ATS operators sunk by Icebergs in Europe turn to America and Asia. ITG, which launched its crossing centre in Canada as recently as the fourth quarter of 2005, has already seen its market share rise to 4.1% of the volume of the dominant Toronto Exchange, TSX.

Big strategic acquisitions might be an exciting diversion for banks’ senior managers. But it is shareholders that pay for them.

The influence of investors in credit default swaps has conspicuously failed to match the growth of the market itself. But a recent restructuring could be the watershed moment that changes the credit markets for ever. Has the ground shifted beneath corporate issuers’ feet without them even noticing? Louise Bowman reports.

Traditionally seen as great for service, but second best in investment performance, private banks have been polishing up their act, investing in research and third-party products to diversify portfolios and win back market share in asset management from other financial service providers. FTSE PriBIL’s Private Banking Indices show that high-net-worth individuals should be taking private banks’ portfolio management more seriously. Plus we profile three of the banks that outperformed it. Helen Avery reports.

Rising intra-regional trade and investment are helping to underpin the economic fortunes of the states that formerly constituted Yugoslavia. Guy Norton takes a look at three examples of a stock exchange, a fund manager and private equity.

Car parks that rival Monaco for the quality of the marques, apartment prices that rival those in New York, but a stock exchange capitalization of only $50 billion. That’s Almaty. Kazakhstan’s government hopes to develop its capital markets and create a financial centre there for all central Asia. The buildings are going up. Will there be enough tenants to fill them? Chloe Hayward reports from Almaty.

Investment bankers in Japan are confident that a hybrid securities market will be established this year, despite fears that the lack of a sizeable standout deal thus far is contributing to investor and issuer caution about the structure. The sector was extremely active in the US as 2006 came to a close, with overwhelming levels of investor demand for deals from Axa and Washington Mutual, and bankers in Japan say that treasurers and CFOs there are looking closely at how their counterparts in the US use the instruments to fund acquisitions and improve capital structure.

The looming pensions crisis means individuals will have to take more responsibility, work longer and begin to save. If the US goes from a nation of spenders to a nation of savers, as it must, what will the impact be for the global economy, asks Gabriel Stein.

China is the world’s largest-ever catch-up economy. It will soon be the world’s largest economy, period. But policymakers in Beijing face some tough choices in the years to come to cope with the strains that industrial revolution brings, writes Diana Choyleva.

Major errors of concept and execution in the Iraq war have weakened the US: a sharp lesson in the limits of what seemed like limitless power. Its allies have been discredited, its enemies strengthened. Its real or wannabe rivals, China and Russia, are new global power centres. Its sway in Latin America and Africa has been compromised. The new Asian regional powers must steer a careful course in a complex world.By Charles Dumas, Diana Choyleva and Gabriel Stein.

After some considerable time in development, Eurex plans to launch the world’s first exchange traded credit derivatives contract on March 27. The contract will be based on the iTraxx Europe five year series and – dependent on market demand and sufficient market maker support – Eurex might also list futures contracts on the HiVol and Crossover indices on the same date. The contracts will be cash settled.

Activity remained high into mid-December after the majors finally broke free of their narrow ranges.

Is it really likely that DK will now be able to persuade better-quality individuals to join the firm? It might be struggling to retain the ones that are left.

Farouk Ramzan has joined Lloyds TSB as head of debt origination reporting to Mark Grant, head of DCM. Ramzan was a long-standing member of SG’s debt team where he was head of UK corporate DCM.

Hundreds pushed out at Dresdner just ahead of bonus round.

Surprise suggestion to take Stansted out of the regulated asset base.

Moody’s threw a potential spanner in the works of the European hybrid market by announcing a consultation on possibly increasing the notching on securities with non-cumulative deferral features and cumulative deferral with stock settlement. Feedback was due at the end of December.

The first of several credit derivative product company (CDPC) launches widely rumoured to be in the works emerged just before the year-end.

New FX indices have been separately launched by the International Index Company (IIC), the company behind the successful iBoxx bond and iTraxx credit derivative indices, and JPMorgan.

Five years after the economic crisis, concerns emerge about overheating.

The southeast of the region could be the star performer in 2007.

