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The Denials Begin: Interactive Brokers Is First To Claim It Has Not Engaged In Commingling Rehypothecation
Now that the rehypothecation bogeyman has been let loose, and the question of just how many paper (and apparently physical) assets have been double, triple, and n-counted (where n can be a number up to "infinity") by the infinitely daisy-chained modern global financial system in which one's liability is someone else's asset....apparently up to infinity times, the next logical step was for the firms named in the original Reuters article to step up and begin denials they had anything to do with anything. Sure enough, below is the first (of many) such response, by Interactive Brokers, claiming it has been greatly misunderstood and unlike MF Global, it has done nothing wrong at all. Of note is that IB was simply one of many brokers mentioned in the Reuters piece, where we read that "Engaging in hyper-hypothecation have been Goldman Sachs ($28.17 billion re-hypothecated in 2011), Canadian Imperial Bank of Commerce (re-pledged $72 billion in client assets), Royal Bank of Canada (re-pledged $53.8 billion of $126.7 billion available for re-pledging), Oppenheimer Holdings ($15.3 million), Credit Suisse (CHF 332 billion), Knight Capital Group ($1.17 billion),Interactive Brokers ($14.5 billion), Wells Fargo ($19.6 billion), JP Morgan($546.2 billion) and Morgan Stanley ($410 billion)." Sure enough, we predicted a firm would have to promptly step up and "deny all charges." To wit: "Oh Jefferies, Jefferies, Jefferies. Barely did you manage to escape the gauntlet of accusation of untenable gross (if not net) sovereign exposure, that you will soon, potentially as early as tomorrow, have to defend your zany rehypothecation practices." As it turns out Jefferies, and all the other mentioned banks tried to avoid this festering can of worms by completely ignoring the topic... until Interactive Brokers' response now demands that every single named bank has to do the same and come out with an outright explanation of why it has billions in hyper-hypothecation, or else not journalists and bloggers, but the market itself will suddenly start asking questions. Something tells us it will not be nearly as easy enough for the others to deny all charges... Incidentally, if this indeed becomes "the next big thing", what the potential collapse of (re) hypothection means is that PBs will be unable to lend out shares anymore, in effect collapsing stock shorting as there is one giant short stock recall/forced buy in. Ironicaly the unwind of the biggest market fraud could result in the entire market pulling one last "Volkswagen"style hurrah, before all hell breaks loose.
From Interactive Brokers
Mr [REDACTED],
Below the response we have put forth regarding the Thomson Reuters article:
Recently, much has been written about the safety of customer assets held by brokers and we believe that customers are justified in their concerns. And so, we are writing to help clarify your understanding of how brokers are permitted to operate and, in particular, how Interactive Brokers protects its customers assets while servicing their needs to trade on margin.
To start, and so as not to leave any confusion as to the position of IB vis-à-vis the Thomson Reuters news article, IB DOES NOT, in any way:
1. Circumvent U.S. securities or commodities rules at the expense of our customers;
2. Invest customers’ segregated funds in foreign sovereign debt or utilize in-house repurchase agreements;
3. Commingle or utilize customer segregated assets for proprietary operations;
4. Enter into agreements which are designed to take advantage of supposedly unrestricted U.K. re-hypothecatio n rules; or
5. Engage in transactions deemed as “hyper-hypo thecation”.
More specifically, regarding hypothecation and the level of such activity at IB: - The hypothecation and re-hypothecation of customer assets is a standard and essential practice, which U.S. brokers employ in the course of financing customer activity. The rights to do so are longstanding, have been explicitly provided by regulation and one should not be surprised to see boilerplate consent language in each broker’s customer agreement acknowledging this.
For example, a customer who incurs a margin debit by virtue of the fact that they have purchased securities with only partly their own money, thereby relying upon the broker to lend them the funds to pay the balance at settlement, subjects a portion (up to 140% of the amount borrowed, also referred to as the margin debit) of those securities to a lien on behalf of the broker. The lien is also known as hypothecation. The broker, in turn, may pledge or re-hypothecate the securities upon which they have a lien to replace the cash.
In the case of IB, this re-hypothecatio n typically takes place in the form of a stock loan. In simple terms, IB borrows money from a third party, using the customer’s margin stock as collateral, and it lends those funds to the customer to finance the customer’s purchase. -
Similarly, a customer who carries a futures position must place a margin deposit with IB. IB may pledge the customer’s cash deposit to a futures clearing house in support of the margin required on that position.
While IB is not in a position to comment on the practices of others and whether they comply or fail to comply with these regulations, or do so in a manner which introduces unwarranted risk to the firm and its customers, we can state that we comply with all regulations and utilize investment policies that tend to be more conservative than those permitted under the regulations.
The Thomson Reuters news article alleged that IB, among other brokers, engaged in a practice that the author categorizes as “hyper-hypo thecation” (apparently a term used to describe a process in which a broker alters the risk of one financial instrument into the exposure of multiple other instruments and perhaps multiple counterparties through a daisy-chain series of pledges) at an amount of $14.5 billion.
