CMKX Sting

Re: gossip August 8-12/10
« Reply #66 on Aug 12, 2010, 12:16pm »
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royalstarofthelion: derivatives http://www.bloomberg.com/news/2010-08-10….dman-says.html

Derivatives Rules Proposals From CFTC, SEC Due by December, Goldman Says
By Matthew Leising – Aug 10, 2010 10:52 AM ET

The U.S. Commodity Futures Trading Commission and the Securities and Exchange Commission will issue draft derivatives rules by December, Goldman Sachs Group Inc. analyst Daniel Harris said.

Harris attended a forum in New York sponsored by the Futures Industry Association yesterday where officials from the agencies discussed the timing of the draft rules, the analyst said today in a note to clients. The CFTC, which may release its proposals as soon as mid-November, has identified 30 rule-making areas and the SEC has pinpointed 26 for its part in regulating swaps markets, he said. “The level of ‘unknowns’ materially outweighs the ‘knowns,’” Harris wrote. “One major takeaway is market participants lack the detailed rule set from the SEC/CFTC to accurately develop systems to implement almost any of the likely requirements of the Dodd-Frank” law, he said.

Among changes to the $615 trillion over-the-counter derivatives market signed into law last month by President Barack Obama are requirements that standardized interest-rate, credit-default and other swaps be processed by clearinghouses and traded on exchanges or similar systems. New designations must be defined as well, such as what constitutes a “standardized” swap and which firms are “major swap participants.”

Regulators have until July to set in place most of the new rules based on the financial regulatory reform law. Industry comments and public reaction will be sought by the regulators after the drafts are released.

No ‘Tsunami’

The SEC “noted it would likely provide ‘waves’ of rules to the industry for comment and discussion rather than a ‘tsunami’ of rules all at one time,” the analyst said. Harris noted that the SEC has significant other areas of jurisdiction in which it must write new rules under the Dodd-Frank Act while the CFTC is only engaged in derivatives reform.

The push to overhaul the market structure of OTC derivatives follows the collapse of the housing bubble that caused the financial crisis and credit markets to seize up, Lehman Brothers Holdings Inc.’s bankruptcy and more than 8 million U.S. job losses. Private swaps complicated efforts to solve the crisis when regulators and market users couldn’t easily determine how interconnected banks had become through trading the contracts.

Clearinghouses, which are capitalized by their members, increase stability in over-the-counter derivatives markets because they lessen the effect of a default by sharing the risk among the membership. They also use daily margining procedures to keep accounts current and allow regulators to see market positions and prices.

Defining Terms
One hurdle for the CFTC and SEC is defining terms in the new law that will have wide consequences for swaps users. One definition is “major swap participant,” which isn’t a dealer in the market but a firm that “maintains a substantial position in swaps” using leverage that creates “substantial counterparty exposure,” according to the Dodd-Frank bill.

Whether large hedge funds, asset managers or other investors qualify under this definition will be up to the regulators over the next year.
The definitions “are still unclear and need further clarity, given their prominence in the legislation,” Harris said. “This also includes other more specific titles, including securities based swaps dealers.”
Securities based swap dealers will be those banks that trade some types of credit-default swaps and will be under SEC regulation.

« Last Edit: Oct 29, 2010, 3:43am by Duc N Altum »

In life, if there is no struggle, there is no progress.

The positives build you and the negatives build your character.

A UK article about their derivitives problems that addresses it is not just an american strain, also focus on what is in bold for quick reading—–>

Naked Short Selling NEWS
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Naked Short-Selling Is Barefaced Recklessness
Financial markets are powerful, but European Socialists can clip their wings, argues Ben Fox
by Ben Fox
Tuesday, October 12th, 2010

The market in financial products must be regulated as a matter of urgency.And in the European Parliament, we will. While effective financial regulation at national level cannot be expected from the Conservative-Liberal Democrat coalition, this overdue regulation is the focus of political work in the Euroepan Union.

George Osborne’s emergency Budget constituted a savage attack on the public sector based on the misguided idea that it would appease the markets. When Osborne talks about the markets, what he actually means is credit rating agencies, bond markets and financiers involved in forms of derivatives: credit default swaps, naked short-selling and other obscure financial products. In other words, the Chancellor is referring to the institutions that caused the financial crisis in the first place.

Fortunately, things are different in the European Parliament. Several months ago, Labour MEP Arlene McCarthy’s report on capping bankers’ bonuses and salaries was adopted by an overwhelming majority of her parliamentary colleagues. And this McCarthy report, while important in curbing the grossly excessive salaries of top financiers, is just part of a raft of major EU reforms of the financial service industry. The EU’s approach to financial regulation has not been perfect, but we are getting there. Much of the past year was spent working on a directive aimed at regulating hedge funds and private equity. A final decision on this is expected this month.

