolidation." Gazing into his crystal ball, Lay predicted that the acquisition of Wessex would swiftly push the subsidiary to the point where it no longer relied on Enron's coffers to maintain its daily operations.
Questionable accounting practices and corporate fraud caused Enron's stock to plummet, leading to Chapter 11 bankruptcy protection in 2001. Enron’s CEO, Kenneth Lay, was indicted by a federal grand jury in 2004; his trial began in January 2006. On May 25, 2006, Lay was convicted of conspiracy and fraud.
-Source: www.history.com
Questionable accounting practices and corporate fraud caused Enron's stock to plummet, leading to Chapter 11 bankruptcy protection in 2001. Enron’s CEO, Kenneth Lay, was indicted by a federal grand jury in 2004; his trial began in January 2006. On May 25, 2006, Lay was convicted of conspiracy and fraud.
-Source: www.history.com
ETFs gain popularity as market turmoil continues
Investors are turning to exchange-traded funds as a means for managing risk. The funds allow investors access to corners of the market that were previously inaccessible to the average investor, including commodities and foreign markets, and even get into short-selling with funds that can pay double if the market falls. "If stocks aren't expected to have a lot of directionality, what's an investor to do?" said David Reilly, director of portfolio strategies at Rydex, which recently launched eight new ETFs.
Read more at http://www.cnbc.com/id/25569774
Read more at http://www.cnbc.com/id/25569774
Wednesday, July 23, 2008
Paulson & Co.’s all-star trader John Paulson
Paulson & Co.'s all-star trader John Paulson – the man behind perhaps the biggest trading coup of all time, having racked up an estimated $3.7 billion by betting on the collapse of the U.S. housing market – is raising money for a brand-new fund. But what kind of fund could properly encore the world’s largest payday ever? Something, it turns out, that utilizes Paulson’s deep knowledge of the subprime market and his expectations that the credit crunch could lead to losses of up to $1.3 trillion. It also has a slightly altruistic bent.
more at http://www.bloomberg.com/apps/news?pid=20601087&sid=a4CcrYaAt_vo&refer=home
more at http://www.bloomberg.com/apps/news?pid=20601087&sid=a4CcrYaAt_vo&refer=home
Buffett's strategy under the spotlight
The current strategy of investment legend Warren Buffett has been analysed by the Daily Mail newspaper.
Mr Buffett, who founded Berkshire Hathaway and is one of the world's most listened-to financial savers, has increased the assets he manages at a rate of 21.1 per cent a year over four decades of investing.
In recent times, he has continued acquiring firms despite the credit crunch - looking to continental Europe and especially family-owned firms in Germany for new opportunities.
The so-called Sage of Omaha also dropped a big hint of a star future buy at the annual meeting of Berkshire Hathaway in May.
"I could find better things to do with a million dollars - probably in Korea - than I could probably find in this market (the US)," he commented.
Mr Buffett's personal wealth - the bulk of which is pledged to charity after his death - currently stands at around £62 billion, according to Forbes magazine.
Mr Buffett, who founded Berkshire Hathaway and is one of the world's most listened-to financial savers, has increased the assets he manages at a rate of 21.1 per cent a year over four decades of investing.
In recent times, he has continued acquiring firms despite the credit crunch - looking to continental Europe and especially family-owned firms in Germany for new opportunities.
The so-called Sage of Omaha also dropped a big hint of a star future buy at the annual meeting of Berkshire Hathaway in May.
"I could find better things to do with a million dollars - probably in Korea - than I could probably find in this market (the US)," he commented.
Mr Buffett's personal wealth - the bulk of which is pledged to charity after his death - currently stands at around £62 billion, according to Forbes magazine.
Tuesday, July 22, 2008
Grasso May Get to Keep $190 NYSE Pay After Second Appeals Win
For over four years, former NYSE chief Dick Grasso had barbs thrown at him from every which direction over his controversial pay package. But in the end he is the last man standing. His initial accuser, Eliot Spitzer, has resigned in disgrace, and his former employer is now a for-profit entity, rendering the charges of unreasonable compensation for the head of a non-profit moot.Read more at Bloomberg http://www.bloomberg.com/apps/news?pid=newsarchive&sid=alPCFuARFrbU
CBOE's Q2 profit up 36%
The Chicago Board Options Exchange, the largest U.S. options market, on Monday said that its second-quarter profit after taxes rose 36 percent, driven by increased volume and expanded product offerings.
The CBOE, which has been operating as a for-profit business model, has reported double-digit growth for 10 consecutive quarters.
The exchange is now in the process of working out a long-standing legal dispute over trading rights with former Chicago Board of Trade members, now part of CME Group Inc.
The resolution of that dispute would open the way for CBOE to complete its transformation into a for-profit, shareholder company from a member-owned organization, and a possible initial public offering.
Earnings after taxes for the second quarter rose to $25.4 million from $18.7 million a year earlier. Before taxes, quarterly profits were $43.9 million, compared with $32.2 million during the same period a year ago, the exchange said.
Fueled by higher trading volume, quarterly revenues grew 15 percent to $97.6 million from $84.6 million a year earlier.
"Strong growth across our product lines during the quarter pushed CBOE's total revenues and income up by double digits," said CBOE Chairman and Chief Executive William Brodsky in a statement.
"Both new and existing products were in place to meet the risk-management needs of market participants during some difficult market conditions," Brodsky added.
"Today the CBOE reported some pretty eye-popping financial results," said Jon Najarian, a founder of Web information site optionmonster.com. Through various investment vehicles Najarian owns a seat on the CBOE.
"The transparency offered by listed options and futures exchanges is clearly in greater demand and once you get the critical mass moving in a direction, it is difficult to stop it," Najarian said.
Average daily volume at the CBOE during the second quarter was 4.3 million contracts, compared with 3.5 million contracts during the period in 2007.
Total trading volume during the second quarter stood at 275.2 million contracts, up from 220.4 million contracts during last year's second quarter.
On June 3, CBOE launched options trading on the SPDR Gold Trust, an exchange-traded fund. In June, nearly 250,000 option contracts traded in the ETF at the exchange, representing 50 percent of all industry trading in the product, CBOE said.
Quarterly expenses totaled $53.7 million compared to $52.4 million in the same year ago quarter. The rise in second-quarter expenses was due mainly to increases in outside services, royalty fees for licensed products and other expenses, offset partially by lower employee costs as compared to second quarter 2007, CBOE said.
In a sign of CBOE's worth in equity, CBOE membership prices hit two all-time highs last month -- $3.3 million on June 18, eclipsing a record $3.2-million seat sale one day earlier.
The CBOE earlier this month postponed a membership vote on its tentative settlement of a trading rights dispute with some CBOT members.
The vote was originally scheduled to take place on July 17 but no new date has been chosen, while representatives of both parties continue to work out the terms of the agreement, according to a July 3 circular sent to CBOE members.
The rights date back to when CBOE was spun off by the CBOT in 1973 and allowed CBOT full members to trade options at the CBOE without having to buy a membership. But CBOE contended that those rights were terminated when CME acquired CBOT last year.
The CBOE, which has been operating as a for-profit business model, has reported double-digit growth for 10 consecutive quarters.
The exchange is now in the process of working out a long-standing legal dispute over trading rights with former Chicago Board of Trade members, now part of CME Group Inc.
The resolution of that dispute would open the way for CBOE to complete its transformation into a for-profit, shareholder company from a member-owned organization, and a possible initial public offering.
Earnings after taxes for the second quarter rose to $25.4 million from $18.7 million a year earlier. Before taxes, quarterly profits were $43.9 million, compared with $32.2 million during the same period a year ago, the exchange said.
Fueled by higher trading volume, quarterly revenues grew 15 percent to $97.6 million from $84.6 million a year earlier.
"Strong growth across our product lines during the quarter pushed CBOE's total revenues and income up by double digits," said CBOE Chairman and Chief Executive William Brodsky in a statement.
"Both new and existing products were in place to meet the risk-management needs of market participants during some difficult market conditions," Brodsky added.
"Today the CBOE reported some pretty eye-popping financial results," said Jon Najarian, a founder of Web information site optionmonster.com. Through various investment vehicles Najarian owns a seat on the CBOE.
"The transparency offered by listed options and futures exchanges is clearly in greater demand and once you get the critical mass moving in a direction, it is difficult to stop it," Najarian said.
Average daily volume at the CBOE during the second quarter was 4.3 million contracts, compared with 3.5 million contracts during the period in 2007.
Total trading volume during the second quarter stood at 275.2 million contracts, up from 220.4 million contracts during last year's second quarter.
On June 3, CBOE launched options trading on the SPDR Gold Trust, an exchange-traded fund. In June, nearly 250,000 option contracts traded in the ETF at the exchange, representing 50 percent of all industry trading in the product, CBOE said.
Quarterly expenses totaled $53.7 million compared to $52.4 million in the same year ago quarter. The rise in second-quarter expenses was due mainly to increases in outside services, royalty fees for licensed products and other expenses, offset partially by lower employee costs as compared to second quarter 2007, CBOE said.
In a sign of CBOE's worth in equity, CBOE membership prices hit two all-time highs last month -- $3.3 million on June 18, eclipsing a record $3.2-million seat sale one day earlier.