While we are not sure of the author’s source for this number, we would refer interested parties to footnote 10 (“Collateral ”) on page 17 of our June 30, 2011 financial statement, which is posted on the IB website (http://www.interactive brokers.com/d...Unaud_Finls .pdf) and reads as follows:
“At June 30, 2011, the fair value of securities received as collateral, where the Company is permitted to sell or repledge the securities was $16,817,859,287, consisting of $13,022,386,422 from customers, $2,886,934,605 from securities purchased under agreements to resell and $908,538,260 from securities borrowed. The fair value of these securities that had been sold or repledged was $4,526,153,369, consisting of $2,583,920,633 deposited in a separate bank account for the exclusive benefit of customers in accordance with SEC Rule 15c3-3, $761,740,278 securities loaned, $877,478,486 securities borrowed that had been pledged to cover customer short sales and $303,013,972 securities that had been pledged as collateral with clearing organizations.”
A closer examination of this $16.8 billion balance reveals the following:
1.$13.0 billion represents the amount IB is authorized to pledge (largely based upon 140% of customer debit balances), of which only $0.8 billion has been repledged, largely through stock lending.
2.$2.9 billion represents the investment of customer’s cash balances in reverse repurchase agreements where the underlying collateral is U.S. treasury securities. These transactions are conducted with third parties and guaranteed through a central counterparty clearing house (FICC). $2.6 billion of this collateral, technically a repledge (i.e., part of the $4.5 billion “sold or repledged”), is not re-hypothecated and it remains in the possession of IB and held at a custody bank in a segregated Reserve Safekeeping Account for the exclusive benefit of customers. The remaining $0.3 billion represents collateral pledged to clearing organizations.
3.$0.9 billion represents short sale transactions whereby the sales proceeds have been pledged as collateral to fully secure the borrowed securities. These transactions are classified as securities sold (i.e., part of the $4.5 billion “sold or repledged”).
Based upon this information, which reflects prudently risk-managed broker financing transactions, we believe a fair-minded author would have drawn a different conclusion regarding IB and hyper-hypotheca tion given a minimum level of investigation and contact.
Regards,
IB
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Hyporeponzifiication can be a problem. and it is perfectly legal with no statutory protection we have just learned!
Simple question: Got etf's mutials,& cash in Principal , Vanguard, Scotttrade and WF (fuck WF). Should i be up early Monday to start moving stuff??
make sure you spell the instructions on the ticket correctly, else you may be forced to borrow some very strange companies on the collateral market!
I plan to do just that. Move the brokerage cash into gold bullion and remaining stock assets to my credit union and silver eagles.
To hell with their game. I'll do my ulcer a favor and sit this out on the sidelines.
IB says:
"The hypothecation and re-hypothecation of customer assets is a standard and essential practice, which U.S. brokers employ in the course of financing customer activity."
This sounds like the "Hydrogen is the only efficient way to float a blimp" argument.
All this hyperfornication talk gets me all worked up.
To all those who lost their money this year when the insurance companies failed and financial markets collapsed ...
Look - you got tricked fair and square - and now its time to move on.
- Barack Obama, November 2012
let's move forward not back
Am I bad because I stop reading posts when I run into CAPITAL LETTERS?
Yes my htc droid version shit.0 will sometimes get stuck on all caps.
I have learned to live without apostrophes also.
WHEN THE BANKERS STICK A MASSIVE UN-LUBED DILDO UP YOUR ASS...YOU WILL BE THE DUMBFUCK THAT WORRIES WHAT COLOR IT IS....!
punctuation isnt the issue....hypothecation is the issue....
*this is directed at meremortal. BtW
HEY THISS ALL OT
Proper spelling, usage and punctuation make it easier to understand the meaning, without the need to reread and rereread to decipher the intent. Non-English-first-language posters excluded; I much appreciate non-U.S. points of view.
Has anyone seen the survival plan anywhere ?
I can't stand contemplating the 'take your medicine son and don't complain. (commonly known as bend over and grab your ankles)
The writing is on the wall... it's plain to see.
Anyone who with large amounts of cash in brokerage/bank accounts is going to get fleeced.
Close your trading account /401k /IRA and convert those electronic digits to PMs while your still able to. There's not much time left... do it NOW.
how can cash in a bank account be rehypothecated
aaaaaaah....da bank takes yo saving money and din da "loan' dat out to people and git 'interest'......is dat how dat werks....?
I simply meant when any part of the ponzi blows up, confidence is gone and it will take the whole banking system down with it. You want your money in a bank or 401k when that happens? I took my money out of the system a long time ago.
I'm amazed that US bank runs haven't started yet. I guess the sheeple are too focused on mass media, sports and tech toys to worry about it. Or could it be that the market is 100% bot controlled?... I guess there's no need to worry now -lol
All cash is aggregated and loaned out; it was forever thus.
Jeffrey Sachs: 'That's not a free market, that's a game'
http://tiny.cc/b0ld3
“...JP Morgan($546.2 billion) and Morgan Stanley ($410 billion)"
This is what is known. What is unknown could be considerably more. The truth is there are a few individuals who have a key to the US treasury and when you have a key to the US treasury that means “unlimited…”
Always remember that it’s much worse than they say. And almost every politician is a liar. Jim Willie makes my point:
“MF Global is just the start of the final grand theft chapter, whose deception is as great as its theft. Two weeks ago (from November 30), the Jackass mentioned that the true theft by JPMorgan of MFGlobal client funds was more like $2 billion, hardly the lesser $650 million intended to deceive the half brain-dead fully shell-shocked public. Word has come that the amount missing is actually at least $3 billion. The usual suspects hold the supposedly missing money. No arrests yet…
“Remember that JPMorgan [Rockefeller/Rothschild] is the operational arm of the US central bank itself. The media and regulators are doing their level best to keep JPMorgan out of the direct involvement in the investigation, but their fingerprints and footsteps are all over the crime scene…” –Jim Willie, November 30, 2011
I would only point out again that the JPM's, MS's and most of others' hyper hypothecated bets are long...which will bring the opposite to intended by them results in 2 months or so :)
:)
"But Mommy, I did not INTEND to take that cookie" says Billy, as he wiped cookie crumbs off his chin.
