Brian Bollen's Blog

Deutsche Börse upgrades Xetra

Deutsche Börse says it has introduced a more advanced version of its Xetra electronic trading system today. With the new 16.0 release, it offers its customers new matching functions specially designed for larger volume orders.

Never rely on what you think you know

Mint – Blain’s Morning Porridge – St Andrew’s Day

“Trust the Lord with all your heart. Never rely on what you think you know.”

Today is St Andrew’s Day, the Patron Saint of Scotland. It’s apt we’re celebrating Scotland’s victory in the Davis Cup Tennis. Well done the Murray lads!

Kennedy handed HSBC Asia appointment

Glenn Kennedy has been appointed as the head of trustee and fiduciary services, Asia for HSBC Securities Services.

As exciting as set concrete

Mint – Blain’s Morning Porridge

“Oh, for the good old days when people stopped Christmas shopping when the ran out of money”…

Growth in Guernsey

Figures from the Guernsey Financial Services Commission (GFSC) show that, at the end of September 2015, the net asset value of all funds under management and administration in the Island stood at £224.8 billion.

Not quite a Christmas carol...

What's that? said my wife when she realised a parcel was being delivered to our door this morning.

Someone has sent me a book to review, I answered.

Ooooohhhh, she said, with a thrill of anticipation, thinking it might be a new Jack Reacher or John Grisham.

Finance-led capitalism, shadow banking, re-regulation and the future of global markets, by Robert Guttman.

To say that she audibly deflated is to do deflation an injustice.

Three in five seeking alternatives

More than three in five (62%) of institutional investors say they are seeking alternatives to traditional bond market exposure, according to new research from NN Investment Partners.

Just a wild stab in the back

Mint – Blain’s Morning Porridge

“No, just a wild stab in the back which is, incidentally, what you’ll be getting if you don’t start being more helpful…”

Beacon Trust picks Maples Fund Services

Maples Fund Services, an independent global fund services provider and division of MaplesFS, has been selected by Beacon Trust Portfolios PLC as administrator for their sub-funds, the Beacon Cautious Fund and the Beacon Growth Fund.  

US rate rise edges closer

A rise in interest rates before Christmas became more likely last week, when the US Federal Reserve (Fed) released the minutes from its October meeting, writes Alan Higgins, UK Chief Investment Officer for Coutts in his most recent weekly blog. They showed that most voting members felt the economy was strong enough to support a rate rise in December.

Negative interest rates here to stay

I have said from very early on in the global financial crisis that I have a blueprint for addressing it effectively. Having reported on the Latin American and other debt crisises from 1984-89 I have experience to draw upon. As I never tire of saying, I was publicly acclaimed as having created the Brady Bond (albeit inadvertently by asking an impertinent question of a pompous German banker) which played a key role in resolving the crises and saving the international financial system (where's my knighthood?).

Calastone welcomes Investec to transfer service

Calastone, the global funds transaction network, has added Investec Wealth & Investment, one of the UK’s largest private client wealth management firms, to the roster of firms, including Rathbone Investment Management, joining its transfer service.

Nobody comes, nobody goes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mint – Blain’s Morning Porridge

“Nothing Happens. Nobody comes, nobody goes. It’s awful.”

Normal service is resumed...my knee is essentially fixed and it’s back to business as normal. Some may think I’ve spent the last few days doing nothing – but “working from home” did involve lots of calls and emails. In between trips to the physio I did manage to get a bit of painting done.. (my favourite way to relax). Remarkably, I’ve sold a few, including the one in the attachment which I painted Friday and sold Sunday! What a renaissance man I have become…

Back to the grinding reality of life.. and just a few days till Thanksgiving…Reading through the street blogs the last few days, it feels the market lacks focus, energy or direction. It feels a bit like traders are waiting for the sake of waiting… The Fed (Federal Reserve) hike only a few weeks away overhangs everything and dominates the info-flow.

But, a brief trawl round the news sites this morning tells me there are lots of dots to connect when it comes to determining current risks. For instance, there is lots of stuff about diminishing liquidity. When even the super-liquid treasury market dries up… folk are sitting up and worrying.  Short term it’s a bigger risk than central bankers are prepared to admit. We all know the threat of everyone running to the exits at the same time could trigger flash-crash like bond losses in the event of a sudden sell-off.  It’s difficult to see how to cure illiquidity via conventional vectors. Most banks have reacted to regulation and capital-rules designed to fight the last crisis by simply exiting markets.

