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CDS Liquidity Set To Tumble As Deutsche Bank Exits IG, HY Trading
Back in 2009, Deutsche Bank salesman J.P. Rorech was the CDS salesman who, alongside Millennium PM Renato Negrin, were the first two traders accused by the SEC of insider trading using Credit Default Swaps, a product which many then said the SEC has no jurisdiction over as it is a "security-based swap" transaction (an umbrella loophole which was subsequently revised). The insider trading charge was subsequently dropped after the SEC was unable to provide sufficient proof the two had colluded "off the record" in purchasing VNU CDS on material non-public info, but the stigma may have stuck.
And while it is not clear if that particular incident is what the bank with the world's greatest amount of outstanding notional derivatives was concerned about, or whether the ongoing collapse in bond market liquidity was the factor but moments ago, Bloomberg released a stunning update that Europe's largest bank is exiting the single-name, both IG and HY, CDS product line, which for years was one of its biggest revenue generators and a product in which DB was for a long time one of the best and deepest CDS trade axes.
As Bloomberg reports, Deutsche Bank AG will stop trading investment-grade and high-yield credit default swaps on single credits and will instead focus on trading corporate bonds, according to a spokeswoman.
“Deutsche Bank is redeploying resources and capital into credit cash trading,” Michele Allison, a spokeswoman for the Frankfurt-based bank, said today.
The company will continue trading credit indexes and single-name CDS tied to distressed or emerging market debt, Allison said.
Of course, the very reason why banks moved from cash to CDS trading in the mid-2000s is because the cash liquidity was never high enough to allow massive profits for most entities involved. That, and that the collateral posted when trading credit via CDS was negligible as compared to actually having to own the underlying bond.
And with that, the CDS market just lost one of its key pillars of liquidity. Should other banks follow suit and stop making markets in CDS, watch as trading in CDS (so profitable due to its OTC nature, where dealers make big profits on the bid/ask spread), trickles to a halt, and as one after another TBTF bank warn their FICC revenue in the coming quarters is about to timble.
Finally, one can't help but wonder: is a massive CDS-market rigging settlement about to be unveiled?
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Blah blah blah... ..."swap" my useless paper for your useless paper...
when the exchange of real goods and services stops, then the world goes to war in earnest, not before.
same as it ever was...
Ha Ha Ha ..... "swap"my useless paper for your usefull fysical gold and silver.
when the exchange of real goods and services stops, then the world goes to war in earnest, not before.
same as it ever was...
When fraud is the status quo, possession is the law...
I don;t know about you guys, but that chart really cleared things up for me...
No, I'm not serious, I'm being sarcastic. WTF????
OK, I did some research (smoked a bowl of LEGAL Colorado recreational pot), and NOW I will interpret this chart for the rest of you who will not admit to ignorance:
The two figures at the top with dots beneath them, these represent the red pill/blue pill paradigm. If you swap your pills over the counter for advil or ibuprofen, (which represent blatant money laundering and open banker fraud) then you lose out on the great deals you could have made UNDER THE COUNTER, ie, in the illegal drugs trade, which is represented by the icon of people holding dollar bills. This is the hidden manipulation of all sorts of markets, gold, etc etc, done in underhanded, secret nefarious ways.
If your illegal transaction was accomplished by some form of modern communications (cell phone, email, telephine, radio, etc), that communique was intercepted by the NSA, represented by the boxes on the left side of the chart. The "public" at the botto of the chart is misleading. It only means your communications are not private. Anyone who wants to can listen in on them.This means you can be blackmailed, and can look forward to getting even richer by doing the bidding of those who control you and own your soul.
If, on the other hand, you resorted to whispers in the ear, carrier pigeons, smoke signals, invisible ink, ten-year old couriers, or other low-tech means of communication, your messages are safe, as plainly revealed by the SAFE icon.
In either case, the SEC is plainly living inside a bubble of its own reality, and couldn't care less how you launder your money.
I think its an instuction on how to use toilet paper to swap your ass after taking a dump, or taking a leak (so they have more liquidity)
You all know CDS trading is simply "robbing the bank in broad daylight". They make these things up and then trade them back and forth and charge you and me fees out of our deposits for doing it.
WAKE THE FUCK UP PEOPLE!
The Banks Loan risk is already spread over THEIR OWN LOAN PORTFOLIO.
Guilty!
I'm jealous of your recreational drug. I'm stuck with alcohol or nothing. Alcohol is just less fun and if you overdo it you feel crappy the next day. Looks like DC legalized it but it'll take another two years til it's actually available. I live too far from CO, AK, WA, OR etc.
you could not tell that those little people icons were 'people'? I could...now the rest.....?
Oh...I think I know what 'swap' means...
Possession is almost ALWAYS the Law. For example...
[1] In a Law-Abiding Society (Rule of Law) ... "Possession is 90% of the Law", it is said.
[2] In a Lawless or Autocratic Society (Law of Rule)... "Possession is 99% of the Law", don't you know.
Hedge accordingly: i.e. keep ownership documents, and the means to retain physical ownership (via arms and hiding places). And beware of Murphy's Laws; hence, mitigate and manage Risk. Kirk out.
