Nov 12GLD loses another 1.79 tonnes/SLV again remains constant/gold and silver down a bit/Swiss Regulators state that UBS engaged in gold/silver rigging/Big fines ensue/

My website is still under construction.  However I will be posting my commentary at

harveyorganblog.com or harveyorgan.wordpress.com  and at the silverdoctors website on a continual basis.

I would like to thank you for your patience.

Gold: $1158.90  down $3.90
Silver: $15.62  down 5 cents

In the access market 5:15 pm

Gold $1163.00
silver $15.70

Gold and silver did not have a good day today price wise as the bankers generally will not let momentum build. They rarely allow a two or three day runup in the precious metals.

The bankers came to work early in London knocking both metals down but gold/silver rebounded as we approached the comex and the 2nd London fix where gold reached its zenith and then it was downhill from there..(strictly a paper market)

 

The gold comex today had a poor delivery  day, registering  0 notices served for nil oz.

Silver registered 0 notices for nil oz.
A few months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 255.02 tonnes for a loss of 48 tonnes over that period. .

 

 

In silver, the open interest rose considerably despite Tuesday’s constant price.  It looks like we have a few nervous shorts in silver racing against the clock to cover some of their shortfall!! The total silver OI  remains extremely high with today’s reading  at 170,684 contracts.
The big  December silver OI contract lowered to 91,419 contracts which is to be expected with a normal contraction as some of the paper longs move to March..

 

 

In gold we had a small loss in OI despite yesterday’s rise in price of gold to the tune of $3.10 . The total comex gold  OI rests tonight quite elevated at 443,422 for a loss of 442 contracts. The December  gold OI rests tonight at 246,126 contracts which is also quite elevated for this time in the delivery cycle.

 

 

Today, we had a big withdrawal of gold Inventory at the GLD of 1.7900 tonnes/ inventory rests tonight at  722.67 tonnes.

In silver,  the SLV inventory had no change.

SLV’s inventory  rests tonight at 344.888 million oz.

.

We have a few important stories to bring to your attention today…

Let’s head immediately to see the major data points for today.

 

 

First: GOFO rates: move  deeper in backwardation!!

OH!!! OH!!

All months basically moved deeper into backwardation and all months moved into the negative direction..

Now, the first 4 month GOFO rates moved  deeply into the negative with the 6th month GOFO just entered  backwardation..  On the 22nd of September the LBMA stated that they will not publish GOFO rates. However today we still received today’s GOFO rates.

It looks to me like these rates even though negative are still fully manipulated.

London good delivery bars are still quite scarce.

The backwardation in gold is incompatible with the raid on gold . It does not make any economic sense.

Nov 12 2014

1 Month Rate: 2 Month Rate 3 Month Rate 6 month rate 1 yr rate

-.2025%                  -0.1475%               -0.0950%          – .0000%          + .11500%

Nov 11 .2014:

1 Month Rate 2 Month Rate 3 Month Rate 6 month Rate 1 yr rate

.185% +          -.1275%                  +-.0800%           +.00500 %      + .120%

 

 

end

 

 

 

Let us now head over to the comex and assess trading over there today,

Here are today’s comex results:

The total gold comex open interest fell by a tiny  margin of 422 contracts from  443,864 down to 443,422 with gold up  $3.10 yesterday. The bankers still seem quite confused as  to the huge increase in oI for gold and a thus a reason to whack again.  The front delivery month is November and here the OI actually rose by 3 contracts We had 0 delivery notices filed on Monday so we gained 3 contracts or  300 additional gold ounces will stand for the November contact delivery month. The big December contract month  saw it’s Oi fall by 7880 contracts down to 246,126 which is a normal contraction. Most of the  December longs sold rolled into February.  The estimated volume today was fair at 142,742.  The confirmed volume yesterday was very good at 219,637. Strangely on this 10th day of notices, we had zero notices filed for nil oz.

And now for the silver comex results.  The total OI rose nicely  by another 333 contracts from  170,351 up to 170,684 even though silver was unchanged yesterday. It seems that judging from gold’s OI, our banker friends are still very nervous as they continue to cover their massive shortfall in silver.   In ounces, this represents a total of 853 million oz or 121.8% of annual global supply.  We are now in the non active silver contract month of November and here the OI fell by 12 contracts down to 112. We had 12 notices filed on yesterday so we neither  gained nor lost any silver contracts that will  stand for the November contract month.  The big December active contract month saw it’s OI fall by 4250 contracts down to 91,419.  This is slightly below normal contraction of around 5,000 contracts. The December contract month remains highly elevated for this time in the delivery cycle.  In ounces the December contract  is represented by 457 million oz or 65.2% of annual global production  (production = 700 million oz – China). The estimated volume today was fair at 34,179.  The confirmed volume yesterday  was huge at 54,838. We also had 0 notices filed  today for nil oz.

Data for the November delivery month.

November initial standings

Nov 12.2014

Gold

Ounces

Withdrawals from Dealers Inventory in oz nil
Withdrawals from Customer Inventory in oz 3225.05 oz  (includes 7 kilobars(Scotia,Manfra)
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz nil oz
No of oz served (contracts) today   0 contracts(nil oz)
No of oz to be served (notices) 29 contracts (2600 oz)
Total monthly oz gold served (contracts) so far this month  10 contracts  (1000 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month    80,623.1  oz

Total accumulative withdrawal of gold from the Customer inventory this month

 517,442.7 oz

Today, we had 0 dealer transactions

 

total dealer withdrawal:  nil   oz

total dealer deposit:  nil oz

we had 2 customer withdrawals:

i) Out of Scotia;  3,000.000  oz  ??? how could this be possible/not even kilobars as not divisible by 32.15 oz

ii) Out of Manfra;  225.05 oz  (7 kilobars)

total customer withdrawals : 3225.05   oz

we had 0 customer deposits:

 

total customer deposits : nil  oz

We had 0 adjustments:

Total Dealer inventory: 868,910.561 oz or   27.02 tonnes

Total gold inventory (dealer and customer) =  8.200 million oz. (255.07) tonnes)

Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 48 tonnes have been net transferred out. We will be watching this closely!

Today, 0 notices was issued from  JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contracts  of  which 0 notices were stopped (received) by JPMorgan dealer and 0  notices were stopped by JPMorgan customer account.

To calculate the total number of gold ounces standing for the November contract month, we take the total number of notices filed for the month (10) x 100 oz to which we add the difference between the OI for the front month of November (29) – the number of gold notices filed today (0)  x 100 oz  =  the amount of gold oz standing for the November contract month.

Thus the  initial standings:

10  (notices filed today x 100 oz +   (29) OI for November – 0 (no of notices filed today) = 3900 oz or .1119 tonnes.  We lost 1700 oz of gold standing for the November contract month.

 And now for silver:

Nov 12/2014:

 November silver: initial standings

Silver

Ounces

Withdrawals from Dealers Inventory  nil oz (Scotia)
Withdrawals from Customer Inventory 185,515.53 oz
(CNT,Brinks,Scotia)
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory nil
No of oz served (contracts) 0 contracts  (nil oz)
No of oz to be served (notices) 110 contracts (550,000 oz)
Total monthly oz silver served (contracts) 124 contracts (620,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  183,382.9. oz
Total accumulative withdrawal  of silver from the Customer inventory this month 4,238,502.3 oz

Today, we had 0 deposits into the dealer account:

 total dealer deposit: nil oz

we had 0 dealer withdrawal:

total  dealer withdrawal: nil  oz

We had 3 customer withdrawals:

i) Out of CNT:  993.10 oz

ii) Out of Brinks:  124,507.43 oz

iii) Out of Scotia;  60,015.000 oz  ?????  how could this be possible  (x.000 oz)

total customer withdrawal  185,515.53  oz

 

 

We had 0 customer deposits:

total customer deposits: nil      oz

we had 0 adjustment

Total dealer inventory:  66.200 million oz

Total of all silver inventory (dealer and customer)   179.442 million oz.

The total number of notices filed today is represented by 0 contracts or nil oz.  To calculate the number of silver ounces that will stand for delivery in November, we take the total number of notices filed for the month (124 ) x 5,000 oz to which we add the difference between the total OI for the front month of November(110) minus  (the number of notices filed today (0) x 5,000 oz =   the total number of silver oz standing so far in November.

Thus:  124 contracts x 5000 oz  +  (110) OI for the November contract month – 0 (the number of notices filed today)  = amount standing or 1,170,000 oz of silver standing.

we neither gained nor lost any silver standing.

It looks like China is still in a holding pattern ready to pounce when needed.

end



The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.

There is now evidence that the GLD and SLV are paper settling on the comex.



***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold.  I can visualize demand coming to the buyers side:


i) demand from paper gold shareholders

ii) demand from the bankers who then redeem for gold to send this gold onto China

 

vs no sellers of GLD paper.

 

 

And now the Gold inventory at the GLD:

 

Nov 12.2014; we lost another 1.79 tonnes of gold at the GLD/Inventory at 722.67 tonnes

This gold left the shores of England and landed in Shanghai.

 

 

Nov 11.2014: we lost another 0.900 tonnes of gold at the GLD/Inventory 724.46 tonnes

Nov 10. we lost another 1.79 tonnes of gold at the GLD/Inventory 725.36 tonnes

Nov 7 wow!! we lost another huge 5.68 tonnes of gold at the GLD/inventory 727.15 tonnes

Nov 6.2014: we had another huge withdrawal of 2.99 tonnes of gold. Inventory 732.83 tonnes

This gold is also heading to Shanghai.  If I was a shareholder of GLD I would be quite concerned as there will be no real gold inventory left per outstanding shares.

Nov 5 we had another huge withdrawal of 3.000 tonnes of gold.  This gold will be heading to Shanghai/GLD inventory 735.82 tonnes

Nov 4.2014: a huge withdrawal of 2.39 tonnes of gold/GLD inventory/738.82 tonnes

Nov 3.2014: no change in gold inventory at the GLD/741.21 tonnes

Oct 31.2014: no change in gold inventory at the GLD despite the raid/inventory at 741.21 tonnes

October 30.2014: we had another 1.2 tonnes of gold leave the GLD and heading to Shanghai/Inventory 741.21 tonnes

October 29.2014: we had another .99 tonnes of gold removed from the GLD/inventory 742.40 tonnes

Oct 28.2014: we had another withdrawal of exactly 2 tonnes of gold heading to Shanghai;  Inventory 743.39 tonnes

Oct 27.2014: no change in gold inventory at the GLD/inventory 745.39 tonnes.

 

Oct 24.2014: a huge withdrawal of 4.48 tonnes of gold at the GLD/Inventory 745.39 tonnes.  This gold is heading to friendly territory: namely Shanghai.

 

Oct 23.2014: no change in gold inventory at the GLD/Inventory at 749.87 tonnes.

 

Oct 22.2014: we lost another 2.1 tonnes of gold at the GLD. Inventory rests at 749.87 tonnes.  This tonnage no doubt is off to Shanghai.

 

Oct 21.2014: no change in inventory/GLD inventory rests tonight at 751.96 tonnes.

 

Today, Nov 12. a big withdrawal of 1.7900 tonnes   gold inventory   at the GLD

inventory: 722.67 tonnes.