With a smile!
Crash positions!!!!
i think you guys are missing the boat... if they get all the people out of the commodity markets, they can easily control them; aka price controls through shadow government.
Do all mutual funds have the same wording in their contracts?
"Your account may include uncollectable shares"
I found it at vanguard and fidelity.
Withdraw your assets from all broker/future accounts first and then wait for the clarification. In simple terms, shoot first and ask question next, this is the only to protect yourself. Or you can ask the victims of M. Global.
register at a big name custodian like state street or BNY Mellon or JP Morgan and have them rhypothecate it you mean and either not tell you or take 90 cents in the dollar on the "facility"?
VW? Maybe a bit at first, but shorts aren't gonna lead stocks down- the lack of liquidity will panic the market, we'll just see no bids......
Rehypothecation creates liquidity in the market. You take away rehypothecation and we have a liquidity squeeze like the 2008 crisis except worse. Me thinks this is the reason for the CB intervention a couple a weeks ago. They know its coming.
"CB intervention a couple a weeks ago" Coordinated CB intervention by GS alumni...
Otherwise known as Robo foreplay (plus thumb in bum)
Dynamic balance with growing oscillations around the mean. Is this Stability or what ?
Rehypothecation creates liquidity in the market. You take away rehypothecation and we have a liquidity squeeze like the 2008 crisis except worse. Me thinks this is the reason for the CB intervention a couple a weeks ago. They know its coming.
most the posters here don't have a clue what hypothacation is.
just bad mouthin for fun.
i used to read bill fleckenstein like religion: lost my rear end.
read zh at sp 700 and stayed in cash: lost again
these kind of sites are like horror movies: they get paid to scare you to death.
see you at sp1320 by dec 31. 1350 by jan 15.
everyoneelse can sit at home waiting for unemployment and rant and rave all they want.
Brokenarrow
ZH is the counterpoint to the MSM pablum.
With S+P at 666, the TBTF panicked the public into transferring their unpayable debts/bets onto the nation. Bonuses were generously paid for such a successful daylight robbery.
Now, the bet is- "can governments carry the debt can". I am betting they cannot and refuse to hold paper assets of any kind, save and except for some necessay cash.
Don't fall for the fallacy of composition.
You say good bye and I say see you on the other side...buckle up buckle up...I don't know why you say good-bye
Brokenarrow, feeling sorry for himself, said:
You're not supposed to take RobotTrader's advice seriously. Let me guess, you didn't buy any gold and silver then either, did you? If you were reading ZH, I can't see how you possibly could have missed all of the gold bitchez, silver bitchez, and BTFD comments. Whose fault is that?
lol, yeah, that's been ZH's position since day one--hold fucking US dollars.
From March 18, 2009: "Maybe one should really start buying stocks ahead of the
uber-hyperinflation that will imminently ensue. We recommend wheelbarrow
stocks.This is textbook back against the wall. But at least the stock
market takes another crutch up."
amen bro
But, but, this couldn't have anything to do with MFG. Jon testified under oath to CONgress that he didn't know how client funds were co-mingled. Popcorn anyone?
Hypothecation and Re-hypothecation means that the ETF's that hold gold silver, etc. may not actually be backed by anything real. Hard to fathom if that is the reality and hardly bullish for confidence amongst counter parties.
Hypothecation is a first call on shares, gold, or whatever financial asset there is, as conjured up by a broker or a bank.
It is a first secured position, and it may have a second, third or unlimited number of claims. You are the last claimant and get wiped out.
It is another cutesy word intended to divert your eyes, while you are being robbed in front of your face.
The more "pledges" that are created, shamelessly described as creating "liquidity", the more unstable markets become.
This all as a result of uncontrolled and unenforced reserve requirements.
Sounds like the way Lloyd's has been distributing risk to "junior" partners for centuries. It's uniquely British - like warm lager - smells bad - tastes bad - but ya drink it cause you wanna be a renaissance man about town (and because it helps loosen that last delightful batch of fish `n chips and boiled beef when there was no time to chase with a cucumber sandwich!)
Of course they are silly - they're backed by their underlying pawn tickets.
So whats the end game?
There are stories off the stream making, on the surface, a good argument both MF Global and Lehman (PDF) collapse were engineered, with the foreknowledge that US statutes will underwrite losses to benefit insurers on the other side of the CDS trades.
Years back there were stories about a provost marshal attempting to enforce a 4 Trilion collateral call on Citi - the links to those stories are dead. If ya don't got the bucks - one way you can assauge noteholders is to figure a way to raise the price of oil really really high. The mis nomered "war" (a glorious genocide indeed) is not about resource mining - it's all about and only all about scaring up commodity market prices (or inflating the fiat - same diff).
