At least three banks seen central to Libor rigging

(Reuters) - New details from court documents and sources close to the Libor scandal investigation suggest that groups of traders working at three major European banks were heavily involved in rigging global benchmark interest rates.
http://www.reuters.com/article/2012/07/28/us-banking-libor-traders-idUSBRE86R03220120728

Krugman: What Draghi didn't do

Update: And this sounds like a “nein” from the Germans.

Actually, he hasn’t done anything, at least yet. But it’s now widely hoped that the ECB will start buying government bonds (although it’s not at all clear whether the Germans will allow this, particularly on a sufficient scale); this has caused a significant decline in Spanish interest rates from their peak.

Limiting interest rates on peripheral borrowing is, however, only part of what the euro needs. As I and others have been arguing for a long time, Europe also needs sufficiently high inflation over the next few years to make it possible for Spain etc. to regain competitiveness without devastating deflation. So have market expectations of inflation risen from their unworkably low levels of recent months? No:

This still looks unworkable.

http://krugman.blogs.nytimes.com/2012/07/28/what-draghi-didnt-do/

EES: NFA fines another Forex firm

As if the PFG situation (see previous articles here and here) wasn't enough, yesterday the NFA fined yet another Forex firm for:

... improperly canceling forex trades and removing profits from customer accounts, failing to timely report trade data and other required information to NFA, failing to observe high standards of commercial honor, failing to comply with NFA's Enhanced Supervisory Requirements and failing to keep accurate records.

http://seekingalpha.com/article/756731-nfa-fines-another-forex-firm

NFA issues $200,000 fine against New York forex firm Alpari US LLC

NFA issues $200,000 fine against New York forex firm Alpari US LLC

July 26, Chicago - National Futures Association (NFA) has ordered Alpari US LLC, a futures commission merchant and forex dealer Member located in New York City, to pay a $200,000 fine as a result of an NFA Complaint filed in June 2012 and a settlement offer submitted by Alpari and two of the firm's principals, Jermaine C. Harmon and Richard A. Lani.

The Decision, issued by NFA's Business Conduct Committee, found Alpari violated several NFA requirements, including improperly cancelling forex trades and removing profits from customer accounts, failing to timely report trade data and other required information to NFA, failing to observe high standards of commercial honor, failing to comply with NFA's Enhanced Supervisory Requirements and failing to keep accurate records. The Decision also found that Alpari - together with Harmon and Lani - failed to supervise.

In addition to the $200,000 fine, Alpari is required to refund within 30 days to customers losses they incurred as a result of the price adjustments that Alpari made to their accounts in connection with an October 2011 "market event." Alpari must also provide verification to NFA that these refunds were paid to and received by customers.

Alpari must also submit a written report to NFA within 180 days of the effective date of the Decision which documents the results of an independent review of Alpari's electronic trading platforms conducted by a qualified outside party and the steps Alpari has implemented to remedy deficiencies with the firm's internal controls.

Alpari, Harmon and Lani neither admitted nor denied the charges. The complete text of the Complaint and Decision are available onNFA's website.

http://www.nfa.futures.org/news/newsRel.asp?ArticleID=4087

U.S. big banks' glory days feared to be gone for good

* Low rates, more regulation depress profit outlook

* Banks show few fundamental signs of improvement in Q2

* Only choice for big banks may be to slim down

(Adds Sandy Weill comments)

By Jed Horowitz

NEW YORK, July 25 (Reuters) - The summer of 2012 may be remembered as the time when regulation, scandals and a protracted slow-growth economy finally caught up with big American banks.

Ever since the financial crisis, U.S. banks and their investors have held out hopes of a return to the good times, when lending profits steadily rose and commercial and investment banking flourished together.

http://in.reuters.com/article/2012/07/25/idINL2E8IP4F320120725

Economists Warn EU on 'Threshold of Catastrophe'

The euro crisis has returned with a vengeance this week, with Greece potentially facing bankruptcy, Spain teetering towards a bailout and even Germany at risk of losing its top credit rating. A group of prominent economists are calling for a radical restructuring of Europe and the euro zone to prevent a disaster of "incalculable proportions."