The registered  vaults at the GLD will eventually become a crime scene as real physical gold  departs for eastern shores leaving behind paper obligations to the remaining shareholders.   There is no doubt in my mind that GLD has nowhere near the gold that say they have and this will eventually lead to the default at the LBMA and then onto the comex in a heartbeat  (same banks).

GLD gold:  722.67 tonnes.

end

 

 

And now for silver:

 

Nov 12.2014: no change in silver inventory at the SLV/inventory rests tonight at 344.888 million oz.  And please note that gold leaves GLD/silver does not.  Why? there is no physical silver at the SLV..just paper obligations.

Nov 11.2014: no change in silver inventory at the SLV/inventory rests tonight at 344.888 million oz.

Nov 10/ we had an addition of 1.438 million oz of silver into inventory at the SLV/Inventory 344.888 million oz  (again note the difference between gold and silver)

Nov 7/ 2014/no change in silver inventory/inventory rests at 343.45 million oz.  (please note the difference between silver (SLV) and gold  (GLD)

Nov 6.2014: no change in silver inventory/(as of 6 pm est) inventory rests at 343.45 million oz.

Nov 5  today, the total silver inventory drops of 2.074 million oz/SLV inventory: 343.45 million oz

Nov 4.2014: wow!! we had another addition of 1.151 million oz of silver inventory/SLV inventory rises to 345.524

Please note the difference between GLD and SLV.  The GLD has physical gold to send on its way to Shanghai/SLV has no silver to offer to the participants to give to various players..

Nov 3.2014:  this is good news:  the “actual silver inventory” rose by 958,000 oz to 344.373 oz

(I guess there is no physical silver to raid from the SLV vaults:)

October 31.2014: despite the huge raids yesterday and today:  no change in silver inventory at the SLV/inventory at 343.415 million oz

October 30.2014; no change in silver inventory at the SLV/inventory at 343.415 million oz

October 29.2014 no change in silver inventory at the SLV inventory/343.415 million oz

October 28.2014: no change in silver inventory at the SLV/Inventory at 343.415 million oz

Oct 27.2014: no change in silver inventory at the SLV

 Today, Nov 12..2014: we have no change in silver inventory /inventory 344.888 million oz

end

And now for our premiums to NAV for the funds I follow:

Note:  Sprott silver fund now deeply into the positive to NAV

Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)

1. Central Fund of Canada: traded  at Negative 10.6% percent to NAV in usa funds and Negative   10.3% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold  61.8%

Percentage of fund in silver:37.60%

cash .6%


( Nov 12/2014)   

2. Sprott silver fund (PSLV): Premium to NAV falls to positive 3.90% NAV (Nov 12/2014)  

3. Sprott gold fund (PHYS): premium to NAV  falls to negative -0.77% to NAV(Nov 12/2014)

Note: Sprott silver trust back hugely into positive territory at 3.90%.

Sprott physical gold trust is back in negative territory at  -0.77%

Central fund of Canada’s is still in jail.

end

 

 

 

And now for your most important physical stories on gold and silver today:

 

 

Early gold trading form Europe early Tuesday morning:

(courtesy Goldcore/Mark O’Byrne)

Swiss Regulator: “Clear Attempt To Manipulate Precious Metals ” … “Particularly Silver”

Published in Market Update  Precious Metals  on 12 November 2014

By Mark O’Byrne

Further proof of manipulation of gold and silver prices – if any were needed – came overnight as  Switzerland’s financial regulator (FINMA) found “serious misconduct” and a “clear attempt to manipulate precious metals benchmarks” by UBS employees in precious metals trading, particularly with silver.

Bloomberg report

Switzerland’s regulator found “serious misconduct” by UBS AG (UBSN) employees in precious metals trading, particularly with silver, as part of its review of the bank’s foreign-exchange business.

Electronic chats played a “key” role in the improper conduct in foreign exchange and precious metals trading, the Swiss Financial Market Supervisory Authority, or Finma, said in a statement today. It found front running, when traders profit from advance knowledge about a transaction expected to influence prices, over client orders for silver.

It is believed that traders manipulated the gold and silver bullion fixes. The benchmarks known as the gold and silver “fix” were used to ascertain gold prices twice daily and silver prices once a day for the precious metals industry and market participants including investors.

Along with other precious metal benchmarks, it has come under increased regulatory scrutiny since the Libor manipulation revelations in the foreign exchange market in 2012.
Reuters Report
Swiss regulator FINMA said on Wednesday that it found a clear attempt to manipulate precious metals benchmarks during its probe of precious metals and foreign exchange trading at UBS 

“The behavior patterns in precious metals were somewhat similar to the behavior patterns in foreign exchange,” FINMA director Mark Branson said in a conference call with journalists. “UBS has both precious metals and foreign exchange desks under combined leadership, therefore it’s not that surprising that one has similar behavior patterns.”
“But we have also seen a clear attempt to manipulate fixes in the precious metal market.”

The Swiss watchdog said earlier that a recent probe showed UBS tried to manipulate foreign exchange benchmarks and staff acted against client interests. It ordered the bank to hand over 134 million Swiss francs ($139 million) in a forex probe.

UBS said in its annual report in May that it had widened an internal probe of its foreign exchange operations to include precious metals trading.

 

The gold fix was until this year set by five banks via a twice a day conference call. Similar mechanisms existed for silver, platinum and palladium. UBS was not among the fixing members.

Deutsche Bank said in January it was putting its gold fix seat up for sale, but failed to find a buyer, leaving the fixing process with only four members.

Members later announced they would disband the gold fix, which will be replaced later this year by an electronic gold platform operated by U.S. bourse Intercontinental Exchange (ICE).

Switzerland’s financial regulator said it would limit bonuses for some UBS employees, as it ordered the bank to disgorge 134 million Swiss francs (138.98 million US dollars) (87.26 million pound) in a foreign exchange trading probe.

The Berne based regulator also said it had begun enforcement proceedings against 11 former and current unnamed UBS employees.

FINMA said variable pay for UBS forex and precious metals employees globally would be limited to 200% of their basic salary for two years. Hardly a deterrent to criminal financial behaviour.

The regulator also said it would introduce an approval process for other high earners at UBS’s Swiss investment bank. UBS is also obliged to automate at least 95% of its global foreign exchange trading, FINMA said.

The order by the Swiss regulator is bigger than the 59 million francs in profits demanded in 2012 in order to settle a case over the rigging of the London Interbank Offered Rate (Libor).

Separately, the UK fined five major banks 1.1 billion pounds ($1.75 billion) for “failings” in currency trading in a landmark settlement after a scandal that has roiled the world’s largest market.

In what appeared like a coordinated move, the Commodity Futures Trading Commission (CFTC) said it was fining five banks $1.4 billion for attempted manipulation in the foreign exchange market.

The CFTC said traders had used private online chat rooms to communicate. They had disclosed confidential customer order information and trading positions, and altered their positions accordingly to “benefit the interests of the collective group”.

Gold in U.S. Dollars – 10 Years (Thomson Reuters)

Gold prices have been under increased regulatory scrutiny this year. Barclays Plc was fined 26 million pounds ($43.8 million) in May for manipulating gold prices. The bank claimed the “failures” were due to lax internal controls that allowed a trader to manipulate gold prices rather than a systematic attempt to manipulate the gold price.

Banks continue to get mere slaps on the wrists for breaking the law. Very few traders or bankers have faced prosecution or jail time. Instead, regulators levy completely ineffectual fines that are tiny when compared to their annual bonuses and indeed profits. 

As long as this continues, we will continue to see criminal behaviour and banks attempting to manipulate and rig markets at the expense of investors and other financial market participants.

Such behaviour is creating huge distortions in markets and will likely contribute to another financial crash and crisis.

Get Breaking News and Updates on the Gold Market Here

MARKET UPDATE

Today’s AM fix was USD 1,163.25, EUR 934.41 and GBP 731.83 per ounce.
Yesterday’s AM fix was USD 1,151.25, EUR 927.90 and GBP 726.43 per ounce.

Gold climbed $16.40 or 1.43% to $1,165.80 per ounce yesterday and silver rose $0.18 or 1.16% at $15.74 per ounce.

Gold in EUR – 1 Year (Thomson Reuters)

Spot gold was last at $1,163.00/1,163.80 per ounce, up $2 on Tuesday’s close and trading within a $9 intraday range.

Physical demand for bullion coins and bars has increased and investor interest has picked up marginally after the metals became oversold. The next resistance level is seen at the previous support at $1,180.

The dollar was last at 1.2460 against the euro, up 0.15 cents on concerns that the ECB may introduce fresh monetary easing measures to kick-start the Eurozone’s stumbling economy. Euro gold is well supported at €900/oz and has recovered to €934/oz.

Swiss regulator FINMA said today, “we have also seen a clear attempt to manipulate fixes in the precious metal market (see above)” The Swiss watchdog said earlier that a recent probe showed UBS tried to manipulate foreign exchange benchmarks and staff acted against client interests. It ordered the bank to hand over 134 million Swiss francs ($139 million) in a forex probe.

The London Bullion Market Association (LBMA) will stop producing its gold lending rates data from January 30th as banks shy away from the risks of providing financial benchmarks, a source close to the situation told Reuters today.

The Gold Forward Offered (GOFO) rate is used as a benchmark for dealers, central banks and others to swap gold for dollars. The LBMA currently sets GOFO each day by polling its eight major bank dealers, including UBS and JP Morgan on the rates at which they are prepared to lend gold.

Gold in GBP – YTD 2014 (Thomson Reuters)

The Bank of England cut its growth forecasts and noted inflation could fall under 1% within months as a renewed slump in the euro area puts pressure on the U.K. economy.

Today’s inflation report by BoE Governor, Mark Carney, forecast expansion of 2.9% in 2015 and 2.6% in 2016. That’s below previous forecasts of 3.1% and 2.8%  in August.

They also said inflation will return to the 2% target in three years, nearly validating investors’ expectations that rate increases may not begin for almost another year. Gold in sterling remains attractive due negative real interest rates and the risk of a renewed bout of sterling weakness in the coming months.

 

 

end

 

Another great commentary from  Chris Powell on the gold/silver rigging:

 

(courtesy Chris Powell/GATA)

 

 

 

Today’s market-rigging disclosures only hint at far greater offenses

Section:

2:54p ET Wednesday, November 12, 2014

Dear Friend of GATA and Gold:

As much as we may claim some vindication from today’s official confirmations of LIBOR and gold-market rigging —

http://www.gata.org/node/14706

http://www.gata.org/node/14707

— they involve, after all, only the smaller participants, the investment banks that often function as agents for Western central banks.

The much bigger issue is the surreptitious involvement of central banks in market rigging, and not just the rigging of the gold market but increasingly the rigging ofall commodity markets, as indicated by the documents filed this year by futures exchange operator CME Group with the U.S. Commodity Futures Trading Commission and the Securities and Exchange Commission:

http://www.gata.org/node/14385

http://www.gata.org/node/14411

This is an enormous story with consequences for everyone on the planet, signifying the destruction of democracy, markets, and human progress everywhere, as well as the vicious exploitation of the developing world and the transfer of its wealth to the developed world. But except for the story’s political sensitivity, why can’t it be reported by respectable financial news organizations?

Today’s disclosures are only the smallest start, by no means a conclusion.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

 

end

 

(courtesy Chris Powell/GATA)

 

Would you die on your feet or your knees — or even win?