The CBOE earlier this month postponed a membership vote on its tentative settlement of a trading rights dispute with some CBOT members.
The vote was originally scheduled to take place on July 17 but no new date has been chosen, while representatives of both parties continue to work out the terms of the agreement, according to a July 3 circular sent to CBOE members.
The rights date back to when CBOE was spun off by the CBOT in 1973 and allowed CBOT full members to trade options at the CBOE without having to buy a membership. But CBOE contended that those rights were terminated when CME acquired CBOT last year.
Cost of Bailout of Loan Giants Is Estimated at $25 Billion
The Congressional Budget Office said the proposed rescue of Fannie Mae and Freddie Mac will appear on the federal budget as a $25 billion cost to taxpayers.
more at http://www.nytimes.com/2008/07/23/business/economy/23treasury.html
more at http://www.nytimes.com/2008/07/23/business/economy/23treasury.html
Profit jumps for CME Group
CME Group Inc. said Tuesday its second-quarter profit rose sharply on the integration of last year's acquisition of the Chicago Board of Trade.
Separately, CME Group said it obtained committed financing for its planned acquisition of Nymex Holdings Inc., the operator of the New York Mercantile Exchange.
Chicago-based CME Group earned $201 million, or $3.67 per share, in the three months ended June 30, compared with $126 million, or $3.57 per share, a year earlier.
Revenue rose to $563 million during the quarter from $329 million during the year-ago period.
Excluding costs related to the CBOT integration and other investments, CME said it earned $3.93 per share in the quarter.
Thomson Financial said analysts it surveyed expected earnings of $3.85 per share on sales of $568.5 million. The earnings estimates typically exclude one-time items.
CME Group initially agreed to buy Nymex in March. It said Tuesday it will receive a combined $3.2-billion bridge loan from Bank of America Corp. and UBS A.G.
Nymex shareholders will receive 0.1323 Class A shares of CME Group and $36 in cash for each share outstanding. Based on CME Group's closing price Monday, Nymex shareholders will receive about $79.07 per common share of Nymex they own.
The deal is scheduled to close during the third quarter, pending approval by Nymex members and shareholders as well as CME Group shareholders.
CME Group said during a conference call it plans to keep the Nymex trading floor in New York through 2012, regardless of profitability.
Shares in CME were up $13.34, or about 4%, to $338.87 in late morning trading Tuesday.
Separately, CME Group said it obtained committed financing for its planned acquisition of Nymex Holdings Inc., the operator of the New York Mercantile Exchange.
Chicago-based CME Group earned $201 million, or $3.67 per share, in the three months ended June 30, compared with $126 million, or $3.57 per share, a year earlier.
Revenue rose to $563 million during the quarter from $329 million during the year-ago period.
Excluding costs related to the CBOT integration and other investments, CME said it earned $3.93 per share in the quarter.
Thomson Financial said analysts it surveyed expected earnings of $3.85 per share on sales of $568.5 million. The earnings estimates typically exclude one-time items.
CME Group initially agreed to buy Nymex in March. It said Tuesday it will receive a combined $3.2-billion bridge loan from Bank of America Corp. and UBS A.G.
Nymex shareholders will receive 0.1323 Class A shares of CME Group and $36 in cash for each share outstanding. Based on CME Group's closing price Monday, Nymex shareholders will receive about $79.07 per common share of Nymex they own.
The deal is scheduled to close during the third quarter, pending approval by Nymex members and shareholders as well as CME Group shareholders.
CME Group said during a conference call it plans to keep the Nymex trading floor in New York through 2012, regardless of profitability.
Shares in CME were up $13.34, or about 4%, to $338.87 in late morning trading Tuesday.
Monday, July 21, 2008
UBS clients to pay up following 'John Doe' summons
Wealthy US clients of Swiss bank UBS could pay back taxes in order to avoid their names being publicly exposed in connection with tax avoidance, Bloomberg reports.
The actions could be prompted by the ongoing trial in Miami of ex-UBS banker Bradley Birkenfeld, who admits helping clients to conceal around $20 billion in order to dodge income tax.
Yesterday, federal prosecutors called on the Miami judge to allow tax authorities to force the bank to give up the clients' personal information - a process known in legal circles as a "John Doe" summons.
If the judge acquiesces, which seems likely, the names will only not be made public if the clients pay up.
Speaking to the news agency, offshore banking expert Jack Blum said: "If I were advising clients, I'd tell them to come clean; the people who come clean early will probably be allowed to get off with paying the tax, the interest and the penalties.
"Others could very easily face criminal prosecution.''
The actions could be prompted by the ongoing trial in Miami of ex-UBS banker Bradley Birkenfeld, who admits helping clients to conceal around $20 billion in order to dodge income tax.
Yesterday, federal prosecutors called on the Miami judge to allow tax authorities to force the bank to give up the clients' personal information - a process known in legal circles as a "John Doe" summons.
If the judge acquiesces, which seems likely, the names will only not be made public if the clients pay up.
Speaking to the news agency, offshore banking expert Jack Blum said: "If I were advising clients, I'd tell them to come clean; the people who come clean early will probably be allowed to get off with paying the tax, the interest and the penalties.
"Others could very easily face criminal prosecution.''
A new era in accounting?
"For many, many years, foreign companies have felt it was worth the cost and effort (to use two accounting standards) because there was no other game in town. Now there are other games," securities lawyer Lola Miranda Hale says.
In the battle to set accounting standards for companies across the globe, the United States appears to have lost. More than 100 countries, including Russia, those in the European Union, and soon Canada, have adopted or agreed to adopt the rules set by the London-based International Accounting Standards Board, a group established just seven years ago.
In doing so, they have rejected generally accepted accounting principles, the standard this country has been using for decades. And now that the world has shown a preference for international financial reporting standards, or IFRS, the big question is if, or maybe when, the United States will do the same.
Accountants who read the Securities and Exchange Commission's actions like tea leaves believe the agency will either allow or require public companies to switch as soon as 2011. Doing so would represent a seismic shift in the otherwise staid world of accounting.
"The capital markets don't respect political borders these days," says Benjamin Resch, a partner with Deloitte & Touche LLP in Chicago. "And IFRS is increasingly the language they speak."
The two methods have significant differences, especially when it comes to reporting revenue, valuing assets and accounting for lease agreements — all of which can lead to dramatic changes on balance sheets and income statements. Depending on the company and industry, those using IFRS may see a boost in their bottom line. Others may end up with a higher tax bill.
MICKEY MOUSE MATH
In many ways, the international standards create a different picture of a company's financial position, one based more on current market value than on historic costs. While that view may appeal to investors, it can be complicated to produce because it often requires estimating the market value of assets for which a market does not exist.
U.S. accountants aren't trained that way. They analyze value according to cost. Thus accounting for Walt Disney Co. is based on the purchase price of its parks and property — not on the value of Mickey Mouse, one of Disney's greatest assets.
It's nearly impossible to say which method would show U.S. companies' financial statements in the clearest or brightest light. Both systems are complicated and have rules that are stricter on some issues and more lenient on others.
Still, there are lots of good reasons for the United States to consider a switch. U.S. financial statements would be more readily comparable to foreign companies', making American companies more attractive to overseas investors.
It may also make U.S. capital markets more attractive to foreign companies because they wouldn't have to spend the money to prepare their financial statements twice: once using IFRS for their country and again using generally accepted accounting principles in the United States.
"In order for the U.S. markets to stay competitive, they really need to convert," says Joseph Schulte, a partner in the Chicago office of Ernst & Young LLP.
Many experts think the change will occur in the next three to five years. The biggest clue came in November, when the SEC announced a major rule change that would allow foreign companies to register to issue stock in the United States without reconciling their financial statements with GAAP.
"I think (the SEC was) concerned about marketshare," says Lola Miranda Hale, a securities lawyer with Epstein Becker & Green P.C. in Chicago. "For many, many years, foreign companies have felt it was worth the cost and effort because there was no other game in town. Now there are other games."
Those other games include AIM, the London Stock Exchange's international market for smaller, growing companies that was founded in 1995 and has more flexible rules for listing, and stock markets in burgeoning economies like Brazil, she says.
LEARNING CURVE
It's only a matter of time before U.S. multinationals that already report results to foreign regulators using IFRS demand the right to use the same method here. In letters to the SEC, companies like Morgan Stanley already have recommended using IFRS to "make financial results of companies across the globe more transparent and reliable."
The change, whether voluntary or required, will create a massive learning curve for corporations, accountants, accounting students and faculty. A March survey by Chicago-based accounting firm Grant Thornton LLP found only 19% of U.S. chief financial officers and senior comptrollers questioned had experience preparing financial statements using IFRS, which requires significant adjustments in how a company collects and analyzes financial information on everything from incentive plans to debt contracts. But perhaps the biggest challenge of all will be at the SEC, which is charged with enforcement.
"There will be a significant transition while we see that . . . infrastructure built up," says Christian Leuz, a professor of accounting at the University of Chicago's Graduate School of Business. "This is where the concern is."
