Comments on: Annals of CDS manipulation, Goldman Sachs edition http://blogs.reuters.com/felix-salmon/2010/12/10/annals-of-cds-manipulation-goldman-sachs-edition/ 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: JohnCoogan http://blogs.reuters.com/felix-salmon/2010/12/10/annals-of-cds-manipulation-goldman-sachs-edition/comment-page-1/#comment-21868 Mon, 13 Dec 2010 16:49:00 +0000 http://blogs.reuters.com/felix-salmon/?p=6508#comment-21868 From the WSJ:http://online.wsj.com/article/SB1000 1424052748703380104576015984159647972.ht ml

“Many mornings before Bernard Madoff’s arrest, Mark Madoff would arrive at his trading desk before 7 a.m. On the Friday before he died, he was still following Wall Street news, sending to friends and ex-colleagues around 5 p.m. a Reuters blog item about Goldman Sachs and Sen. Carl Levin.”

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By: Danny_Black http://blogs.reuters.com/felix-salmon/2010/12/10/annals-of-cds-manipulation-goldman-sachs-edition/comment-page-1/#comment-21806 Sat, 11 Dec 2010 06:57:59 +0000 http://blogs.reuters.com/felix-salmon/?p=6508#comment-21806 Look at how the trader is renumerated. If he is renumerated solely on the P&L of the positions then he is probably a prop trader – as opposed to say a govie market maker who may lose a bit of money but does enough volume to drive the business to the sales guys underwriting government debt. Look at his position on the trading floor, if he is off in some glass office to the side or not on the floor at all then he is probably a prop trader. If he is sitting next to the sales traders he is probably market making not prop trading. Look at the tools on his desk, look at the people he trades with.

Banks usually have zero difficulty deciding who is a prop trader vs servicing a client. By the way it has nothing to do with whether the client makes or loses money on the trade.

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By: Greycap http://blogs.reuters.com/felix-salmon/2010/12/10/annals-of-cds-manipulation-goldman-sachs-edition/comment-page-1/#comment-21803 Fri, 10 Dec 2010 23:54:12 +0000 http://blogs.reuters.com/felix-salmon/?p=6508#comment-21803 @FosterBoondog, I think “short squeeze” is a figure of speech here. Obviously you cannot squeeze an asset that does not need to be delivered. BUT … these deals would be under CSA and you can “squeeze” them for collateral. If you can sell enough protection to move the market, the protection buyers have to post more collateral. Few funds have heaps of collateral sitting around doing nothing, so they would have to sell something. Eventually they might have nothing to sell but the CDS position itself. Once that point is reached, the process is self-reinforcing, as the process of closing out the positions narrows spreads further.

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By: FosterBoondog http://blogs.reuters.com/felix-salmon/2010/12/10/annals-of-cds-manipulation-goldman-sachs-edition/comment-page-1/#comment-21771 Fri, 10 Dec 2010 14:34:36 +0000 http://blogs.reuters.com/felix-salmon/?p=6508#comment-21771 I’m confused. How can you create a “short squeeze” in a derivative whose potential supply is unlimited? It’s not like they’re going to run out of copies of the ISDA contract.

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