Section:

2:21p ET Wednesday, November 12, 2014

Dear Friend of GATA and Gold:

Gold mining companies that haven’t already committed themselves to die quietly, and any of their shareholders who aren’t completely demoralized and useless, might note what Bloomberg News was told by a market analyst in Geneva in regard to the huge fines announced today against the investment banks that were caught manipulating the LIBOR interest rate.

“‘Many will see this as drawing a line under this sad episode,’ said Tim Dawson, an analyst at Helvea SA in Geneva who covers financial firms. ‘We are less optimistic,’ he said. The banks are ‘likely to face a heavy burden of potential litigation in coming years.'”

(See: http://www.bloomberg.com/news/2014-11-12/banks-to-pay-3-3-billion-in-fx-….)

Since Switzerland’s market regulatory agency announced today that it had caught Swiss banking giant UBS trying to manipulate the daily London gold fix —

http://www.gata.org/node/14707

— and since Barclays Bank already has admitted and been fined for an incident of gold market rigging —

http://www.bloomberg.com/news/2014-05-23/barclays-fined-44-million-for-l…

— why shouldn’t such litigation now become an avalanche against the bullion banks involved in the London fix and against the investment banks that have gotten anywhere near it?

A class-action lawsuit is already under way against the London gold fix banks and its plaintiffs are looking for people to join their complaint. All people have to do is send an exploratory e-mail:

http://www.gata.org/node/14674

Good weapons are at hand. Do you want to die on your feet or on your knees — or would you even prefer to win?

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

 

 

end

 

Jan Harvey reports on the Swiss regulators stating that UBS manipulated monetary metals at the fix:

 

(courtesy Jan Harvey/Reuters)

 

Swiss regulator says UBS tried to manipulate monetary metals fixes

Section:

Clear Attempt to Manipulate Precious Metals Benchmarks at UBS, FINMA Says

By Jan Harvey
Reuters
Wednesday, November 12, 2014

LONDON — Swiss regulator FINMA said on Wednesday that it found a “clear attempt” to manipulate precious metals benchmarks during its investigation into precious metals and foreign exchange trading at UBS.

The benchmark known as the gold “fix” is used to ascertain reference prices twice daily for the precious metals industry. Along with other precious metal benchmarks, it has come under increased regulatory scrutiny since the Libor manipulation scandal broke in the foreign exchange market in 2012.

“The behaviour patterns in precious metals were somewhat similar to the behaviour patterns in foreign exchange,” FINMA director Mark Branson said in a conference call with journalists.

He said that as UBS has precious metals and foreign exchange desks under combined leadership, it was not surprising to find similar behaviour.

“But we have also seen a clear attempt to manipulate fixes in the precious metal market.” …

… For the remainder of the report:

http://www.reuters.com/article/2014/11/12/banks-forex-settlement-gold-id…

 

 

 

end

 

 

 

 

Bloomberg reports on the 4.3 billion in fines leveled so far in the rigging of  FX”

 

(courtesy Bloomberg)

 

 

 

Fines bring bank currency-rigging settlement to $4.3 billion

Section:

By Suzi Ring, Liam Vaughan, and Jesse Hamilton
Bloomberg News
Wednesday, November 12, 2014

Regulators in the U.S., Britain, and Switzerland ordered six banks to pay about $4.3 billion in the first wave of penalties since authorities began a global probe into the rigging of key foreign-exchange benchmarks last year.

The Office of Comptroller of the Currency fined Bank of America Corp. $250 million, while JPMorgan Chase & Co. and Citigroup Inc. will pay $350 million each, according to a statement. That adds to $3.3 billion of penalties announced earlier today by the U.S. Commodity Futures Trading Commission, Britain’s Financial Conduct Authority and the Swiss Financial Market Supervisory Authority.

Banks and individuals could still face further penalties and litigation following the 13-month probe into allegations dealers at the biggest banks colluded with counterparts at other firms to rig benchmarks used by fund managers to determine what they pay for foreign currency. The Justice Department, which is working with the Federal Reserve, and Britain’s Serious Fraud Office, are still leading criminal probes into the $5.3 trillion-a-day currency market.

“Many will see this as drawing a line under this sad episode,” said Tim Dawson, an analyst at Helvea SA in Geneva who covers financial firms. “We are less optimistic,” he said. The banks are “likely to face a heavy burden of potential litigation in coming years.” …

… For the remainder of the report:

http://www.bloomberg.com/news/2014-11-12/banks-to-pay-3-3-billion-in-fx-.

 

 

end

 

 

 

Chris Powell of GATA is interviewed/you do not want to miss this!!

 

(courtesy Chris powell/Jason Burak)

 

 

 

Wall Street for Main Street’s Jason Burack interviews GATA secretary

Section:

7:09p ET Tuesday, November 11, 2014

Dear Friend of GATA and Gold:

Jason Burack of the Wall Street for Main Street Internet site today interviewed your secretary/treasurer about the historical facts of gold price suppression and how the current round might end. As your secretary/treasurer talks too much even as he is fighting off a cold, the interview is almost 40 minutes long. It can be heard at You Tube here:

https://www.youtube.com/watch?v=JFFq_uLNxtk&feature=youtu.be

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

 

 

end

 

 

 

 

Stephen Leeb talks with Eric King on Russia’s confrontation with the west

 

(courtesy Stephen Leeb/Kingworldnews/Eric King)

 

 

 

Russia is winning confrontation with West, Leeb tells KWN

Section:

7:20p ET Tuesday, November 11, 2014

Dear Friend of GATA and Gold:

Fund manager Stephen Leeb tells King World News today that Russia is winning its confrontation with the West, that China is the biggest buyer of oil on the current dip, and that he wouldn’t be surprised if oil is 70 to 90 percent higher within a year. An excerpt from the interview is posted at the KWN blog here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/11/11_T…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

 

end

 

 

 

 

what a joke!!

 

(courtesy Reuters/GATA)

 

LBMA gathers in Peru to disparage gold, discourage redemption of unbacked paper

Section:

Shaken Gold Bulls Learn to Accept ‘New Normal’

By Clara Denina
Reuters
Tuesday, November 11, 2014

LIMA, Peru — Blinking from sweeping reform on price benchmarks, even the most die-hard gold enthusiasts accepted that the market’s glory days had faded for now, as the bullion industry’s annual conference agreed prices would nurse losses over the next year.

Gold, which hit a four-year low of $1,131.85 an ounce last week, was expected to stabilise around $1,200 an ounce by October 2015, some of the 400 delegates at the London Bullion Market Association annual conference in Lima, Peru, forecast.

Spot gold has shed around 5 percent this year, in the wake of last year’s 28-percent tumble that halted a 12-year rally. It is currently trading at around $1,170.

“The question is not anymore whether gold prices can rise, but how long they will languish at current levels,” one banking delegate said. …

… For the remainder of the report:

http://www.reuters.com/article/2014/11/11/gold-conference-mood-idUSL6N0T…

 

end

 

 

 

 

Nicholas Larkin of Bloomberg talks about the negative GOFO rates and what it means to gold pricing:

 

(courtesy Nicholas Larkin/Bloomberg/GATA)

 

 

 

 

Gold to find solace from negative lending rate

Section:

By Nicholas Larkin
Bloomberg News
Tuesday, November 11, 2014

Gold at a four-year low should find solace after rates at which bullion is lent for dollars turned negative, signaling tighter supply, Natixis SA said.

The Chart of the Day shows the three-month gold forward offered rate has turned negative on a weekly basis. Prices rose in three of the past four times this occurred since last year. There’s now a “limited window” to bet on a gold rebound, Natixis economist Evariste Lefeuvre said in a Nov. 10 report.

A form of backwardation, when earlier prices are more expensive than for later dates, the negative GOFO rate signals that dealers are paid to lend metal against cash, rather than paying for the privilege. As bullion slid to the lowest since April 2010 this month on a stronger dollar and outlook for higher interest rates, demand for U.S. Mint coins increased. …

… For the remainder of the report:

http://www.bloomberg.com/news/2014-11-12/gold-to-find-solace-from-negati…

 

end

 

 

 

 

The big story of the day!!

The banker boys are caught rigging foreign exchange and gold/silver

 

(courtesy Reuters)

 

 

 

 

“A Clear Attempt To Manipulate Fixes In The Precious Metal Market”

 

Just in case there is still any confusion, here is Reuters to clear things up.

Swiss regulator FINMA said on Wednesday that it found a “clear attempt” to manipulate precious metals benchmarks during its investigation into precious metals and foreign exchange trading at UBS.

 

“The behaviour patterns in precious metals were somewhat similar to the behaviour patterns in foreign exchange,” FINMA director Mark Branson said in a conference call with journalists.

 

He said that as UBS has precious metals and foreign exchange desks under combined leadership, it was not surprising to find similar behaviour.

 

“But we have also seen a clear attempt to manipulate fixes in the precious metal market.”

Luckily, it was only at UBS. As for Andre Flotron, who is “keen to return in due time“… don’t hold your breath.

Now all those traders who lost money with UBS on the other side, will get their money back right?

 

 

 

 

end

 

 

 

 

And guess what:  for all that criminal activity their punishment will be their bonus capped at 200% of their base salary…

 

UNBELIEVABLE!!!

(courtesy zero hedge)

 

 

 

Caught Rigging FX and Gold? Your Punishment Will Be A Bonus Capped At Just 200% Of Your Base Salary

Tyler Durden's picture

 

 

Here are some more details on today’s headline news: the banks’ wholesale settlement to put FX-rigging in the rearview mirror. First example: if you ever saw your stops taken out from beneath your feet, thank your broker, JPM, which acted against its own clients to crush their stops.

From the FCA’s JPM notice:

JPMorgan’s failings in this regard allowed the following behaviours to occur in its G10 spot FX trading business:

  1. Attempts to manipulate the WMR and the ECB fix rates, alone or in collusion with traders at other firms, for JPMorgan’s own benefit and to the potential detriment of certain of its clients and/or other market participants;
  2. Attempts to trigger clients’ stop loss orders for JPMorgan’s own benefit and to the potential detriment of those clients and/or other market participants; and
  3. Inappropriate sharing of confidential information with traders at other firms, including specific client identities and, as part of (1) and (2) above, information about clients’ orders.

From Reuters:

Dozens of dealers have been suspended or fired for sharing confidential information about client orders and coordinating trades to make money from a foreign exchange benchmark used by asset managers and corporate treasurers to value their holdings in the latest scandal to hit the financial industry.

 

They used code names to identify clients without naming them and created online chatrooms with pseudonyms such as “the players”, “the 3 musketeers” and “1 team, 1 dream” in which to swap information. Those not involved were belittled.

Here is what they did in these chat rooms:

Traders in a chat room with net orders in the opposite direction to the desired movement at the fix sought before the fix to transact or “net off” their orders with third parties outside the chat room, rather than with other traders in the chat room. This maintained the volume of orders in the desired direction held by traders in the chat room and avoided orders being transacted in the opposite direction at the fix. Traders within the market have referred to this process as “leaving you with the ammo” or similar.