To illustrate some of the most significant differences between GAAP and IFRS, Crain's asked four accountants to explain how four fictional companies would change their reporting as a result of the switch. The four companies are in industries common to Chicago: manufacturing, consumer products, financial services and software development. Each industry faces unique challenges and benefits from using IFRS. With change in the air, it's not too early for Chicago companies to start evaluating how their accounting systems would need to adapt.
In the battle to set accounting standards for companies across the globe, the United States appears to have lost. More than 100 countries, including Russia, those in the European Union, and soon Canada, have adopted or agreed to adopt the rules set by the London-based International Accounting Standards Board, a group established just seven years ago.
In doing so, they have rejected generally accepted accounting principles, the standard this country has been using for decades. And now that the world has shown a preference for international financial reporting standards, or IFRS, the big question is if, or maybe when, the United States will do the same.
Accountants who read the Securities and Exchange Commission's actions like tea leaves believe the agency will either allow or require public companies to switch as soon as 2011. Doing so would represent a seismic shift in the otherwise staid world of accounting.
"The capital markets don't respect political borders these days," says Benjamin Resch, a partner with Deloitte & Touche LLP in Chicago. "And IFRS is increasingly the language they speak."
The two methods have significant differences, especially when it comes to reporting revenue, valuing assets and accounting for lease agreements — all of which can lead to dramatic changes on balance sheets and income statements. Depending on the company and industry, those using IFRS may see a boost in their bottom line. Others may end up with a higher tax bill.
MICKEY MOUSE MATH
In many ways, the international standards create a different picture of a company's financial position, one based more on current market value than on historic costs. While that view may appeal to investors, it can be complicated to produce because it often requires estimating the market value of assets for which a market does not exist.
U.S. accountants aren't trained that way. They analyze value according to cost. Thus accounting for Walt Disney Co. is based on the purchase price of its parks and property — not on the value of Mickey Mouse, one of Disney's greatest assets.
It's nearly impossible to say which method would show U.S. companies' financial statements in the clearest or brightest light. Both systems are complicated and have rules that are stricter on some issues and more lenient on others.
Still, there are lots of good reasons for the United States to consider a switch. U.S. financial statements would be more readily comparable to foreign companies', making American companies more attractive to overseas investors.
It may also make U.S. capital markets more attractive to foreign companies because they wouldn't have to spend the money to prepare their financial statements twice: once using IFRS for their country and again using generally accepted accounting principles in the United States.
"In order for the U.S. markets to stay competitive, they really need to convert," says Joseph Schulte, a partner in the Chicago office of Ernst & Young LLP.
Many experts think the change will occur in the next three to five years. The biggest clue came in November, when the SEC announced a major rule change that would allow foreign companies to register to issue stock in the United States without reconciling their financial statements with GAAP.
"I think (the SEC was) concerned about marketshare," says Lola Miranda Hale, a securities lawyer with Epstein Becker & Green P.C. in Chicago. "For many, many years, foreign companies have felt it was worth the cost and effort because there was no other game in town. Now there are other games."
Those other games include AIM, the London Stock Exchange's international market for smaller, growing companies that was founded in 1995 and has more flexible rules for listing, and stock markets in burgeoning economies like Brazil, she says.
LEARNING CURVE
It's only a matter of time before U.S. multinationals that already report results to foreign regulators using IFRS demand the right to use the same method here. In letters to the SEC, companies like Morgan Stanley already have recommended using IFRS to "make financial results of companies across the globe more transparent and reliable."
The change, whether voluntary or required, will create a massive learning curve for corporations, accountants, accounting students and faculty. A March survey by Chicago-based accounting firm Grant Thornton LLP found only 19% of U.S. chief financial officers and senior comptrollers questioned had experience preparing financial statements using IFRS, which requires significant adjustments in how a company collects and analyzes financial information on everything from incentive plans to debt contracts. But perhaps the biggest challenge of all will be at the SEC, which is charged with enforcement.
"There will be a significant transition while we see that . . . infrastructure built up," says Christian Leuz, a professor of accounting at the University of Chicago's Graduate School of Business. "This is where the concern is."
To illustrate some of the most significant differences between GAAP and IFRS, Crain's asked four accountants to explain how four fictional companies would change their reporting as a result of the switch. The four companies are in industries common to Chicago: manufacturing, consumer products, financial services and software development. Each industry faces unique challenges and benefits from using IFRS. With change in the air, it's not too early for Chicago companies to start evaluating how their accounting systems would need to adapt.
Sunday, July 20, 2008
Deutsche Börse celebrates 20 years of DAX
Trading Hall in Frankfurt on Tuesday. The DAX index tracks the 30 largest and best-performing German companies traded in Frankfurt. DAX is the most successful and best-known Deutsche Börse brand; following its launch on 1 July 1988, DAX quickly became Germany’s leading equity index.
As an index, the DAX was designed with the goal of serving as a basis for financial instruments. This index innovation has also positioned itself excellently in international terms. As an underlying for futures and options, the DAX ranks third worldwide behind the S&P 500 and Dow Jones EURO STOXX 50®, with a trading volume of EUR 12.8 billion in 2007. Overall, around 24,000 products, ranging from reverse convertibles to certificates and warrants, are traded on the DAX. The fiveExchange Traded Funds (ETFs) on the DAX have more than EUR 4.5 billion in assets under management.
The success of DAX is largely due to its transparency, its completely rule-based approach and its high tradability. As a performance index, the DAX is calculated and distributed every second by Deutsche Börse. It takes dividend payments into account, thus fully reflecting the actual performance of an investment. Today, the 30 DAX stocks comprise just under 80 percent of the total market capitalization of all listed German companies. Deutsche Börse has continuously maintained and developed the index since it was launched.
The DAX also mirrors the technological change in structure of the German equities market over the last 20 years. Companies in new sectors such as software and IT have also been promoted to the DAX index. Currently, companies from industry and the automotive sector are most strongly represented in the DAX with around 27 percent, followed by the financial sector comprising financial service providers, banks and insurance companies with around 23 percent, with companies from the pharmaceutical and chemical sectors constituting just under 17 percent.
Based on the DAX selection index, Deutsche Börse has created a global indexuniverse that comprises new subjects and countries as well as strategies.
Börse indices are synonymous worldwide with top quality and innovation, under names such as DAXglobal® or DAXplus®. Market Data & Analytics calculates and publishes more than 2,600 indices in total. Deutsche Börse thus ranks among the world’s major index providers.
As an index, the DAX was designed with the goal of serving as a basis for financial instruments. This index innovation has also positioned itself excellently in international terms. As an underlying for futures and options, the DAX ranks third worldwide behind the S&P 500 and Dow Jones EURO STOXX 50®, with a trading volume of EUR 12.8 billion in 2007. Overall, around 24,000 products, ranging from reverse convertibles to certificates and warrants, are traded on the DAX. The fiveExchange Traded Funds (ETFs) on the DAX have more than EUR 4.5 billion in assets under management.
The success of DAX is largely due to its transparency, its completely rule-based approach and its high tradability. As a performance index, the DAX is calculated and distributed every second by Deutsche Börse. It takes dividend payments into account, thus fully reflecting the actual performance of an investment. Today, the 30 DAX stocks comprise just under 80 percent of the total market capitalization of all listed German companies. Deutsche Börse has continuously maintained and developed the index since it was launched.
The DAX also mirrors the technological change in structure of the German equities market over the last 20 years. Companies in new sectors such as software and IT have also been promoted to the DAX index. Currently, companies from industry and the automotive sector are most strongly represented in the DAX with around 27 percent, followed by the financial sector comprising financial service providers, banks and insurance companies with around 23 percent, with companies from the pharmaceutical and chemical sectors constituting just under 17 percent.
Based on the DAX selection index, Deutsche Börse has created a global indexuniverse that comprises new subjects and countries as well as strategies.
Börse indices are synonymous worldwide with top quality and innovation, under names such as DAXglobal® or DAXplus®. Market Data & Analytics calculates and publishes more than 2,600 indices in total. Deutsche Börse thus ranks among the world’s major index providers.
Saturday, July 19, 2008
Chinese fund manager goes for a Buffett
A Chinese fund manager spent $2.11 million on a lunch he has yet to eat last week.
Zhao Danyang made the seven-figure winning bid at an eBay charity auction - which offered the opportunity to have a meal with investment legend Warren Buffett.
The bidder, who runs the Pureheart China Growth Investement Fund in Hong Kong, will now be lunching with the richest man in the world at New York's Smith & Wollensky steakhouse.
Mr Buffett - whose previous investments include American Express and Coca-Cola - began the annual eBay lunch dates in 2000, with all winning bids going to his philanthropic Glide foundation.The billionaire has recently pledged that the majority of his fortune will go to charity after his death.
This year's winning bid also shows an annual growth which, it is likely, was much appreciated by the so-called Sage of Omaha: last year's winner, California-based Mohnish Pabrai, paid just $650,000 for the lunch.
Zhao Danyang made the seven-figure winning bid at an eBay charity auction - which offered the opportunity to have a meal with investment legend Warren Buffett.
The bidder, who runs the Pureheart China Growth Investement Fund in Hong Kong, will now be lunching with the richest man in the world at New York's Smith & Wollensky steakhouse.
