Comments on: Goldman’s conflicts http://blogs.reuters.com/felix-salmon/2010/01/13/goldmans-conflicts/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: timrg http://blogs.reuters.com/felix-salmon/2010/01/13/goldmans-conflicts/comment-page-1/#comment-11129 Thu, 14 Jan 2010 10:51:06 +0000 http://blogs.reuters.com/felix-salmon/2010/01/13/goldmans-conflicts/#comment-11129 I don’t believe this is really news. Goldman and all of the other brokers have ‘desk analysts’ whose job it is to search out opportunities to benefit the trading desk, not clients. When you speak to a ‘desk analyst’ or a sales person, one has to assume their recommendations are conflicted. That is the way it works.

]]>
By: randolfduke http://blogs.reuters.com/felix-salmon/2010/01/13/goldmans-conflicts/comment-page-1/#comment-11114 Wed, 13 Jan 2010 19:54:28 +0000 http://blogs.reuters.com/felix-salmon/2010/01/13/goldmans-conflicts/#comment-11114 1) There are clear cases when GS has recommended to institutional clients to take one side of a trade and for retail to take the other
2) Anytime a firm acts as principal, it is taking the other side. Every OTC trade. When the firm recommends a trade and acts as principal then things get interesting. They are a) either making a bid ask spread, which even if gauging, is acceptable; or b) entering into a trade/bet/position which would not be attainable at a reasonable price and/or reasonable size without client flow.

This happens all the time. If you are smart and a good client, the firm may allow you to enter position with them. This might happen in order to facilitate another client in a size greater than the trader wants to hold on his books.

The real shocker is how dumb many clients are. Most clients tell the firm what trade they will do before they do it (allowing the firm to position ahead of trade and/or to give a price that is advantageous to the firm). These clients often won’t ask for a two sided market and won’t get competing prices from other firms.

]]>
By: DrEvil http://blogs.reuters.com/felix-salmon/2010/01/13/goldmans-conflicts/comment-page-1/#comment-11110 Wed, 13 Jan 2010 18:48:23 +0000 http://blogs.reuters.com/felix-salmon/2010/01/13/goldmans-conflicts/#comment-11110 What is quite common at GS & others is for the prop desk to offer a wonky rationale for a trade idea which the (purposely ignorant) sales desk then shop around the street. This is essentially common in derivative trades or trades which will allow the prop book to get hold of otherwise unobtainable (preferably term) borrow. I have lost count of the occasion when I have said to sales guys “but why would I want to do that” only to have to explain to them the “hidden” sting in the trade, usually to be told that they have done boatloads already. Having amiable idiots good at flattery is how you shift CDOs etc.

]]>
By: q_is_too_short http://blogs.reuters.com/felix-salmon/2010/01/13/goldmans-conflicts/comment-page-1/#comment-11105 Wed, 13 Jan 2010 17:33:08 +0000 http://blogs.reuters.com/felix-salmon/2010/01/13/goldmans-conflicts/#comment-11105 also, goldman is a big company with a lot of independent parts. sometimes one part bets one way and another part bets the other way!

]]>