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July 2008

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  • NYSE plans rule changes to improve the competitiveness of its trading floor.
  • Tight spreads and a lack of differentiation between issuers are things of the past in the covered bond markets. But perhaps this is more “normal” than the bull market situation.
  • The announcement of the creation of a central counterparty for over-the-counter credit default swap trades has been described as one of the biggest developments in the history of the market.
  • "We’ve certainly seen some clients actively seeking out firms that have avoided the worst of the problems. I should say ‘there, but for the grace of God’... but the truth is, we’ve so far avoided massive write-downs and that’s allowed us to focus on our clients and their needs, and not have to be very focused on ourselves"
  • We could be living through the last days of the independent investment banks.
  • The 2008 Global Awards for excellence
  • Institutional investment in commodity markets is boon not bane.
  • As part of the decision-making process for the Awards for Excellence, Euromoney journalists conduct numerous interviews with senior bankers who aim to convince us why they should win.
  • As the structured finance market struggles to reinvent itself, the orgy of recrimination among constituents is intensifying.
  • Man Group has bought a 25% stake in alternative investment manager Nephila Capital. The Bermuda-based manager specializes in insurance-based instruments such as catastrophe bonds, weather derivatives and insurance-linked securities.
  • Euromoney’s awards for excellence recognize the banks that have best performed under difficult conditions over the past year. But what of the CEOs? Profile is everything but how can one really judge the most influential chiefs of the world’s biggest banks?
  • Barings, Castlepoint, AIG, Eclectica, to name but a few, have all set up agriculture funds in the past 12 months to cash in on expected commodity price increases. And if returns to date are anything to go by, more will be joining them.
  • Jack Jeffery, former chief executive of EBS, has joined option pricing specialist SuperDerivatives as chief operations officer. Jeffery will lead SuperDerivatives’ management team and oversee the execution of its business strategy. He will be based in London. The company has also employed Anton Aucamp, who worked with Jeffery at EBS, as its head of marketing.
  • 'The Black Swan: The Impact of the Highly Improbable' is an excellent read, but anyone who talks about the credit crunch in these terms is not being intellectually honest.
  • Underlying the headlines are distortions in the market that can be overcome by liberalization.
  • The firm appears to have timed the launch of its upgraded option system to perfection.
  • Standard Chartered has opened a branch in Paris to tap into the considerable flow it already sees from French corporates and financial institutions. The bank says the branch will facilitate access for those French firms looking to capitalize on the huge investment flows between key markets in Asia, Africa and the Middle East. The team in Paris will be led by Raoul Leblanc.
  • Many hedge funds are significantly more hedged that they were one year ago, says Steve Gross, principal of Penso Capital Markets, a New York asset management and risk management firm.
  • Drake Management, the $11 billion global macro fund, has said it will be shutting its two remaining funds after poor performance. Its largest fund dropped 24% last year. Anthony Faillace, Drake’s CIO, has built up a solid reputation, however, after the fund returned more than 40% in 2006. The firm is expected to create some successor funds for investors that want to stay with it.
  • Last month’s Global ABS conference in Cannes was shaping up to be more of a wake than its usual annual party as things in the market went from bad to worse in the first quarter this year. But speakers at the event in June were (not surprisingly, given what they do for a living) determinedly upbeat about the market’s prospects. "We come to praise Caesar, not to bury him," declared Clifford Chance’s Kevin Ingram in the opening panel.
  • The China Securities Regulatory Commission has given Credit Suisse the go-ahead to launch a joint venture with local firm Founder Securities. The Swiss bank takes a 33% share in the new entity, which will be able to sponsor and underwrite A shares, foreign investment shares and government and corporate bonds. The firm will not be able to offer secondary market services such as research and broking, however: under new regulations announced in 2007 Sino-foreign joint ventures must show a track record of five years’ unblemished service before being able to expand their activities.
  • Brazilian mining company Vale announced on June 12 that it had requested permission to issue $14 billion in shares to raise cash for acquisitions and growth. Vale, the world’s largest producer of iron ore, has filed with the Brazilian securities and exchange commission to sell an unspecified number of common and preferred class-A shares in Brazil and abroad, as well as US traded ADRs. In a statement the company said the money would help fund a $59 billion investment plan.
  • According to a survey by Tabb Group, one in four US hedge funds is planning to open a new office outside the US in the next two years. At least 400 offices will open in the next 12 months and, depending on market conditions, a further 400 in the next two years, says the report. The majority of funds opening abroad are multi-strategy. These need to move to markets in which investment opportunities arise.
  • The biggest retailers will regret having been blind to opportunities in emerging Europe.
  • Changes in domestic market conditions are making borrowing abroad the most attractive option for Chilean banks and corporates.
  • OGX, the Brazilian mining company owned by billionaire Eike Batista, and the Bolsa Mexicana de Valores, the Mexican stock exchange, both came to market last month with landmark IPOs. They were important deals in a number of respects, including getting Latin primary market issuance going again this year. At least as significant was the emergence of China’s sovereign wealth fund, China Investment Corporation, as an investor in Latin American IPOs.
  • The transatlantic exchange group this June announced a strategic partnership with the State of Qatar to invest $250 million in a 25% stake in the Doha Securities Market. The DSM will adopt NYSE Euronext technology and gain an international partner while NYSE Euronext will gain a foothold in the fast expanding Middle East.
  • HBOS, whose dealing rooms operate under the name of Bank of Scotland Treasury, has made two senior appointments to its Australian FX operations. Michael Peric joined as head of trading from NAB in early June. He has been joined by Matt Brady as head of FX trading.
  • After being among the top performers of 2007, Asia-focused hedge funds are suffering this year. In 2007, the HFR Asia composite hedge fund index returned more than 17%, and the Asia ex-Japan index almost 40%. Year to end-May 2008, however, the Asia ex-Japan index is down almost 10%. If investors piled in based on past performance, they will now be kicking themselves.
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