Mr Buffett - whose previous investments include American Express and Coca-Cola - began the annual eBay lunch dates in 2000, with all winning bids going to his philanthropic Glide foundation.The billionaire has recently pledged that the majority of his fortune will go to charity after his death.
This year's winning bid also shows an annual growth which, it is likely, was much appreciated by the so-called Sage of Omaha: last year's winner, California-based Mohnish Pabrai, paid just $650,000 for the lunch.
Warren Buffett, chairman of Berkshire Hathaway Inc., right, poses for photographers with Zhao Danyang, director of Pureheart Asset Management, left, and his son Zhao Ziyang at Smith & Wollensky steakhouse in New York, U.S., on Wednesday, June 24, 2009. Danyang , the hedge fund manager who paid more than $2.11 million to have lunch with Buffett, said he owed his firm's 600 percent return over the past six years to lessons he learned from the Oracle of Omaha.
1873-1876 : The Panic of 1873
After the end of the Civil War, railroad construction in the United States had been booming. By 1873 railroad mileage had doubled itself since 1869, and this was a cause of rash speculation. Between 1866 and 1873, 35,000 miles of new track were laid across the country. Banks and other industries were putting their money in railroads.
While business was expanding the currency was contracting. Paper money had depreciated, and the conditions foreboded a crash. So when the banking firm of Jay Cooke and Company, a firm heavily invested in railroad construction, closed its doors on September 18, 1873, a major economic panic swept the nation.
Jay Cooke firm handled most of the government loans during the war and was financing the planned Northern Pacific Railroad. The first transcontinental railroad had been completed in 1869 and entrepreneurs planned the Northern Pacific as the second. Cooke’s firm was the financial agent in this venture and poured money into it. Then on September 18, 1873, the company realized it had overextended itself and declared bankruptcy.
The collapse was disastrous for the nation’s economy. Other strong institutions tottered and thousands of people in every rank of life were stricken with absolute ruin. The blow was felt for years in impaired credit, pressure for payment of dues, the lowering of securities and general dread of even safe enterprises. Savings were exhausted and many banks went under. The New York Stock Exchange closed its doors for ten days. Credit dried up, foreclosures were common. Factories closed, costing thousands of worker’s their jobs. A startling 89 of the country’s 364 railroads crashed into bankruptcy. In two years, a total of 18,000 businesses failed and by 1876, unemployment in this country was at 14 percent.
The public tended to blame President Grant and Congress for mishandling the economy. The causes, however, were much broader. The postwar period was one of frantic, unregulated growth with the government playing no role in curbing abuses. The extreme overbuilding of the nation’s railroad system, more than any other single event, laid the groundwork of the Panic and the depression that followed. Recovery was not realized until 1878.
In the end, the Panic brought bitter antagonism between labor and the leaders of banking and manufacturing. Workers all over the country, in response to wage cuts and poor working conditions, struck and prevented trains from moving. President Rutherford B. Hayes was forced to send federal troops to more than a half a dozen states to stop the strikes. When it was over the fighting between strikers and troops left more than 100 people dead and many more injured. This tension between labor and manufacturing lasted for decades after.
While business was expanding the currency was contracting. Paper money had depreciated, and the conditions foreboded a crash. So when the banking firm of Jay Cooke and Company, a firm heavily invested in railroad construction, closed its doors on September 18, 1873, a major economic panic swept the nation.
Jay Cooke firm handled most of the government loans during the war and was financing the planned Northern Pacific Railroad. The first transcontinental railroad had been completed in 1869 and entrepreneurs planned the Northern Pacific as the second. Cooke’s firm was the financial agent in this venture and poured money into it. Then on September 18, 1873, the company realized it had overextended itself and declared bankruptcy.
The collapse was disastrous for the nation’s economy. Other strong institutions tottered and thousands of people in every rank of life were stricken with absolute ruin. The blow was felt for years in impaired credit, pressure for payment of dues, the lowering of securities and general dread of even safe enterprises. Savings were exhausted and many banks went under. The New York Stock Exchange closed its doors for ten days. Credit dried up, foreclosures were common. Factories closed, costing thousands of worker’s their jobs. A startling 89 of the country’s 364 railroads crashed into bankruptcy. In two years, a total of 18,000 businesses failed and by 1876, unemployment in this country was at 14 percent.
The public tended to blame President Grant and Congress for mishandling the economy. The causes, however, were much broader. The postwar period was one of frantic, unregulated growth with the government playing no role in curbing abuses. The extreme overbuilding of the nation’s railroad system, more than any other single event, laid the groundwork of the Panic and the depression that followed. Recovery was not realized until 1878.
In the end, the Panic brought bitter antagonism between labor and the leaders of banking and manufacturing. Workers all over the country, in response to wage cuts and poor working conditions, struck and prevented trains from moving. President Rutherford B. Hayes was forced to send federal troops to more than a half a dozen states to stop the strikes. When it was over the fighting between strikers and troops left more than 100 people dead and many more injured. This tension between labor and manufacturing lasted for decades after.
Friday, July 18, 2008
LSE, Lehman to launch pan-European equities-trading platform
The London Stock Exchange has entered a joint venture with Lehman Bros. to establish a new equities-trading platform in Europe to compete with the exchange's rivals. Chi-X and other new trading platforms have whittled away at LSE's market share in U.K. equities. The development comes only days after the NYSE Euronext beat out the LSE for a 25% holding in Qatar's stock exchange and indicates that LSE Chief Executive Officer Dame Clara Furse has chosen an aggressive strategy.
More at http://www.ft.com/cms/s/0/128d6352-42f2-11dd-81d0-0000779fd2ac.html
More at http://www.ft.com/cms/s/0/128d6352-42f2-11dd-81d0-0000779fd2ac.html
NYSE moving to boost competition with CME
The New York Stock Exchange plans to open a U.S.-based futures market next quarter as it ramps up competition with CME Group Inc.
The new exchange is expected to get regulatory approval in the third quarter, parent NYSE Euronext Inc. said in a statement Tuesday. NYSE Liffe LLC, as it will be called, will initially offer trading in futures on gold and silver, a franchise bought from CME earlier this year.
CME had acquired the metals business as part of its purchase of the Chicago Board of Trade last year, but was prevented from listing the products on its own trading system because of a prior partnership with the New York Mercantile Exchange, which also trades futures on the precious metals.
CME has agreed to buy Nymex, which would put gold and silver futures under CME’s umbrella and increase the rivalry between the two exchanges. NYSE Euronext has also said it will list other futures products once it forms a U.S. exchange, which will be regulated by the Chicago-based National Futures Assn. A spokesman for NYSE Euronext declined to provide further details.
CME this week moved its stock listing to the Nasdaq Stock Market from NYSE. A CME spokesman said the move had “nothing to do” with the anticipation of increased competition with NYSE. CME will clear, or guarantee, trades in NYSE Liffe’s precious-metals futures through the end of first-quarter 2009.
The new exchange is expected to get regulatory approval in the third quarter, parent NYSE Euronext Inc. said in a statement Tuesday. NYSE Liffe LLC, as it will be called, will initially offer trading in futures on gold and silver, a franchise bought from CME earlier this year.
CME had acquired the metals business as part of its purchase of the Chicago Board of Trade last year, but was prevented from listing the products on its own trading system because of a prior partnership with the New York Mercantile Exchange, which also trades futures on the precious metals.
CME has agreed to buy Nymex, which would put gold and silver futures under CME’s umbrella and increase the rivalry between the two exchanges. NYSE Euronext has also said it will list other futures products once it forms a U.S. exchange, which will be regulated by the Chicago-based National Futures Assn. A spokesman for NYSE Euronext declined to provide further details.
CME this week moved its stock listing to the Nasdaq Stock Market from NYSE. A CME spokesman said the move had “nothing to do” with the anticipation of increased competition with NYSE. CME will clear, or guarantee, trades in NYSE Liffe’s precious-metals futures through the end of first-quarter 2009.
Market makers may be exempt from ban on naked short selling
Exchanges and brokerages urged the SEC's staff to exempt market makers from an emergency, temporary rule that prevents some short selling in shares of Fannie Mae, Freddie Mac and major Wall Street firm to curb abuses. "The staff is recommending exceptions to the short-sale order for market makers of the 19 stocks and their derivatives from arranging to borrow in advance for short sales in their market-making and related hedging activities, to avoid constraining the market makers' provision of liquidity," said SEC spokesman John Nester. SIFMA had voiced concerns about the restrictions and the effects they might have on market liquidity.
more at http://www.bloomberg.com/apps/news?pid=20601203&sid=a6vYdD7V5sB4&refer=insurance
more at http://www.bloomberg.com/apps/news?pid=20601203&sid=a6vYdD7V5sB4&refer=insurance
UBS shares plunge as 'secret accounts' trial continues
Stock in Swiss bank UBS has registered a further decline in value, after federal prosecutors suggested that the names of wealthy tax-avoiding clients would soon be made public.
A Miami-based trial judge, currently presiding over the case of ex-UBS banker Bradley Birkenfeld, has been asked by the prosecutors to allow tax authorities to force the bank to reveal the names.
Mr Birkenfeld has already pleaded guilty to charges that he assisted the clients in hiding around $20 billion of assets, in order for them to cut their income tax payments.
