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February 2007

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  • Any football supporter will tell you that the team is usually only as good as the person who runs it. The same applies to investment banking. The CEO sets the agenda for the entire firm. It is a highly pressurized role that will culminate in their removal if the team they manage fails to perform. And the performance that ultimately matters for bank CEOs is to deliver returns to shareholders.
  • Nothing is more likely to cause instability than a long period of stability. And excessive growth of credit and liquidity is a clear warning sign of crashes to come, probably within the next year.
  • Regulatory arbitrage will to take a new form once bankers can get their heads around Basle II.
  • Currenex’s sale may force a re-rating of FX platforms and their owners.
  • Recent research belies the image of hedge fund activists as short-termists that destroy corporate value rather than create it.
  • Summary table of top banks, with quick links to more related content on
  • A European transaction-cost-analysis survey conducted by business school Edhec and commissioned by HSBC came up with figures in January that show just how unprepared many fund managers are to meet the requirements of the EU’s Markets in Financial Instruments Directive (Mifid) and the best execution requirements of their clients.
  • Data on the US housing market spells bad news for ABS CDOs this year.
  • Much of the singsong about the advantages to Euronext of the merger with the NYSE sounds flat.
  • Two milestones reached in January are testament to the pace of economic change in China.
  • This tongue-in-cheek reaction of one banker on hearing that Société Générale is the latest bank to create a fixed-income, currencies and commodities (FICC) division is understandable.
  • Babson-managed CDPC takes industry to the mainstream of structured credit.
  • Proponents of the merger between the New York Stock Exchange and Euronext believe it will enhance Paris’s position as a financial centre as the $14 billion deal promises to maintain independence. One cheerleader has been Daniel Bouton, chairman and CEO of Société Générale. At the Euromoney Paris Forum, held at the close of 2006, he was interviewed by Mark Johnson, Euromoney’s editor of conferences.
  • “I guess if Goldman Sachs can’t even read our P/E off a screen then the chances of them being good at the rest of the numbers is pretty low!”
  • It’s good to see that the top men in the multilaterals are devoting time to looking after the interests of the man in the street and not just governments. Or so the Nigerian 419-style scamsters would like to have us believe.
  • Saxo Bank is launching a year-long competition called World TopInvestor on February 19 for its white-label partners’ clients. The move follows a similar game held by its Portuguese white label partner, DIF Broker, last year. The competition is open to qualified, experienced investors familiar with the risk involved in trading in various different assets and the winner will be given a mandate to manage what Saxo says is a significant portfolio on its SaxoTrader platform.
  • Three more former employees of struggling hedge fund Pirate Capital have joined FrontFour Capital, an event-drive fund set up by ex-Pirate Andrew Stotland. The fund launched in January and is reportedly seeded by Weston-Atlas Partners, a joint venture between London-based alternative asset management firm Atlas Capital Group and Weston Capital.
  • According to Clontarf Capital: "The global tide of liquidity shows no sign of abating and this will mean another brutal year for short-sellers. For the past three years only auto-parts suppliers have been sure shorts and we believe that this may be a year to pause with long/short funds - at least new entrants, or those managers with little meaningful experience on the short side. After a few years of quiet launches, it could be that the hedge funds’ sibling long-only products are the ‘idea whose time has come’."
  • The UK has been eagerly awaiting the introduction of tax-free real estate investment trusts for years, so when the legislation permitting them finally took effect at the start of 2007 nine of the UK’s largest property companies were ready to make the switch.
  • Russell Investment Group has launched a range of global indices that apply the same criteria to all companies regardless of size and the country in which they are listed.
  • Babson Capital has launched a credit opportunity fund designed to exploit sales of stressed and distressed leveraged loans that have been forced by CLO triggers.
  • Richard Downer, who left Bear Stearns last June having been responsible for its troubled Rooftop Mortgages subsidiary, has joined Bank of America in London. The hire of Downer, together with former Bear colleague Neil Warman, would suggest that BoA might be the latest bank planning a move into the non-conforming mortgage space. Bear Stearns opted to bring in US talent to run the London-based residential mortgage business, which is now headed by Fred Khedouri. In another London-based move, Colin Evans has transferred to the specialty finance group at JPMorgan with a remit to boost consumer finance and non-bank financial business. He was previously head of FIG securitized products at the bank.
  • "Misguided hedge fund guy seeks $2,000 friend with benefits - 36
  • There are sound reasons why volatility has fallen across asset classes. But a safe bet for 2007 is that it will rise again.
  • Asia... start your engines.
  • China’s hot...
  • Numerical proof of how tough the foreign exchange market was for many participants through the summer of 2006 has been provided by semi-annual volume data released by the Federal Reserve Bank of New York’s Foreign Exchange Committee and the Bank of England’s FX Joint Standing Committee. According to the FXC, average daily volume in over-the-counter FX instruments in October 2006 totalled $534 billion, 7.5% down on April 2006.
  • Some investors are due to reduce holdings in favour of single-strategy peers.
  • The growing number of investors wanting to short the commercial property market is good news for property derivatives.
  • Japan still boasts the world’s second-largest economy but its investment banking markets remain immature compared with western peers. In two articles, Euromoney spoke to key bankers in Tokyo about the economic renaissance and what it means for investment banking in Japan. Chris Leahy reports.