In the medium term, it’s clear the distribution/sell-/buy-side structure of the market has changed as banks have exited the role of market-making. What will replace them? That’s still an evolutionary question that’s likely to see new broker roles and platforms.

But, it’s not just a question of new distribution and buy-/sell-side dynamics. Perhaps its time for a rethink on the actual compositional structure of government debt markets? They comprise multiple off-the-run securities but only a few current bonds. Perhaps it’s time to think about  something cathartic in terms of making a far larger portion of the market liquid – perhaps through book-keeping/custody/exchange-based technologies promoting exchange/switch facilities or even more radical solutions to morph illiquid bonds into liquid generics?

We’ve got ideas on how – and we’re more than happy to work with debt management offices and treasury departments on what they can do to improve markets! (Hint.. Goldman Sachs are not the only ones who think they understand fixed income….) 

Meanwhile, the rise in corporate defaults as the markets grub ever deeper into Junk territory in search of yield is another source of angst. This really should not be an issue – yield tourists will get stung by credits they don’t understand, and it was ever thus.

However, as I commented above - in these fractious times there is a larger risk of flash-floods crashing markets. The bond herd is very skittish, and it’s at times like these that stampedes are likely. Runaway markets aren’t fussy about what they trample underfoot.

In the same way, another article I was reading this morning was an article about US accounts betting big on banks and EM (emerging markets) paper. From a simple relative yields and returns basis that makes sense – but how should you factor in the possibility of a sudden flash-crash bond sell-off in one sector infecting others?

Any sell-off in corporate bonds is bound to worry bank bond holders.. (Personally, I’d see a crash in US bank paper as a buying opportunity – unlike their European brethren, US banks are essentially fixed! Just look at Italy having to bad-bank smaller banks’ non-performing loans to beat the bail-in rules).

On the subject of EM - I wonder how robust the EM sector will be to a dollar shock? One US account manager says he’s buying Mexico as central bank officials say they’ll tighten alongside the Fed to keep the nation’s interest rate advantage and keep foreign investors from pulling our capital.. Er.. run that one by me again? 

And back in the real world, we’ve got the Pfizer/Allergan merger – or to be honest.. tax arbitrage. They call it the largest tax inversion trade – but it's basically a play on cheaper Irish versus US taxes. Yet again loads of money paid for a corporate event that realistically won’t create new jobs or drugs, but will create loads of profits to reward the senior management…

Meanwhile, in the land of alternative assets – where I now spend much of my time – we have a number of new avenues to explore. Shipping. If you are interested in shipping-related assets (and there are very good reasons to be so!) then get in touch. Trade finance: same question – we’ve got a very interesting deal lined up. Give me a shout if intrigued.

On the general theme of alternatives: If you are looking for five-year sterling paper with a 5.5% yield with the characteristics of a AA ABS bond… or a 10% return with a bit of whoosh, then it's time we were chatting…

Out of time…

Bill Blain

44 207 786 3877

44 7770 881033

[email protected]

[email protected]

TES a US gogo

Eurex says it began offering its trade entry services (TES) for customers based in the US last Monday.

Fullgoal chooses Deutsche Bank

Deutsche Bank is to provide custody, fund administration and transfer agency services to Fullgoal Asset Management (HK) Ltd for the company’s new Luxembourg-domiciled RQFII fund, one of the first fixed income RQFII funds launched under UCITS IV regulations. 

Finding positives in lower for longer

The UK economy continues to display signs of strength, certainly when compared with other developed economies, according to Ben Russon, Vice President and Portfolio Manager, UK Equity, Franklin Local Asset Management in a newly issued note.

Anglo American appoints BNY Mellon

UK-based mining giant Anglo American plc has named BNY Mellon as depositary bank for its sponsored American depositary receipt (ADR) programme, replacing a previously unsponsored facility.

Data struggle for asset managers

Most asset managers struggle with ensuring data consistency and quality across their organisations, according to a recent survey by SimCorp: “Mastering Data Management: Going beyond Traditional EDM Approaches.”

They appear almost human

Mint – Blain’s Morning Porridge

“Now that I see them up close, they seem so much less frightening. Indeed, they appear almost human…”

New vendor management hub on its way

Fintech startup serving asset managers/owners, wealth managers and broker-dealers.

A launch date of December 7 has been set for ServiceMatrix.net, a new and unique vendor management hub for institutional investors, asset managers, family offices, wealth managers and broker-dealers. With 50+ participating providers, the Service Matrix defines service provision across the front, middle and back offices and provides a simple interface to examine, measure and rate services. 

A preview is available now at www.servicematrix.net