A panel of respected European economics experts are ringing the alarm bell this week over the euro crisis -- direly calling on all European leaders to move swiftly to deploy the most powerful tools available to halt the currency's downward spiral.
"We believe that as of July 2012, Europe is sleepwalking toward a disaster of incalculable proportions," the New York-based Institute for New Economic Thinking (INET) stated in a report warning leaders they need to move faster and more decisively to save the common currency. Otherwise it could very well disintegrate.

http://www.spiegel.de/international/europe/debt-crisis-economists-warn-of-euro-catastrophe-a-846327-druck.html

Is the fix in?

The Foreign Exchange Market

Or the Forex market in City-speak. It's hard to call this a dark corner. It's the biggest market in London, and in the world, in terms of the sheer volumes of money changing hands – $4trn (£2.6trn) daily. Not that this stops people from trying to manipulate it.

Central banks such as the Bank of England, the US Federal Reserves and lots of others are always at it, either trying to push their currencies higher (when they fear a forced devaluation and inflation) or lower (to make exports more competitive). Their efforts tend to meet with very limited success.

Speculators, particularly hedge funds, are very active and their role can also prove highly controversial.

Of more concern right now are the games being played by so called "high-frequency traders" who use black boxes to place blistering numbers of currency trades in nano seconds.

Lots of influential people question their activities and want the hammer brought down. They might have a point.

http://www.independent.co.uk/news/business/analysis-and-features/special-report-after-libor-where-will-the-next-scandal-be-7946899.html

Germany no longer considered Safe Haven

 'When your ship is sinking, there is no safe room on board. Likewise, when Europe is sinking, there is no safe country in which to stash your money. No, not even Germany.

Investors have been remarkably slow to grasp this simple truth...'

http://www.businessweek.com/articles/2012-07-24/germany-is-no-longer-a-safe-haven#r=read

Deliverable Currency with hedging

Elite E Services, Inc. and Currencies Direct

Whatever your foreign currency requirements, whether you are transferring savings for your new life in the sun, investing in property abroad, making regular currency transfers overseas or needing holiday money each time you travel, we understand that you will want to get as much for your money as you can. That's why Elite E Services, Inc. has teamed up with Currencies Direct to offer you the best service and the most competitive foreign currency exchange rates available today. With years of experience providing financial solutions, Currencies Direct have developed an innovative range of products and currency transfer services that can help to minimise your foreign exchange risks and take the hassle out of international payments.

Get deliverable currency, regular FX payments with hedging, forwards, and other deliverable Forex contracts

Euro crisis brings world to brink of depression

WASHINGTON (MarketWatch) — Europe is a tinderbox waiting for a spark.

The financial volatility in Europe may have created a situation that is now beyond the capacity of policy makers to control or curb.

When an accomplished fixer like Pascal Lamy, the head of the World Trade Organization and the longtime chief of staff for former European Commission President Jacques Delors, describes the situation in Europe as “difficult, very difficult, very difficult, very difficult,” you know it is time to run for cover.

http://www.marketwatch.com/Story/story/print?guid=EC6D6916-D59F-11E1-B099-002128049AD6

Moody's downgrades outlook for Germany, Luxembourg, and Netherlands from AAA

Moody's Investors Service has today revised to negative from stable the outlooks on the Aaa sovereign ratings of Germany, the Netherlands and Luxembourg. In addition, Moody's has also affirmed Finland's Aaa rating and stable outlook.


http://www.telegraph.co.uk/finance/financialcrisis/9422167/Moodys-put-negative-outlook-on-Germany-the-full-text.html

Banks charged for bid rigging, LIBOR fixing, and other fraud

Bid-rigging was the subject of U.S. v. Carollo, Goldberg and Grimm, a ten-year suit in which the U.S. Department of Justice obtained a judgment on May 11 against three GE Capital employees.  Billions of dollars were skimmed from cities all across America by colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion.  Other banks involved in the bidding scheme included Bank of America, JPMorgan Chase, Wells Fargo and UBS.  These banks have already paid a total of $673 million in restitution after agreeing to cooperate in the government’s case.


http://www.marketoracle.co.uk/Article35713.html

"And remember, where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that." John Dalberg Lord Acton

This HSBC scandal is being overshadowed by LIBOR a bit in the States at least, and the usual diversions of the day to day, but it seems about to explode into the headlines of the insular major media.


http://www.marketoracle.co.uk/Article35718.html

Spain yields soar, more Europe market turmoil

Europe was plunged into fresh market turmoil as this week’s visit by Greece’s creditors rekindled concern the currency union will splinter and the first call for bailout aid by a Spanish region caused borrowing costs to surge.