I think I know the endgame. The bailouts - the eactraction - are all about and only about printing fiats and parking `em in the counting rooms of the fat cats eating deep fried children at the annual Global Usury's Vampire dinner while maw and paw take same or less tokens home each week.
At some point when the counting rooms are busting at the seams with efflorescent fiat tokems and maw and paw can't afford toeven drive to the petro station to get a half gallon of fuel - the orks, eating the fried kiddies at the Global Usury's annual dinner will come up with a grand solution: Return to a physical standard - and - of - course - disburse physical ownership as a function of the number of inflated fiat tokens an indivual or bank has. Game set match - since the token print is going nowhere except, and only, to the counting rooms of the addendees of the very special Global Usury's annual vampire dinner.
GUESS F*CKING WHAT - SINCE THEY GOT ALL THE TOKENS THEY GETZ ALL THE PHYSICAL (it's beautiful)
Took years to get the pieces in place (a starter list but by no means "the" list),
1) S&L Crisis - Wall Street lobbyist codified proto-bail-out law
2) The pre demolition structural assay also known as the 1993 WTC basement bombing and sunsequent renovation (read "to instal mil spec nano therm plumbing - blasting caps and ignition timers installation was finalized the weekend before 911 attack when the trade center, for first time ever, was off the power grid
3) PNACs plea for a "new pearl harbor like event"
4) Billy's lip wrap concurrent to his pen on the act repealing Glass Steagal and the "what difference did it make" Diebold and supreme court crowning of a poor "boy" with drool control problems and barely the wherewithals to bag groceries, though he was a very excellent cheerleader back in the daze at his pappys old school, as supreme leader of the "herd of da exceptional and "stone dumb naive"
.. and just in Aug 2001 ..
5) CIA visit sthe original Bin, still under CIA contract, in a hospital on his death bed in some money laundering center on the shores of the Persian Gulf
6) Pepe Greenberg Escobar writes in the Asia Times the need to get the Bin before its too late,
7) FAA turns off Radars at Commercial Airports forcing tower controllers to rely only on transponder signals - FAA also reverses policy that allowed polits to pack heat in the cockpit (drones - even 757 drones don't need pilots).
8) Houston TX, the Taliban deny a US pipeline right of way request through Afghanistan
9) Luck Larry Silverstein Buys World Trade Complex and he be the only Manhattan Real Estate Mogul with sky terror insurance that pays back 5 Billion on a 150 Million investment
10) 9-10-2001 reports he lost 2.3 Trillion under a couch cushion in the Pentagon somewhere
11) crash boom bang - and the sheeple put their shorts on backwards waiting for a blissful orgasm that never comes - US demands Taliban turn over the already dead Bin. Taliban says yes - but first show us your evidence - the FBI says it ain't got enough to indict the Bin corpse for the nasty caper - Armatage, as usual, and again, lay de old "we be bombing you Taliban Axis of Evil box cutter bandits back to stone age - Taliban -say so what - we still live in the stone age.
Click heels together thee times and repeat - "It's all just a really big set facts indicating nothing more than a most fantastic set of coincidence".
What surprised most? The Sham Wow guy never hawked "box cutter proof vests"!
:)
I can't wait for the day when credit dies.
Yes-siree - when you buy a share of something and it isn't a fucking derivative of a fucking derivative of a fucking derivative.
Since there are about 7 people here not living paycheck to paycheck and credit card to credit card I would say that day is closer than I think
Like tomorrow when the markets open and the zionists get their asswooping.
I'm not rich but one of those seven, for now anyway. Kidding aside, I know what you're saying. I watch people in stores paying a $10 food checkout order with a credit card. LOL, most big food checkout orders are paid with a benefit card. Only in America.
8
"I would say that day is closer than I think"
It took me a while to figure out this phrase, then it hit me...you're re-hythoughticating.
Just kidding.
I promise you this , we promise them that, we promise to promise your promise in the event their promise is premised on our promise blah blah blah blah blah bleh meh
As they say promises... promises.... or is it promises were made to be broken.
An incestious daisy chain of promises that when unraveled is settled in a third parties promise backed by some other parties prmoise etc... It just never ends.
My head hurts
4. Enter into agreements which are designed to take advantage of supposedly unrestricted U.K. re-hypothecatio n rules; or
Does that mean they DO enter into agreements that are NOT designed BUT do take advantage of unrestricted U.K. re-hypothecation rules
mmm.
Interactive Brokers
Office: One Carey Lane, Fifth floor, London EC2 V8AE
Soon to be renamed Don't Carey Lane.
Givw ya 3 guesses and the first 2 don't count
The acronym is properly spelled EROEI and it stands for, 'Energy Return on Energy Invested.'
DUH! It's DEFINED as a energy ratio. Convert BTUs or Kcal to dollars, it's STILL an energy ratio.
Taking a poll. What's the half-life of the financial system? In other words, there is a 50% chance of its demise in how many days/weeks/months?
1-2 years. I wish it was sooner, just think they can keep playing these games for a while.
you should ask how long will it take fifty percent of the system to decay into
some other thing ( not part of the financial system ). but that is problematic
cause everything figures as part of the "financial system" when everything
has been financialized.
your question is one of implosion/collapse, not half -life, me thinks.
