Chilton’s DLA Piper office is a modern, all-glass affair in central Washington. On a September afternoon he’s sitting behind a glossy oval desk with a red lava lamp on it, its cream-colored orbs undulate from one end to the other. Chilton’s long, white-steel hair flutters in the breeze of a nearby fan, and the lamp’s pinkish light gives him the rosy cast of a romance novel cover model. [BusinessWeek]
And the flaxen-maned former CFTC commissioner said it—basically the same high-frequency traders aren’t evil but should be regulated stuff he pedaled during his regulatory years—with nary a metaphor or folklore reference in sight. Read more »
The outspoken, flaxen-maned regulator is not going to be chairman of the CFTC. So, with this, he’s achieved all he will achieve, and will take his bows, depriving the financial world of a second hirsute overseer in as many days. Read more »
An important element of any Wall Street education is figuring out what shady practices will win you a reputation as a genius, what shady practices will win you a reputation as a scumbag, and what shady practices will win you a prison sentence. There is substantial overlap!1 That education is extremely contextual, and your intuitions about what shadiness flies in one business won’t necessarily help you in another, or in court for that matter. For instance I grew up in a corporate equity business, so I’d be happy to tell you why Yahoo!’s share repurchase from Dan Loeb wasn’t insider trading but you can probably figure that out on your own. Meanwhile I have no idea what to make of spoofing, but it seems like Panther Energy Trading did some of it, and now they are in trouble: Read more »
If Charlie Gasparino And The Fox Business Police Were In Charge, Jon Corzine Would’ve Been Nailed Years AgoBy Bess Levin
As you may have heard, earlier today the Commodity Futures Trading Commission charged Jon Stevens Corzine for (allegedly!) misusing nearly $1 billion in customer funds at MF Global. According to the CFTC, this was able to happen in large part because JSC “did not enhance MF Global’s deficient systems and controls sufficiently to ensure that the firm’s increasing reliance on FCM cash did not result in unlawful uses of customer money.” This pissed off Fox Business reporter Charlie Gasparino for two reasons, both of which he shared with CFTC Commissioner Bart Chilton this afternoon:
1. He wrote about MF Global’s insufficient controls two years ago, ergo, the CFTC could’ve and should’ve brought the charges against Corzine way back then, instead of dragging its ass. In fact, Chaz says that on his watch, we would’ve seen action within one week’s time.
2. No fraud charges? What’s that about? Add it to the list of things CG would get done in his capacity as Senior Kicker of Ass and Taker Of Names. Read more »
Are you as puzzled as I am by the mild brouhaha over the CFTC’s new swap execution facility rules? Basically the rules require that most swaps be traded on pseudo-exchange-y-type things called “swap execution facilities,” which are run either by an order-book system or a “request for quote” system. The RFQ system would require anyone wanting to trade to send an RFQ to at least 3 (2 for “an initial phase-in period”) potential counterparties. The original proposal was for that to be five counterparties. The revised proposal has caused a striking amount of rage, as various people have confused themselves into thinking that of course it’s obvious that every transaction should be an auction among five potential counterparties. Presumably few of those people orient their daily life that way. I don’t, anyway; I get lunch at Chipotle every day because it’s next door to Dealbreaker HQ.1
On the other hand people who think that customers should choose how many quotes to get don’t like the 3-quote compromise either. Here’s a SIFMA guy whining about it, and he doesn’t seem all that wrong:
SIFMA’s Asset Management Group continues to believe that any minimum-bid requirement will tie the hands of portfolio managers who already have a fiduciary obligation to serve the best interests of their clients. Requiring portfolio managers to broadcast their trading position more widely than they would otherwise choose could negatively impact the prevailing price of their trades, making it more expensive and difficult to hedge their clients’ risk. SIFMA strongly believes that professional investment managers, and not the government, should determine appropriate trading strategy.
The thing that trading is is, deciding how broadly to expose your order. Wider exposure gets you more and potentially better bids, but at the risk of getting front-run or picked off or otherwise abused.2 I realize that I won’t persuade everyone by quoting a trading textbook but here: Read more »
Finally, boys and girls, I want to tell you a bit about a children’s story. Once upon a time in a faraway land there lived a sweet young maid named Little Red Riding Hood—yeah, her. … Now, ye of little faith, before you think I’ve stopped carrying on your wayward son from futures, markets, Massive Passives and technology, hold your horses, or cheetahs or wolves of a color of your choice. Whatever they are, just hold ‘em a cotton-picking, or corn, bean or rice-picking minute! Maybe it is Minute Rice—I forget. The rice guys can help me out later. Read more »