Stocks and the euro fell before the arrival in Athens tomorrow of Greece’s troika of international creditors -- the European Commission, the European Central Bank and the International Monetary Fund. In Spain, Catalonia joined a list of the country’s regions that may tap aid from the central government in Madrid, spurring Spanish 10-year yields to surge above 7.5 percent for the first time.

http://www.bloomberg.com/news/2012-07-22/greece-back-at-center-of-euro-crisis-as-exit-talk-resurfaces.html

PFG trustee establishes website

As you aware, PFG filed for liquidation in a U.S. bankruptcy court in Chicago and the U.S. Trustee appointed Ira Bodenstein to act as trustee for PFG and its assets, including customer property. On July 13, the bankruptcy court authorized the trustee to continue to operate PFG's business for a limited time in order to (among other things) prepare and distribute final customer statements, and record transactions related to customer accounts. It likely will take several days for the trustee, working with the remaining PFG employees that he has been authorized by the bankruptcy court to employ, to complete that process. At this time, it is not clear when the trustee will be authorized to release any funds to customers.

In addition, the trustee has established a website www.PFGChapter7.com that contains information about the PFG case. The website was created to assist the trustee in providing information to customers and to receive comments or questions from customers.

https://www.nfa.futures.org/NFA-investor-information/PFG.HTML

How top executives lived in 1955

Editor's note: Every Sunday, Fortune publishes a story from our magazine archives. With the annual Fortune 500 list ready to be revealed tomorrow, turn this week to our inaugural Fortune 500 list, in July, 1955. General Motors topped the list that year, and writer Duncan Norton-Taylor took an inside look into the lives of America's top executives. What does the boss do with his spare hours--if any? How do vice presidents spend their money, and their time away from the office? Here, some glimpses into the private lives of executives in 1955 who earned more than $50,000.


http://features.blogs.fortune.cnn.com/2012/05/06/classic-top-500-executives/

21 Trillion or more hidden in tax havens

A global super-rich elite had at least $21 trillion (£13tn) hidden in secret tax havens by the end of 2010, according to a major study.

The figure is equivalent to the size of the US and Japanese economies combined.

The Price of Offshore Revisited was written by James Henry, a former chief economist at the consultancy McKinsey, for by the Tax Justice Network.

Tax expert and UK government adviser John Whiting said he was sceptical that the amount hidden was so large.

Mr Whiting, director of the Office of Tax Simplification, said: "There clearly are some significant amounts hidden away, but if it really is that size what is being done with it all?"

Mr Henry said his $21tn is actually a conservative figure and the true scale could be $32tn. A trillion is 1,000 billion.

http://www.bbc.co.uk/news/business-18944097

Alternative Currency Systems and Open Source Banking

(Thomas Dishaw)  Below is a comprehensive  list of alternative currency systems from around the world. As the economy continues to be propped up by fiat currency and fake data numbers, more and more people are using alternative ways  to buy sell and trade for services. View the complete list here.
http://govtslaves.info/list-of-alternative-currency-systems-from-around-the-world/

A Community Currency is often used as synonym for complementary currency, local currency, regional currency, alternative currency, auxiliary currencies, and private currencies. The debate is not easy to solve, since the words have different meanings to different people. All are currencies that have different designs and serve different purposes than our conventional money. They depart from the notion that money is essentially a human invention and instrument to influence the relations between citizens and organizations. A solid theoretical framework legitimizes this idea and in the past hundred years a lot of experimentation and experience was picked up with realizing social goals by the implementation of community currencies.
http://en.wikipedia.org/wiki/Local_currency

Cyclos is a project of STRO, a leading organisation on monetary innovations. Cyclos offers a complete on-line payment system with additional modules such as e-commerce and communication tools. The Cyclos platform permits institutions such as local banks and MFI`s to offer banking services that can stimulate local trade and development. Cyclos is also used by manyorganizations and communities to provide community currency services. 