At the start of December, Ford Motor Co grabbed a liquidity lifeline with its first ever secured loan facility. All manufacturing and auto assets, plus some or all of its subsidiaries, are included. The move structurally subordinates unsecured debt holders, particularly in FMC, prompting one-notch downgrades to triple Caa1 for FMC from Moody’s, and to B from Fitch and a two-notch move from S&P to CCC+. Ford Motor Credit remains in Single B territory.

In its financial stability review in December, the European Central Bank suggested the introduction of an international register containing information on the exposure of firms to highly leveraged institutions, such as hedge funds and prime broker banks. The register would provide prime brokers with frequent and aggregated risk information on the whole portfolio of an individual hedge fund, says the report. However, the report adds, it’s a little bit complicated and might be best left to some of the existing market products that collect reporting and flow information.

Abuse of information prompts worries about integrity in credit markets.

Wealth managers are muscling in on the fund of hedge funds business.

Marina Bay Residences: Singapore’s “first Über Penthouse”

When it comes to hedge fund regulation 2006 is a year to be forgotten. It began with regulation by the SEC, only for it to be withdrawn later after an adverse court ruling. And no country seemed willing or able to decide what to do about international regulation. A pessimist would suggest that things won’t change much in 2007.

“Retail demand in Brazil is getting used to the idea that the very high level of real interest rates will not be available in the near future.”

Two major state companies will be partly privatized and up to 10 private companies are expected to undertake initial public offerings in Colombia next year.

Vincenzo Pelosi explains why pension funds are catching the swaps bug.

CapitaLand Limited, Singapore’s leading property group and already the sponsor of four Singapore-listed real estate investment trusts, including the recent mainland China Reit, CapitaRetail China Trust, added to its portfolio in December with the IPO of a fifth Reit and its first to be listed abroad.

“I’m afraid he says he is unable to speak with you at the moment.”

Has anyone seen this man?

Volume and profits in the FX market have grown more consistently than in any other part of the financial markets. New entrants and existing users still cannot resist the promise of diversification and excess return.

Another record year for financial institutions suggests no end to the boom in global financial markets. But they may be ignoring underlying economic conditions that threaten global growth and might cause a severe correction in the global capital markets, says Clive Horwood.

Corporates need to recognize that they need to care about their CDS investors and that the old attitude of concentrating on the requirements of bondholders alone will no longer wash.

It is traditional around year-end for awards to be received for deeds performed during the previous 12 months. We hereby announce Euromoney magazine’s inaugural awards for high-quality press relations. We did not ask for submissions as we are constantly bombarded with incidents from which to choose.

The wonderful world of financial PR

One market segment – banks – has been noticeably absent from the glut of Russian companies rushing to undertake IPOs in recent years. Is there now a danger that, after the long wait for exposure to Russia’s banking sector, investors will be overburdened with supply? Kathryn Wells reports.

Southeastern Europe is experiencing a retail lending boom. Although this credit expansion is helping the region’s economies to grow, there is concern that it is putting pressure on banking systems. Sudip Roy explores the dimensions of that risk and weighs up what the authorities are doing to mitigate it.

Banks have been profiting from a rising tide of consumer borrowing. As increasing bank intermediation offers plenty of loan growth, a mismatch in assets and liabilities puts pressure on banks to come to the international capital markets and make use of more sophisticated funding. Florian Neuhof reports from Kiev.

The May-June 2006 markets crunch was a dress rehearsal for liquidity implosion. And, in an alarming trend, the Eurasian savings glut is increasing, sustaining Goldilocks short-term but aggravating the potential global demand deficiency. Charles Dumas argues that a hard landing followed by poor recovery is the natural consequence of the glut.

India’s recent rapid growth masks the fact that it still lags far behind China in terms of its economic development. Its catch-up potential remains huge, and its growth could be even faster. By Diana Choyleva and Maya Bhandari.

Europe’s economies are split in two: the surpluses of the centre and the north, versus the deficits of the UK, France, and the Mediterranean and accession countries. As the imbalances become exacerbated, Charles Dumas asks if there is a get-out clause for the continent’s likely downswing.

