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GLG News by this Author

Singapore and the Swiss

November 6, 2009

Analysis of:Swiss Banks Lose European Clients | online.wsj.com

The article is correct. Money is flowing to Singapore.  Not only money from Switzerland, but also money from China, Russia, and Indonesia.  People do not trust their governments, and they are putting their trust in the benevolent dictator in Singapore.  Singapore's government can stand up to the pressure put on it by other governments.  It is a cross roads nation, and they have done a very good job positioning themselves to be a center of commerce in Asia.  I think the other thing the article proves is that people respond to incentives.  If a government gets too overbearing, they will hide money.  Look for the underground economy in the US to grow with the heavy tax hand of the Obama administration. 

CME not a monopoly

March 3, 2008

Analysis of:Nymex stakes in other exchanges a factor in talks with CME | www.marketwatch.com

The DOJ has implied in an internal memo that the CME is a monopoly.  The Futures Industry Association concurs. The CFTC, and key members of Congress do not concur. In order for the CME to lose its clearing house, it will take an act of Congress and approval by the CFTC.  While the debate will happen, it is doubtful at this point that the CME will lose.  Exchanges world wide are seeking to vertically integrate and copy the CME business  model.

Good deal-depends

January 29, 2008

Analysis of:CME-Nymex: Good Deal? | online.wsj.com

CME is seeking to create a end to end solution for commodities.  It will be the number one provider of all commodity asset classes. NYMEX has risk going forward if volumes drop, and has not invested enough in technology to be a robust competitor going forward.

uncertainty crisis-nothing more

January 22, 2008

Analysis of:The next banking crisis on the way | articles.moneycentral.msn.com

This meltdown was caused by uncertainty.  The root of the cause was the investment banking community.  Mark to model, rather than mark to market was the practice, and caused distortions in financial pictures.

Incentives

December 10, 2007

Analysis of:Singapore Hedge Fund Mecca Lures Japanese Dismayed by Regulator | www.bloomberg.com

There are two key points to the analysis to focus on.  First, taxes.  Taxes should be looked at as incentives for behavior, not ways for the government to collect revenue.  Countries that are low tax are enjoying boomlets.  Ireland comes to mind.  Singapore has aggressively courted the buy side because they understand that not only do they bring jobs, but they bring in and create the human networks necessary to keep the economic environment active.  Second, Japan is not a diverse society.  They do not have a lot of immigration.  This lack of diversity leads to decisions by entities that only benefits the ones in power.  Hence, firms from outside the bubble cannot close deals.  Why keep trying when there are other opportunities? Third, rents and those types of operating costs are not relevant.  London has a huge population of hedge funds, and it is one of the most expensive places on the planet.

end of year credit crunch

December 6, 2007

Analysis of:Why Municipal Bonds Are Stumbling | www.kiplinger.com

sub prime woes spread               

value of merger proven

November 2, 2007

Analysis of:CME Buy of CBOT Easily Approved by Shareholders | www.reuters.com

Since the merger was finalized, we have had time to reflect on the beginnings of the outcome. The integration of the two cultures is going swimmingly.  Even though the two exchanges were in the same business, they had very different ways of doing things.  This extended from the trading floor all the way back to the executive offices.  CME is running the technology as far as computer trading is concerned.  The new trading floor will incorporate existing CBOT technology.  The new add is the CME's handheld (GALAX-C). This will add a lot of volume to existing contracts since it allows current pit traders to directly and easily access the screen.  The trader can access the screen in multiple contracts as well. CME is ahead of schedule on the integration.  It remains to be seen if they can capture the cost efficiencies they trumpeted in the merger.  My best guess is that they will exceed those initial estimates.

CME Third Quarter Earnings

October 29, 2007

Analysis of:Chicago Mercantile posts 42% jump in first-quarter earnings | www.belleville.com

CME reports record profits Trading volume up New deal with Brazilian exchange          

CFO choices

October 25, 2007

Analysis of:Banks face more writedowns in fourth quarter | www.financialnews-us.com

Investment banks had a choice this quarter.  Recognize losses now, or hope things improved next quarter and they could hide them now and try to rectify them later.  Merrill chose to take the pain.  Other banks that posted profits this quarter now have statements that are suspect in my opinion.  They are settling a lot of these exotic derivative products to models that they dreamed up.  You can manipulate settlements for a while.  But at the end of the year, the pigeons come home to roost.

no surprise

September 27, 2007

Analysis of:LSE sees strong first-half results | uk.reuters.com

This is not a surprise.  London is far less regulated than New York, and firms are engaging in regulatory arbitrage by listing there rather than NYC.  The other phenomena is that the European economy is expanding faster than the US economy at this time.  I believe this translates into more listings, and faster growth for LSE versus any US exchange.  They also benefited from the volatility in the markets the last month and a half.  It will be very interesting to see how the deal with NASDAQ Dubai, QUATER affects them.  They will also need to consolidate there acquisitions as quickly and painlessly as possible.  It is much tougher to generate short term savings from technology merges because the operational costs escalate rather quickly. 

Deal is Done

July 9, 2007

Analysis of:Chicago Mercantile Exchange raises offer for CBOT to fend off rival bidder | www.iht.com

CME gets its quarry in the CBOT-did it overpay? Will control 85% of all futures Will be a potent entrant into OTC derivatives trading Can it turn promised cost savings into actual savings? Will it recapitalize company to finance growth with debt rather than cash?

ICE on ice in the USA

May 14, 2007

Analysis of:IntercontinentalExchange, Inc. Reports Record Quarterly Net Income of $55.6 Million, Up 183%; Record Revenues of $126.6 Million, Up 152%; Diluted EPS of $0.80 | www.prnewswire.com

ICE reported increasing earnings.  However, their volume of crude oil contracts traded head to head with the NYMEX decreased.  In markets where they have no competitors, they had increasing volume.  ICE had the benefit of increasing volume at the NYBOT post acquisition because NYBOT products had never been traded on a screen before.  Whenever the product moves from open outcry to screen, there is a pop in volume.  From reports of my collegues that trade oil, ICE has a lot of computer problems.  Response time is slow.  The screen freezes a lot.  It is unreliable. It is very expensive to trade there compared to other exchanges.  It's a 1.80 side for a trade.  The arcade rate at Eurex, LIFFE and CME is around .44 a side.  ICE is vulnerable to competition if other exchanges decide to go after them.

Good Earnings, but here is what they didn't tell you

April 27, 2007

Analysis of:Chicago Mercantile posts 42% jump in first-quarter earnings | www.belleville.com

CME had solid growth

CME has eyes on potential future growth in OTC markets

CME has eyes on more growth in Asia by setting up techological hubs

CME thinks their offer is the best offer for the CBOT

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