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31  Community Forums / The Lounge / Re: The UK Politics and EU Referendum thread - merged on: September 23, 2019, 09:42:23 PM

In general, I think that derivatives should be limited to those with an "insurable interest".  They are simply gambling otherwise and increase risks to the economic system.  In addition in cases like this, where the collapse of a company is going to benefit certain parties (albeit I acknowledge that counterparties obviously suffer) there are incentives for corrupt practices.  

That would be fraud.

Really? fraud?  

Well blow me down!

You seem a bright chap.  Has there ever been a case of fraud in the city?



Of course.  However there are consequences for fraud, although I imagine you'll lump banks taking too much risk into the fraud bucket to try and make a point.

Anyway, on your idea - banning derivatives without insurable interest on the grounds you are gambling.  Working through the steps

1) Hedge Fund has purchased protection on a CDS, paying premiums and gets a lump sum on default (like insurance).  This is disgusting in your view.
2) The counterparty is likely the market making desk of an investment bank.  They receive premiums but need to pay out a lump sum on default.  This is a riskier trade.  They won't have any insurable interest either as they are going about their market making business and will likely be taking bid offer by doing the opposite trade with someone else.  (granted there will be some scenarios where they have insurable interest but the quickest way for them to make money is the match buyers and sellers).
3) Okay so let's ban this activity on both sides.  Desk closes.  Jobs lost.  But that's not really the point.
4) Another hedge fund or bank is buying corporate bonds.  That’s good right?  A good solid investment and honourable activity.
5) But hold on!  If I buy a bond what is my risk profile?  I get coupons every so often, but if the company goes bust I lose my lump sum investment.  This looks an awful lot like (2) where we receive CDS premiums but lose the house when company goes bust.
6) Hmm – this is bad as well.  Let’s ban trading in corporate bonds apart from primary issuance as we are just gambling again.
7) However, if we kill the secondary market, we kill the primary market because companies are now issuing an illiquid asset which is far less appealing.
8 ) It is now impossible for Companies to raise money by bond issuance, and investors have also lost access to what can be a good investment vehicle.
9) I’m sure we can now do equity derivatives and get the equity market banned as well.
10) In short, regulate things.  Don’t ban things.



Why does the concept of insurable interest exist and is enforced in the insurance market?

I could go through your "list" but it is frankly embarrassing.  In short, my only suggestion was that "derivatives" unlinked from the primary instrument were gambling and had no economic value.  In addition to that they greatly increased risk in the financial system.  If you want to debate that point fair enough but to suggest that I was wanting to ban selling bonds in secondary markets or ban insuring against losses by the holders of those bonds is desperate stuff.



The counterparty of the CDS that paid out to the hedge fund has the same risk profile as a bond holder.  Calling for banning stuff you don’t understand isn’t a great look.

What has that got to do with it?

Bonds are limited in value.  If CDS are limited to that value the systemic risk is obviously lower than if many multiples of the bonds value are in play (and the value of those contracts used as assets for other derivative liabilities).

And you still haven't answered the first question:

Why does the concept of insurable interest exist and is enforced in the insurance market?





The entire City is a casino and is built on liquidity.  If you introduce insurable interest the CDS market is dead.  There would not be enough customers.  Add to that it is unworkable.  Every market participant would need to recalculate their insurance interest status every morning.

There is already regulation to at least partially address your concerns (eg compression requirements/capital charges).  Why do you want to kill an entire market?  
32  Community Forums / The Lounge / Re: The UK Politics and EU Referendum thread - merged on: September 23, 2019, 09:11:05 PM
It's hard to believe some of the stuff Labour are doing is actually serious and not a wind up.

It’s like the fantasy stuff the Lib Dem’s have thrown up in the past. If you know you have no chance of being elected you can promise the Moon!

It’s the class war stuff that really scares the shit out of me. After all, the electorate hasn’t really done what’s been expected in the last few votes.

Yep.  It’s all a bit of a funny joke at the moment but it’s not impossible that they get in.  A terrifying prospect.
33  Community Forums / The Lounge / Re: The UK Politics and EU Referendum thread - merged on: September 23, 2019, 08:43:51 PM

In general, I think that derivatives should be limited to those with an "insurable interest".  They are simply gambling otherwise and increase risks to the economic system.  In addition in cases like this, where the collapse of a company is going to benefit certain parties (albeit I acknowledge that counterparties obviously suffer) there are incentives for corrupt practices.  

That would be fraud.

Really? fraud?  

Well blow me down!

You seem a bright chap.  Has there ever been a case of fraud in the city?



Of course.  However there are consequences for fraud, although I imagine you'll lump banks taking too much risk into the fraud bucket to try and make a point.

