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October 2007

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  • The allure of private equity to senior banking figures is well documented: why run a business for a bank when you can run a fund for yourself?
  • The industry collectively did not cover itself in glory during the August/September correction. But there is now a rich environment for a wide range of strategies, says Nick Evans, editor of EuroHedge.
  • Pfandbrief issuers were notable by their absence as the covered bond market descended into chaos.
  • Investors may have learnt the lesson that bonds aren’t supposed to provide equity-like returns.
  • Barclays Capital is further expanding its equity origination business with the appointment of William Ortner from Citi to its New York office as managing director in equity product origination. Ortner is the latest of several new hires that Barcap has made this year to its equity origination business. He was most recently a managing director responsible for corporate equity derivatives at Citi.
  • Bankers fear new requirements could prove costly.
  • More on CLS from The weeklyFiX
  • Absolute Capital Management is restructuring five of its equity hedge funds following the departure of co-chief executive officer Florian Homm, which prompted in excess of $100 million of redemption requests for funds with up to $530 million invested in illiquid US stocks quoted on over-the-counter bulletin boards. Chief executive Jonathan Treacher calls the affair "a significant distraction".
  • Goldman Sachs knows how to spot an opportunity.
  • Buried deep in the announcement of Morgan Stanley’s third-quarter earnings results was a substantial hit from the bank’s newly built hedge funds business.
  • Rumours that RBC Capital Markets had let go up to 40 sales and trading officials in the US were firmly denied by officials at the Canadian bank, who refused to comment on possible redundancies.
  • As the loan market revives, both buyers and sellers are struggling to establish the upper hand.
  • After the crash, here comes CASH
  • As volatility spreads across the debt markets, the CMBS market is taking stock. Property derivatives are likely to increase volatility in the market and contribute to spread widening just as refinancing activity – a significant driver of CMBS volumes – slows. But as competition between commercial lenders and conduit lenders expands across Europe, the market is looking to new jurisdictions to maintain growth.
  • When China’s leading state-run banks lined up to announce their sub-prime exposure in late August, it was surprising and disconcerting.
  • "If you speak only one language, you are an American."
  • The ADR has been a very important equity market tool for many years. So long in fact that in 2007 the instrument celebrates its 80th birthday. Apparently, the ADR was invented by John Pierpont Morgan, Jr when his friend and fellow American, Harry Gordon Selfridge, the owner of Selfridges, one of London’s most renowned retail stores, asked him to develop a way for Selfridges shares to be sold in New York. Morgan’s good deed for a friend turned into a very profitable line of work, and one that JPMorgan still holds the top spot in. Now the only question that remains is how exactly JPMorgan is planning to commemorate this momentous year.
  • Could problems in the UK inter-bank market have been avoided?
  • "Once you get a contract, unless you screw it up, you get the renewal"
  • Northern Rock’s Granite master trust did launch a deal in September – but Granite Master Issuer 2007-3 was a far cry from what the market had been expecting just a matter of months ago.
  • It seems as if the sub-prime market implosion might have roots deep in the proverbial mists of time.
  • It’s not often that you can walk onto a trading floor and are greeted by England cricket legend Mike Atherton, twinkle toes Mark Ramprakash, champion jockey Frankie Dettori and Olympics silver medallist boxer Amir Khan.
  • "Interest rate cuts will be like Viagra – an artificial stimulus that doesn’t cure the underlying problem"
  • The world’s stock and futures exchanges have benefited handsomely from equity market uncertainty.
  • Nothing signals the end of easy money better than the troubles that have afflicted Northern Rock. The City’s former poster child is about to be taken over, either by a rival or for dismemberment by hedge funds, its reputation in tatters.
  • Barclays Global Investors has appointed Karen Prooth, previously a managing director at JPMorgan Asset Management, as managing director and European chief operating officer for iShares, the company’s exchange-traded funds business, and GIMG (Global Index and Markets Group), which covers a number of businesses from equity index products to securities lending. She will be responsible for coordinating the operations, technology and finance functions for the businesses and reports to Rory Tobin, chief executive of iShares and GIMG Europe.
  • Goldman Sachs shows that marking to market goes hand in hand with good risk management and smart position taking.
  • Calyon’s management uncovered a large position of credit indices in its New York office’s proprietary trading desk last month. The bank said positions were largely built at the end of August and were above internal limits. Calyon said appropriate disciplinary action had been taken and controls strengthened to prevent any repeat. The losses, following a winding down of the positions, were €250 million.
  • The asset-backed securities market in Latin America might be hampered by inadequate regulation, said the Bank for International Settlements in a report released last month.
  • After what could be described as a difficult conception and then arduous labour, foreign exchange settlement system CLS has gone on to thrive in the first five years of its life. Lee Oliver reports.
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