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By: DavidMerkel Wed, 02 Oct 2013 12:10:54 +0000 I guess there is a broader question here, Felix. Is it legitimate to have a purely private investment market? And variables that are privately determined? Where all business is “Enter/Use at your own risk?”

We have a concept like that regarding accredited investors, for both sophisticated individuals and corporations. What’s happened here and in other places where you have “fixes” in the market price, is that the market has gotten so big that the position of the fix affects a wide number of players, and the variables affect some non-sophisticated players (e.g. an adjustable rate loan that floats off LIBOR).

I wrote an article on this a while ago: nal-indexes-like-libor/

Now obviously, my opinion has been wrong with respect to how the tide of public policy has moved. My point is this: you can dig into a large number of complicated situations, and probably find someone taking advantage of information asymmetries. Is he a trader, an arb, or a felon? If a felon, there are going to be a lot of surprised people who though they were just making an internal market.

As always, I appreciate your work.


By: MrRFox Thu, 26 Sep 2013 13:01:52 +0000 KiddoD, like Matty (‘I love The Street’)Levine, does everything but address the obvious fact that somebody had to have received advance knowledge of the Fed’s decision – there is no other plausible explanation for the sequence of observed trades.

The preferred cover-story is that it must have been those naughty reporters who jumped the gun – not likely, IMO. They were limited to a small group and kept in a locked room. Far more people within the Fed itself knew of the decision, and nobody kept them under lock and key.

Somebody who had the capacity to put $600-million on the table, via direct computer-link to the Exchange, and have the order executed within the space of a few thousandths of a second knew what was going to happen before it was announced. That has to be somebody big in NYC, and those guys are much closer to folks at the Fed than they are to any of blabber-mouth reporters; they should be – NYC rabbis made all of them rich.

By: KidDynamite Thu, 26 Sep 2013 11:32:27 +0000 @MrRFox –

there are people who understand the mechanics of markets – people like Matt Levine and myself – who understand why this is a non-story.

then there are people who don’t and are looking for useless populist lynch mobs.

of course, Levine explained this all in his post. I also explained it in a post Levine linked to. The answers are all there if you really want to understand reality instead of looking for an enemy to blame.

good luck.

By: MrRFox Thu, 26 Sep 2013 04:06:16 +0000 As between KidD, a certain blogger, and Matt Levine – who’s the biggest Wall Street shill?

“Non-story”, Kid – $600-million put on the table in a few micro-seconds? This isn’t a couple of wise guys bribing some low-rent scribe, ya’ know. Most plausible, the tip had to come from inside the Fed, and be passed on to someone with real sway on The Street.

There is a ‘paper trail’ – easy enough to find out, if rabbi Lew cares to do so, who placed the offending trades; from there it’s just a matter of sweating the truth out of whoever that was until he spills the truth about where the tip came from. “Non-story” – IDTS. An ugly story our conflicted masters in DC don’t care to pursue – that’s more the ticket IMO.

By: KidDynamite Wed, 25 Sep 2013 22:00:10 +0000 Matthew_Saroff:

here’s a good post on that total non-story:  /eric-schneiderman-wall-street-time-mac hine-sheriff.html

By: Matthew_Saroff Wed, 25 Sep 2013 19:46:14 +0000 I’d like to see how this compares to the trading irregularities om Chicago regard the Fed and the Taper.

Someone traded the instant the news was announced, but as they were in Chicago, they so got a 7 millisecond head start courtesy of the speed of light, and conducted $600m worth of trades.

By: MrRFox Wed, 25 Sep 2013 18:15:34 +0000 Hmm … isn’t what these guys appear to have done trivial in comparison to what HSBC was allowed to walk away clean from? And we all do recall the perfect justice of that, as explained to us by a certain blogger, don’t we?

What’s the point of even talking about things like this any longer?

By: KidDynamite Wed, 25 Sep 2013 17:41:15 +0000 Felix – please let me know when you start selling “Lord Libor” t-shirts. I want one.