 

Traders in a chat room with net orders in the same direction as the desired rate movement at the fix sought before the fix to do one or more of the following:

  • Net off these orders with third parties outside the chat room, thereby reducing the volume of orders held by third parties that might otherwise be transacted at the fix in the opposite direction. Traders within the market have referred to this process as “taking out the filth” or “clearing the decks” or similar;
  • Transfer these orders to a single trader in the chat room, thereby consolidating these orders in the hands of one trader. This potentially increased the likelihood of successfully manipulating the fix rate since that trader could exercise greater control over his trading strategy during the fix than a number of traders acting separately. Traders within the market have referred to this as “giving you the ammo” or similar; and/or
  • Transact with third parties outside the chat room in order to increase the volume of orders held by them in the desired direction. This potentially increased the influence of the trader(s) at the fix by allowing them to control a larger proportion of the overall volume traded at the fix than they would otherwise have and/or to adopt particular trading strategies, such as trading a large volume of a currency pair aggressively. This process was known as “building”.

Traders increased the volume traded by them at the fix in the desired direction in excess of the volume necessary to manage the risk associated with firms’ net buy or sell orders at the fix. Traders within the market have referred to this process as “overbuying” or “overselling”.

There are many more details and we will break them out shortly, but cutting to the chase, here is the punishment:

FINMA has also instructed UBS to limit bonuses for traders of foreign exchange and precious metals to 200 percent of their base salary for two years.

Which means that clearly nobody is going to jail, however the punishment is far more harsh: riggers will have a bonus of ONLY 200% their base salary for two years to look forward to!

The horror, the horror.

Which naturally means that base salaries across the rigging banks are about to soar to offset the tempoyrary bonus cap to the “keep the talent” happy. After all someone has to keep on rigging markets and generate bank revenue.

 

 

end

 

 

 

And now we have some disclosures from the regulators

 

It is collusion to the highest degree!!

 

(courtesy zero hedge)

 

 

 

How To Rig FX Like A Pro “Bandit”, And Make Millions In The Process

Tyler Durden's picture

We finally have the answer, courtesy of the FCA’s partial and very much selective disclosure of FX rigging findings by “The Cartel”, the “Bandits” and so on, as part of its wrist-slapping settlement, just how the big boys make millions in FX on every single fix. Hopefully one day the regulators, who are as corrupt and conflicted as the banks they quote-unquote police, will reveal all the documents in their possession and let the public decide what is important and what isn’t. But in the meantime, for all those curious just why the Too Big To Fail are also Too Big To Prosecute, here is the blow by blow.

First, an example of JPMorgan manipulating the fix

An example of JPMorgan’s involvement in this behaviour occurred on one day within the Relevant Period when JPMorgan attempted to manipulate the WMR fix in the EUR/USD currency pair. On this day, JPMorgan had net buy orders at the fix which meant that it would benefit if it was able to move the WMR fix rate upwards. The chances of successfully manipulating the fix rate in this manner would be improved if JPMorgan and another firm or firms adopted trading strategies based upon the information they shared with each other about their net orders.

In the period between 3:41pm and 3:51pm on this day, traders at two different firms (including JPMorgan) inappropriately disclosed to each other via a chat room details about their net orders in respect of the forthcoming WMR fix in order to determine their trading strategies. The other firm is referred to in this Final Notice as Firm A. On the day in question, a third firm (Firm B) was a member of the chat room, but did not participate in the discussions. JPMorgan then participated in the series of actions described below in an attempt to manipulate the fix rate higher.

  1. At 3:43pm, Firm A asked JPMorgan whether it would need to buy EUR in the market for the forthcoming WMR fix. JPMorgan responded that it had net buy orders for the fix, which it subsequently confirmed amounted to EUR105 million. It offered to transfer its net buy orders to Firm A.
  2. At 3:44pm, Firm A replied “maybe” and went on to state that it had a buy order “for a top [account]” for EUR150 million at the fix.
  3. At 3:46pm, Firm A then stated “i’d prefer we join forces”. JPMorgan responded “perfick…lets do ths…lets double team em”. Firm A replied “YESsssssssssss”. The Authority considers these statements to refer to the possibility of JPMorgan and Firm A co-ordinating their actions in an attempt to manipulate the fix rate higher. Since JPMorgan and Firm A each needed to buy EUR at the fix, each would profit to the extent that the fix rate at which it sold EUR was higher than the average rate at which it bought EUR in the market.
  4. At 3:47pm and 3:51pm, JPMorgan informed Firm A that it had conducted trades with third parties that resulted in it needing to buy additional EUR at the fix. This is an example of “building”.
  5. At 3:48pm, Firm A said that it was monitoring activity in relation to the forthcoming fix in the interdealer broker market (“i got the bookies covered”).

In the period leading up to the fix, JPMorgan “built” the volume of EUR that it needed to buy for the fix to a total of approximately EUR278 million via a series of transactions with market participants. Firm A had net buy orders associated with its client fix orders of EUR170 million in the period leading up to the fix. It increased this amount (or “built”) by EUR70 million.

From 3:52pm until the opening of the fix window at 3:59:30pm, JPMorgan and Firm A bought EUR on the EBS trading platform. In particular JPMorgan bought EUR57 million from 3:58pm onwards. These early trades were designed to take advantage of the expected upward movement in the fix rate following the discussions within the chat room described above.

In the first five seconds of the fix window, JPMorgan and Firm A each placed orders to buy EUR50 million and subsequently placed smaller orders to buy EUR throughout the remainder of the fix window. During the 60 second fix window, JPMorgan bought a total of EUR134 million and Firm A bought EUR125 million. Between them, they accounted for 41% of the volume of EUR/USD bought during the fix window.

The rate prevailing on EBS at the start of the fix window was 1.3957. Over the course of the window period, the rate rose and WM Reuters subsequently published the fix rate for EUR/USD at 1.39605.

The information disclosed between JPMorgan and Firm A regarding their order flows was used to determine their trading strategies. The consequent “building” by JPMorgan and its trading in relation to that increased quantity in advance of and during the fix window were designed to increase the WMR fix rate to JPMorgan’s benefit JPMorgan’s trading in EUR/USD in this example generated a profit of approximately USD33,000.

Subsequent to the WMR fix, the two traders discussed the outcome of their trading. At 4:03pm, Firm A stated “sml rumour we havent lost it”. JPMorgan responded “we…do…dollarrr”.

The following day Firm A stated to Firm B “we were EPIC at the [WMR] fix yest”. Firm B responded “yeeeeeeeeeeeeeeeeeeah”. Firm A added “i dragged [JPMorgan] in , we covered all the bases b/w us”. Firm B commented “so couldnt have been that $hit a week!!”

* * *

Here is UBS doing the same and making $513K in the process

An example of UBS’s involvement in this behaviour occurred on one day within the Relevant Period when UBS attempted to manipulate the ECB fix in the EUR/USD currency pair. On this day, UBS had net client sell orders at the fix which meant that it would benefit if it was able to move the ECB fix rate lower.10 The chances of successfully manipulating the fix rate in this manner would be improved if UBS and other firms adopted trading strategies based upon the information they shared with each other about their net orders.

In the period between 12:35pm and 1:08pm on this day, traders at four different firms (including UBS) inappropriately disclosed to each other via a chat room details about their net orders in respect of the forthcoming ECB fix at 1:15pm in order to determine their trading strategies. The other three firms are referred to in this Final Notice as Firm A, B and C. UBS then participated in the series of actions described below in an attempt to manipulate the fix rate lower.

  1. At 12:36pm, Firm A disclosed that it had net sell orders for the fix. At 12:37pm, Firm A disclosed that these net sell orders were EUR200 million. At 12:40pm, Firm A updated this figure to EUR175 million.
  2. At 12:36pm, UBS disclosed that it had net sell orders for the fix of EUR200 million. At 12:44pm, UBS disclosed that its net sell orders had increased to EUR250 million. Since UBS needed to sell Euros at the fix it would profit to the extent that the fix rate at which it bought Euros was lower than the average rate at which it sold Euros in the market.
  3. At 12:36pm, Firm B disclosed that it had net sell orders for the fix of EUR100 million and that another of its offices also had net sell orders.
  4. At 12:48pm, Firm A disclosed that its net sell orders had reduced to EUR100 million, but that it was “…hopefully taking all the filth out for u…”. The Authority considers that this statement referred to Firm A having netted off part of its net sell orders with smaller buy orders held by third parties, which might otherwise have traded in the opposite direction to UBS at the ECB fix. This is an example of Firm A “clearing the decks”.
  5. At 1:02pm, Firm A disclosed that it had sold EUR25 million to a client in a transaction separate to the fix but would remain EUR25 million short (“lose… shet [i.e. 25 million] though natch dont buy”). The Authority considers that this statement referred to Firm A’s intention not to buy this amount of Euros in the market immediately, but to take advantage of the anticipated downwards rate movement at the fix by only buying when the rate had dropped.
  6. In response, UBS disclosed that it had also sold EUR25 million to a client in a separate transaction. UBS inappropriately revealed the identity of the client to the chat room using a code known to the chat room participants. Firm B indicated that these short positions should be held for 12 minutes (i.e. until the ECB fix).
  7. At 1:03pm, Firm A disclosed that it had been trading in the market and its net sell orders at the fix had been reduced to EUR50 million (“i getting chipped away at a load of bank filth for the fix… back to bully [i.e. 50 million]… hopefully decks bit cleaner”). The Authority considers this to refer to trades between Firm A and other market participants, whose buy orders might otherwise be traded in the opposite direction to UBS and Firm A at the fix. This is a further example of Firm A “clearing the decks”.
  8. At 1:04pm, UBS disclosed that it still had net sell orders for EUR200 million at the forthcoming ECB fix. UBS also stated that it had a separate short position of EUR50 million. At 1:05pm, Firm B disclosed that it also had a short position of EUR50 million.
  9. At 1:07pm, Firm C disclosed that it had net buy orders of EUR65 million at the forthcoming ECB fix. Firm C subsequently netted off with Firm A and Firm B, such that at 1:08pm Firm C disclosed that it only had EUR10 million left to buy in the opposite direction at the fix. This is an example of “leaving you with the ammo”. Firm B advised Firm C to “go late” (i.e. buy later when the rate would be lower).
  10. At 1:14pm, Firm B copied into the chat a comment made by UBS at 12:04pm that day describing an earlier fix as “the best fix of my ubs career.” Firm B then said “chalenge [sic]” and Firm C added the comment “stars aligned”.

UBS’s net sell orders associated with its client fix orders were EUR86 million. During the period leading up to the ECB fix, UBS increased (or “built”) the volume of Euros that it would sell for the fix to EUR211 million through a series of additional trades conducted with other market participants, well above that necessary to manage UBS’s risk associated with net client orders at the fix.

From 12:35pm to 1:14pm, UBS sold a net amount of EUR132 million. At 1:14:59pm (i.e. 1 second before the ECB fix), UBS placed an order to sell EUR100 million at 1.3092, which was three basis points below the prevailing best market bid at that time.

This order was immediately executed and accounted for 29% of the sales in EUR/USD on the EBS platform during the period from 1:14:55 to 1:15:02pm.

The ECB subsequently published the fix rate for EUR/USD at 1.3092.

The information disclosed between UBS and Firms A, B and C, regarding their order flows was used to determine their trading strategies. The consequent “building” by UBS and its trading in relation to that increased quantity at the fix were designed to decrease the ECB fix rate to UBS’s benefit. UBS undertook the selling of Euros prior to the 1:15pm ECB fix in anticipation that the fix rate at which it would buy Euros would be lower than the average rate at which it had sold. The placing of a large sell order by UBS immediately prior to 1:15pm was designed to achieve this outcome. UBS’s trading in EUR/USD in this example generated a profit of USD513,000.