With the latest version it is possible to roll out mobile banking services such as SMS banking and apps for smartphones. Cyclos is published under the GPL (open source) license meaning that it can be downloaded for free and used at no cost. Cyclos is currently available in ten languages and new languages are added with each release.

http://project.cyclos.org/

PFG customers claims priced 25 cents on the dollar

Customers’ claims on Peregrine Financial Group Inc., whose founder is accused by regulators of misappropriating more than $200 million, may fetch less than a quarter of their value in the wake of the firm’s bankruptcy, a trader said.

Quotes of 22 cents on the dollar to 25 cents were given to half a dozen Peregrine customers yesterday who called CRT Capital Group LLC, which buys and sells distressed debt, said Joseph Sarachek, managing director of claims trading. He is being “deluged” by calls today, he said. By comparison, bankrupt MF Global Inc.’s U.S. claims have always sold in the high 70s, he said.

http://www.businessweek.com/news/2012-07-11/peregrine-customers-claims-priced-at-25-cents-on-dollar 

Grid Strategy

Grid strategies are common alternatives for traders that do not have an opinion on market direction. They are almost exclusively associated with forex trading. I've never seen grid trades in any other context.

The goal of a grid strategy is to outline a ranging or trending bias without committing to the underlying direction. That may sound confusing.

The goal is to only summarize the type of market. Trending conditions prevail in today's market. If a trader did not know the future direction of the price, he might place stop entry orders a certain distance away from the current market. If the market happens to increase 10 pips, then perhaps that triggers a buy stop order on the expectation of a continuation. Another 10 pips later, another buy order triggers, and so on. The goal is to keep stacking orders on one way moves.



Ranging grids work on the opposite assumption. They use a limit entry instead of a stop entry order. The grid assumes that if the price drifts very far, then it's likely to come back to where it started.

Problems with Grid Strategies

Position sizing and money management are always some of the biggest concerns with an expert advisor. Two of the more common approaches that I see in grids are either to use a fixed lot size or to use a Martingale approach.

I see merit in the idea of varying lot sizes at different levels. Martingale, however, takes it way too far. It's a mathematical fact that it will blow up at some point in time. A more reasonable approach is to increase at a very slow rate like 10% as trades become increasingly likely to exit. If a trade is decreasingly likely to exit, the idea of not trading should come to mind. Alternatively, trading smaller sizes is always an option.

The other problem is that grids only work at the moment in time where it's applied. When a ranging grid expert advisor is placed at the top of a range, the grid will correctly anticipate the market conditions but poorly implement the prediction. The top of the range means that the price falls back down into the middle. The grid, however, assumes it was placed in the middle. The grid buys as the price falls into the mid-range on the errant expectation that it will return to the top of the range.

This is precisely what I dislike about grids. They are totally blind to the context of their current placement. They are best used, in my opinion, in the context of slight directional bias but where outright trades may not make sense.

The Chronology Of A Collapse: Santelli's Primer On The PFG Debacle

EES: The frightening truth about PFG

Forex brokers have been going under nearly on a monthly basis, as any forex trader or client can attest for the last few years. The most recent, PFGBest, was also a futures commissions merchant with over 70,000 clients and a reported $500 million in customer funds.

http://seekingalpha.com/article/717721-the-frightening-truth-about-pfgbest

Russell Wasendorf Sr. on NFA advisory committee, NFA removes from site

Above snapshot google cache:

http://webcache.googleusercontent.com/search?q=cache:_9gmnxqiRn0J:www.nfa.futures.org/nfa-about-nfa/committees/advisory-committee.HTML+&cd=3&hl=en&ct=clnk&gl=us

Current site:

http://www.nfa.futures.org/nfa-about-nfa/committees/advisory-committee.HTML

Citigroup Lets Clients See Fund Data After Peregrine

Citigroup Inc. (C), the third-biggest U.S. bank, said it will show trading clients how the lender is managing their funds as regulators probe missing customer cash at MF Global Holdings Ltd. (MFGLQ) and Peregrine Financial Group Inc.