Look out below!
https://www.youtube.com/watch?v=xxbg6LQjapE
Prepare for lift off...
A stroke of sanity, from Deutsche Bank, of all volk?
Mein godt, will wonders never cease?
(More like captial restrictions, finally, at long last, being enforced.)
They live in the same country as Bafin. Most likely they have a red hot poker up their butts 24/7 and strict instructions to limit exposure to American ponzi banking practices.
Let us see who is holding the shale gas HY bag shall we? And let us see what happens to HY liquidity without a big sucker standing by...
I'm gonna need more popcorn;)
Better buy the machine...
Yep, they figure the big money making days of the scam are over. Get out and let someone else hold the bag.
Paging Dr. Bernanke, Dr. Yellen, your ICU patient is seizing. V FIB!!!
OK, I'll take a shot at an explanation on this one:
"I'm fucking full" - Mr. Creosote, Monte Python's "The Meaning of Life"
Better get a lot moar than a bucket this time too!
Can I get a wife swap...or is that illiquid as well
Not if you swap her for a nice truck
Wives yes,
Wookies, not so much.
I understand that if you have Sister-Wives, you can do all the swapping of liquidities that you can muster. ;-),
Damn, if I get rich, I'll convert to this flavor of Mormonism. Cause I just don't have enough grief with One wife.
they can make their own bread....
more than I can say for most of the kids....
industrial production ... again
one of my canaries has been subprime auto lending (beginning to sour)
october new vehicle sales saw GM and Chrysler (Ford doesn't report #) month end dealer inventory grew by ~ 10 days ... DESPITE (from IP report for oct)
"These gains were partially offset by declines of more than 1 percent in the indexes for nonmetallic mineral products and for motor vehicles and parts. The decline in motor vehicles and parts resulted from a decrease in vehicle assemblies, which fell 400,000 units to an annual rate of 11.1 million."
and sept's IP report noted a 3/4 percent drop in this category.
in contrast
sept 2013 ... +1.9%
oct 2013 ... -1.3%
DB, the other LEH
Only bigger.
Their new motto:
DB, negative EPS, still pays a dividend.
lulz lulz lulz
yep
it is clear (imo) DB knows SOMETHING we don't
and not good ... if they are exiting the field of play for something till now been profitable
This is a really big deal.
Shale related damage estimated to be 2-3% of HY.
Jim Willie call your office.
Germany backtracking through the maze.
Quietly like Danny.
Makes you wonder what new scam DB has cooked up to defraud Main Street so their 'made' men can afford the little extras in life (the Gee-Vee, the manse for the mistress, and the double vacations to St Barts and Vail). Hang 'em high!
Sum Ting Wong.
The fact that Douche bank's stock has been on a death march may have something to do with this decision.
http://goo.gl/ZYhA5o
Dead Man Walking?
Let me be the first to say it'd be a dirty rotten shame if CDS liquidity problems caused it to start raining bankers from the tops of tall buildings again.
Are they sold out of nail guns?
Damn early Christmas shoppers.
DB doesn't think selling "portfolio insurance" is such a good idea any more? Wow.
Credit event.... lol.... Don't they have those every president's day at furniture stores and used car dealerships?
"*This graphic is based on the provisions of the Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act as well as the SEC's implementation efforts to date"
That is the chart SEC Chairtwat Mary Jo White uses to try to fathom what is going on.
The E- trade baby is gonna be pissed.
+1 for the avatar
Comon man can't you see +2
MARKIT?
Germany is betting against Germany and the EU with US banks and Treasury as the counter-parties, genius
Does the Kenyan know?
Yes, he's in on it too with a %.
Given a choice between being under-weight versus being over-weight plus holding a piece of paper that says im actually under-weight...
People think they can play cute and offset exposure on a moments notice and thus avoid pain...good luck.
It worked last time. AIG was the counterparty for a lot of this type of insurance was it not? They got backed up by the Fed and the Treasury so banks and hedge funds could get bailed out under the table.
People think they can play cute because history shows they can (until the sovereign itself defaults.)
It is only you and I that have to eat our broccoli.
Finally, one can't help but wonder: is a massive CDS-market rigging settlement about to be unveiled? Does not smell right to me. Just as other banks have dumped their dodgy business lines before the SHTF. Pretty much just setting up shop in new playground to manipulate.
Bank lobby surrendering to Pentagon.
I no longer foresee any suicides or assassinations at this point.
Surrender seems to be under way.
What has been surrendered? I still see trillions in unfunded liabilities.
Listen.
Use to be big enough margins in CDS trading to justify the risk. Now, not so much. Even Tyler use to shed light on potential trades. Years ago. Markit.
This is good news for CDS trading.
...to the flower people.
+1 for Spinal Tarp reference.
http://www.youtube.com/watch?v=QjSIdurhSOg
Listen, to what the flower people say, ah ahhhhhhh,
listen, it's getting louder every day...
The amazing thing about CDS is that the insuranec industry lobbied to keep these things "OTC" and they are not regulated insurance products..even though they are 'insurance'
I wish I could trade CDS but theree is no such thing for retail pikers liek myself
~DipshitmiddleclassWhitekid