In the immediate aftermath of the ECB fix, UBS was congratulated on the success of its trading by Firms A, B and C (“hes sat back in his chaoir [sic]…feet on desk…announcing to desk…thats why i got the bonus pool” and “yeah made most peoples year”).

* * *

JPM triggering client stop loss orders

During its investigation, the Authority identified instances within JPMorgan’s G10 spot FX trading business of attempts to trigger client stop loss orders. These attempts involved inappropriate disclosures to traders at other firms concerning details of the size, direction and level of client stop loss orders. The traders involved would trade in a manner aimed at manipulating the spot FX rate, such that the stop loss order was triggered. JPMorgan would potentially profit from this activity because if successful it would, for example, have sold the particular currency to its client pursuant to the stop loss order at a higher rate than it had bought that currency in the market.

This behaviour was reflected in language used by G10 spot FX traders at JPMorgan in chat rooms. For example, a JPMorgan trader explained to other traders in a chat room that he had traded in the market in order “to get the 69 print” (i.e. to move the spot FX rate for that currency pair to the level (“69”) at which a stop loss would be triggered). On another occasion, the same trader disclosed the level of certain clients’ stop loss orders to other JPMorgan traders in a chat room and asked “shall we go get these stops?”

* * *

UBS tigerring stop loss orders

During its investigation, the Authority identified instances within UBS’s G10 spot FX trading business of attempts to trigger client stop loss orders. These attempts involved inappropriate disclosures to traders at other firms concerning details of the size, direction and level of client stop loss orders. The traders involved would trade in a manner aimed at manipulating the spot FX rate, such that the stop loss order was triggered. UBS would potentially profit from this activity because if successful it would, for example, have sold the particular currency to its client pursuant to the stop loss order at a higher rate than it had bought that currency in the market.

This behaviour was reflected in language used by G10 spot FX traders at UBS in chat rooms. For example, one UBS trader commented in a chat room “i had stops for years but they got sick of my butchering”. On a subsequent occasion, the same trader described himself as “just jamming a little stop here.

UBS leaking confidential information

The attempts to manipulate the WMR and ECB fixes and trigger client stop loss orders described in this Notice involved inappropriate disclosures of client order flows at fixes and details of client stop loss orders.

 

HSBC is pretty good too. Here is the scandal-ridden bank rigging a GBP fix:

  1. At 2:50pm, Firm A disclosed in a chat room (including to HSBC) that it had net sell orders for more than GBP100 million at the fix. At 3:25pm, Firm A indicated that the orders were for approximately GBP130 million.
  2. At 3:25pm, HSBC disclosed to Firm A in a one-to-one chat that it had net client sell orders for GBP400 million at the fix. Since HSBC and Firm A each needed to sell GBP at the fix each would profit to the extent that the fix rate at which it bought GBP was lower than the average rate at which it sold GBP in the market.
  3. Firm A informed HSBC that it now had net sell orders of GBP150 million at the fix. HSBC responded by saying “lets go”,11 to which Firm A replied “yeah baby”. The Authority considers these statements to refer to the possibility of HSBC and Firm A co-ordinating their actions in an attempt to manipulate the fix rate downwards.
  4. At 3:28pm in a chat room which included HSBC, Firm A expressed the hope that other traders would also have sell orders at the fix (“hopefulyl a fe wmore get same way and we can team whack it”). At 3:36pm, Firm B, which was a participant in the chat room, confirmed to the other traders that he now also had net sell orders for GBP40 million at the fix.
  5. At 3:28pm, HSBC informed Firm C via a one-to-one chat room that he had net client sell orders of around GBP300 million at the fix and asked the trader to do some “digging” to see if anyone else had orders in the same direction at the fix. Firm C replied at 3:34pm and disclosed to HSBC that it now also had net sell orders of GBP83 million at the fix.
  6. At 3:36pm, Firm D asked Firm A in a chat room (which included HSBC), for an update on its net sell orders. Firm A disclosed that it had now increased to GBP170 million. Firm D noted that it did not have any fix orders at that time, but commented that he expected Firm A to “bash the fck out of it”.
  7. At 3:38pm, HSBC commented simultaneously into chat rooms in which Firms A, C and D participated that it had net client sell orders at the fix for GBP in a “good amount”.
  8. At 3:42pm, in a one-to-one chat Firm A warned HSBC that another firm which was not a participant in the chat room (Firm E) was “buidling” in the opposite direction to them and would be buying at the fix.
  9. At 3:43pm, Firm A updated HSBC by indicating that it had netted some of its sell order off with Firm E and “taken him out… so shud have giot rid of main buyer for u…im stilla seller of 90… gives us a chance”. The Authority considers that this refers to Firm A’s belief that Firm E would no longer be transacting its orders in the opposite direction at the fix. It also confirmed that Firm A still held net sell orders for GBP90 million to trade at the fix and could still participate in the co-ordinated behaviour. This is an example of Firm A “clearing the decks”.

The information disclosed between HSBC and Firms A, B and C, regarding their order flows was used to determine their trading strategies. The consequent trading by HSBC during the fix window was designed to decrease the WMR fix rate to HSBC’s benefit. HSBC’s trading in GBP/USD in this example generated a profit of approximately USD162,000.

Subsequent to the fix, traders in the chat rooms congratulated one another by saying: “nice work gents…I don my hat”, “Hooray nice team work”, “bravo…cudnt been better” and “have that my son…v nice mate” and “dont mess with our ccy [currency]”. One of the traders commented “there you go … go early, move it, hold it, push it”. HSBC stated “loved that mate… worked lovely… pity we couldn’t get it below the 00”12 and “we need a few more of those for me to get back on track this month”.

 

Here is HSBC crucifying client stops:

For example, an HSBC trader in a chat room referred to “going to go for broke at this stop… it is either going to end in massive glory or tears”. On another occasion, the same trader refers in a chat room to the fact he is “just about to slam some stops”. When asked by a colleague whether a particular client’s stop loss orders were “a pain for you guys”, another HSBC trader replied “nah love them … free money” and “we love the orders … always make money on them”.

Because a stop-loss muppet is born every minute.

* * *

Here is Citi rigging the fix…

During the period from 1:14:29pm to 1:15:02pm, Citi bought EUR374 million which accounted for 73% of all purchases on the EBS platform. At 1:15:00pm, the bid (buying price) and the first trade for EUR/USD on the EBS platform was 1.3222. The ECB subsequently published the fix rate for EUR/USD at 1.3222.

The information disclosed between Citi and Firms A, B, C and D regarding their order flows was used to determine their trading strategies. The consequent “building” by Citi and its trading in relation to that increased quantity at the fix were designed to increase the ECB fix rate to Citi’s benefit. Citi bought EUR prior to the 1:15pm fix in anticipation that the fix rate at which it would sell EUR would be higher than the average rate at which it had bought. The placing of large buy orders by Citi immediately prior to 1:15pm was designed to achieve this outcome by improving the chance that the first trade on the EBS platform at 1:15:00pm, which it believed to be the basis for the ECB fix, was at a higher level. Citi’s trading in EUR/USD in this example generated a profit of USD99,000.

Subsequent to the ECB fix, Citi’s trading was variously described by other traders in chat rooms as “impressive”, “lovely” and “cnt teach that”. Citi noted “yeah worked ok”. When the fix rate was published to the market, Firm A commented “22 the rate” and Citi replied “always was gonna be.”

* * *

And taking out client stops:

During its investigation, the Authority identified instances within Citi’s G10 spot FX trading business of attempts to trigger client stop loss orders. These attempts involved inappropriate disclosures to traders at other firms concerning details of the size, direction and level of client stop loss orders. The traders involved would trade in a manner aimed at manipulating the spot FX rate, such that the stop loss order was triggered. Citi would potentially profit from this activity because if successful it would, for example, have sold the particular currency to its client pursuant to the stop loss order at a higher rate than it had bought that currency in the market.

This behaviour was reflected in language used by G10 spot FX traders at Citi in chat rooms. For example, a Citi trader referred in a chat room to the fact he “had to launch into the 50 offer to get me stop done”. On another occasion, a trader at Citi described in a chat room how he “went for a stop”.

* * *

Finally, here is RBS:

In the period leading up to the 4pm fix, RBS increased (or “built”) the volume of GBP it would sell at the fix via a series of trades conducted with other market participants. RBS commenced this “building” after Firm A’s disclosure of its net sell orders at 3:22pm. Subsequently RBS received further client orders for the fix and briefly had net orders to buy GBP25 million before further “building” and client orders resulted in RBS having to sell GBP at the fix. Ultimately, RBS’s net sell orders associated with its client fix orders was GBP202 million; it “built” the volume of currency that it needed to sell at the fix to GBP399 million, well above that necessary to manage the risk associated with net client orders.

From 3:50:30pm to 3:52:10pm, RBS placed a series of sell orders in the GBP/USD currency pair on the Reuters platform. During this period, RBS sold GBP93 million and the GBP/USD rate dropped from 1.6276 to 1.6250. At 3:52pm, Firm C commented “nice job gents”.

In the period from 3:50:30pm to 3:59:30pm (i.e. immediately prior to the 4pm WMR fix window), RBS sold a total of GBP167 million and Firm A sold GBP26 million. Together they accounted for 28% of all sales on the Reuters platform during this period. The GBP/USD rate steadily dropped from 1.6276 to 1.6233. These early trades were designed to take advantage of the expected downwards movement in the fix rate following the discussions within the chat rooms described above.

During the 60 second fix window, RBS sold GBP182 million, which accounted for more than 32% of the sales in GBP/USD on the Reuters platform. RBS and Firm A together accounted for 41% of the sales in GBP/USD on the Reuters platform during the fix window. During this period, the GBP/USD rate fell from 1.6233 to 1.6213. Subsequently WM Reuters published the 4pm fix rate for GBP/USD at 1.6218.

The information disclosed between RBS and Firms A, B and C, regarding their order flows was used to determine their trading strategies. The consequent “building” by RBS and its trading in relation to that increased quantity in advance of and during the fix window, were designed to lower the WMR fix rate to RBS’s benefit. RBS’s trading in GBP/USD in this example generated a profit of USD615,000.

The trading was discussed by the participants in the chat rooms subsequent to the fix, with references to “I don my hat”, “welld one [sic] lads”, “what a job”, “bravo” and “[RBS] is god”. RBS commented when the 4pm WMR fix rate was published “1.6218…nice”, whilst Firm A commented later on ”we fooking killed it right… [Firm C], myself and RBS.”

 

 

 

end

 

 

 

 

a great discussion from 3 guys who really know what is going on in the precous metals arena!!

 

(courtesy Eric Sprott/Rick Rule/John Embry/EricSprott.blogspot.com)

 

 

 

 

Wednesday, November 12, 2014

Sprott Precious Metals Roundtable Webcast

A Round Table Discussion with Eric Sprott, Rick Rule and John Embry.
http://ericsprott.blogspot.com/-END-

And now for our more important paper stories

today:

 

 

Early Wednesday morning trading from Europe/Asia

1. Stocks mostly up with  Asian bourses   with a higher yen  value   to 115.24

1b Chinese yuan vs USA dollar  (yuan weakens) to 6.14182

2 Nikkei up 73 points or 0.43%

3. Europe stocks all down  /Euro rises/ USA dollar index up at 87.65.

3b Japan 10 year yield at .52%/Japanese yen vs usa cross now at 115.24/ (the rising Japanese yield is ominous)

3c  Nikkei now above 17,000

3d  Abe goes all in with another QE/it is now all up to Japan to stimulate the world/will be known as the great Yen massacre!!!

