The ECB Met With Goldman, Other Banks At Shanghai G-20 Meeting, Allegedly Leaking March Stimulus

Tyler Durden's picture

On May 18, 2015, the ECB's Benoit Coeure held a closed-door speech under "Chatham House" rules in which he leaked to an audience of hedge funds in London that "the central bank would moderately front-load its purchases in its quantitative easing program because of the seasonal lack of market liquidity in the summer." The reaction was an instant 50 pips drop in EURUSD as one or more funds decided to ignore the "rules", and promptly traded on the material, market moving leak.

The problem for the ECB is that it had just disclosed material, non-public, was inside information to a group of market professionals fully aware they would trade on the news. It wasn’t released to the trading public until around 8am the next day (London time) when it resulted in a further 150 pip plunge. This, for lack of a better word, was criminal.

 

 
As egregious as this obviously was, it didn't surprise us or anyone else familiar with the relationship between policymakers and those who essentially gamble on policy decisions, aka the commercial banks who own the central banks. Indeed, it was simply another example of nefarious intermingling between central planners and a select group of private sector operators and came just as Jeb Hensarling began to turn up the heat on Janet Yellen regarding leaked Fed data (an investigation that has gone precisely nowhere).

To be sure, once caught leaking market moving data to a select group of billionaires, just a few days later the ECB blamed the fiasco on an "internal procedural error" and promised such behind the scenes meetings with hedge funds profiting from ECB leaks would not happen again.

It happened just a few months later when as the FT reported in November "some of the European Central Bank’s top decision-makers met banks and asset managers days before major policy decisions, and on one occasion just hours before, copies of their diaries reveal."

The diaries show two members of the ECB’s executive board, Benoît Cœuré and Yves Mersch, met UBS bank the day before a two-day policy meeting of the central bank’s rate-setting governing council on September 3 and 4 2014. Mr Cœuré also met BNP Paribas bank on the morning of September 4, the day the ECB’s governing council surprised markets by cutting interest rates. It also announced it would begin buying private sector assets to save the eurozone’s economy from the threat of deflation. UBS and BNP Paribas declined to comment.

It would appear that when it comes to leaking ECB data, Benoit Couere is the designated middleman whose only job is to notify commercial banks of top secret ECB decisions. Of course, the ECB was troubled by these recurring allegations, and said that "officials never discuss market-sensitive information in private meetings. "The quiet period refers to public communication ahead of monetary policy governing council meetings. The same underlying principles — guarding against signalling future monetary policy — are of course applied to bilateral meetings. In any case, no market-sensitive information is disclosed by the ECB in any non-public forum,” an ECB spokesperson said.

Ironically, just 6 months earlier, the same Couere had very deliberately leaked market-sensitive information to a select group of hedge funds.

* * *

Fast forward to March 10, 2016 when the ECB announced the biggest expansion to quantitative easing in European history, when it shocked the market by announcing not only a reduction in its negative rate and expansion in the TLTRO program, but also the launch of a corporate bond monetization program.

Well maybe not "shocked" the market, because as Bloomberg writes, ECB board members met with representatives of banks and investment managers including Goldman Sachs, BlackRock, Credit Suisse and Moore Europe Capital Management in February, just days before the ECB's March 10 announcement, records published on Friday showed.

Once again the ECB was holding closed door sessions ahead of key market moving events, and if the events from 10 months prior are any indication, the ECB has allegedly leaked everything it was preparing to do to a select group of banks.

As Bloomberg reports, the ECB has released the Executive Board’s diaries, with a three-month lag,  since the start of this year under a drive to become more transparent. The latest edition covers part of the period between the Jan. 21 monetary policy meeting, when President Mario Draghi signaled the need for more stimulus, and the March 10 session when the ECB lowered interest rates and expanded a bond-buying program.

The documents don’t cover the weeklong “quiet period” before policy meetings, when board members are supposed to refrain from making comments that could influence expectations about monetary policy decisions.

 

The Frankfurt-based central bank is treading a fine line between keeping abreast of market sentiment and avoiding the perception that some participants get an unfair advantage from confidential meetings. While guidelines have been tightened in the past year after the inadvertent release of price-sensitive information at a dinner for financial professionals in May 2015, the subsequent risk of a disconnect was shown in December when markets sold off after the ECB announced a smaller stimulus package than investors had anticipated.

But what we find most entertaining is that it was once again the same designated leaker, the ECB's "markets chief" Benoit Coeure who was instrumental in perpetuating the ECB's allegedly criminal information leakage.

ECB Vice President Vitor Constancio and markets chief Benoit Coeure each met with Goldman Sachs in Shanghai on Feb. 27 and Feb. 28, respectively, the diaries show. The men were in the Chinese city for the Group of 20 meetings of finance ministers and central-bank governors. Coeure also met with Credit Suisse and BlackRock over those two days. The topics were described broadly as covering global economic and financial issues.