UBS shares dropped 6.9 per cent on the Zurich exchange following the news, Bloomberg reports.
The prosecutors' move represents further bad news for the bank, which has already announced losses stemming from the credit crunch of around $37 billion.
Commenting on the Birkenfeld case in a note to clients, Dresdner Kleinwort analyst Stefan-Michael Stalmann said: "[It] has the potential to develop into a serious strategic headache for UBS in its most profitable business.
"There is a clear risk that the damage will reach beyond whatever the direct cost of a settlement or fine will be.''
A Miami-based trial judge, currently presiding over the case of ex-UBS banker Bradley Birkenfeld, has been asked by the prosecutors to allow tax authorities to force the bank to reveal the names.
Mr Birkenfeld has already pleaded guilty to charges that he assisted the clients in hiding around $20 billion of assets, in order for them to cut their income tax payments.
UBS shares dropped 6.9 per cent on the Zurich exchange following the news, Bloomberg reports.
The prosecutors' move represents further bad news for the bank, which has already announced losses stemming from the credit crunch of around $37 billion.
Commenting on the Birkenfeld case in a note to clients, Dresdner Kleinwort analyst Stefan-Michael Stalmann said: "[It] has the potential to develop into a serious strategic headache for UBS in its most profitable business.
"There is a clear risk that the damage will reach beyond whatever the direct cost of a settlement or fine will be.''
Thursday, July 17, 2008
Spain Offers To Pay Jobless Foreigners To Move Out
Hundreds of thousands of migrants worked in Spain during the housing boom. Now that the economy is slowing, many are jobless. Because they've been legalized, they are entitled to unemployment benefits. The Spanish government is now trying to pay jobless foreigners to leave.
More at http://www.npr.org/templates/story/story.php?storyId=92545033&ft
More at http://www.npr.org/templates/story/story.php?storyId=92545033&ft
CME to be listed only on Nasdaq
CME Group is canceling its listing on the New York Stock Exchange, moving to a sole listing with Nasdaq OMX Group.
The move from a dual listing on NYSE Euronext's Big Board and the Nasdaq is a coup for the electronic exchange, which fights hard to lure listings from its more established rival.
As part of the deal, Nasdaq OMX agreed to extend by seven years, to 2019, CME's exclusive rights to Nasdaq index futures and options.
CME Chief Executive Craig Donohue said in a statement that the extension would strengthen CME's growth prospects and earnings potential.
CME also has exclusive rights to offer futures and options on Standard & Poor's indexes until 2016 and on Dow Jones indexes until 2014.
Nasdaq OMX Chief Executive Bob Greifeld said in a separate statement that CME chose to list only on Nasdaq after reviewing the amount of trading that happens on Nasdaq's platform.
CBOE launches oil-volatility index
The Chicago Board Options Exchange launched the Crude Oil Volatility Index (ticker OVX) this week, an energy counterpart to its closely watched Volatility Index.
The OVX, or "Oil VIX," measures the market's expectation of 30-day volatility of crude oil prices by applying the well-known CBOE Volatility Index (VIX) methodology to options on the United States Oil Fund, LP (ticker symbol USO), spanning a wide range of strike prices. Information on OVX will be disseminated daily through CBOE's website, as well as through all major data vendors.
The new exchange allows investors to bet on the oil market's direction by buying options contracts.
Investors can make money on moves in the oil market either way by buying options contracts that bet on a certain level for the index.
A typical contract will cost about $500, depending on market factors and price determinants. Traders capitalize as oil trading moves in both directions, with a 30-day contract duration.
More at http://www.cboe.com/micro/oilvix/introduction.aspx
Wednesday, July 16, 2008
1998: AMP introduces mandatory furloughs
During the early stretch of the 1990s, corporate America grew fond of downsizing, the practice of slashing work rolls in order to boost the bottom line. But, with the bull run of the late 1990s, downsizing was putatively discontinued and replaced by gentler methods of goosing profits. Thus, on this day in 1998, struggling electrical giant AMP, Inc. opted not to dump a chunk of its workforce, but instead forced 22,000 employees to take "mandatory furloughs." Along with this respite'-which took the form of either a week sans pay or a "week-long holiday"'-AMP also announced that 2,200 of its workers were volunteering for early retirement. Despite its status as the international leader in the field of electrical connections, AMP's sales had been hit hard by the recent Asian economic crisis. Company chief William Hudson also placed blame on "higher than normal pricing pressures in the marketplace and a strong dollar, which led to losses in foreign currency translations." The move marked the second time in as many months that AMP had mandated furloughs in hopes of soothing its various ailments. Despite their efforts to avoid layoffs, AMP later laid off nearly 4,000 employees in 1998, and while most jobs were replaced within a few months, an additional fifteen percent of AMP's workforce (including the jobs that were replaced from the first round of layoffs) was eliminated last April when AMP was bought out by Tyco International, Ltd. That same April, AMP's chairman and CEO Robert Ripp resigned, becoming yet another casualty of Tyco's buyout.
Source: www.history.com
Source: www.history.com
SEC issues temporary rule to limit short selling
The Securities and Exchange Commission has issued an emergency, temporary rule to curb some short selling in Fannie Mae, Freddie Mac and other financial firms. The rule will be in effect Monday through July 29 and could be extended. The move is the commission's latest effort to crack down on market manipulation. According to the SEC, short selling may exacerbate a loss of confidence in financial markets, prompting panic sales.
Read more at http://www.reuters.com/article/ousiv/idUSN1533827820080716
Read more at http://www.reuters.com/article/ousiv/idUSN1533827820080716
Citadel among hedge fund advisers that got subpoenas
The U.S. Securities and Exchange Commission (SEC) has sent subpoenas to more than 50 hedge-fund advisers as it investigates whether individuals spread false rumors to manipulate shares in two Wall Street firms, the Wall Street Journal said, citing a person familiar with the matter.
The subpoenas, sent as recently as Monday, are seeking trading and communications data related to short-selling and options trading in Bear Stearns Cos. or Lehman Brothers Holdings Inc., the person told the paper.
Rumors have been blamed for the collapse of investment bank Bear Stearns and for the 40 percent slide in Lehman shares this month.
Some of the hedge-fund advisers have received subpoenas related to both probes, while others were contacted with respect to only one.
Among the firms that have received subpoenas are Citadel Investment Group LLC in Chicago and SAC Capital Advisors in Stamford, Conn., the paper said.
The subpoenas relate to trading in securities of the brokers, as well as correspondence between the hedge funds and other parties, people familiar with the inquiry told the paper.
The subpoenas are part of a broad inquiry, and firms that have received subpoenas were told by the SEC that they are not necessarily the focus of specific allegations, the Journal said.
Some hedge funds received subpoenas Monday. Other subpoenas were sent within the past few weeks, and several firms have turned over information to the SEC already. The probe is still in its early stages, the paper said, citing people familiar with the matter.
Separately, NYSE Regulation Inc, the regulatory unit of stock-exchange parent NYSE Euronext, sent a letter Monday to a number of its "largest member firms" requesting details on how those securities firms monitor compliance with rules prohibiting circulation of false and misleading rumors that could roil stock prices, the paper said.
The letter said the review was being conducted jointly with the Financial Industry Regulatory Authority, a Wall Street self-regulatory agency.
The securities firms that received Monday's letter were given a July 28 deadline to provide the information, including any disciplinary actions taken against employees linked to false or misleading rumors, the paper said.
Citadel Investment, SAC Capital and the SEC could not be immediately reached for comment.
The subpoenas, sent as recently as Monday, are seeking trading and communications data related to short-selling and options trading in Bear Stearns Cos. or Lehman Brothers Holdings Inc., the person told the paper.
Rumors have been blamed for the collapse of investment bank Bear Stearns and for the 40 percent slide in Lehman shares this month.
Some of the hedge-fund advisers have received subpoenas related to both probes, while others were contacted with respect to only one.
Among the firms that have received subpoenas are Citadel Investment Group LLC in Chicago and SAC Capital Advisors in Stamford, Conn., the paper said.
The subpoenas relate to trading in securities of the brokers, as well as correspondence between the hedge funds and other parties, people familiar with the inquiry told the paper.
The subpoenas are part of a broad inquiry, and firms that have received subpoenas were told by the SEC that they are not necessarily the focus of specific allegations, the Journal said.
Some hedge funds received subpoenas Monday. Other subpoenas were sent within the past few weeks, and several firms have turned over information to the SEC already. The probe is still in its early stages, the paper said, citing people familiar with the matter.
Separately, NYSE Regulation Inc, the regulatory unit of stock-exchange parent NYSE Euronext, sent a letter Monday to a number of its "largest member firms" requesting details on how those securities firms monitor compliance with rules prohibiting circulation of false and misleading rumors that could roil stock prices, the paper said.
The letter said the review was being conducted jointly with the Financial Industry Regulatory Authority, a Wall Street self-regulatory agency.
The securities firms that received Monday's letter were given a July 28 deadline to provide the information, including any disciplinary actions taken against employees linked to false or misleading rumors, the paper said.
Citadel Investment, SAC Capital and the SEC could not be immediately reached for comment.