3e  The USA/Yen rate crosses back over the 115 barrier again last night as Abe hints on delay of sales tax and a snap election. (again/market not buying the headlines)

3fOil:  WTI  77.25   Brent:     81.19 /

3g/ Gold up/yen down;  yen well above 115 to the dollar/

3h/ Japan is to buy the equivalent of 108 billion usa dollars worth of bonds per MONTH or $1.3 trillion

Japan’s GDP equals 5 trillion usa/thus bond purchases of 26% of GDP

3i  Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt (see Von Greyerz)

 3j ECB to start expanding its balance sheet.  Should be positive for gold.

Japan and China relations improve at the APEC meeting. USA left in the dark.

3k Huge FX rigging settlement at 3.3 billion dollars.  Barclay’s left out and may lose its uSA banking license.

3l Gold at $1157.00 dollars/ Silver: $15.61

4.  USA 10 yr treasury bond at 2.36% early this morning.
5. Details Ransquawk/Bloomberg/Deutche bank/Jim Reid

(courtesy zero hedge)/your early morning trading

 

US Futures Drop As USDJPY Algos Take Profit On Headline Confusion

Tyler Durden's picture

With the USDJPY repeatedly touching 116.00 as a result of the same pair of headlines hitting either Reuters, the Nikkei or Sankei every 6 or so hours for the past 3 days, namely that Japan will delay its sales tax hike by almost two years, and that Abe is preparing early elections, perhaps the algos realized they were pricing in the same event about 4 times in one day, and unable to break the 7-year-high resistance level, slid dropping nearly 100 pips to just over 115 at least check, which may well be today’s “tractor” level, which in turn has also dragged down both European stocks and US futures. But the thing that made the vacuum tubes really spark is that at a press conference yesterday in Beijing, Abe was quoted as saying that he “has never made any reference to the dissolution of parliament”, this came after the chief cabinet secretary Suga saying that the decision on whether or not to go to the polls would be Abe’s only.

In other words, all those headlines were merely trial balloons by Japan to gauge market reaction, and Abe is certainly unsure what he will do at this point. In any event prepare for USDJPY algos to be shocked again when the same FX headlines are blasted for the 4th day in a row.

And speaking of FX, 5 banks earlier announced they had settled FX-rigging charges with US, UK and Swiss regulators for a total of about $3.3 billion, although Barclays was excluded from the grand settlement due to what some say are fears it may finally lose its New York banking license. Considering it has proven time and again it is a criminal organization through and through, perhaps as a Plan B Barclays should apply to join NY’s Russian mafia instead. More on that shortly.

Quickly skimming through the markets, European shares fall with the autos and utilities sectors underperforming and basic resources, telco outperforming. The Italian and Spanish markets are the worst- performing larger bourses, the Dutch the best. Regulators in the U.S., Britain and Switzerland ordered five banks to pay ~$3.3b in first FX-rigging settlements. U.K. unemployment stays at 6- year low, Brent crude nears 4-year low. The euro is weaker against the dollar. Japanese 10yr bond yields rise; Greek yields decline. Commodities decline, with natural gas, Brent crude underperforming and soybeans outperforming. U.S. mortgage applications, wholesale inventories due later.

Some further details about Europe where despite opening in relatively neutral territory, European equities have drifted into the red throughout the session, with financial names dragging stocks lower amid an absence of any greater macro trend. The banking sector has come under close scrutiny today after the FCA and CFTC came to an agreement over fines with JP Morgan Citi, RBS, HSBC and UBS. However, talks are still ongoing between regulators and Barclays over a figure for such a fine and thus Barclays (-2%) shares are dragging the financial sector as should talks extend further then they may miss out on a potential discount for an early settlement. Elsewhere, Sainsbury’s (-5.5%) shares are continuing to exert pressure on the UK retail sector after they reduced their dividend and remain cautious on their outlook for H2. Further to the downward momentum seen in stocks, this was also allied with the late performance in Japanese equities after a Japanese government spokesman denied the recent reports of a delay to the sales tax hike and thus erased some of the overnight gains for the Nikkei 225.

Regional Asian equities are mixed this morning. The Shanghai Composite and ASX 200 are +0.19% and -0.98% respectively whilst the Hang Seng is broadly flat but the KOSPI is up 0.31%. Asian credit markets are broadly stable with spread products mostly unchanged to marginally tighter on the day. Supply will be the key driver in the coming weeks with the window narrowing fast as we approach Thanksgiving in about 2 weeks time.

The main event for Europe this morning was that of the BoE’s QIR, whereby the central bank revealed that they see inflation likely to fall below 1% within 6 months, thus presenting a more dovish than expected tone. As such, short sterling futures pushed back rate hike expectations to Sep 2015 vs. Jun 2015 pre report release, with fixed income products subsequently supported across the board following the likelihood of lower rates for longer.

Looking ahead at US data, there is only wholesale inventories and MBA mortgage applications on the docket. Expect more good cop, idiot cop from the Fed, with the Fed speakers lined up today. Fed’s Plosser will be speaking on the US economic outlook and Kocherlakota will be touching on monetary policy.

Market Wrap

  • S&P 500 futures down 0.2% to 2031.8
  • Stoxx 600 down 0.5% to 337.4
  • US 10Yr yield down 3bps to 2.34%
  • German 10Yr yield down 2bps to 0.81%
  • MSCI Asia Pacific up 0.2% to 141.3
  • Gold spot down 0.1% to $1163.7/oz

FX

FX markets traded in a relatively tentative manner in the early stages of trade. However, GBP gained broad-based strength following the release of the latest UK jobs numbers which revealed a better than expected wage growth component. This also provided EUR/GBP with a bout of downside, with the release amplifying policy divergence between the BoE and ECB, while the short-sterling strip was seen lower by around 3 ticks. In terms of the QIR release, GBP/USD pared the post-data gains, although the bid in UK fixed income products was more pronounced than the fall in GBP, largely because fixed income had seen some selling ahead of the QIR in response to better than expected wage growth seen this morning, and hence FI products have greater scope for upside in the short-term.

COMMODITIES

In the commodities complex, energy markets continue to be supressed by USD strength, while the glut of US supply continues to outweigh fears over supply disruptions in Libya. However, it is worth keeping an eye on the situation in Ukraine as Ukraine’s military has said the separatists battling government troops are regrouping and mobilizing forces on the outskirts of the port city of Mariupol and massing armoured vehicles in other parts of the Donetsk region. In precious metals markets, both spot gold and silver trade relatively unchanged in line with the broader movements seen in the USD-index.

Overnight Bulletin Highlights from RanSquawk and Bloomberg

  • European equities enter the North American crossover in the red with financial names the underperformers with the banking sector under close scrutiny following settlements with UK and US regulators over the FX probe.
  • The BoE’s QIR led participants to push back their expectations of a rate hike by the central bank as the MPC revealed that they see inflation likely to fall below 1% within 6 months.
  • Looking ahead, attention turns towards the release of US wholesale & API inventories and any comments from Fed’s Kocherlakota.

DB’s Jim Reid Concludes the overnight recap

Markets seem to be more or less in a holding pattern for now and Veterans’ Day in the US yesterday probably did little to break that. Indeed US bond markets were closed and the S&P 500 (+0.07%) was virtually unchanged although on paper the index is now up for the 5th consecutive day which is the longest streak since mid-June. In the absence of main market movers, the weakness in Oil was perhaps one of the more notable themes yesterday. Brent (-0.8%) fell below US$82/bbl to a new four year low and is further extending the fall into the Asian session overnight. Interestingly a softer day for the Dollar yesterday didn’t quite give Oil the boost that one would normally expect but given the US holiday it is hard to read too much into it.

The weakness in Oil comes ahead of the OPEC meeting later this month (27th Nov). The meeting should be a source of headlines given market’s concerns around current production levels amid global supply pressure. As credit analysts we were intrigued by a FT story which highlighted that the fall in oil price has also coincided in a period where we’ve also witnessed a notable amount of debt issuance from energy companies. According to the FT almost $17bn of energy debt has been issued in the US this month alone with proceeds going towards refinancing existing debt in the face of a further decline in oil prices rather than any sort of capital expansion. In reality it is probably difficult to justify further investments here given where oil prices are and any cash saving exercise should be welcomed in an environment where breakeven oil is increasingly being scrutinized.

Whilst it was a quiet day for the US markets, there was no down time for China’s online retailers. Indeed Single’s Day in China (which is oft-compared against Cyber Monday in the US) has now turned into the largest shopping day in the world. This is also benefitting leading e-commerce players in the country. Yesterday alone saw a total of US$9.3bn worth of goods transacted through China’s largest online shopping site, an amount which is around 62% higher than last year. Away from China, we’ve had various press reports mentioning that momentum is building for a snap election in Japan as Prime Minister Abe looks to seek a popular mandate and push back on the proposed second consumption tax. Reports are suggesting that a decision could be made as early as Tuesday next week with a possible lower-house election on the 14th or 21st of December (FT). At a press conference yesterday in Beijing, Abe was quoted as saying that he ‘has never made any reference to the dissolution of parliament’, this came after the chief cabinet secretary Suga saying that the decision on whether or not to go to the polls would be Abe’s only.

Our Japanese colleagues yesterday noted that they were under the impression that the government is trying to speed up policy implementation and therefore this could be seen as sign that a general election could be planned sooner than expected. They do however note that if the consumption tax was to be postponed, then the social security sector will likely have to take more of the burden which means a radical restructuring of such system could be deemed necessary. Given the recent monetary easing by the BoJ, a delay in the consumption tax could cause something of a change in the cooperative relationship between the government and the BoJ following the joint declaration in January 2013 which mentioned that the government would ‘promote measures aimed at establishing a sustainable fiscal structure with a view to ensuring the credibility of fiscal management’. At first glance the market seemed to welcome these developments. The Nikkei closed +2.05% yesterday and is up another 1.3% this morning to a new 7 year high. The JPY however hit a low of 116.20 against the Dollar (a seven year low) but is now off those lows at around 115.6 as we type.

Away from Japanese markets, regional Asian equities are mixed this morning. The Shanghai Composite and ASX 200 are +0.19% and -0.98% respectively whilst the Hang Seng is broadly flat but the KOSPI is up 0.31%. Asian credit markets are broadly stable with spread products mostly unchanged to marginally tighter on the day. Supply will be the key driver in the coming weeks with the window narrowing fast as we approach Thanksgiving in about 2 weeks time.

Recapping some of the European moves yesterday, the Stoxx 600 added +0.4% buoyed by some solid corporate earnings whilst Credit was also modestly firmer with the Xover tightening by 2.75bps. The notable data release yesterday was in Sweden where October CPI came in stronger than expected at 0.1% mom with the Riskbank’s policy meeting minutes appearing less dovish than the market was expecting. The Treasury market was closed however in other fixed income markets JGB’s were notably weaker across the curve following the headlines, the 10yr 4bps wider to 0.48% whilst back in Europe Bunds were mostly unchanged. Peripheral bond yields did well yesterday following comments from ECB member Mersch that the central bank will expand debt purchases. Benchmark 10yr yields in Spain, Portugal and Italy rallied 3bps, 4bps and 2bps respectively as the board member mentioned that the central bank will likely start purchasing asset-backed securities next week and that buying government bonds was a ‘theoretical option’.