.
by the way, here is this. promises, someone else's promises, that is
what we love to break and sell to the unsuspecting. like pottery barn in
reverse, "we break it, you own it!"?
.
Rehypothecation. Rehypothecation occurs when your broker, to whom you have hypothecated -- or pledged -- securities as collateral for a margin loan, pledges those same securities to a bank or other lender to secure a loan to cover the firm's exposure to potential margin account losses.
When you open a margin account, you typically sign a general account agreement with your broker, in which you authorize your broker to rehypothecate.
Sounds straight of the ENRON play book - made it black market in the US (didn't they) but left enough of an exploitable loop hole that the Wall Street Pedophile Syndicate, whose lobbyists wrote the post ENRON safeguards, are (still) allowed to offshore that particular racket to the Land of Ponzi Dons, and stoic palace guards in fuzzy hats, where market rigging is protected by the crown's banking laws. It's a national treasure for jesus f*cking titty chrixt's sake!
Dress British - think Yiddish!
we're all hooligans now !
Goldman Sachs International: Peterborough Court, 133 Fleet Street, London EC4A 2BB
Canadian Imperial Bank of Commerce: 150 Cheapside, London, EC2V 6ET
Royal Bank of Canada: Riverbank House, 2 Swan Lane, London, United Kingdom, EC4R 3BF
Oppenheimer Europe Ltd: 6 Gracechurch Street, 1st Floor, London EC3V 0AT
Credit Suisse: One Cabot Square, London E14 4QJ
Knight Capital Group: City Place House, 55 Basinghall Street, London EC2V 5DU
Interactive Brokers: One Carey Lane, Fifth floor, London EC2 V8AE
Wells Fargo: 25, Canada Square, Canary Wharf, London, E14 5LQ
JP Morgan: 25 Bank Street, Canary Wharf, London
Morgan Stanley: 25 Cabot Square, London E14 4QA
Coincidence!
all those London office addresses are so quaint and English sounding good honourable chaps and all that.
Oh, the irony !
Canary Wharf, the collapse of a leveraged real estate bet, becomes the home of a financial leveraged bet. Who wrote this script ?
The guy that broadcast the play by play carnage of the Hindenburg implosion?
who knew townes van zandt would go so naturally
with re-hypothefornication ?
.
Townes van Zandt - No Deal
http://www.youtube.com/watch?v=6n9-Ok0reog&feature=bf_prev&list=AVGxdCwV...
finviz.com has the Nikkei +9,839%
That's quite a move.
Seems to me:
1) A casino only needs enough chips to equal the amount of money that the customers bring to the table
2) If 4 times as many chips are in play the house must be betting against itself
3) If the casino owners are getting richer they must be cashing in the winning bets and hiding the losing
4) The bank that's financing the casino is getting hollowed out, and must be aware of it
5) That bank would long since have failed if it didn't have an unlimited line of credit
6) The people running the line of credit would have to know what's going on
7) The people backing the line of credit, you and me, will never see that money again
8) The same group of people run the casino, the bank, and the line of credit
OT: Is it a bird? Is it a plane? No, it's a good ol' BANK RUN!
Again in Latvia, from the swedish banks...
http://mobil.aftonbladet.se/nyheter/article14063708.ab?partner=wwwredirect
http://e24.no/boers-og-finans/her-tar-swedbank-kunder-ut-kontanter-i-pan...
Ok guys, My English is not the best but simple and clear.
I have an Account at IB. Should I close it or what?
What is this all about? can anybody please explain simple to me?
thanks in advance!
It's your decision and no-one can advise you. Ultimately you have to assess the risk based on your personal circumstances.
I have accounts at IB. I am personally not especially worried. The CEO (Petterfly) is worth USD5bil, most of it tied to his holiding in IB. He is self-made and seems very conservative.
It was only about a month ago that IB was looking at buying MF. I like the fact they backed out.
Strange writing style you have there ed. lol. "No-one can advise you"? Where did you get that from? And so if people reply and advise him, what are you going to do about it? Is this your first comment ever? And that is what you write?
It's your decision and no-one can advise you. Ultimately you have to assess the risk based on your personal circumstances.
I have accounts at IB. I am personally not especially worried. The CEO (Petterfly) is worth USD5bil, most of it tied to his holiding in IB. He is self-made and seems very conservative.
It was only about a month ago that IB was looking at buying MF. I like the fact they backed out.
if Petterfly's wealth is tied up in IB, then his wealth is your hypothecated money...hahahahahaha!
it's not nice to laugh at people like that.
Well, how big of a chance does there have to be of you losing your money for you to want to take it out? Tell us that and we'll tell you what you should do.
For top-notch investment advice, fire off an e-mail to J.Corzine@Hypothecations-R-Us.com
Psssst.... for the best "servicing", aXe about the Celente Package - you're welcome ;)
http://www.youtube.com/watch?v=gtW108oGyhY&feature=autoplay&list=AVGxdCw...