Tuesday, July 15, 2008
Gas Now So High, Stations Are Running Out Of 4s
With gas prices shooting well past $4 a gallon in the U.S., filling-stations are facing a fresh crisis: even after upending their storage closets, they are experiencing a shortage of extra 4s to display on their pumps. You cannot make this stuff up.
Monday, July 14, 2008
Starbucks to debut smoothies Tuesday
Starbucks Corp. plans to introduce a new line of smoothies Tuesday called Vivanno.
The drinks are the latest push by Starbucks CEO and founder Howard Schultz to boost sluggish sales at the Seattle-based coffee chain. The smoothies illustrate Starbuck’s strategy of offering more healthy options to attract new customers. The 16-oz smoothies will sell for $3.75 to $3.95, and initially will feature two flavors: orange mango banana and banana chocolate.
The drinks will include a banana, whey protein and Naked juice. The orange mango banana blend will have 250 calories, 16 grams of protein and 2 grams of fat. The banana chocolate blend will have 270 calories, 21 grams of protein and 5 grams of fat.
The drinks are the latest push by Starbucks CEO and founder Howard Schultz to boost sluggish sales at the Seattle-based coffee chain. The smoothies illustrate Starbuck’s strategy of offering more healthy options to attract new customers. The 16-oz smoothies will sell for $3.75 to $3.95, and initially will feature two flavors: orange mango banana and banana chocolate.
The drinks will include a banana, whey protein and Naked juice. The orange mango banana blend will have 250 calories, 16 grams of protein and 2 grams of fat. The banana chocolate blend will have 270 calories, 21 grams of protein and 5 grams of fat.
Sunday, July 13, 2008
1985: "New Coke" is introduced
1985 was a trying year for America's soda. With hopes of eking out a lead in the hotly contested "Cola Wars," soft drink giant Coca-Cola decided to muck about with the recipe for its namesake drink. As ill-conceived as the notion may sound to our ears now, Coke thought it had a winner at the time. Indeed, an expensive battery of market testing seemed to bode well for the new formula. As one of the officials for Coke's advertising agency noted, "research clearly said we had a winner."
However, despite lavishing hefty sums on an advertising blitz, the new product--aptly dubbed "New Coke"--was a resounding flop. America's legion of soft drink aficionados simply despised the new formula. Worse yet, the public pined mightily--and quite loudly--for the "old" version of Coke to be returned to the shelves. Officials for the cola giant got the message and swiftly restored order to the soft drink universe: on July 11, 1985 the company unveiled plans to return the beloved version of Coca Cola--now christened "Classic Coke"--to the market. In the wake of this groundbreaking, company officials quietly conceded that they had erred in halting distribution of the "classic" version of the drink. However, they refused to admit that releasing New Coke was a mistake. Indeed, even though American consumers reviled it, the company kept New Coke in circulation, albeit in cans and bottles that identified the drink simply as "Coke."
Source: www.history.com
Friday, July 11, 2008
2 different views on oil speculation
With oil hitting yet another record high Friday, many members of Congress are in a “ready, fire, aim” mode, as one put it recently, eager to bring gasoline prices down by curbing speculation in oil futures markets, an issue that divides UAL Corp. Chairman and CEO Glenn Tilton and CME Group Inc. Executive Chairman Terrence Duffy.
Mr. Tilton, who left a career in the oil industry to head United Airlines just before it headed into bankruptcy in 2002, was quietly making the rounds on Capitol Hill, a day after United and other airlines sent millions of e-mails to their employees and frequent fliers, asking them to contact Congress to “reform the oil markets and solve this growing problem.”
“He has been a very active participant in our processes,” Jim May, president of the Air Transport Assn., said after a press conference to announce a new lobbying coalition led by the airline industry group, called Stop Oil Speculation Now. “He’s here in town to make some visits on Capitol Hill. He believes in this cause fully.”
Meanwhile, Mr. Duffy, head of Chicago’s futures exchanges, was testifying before the House Agriculture Committee, which oversees regulation of futures trading. The panel held an unusual three-day set of hearings this week to hammer out legislation on the issue, an indication of its political urgency.
While oil isn’t traded in Chicago, Mr. Duffy is concerned about the regulatory implications for his agricultural and financial futures markets, as well as CME’s plan to buy the New York Mercantile Exchange, where most of the world’s oil futures are traded.
In his testimony, Mr. Duffy told the panel that limiting how many oil futures contracts can be held by large investors such as pension funds — the airline industry’s primary goal — would not bring oil prices down.
Large players that invest in a range of commodity futures, called index funds, tend to buy and hold their positions, he said, but it is the daily back and forth of trading based on new information that drives prices up or down.
While supporting more disclosure to gather data and study more closely what the markets are doing, Mr. Duffy urged lawmakers to drop the idea of raising margins to dampen speculation. Increasing margins would be counterproductive, driving sellers out of the market, he said, and it would shift trading overseas and to less-regulated off-exchange markets.
“While the allure of this suggestion is understandably seductive on a political level, Congress can ill afford to make a misstep in this regard,” according to Mr. Duffy’s testimony. “Congress’ credibility is at risk in adopting simplistic, ill-conceived responses that are destructive to U.S. futures markets and those who legitimately rely on those markets.”
The Stop Oil Speculation Now coalition has generated a million e-mails to Congress in the three days since its Web site went online, including 50,000 to members of the Illinois delegation as of Friday morning.
“We didn’t have any appreciation for the nerve we’d hit,” Mr. May said.
Mr. Tilton, who left a career in the oil industry to head United Airlines just before it headed into bankruptcy in 2002, was quietly making the rounds on Capitol Hill, a day after United and other airlines sent millions of e-mails to their employees and frequent fliers, asking them to contact Congress to “reform the oil markets and solve this growing problem.”
“He has been a very active participant in our processes,” Jim May, president of the Air Transport Assn., said after a press conference to announce a new lobbying coalition led by the airline industry group, called Stop Oil Speculation Now. “He’s here in town to make some visits on Capitol Hill. He believes in this cause fully.”
Meanwhile, Mr. Duffy, head of Chicago’s futures exchanges, was testifying before the House Agriculture Committee, which oversees regulation of futures trading. The panel held an unusual three-day set of hearings this week to hammer out legislation on the issue, an indication of its political urgency.
While oil isn’t traded in Chicago, Mr. Duffy is concerned about the regulatory implications for his agricultural and financial futures markets, as well as CME’s plan to buy the New York Mercantile Exchange, where most of the world’s oil futures are traded.
In his testimony, Mr. Duffy told the panel that limiting how many oil futures contracts can be held by large investors such as pension funds — the airline industry’s primary goal — would not bring oil prices down.
Large players that invest in a range of commodity futures, called index funds, tend to buy and hold their positions, he said, but it is the daily back and forth of trading based on new information that drives prices up or down.
While supporting more disclosure to gather data and study more closely what the markets are doing, Mr. Duffy urged lawmakers to drop the idea of raising margins to dampen speculation. Increasing margins would be counterproductive, driving sellers out of the market, he said, and it would shift trading overseas and to less-regulated off-exchange markets.
“While the allure of this suggestion is understandably seductive on a political level, Congress can ill afford to make a misstep in this regard,” according to Mr. Duffy’s testimony. “Congress’ credibility is at risk in adopting simplistic, ill-conceived responses that are destructive to U.S. futures markets and those who legitimately rely on those markets.”
The Stop Oil Speculation Now coalition has generated a million e-mails to Congress in the three days since its Web site went online, including 50,000 to members of the Illinois delegation as of Friday morning.
“We didn’t have any appreciation for the nerve we’d hit,” Mr. May said.
Thursday, July 10, 2008
CBOE-CBOT settlement bogs down, along with IPO hopes
Efforts to finalize the Chicago Board Options Exchange’s $1-billion settlement with Chicago Board of Trade members are dragging on longer than expected, dealing a potential blow to the CBOE’s plans to become a public company.
CBOE is so concerned about the lack of progress on a definitive settlement that it has postponed a July 17 member vote on the deal.
"Representatives of the plaintiff class and counsel for the parties are currently working to complete the terms of the proposed agreement," CBOE chairman and CEO William Brodsky said in a note to members Thursday. "We will inform you of the revised date of the vote once the definitive agreement has been completed."
The settlement, announced June 2, was meant to end CBOE’s legal tangle with CBOT members who say their role in founding the options market 35 years ago entitles them to a stake in it today.
Two CBOT members sued CBOE in August 2006 to press that view on behalf of their fellow members. Resolving the dispute by handing CBOT members 18% of its stock and $300 million in cash, as per the terms of the tentative agreement, would free CBOE to pursue an IPO. But almost as soon as they got word of the deal, CBOT members began bickering over how to divide the spoils.
Now, several prominent CBOT members — including a former CBOT chairman and the head of one of the biggest trading firms at the Chicago Mercantile Exchange — have lodged written objections with the lawyer who brokered the agreement, saying it unfairly favors some CBOT members over others and suggesting they will take legal action to block it.
Separately, CME Group Inc., which has been footing the legal bill for CBOT since it bought the exchange last year, wants to avoid a settlement that could reduce the value of some of its assets, people familiar with the talks say. CME must sign off on any settlement.