18,000,000,000 the dollar volume of ECM deals that was expected to be executed in December 2006 in the EMEA region, according to Dealogic. $244 billion was raised in the first 11 months of the year, up 9% on full-year 2005, making the amount of money raised in ECM deals in 2006 the highest on record.

“Hedge funds have trailed equities on a relative basis in 2006 because of the unusually consistent strength in the equity markets”

Asia’s nascent market in structured growth capital is hard to define and even harder to resist. Fat margins and tied clients are bringing more entrants and might engender greater risks.

The SEC has proposed increasing the minimum net worth for an investor in hedge funds to $2.5 million from $1 million in 2007. The $2.5 million net worth minimum is to include only liquid assets. Analysts doubt that the move will have much effect.

Germany’s deputy finance minister, Thomas Mirow, has promised that industrial nations will “coordinate efforts to reduce risks posed from hedge funds”, in a briefing dealing with Germany’s upcoming presidency of the G8 in 2007. He did, however, add that regulation might not be the way to reduce risk, suggesting that more transparency might rather do the job.

Alongside the announcement that it was raising its key interest rates by 25 basis points last month, the European Central Bank released the latest set of growth and inflation forecasts prepared jointly by the staff of the ECB and the euro area national central banks. ECB president Jean-Claude Trichet is always at pains to emphasize that these “projections” – which are shown as ranges, rather than point estimates, to reflect the uncertainties associated with past forecasting errors – are published on the responsibility of the staff and are not formally endorsed by the ECB’s executive board or its governing council.

January is the month to purge the excesses of Christmas and New Year from the system. Detoxing won’t be so easy for the markets.

The gathering momentum in the hybrid securities market has been given another boost by the first issuance of such a structure by an Argentine bank under the country’s tier 1 capital regulations.

Just over one-third of people in the region believe that their economic situation has improved.

Bolivian president Evo Morales has taken control of foreign energy companies operating in the landlocked country. The deals give the government a majority share of the companies’ revenues, generated by the second-largest natural gas reserves in Latin America, behind Venezuela. According to Morales, this nationalization process, begun in May with the petroleum industry, “will continue [in 2007] with the recovery of other natural resources benefiting the Bolivian people”.

M&A and capital expenditure needs likely to drive more deals.

“The most important project ever contemplated for the continent”

As a result of the overwhelming demand, the stock soared 40% when it debuted on the ZSE in early December, hitting K2,400 within minutes of starting trading.

Bank Zenit issued the first collateralized debt obligation backed by a portfolio of Russian corporate debt last month. The Red Square transaction is a two-year synthetic CDO, denominated in roubles with 40 local credits. It is one of a handful of emerging market CDO transactions, and what makes it significant is that the underlying portfolio consists of local-currency debt.

In 2000 Saddam Hussein attempted to stop accepting US dollars for oil transactions in favour of the euro, threatening demand for and the liquidity value of the dollar. After the Bush regime had invaded Iraq and ousted the dictator, they quietly went about converting Iraq’s oil currency back to the dollar.

The Saudi banking sector is set for sustained growth on the back of GCC-wide economic development. Foreign banks are keen to join the bonanza.

The securities prove to be among the hottest assets of 2006 – some of the best trades across the globe.

Strong business confidence, healthy demand for German products and an increasing share of income going to capital belie fears that Germany’s growth rate is under threat.

Austria’s RZB has hired Tracy Frampton to head up its sales of central and eastern Europe capital market products. Frampton was previously in fixed-income sales at Troika Dialog UK, where she focused on Russian corporate external and domestic debt. Before that she was head of distribution at Moscow Narodny Bank. Frampton is based in London.

The International Finance Corporation (IFC), the private sector arm of the World Bank, has issued its first local currency bond offering in sub-Saharan Africa. The XOF22 billion ($44.6million), five-year bond was placed in the eight West African Economic and Monetary Union member nations. IFC vice-president Nina Shapiro said: “IFC expects to follow this bond issue with structured products developed in partnership with local financial institutions.” BNP Paribas is leading the issue.

"We’ve reduced equity market exposure by 10% – from Asia, Europe and the UK – but still view equities as the best asset class."

Lombard Odier Darier Hentsch’s US dollar, low-risk portfolio caters to high-net-worth clients who want to preserve their money over the long term but are also looking for performance.

