Tag: derivatives

Business Models, regulation

The Magnetar Trade – otherwise known as ‘The Black Hole”

Colin Henderson

This is a complex article at ProPublica that in simple terms illuminates all that was wrong with CDO’s and synthetic CDO’s. These instruments allowed investment bankers like Magnetar to circumvent insider trading rules.  The story of Goldman Sachs being charged by the SEC for fraud is only the beginning.  Financial reform is the last thing many financiers and bankers will have to worry about as this story takes hold. Magnetar involved all the big names and most are listed here.  You will see many recognisable names, eg. Citi, Wachovia, Deutsche, Lehmans, UBS, Mizuho, JP Morgan.  At this point it appears … Continue reading The Magnetar Trade – otherwise known as ‘The Black Hole”

Uncategorized7 Comments

The true meaning of innovation in financial services lies in the plumbing, not UI

Colin Henderson

This piece on internet and evolution of financial services has the best quote I have seen for some time. “these companies have merely built nice UI’s to Wall Street” How To Disrupt Wall Street | The Business Insider As I see it, these companies have merely built nice UI’s to Wall Street: Mint connects to your banks and Square to Visa and Mastercard and the bank that issued the credit card. If people at farmers’ markets use credit cards instead of cash, that means more money for Wall Street, not less. Brilliant. I take no issue with the likes of … Continue reading The true meaning of innovation in financial services lies in the plumbing, not UI

Uncategorized

Concern over banks and ‘dark pools’ reaches G20

Colin Henderson

A new concern has arisen over the growth of ‘dark pools’ or private unregulated trading exchanges, where banks and large investors are trading derivatives off balance sheet. IT is significant enough to have come to the attention of this weeks G20. Exchanges issue warning on spread of ‘dark pools’ | ft.com The world’s stock and derivatives exchanges on Tuesday warned the Group of 20 leaders that the continued “proper functioning” of their markets could not be taken for granted because of a proliferation of alternative trading venues such as “dark pools”. This is relevant because the near $ 1 trillion … Continue reading Concern over banks and ‘dark pools’ reaches G20

Uncategorized3 Comments

How much outstanding in derivatives in the world? | $ 684 trillion

Colin Henderson

It is impossible to comprehend this amount of money.  $531 UPDATE $684 trillion represents 3 or 4 times the combined value of the worlds equity markets, bond markets, and world GDP.  It is a stunning number. There is a possibility that we need to add in the combined value of homes and other assets in the world to come to terms with the number, but then we risk double counting assets which are already valued in equity markets.  Need to think that through some more. This can only be described as ponzi money – money that is levered and based … Continue reading How much outstanding in derivatives in the world? | $ 684 trillion

Uncategorized

Banks are unwinding derivatives

Colin Henderson

My next target is to try and highlight the derivatives market, and the status.  The size of the derivative market and in particular the infamous Credit Default Swaps represent a gigantic ponzi scheme of artificial liabilities between banks around the world. Quietly banks have been unwinding those contracts, which by the way they could only do if there is no substantive asset behind them.  One dollar of debt can be translated into $3 + of derivatives as if by magic. This from the Financial Times in January that I missed then.  But read on – this is only the beginning … Continue reading Banks are unwinding derivatives