It’s unclear whether the decision to delay CBOE’s member vote signals a complete collapse of the settlement. But it is a blow to Mr. Brodsky, who has watched competing exchanges snag huge windfalls through IPOs and mergers but has been prevented by the ownership dispute from taking part in any deal-making himself.
“Time is not our friend and comes at a great cost to CBOE and its owners,” Mr. Brodsky told CBOE members shortly after the settlement was announced. Without a settlement, the legal process “could tie us up for three years or more.” A settlement would allow CBOE to lay the groundwork for a potential IPO by the end of the year.
At issue, according to letters from prominent CBOT members, are the eligibility requirements for participation in the settlement. There are about 400 CBOT members who appear to qualify under any circumstances. Another 1,000 would have to buy CME stock and/or one or more trading rights in order to participate. Special rules — such as requiring the stock be held for a certain period to qualify — could deter them from doing so. The higher the hurdles, the fewer who will actually participate and the bigger the payout to each that does.
In a June 19 letter to Gordon Nash, the lawyer for the two CBOT plaintiffs, DRW Trading CEO Don Wilson calls for the settlement to be crafted to allow the maximum number of CBOT members to take part. In a separate letter dated July 2, former CBOT Chairman Nickolas Neubauer takes Mr. Gordon to task over terms Mr. Neubauer says will unfairly limit the pool of participants.
“This is both wrong and a mistake,” Mr. Neubauer said in the letter, which was also signed by former CBOT director Frank Serrino and longtime trader Jacob Morowitz. “We have been working with a significant number of members who would file objections to such settlement terms, opt out of the class and/or institute a new suit.”
CME’s interests appear to align with the disgruntled letter writers. It paid $40 million last year to acquire 159 trading rights from CBOT members as part of its takeover of the exchange. Restricting eligibility for the settlement would dampen demand for those rights, known as ERPs, and cut into CME profits.
CBOE is so concerned about the lack of progress on a definitive settlement that it has postponed a July 17 member vote on the deal.
"Representatives of the plaintiff class and counsel for the parties are currently working to complete the terms of the proposed agreement," CBOE chairman and CEO William Brodsky said in a note to members Thursday. "We will inform you of the revised date of the vote once the definitive agreement has been completed."
The settlement, announced June 2, was meant to end CBOE’s legal tangle with CBOT members who say their role in founding the options market 35 years ago entitles them to a stake in it today.
Two CBOT members sued CBOE in August 2006 to press that view on behalf of their fellow members. Resolving the dispute by handing CBOT members 18% of its stock and $300 million in cash, as per the terms of the tentative agreement, would free CBOE to pursue an IPO. But almost as soon as they got word of the deal, CBOT members began bickering over how to divide the spoils.
Now, several prominent CBOT members — including a former CBOT chairman and the head of one of the biggest trading firms at the Chicago Mercantile Exchange — have lodged written objections with the lawyer who brokered the agreement, saying it unfairly favors some CBOT members over others and suggesting they will take legal action to block it.
Separately, CME Group Inc., which has been footing the legal bill for CBOT since it bought the exchange last year, wants to avoid a settlement that could reduce the value of some of its assets, people familiar with the talks say. CME must sign off on any settlement.
It’s unclear whether the decision to delay CBOE’s member vote signals a complete collapse of the settlement. But it is a blow to Mr. Brodsky, who has watched competing exchanges snag huge windfalls through IPOs and mergers but has been prevented by the ownership dispute from taking part in any deal-making himself.
“Time is not our friend and comes at a great cost to CBOE and its owners,” Mr. Brodsky told CBOE members shortly after the settlement was announced. Without a settlement, the legal process “could tie us up for three years or more.” A settlement would allow CBOE to lay the groundwork for a potential IPO by the end of the year.
At issue, according to letters from prominent CBOT members, are the eligibility requirements for participation in the settlement. There are about 400 CBOT members who appear to qualify under any circumstances. Another 1,000 would have to buy CME stock and/or one or more trading rights in order to participate. Special rules — such as requiring the stock be held for a certain period to qualify — could deter them from doing so. The higher the hurdles, the fewer who will actually participate and the bigger the payout to each that does.
In a June 19 letter to Gordon Nash, the lawyer for the two CBOT plaintiffs, DRW Trading CEO Don Wilson calls for the settlement to be crafted to allow the maximum number of CBOT members to take part. In a separate letter dated July 2, former CBOT Chairman Nickolas Neubauer takes Mr. Gordon to task over terms Mr. Neubauer says will unfairly limit the pool of participants.
“This is both wrong and a mistake,” Mr. Neubauer said in the letter, which was also signed by former CBOT director Frank Serrino and longtime trader Jacob Morowitz. “We have been working with a significant number of members who would file objections to such settlement terms, opt out of the class and/or institute a new suit.”
CME’s interests appear to align with the disgruntled letter writers. It paid $40 million last year to acquire 159 trading rights from CBOT members as part of its takeover of the exchange. Restricting eligibility for the settlement would dampen demand for those rights, known as ERPs, and cut into CME profits.
Fund manager 'earns $90 million'
A London-based hedge fund manager is weathering the credit crunch - and has scooped a $90 million paycheck.
The anonymous City worker, who is one of the three managers at London Diversified Fund Management, drew the payment from the firm's pot of $150 million - for which just 24 people qualify.
London Diversified specialises in bond market investment, and was set up in 2002 by partner-managers Rob Standing, David Gorton and Mark Corbett.
The previous financial year, the top check drawn by a manager at the firm was worth just over $40 million.
It was also revealed that London Diversified profits have fallen by 30.9 per cent for the year to August 2007, totalling around $144 million.
The payout information for the hedge fund was contained in its submission of annual accounts to the UK's Companies House website.London Diversified declined to comment.
The anonymous City worker, who is one of the three managers at London Diversified Fund Management, drew the payment from the firm's pot of $150 million - for which just 24 people qualify.
London Diversified specialises in bond market investment, and was set up in 2002 by partner-managers Rob Standing, David Gorton and Mark Corbett.
The previous financial year, the top check drawn by a manager at the firm was worth just over $40 million.
It was also revealed that London Diversified profits have fallen by 30.9 per cent for the year to August 2007, totalling around $144 million.
The payout information for the hedge fund was contained in its submission of annual accounts to the UK's Companies House website.London Diversified declined to comment.
Wednesday, July 9, 2008
Chrysler Building Is Sold to Abu Dhabi Fund
The Chrysler Building, the Art Deco tower whose graceful curves help define the Manhattan skyline, was purchased by the Abu Dhabi Investment Council on Tuesday for an undisclosed price, Bloomberg News reported.The Abu Dhabi sovereign wealth fund, which bought the skyscraper from a fund managed by Prudential Financial, was set to pay about $800 million for the Midtown Manhattan building, an unnamed source told Bloomberg last month. The New York Post reported the same figure then.
Bloomberg pointed out that it is the second sale of a major New York tower to a Middle Eastern buyer in as many months. The General Motors Building was sold to a Boston Properties consortium that included a Dubai fund last month.
SEC may loosen rules for trading with foreign brokers
The Securities and Exchange Commission, in its latest move to facilitate a truly global securities market, plans to recommend looser rules for U.S. investors who want to trade with foreign brokerages. The commission will propose dropping the chaperon rule, which requires a foreign broker to work with an American broker when soliciting U.S. investors to trade securities that are listed overseas, a source said.
1892: Showdown at Homestead steel plant
Ever mindful of Amalgamated's potentially deleterious impact on his profit margins, Andrew Carnegie looked to erode the power of the union. In 1892, the company made its move against Amalgamated, though not with Carnegie at the helm: the steel baron had departed for a vacation in Scotland, leaving the task of smashing the union in the hands of his partner, Henry Clay Frick.
Frick took his mission all too seriously: after refusing to renew the company's contract with Amalgamated, he dug in for war, erecting a three-mile long steel wire fence around the plant. Frick also enlisted the aid of the Pinkerton Detective agency, which sent three hundred men to Homestead to ensure the plant's transition to non-union workers.
Seven strikers and three Pinkertons were eventually killed as Andrew Carnegie hires armed thugs to protect strikebreakers in an effort to smash the union.
Amalgamated's leaders responded in kind, lining up scores of workers, as well as a good chunk of the town, to wage battle against the plant. The showdown began in earnest on July 2, as Frick halted work at Homestead until the plant was staffed entirely by non-union workers. Three days later, the Homestead affair turned bloody, as the Pinkerton agents made their first appearance on the scene. Attempting to reach the plant via the Monongahela River, the agents were met by Amalgamated's forces; the two sides engaged in a long and vicious battle that left nine strikers and seven agents dead. Despite the losses, Amalgamated's motley army was able to turn back the detectives. Sensing that they were on the verge of disaster, officials for Carnegie enlisted the aid of the Pennsylvania Government. And, on this day in 1892, the state sent a band of 7000 troops to Homestead to "restore law and order." The militia effectively squelched Amalgamated's strike: the troops helped the Carnegie restaff its plant with non-union workers and by September, the Carnegie company had resumed production. Later that November, the union conceded defeat and called off its strike; Carnegie responded by summarily firing and even blacklisting the strikers.
