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EU charges eight banks over alleged government bond cartel

reuters.com

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Re: EU charges eight banks over alleged government bond cartel

#31

Post by xfitm3 »

mickeyp wrote: post #8
lordnacho wrote: post #6

As an ex trader, I'm not surprised. Customers on the buy side have been suspicious for years, but any one of us would not have the pieces to figure it out. Roughly in the mid 2000s it got very common for people in the trading business to get on chatrooms. Bloomberg is probably the best known, but somehow Yahoo Chat also has a piece in the commodity space. The chats go on constantly, and I would guess people just didn…

When I worked in commodities trading about 8-9 years ago, everyone used Yahoo Chat. However, it also popped up a message (as I recall) informing the user their conversations were being recorded for regulatory reasons.

I’m really impressed that chat rooms were used to trade information. It’s something I do in my area of technology and it makes perfect sense in hindsight.

Are the groups an open secret to give legitimacy to the info, or is membership more controlled?

Re: EU charges eight banks over alleged government bond cartel

#32

Post by mtgx »

nicktelford wrote: post #9
mtgx wrote: post #4

Earlier quoted context omitted.

There's no good reason why those names should be hidden from the EU population. None. It's a disgrace that governments continue to cater to large corporations and allow them to get away with small fines and "admitting no wrong" (despite receiving the fines for the crime done).

A plausible reason is that it would likely impact their market value as shareholder confidence in those banks is affected by the potential for large fines in the near-future. Since the banks haven't actually been found guilty of anything (yet), they're simply being investigated, it would be damaging to release their names.

The "economy will be hurt" if bankers go to jail is getting a little old, isn't it?

It's also sounds like exactly the kind of thing bankers would like the public to believe and would try to influence media narrative to repeat it.

Re: EU charges eight banks over alleged government bond cartel

#33

Post by bboreham »

xiphias2 wrote: post #14

Again as usual people were stealing lots of money (not just the banks), and they aren't even named, and they won't go to prison. These ,,charges'' are part of the cost of doing ,,business''

Traders went to prison for the Libor scandal; why would you think no-one will go to prison for this?

Re: EU charges eight banks over alleged government bond cartel

#34

Post by short_sells_poo »

heyjudy wrote: post #17
short_sells_poo wrote: post #5

Earlier quoted context omitted.

I work in finance (although on the buy side), my gut feeling is that it's the usual suspects: big investment banks. The people manning the prop desks in these institutions get to know each other eventually as the landscape is fairly small and they all work for/with each other eventually. This means that cliques along the lines of "I'll scratch your back if you'll scratch mine" form naturally. It's almost impossible t…

Checkbox-ticking folks will be glad to sell you a quasi-legal tax avoidance scheme: powered by PwC, EY, D(&T), KPMG. Recommended by MBB.

Absolutely. The bank - advisor (PwC, EY, etc...) relationship is just as riddled with conflicts of interest. It is in the interest of the advisory firm to find a "creative" solution for their clients (the banks). Otherwise the bank would go to a slightly less scrupulous institution. The theatrics apply again, the bank gets to claim to have been audited by a prestigious consultancy, the consultancy gets paid, the authorities get to shovel the problem under the carpet and the specific individuals in the authorities get a cushy consultancy job after their public service. It is not in the interest of any of these players to change anything, so it is not going to change.

Re: EU charges eight banks over alleged government bond cartel

#35

Post by short_sells_poo »

clort wrote: post #23
short_sells_poo wrote: post #5

Earlier quoted context omitted.

I work in finance (although on the buy side), my gut feeling is that it's the usual suspects: big investment banks. The people manning the prop desks in these institutions get to know each other eventually as the landscape is fairly small and they all work for/with each other eventually. This means that cliques along the lines of "I'll scratch your back if you'll scratch mine" form naturally. It's almost impossible t…

> It's not in the best interest of the banks to monitor their internals too closely. So keep raising the fines. make them proportional to the banks turnover, or their perceived size if it appears that they are trying to disguise profits. The leadership of the banks need to follow the rules too, and make sure that the organisation follows those same rules. Maybe they should be held accountable when that doesn't happen…

Alas, I don't think this is going to happen, because financial accidents are rarely gory so it's tricky to mobilize the masses. If someone gets pounded to pulp by a power hammer, that will get plenty of visceral coverage and politicians will latch on to score easy cookie points for being seen "committing good deeds".