TOWNES VAN ZANDT - THE COO COO
In this day and age there are some major themes that ZH does not touch on :
1° Climate change and the minimal agreement at Durban, where the three culprits who have tried to avoid any commitment in this area are the usual "dumb ass suspects" hot on pursuing a model which now belongs in the rubbish bin of hyperconsumption : USA, China and India. Of course the main culprit is the USA, which has the scientific fire power to understand/corroborate the findings of this scientific community as the principal per capita polluter on planet. But like in the Financial crisis, the USA fuels the fire instead of fueling the fire fighting. The latest report does conclude 75% of climate change is man-made....Ominous, if true.
2° The coming demise of the NAtion State in the face of the Global Oligarchy. All the first world countries are now impotent and worse, surrogates of the Oligarchy. Must the third world spill its blood to fight these multinational T-REXs and not count on the legitimate elected governments in the first world to do due diligence? The total effacement of the political class in the face of this crisis is the most damning regression of first world civilization. It would be nice to see ZH take an EDITORIAL position on this issue, beyond its current position. Not subcontract it to others like GW, OFFSHORING is not the solution. The TDs, you should COme out with an EDITORIAL on this. SHow us you understand the issues on the LARGER scale not just as a financial blog of US red neck day trader community. I don't mean to be derogatory but I don't mean to be pussy footed either. I mean to be sincere. All your analysis shows us clearly that you understand the political agenda. Yet there is nobody who can nail the political consequences of this regression clearly for your readers; something you do so well on the financial side. I know your excellence on financials makes me hungry for a similar excellence on the political front. I may be presumptuous. But as clear followers of Ron PAul ticket, its time ZH made a cohesive case for him and what the issues are from an Editorial perspective and how to address them. I don't necessarily adhere to HIS platform but it needs to be presented. The Ron Paul position is NOT being presented on MSM. Its time somebody presented this guy's position clearly and cohesively. It would do American democracy a whole lot of good. That is the crux of the matter, His case has to be clearly made and ZH has the ability to do it. Give him an interview and let him present his platform HERE on ZH. He deserves the nation's respect.
3° THe new energy paradigm. Its time we have some serious cost/performance comparisons of alternative energy models to those of OIL/GAS/NUclear base scenario. As this is depleting fast. There are no serious economic figures on this. In Europe I hear that compared to the 1 euro/KWhr for conventional nuclear electricity we are at 1.25 euro/KWH for solar and this was 4.0 E/KWH five years ago and should be below nuclear curve and 1E/KWH figure soon, as this nuclear now has to be upgraded in cost terms post Fuku, where decommissioning and used waste treatment costs have to be upgraded in mark-up terms; whereas the experience curve on Solar should bring us below 1.0 Euro/KWH in Europe, aka German projects and their Desertec project long term in Africa. This is genuine trailblazing food for thought. As both for ecological and energy constraint reasons, we have to move to renewables, sooner or later; those with good EROI and those who are reliable. Obviously the solar bottleneck of energy storage has to be broken We don't know how to store electricity generated by non continuous renewable sources. But all this is do-able. Thats the good news. Its just a question of going down the experience curve as for semiconductors. And debottlenecking by economies of scale and RM research for alternate technology sources.
We should be there by 2030. In the meantime...we need some serious good reporting on this. I'm counting on you.
also ZeroHedge has never done a story on why my cat vomits in the hallway.....
Because your foot is a barf magnet?
so elaborating Ron PAul's political vision is like your cat's vomit? You have a high opinion of the democratic process and debate in your country.
1. You're forgetting about Canada, which has tar sand interests and sides with America
2. Predicting the future is difficult, even more so when you are trying to predict human behavior rather than math patterns
3. 1 Euro per KWh?! Holy crap, I pay like $0.06 per KWh, hydroelectric. You can get solar for as little as $2 / watt grid-tie in or $1 per watt off-grid (with extra work involved i.e. soldering, gluing, etc).
Of course, you have to take into account your local regulations, land prices, hours of sunlight per day average, and consider storing power for night. Realistically for a major project, you'd be looking at Spain or North Africa, then transmit to where you need it.
When you say 1 Euro per KWh, is that the ongoing cost of nuclear where you are? Or the cost of building the plant in the first place?
1° tar sands has a high built in cost and high EROI. Its going to leave a high EROI and hi ecologocal foot print. Just like Shale Frack gas.
2° About KWh solar and Nuclear the figures I give I'll have to check if there isn't a 100 or 1000 factor adjust.
The big bank accountants will be busy next week! Seriously, I wonder how many times over and over most silver and gold bullion bars have be rehypothecated? The lawyers will be making out big with this one (and the paper market holders will be BIG losers ie. SLV & GLD)!
"Natural and Artificial Aristocracy [Thomas Jefferson's letter to John Adams] John Adams Oct. 28, 1813 DEAR SIR: According to the reservation between us, of taking up one of the subjects of our correspondence at a time, I turn to your letters of Aug. 16th and Sep. 2nd." etc etc etc ... "For I agree with you that there is a natural aristocracy among men. The grounds of this are virtue and talents. Formerly bodily powers gave place among the aristoi. But since the invention of gunpowder has armed the weak as well as the strong with missile death, bodily strength, like beauty, good humor, politeness and other accomplishments, has become but an auxiliary ground of distinction. There is also an artificial aristocracy founded on wealth and birth, without either virtue or talents; for with these it would belong to the first class. The natural aristocracy I consider as the most precious gift of nature for the instruction, the trusts, and government of society. And indeed it would have been inconsistent in creation to have formed man for the social state, and not to have provided virtue and wisdom enough to manage the concerns of the society. May we not even say that that form of government is the best which provides the most effectually for a pure selection of these natural aristoi into the offices of government? The artificial aristocracy is a mischievous ingredient in government, and provision should be made to prevent it's ascendancy." etc etc etc ... Adam's and Jefferson's worst fears have come true...and we are now beholding to the crooks that the two feared ! These letters may be found at www.loc.gov
No one goes to jail, but no one gets out alive. Die mudder phuckers die!!!