It could be that the bank is simply too large, and only disposals can change the culture. But the recent changes are, to date at least, a missed opportunity.

The best agency players make attractive acquisition targets.

Roger James reports on why the market might finally be ready for takeoff.

Dresdner Bank’s EUR medium-risk portfolio is one of six risk profiles the bank runs for high-net-worth investors looking for a balanced portfolio and accepting exposure to global markets.

London-based exchange launches derivatives on LSE-listed Russian stocks.

Uncertainty and opportunity as the central Asian republic prepares a currency float.

In spite of all the takeover talk among major global exchanges, and the heavy consolidation in eastern Europe’s banking sector, not everyone believes that acquisitions are the only way to expand business in the region. Florian Neuhof talks to Heinrich Schaller, joint CEO of the Wiener Börse, who outlines his vision of cooperation with the developing regional exchanges.

Chesapeake is first US energy issuer to target euro investors this decade.

Another record year for financial institutions suggests no end to the boom in financial markets. But a correction in the global imbalances that have so far sustained the boom threatens economic growth and could have painful consequences for global capital markets. Are we on the cusp of a downturn?

What’s bad news for the hard-pressed bean counters at financial institutions across Europe trying to curb the exorbitant expenses claims of their equity capital market teams promises to be good news for AirAstana, the leading Kazakh airline that’s one of the candidates for a stock market listing in 2007.

In October the Province of Buenos Aires issued its first international bond since the sovereign’s default in December 2001. The placement’s success demonstrates how far Argentina has since come. Hernan Lorenzino, the province’s under-secretary of finance, tells Chloe Hayward about this bond issue and its impact for Argentina.

The expulsion of Citigroup Private Bank from Japan in 2004 was merely the most dramatic of a string of failures among foreign firms that have too often misread the attitudes of investors and regulators. Now, as Japan’s economic recovery creates new millionaires and wealthy baby boomers prepare to retire, several foreign firms are trying again to crack this difficult but lucrative market. Lawrence White went to Tokyo to ask their CEOs what it takes to succeed in private banking in Japan.

Corporate treasury bears the brunt of regulatory and technological change, and those changes are accelerating. At the same time, demands for performance increase, and it’s the banks who have to deliver.

We can work it out.

Investor doubt evaporates.

The causes of unprecedented global financial imbalances are complex, and understanding them is key to predicting what happens next. But do global economic prospects, as Brian Reading suggests, boil down to a simple question: will Americans stop wanting to borrow and spend before Eurasians stop wanting to save and lend?

The US private banking market is becoming increasingly competitive as domestic and foreign players battle it out for the country’s wealthiest clients, who are making increasingly complex demands that require more holistic approaches from banks. Private bankers’ salaries are at all-time highs and there seems little chance of them coming down in the near future. Helen Avery reports.

UK-based bond dealers breath sigh of relief as regulator turns back from proposals set out eight months ago.

Unsuspecting staff at the Citigroup Centre in London passing by the fixed-income trading floor were shocked to see their head of high-yield sales and trading, Mickey Brennan, and their head of emerging markets sales, Marc Pagano, getting their heads shaved while fellow staff members cheered on.

Charles Dumas warns of a ‘reverse Robin Hood’ scenario.

Private banks have never had it so good. Every region in the world offers a growth opportunity. Clients want an ever-increasing array of products and services. This leads to intense competition, evident in Euromoney’s latest annual private banking survey. But is further consolidation inevitable? Helen Avery reports.

In October 2006, Merrill Lynch raised $279 million to fund the leveraged buyout of Indonesian coal mining company PT Berau Coal by Indonesian businessman Rizal Risjad. The transaction was financed using two layers of secured structured debt with the subordinated issue, dubbed CELLS – collateralized equity leveraged loan securities – offering investors equity participation rights in the future sale or IPO of the company.

Sterling market opened in the Middle East and CIS.

Western investment banks are competing to acquire Russian investment houses, while the chief executive of VTB, the country’s second-largest bank, is prioritizing either the acquisition of a local investment bank or the establishment of a partnership with an international player. But can domestic banks successfully compete with their international rivals in the longer term? Kathryn Wells reports.