Anonymous Sports Book Manager left academia to run a trading department at one of the world’s largest offshore bookmaking outfits. He now works onshore with his cellphone, pencil, rice paper, and a bucket of water. He’s trying to go legit as a consultant (please send job offers), but every time he gets out of the bookie business, they pull him back in.
I’m cranky. It’s probably because the Giants opened +3.5 in the Super Bowl and now it’s nearly +2.5 and I’ve taken in a lot of sharp money I don’t want. “3” is the biggest number in football. That’s a problem, and it’s put me on edge. So other stuff is getting my goat—especially stupid stuff. Like this: Continue reading »
Apparently lawyers at Davis Polk pulled an all-nighter reading and summarizing the Volcker Rule draft that was published yesterday. And they’re not the only people annoyed by the regulators’ refusal to get to the point:
As people drilled down into the details of the draft, many were concerned that it appeared to require very granular policing of individual traders at banks as part of the stringent, multilevel compliance regime described in the document.
“They have chosen the most burdensome way of doing it,” said Tim Ryan, chief executive of the Securities Industry and Financial Markets Association, a Wall Street trade association, in an interview.
While last night’s rule-summarizing festivities undoubtedly distracted some young lawyers from the Yankees game / general yearning for death, there may be other more consequential distractions. Continue reading »
The fact that one lovable rogue in London misplaced UBS’s bonus pool for the year has people talking again about the Volcker rule, which would ban proprietary trading at banks. I still don’t really understand that, and I’m not alone. Here is a thing about the Volcker rule and “Delta desks” (what?):
Yet the definition of what constitutes proprietary trading can be fuzzy. Many on Wall Street consider proprietary trading, or prop trading, to involve only trades made by dedicated traders who are using the bank’s capital and do not have access to client information. The trading done on Delta desks, they contend, is done on behalf of clients.
Those boundaries, however, can blur. A bank may buy a derivative or security from a client in order to make a market, then decide it is worth hanging onto, turning it into a proprietary bet.
The Volcker rule of the Dodd-Frank act is named after Paul A. Volcker, the former Federal Reserve chairman who proposed it. It is intended to prevent American banks from taking on too much risk. The fine print, however, has yet to be worked out, and regulators are debating just how comprehensive to make the definition of proprietary.
This is sort of correct but nicely embodies the conceptual confusion that I suspect lies behind the Volcker rule. Let’s spend four hours talking about it, shall we?
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