However, much as we may dislike the practices of asset stripping and slash-and-burn economics favoured by many private equity firms, they were not the primary cause of the systemic risk to the global economy that ultimately led to the financial crisis. The non-existent regulation of the opaque world of the derivatives market should have been our first priority. Now, finally, Europe has legislation in this field on which to work.

The derivatives market, made up of financial instruments which derive their value from an underlying asset or credit, was probably the biggest driver of the sovereign debt crisis that has led to massive – and largely unnecessary – austerity budgets being implemented by panicked finance ministries across Europe.
One of the main problems is with derivative trades between two parties – known as over the counter. With an OTC trade, regulators have no idea what has been traded and what it is worth. It is, essentially, a financial black hole. This industry has boomed over the past two decades. At the end of 2009, OTC derivatives had a notional value of $615 trillion. That’s almost 10 times larger than the entire global economy.

Derivatives are basically futures. Their primary purpose involves companies managing future costs, such as airlines dealing with fluctuations in fuel prices. The problems come when they are used purely for speculation – such as when a trader bets on assets without ever buying them.

This was a major factor in the sovereign debt crisis that hit Greece and other European nations. A handful of major investment banks and traders took massive credit default swaps to bet against a country’s economic performance. Such behaviour is financial markets at their worst. It has no intrinsic merit, but has caused devastating damage, both economically and socially. It must not be allowed to happen again.

The European Parliament set out its position on such derivatives earlier this year, advocating more use of central clearing of derivative contracts in order to minimise the risk of defaults, along with independent and transparent valuation of contracts so we know what deals are being done and whether they pose a risk. Although the Socialist Group, the centre-right European People’s Party, the Liberals and Greens all support tight regulation, British Conservative MEPs voted against amendments aiming at tackling conflicts of interest and abuse in the derivatives market.

Now there are legislative proposals from the Commission designed to deal with the derivatives market. Commissioner Michel Barnier has described this as “a Wild West territory” that “contributed to the financial crisis”. He wants to set up a watchdog to monitor all derivative trades. He wants to see disclosure by investors of whether they are short selling and on what, central clearing parties to avoid companies defaulting and a clamp-down on “naked” short-selling – when a trader sells a financial product that they haven’t yet borrowed. All this constitutes a decent start, but we need to go further. We should follow the German government’s lead and ban “naked” short-selling altogether.

This area of the financial sector is murky and complex, and the market players have substantial means to lobby politicians into submission. But centre-left politicians in Europe must stand firm. There is no value in destroying the financial sector, but we cannot go back to the days of unregulated laissez-faire capitalism.

Labour has lost the power to legislate at Westminster and a shift of attention to Brussels must form part of its fight back. The House of Commons is not the only game in town. In fact, when it comes to regulating the financial sector, the most effective legislation comes from either the EU or global institutions. In the light of a recession and a sovereign debt crisis caused by speculation, what happens at European level is more important now than ever before. Under their new leadership, Labour MPs must work with socialist politicians from their sister parties to ensure that Europe does what the Con-Dems refuse to do and introduce stringent regulation of the financial industry.
Ben Fox is a parliamentary advisor in the European Parliament. He is also chairman of the GMB’s Brussels branch.
http://www.tribunemagazine.co.uk/2010/10….d-recklessness/

« Oct 14, 2010, 5:32am by Duc N Altum »

In life, if there is no struggle, there is no progress.

The positives build you and the negatives build your character.

So back to my attempted point of the 30 rules in place for the derivitives. If the CFTC was working on 30 rules and ONLY derivitive rules then I am holding much comfort in my belief of the so called script finally finishing out in its time.

And to add an old post to relate the derivitives to the CMKM situation, I will re post.

___________________

TY Taskforceviking

On the eve of the Presidential signature for the Financial Reform Bill, I’m digging up a very interesting, and perhaps prophetic, email I received last July from the urban legend jay_adobe:

See below: “It’ll end with derivatives’ finality.”

—– Original Message —–

From: Jay Adobe <jay_adobe@yahoo.com>
Date: Saturday, July 4, 2009 7:06
Subject: Re: Fwd: Edwards’ Penalty
To: Scott MAJ FORSCOM <scott.xxxx@us.army.mil>

> Scott, My thoughts are no longer needed. Just re-read my old
> posts. If nothing else, they are spoken too soon. We are where
> we are, and soon enough we will have finally arrived.The
> astonishment is yet to come, but this is a good start. It’ll end
> with derivatives’ finality. Enjoy your day. Hang in there as the
> script unfolds all around us and countries continue the re-
> alignment. ‘Tis a wonderful day to be a shareholder. IMO.

In life, if there is no struggle, there is no progress.

The positives build you and the negatives build your character.

Today at 2:35am, Duc N Altum wrote:

And if people think oh a guru statement oh brother, none of them have ever been right. Well that just depends on what a person has been looking for out of a poster. If how much and when ONLY, then yeah many have missed some key points which is fine. Anyway, just going to post 1 GROUP of posts and I am impressed with how in the world he knew this and notice the dates.

