New Mexico State Investment Council v Bank of America
Since 2005, the Wall Street banks that comprise the major dealers of credit default swaps (“CDS”) have been engaged in a conspiracy to manipulate the CDS “final auction price,” the benchmark price used to value all CDS contracts market-wide at settlement.
PDF (133 pages): New Mexico State Investment Council v Bank of America
Subject: Overview of Clearance and Settlement system
You have requested an overview of how the clearance and settlement system deals with the large amount of stock that is not being delivered in the U.S. and elsewhere. All of the following are detailed in the enforcement actions I enclose. While the cases we have handled have similar evidence, I cannot discuss those (as they are subject to a confidentiality order that prohibits disclosure to people outside the lawyers and clients in the case).
Let’s understand what occurs based on the enclosed:
Continue reading “Paper: Overview of Clearance and Settlement system”
A big short growing in Italian debt
Abhinav Ramnarayan, Saikat Chatterjee, 09 November 2018
LONDON (Reuters) – A surge of interest in Italian bond futures may be a sign of a substantial short position building up in the derivatives market as tensions rise over budget negotiations between Rome and Brussels.
The big short in the futures market reflects a buildup in speculative and hedging activity after a tumultuous summer in the Italian markets and also indicates rising concerns of capital outflows. Continue reading “Article: A big short growing in Italian debt”
“No evidence” bank CDS used as sovereign shorting proxy
Christopher Whittall, 30 April 2013
LONDON, April 30 (IFR) – The European Union’s ban on short selling government debt using credit default swaps is pushing hedging or speculative activity into the bank CDS market, according to some market participants, but analysis from JP Morgan has poured cold water on these claims.
Sovereign CDS trading volumes have fallen off a cliff since the EU’s ban on naked or outright short positions came into force last November, with some arguing that trading is migrating to financial CDS, which are not covered by the rules. Continue reading “Article: “No evidence” bank CDS used as sovereign shorting proxy”
EU ban on naked CDS short worries Asian investors
Christopher Langner, Christopher Whittall, IFR, 23 October 2012
Some Asian fixed-income investors are grappling with how to hedge high-beta portfolios on the eve of the implementation of a ban on naked shorting of European sovereign CDS.
Until March this year, using European CDS bets to offset potential losses from a drop in prices of Asian high-yield bonds had become a fairly popular strategy. However, since regulators in Europe said they were banning the practice from November 1, many of those bets were unwound. Continue reading “Article: EU ban on naked CDS short worries Asian investors”
Watchdog says jury out on CDS short-selling impact
Huw Jones, 18 June 2012
There is no firm proof that short-selling credit default swaps (CDS), blamed by some policymakers for exacerbating Greece’s debt problem, damages the underlying government bond market, the world’s top securities body said.
CDS are contracts written by large banks that insure the buyer against a default in an underlying asset such as a government or corporate bond. Continue reading “Article: Watchdog says jury out on CDS short-selling impact”
“Naked” ban deals further blow to CDS
Christopher Whittall, 04 April 2012
A ban on “naked” sovereign credit defaults swaps trading will be stricter and more far-reaching than market participants had previously thought and could severely damage market liquidity, analysts have warned.
The European Union recently published the final version of new regulation prohibiting participants from using CDS to take outright short positions in sovereigns. The regulation developed in the aftermath of various European politicians blaming sovereign CDS for peripheral bond yields widening during the euro zone crisis, despite a lack of empirical evidence to support these claims.
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