Benoît Coeuré, executive board member of the European Central Bank

Why the European Central Bank would be meeting with a private bank-slash-central bank incubating hedge fund at a meeting whose purpose was to secretly implement the Shanghai Accord and weaken the dollar, is unclear.

Oh wait, we almost forgot that the head of the ECB is former Goldman partner, Mario Draghi, the same person who was instrumental in creating, and covering up, the FX swaps designed to cover up the tragic Greek economic situation as the insolvent European nation was becoming part of the Eurozone.

And now it all falls into place.

While Draghi’s diary is dominated by meetings with fellow central-bank heads and finance ministers, he also met with Royal Bank of Scotland Group Plc on Feb. 3. to discuss European Union “economic and financial issues.”

Many other banks were also notified: Peter Praet, the ECB’s chief economist, met with Nomura, Germany’s Deka Group and Brussels-based BNP Paribas Fortis, as well visiting SGH Macro Advisers in New York. Other meetings included Yves Mersch with Roubini Global Economics and Moore Europe, Coeure with Deutsche Bank AG, HSBC Holdings Plc and France’s Attali & Associes, and Constancio with Axa Group.

* * *

So did the ECB once again leak material, market moving, non-public information to some of the biggest investors in the world? There is a very simple way to prove it did not: release the full transcript of what was said. This, however, won't happen for the same reason the Fed will never release the transcript of what was said between Janet Yellen and former Goldman partner and BOE head Marc Carney on February 11 at the trough of the market dump, nor will the Fed release what was said between Janet Yellen and former Goldman partner and ECB head Mario Draghi the very next day as stocks soared.

 

Why won't these critical transcripts be released? Because as the Fed explained to a Zero Hedge reader a month ago, "the responsive document contains nonpublic commercial or financial information" and while "the document containing the exempt information was reviewed... no reasonably segregable nonexempt information was found." Case closed.

This came from the "most transparent Fed ever", and organization that is supposedly there to serve the people, not the banks... who just happen to be its owners as Ben Bernanke's former advisor explained.

We doubt the most leaky if least transparent ECB would be any better.

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HedgeAccordingly's picture

The squid!!! Ahh they always win. Market is centrally planned. Proof!!!

Mario Draghi hints at more stimulus October 2015

Four chan's picture

qe4 started march 12 decision by yellin on march 10.

A Pimp's love is different's picture

that dutch bowl haircit yenta hag doesn't know the difference between QE & matzoh ball soup served in a gefilte/chicken stock broth. 'Marching orders' come from above.

COSMOS's picture

WJC subcommittee meeting you mean, the clan is tight.

back to basics's picture

All I want to know is how many times they met hedgies, Goldman and the like THAT ARE NOT SHOWN ON THE CALENDAR.

I remind you all of the genius of George Carlin:
"it's a big club, and you ain't in it"

booboo's picture

My question is why anyone would be surprised, pissed off or enraged? The Central Banks have always been the queen bee of the wretched hive of scum and villiany. I always thought Mos Eisley was a swipe at the Jews anyways since it sounds like a good name of a Israeli settlement.

rawsienna's picture

At the end of the day the hedge funds that traded on what was disclosed at the meeting were in violation of insider trading rules. They should not be fined, but rather shut but down and jailed.

Consuelo's picture

 

 

Two civilizations, both in excess of 5000 years existence.   Both highly adept at the art of deceit and obfuscation.   One wonders whether the host here (Shanghai), or the guest (GS), has the advantage - the one who 'appropriates' unto itself - all over the globe, or the one who waits (with gold) for the appropriate time to unleash Hell...?

 

 

COSMOS's picture

Chinese one yes, the other alleged middle east one cant find the archeological record to prove itself past the Roman record.  I find it strange that the people of the word had no written archeological record of their own before Roman times.  Oy vey.  At least that word somewhere scratched on a rock.

gmak's picture

I'm shocked. Shocked, I tell you. I had no idea gambling was going on in this joint. 

 

(To be fair, I'm not fond of Calamari)

 

 

 

 

Squid Viscous's picture

let me guess - Goldman Prop Desk had a "green" day on May 19?

Last of the Middle Class's picture

because of the seasonal lack of market liquidity in the summer.   Bwaaaaaa, Because a completely captured economy can't fucking go anywhere on it's own.  There, fixed for ya. 

Colonel Klink's picture

When are we going to execute these fuckers?

COSMOS's picture

Well it certainly didnt happen during the Great Hoax

Paul Kersey's picture

The secret world of Central Banks has one secret.  While they prove that money flows from the bottom to the top, they tell the debt serfs that money "trickles down" from the top to the bottom.  And now for some more public bank bail-outs and bail-ins, orchastrated by the ECB and funded by endless sovereign debts resulting in even larger austerity programs for the masses. 