Customers using New York-based Citigroup to buy and sell futures and over-the-counter derivative products can now see how much client funds the bank holds, Christopher Perkins, global head of OTC clearing, said today in a phone interview. Clients can use a Citigroup website to monitor the composition of the funds and where they’re being held, he said.

Citigroup is responding to allegations surrounding MF Global and Peregrine, which filed for bankruptcy after shortfalls in client accounts. This has raised scrutiny of how regulators ensure that banks and brokerages separate and protect customer cash when trading in futures.

“It’s almost impossible for regulators to come up with rules that prevent malfeasance and fraud,” Perkins said. “You can come up with the best rules in the world but if people violate them, you’ve still got a problem. The best way to mitigate these kinds of threats to client money would be through enhanced transparency.”

http://www.bloomberg.com/news/2012-07-11/citigroup-lets-clients-see-fund-data-after-peregrine.html 

EES Articles now available on Seeking Alpha

Elite E Services, Inc. (EES) announces a publishing agreement with Seeking Alpha.  EES has published articles on the topics of finance and technology in publications such as Futures Magazine, Stocks & Commodities Magazine, FX Trader Magazine, and on websites such as barchart.com. 

About Seeking Alpha

Seeking Alpha is the premier website for actionable stock market opinion and analysis, and vibrant, intelligent finance discussion. We handpick articles from the world's top market blogs, money managers, financial experts and investment newsletters - publishing approximately 250 articles daily. Seeking Alpha gives a voice to over 5,000 contributors, providing access to the nation's most savvy and inquisitive investors.  Our site is the only free, online source for over 1,500 public companies' quarterly earnings call transcripts, including the S&P 500.  Seeking Alpha was named the Most Informative Website by Kiplinger's Magazine and has received Forbes' 'Best of the Web' Award.

EES Profile URL: http://seekingalpha.com/author/elite-e-services

EES analysis advises international clients on Forex markets.  For customized Forex research, hedging solutions, and Currency Overlay, contact Elite E Services at http://contact.startelite.com

PFG shut down by NFA

NFA takes emergency enforcement action against Chicago futures firms Peregrine Financial Group, Inc. and Peregrine Asset Management, Inc.

July 9, Chicago - National Futures Association (NFA) announced today that it has taken an emergency enforcement action againstPeregrine Financial Group, Inc. (PFG), an NFA Member futures commission merchant (FCM) and Peregrine Asset Management, Inc. (PAM), an NFA Member commodity trading advisor (CTA) and commodity pool operator (CPO) located in Chicago, Illinois.

NFA has taken the Member Responsibility Action (MRA) to protect customers because PFG has failed to demonstrate that it meets capital requirements and segregated funds requirements. NFA also has reason to believe that PFG does not have sufficient assets to meet its obligations to its customers.

Effective immediately, PFG and PAM are prohibited from soliciting or accepting any additional customer accounts or customer funds, except as margin for existing positions. Additionally, PFG and PAM are prohibited from accepting or placing trades for any customer accounts except for the liquidation of existing customer positions and are prohibited from distributing, disbursing or transferring any funds, including to existing customers, without the prior approval of NFA.

PFG and PAM may request a hearing on this matter before NFA's Hearing Committee.

The complete text of the MRA is available on NFA's website (www.nfa.futures.org).

NFA is the premier independent provider of innovative and efficient regulatory programs that safeguard the integrity of the futures markets.

Topic Research:

http://www.businessinsider.com/the-pfg-cash-shortfall-crisis-heres-what-we-know-so-far-2012-7

http://www.cbsnews.com/8301-500395_162-57469161/peregrine-financial-group-brokerage-said-to-be-$220-million-short-in-customer-funds/

Roubini Says 2013 `Storm' May Surpass 2008 Crisis

JPMorgan, Goldman Shut Europe Money Funds After ECB Cut

JPMorgan Chase & Co. (JPM), Goldman Sachs Group Inc. and BlackRock Inc. (BLK) closed European money market fundsto new investments after the European Central Bank lowered deposit rates to zero.
JPMorgan, the world’s biggest provider of money-market funds, won’t accept new cash in five euro-denominated money-market and liquidity funds because the rate cut may result in losses for investors, the company said in a notice to shareholders. Goldman Sachs won’t accept new money in its GS Euro Government Liquid Reserves Fund, and BlackRock, the world’s largest asset manager, is restricting deposits in two European funds.