Anyway, on your idea - banning derivatives without insurable interest on the grounds you are gambling.  Working through the steps

1) Hedge Fund has purchased protection on a CDS, paying premiums and gets a lump sum on default (like insurance).  This is disgusting in your view.
2) The counterparty is likely the market making desk of an investment bank.  They receive premiums but need to pay out a lump sum on default.  This is a riskier trade.  They won't have any insurable interest either as they are going about their market making business and will likely be taking bid offer by doing the opposite trade with someone else.  (granted there will be some scenarios where they have insurable interest but the quickest way for them to make money is the match buyers and sellers).
3) Okay so let's ban this activity on both sides.  Desk closes.  Jobs lost.  But that's not really the point.
4) Another hedge fund or bank is buying corporate bonds.  That’s good right?  A good solid investment and honourable activity.
5) But hold on!  If I buy a bond what is my risk profile?  I get coupons every so often, but if the company goes bust I lose my lump sum investment.  This looks an awful lot like (2) where we receive CDS premiums but lose the house when company goes bust.
6) Hmm – this is bad as well.  Let’s ban trading in corporate bonds apart from primary issuance as we are just gambling again.
7) However, if we kill the secondary market, we kill the primary market because companies are now issuing an illiquid asset which is far less appealing.
8 ) It is now impossible for Companies to raise money by bond issuance, and investors have also lost access to what can be a good investment vehicle.
9) I’m sure we can now do equity derivatives and get the equity market banned as well.
10) In short, regulate things.  Don’t ban things.



Why does the concept of insurable interest exist and is enforced in the insurance market?

I could go through your "list" but it is frankly embarrassing.  In short, my only suggestion was that "derivatives" unlinked from the primary instrument were gambling and had no economic value.  In addition to that they greatly increased risk in the financial system.  If you want to debate that point fair enough but to suggest that I was wanting to ban selling bonds in secondary markets or ban insuring against losses by the holders of those bonds is desperate stuff.



The counterparty of the CDS that paid out to the hedge fund has the same risk profile as a bond holder.  Calling for banning stuff you don’t understand isn’t a great look.
34  Community Forums / The Lounge / Re: The UK Politics and EU Referendum thread - merged on: September 23, 2019, 07:40:08 PM

In general, I think that derivatives should be limited to those with an "insurable interest".  They are simply gambling otherwise and increase risks to the economic system.  In addition in cases like this, where the collapse of a company is going to benefit certain parties (albeit I acknowledge that counterparties obviously suffer) there are incentives for corrupt practices.  

That would be fraud.

Really? fraud?  

Well blow me down!

You seem a bright chap.  Has there ever been a case of fraud in the city?



Of course.  However there are consequences for fraud, although I imagine you'll lump banks taking too much risk into the fraud bucket to try and make a point.

Anyway, on your idea - banning derivatives without insurable interest on the grounds you are gambling.  Working through the steps

1) Hedge Fund has purchased protection on a CDS, paying premiums and gets a lump sum on default (like insurance).  This is disgusting in your view.
2) The counterparty is likely the market making desk of an investment bank.  They receive premiums but need to pay out a lump sum on default.  This is a riskier trade.  They won't have any insurable interest either as they are going about their market making business and will likely be taking bid offer by doing the opposite trade with someone else.  (granted there will be some scenarios where they have insurable interest but the quickest way for them to make money is the match buyers and sellers).
3) Okay so let's ban this activity on both sides.  Desk closes.  Jobs lost.  But that's not really the point.
4) Another hedge fund or bank is buying corporate bonds.  That’s good right?  A good solid investment and honourable activity.
5) But hold on!  If I buy a bond what is my risk profile?  I get coupons every so often, but if the company goes bust I lose my lump sum investment.  This looks an awful lot like (2) where we receive CDS premiums but lose the house when company goes bust.
6) Hmm – this is bad as well.  Let’s ban trading in corporate bonds apart from primary issuance as we are just gambling again.
7) However, if we kill the secondary market, we kill the primary market because companies are now issuing an illiquid asset which is far less appealing.
8 ) It is now impossible for Companies to raise money by bond issuance, and investors have also lost access to what can be a good investment vehicle.
9) I’m sure we can now do equity derivatives and get the equity market banned as well.
10) In short, regulate things.  Don’t ban things.

35  Community Forums / The Lounge / Re: The UK Politics and EU Referendum thread - merged on: September 23, 2019, 06:31:05 PM

In general, I think that derivatives should be limited to those with an "insurable interest".  They are simply gambling otherwise and increase risks to the economic system.  In addition in cases like this, where the collapse of a company is going to benefit certain parties (albeit I acknowledge that counterparties obviously suffer) there are incentives for corrupt practices. 

That would be fraud.
36  Community Forums / The Lounge / Re: The UK Politics and EU Referendum thread - merged on: September 23, 2019, 06:28:45 PM
The sober reality of Brexit once again showing it’s head as Thomas Cook look like going under, with Brexit being a major factor in it. 9,000 jobs going, 150,000 abroad and set to have a major impact on leisure industry.