Source: www.history.com
Tuesday, July 8, 2008
"London Loophole" needs to be closed
Sen. Richard Durbin, D-Ill., recently introduced legislation that gives the Commodity Futures Trading Commission the authority to regulate trading of crude-oil contracts on London's IntercontinentalExchange. As the price of fuel soars, Bart Chilton, a CFTC commissioner, argues why the so-called "London Loophole" needs to be closed. "(T)his proposed legislation and relatively modest regulatory action is a model for the kind of coordination that will be necessary in our international marketplace," Chilton writes.
Read more at http://www.ft.com/cms/s/0/99c02980-4127-11dd-9661-0000779fd2ac.html
Read more at http://www.ft.com/cms/s/0/99c02980-4127-11dd-9661-0000779fd2ac.html
John Templeton 1912-2008
SAN JUAN, Puerto Rico — Global investor and philanthropist John Templeton has died at a hospital in the Bahamas.
Spokesman Don Lehr said Templeton died Tuesday from pneumonia. He was 95.
Templeton created the John Templeton Foundation in 1987 to encourage scientific research. The foundation has an estimated endowment of $1.5-billion (U.S.) and awards some $7- million in annual grants.
Mr. Templeton was a naturalized British citizen who lived in Nassau. He was knighted in 1987 for his philanthropic accomplishments. He is survived by two sons, a stepdaughter, three grandchildren and three great-grandchildren.
Spokesman Don Lehr said Templeton died Tuesday from pneumonia. He was 95.
Templeton created the John Templeton Foundation in 1987 to encourage scientific research. The foundation has an estimated endowment of $1.5-billion (U.S.) and awards some $7- million in annual grants.
Mr. Templeton was a naturalized British citizen who lived in Nassau. He was knighted in 1987 for his philanthropic accomplishments. He is survived by two sons, a stepdaughter, three grandchildren and three great-grandchildren.
Monday, July 7, 2008
CME ups Nymex bid with buyback, special dividend
CME Group has enhanced its bid for Nymex Holdings by announcing a share buyback and special dividend. The company plans to buy back $1.1 billion in stock over the next 18 months and pay a $5-a-share dividend whether or not its bid for the energy-and-metals exchange succeeds.
Read more at http://www.marketwatch.com/news/story/cme-sweetens-nymex-offer-buyback/story.aspx
Read more at http://www.marketwatch.com/news/story/cme-sweetens-nymex-offer-buyback/story.aspx
Sunday, July 6, 2008
Hedge fund fraudster Samuel Israel III 'gives himself up'
A hedge fund scam mastermind gave himself up yesterday after a month of evading authorities.Samuel Israel III, who admits to cheating investors in his Bayou fund of around $450 million, turned himself in to police near Boston, Massachusetts.
The fund manager originally went on the run in order to avoid a 20-year jail term for his actions.
He originally went missing on June 9th, the day on which he was due to go to prison, leaving his car by the Hudson River in New York with an apparent suicide note written in the dust on the bonnet.
However, police allege that Mr Israel's girlfriend then helped him to go on the run by leaving another car for him to use nearby; she has since been arrested.
At his trial earlier this year, the hedge fund manager was found to have claimed non-existent profits to investors, and to have falsified audits.
Prosecuting lawyer Ross Intelisano, speaking after Mr Israel went missing, commented: "This is a very crafty guy who was able to steal a lot of money from other smart people.
"My gut tells me he's not the type to jump off a bridge."
Exchanges consider linking up with dark liquidity pools
Dark liquidity pools have been considered a threat to exchanges, but now some of the biggest bourses are considering linking up with the pools. The exchanges, such as NYSE Euronext and Nasdaq, are trying to figure out how to connect to the anonymous trading venues, which account for as much as 12% of daily stock-trading volume in the U.S. Liquidnet, an operator of dark pools, is in talks with exchanges worldwide, including the London Stock Exchange. The LSE has not said whether it is interested.
Read more at http://www.ft.com/cms/s/0/bab73b9a-4147-11dd-9661-0000779fd2ac.html
Read more at http://www.ft.com/cms/s/0/bab73b9a-4147-11dd-9661-0000779fd2ac.html
Saturday, July 5, 2008
SEC proposal would diminish role of credit ratings
Proposed Securities and Exchange Commission rules could diminish the long-standing importance of credit ratings across various markets, including the $3.4 trillion money market industry. The rules, which would make it possible for U.S. money market funds to invest in short-term debt without regard to ratings, are seen as the latest blow to the credit-rating industry.
[source: The Wall Street Journal]
[source: The Wall Street Journal]
Friday, July 4, 2008
Citi 'to axe one in ten global banking staff'
Banking giant Citigroup could cut ten per cent of its entire global banking division.
Analysts expect the firm to reduce its investment banker numbers by around 6,500 worldwide - with some trading desks in the financial centres of London and New York to disappear entirely.
The move would follow new Citi chief executive Vikram Pandit's warning, made earlier this year, that the company needed to "get fit" in the wake of the financial hit of the credit crunch.
Citi has announced asset writedowns exceeding $15 billion so far in 2008.
Elsewhere, Goldman Sachs is also expected to reduce staff numbers - with a ten per cent cut of its mergers and acquisitions unit.
These job losses will come in addition to those enforced following the bank's annual staff review, which saw the worst-performing five per cent asked to leave.
Second quarter profits at Goldman stood at over $2 billion, it was announced last week.
Analysts expect the firm to reduce its investment banker numbers by around 6,500 worldwide - with some trading desks in the financial centres of London and New York to disappear entirely.
The move would follow new Citi chief executive Vikram Pandit's warning, made earlier this year, that the company needed to "get fit" in the wake of the financial hit of the credit crunch.
Citi has announced asset writedowns exceeding $15 billion so far in 2008.
Elsewhere, Goldman Sachs is also expected to reduce staff numbers - with a ten per cent cut of its mergers and acquisitions unit.
These job losses will come in addition to those enforced following the bank's annual staff review, which saw the worst-performing five per cent asked to leave.
Second quarter profits at Goldman stood at over $2 billion, it was announced last week.
Thursday, July 3, 2008
Goldman profits 'boosted by commodities'
Goldman Sachs has released stronger-than-expected second quarter profits.
Gains in the bank's prime brokerage and commodities boosted net income to $2.09 billion across the three months.
While down by 11 per cent on the second quarter of 2007, the Goldman profits exceed previous estimates from analysts.
The bank received praise from the senior portfolio manager at Huntington Asset Advisors for its strong earnings, which come despite the ongoing credit crisis which also led to Goldman writing off $775 million of assets over the quarter.
Peter Sorrentino said: "They had enough of an arm's length distance so that when the stuff blew up it didn't splash back on them the way it did on others.''He added: "The magnitude of the beat is pretty astounding."
Earlier this week, rival investment bank Lehman Brothers announced a loss of $2.8 billion for the second quarter - its first since becoming a public company in 1994.
Gains in the bank's prime brokerage and commodities boosted net income to $2.09 billion across the three months.
While down by 11 per cent on the second quarter of 2007, the Goldman profits exceed previous estimates from analysts.
The bank received praise from the senior portfolio manager at Huntington Asset Advisors for its strong earnings, which come despite the ongoing credit crisis which also led to Goldman writing off $775 million of assets over the quarter.
Peter Sorrentino said: "They had enough of an arm's length distance so that when the stuff blew up it didn't splash back on them the way it did on others.''He added: "The magnitude of the beat is pretty astounding."
Earlier this week, rival investment bank Lehman Brothers announced a loss of $2.8 billion for the second quarter - its first since becoming a public company in 1994.
Wednesday, July 2, 2008
1998: AT&T goes local, again
Merger mania, indeed: on this day in 1998, AT&T made a move to return to the local phone service game by snapping up cable heavyweight Tele-Communications, Inc. for a reported $48 billion. The deal, inked a mere ten days after the two companies opened negotiations, handed AT&T cable connections in roughly 33 million homes across the United States. This was a stunning reversal of fortune for the phone industry king, which, a decade back, had been forced to relinquish its choke hold over local phone lines and divest itself of its regional service providers (the "Baby BellsÝ). Along with reemerging as a local phone force, the acquisition of Tele-Communications also boosted AT&T's status in the booming Internet industry. Moreover, the company was primed to take a leading role in the long-awaited convergence of the various telecommunications channels. For cash-strapped Tele-Communications, the merger promised to help ease the debts company chief John Malone piled up in his quest to make his company the king of convergence.
Source: www.history.com
Source: www.history.com
Tuesday, July 1, 2008
Goldman cuts jobs; Citigroup likely to be next
Citigroup is expected to lower its worldwide headcount by as much as 10%, or 6,500 positions. It may eliminate entire trading desks in London, New York and other cities. Meanwhile, Goldman Sachs, which has weathered the credit crunch better than its rivals, is said to have cut jobs at its investment-banking division last week.
Read more at http://www.ft.com/cms/s/0/4b0e96b2-4093-11dd-bd48-0000779fd2ac.html?nclick_check=1
Read more at http://www.ft.com/cms/s/0/4b0e96b2-4093-11dd-bd48-0000779fd2ac.html?nclick_check=1
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