“The European market environment is in unchartered territory with such historically low -- or even negative --yields for high-quality issuance,” Goldman Sachs (GS) said in a memo to fund shareholders, citing the ECB’s rate cut. “It is not currently feasible for our portfolio managers to deploy capital without substantially diluting the yield for the existing base of shareholders.”

The ECB yesterday reduced its benchmark rate to a record low of 0.75 percent and took its deposit rate to zero. Money funds have been struggling to invest client assets at a profit as interest rates globally are near record lows and Europe’s sovereign debt crisis has reduced the supply of available debt. Managers have been forced to cut fees to keep customer returns above zero, and some have abandoned the business.
All three firms said the restrictions are temporary and they will monitor market conditions. Investor redemptions from the funds are not being limited.

http://www.bloomberg.com/news/print/2012-07-06/jpmorgan-shuts-europe-money-market-funds-on-ecb-rate-cut.html

ECB cuts rates by quarter point, other central banks join in

The European Central Bank cut rates by a quarter point, as expected, and the Bank of England moved forward with more quantitative easing. In a surprise move, the People's Bank of China joined in Thursday, moving forward with surprise rate cuts at about the same time as the Bank of England news.

http://www.cnbc.com/id/48082851


The euro sank to a one-month low as Spanish and Italian bonds plunged, while stocks retreated, after the European Central Bank disappointed investors anticipating a more aggressive effort to fight the debt crisis.


http://www.bloomberg.com/news/2012-07-05/asian-stocks-oil-copper-drop-as-europe-slump-may-worsen.html

http://www.dailymail.co.uk/money/news/article-2169209/Pound-moves-half-year-highs-euro.html

(Reuters) - Stocks fell on Thursday after the biggest three-day rally of the year and the euro and commodities slid too as investors awaited clues on Federal Reserve stimulus and a jobs report likely to show Europe's crisis weighing on the U.S. economy.

A slowdown in the U.S. service sector to a 2-1/2-year low in June was in line with investor fears the euro zone debt crisis was sapping global growth. The data encouraged traders to take profits from a strong equity market rally that began last Friday and extended into the first two sessions of this week.

http://www.reuters.com/article/2012/07/05/us-markets-global-idUSBRE8520GN20120705

What is Libor and why should we care?

The LIBOR manipulation story has exploded into a major scandal overseas. The CEO of Barclays, Bob Diamond, has resigned in disgrace; his was the first of what will undoubtedly be many major banks to walk the regulatory plank for fixing the interbank exchange rate. The Labor party is demanding a sweeping criminal investigation. Mervyn King, Governor of the Bank of England, responded the way a real public official should (i.e. not like Ben Bernanke), blasting the banks:

It is time to do something about the banking system…Many people in the banking industry are hardworking and feel badly let down by some of their colleagues and leaders. It goes to the culture and the structure of banks: the excessive compensation, the shoddy treatment of customers, the deceitful manipulation of a key interest rate, and today, news of yet another mis-selling scandal.

Read more: http://www.rollingstone.com/politics/blogs/taibblog/why-is-nobody-freaking-out-about-the-libor-banking-scandal-20120703#ixzz1zlE8PbwZ

EES: Put on the Euro

In a recent article on Seeking Alpha, we outlined a strategy to strangle the euro which is a bet on volatility, not direction. However, a growing number of analysts are becoming more bearish on the euro and overall European situation. With any meltdown in the eurozone, the best way to profit from a collapse of the euro is by buying a euro Put option (ideally spot EUR/USD (FXE)).

http://seekingalpha.com/article/702181-a-put-on-the-euro-to-parity

EES: Modern Institutional Decay

What has happened to our institutions?

The trend of the modern institutionalization of our system began in the late 19th century, but didn't gain worldwide support until the early 20th century. It reached its peak after World War 2, when the feeling was that global institutions could stave off further bloody conflicts. Without WW2, establishing institutions such as the United Nations, the International Monetary Fund, and eventually the European Union, would not have been possible.

http://seekingalpha.com/article/695701-modern-institutional-decay