Quick update on EM, we note that Russia and Iran announced a nuclear deal yesterday with plans to build eight new reactors. The deal comes at a time when talks between Iranian negotiators and members of the UN Security Council come close to the proposed deadline with the talks focused on easing international sanctions on the country in exchange for permanent limits to its uranium enrichment activities.

Looking ahead the data hiatus in the US is set to stay before the more interesting JOLTs and jobless claims tomorrow. Wholesale inventories and MBA mortgage applications are the only highlights today. Given the recent trend, we probably get more interesting snippets from the Fed speakers lined up today. Fed’s Plosser will be speaking on the US economic outlook and Kocherlakota will be touching on monetary policy.

On the other side of the pond, we’ve got employment data and inflation report due out of the UK. We will also be keeping an eye on any hints from Carney in his conference post the release. In Europe we will have the wholesale price index in Germany followed by the industrial production print for the Eurozone.

 

end
The fun begins;  The Bank of England’s chief foreign exchange trader
fired for participating in currency rigging.
Five banks announced a settlement with regulators for 3.3 billion usa dollars.  Barclay’s not included as the USA wants to pull it’s USA license.
Next up to the plate:  the gold/silver rigging!!
(courtesy zero hedge)

Bank of England Fires Chief FX Dealer Participating In Currency-Rigging Scandal

Tyler Durden's picture

Early in 2014, when the FX rigging scandal was still news, one of the most disturbing developments to emerge was that none other than the venerable Bank of England itself had been engaged in collusion with various manipulating parties, explicitly those participating in “The Bandits Club”, “Cartel” and other chatrooms, as described in “Bank Of England Encouraged Currency Manipulation By Banks.” As Bloomberg reported at the time:

Bank of England officials told currency traders it wasn’t improper to share impending customer orders with counterparts at other firms, a practice at the heart of a widening probe into alleged market manipulation, according to a person who has seen notes turned over to regulators.

 

Traders representing some of the world’s biggest banks told officials at the meeting that they shared information about aggregate orders before currency benchmarks were set, three people with knowledge of the discussion said. The officials said there wasn’t a policy on such communications and that banks should make their own rules, according to the people. The notes could drag the U.K. central bank into another market-rigging scandal two years after it was criticized by lawmakers for failing to act on warnings that Libor was vulnerable to abuse.

Of course, the Bank of England promptly denied everything and pulled the Hogan’s Heroes defense: “It knew nothing”, and yet something stank.

The BOE is probing allegations officials condoned practices at the heart of a widening rigging scandal involving traders at the world’s largest banks. It said today the investigation has found no evidence to date its employees were involved in collusion…. The suspended individual, who wasn’t named, is being investigated and “no decision has been taken on disciplinary action.”

At a July 4, 2006, meeting led by BOE chief dealer Martin Mallett, attendees discussed “evidence of attempts to move the market around popular fixing times by players that had no particular interest in that fix,” according to the minutes. “It was noted that ‘fixing business’ generally was becoming increasingly fraught due to this behavior.”

In a May 2008 meeting of the subgroup, a “large majority” of those present expressed “concern about the lack of transparency among some methodologies and the impacts in managing order flow and pricing liquidity at times of concentrated benchmarked interest such as the 4 p.m. London fix.”

At that discussion “it was suggested that using a snapshot of the market may be problematic” and “could be subject to manipulation,” according to the minutes.

“This extensive review of documents, e-mails and other records has to date found no evidence that Bank of England staff colluded in any way in manipulating the foreign exchange market or in sharing confidential client information,” the central bank said in today’s statement. “The Bank of England does not condone any form of market manipulation in any context whatsoever.”

Today, as widely reported previously, 5 banks settled with regulators such as US CFTC, UK’s CFA and Swiss Sifma, for a total amount of $3.3 billion ($1.4 billion to the CFTC, $1.75 billion to the CFA). The banks were:

  • HSBC Holdings PLC
  • Royal Bank of Scotland Group PLC
  • UBS AG
  • Citigroup Inc.
  • J.P. Morgan Chase & Co.

Hilariously, as a result of “cooperating” the 5 banks received a 30% discount on their British settlement. Because when it comes to admitting one’s crime there is apparently a pre-Thanksgiving blue light special.

Oddly enough, none of the other usual suspect banks, such as Goldman, Credit Suisse or Deutsche, all of whom also fired legacy FX traders and dealers, were once again completely forgotten, because clearly one can’t disturb the two banks that pull the strings in the US, Goldman, and in Europe, Deutsche.

However, one less than critical bank stood out: as Bloomberg reports, Barclays dropped out due to issues with New York regulators, according to a person with knowledge of the matter. “After discussions with other regulators and authorities, we have concluded that it’s in the interests of the company to seek a more general coordinated settlement,” the London-based bank said in an e-mailed statement today.

By missing the full reduction on offer from U.K. regulators, Barclays may have to add to the 500 million pounds it set aside in the third quarter to settle currency probes, Sandy Chen, an analyst at Cenkos Securities Plc with a sell rating on the stock, said by e-mail.

“If you settle outside of stage one, which is the earliest stage, which is what this is, you get a 30 percent discount,” McDermott said at a press conference in London today. “If you settle outside of stage one you get a 20 percent or 10 percent discount.”

The New York Times reported Barclays’s perceived complications with the U.S. state’s regulator earlier.Barclays was concerned about civil liabilities and the potential of having its New York banking license revoked, the Times said.

Which means that the bank that consumed what was left of Lehman may be Lehmaned itself and soon be barred from operating in the world’s financial capital, something which all of its revenue-strapped competitors will be delighted by.

But back to the Bank of England, which it turns out, lied about its involvement in FX rigging. According to Bloomberg, alongside the FX settlement announcement, the Bank of England fired its chief currency dealer – the abovementioned Martin Mallett – a day before he was faulted in an independent investigation for failing to alert his superiors that traders were sharing information about client orders.

Martin Mallett was dismissed by the Bank of England yesterday for “serious misconduct relating to failure to adhere to the Bank’s internal policies,” according to a statement by the central bank today.

 

Mallett, who worked at the bank for almost 30 years, had concerns from as early as November 2012 that conversations between traders right before benchmarks were set could lead to the rigging of those rates, according a report today by Anthony Grabiner, who was commissioned by the central bank to look into what its officials knew about practices under investigation around the world. Mallett was “uncomfortable” with the traders’ practices, yet he didn’t escalate these concerns, Grabiner said.

 

“We’re disappointed because we hold ourselves to the highest standards — we have an outstanding markets division,” BOE Governor Mark Carney said at a briefing in London today. “What Lord Grabiner found was that our chief dealer was aware of circumstances in the market that could facilitate or lead to improper behavior by market participants.”

And then just to keep the ball rolling, the BOE lied again!

Mallett “was not acting in bad faith,” according to the Grabiner report. He wasn’t “involved in any unlawful or improper behavior, nor aware of specific instances of such behavior,” it said.

Reuters adds, that the dismissal was unrelated to an ongoing foreign exchange scandal  “This information related to the Bank’s internal policies, not to FX,” a BoE spokeswoman said on Wednesday. So… the Bank’s internal policies on FX rigging?

Of course, Mallett’s fate was sealed long ago when it became clear we was the man most directly implicated with rigging at the BofE. This is what the Times wrote in March:

Obscure prodigy poised to become centre of attention

 

Martin Mallett is not well-known outside the arcane circles of foreign exchange traders, but, along with the senior Bank of England officials Paul Fisher and Andrew Bailey, the public are likely to hear a lot about him in the coming months.

 

The Bank released 180 pages of minutes yesterday taken from meetings of a committee of senior currency traders that Mr Mallett chaired.

 

It was at one of the committee’s meetings in 2012 that Bank officials allegedly condoned the practice of sharing inside information before trading on the markets.

But back to the reason for Mallett’s termination: we don’t get it: was he fired for not rigging the market then according to the BOE’s joke of an explanation?

Actually, scratch that: we do – Mallett’s only crime was being exposed in the papers, and with that highlighting that the biggest ringleader when it comes to rigging markets is none other than the central bank itself. Which may have shocked someone in 2009 but now that even the CME openly admits foreign banks are among the biggest traders of the E-Mini, hardly anyone will notice.

And now we look forward to the next batch of revelations – the gold rigging scandal, and its prompt settlement for a few thousand dollars – and finding out how many central banks will fire personnel for not rigging that particular market.

 

 

end

 

This is a huge nail in the coffin of the USA dollar;  The Russians will have their swift

system up by the Spring of 2015:

(courtesy RT news) and special thanks to Robert H for sending this to us

Russia to launch alternative to SWIFT bank transaction system in spring 2015

Published time: November 11, 2014 15:55

AFP Photo

AFP Photo

94808

Russia intends to have its own international inter-bank system up and running by May 2015. The Central of Russia says it needs to speed up preparations for its version of SWIFT in case of possible ”challenges” from the West.

“Given the challenges, Bank of Russia is creating its own system for transmitting financial messaging… It’s time to hurry up, so in the next few months we will have certain work done. The entire project for transmitting financial messages will be completed in May 2015,” said Ramilya Kanafina, deputy head of the national payment system department at the Central Bank of Russia (CBR).

Calls not to use the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system in Russian banks began to grow as relations between Russia and the West deteriorated over sanctions. So far, SWIFT says despite pressure from some Western countries to join the anti-Russian sanctions, it has no intention of doing so.

READ MORE: SWIFT: ‘No authority’ to suspend Russia, Israel from intl payments over sanctions

Ramilya Kanafina says the system will meet all the market requirements due to its security. A center for processing messages in SWIFT format is in the process of development. It is expected that all messaging options will be operating by December 2014, she added.

The National Payments Council, a non-profit partnership comprising members of the Russian national payment system, proposed establishing a Russian version of SWIFT 100 percent owned by Bank of Russia in September.

SWIFT, is currently one of Russia’s main connections to the international banking system, and if turned off, could hurt the Russian economy, in the short-term. Globally it transmits orders for transactions worth more than $6 trillion, and involves more than 10,000 financial institutions in 210 countries. According to SWIFT’s statute, the system has national groups of members and users in each country. In Russia it’s ROSSWIFT – the second biggest worldwide SWIFT association after the US.

 end
Closing Portuguese 10 year bond yield: 3.22% up 2  in basis points on the day.
Closing Japanese 10 year bond yield: .53% up 4  in basis points from Tuesday.  (this is scary!! /if this rate rises to 2% Japan goes bust)
And now for our more important currency crosses this Wednesday morning:
EUR/USA:  1.2461  down .0013

USA/JAPAN YEN  115.35  down  .370

GBP/USA  1.5824  down .0099

USA/CAN  1.1314   down .0019

This morning in  Europe, the euro is slightly down, trading now well above  1.24 level at 1.2461 as Europe reacts to deflation and crumbling bourses. Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen from 70 trillion on Oct 31.. The yen staged a comeback as it is up this morning  closing in Japan rising by 37  basis points to  115.24 yen to the dollar.  The pound is slightly down  this morning as it now trades well below  the 1.59 level at 1.5824.

The Canadian dollar is up again today, trading at 1.1314 to the dollar.

