Category: Financial System

Financial System

GlobalIntelHub2

Barclays Warns End-Of-QE.. Would Make 2000 Bubble Look Like A Day At The Beach

Elite Forex Blog - Market Research & Analysis

“It’s hard to make the case that [US stocks are up 17% on a 2.5% earnings rise] based on fundamentals alone – it’s money in motion,” is how BofA’s CIO Hans Olsen describes the unreality occurring in US asset markets currently. He noted in last wee…

Continue Reading
GlobalIntelHub2

CFTC Fines Algorithmic Trader $2.8 Million For Spoofing In The First Market Abuse Case Brought By Dodd-Frank Act, And Imposes Ban

Elite Forex Blog - Market Research & Analysis
There has been some degree of concern among regulators during the course of this year with regard tohigh speed algorithmic trading and what certain authorities consider to be the disruptive behavior in which certain traders engage by using algorithms to outpace other market participants.
Today, the US Commodity Futures Trading Commission (CFTC) has brought a successful case against two parties, citing them for engaging in what the CFTC considers to be the disruptive process of spoofing. This is a milestone case, as it represents the first time that a trading firm has been prosecuted under the Dodd-Frank Act’s prohibition of spoofing, which is defined under the act as the illegal practice of bidding or offering with intent to cancel before execution.
Britain’s Financial Conduct Authority (FCA) collaborated with the CFTC on this matter, and has also issued a penalty to the same parties.
One of the reasons that algorithmic trading is on the agenda of regulators is that it facilitates positions to be opened and closed at extremely high speeds, using extremely high technology, therefore giving certain traders a distinct advantage over others.
In this particular case, Panther Energy Trading LLC and its Principal Michael J. Coscia utilized a computer algorithm that was designed to illegally place and quickly cancel bids and offers in futures contracts.
The resultant toxic order flow of firms that use algorithms without contravening any laws has resulted in German regulator BaFIN proposing a mandatory delay in trade execution times to prevent disruptions, and go against latency arbitrage by those with quicker systems and complex automated algorithms.
Certain firms, without any encouragement from regulators, are also considering imposing a latency floor in order to absolve them of any such business. EBS recently embarked on such a consideration.
The CFTC’s order against Mr. Coscia and his firm finds that this unlawful activity took place across a broad spectrum of commodities from August 8, 2011 through October 18, 2011 on CME Group’s Globex trading platform.
The CFTC Order requires Panther and Coscia to pay a $1.4 million civil monetary penalty, disgorge $1.4 million in trading profits, and bans Panther and Coscia from trading on any CFTC-registered entity for one year.
According to the Order, Coscia and Panther made money by employing a computer algorithm that was designed to unlawfully place and quickly cancel orders in exchange-traded futures contracts.
For example, Coscia and Panther would place a relatively small order to sell futures that they did want to execute, which they quickly followed with several large buy orders at successively higher prices that they intended to cancel.
By placing the large buy orders, Mr. Coscia and Panther sought to give the market the impression that there was significant buying interest, which suggested that prices would soon rise, raising the likelihood that other market participants would buy from the small order Coscia and Panther were then offering to sell.

http://forexmagnates.com/cftc-fines-algorithmic-trader-2-8-million-for-spoofing-in-the-first-market-abuse-case-brought-by-dodd-frank-act/

Continue Reading
GlobalIntelHub2

Financial Reforms Drove the Soviet Union Into the Grave

GIHAdminLeave a Comment on Financial Reforms Drove the Soviet Union Into the Grave

Who of the famous people in Russia’s modern history said the phrase: “I wanted the best, but it turned out as always”? There is quite a list of names that comes up in this connection, although it is associated with only one man – the Minister of Finance of the USSR, Valentin Pavlov, who once […]

Continue Reading
GlobalIntelHub2

G20 backs plan to stop global tax avoidance and evasion

Elite Forex Blog - Market Research & Analysis
Finance ministers from the G20 group of leading nations have formally backed plans to tackle international tax avoidance and evasion.
A statement issued earlier supports the automatic exchange of tax information between countries.
It also backs plans by the Organisation for Economic Cooperation and Development to stop firms moving their profits across borders to avoid taxes.
The OECD said some firms “abuse” current rules to avoid tax.
UK Chancellor George Osborne said the announcement, which came after a two-day G20 meeting in Moscow, was an “important step towards a global tax system that is fair and fit for purpose for the modern economy”.

‘Aggressive tax avoidance’

Last month, the G8 group of leading economies agreed a deal to “fight the scourge of tax evasion”, and nations including the UK, France, Germany, the USA and Australia are taking part in a pilot information exchange scheme.
British Prime Minister David Cameron made the issue a priority for the UK’s presidency of the G8 this year, and Australia has agreed to do the same during its G20 presidency next year.
The OECD said current tax rules, some dating to the 1920s, were created to avoid “double taxation” of companies working in more than one country – but it said they were being abused to allow “double non-taxation”.
BBC business correspondent Joe Lynam said the “bandwagon of clamping down on aggressive tax avoidance” was moving on from developed economies to emerging ones like Brazil and India.
The rules should mean bigger bills for companies which could previously “pit one country off against another in terms of tax”, our correspondent added.
The G20 asked the OECD to come up with a plan to improve tax cooperation, and the finance ministers said they “fully endorse the OECD proposal for a truly global model” of information sharing.
Their statement called on all countries to make automatic information sharing a reality “without further delay”, adding that “capacity-building support” would be provided for poorer nations.