INTERACTIVE BROKERS ARE PLAIN CROOKS WHO LIKE MANY OTHERS HAVE BEEN STEALING CUSTOMERS MONEY FROM PAPER TRADING - TIME TO CLOSE THE BUSINESS DOWN
Something has to give, I will go long the ticker.
Assume Bernanke is buying Euro bonds, saving Europe. Euro will go up, USD will go down. US Equities will go up, and Gold will go up somewhat, but the reduction in "fear" will limit it's immediate rise.
But this triangle is amazing, and it will break up or down.
http://oahutrading.blogspot.com/
Ho hum. Bullish for stocks, forgotten tomorrow.
and of course there is this... what a deal!
this is what everyone is talking about, right?
http://www.interactivebrokers.com/en/accounts/legalDocuments/homepageDis...
.
"..IB can sell your securities or other assets without contacting you. Some investors mistakenly believe
that a firm must contact them for a margin call to be valid, and that the firm cannot liquidate securities
or other assets in their accounts to meet the call unless the firm has contacted them first. This is not
the case. As noted above, IB generally will not issue margin calls and can immediately sell your
securities or futures contracts without notice to you in the event that your account has insufficient
margin.
You are not entitled to choose which securities or futures contracts or other assets in your account(s)
are liquidated or sold to meet a margin call. IB has the right to decide which positions to sell in order to
protect its interests.
IB can increase its “house” maintenance margin requirements at any time and is not required to provide
you with advance written notice. These changes in firm policy often take effect immediately. Your
failure to maintain adequate margin in the event of an increased margin rate generally will cause IB to
liquidate or sell securities or futures contracts in your account(s).
If IB chooses to issue a margin call rather than immediately liquidating undermargined positions, you
are not entitled to an extension of time on the margin call."
....
.. etc..
It's so obvious that even a blindman can see it.
John Corzine explains to Judge how hypothetically and unintentionally segargated accounts could get co miggled. Jingle jingle
Your Honor,
1). Buy a shell of a company.
2) Replace the CHeif Operations Officer, thechief Risk Officer and all Internal Audit teams with freshmen from Goldman.
3) replace CEO with best friend
4) buy insursance policy on the whole wad from JC FLowers, the same dude who hired you for the arson.
5) set fire to building and all records.
6) call Rating Agency and explain the place is on fire
7)then call JC Flowers and the private capital people and have them deliver the boxes that say "euro soverign toxic" amd place in the onferno
8). Call the fire department
9) make onevmillion transactions while the place byrns for one last round of commissions to have forwarded to another account.
10). Change coporate from laptop on get away jet to Caymans to include the following;
I use MaTCH BOoK accounting : as follows
Long = short.
Repo = reverse Repo
Free financing from fed. Always
In case of LIQUIDITY trap , what was yours , know belongs to us, or the board.
Liquidty traps may be dangerous to your health!
Go to cayman Islands and waith for Goldman to send your halve of the take!
IB is not MFG or Jeffries, but the bottom line is that one should not implicitly trust any FCMs or brokerages. That is the lesson taught us by MFG. If you want to trade futures, keep minimal excess capital over margin. Better to hold and wire transfer funds from a bank outside the brokerage and keep your longer term capital in "real stuff" like physical PMs in your possession. Not that one should put much trust in a bank these days either. Bottom line, is that assets which are not in your physical possession are at risk or being stolen and/or frozen if the institution goes under. ZH does a good job of alerting us to potential risks long before the mainstream meda. It's up to each individual to make their own decisions.
Will be interesting to see how the HSBC lawsuit against the MFG trustee (i.e. Jamie Dimon) and Jason Fine regarding the rehypothecation of Fine's 5 gold contracts and 3 silver contracts plays out regarding gold and silver prices. Personally, all 3 outcomes to the lawsuit I can envision see a smack in the PAPER prices of gold and silver. Interested in your guys' opinions.
http://silverdoctors.blogspot.com/2011/12/implications-of-hsbc-gold.html
I agree with the options you've laid out, and I'm most curious to see how many people get out now, and how many wait for the judgment. i.e. how many smart investors are in these ETFs. Either way, the paper price almost certainly goes down and this very likely could lead to physical shortages, especially as Sprott is reported to be trying to purchase $1.5Bn of silver right now. I have always considered the markets to be scams, but never has it been so obvious and well-documented for everyone to see. If I was holding GLD or SLV, I most definitely would be panicking and would be on the phone first thing tomorrow morning to cash out.
AUD just blew supports = Asia selling again, which means China's CPI is gonna be crap...and of course the collateral ponzi scheme via rehypothecation is some more neg news.
IB pulled out of deal with MF
BECAUSE they found out about the comingling assets.
And they broadcast this fact, putting themselves at legal risk.
IB pulled out of deal with MF
BECAUSE they found out about the comingling assets.