Perhaps a little karma for some of those abroad who voted to leave, they can now see what their vote is doing.

This is a truly disgusting post.

Ruining families holidays is okay because its a  'little karma'

Brexit is really a tiny factor in this situation so I don't think anyone deserves to be stranded abroad or have to explain to their kids why they arent going on holiday whether they voted leave or remain.

Shame on you.

Here are some people who wanted TC to fail so that they made money.  That is disgusting.


https://www.bloomberg.com/news/articles/2019-09-23/thomas-cook-collapse-sets-up-250-million-hedge-fund-windfall?srnd=premium-europe



Hedge Fund takes position in vanilla credit default swap.  Bloke on internet outraged.
37  Community Forums / Betting Tips and Sport Discussion / Re: Noisy Neighbours - the Man City thread on: September 22, 2019, 02:36:22 PM
Fixture list kind?  You’ve got Watford Saturday son.



That aged well.

I am currently unavailable for comment. 
38  Community Forums / Betting Tips and Sport Discussion / Re: Noisy Neighbours - the Man City thread on: September 17, 2019, 11:22:10 PM
Fixture list kind?  You’ve got Watford Saturday son.

Yes I have a feeling that comment might come back to bite me on my arse Smiley

What's our recent record like against your mob? Wink

Last game I recall we beat you 1-0 with a goal by Iwan Roberts in 1988.
39  Community Forums / Betting Tips and Sport Discussion / Re: Noisy Neighbours - the Man City thread on: September 17, 2019, 08:43:41 PM
Fixture list kind?  You’ve got Watford Saturday son.
40  Community Forums / Betting Tips and Sport Discussion / Re: Arsenal FC a sad sad story on: September 16, 2019, 06:46:33 PM
The anticipation every time Arsenal had a goal kick was immense.  It was like having a free kick just outside the D.
41  Community Forums / Betting Tips and Sport Discussion / Re: Noisy Neighbours - the Man City thread on: September 14, 2019, 11:15:20 PM
Been a bit quiet in here lately. You boys on holiday ?

Actually just landed back from Vegas earlier today, so yes Smiley

Sadly, I landed back with enough time to catch that shower of shite this afternoon.
And I'm shattered from the flight back so that's a great excuse to dodge MOTD tonight Wink

Don't miss it.  You can help explain to me why Kyle Walker was playiign and moaning like his life depended on this result.   His reactions are times today were incredible.

Kyle Walker is a crybaby.  Embarrassing stuff.
42  Community Forums / Betting Tips and Sport Discussion / Re: Tips for Tikay on: August 10, 2019, 10:34:10 PM
Watford 6-1 to go down with WH.  Dreadful today and next games are:  Everton, West Ham, Newcastle, Arsenal, Wolfs, Man City.  Not inconceivable we hit international break 2 with 2 or 3 points.  Probably won't go down but reckon this will trade a lot shorter during the next 2 months.
43  Community Forums / The Lounge / Re: The UK Politics and EU Referendum thread - merged on: July 21, 2019, 08:08:36 PM
Just uncomfortable with how the rhetoric for remain continues to be presented

That picture of Boris, Mad, Stupid, People deciding is like children performing brain surgery with crayons etc

If we look back at my previous point, when did the people ever opt into this hugely complex situation with every implication clearly presented? We have been hoodwinked into an ever evolving German influenced system that encroaches into any semblance of the original agreement. The first time we get a say we express our will and it’s insult after insults. All very moody.

An equally significant development is a British tanker is now seized because we were upholding EU sanctions. Where is the super supportive rhetoric delivered with equal passion? Perhaps outside of EU we won’t have the motivation or funding to continue playing global sheriff. Might make UK a safer place for our people.


Surely the ball is in Boris’s court on this. If he (and you) want to people to stop pointing out that he is an incredibly useless, inept and ignorant c***, then he needs to do and say different things. The guys only redeeming feature is that he’s so shit at everything (including lying) that watching him is funny. The British law on kippers that he got confused about and you so enjoyed is a prime example.

Also worth noting that all the things we get hoodwinked in to doing benefit the country.

Is this language really necessary to make your point? 
44  Community Forums / Betting Tips and Sport Discussion / Re: Tips for Tikay on: July 16, 2019, 06:08:53 PM
After being a boo boy Andre Gray had a good goals to minutes ratio last season mostly from the bench. If he could secure a place in the team regularly 200-1 could be a runner.
45  Poker Forums / The Rail / Re: WSOP 2019 Updates on: July 11, 2019, 09:30:38 PM
What are "plastic Brits"?

I assume they are referring to inverse Lewis Hamilton’s who live in UK because gambling winnings are tax free?
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