 Early Wednesday morning USA 10 year bond yield:  2.36% !!!    down 1  in  basis points from  Wednesday night/

USA dollar Index early Wednesday morning: 87.82  up 29 cents from Wednesday’s close

end

The NIKKEI: Wednesday morning  up 73 points or 0.43%

Trading from Europe and Asia:
1. Europe  all in the red

2/    Asian bourses all in the green except Australia     / Chinese bourses: Hang Sang  in the green, Shanghai in the green,  Australia in the red:  /Nikkei (Japan) green/India’s Sensex in the green/

Gold early morning trading:  $1162.00

silver:$ 15.62

Your closing Spanish 10 year government bond Tuesday/ down 2  in basis points in yield from Monday night.

Spanish 10 year bond yield:  2.10% !!!!!!

Your Thursday closing Italian 10 year bond yield:  2.34 %/ down 3  in basis points:

trading 24 basis points higher than Spain:

 IMPORTANT CLOSES FOR TODAY

Closing currency crosses for Wednesday night/USA dollar index/USA 10 yr bond:   currencies falling apart this afternoon

Euro/USA:  1.2433 down .0042!!!!!!

USA/Japan:  115.55 down .230

Great Britain/USA:  1.5784  down .0135  (Barclay’s trouble)

USA/Canada:  1.1313 down .0018

The euro fell in value during this afternoon’s  session,  and it was down  by closing time , closing well below the 1.25 level to 1.2433.  The yen was down  during the afternoon session, but it gained 23 basis points on the day closing well above the 115 cross at 115.55.   The British pound lost huge  ground  during the afternoon session and was down on the day  at 1.5784.  The Canadian dollar was up   in the afternoon and was up on the day at 1.1313 to the dollar.

Currency wars at their finest today.

Your closing USA dollar index:   87.82   up 29 cents  from last night.

your 10 year USA bond yield , down 1  in basis points on the day: 2.36%

European and Dow Jones stock index closes:

England FTSE down 16.36 or 0.25%

Paris CAC  down 64.22 or 1.51%

German Dax down 158.07 or 1.69%

Spain’s Ibex down 181.50 or  1.76%

Italian FTSE-MIB down 553.37    or 2.87%

The Dow: down 2.70  or 0.02%

Nasdaq; up 14.58   or 0.31%

OIL:  WTI 76.84

Brent: 79.97

end

 

 

 

And now for your big USA stories

Today’s NY trading:

 

 

 

(courtesy zero hedge)

 

Party’s Over: Closing Ramp Fails To Close Stocks Green

Tyler Durden's picture

 

With bond traders back in the fray, US equity volumes were… just as shitty (around 35% below recent averages). Futures drifted lower overnight as Japanese election headlines wer dashed and USDJPY dragged stocks lower… then the US cash session opened and we were off to the levitation races (nope, no other catalyst at all). The Dow and S&P were mucvh less exuberant that Trannies and Small Caps and AAPL dragged Nasdaq higher. Treasury yields dropped earlier but bonds sold off in the US session to end the day unch. The USD rallied (+0.4% on the week) led by EUR weakness.Commodities were weaker across the board but WTI and Brent were cracked again to new multi-year lows (Brent under $80 – lowest since Sept 2010) as Brent-WTI crossed under $3. For the 2nd day in a row, VIX closed higher in the face of mixed equities. After 14 days in a row, the S&P ramped in the last 30 minutes.. but failed to close positive – Dow, S&P red.

For the first time since the Bullard lows ramp began, the last 30 minutes of the day saw a failed ramp attempt…

 

Off the Bullard lows… Trannies are up a stunning 18%

 

On the day, the S&P and Dow closed red!!!

 

It appears not everyone is so excited about these record highs… as VIX was bid once again as hedgers bought protection

 

Stocks and HY Credit were largeyly in sync though its clear stocks kept ripping and dipping…

 

HYG (the High Yield Bond ETF) had a notably weak day (after that late-day melt-up yesterday…

 

The USD rose today led by EUR weakness..

 

Treasury yields slid as stocks sold off overnight but rose during the US session to close unchanged…

 

Commodities were weak across the board but oil hurt most…

 

As once again oil futures got jiggy between 11-12 (European close) and 2-3 (pit close)

 

Brent-WTI dropped below $3…

 

Charts: Bloomberg

 

end

 

Simply amazing!!!

 

America Watches In Stunned Disbelief As Afghanistan Jails Two Failed Bank Executives

Tyler Durden's picture

Spot the banana republic:

  • Nation #1 spends and issues tens of trillions in taxpayer funds and debt, crushing the growth potential of future generations, just to bail out a banking sector full to the brim with criminal “riggers” (as today’s settlements once again prove), where bubble mania was so pervasive not a single bank would have survived absent a global central bank bailout, and where bank executives wouldn’t bend over for anything less than a million.
  • Nation #2 just sentenced two senior officials of a bank that collapsed under (a measly by New Normal standards) $1 billion in debt to 15 years in prison each for embezzlement and fraud.

Nation #1 is, of course, the US (or any other western nation). Nation #2 is Afghanistan.

Which one is the banana republic again?

AP reports that the scandal in 2010 shook confidence in Afghanistan’s tiny banking sector, and the loss accounted for around 5 percent of the country’s economy, making it the biggest banking collapse in history. By comparison, just the derivative book of JPMorgan alone is 4 times the size of US GDP.

Like in the US, the government had no choice but to bail out the bank and brought in receivers who, officials say, have traced most of the missing funds.

The scandal struck at the heart of the Kabul political establishment, involving relatives of the former president Hamid Karzai and one of his deputies, Marshall Mohammad Qasim Fahim.

 

President Ashraf Ghani has put the case at the center of his anti-corruption campaign, and within days of taking office in September ordered it resolved within 45 days.

So banker justice does exist? And this is how non-banana republics deal with a runaway criminal financial sector, which dangles the threat of systemic collapse any time the regulators, at least those who don’t hope to get a job on Wall Street next, come sniffing:

The Kabul Bank’s former chairman Sherkhan Farnood and former chief executive officer Khalillulah Ferozi were sentenced live on television, after a two-day appeal against earlier sentences of five years in prison. They have already served more than four years of the original sentence.

 

A panel of five judges at the Kabul Appeals Court also fined Farnood more than $237 million.

 

The court also ordered the assets of Mahmood Karzai and Hasin Fahim, brothers respectively of the former president and deputy president, along with 17 other defendants, frozen until their debts are repaid.

 

“If there is any delay in returning all the outstanding debt, they will be dealt with by the courts,” the judgment said.

 

The bank was one of the country’s flagship institutions and until its collapse had been responsible for paying salaries of government employees, army and police across the country.

 

It was split into two, with the offshoot, the New Kabul Bank now responsible for the salary payments, and holding around $400 million in customer deposits, officials said.

Curious for more? Read “The Great Afghan Bank Heist.”

And while Afghanistan’s banking sector is now well on the road to recovery and doesn’t need endless central bank bailouts (unlike the US, Europe or Japan) the nation does remain a banana republic but for other reasons: namely, US forces refuse to leave. Why? One look at the chart below should explain it.

Why Afghanistan remains an incubator – under constant US supervision – for the heroin trade, read “7.6 Billion Reasons Why The US ‘War On Drugs’ In Afghanistan Failed

 

 

end

 

The following will kill 4th quarter GDP:

(courtesy zero hedge)

 

 

 

 

Wholesale Inventories & Sales Weak Trend Continues, Petroleum Inventories Plunge 13.2% YoY

 

Wholesales Inventories and Sales beat expectations (+0.3% and +0.2% respectively) but, thanks to significant downward revisions in August, hope for a Q3 GDP boost are dashed. Sales growth remains near 2014 lows and inventory growth hovers near 14 month lows. Inventories-to-Sales ratios were flat in September at 1.19 months. Petroleum inventories plunged 5.3% MoM and down 13.2% YoY – the largest since Jul 2009.

Weaker trend continues…

 

and the detailed breakdown…

 

as Petroleum inventories plunge most YoY since July 2009…

 

 

Charts: Bloomberg

 

end

 

Let us close with the following and it is a must view:

 

 

 

(courtesy James Turk/Greg Hunter USAWatchdog)

 

 

 

Outlook for Dollar Not Good-James Turk

 

By Greg Hunter’s USAWatchdog.com 

Gold expert James Turk says the U.S. dollar is not going to stay strong. Turk contends, “Canada, one of the closest allies of America, just announced a Chinese trade arrangement to deal in Chinese yuan with Canadian dollars.  That bypasses the U.S. dollar.  So, the outlook for the U.S. dollar is not good, despite this temporary strength that we are seeing now. It’s not good and, to me, the writing is on the wall for the dollar.” 

Turk goes on to say, “What the U.S. government will do, though, is everything in its power to protect the dollar’s position, and that means more capital controls.  There are already capital controls in place.  It’s almost impossible for a U.S. citizen to come over here in Europe and open a bank account.  They just don’t want to deal with U.S. citizens anymore.  Another type of capital control is that $16 trillion sitting outside the United States cannot come back and be spent in the United States.  If that were to happen, all those dollars overseas would fall to a steep discount to the domestic dollar because they would not have the same usefulness if they can’t be spent in the United States.”  But wouldn’t that be a default that would crush the U.S. dollar?  Turk explains, “It wouldn’t crush the domestic dollar.  It would crush the international dollar relative to the domestic dollar.  The domestic dollar will be inflated away in any case over the longer run.  The immediate impact would be on dollars outside the U.S. and, yes, that is a default.”

How long can this go on? Turk takes us back 100 years to the start of the Federal Reserve and says, “What the government is supposed to do is maintain stability and purchasing power of the dollar.  Today, the dollar purchases one penny of what a dollar in 1913 purchased.  That’s how bad the inflation has been.  That big picture thinking is important because we’ve had inflation and debasement of the dollar for 100 years.  People say it’s been 100 years.  Why couldn’t it go another 100 years?  Well, if you look at the Roman Empire, for example, it debased the denarius for 100 years until the denarius fell off the end of the table.  Just because that trend has been in place, it is not going to continue forever.  The key here is the amount of debt we have in the system and the amount of money the politicians are spending.  The reason why we have not had hyperinflation is the U.S. government has managed to keep its debts lower than they should be because the interest rates are zero. . . . We’re walking on a tight rope here, and it could go either way.  To me, we are looking at more currency debasement here . . .”

On gold, Turk says, “COMEX is just a side show. It’s just a paper market.  The action is taking place over here in London.  You are seeing this huge backwardation.  If you want to put a big order in, say $50 million for physical metal, you can’t get that metal tomorrow.  You are going to have to wait for a while before you can get that metal. That’s sign to me that gold is cheap.  The same thing is happening in silver.  As a result of that, you are going to see much higher prices as we move to the end of the year.”  Turk goes on to add, “We’ve seen the slow burn in the dollar.  You have these blips up and down and, right now, we are having this momentary blip of dollar strength, but eventually, it will go over the edge of the cliff.  That is ultimately what happens when a currency collapses.  Eventually, people realize the currency no longer makes sense.”

Join Greg Hunter as he goes One-on-One with James Turk of GoldMoney.com.

 

Video Link

http://usawatchdog.com/outlook-for-dollar-not-good-james-turk/

-END-

 

That is all for today

I will see you Wednesday night

bye for now

Harvey,

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