Closing loopholes

The G20 said the changes should be in place within two years, but our correspondent called that “very ambitious” because hundreds of tax treaties exist between countries and “thousands of amendments” might be needed.
Many multinational firms currently avoid tax – legally – by means including loopholes and tax havens, but the new rules could require them to pay more in the countries where they do business.
Firms including Google, Starbucks, Amazon and Apple have been criticised for the amount of tax they pay.
Earlier this year, MPs attacked Google for routing £3.2bn of UK sales through Dublin and paying little tax as a result.
Starbucks has been questioned for transferring money to a Dutch sister company in royalty payments, though the firm agreed to pay more tax after strong public criticism.
The companies point out that these schemes are legal and they have a duty to shareholders to minimise their tax bills.
Continue Reading
GlobalIntelHub2

Did A Raging Fire Burn Down JPMorgan’s Gold Vault?

Elite Forex Blog - Market Research & Analysis

Overnight there has been a flood of viral reports that ‘there was a fire at JPM’s gold vault’ based on a self-made video showing a barrage of fire trucks located on Broad Street between Wall Street and Exchange Place, further substantiated additio…

Continue Reading
GlobalIntelHub2

IMF Economists Say The Economic Recovery Is A Fake

GIHAdminLeave a Comment on IMF Economists Say The Economic Recovery Is A Fake

WE ALWAYS BELIEVE THE IMF Yet another ‘leaked report’ this time tells us something we have suspected for a long time – not only concerning the IMF’s underhand “plausible denial” way of communicating bad news. The story starts with an internal IMF report called ‘confidential’ which was ‘leaked to a Wall St Journal contributor’. This […]

Continue Reading
GlobalIntelHub2

Post Scarcity Economics

GIHAdminLeave a Comment on Post Scarcity Economics

We live like gods, and we don’t even know it. We fly across oceans in airplanes, we eat tropical fruit in December, we have machines that sing us songs, clean our house, take pictures of Mars. Much the total accumulated knowledge of our species can fit on a hard drive that fits in our pocket. […]

Continue Reading
GlobalIntelHub2

Global Tax Chaos coming

GIHAdminLeave a Comment on Global Tax Chaos coming

The OECD has stated in a report commissioned by the G20 that there will be “global tax chaos” in the next few years due to falling tax revenues from multinational companies around the world. Perhaps we could have saved a few thousand dollars by not commissioning the OECD report, since we could have all told them that was going […]

Continue Reading
GlobalIntelHub2

40 Stats That Show The U.S. Economy’s Real Collapse Over The Past Decade

GIHAdminLeave a Comment on 40 Stats That Show The U.S. Economy’s Real Collapse Over The Past Decade

Submitted by Michael Snyder of The Economic Collapse blog [17], The “coming economic collapse” has already been happening.  You see, the truth is that the economic collapse is not a single event.  It has already started, it is happening right now, and it will accelerate during the years ahead.  The statistics in this article show very clearly that the […]

Continue Reading
GlobalIntelHub2

Savers And The ‘Real’ $10.8 Trillion Cost Of ZIRP

Elite Forex Blog - Market Research & Analysis

Via Chris Turner,
  1. Total Savings – FRED
  2. Average interest rates on savings deposits – FRED (M2OWN)
  3. Interest Income – IRS tax stats, NIPA tables
  4. Effective Federal Funds Rate (FRED)
The good news behind the bottom 85% of close-to-retiree status Baby Boomers that participate in the “markets” via sub $50,000 retirement money is that at some point, the voters might actually get smart and get mad at how much money has been siphoned from them.  Consult the chart below to see a historical relationship between total savings and amount of interest income earned on the savings.
 [6]
Note that prior to 2001, as savings increased (blue line), interest income received increased (red line) proportionally.  However, after 2001, the interest earned stopped increasing.  The green line shows the effective interest paid on interest bearing accounts.
Scaling into the shaded area representing 1986 to present, the following chart depicts the actual Fed Funds rate determined by FOMC.
 [7]
As savings increased when Fed Funds rate remained around 5%, interest income continued to rise.  However, post 2001, the interest income received stopped growing at the same rate.  With the exception of 2005 to 2008 when rates went back to “normal” in the 5% range – the interest income earned has remained stable at just under 1 trillion (Ben Bernanke is so smart).
Let’s apply some thought experiments and make a couple calculations – what would happen if the FOMC were removed and the Fed Funds rate “floated?”  Using average historical rates from the 1920’s for the 10 year note– the mean rate would sit around 5.82%.  With a floating Fed Funds rate, banks would be competing for money and providing responsible savers with some interest income.  Voila, a calculation is borne:
 [8]
By calculating the estimated interest income from historical ratios (orange shaded area), we can see that as of July 2013, approximate interest income would be just over 3 trillion (1/5th of GDP) on savings of 6.8 trillion (using the left scale).  Whereas the actual interest income reported by NIPA remained at 1.1 Trillion, the difference in interest received and lost interest equals roughly 2 Trillion.  Remember, this is interest income to SAVERS forever lost since 2001.  By aggregating the entire shaded orange area, SAVERS have missed out on a whopping 10.8 Trillion in earned interest usage.  The final chart above makes a loud and clear statement toward the beneficiaries of the low interest rate environment.

http://www.zerohedge.com/print/476537

Continue Reading