Finance is too abstract for this to work. "Big Bank Co ABC defrauding other institutional clients by XYZ billions" is so far removed from common folk that they can't relate to it. Some politicians will make some token moves, which (as described in another comment of mine) will just end up funneling some money into another special interest group and that's it.

Re: EU charges eight banks over alleged government bond cartel

#36

Post by projectramo »

benj111 wrote: post #10

To play devils advocate. Around that time you had periods where banks didn't know if their competitors were going to be around next month, there were also periods where they didn't know if several major European nations were going to be defaulting on their debts. In that kind of situation do the normal rules apply? I don't doubt during the banking crisis several 'dodgy' deals were done between the central banks, poli…

I think you have to complete the thought. What kind of scenario are you proposing.

The accusation is that banks were manipulating an index to make their position more profitable at the expense of the client.

I don't see how the potential collapse of some third party (a nation) changes this. Surely you're not saying, hey Bank A ripped of Customer C but that's only because we didn't know if Greece was going under.

You seem to be suggesting that somehow a government might have let the bank do it to save themselves? I am not sure.

Re: EU charges eight banks over alleged government bond cartel

#37

Post by gammateam »

benj111 wrote: post #10

To play devils advocate. Around that time you had periods where banks didn't know if their competitors were going to be around next month, there were also periods where they didn't know if several major European nations were going to be defaulting on their debts. In that kind of situation do the normal rules apply? I don't doubt during the banking crisis several 'dodgy' deals were done between the central banks, poli…

The global financial system is an ecosystem with very few silo-ed actors.

These institutions have settled market rigging accusations in every market that any relevant government can weasel jurisdiction in.

It is personal enrichment, it is common practice, it is a kickback to the government, the normal rules are never clarified fast enough to keep up with the new markets, the rules can be changed if the banks want, settling a decade later isn't a deterrent, imagine what they are doing in 2019 right now that we won't hear about until 2030.

I'm agreeing with you.

Re: EU charges eight banks over alleged government bond cartel

#38

Post by throwaway0009 »

short_sells_poo wrote: post #5
Fnoord wrote: post #2

Which 8 banks?

I work in finance (although on the buy side), my gut feeling is that it's the usual suspects: big investment banks. The people manning the prop desks in these institutions get to know each other eventually as the landscape is fairly small and they all work for/with each other eventually. This means that cliques along the lines of "I'll scratch your back if you'll scratch mine" form naturally. It's almost impossible t…

> The people manning the prop desks in these institutions

The Volcker Rule (part of Dodd-Frank) prohibits prop trading at banks (with few exceptions). The big banks have been actively discouraging it as well, changing comp structures to avoid rewarding prop trading.

> trading happens directly between traders and never crosses exchange boundaries

All these trades still need to be cleared, no? There's a structure to markets that you're papering over here.

> It's not in the best interest of the banks to monitor their internals too closely.

You may think this, but traders at banks are subject to tons of surveillance. Banks take lots of measures now to catch rogue traders even if it's just because they don't want dirty laundry being aired publicly.

Re: EU charges eight banks over alleged government bond cartel

#39

Post by jtr_47 »

bboreham wrote: post #33
xiphias2 wrote: post #14

Again as usual people were stealing lots of money (not just the banks), and they aren't even named, and they won't go to prison. These ,,charges'' are part of the cost of doing ,,business''

Traders went to prison for the Libor scandal; why would you think no-one will go to prison for this?

The management and executives should also go to prison, but they don't. This is where the corruption begins, but it's only the "little" guys that get thrown in jail.

Re: EU charges eight banks over alleged government bond cartel

#40

Post by throwaway0009 »

xfitm3 wrote: post #31
mickeyp wrote: post #8

Earlier quoted context omitted.

When I worked in commodities trading about 8-9 years ago, everyone used Yahoo Chat. However, it also popped up a message (as I recall) informing the user their conversations were being recorded for regulatory reasons.

I’m really impressed that chat rooms were used to trade information. It’s something I do in my area of technology and it makes perfect sense in hindsight. Are the groups an open secret to give legitimacy to the info, or is membership more controlled?

Chat rooms are used as a way to communicate with clients. Clients can inquire about prices and submit orders through chat. They're also used to share market commentary within banks. It's not allowed to have chats between traders at different banks now.
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