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May 2008

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  • Foreign exchange has arguably held up better than any other financial market in the fallout from the sub-prime crisis. Will its robustness result in it being taken more seriously as both a business and as an asset class? And which banks have fared best in Euromoney’s benchmark industry poll?
  • Including: ● MiFID update ● NDFs ● Automated trading ● Transaction Cost Analysis (TCA)
  • Tradeweb has unveiled an electronic market for deposits. The platform’s management say that Tradeweb Deposit will support the placement of new and maturing deposits in euro, sterling, dollar, Swiss franc and yen. The timing of this launch comes just as the focus on the money markets has sharpened as discrepancies between the reported fixing of the interbank offered rate and the real level of bank funding have emerged. The new offering has been running on beta since January and 1,500 placements had already been conducted as of April 22. Tradeweb’s belief that electronic trading will help price transparency in the market will no doubt be challenged by the leading brokers. But the benefits of e-finance around processing are less disputed.
  • If you’re sick of hearing about Goldman Sachs beating the competition, look away now. Euromoney has conducted its first (somewhat unscientific) poll of investment banks’ online popularity as measured on social networking site Facebook, and the US firm has won by a clear margin. Facebook allows companies to create ‘fan’ pages: "...a unique experience where users can become more deeply connected with your business or brand. Users can express their support by adding themselves as a fan, writing on your Wall, uploading photos and joining other fans in discussion groups."
  • Sepa came into being in January but there is still much work to be done before the full benefits come through for banks and corporate customers. What are the main threats or opportunities of the developments? What obstacles have to be overcome? Euromoney’s debate panel wrestles with the key issues.
  • The International Capital Markets Association raised SFr100,000 ($97,000) for underprivileged children with its annual ski weekend in Davos at the end of March. The event is more than 30 years old, but the potential for charitable contributions was only realized last year.
  • With the euro hitting fresh record highs against the dollar, it must be tempting for European policymakers to crow. However, complacency could lead to crisis.
  • Not content with its £10 billion-a-year PFI programmes, the UK government plans to extend its use of securitization to its student loan book. This is worth about £18.1 billion and is expected to increase in value to £55 billion over the next 10 years. Legislation is now in the House of Lords to enable the government to sell these loans to the capital markets – a process that it hopes will raise £6 billion by 2010.
  • As a new approach to financial PR it may take some time to bed in.
  • "Who is this?"
  • Does the EC need to force clarity on clearing?
  • UniCredit Markets and Investment Banking has hired Xavier Alexandre as its head of e-commerce and electronic trading for FICC. The bank has yet to finalize the reporting lines for this new position. Alexandre will be based in London.
  • Banks are paying the price for hanging on to their stuck leveraged loans for so long.
  • Competition between trading venues is leading to soaring trading volumes in Europe. Brokers are reaping the benefits and incumbent exchanges have yet to feel any pain, despite the success of new competitors.
  • Private equity businesses have taken a battering from the credit crisis but the industry remains flush with cash commitments from investors and appears to be trying to adapt to a world devoid of easy and cheap financing.
  • Uncertainty worldwide on the next move in interest rates is leading to short-term volatility and price gyrations in the foreign exchange market.
  • Figures released by Isda during April show that the notional amount of credit default swaps outstanding during 2007 grew by 37% from the first half of the year to the second half. After the first six months of 2007 – before problems in the US sub-prime mortgage market tipped the credit markets into turmoil – there were $45.5 trillion of CDS outstanding but by the end of the year there were $62.2 billion. CDS notional growth for the whole year was a full 81%. The figures are a stark illustration of the extent to which CDS were embraced as a means of hedging credit risk when the markets turned.
  • 29.4 and 44,000,000,000
  • Can the rapid growth of e-trading in recent years continue?
  • Liquidity remains the primary challenge in the present environment, meaning that few credit managers have ventured beyond the relatively liquid credit derivative indices. Managers including BlueCrest, Cairn Capital, CQS and Pimco are all seeking to take advantage of the unique opportunities the dislocation in the credit market has created, say market participants.
  • As part of Man Investments’ plan to expand its range, the firm has joined its European credit manager, Pemba Credit Advisors, with Ore Hill, a US credit specialist. Man has taken a 50% stake in Ore Hill, and Ore Hill has taken a 50% stake in Pemba.
  • The net new inflow into hedge funds collectively was a meagre $16.5 billion over the first quarter of 2008, according to Hedge Fund Research, in comparison with almost $200 billion in 2007. Some strategies fared better than others: macro hedge strategies posted $1 billion in redemptions; merger arbitrage strategies had outflows of $4 billion; while distressed strategies attracted $8 billion. Macro strategies, however, posted returns of 4.7% in Q1, while the overall hedge fund index was down more than 3%.
  • Speakers at the EuroHedge Summit offered sound advice: leverage addicts were warned about the drug’s potency, and panickers were advised to panic in good time. Neil Wilson reports from Paris.
  • London’s position as a centre for hedge funds is under threat. Brevan Howard is the latest to warn the UK government that it will be moving its headquarters abroad if proposed tax changes are implemented.
  • There are complaints that investors are being misled by funds.
  • A plentiful supply of cheap, high-quality farmland means Russia may become key in the drive to solve global food shortages.
  • The volume of equity raised by issuers from eastern Europe so far this year amounts to just $2 billion, down from $11.1 billion over the same time in 2007. Eastern Europe ECM volume accounts for just 6% of the total EMEA ECM volume raised in 2008, compared with 14% this time last year.
  • High-ticket foreign purchases by Tata Steel and Hindalco have grabbed the headlines but India’s SMEs are also increasingly acquisitive. Cash-rich, or funded by enthusiastic local banks or foreign investors, they are taking advantage of turmoil in the US. Elliot Wilson reports.
  • Bad infrastructure, a weak economy and vulnerable financial assets – but bankers in South Africa remain confident.
  • More on sovereign wealth funds