COSMOS's picture

Trickle down always bothers me cause it means someone is getting more than their fair share of the fiat.  As far as I know the fed faucets have been gushing and there is nothing making its way down to the middle class.

Yen Cross's picture

   Does anyone remember when the ECB used to almost immediately "sterilze" liquidity infusions after market liquidity requirements were satisfied?  That was less than ten years ago.

  These Central Banksters have gone full  narcissistic- kleptomaniac-retard. [ They're in self preservation mode]

knukles's picture

Yessiree, I sure do remember those times, indeed.
The Fed used to likewise sterilize FX transactions in the bond market, etc.
How one longs for the days of Volcker.

 

                                     Seriously, this inside dealing shit's gotta stop.

Yen Cross's picture

   That's my Knuks. Well said.

essence's picture

"It's a big club, and you aren't in it"

George Carlin was way ahead of his time.

Amish Hacker's picture

What used to be a market is now just a casino where gamblers bet on what the next central bank policy statement will be. Forget about price discovery, supply and demand, charts, etc. All markets have become instruments of Deep State policy.

debtor of last resort's picture

Illusionists will show you the pigeon. Not the pig.

gregga777's picture

Alan Greenspan, Benjamin S. Bernanke, Janet Yellen, the rest of the Fersl Reserve System and the entire banking system are criminal gangsters in a RICO (Racketeering In Corrupt Organization) system. Alan Greenspan may be lucky enough to die of old age before he answers for his egregious criminality. Hopefully the rest of the banking gangsters won't be so lucky. Over the past decade they've stolen $8,000,000,000,000 ($8 trillion) just from American holders of deposit savings account. They've bankrupted American workers pension plans. When the American People finally realize what these banking criminals have done, with the full blessing of the bribery-blinded political parasites in the Fascist Party (the Democratic-Republican Party), there is going to be hell to pay.

Big Stapler's picture
Big Stapler (not verified) May 14, 2016 6:17 PM

Mario Draghi, ex goldman sachs partner, favors his cronies and makes sure they get info before the public?

Hardly news.

The big question is: why do the stupid citizens of Europe continue to allow this guy to steal their savings and wreck their economies? Are you people all masochists? You enjoy being told what to think by unelected bureaucrats in Brussels, while your (supposedly) elected officials shrug their shoulders at you?

Ghordius's picture

why? because we aren't an island. or something reasonably resembling a island

we can't avoid looking to the West and see the FED, and we can't avoid looking to the East and see the PBoC (and the BoJ)

we don't have the sheer luxury of dreaming of isolation, like compact empires that could be completely self-sufficent. we have to trade

this counts even four times more for any european country outside of our co-op clubs of sovereigns

Draghi and that bunch of national bank governors have one, just one simple task: price stability. the unspoken part of it is... whatever the others are doing

some evidence: the ECB is doing the "with reckless abandon stuff"... after the others have exchanged the newest broadside

look at the numbers: the FED has lately indirectly strongly increased the dollarzone outside the US, then loans and investments denominated in USD abroad (be them developed or more often, emerging markets) have strongly increased, and denermining the FED "explanation" that it can't yet raise rates... because of the impact on those foreign markets

the question for us is a simple one: do we want our own shared currency or do we get our national currencies to satellize around other people's currencies?

yes, in one way we are masochists, note: our statistics. actually, there is another way: some of our budgets are balanced

anyway, your invitation to scrap Brussels, to scrap Frankfurt is noted. the alternatives, though, do not look very enticing. perhaps if we were the US they would look better, but here? beg to differ

Drain Bamage's picture

Central Bank officials shouldn't be allowed to meet with anyone in private.

 

If they got something to say, say it on a teleconference. 

Fuku Ben's picture

Rules are for the serfs and made to be broken and identify who's in the club. I'm confident Congressman X would have better luck obtaining the information. He probably already did as part the insider information sharing system CONgress uses. That's an appropriate zip code for the Fed. More interestingly the street name fits pieces of the ponzi scam to the letter.

gregga777's picture

The true purpose of central planning bureaucracies are the implementation of corrupt practices, subverting government into a utility to deliver wealth, privileges, position and status to favored insiders, to those whom have captured government and its organs of central planning. So, of course, central bankers from the US Feral Reserve System and the European Central Bank periodically meet with the banking gangsters and Con Street financial scamming criminals to give them tradable inside information. That's the entire purpose for their existence.

PPT Inc.'s picture
PPT Inc. (not verified) May 15, 2016 6:20 AM

Meanwhile, the UK is sending goyim small-fray "insider traders" to jail for 10 years.