And they broadcast this fact, putting themselves at legal risk.
Speaking of unregulated gambling:
"Goldman Said to Plan CDs Tied to Equities"http://www.bloomberg.com/news/2011-12-09/goldman-sachs-is-said-to-start-...
Anyone hear about the bank run in Latvia invloving Swedbank?
http://tinyurl.com/ch3tf3y
Lol, in 3 years, this is the first time I could comment without reading the article. Yeah, we are not endangering your account. Too funny.
John Peterffy was a floor trader, founded IB 30 years ago, and continues to run the company. He is one of the relatively good guys: always gave customers the best margin rates ( currently 1.3% ) deep-discount comissions, and never was involved in the OTC CDS market craziness that sank AIG or European bonds that sank MF.
If the entire financial system liquidity freezes up and crashes as some in ZH predict, can't say if IB will escape or not, but just saying the fellow who runs IB is way different from Cowboy Corzine.
Even though IB is currently conservately within the rules, for best response i think they ought to forgo some profit for a few months and reduce rehypothecation to the minimum, and let people know they have done that.
its Mr. Thomas Peterffy
Put it this way, if his walk is only 50% of his talk, clients have nothing to worry about.
Corswine, on the other hand, has had hustler, pimp, con man written all over him for years.
There's some other reasons to trust IB (albeit not 'implicitly') here:
http://www.caseyresearch.com/articles/abcs-re-hypothecation-gold-and-sec...
Hmmm... I see gold and silver is down already at the Globex open. The question is how low can we go?
Popcorn time!
And just let me add: And it's gone!
You go girl!
Bye bye Jefferies. I feel that client liquidation coming. So where is the Squib in all this?
Tyler what about rehypothecation of CASH collateral? I did a simple search on NY Fed's website and I found this:
"The values of the LLC’s cash equivalents and investments, purchased by the re-hypothecation of cash collateral associated with the TRS, were $0.8 billion and $0, respectively, as of December 31, 2010..."
that LLC is Maiden Lane
http://www.newyorkfed.org/aboutthefed/annual/annual10/MLI%20_32111.pdf
end game bitchez?
The second shift of commenters is starting.
Hello Europe.
STOCK LEGENDS RADIO SHOW ~ MONDAY DECEMBER 12TH 10AM EST.
http://stocklegends.com/radio-show-cms-39
Be sure to check out this weeks show as we peer into the financial black holes engineered by the global shadow banking system and then laugh it up with Chris Camillo and his unique view of investing. He is author of his new book, Laughing At Wallstreet.
Hosts: QuickDraw ~ Matt_Chart
Topics: Which Country Has Nearly 1000% Debt of GDP?
The Future Of The Euro
Rehypothecation
MF Global ~ Corzine Testimony
HSBC Sues MF Global Over Gold Claims
$707,568,901,000,000 Derivatives!
Special Guest: Chris Camillo ~ www.LaughingAtWallstreet.com
Interactive Brokers admits rehypothecation:
"a customer who incurs a margin debit by virtue of the fact that they have purchased securities with only partly their own money, thereby relying upon the broker to lend them the funds to pay the balance at settlement, subjects a portion (up to 140% of the amount borrowed, also referred to as the margin debit) of those securities to a lien on behalf of the broker. The lien is also known as hypothecation. The broker, in turn, may pledge or re-hypothecate the securities upon which they have a lien to replace the cash. In the case of IB, this re-hypothecatio n typically takes place in the form of a stock loan. In simple terms, IB borrows money from a third party, using the customer’s margin stock as collateral, and it lends those funds to the customer to finance the customer’s purchase."
So Interactive Brokers borrows money using property that is not theirs.
"Engaging in hyper-hypothecation have been Goldman Sachs ($28.17 billion re-hypothecated in 2011), Canadian Imperial Bank of Commerce (re-pledged $72 billion in client assets), Royal Bank of Canada (re-pledged $53.8 billion of $126.7 billion available for re-pledging), Oppenheimer Holdings ($15.3 million), Credit Suisse (CHF 332 billion), Knight Capital Group ($1.17 billion),Interactive Brokers ($14.5 billion), Wells Fargo ($19.6 billion), JP Morgan($546.2 billion) and Morgan Stanley ($410 billion)."
So if you have a Chase checking/savings account, your accounts are serving as collateral for JPM's hypothecated funds (because there is no more Glass-Steagall)???
Pimm Fox of Bloombergrosenbaumgoldrosensteinblattsilver pretty much summed up this hypothecation - rehypothecation situation with London in about 5 sentences. Almost as if he read the article.....Amazing.
So...how does SIPC fit into this?
Consider at account at IB, consisting of stock, none held on margin.
IB blows up...SIPC covers the stock if it is lost (I think the wording is)"by theft or misallocation."
But SIPC has a paltry $1.5 billion and what would a scenario like this create? A few trillion--many trillion?
I can accept the hpothecation of stock when margin is involved, but do rules allow hypothecation of stock in a customer's account when margin is not an issue?
And...will we hear, as "it's a haircut, silly, not a default" sort of phraseology something like "well, this doesn't fit under theft or misallocation" so no SIPC won't cover anything---too bad?
Can anyone answer this please?
I think the obvious answer is: "Sir, I'm afraid all your funds have been lost."
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