Banks Revamp Credit Trading Models

If you have no presence in a region, just developing secondary market-making won't make economic sense. Where you are and how big you should be depends on what products the bank provides in a given region," said Benjamin Jacquard, global head of credit BNP Paribas. "We have seen many players withdraw from CDS, for instance, which isn't vital for primary market activity or bond trading." While many smaller banks exited CDS market-making in the aftermath of the 2008 crisis, there have also been some high-profile exits, including RBS and Commerzbank. More recently, UBS withdrew from voice-broking in credit derivatives in the face of eye-watering capital charges imposed by its local regulator. The Swiss lender is the flag bearer for the minimalist approach to credit trading - the first of three camps into which global investment banks' credit businesses can broadly be divided at the moment. Source: http://www.reuters.com/article/2014/01/13/idUSL6N0KN1YC20140113?feedType=RSS&virtualBrandChannel=11563





RPT-Fitch: Dilution of basel leverage ratio assists trading banks



At Stock Options Channel , our YieldBoost formula has looked up and down the SRCL options chain for the new August 16th contracts and identified one put and one call contract of particular interest. The put contract at the $115.00 strike price has a current bid of $5.10. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $115.00, but will also collect the premium, putting the cost basis of the shares at $109.90 (before broker commissions). To an investor already interested in purchasing shares of SRCL, that could represent an attractive alternative to paying $116.93/share today. Source: http://www.forbes.com/sites/stockoptionschannel/2014/01/15/first-week-of-august-16th-options-trading-for-stericycle-srcl/







We believe reverse repo books and secured funding at trading banks are likely to reduce further, even with the relaxation of netting rules. A standardised leverage ratio should help adjust for accounting differences. For web link example, US GAAP has offsetting rules for derivatives that result in exposures being reported net, rather than gross under IFRS. The revisions allowing some netting appear to be a compromise between the two standards. But the extent to which the US will adopt the Basel definitions when it finalises its supplementary leverage ratio remains unknown. Source: http://www.reuters.com/article/2014/01/14/fitch-dilution-of-basel-leverage-ratio-a-idUSFit68372820140114







Overall inflation remained mild. The Labor Department says the producer price index, which measures costs before they reach the consumer, rose 0.4 percent last month. The yield on the 10-year Treasury note rose to 2.91 percent from 2.87 percent on Tuesday. The price of oil climbed 75 cents, or 0.8 percent, to $93.36 a barrel. Source: http://www.cbsnews.com/news/stocks-rise-in-early-trading-on-wall-street/












NJ doctor testifies at NY insider trading trial



Would you pay $30,000 for a car you can get elsewhere for $28,000? Of course not. Well, NFL teams that trade up in the first round have historically been paying extra for something they could have just gotten later. The cost is too high right now. 2014 Prospects The idea here isn't that you should never trade up in the first round, but rather that because the numbers are so disproportionately in favor of moving down, you'd better be sure you're getting an elite player (a Dez Bryant in the 20s, for example). Source: http://bleacherreport.com/articles/1924400-why-dallas-cowboys-should-consider-trading-down-in-2014-nfl-draft





Stocks rise in early trading on Wall Street



Cohen, has pleaded guilty to fraud charges and agreed to pay $1.8 billion. Cohen has not been charged criminally, but regulators have accused him in a civil action of failing to prevent insider trading at the company. Prosecutors said Martoma, of Boca Raton, Fla., persuaded Ross and another doctor to leak information about the testing of a drug to treat Alzheimers so he and others at SAC Capital could trade ahead of public announcements. Ross, testifying as part of a non-prosecution agreement, said that he shared information with Martoma, who paid him for several meetings in 2007 and 2008, in part because he wanted the well-connected Martoma to help him contact biotechnology companies that might be interested in using a drug research center he was opening in Eatontown, N.J. Source: http://www.washingtonpost.com/business/nj-doctor-testifies-at-ny-insider-trading-trial/2014/01/14/30f9d98a-7d69-11e3-97d3-b9925ce2c57b_story.html