By: jay_adobe
27 Mar 2008, 12:16 PM EDT
Msg. 693042 of 778290
Jump to msg. #

Next bouncing ball:
LEH
Followed potentially by MER, but not necessarily so for MER if the planned PPT intervention inhibits the public knowledge of loss and write downs as an attempt to stabilize the outcome is enacted. Watch it happening all around you. Never, in the history of the markets, have you seen this and you more than likely will not see it again. Enjoy your day. imo

========================================

By: ncmale28409
06 May 2008, 02:29 PM EDT
Msg. 715947 of 778289
Jump to msg. #

Looks like Lehman is headed the Bear Stearns way. JMHO.

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By: jay_adobe
06 May 2008, 07:16 PM EDT
Msg. 716027 of 778289
(This msg. is a reply to 715947 by ncmale28409.)
Jump to msg. #

ncmale, I think you’re right. post # 693042

<—- that is his actual post with he putting the post number in if anyone was wondering.

________________________________________

So yes I find it VERY INTERESTING how Jay called out LEH (Lehman) would not be saved by the PPT ( Plunge Protection Team) but Merr Lynch would. Jay called that out 6 months before that happened. Bear Stearns had collapsed mid March of 08 but the Financial Tsunami did not hit until September 08 with full force. So he calling it out specifically as he had done MANY times in his past posts on other topics, I will definitely NOT throw away his thoughts as being possibilities to when they are to mature.

And for anyone wanting to follow the Lehman Specifics —–>

Lehman

On September 15, 2008, the firm filed for Chapter 11 bankruptcy protection following the massive exodus of most of its clients, drastic losses in its stock, and devaluation of its assets by credit rating agencies. The filing marked the largest bankruptcy in U.S. history,[4] and is thought to have played a major role in the unfolding of the late-2000s global financial crisis. The following day, Barclays announced its agreement to purchase, subject to regulatory approval, Lehman’s North American investment-banking and trading divisions along with its New York headquarters building.[5][6] On September 20, 2008, a revised version of that agreement was approved by US Bankruptcy Court Judge James M. Peck.[7] The next week, Nomura Holdings announced that it would acquire Lehman Brothers’ franchise in the Asia-Pacific region, including Japan, Hong Kong and Australia,[8] as well as Lehman Brothers’ investment banking and equities businesses in Europe and the Middle East. The deal became effective on October 13, 2008.

In life, if there is no struggle, there is no progress.

The positives build you and the negatives build your character.

Duc N Altum
DIAMOND DIGGER
Posts: 68
Re: Derivatives and CMKM’s finish-line?
« Reply #20 Today at 11:14am »

http://millionaires.proboards.com/index…..ad=39577&page=2

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Yes and sorry I have my original point or message of why I posted these posts (after a decent sleep).

I was concerned about seeing that only 30 rules out of the 380 were completed, a week before July 16th of when the Financial Reform Bill was to be completed.

I am of the firm belief that there is much more to CMKM than meets thee eye. During the cert pull days and all that took place must of revealed a “SURPRISE” when many interesting events took place during that time, which most have glanced at.

Anyway,I am of the belief that ANYTHING labeled CMKM and lawsuit or court hearing, like Al Hodges, or Tyler chipping away at Roger Glenn, or Urban Casavant looking bad and he needing to come to court to defend his name IS ALL HUGE IN MY MIND OR BELIEF. If anything here goes to any form of a trial then watch out with what could cripple the system with what were to get revealed publicly there.

So my belief is all of these side actions have been very helpful in the leverage category in making sure that this never happens again. No loop-hole writing in the financial reform bill to where business can go back to usual after any and all leverage has faded and disappeared.

So with that said, now back to the 30 rules only done out of the 380. I was concerned that with only 30 rules done and us being leverage and we not getting paid until it is done, had me quite concerned internally.

So the third post of this thread ( UK article- Naked short News ) spells out the derivative mess over there and just as the article explains, that they were 1st working on regulating hedge funds but later realized “the derivatives market should have been our first priority.” And it appears at the present time that OUR financial reform bill is acting the same. Because in the second post of this thread it tells of the CFTC has identified 30 rule-making areas AND the CFTC is only engaged in derivatives reform.

So right now with our financial reform bill only having 30 rules done could very well be thee number one concern of thee out of control unregulated derivatives that has snowballed into the $600 Trillion arena which is almost ten times the size of the whole world economy as the 3rd article says.

And then the Jay Adobe email speaks for itself and relates the derivative situation to CMKM finality. And the last post of Jay Adobe posts about Lehman is just one example of some amazing foresight that I believe adds outstanding credibility to his statement in his email that “It’ll end
> with derivatives’ finality.”

So that was my direction of the posts of this thread. Thank you to all the outstanding CMKM shareholders here, my infinite respect to us all for what I believe to be a historic journey.

Take care and thank you all and be well and with infinite respects!!!