Podcast Center
Video Center
Webcasts
Resource Center
Events
March 14, 2014 at 07:39 AM
(Bloomberg) — What HFT is for. This is one of the better defenses of high frequency trading you can read, by Mark Buchanan, who is not particularly a cheerleader for HFT. But here he summarizes a recent paper by Oxford physicist Austin Gerig about how HFT “synchronizes” prices, making sure that for instance new information about Coke’s prospects is rapidly incorporated into Pepsi’s price. The result is that “price synchronization is broadly good for the market, as it makes prices more accurate and thereby reduces transaction costs,” helping uninformed investors at the expense of informed investors who would otherwise profit from price inaccuracy.
Barclays will have a new strategy for its investment bank.
The current strategy of bonuses going up while profits go down doesn’t seem to be working. Barclays’ meta-strategy of changing its investment bank’s strategy every year or so seems to be proceeding apace; the current heads of the investment bank “were only appointed by Mr Jenkins a year ago to replace Rich Ricci, a close ally of the previous chief executive, Bob Diamond, who was ousted in 2012 as a result of the Libor rate manipulation scandal,” and now they may be on the outs too.
UniCredit also has a new strategy.
It’s: Take a bunch of losses now, to reflect the bank’s actual best estimate of its economic position, instead of slowly leaking them out over the next few years. This is apparently a “courageous decision,” according to UniCredit, and the market more or less agrees. The first paragraph here discusses UniCredit’s “unpleasant decision” last Friday, whether to “announce a record-breaking loss or run the risk of displeasing investors and Italian regulators.” In a more normalized world announcing a record-breaking loss would displease investors and regulators; the goal is to make money. But not by, you know, pretending that losses don’t exist.
Gleacher also has a new strategy.
Gleacher & Company, an investment bank boutique slash bond brokerage that made $666,000 in fees last year, for a net loss of $99.5 million, has announced that it plans to liquidate, returning $60-90 million to shareholders. Umm. Yes? I feel like when you are a company named for a person, and you have no revenue and big net losses and that person has quit (Eric Gleacher left in January 2013), winding up and returning cash to shareholders seems like a good idea. Having the guy’s name on the door probably helps a bit with reaching that honorable conclusion, as opposed to the perpetual-public-company approach of pivoting to new business models until you run out of money altogether.
Imagine the synergies.
“Apollo Global Management LLC (APO), which acquired Chuck E. Cheese last month, is weighing a bid for another chain that mixes food and entertainment, Dave & Buster’s Inc.,” and it does seem obvious that you’d combine Chuck E. Cheese — described here as “a kid-oriented purveyor of pizza, arcade entertainment and animatronic robots” — with Chuck E. Cheese For Adults. Price synergies really are discussed, though really the growth opportunity is indoctrinating kids into the Chuck E. Cheese lifestyle and then having them graduate to Dave & Buster’s when they turn 21.
Hibor was only manipulated a little.
The Hong Kong Monetary Authority found that UBS tried to manipulate Hong Kong’s benchmark interest rate, but didn’t collude with any other banks so had only a tiny impact on the rate. Which is adorably UBS; the bank was generally the best at manipulating interest rates for unproductive or counterproductive ends.
“S.E.C. Brings Case Against 10th Former SAC Capital Employee”
Were you counting? I would have guessed this was number seven, but there you go. This one is Ronald N. Dennis, who insider traded in Dell and Foundry and settled for $200,000, after previously starring as an uncharged co-conspirator in several criminal cases. “His actions have cost him the privilege of working in the hedge fund industry ever again,” says an SEC guy, and I guess his charged co-conspirators would be happy if that’s all their actions had cost them. Speaking of uncharged co-conspirators, apparently Steve Cohen makes a cameo appearance in this one.
