Saturday 5th September 2015
NEWS TICKER, THURSDAY, September 3rd: The Straits Times Index (STI) ended 28.3 points or 0.98% higher to 2906.43, taking the year-to-date performance to -13.63%. The top active stocks today were SingTel, which gained 0.82%, DBS, which gained 0.80%, UOB, which gained 1.40%, OCBC Bank, which gained1.13% and CapitaLand, with a 0.36%advance. The FTSE ST Mid Cap Index gained 0.55%, while the FTSE ST Small Cap Index rose 0.24% - Madrid City Hall announced it would dedicate €10m out of its 2016 budget to a "welcome plan for refugees" to include housing, integration, psychological support and legal aid, City Hall spokeswoman Rita Maestre (Ahora Madrid) said during a press conference on Thursday. Maestre said a budget had been decided upon but that specific numbers had not: "We want to welcome all those who are fleeing from war", adding that given their situation "a permanent housing solution" would be needed in the city. The Mayor of the Spanish capital, Manuela Carmena, said on Wednesday that a decision would be taken at the city government meeting today: "The city of the hug must, of course, be ready to welcome refugees" - The European Bank for Reconstruction and Development (EBRD) is joining international efforts to clean up Tunisia’s Lake Bizerte with a €20m loan and technical assistance to support the expansion and rehabilitation of the sewerage network of the Bizerte region and the rehabilitation of three wastewater treatment plants located near the lake. The EBRD’s investment is part of an integrated environmental programme aimed at de-polluting Lake Bizerte and reducing sources of pollution through investments in wastewater, solid waste and industrial effluents. This programme is labelled by the Union for the Mediterranean and is part of the Horizon 2020 Initiative, which aims to de-pollute the Mediterranean by the year 2020. The European Investment Bank is providing a €40 million sovereign loan to the programme while the European Union Neighbourhood Investment Facility is contributing a €15m grant for both capital expenditure and technical cooperation - Analysis of illicit financial flows (IFFs) by Global Financial Integrity (GFI) shows that over the period 2003-2012 the global volume of IFFs grew by more than 9% annually (. In 2012 (the most recent year for which data are available), illicit flows were estimated at close to $1trn. In response to this unfettered surge in illicit capital leaving developing nations, the UN has endorsed target 16.4 in the Sustainable Development Goals (SDGs), which commits the global community to “significantly reduce” IFFs by 2030. This UN action “represents an historic moment in development policy given that it is the first time the international community has recognized the illicit flows problem and pledged to address it,” says GFI President Raymond Baker - US Secretary of Commerce Penny Pritzker named Eduardo Leite, Chairman of the Executive Committee of Baker & McKenzie LLP, as the new chair of the US section of the US-Brazil CEO Forum. “Mr. Leite has served on the U.S. section of the CEO Forum for several years, and I am pleased that he has agreed to serve as Chairman,” said Secretary Pritzker. The new US section chair was named after the former chair, Ms. Patricia Woertz, Chairman of the Board of Directors of Archer Daniels Midland Company, submitted her resignation from the role. However, Woertz will remain a member of the U.S.-Brazil CEO Forum, and Leite will complete the current three-year term, which ends on August 13th 2016 - MarketAxess Holdings Inc. (Nasdaq:MKTX), the operator of a leading electronic trading platform for fixed-income securities, and the provider of market data and post-trade services for the global fixed-income markets, today announced total monthly trading volume for August 2015 of $75.5 billion, consisting of $43.7 billion in U.S. high-grade volume, $26.7bn in other credit volume, and $5.1 billion in liquid products volume. MarketAxess is providing both the reported and adjusted estimated US high-grade TRACE volumes on its website. The Company believes that the adjusted estimated volumes provide a more accurate comparison to prior period reporting.

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20-20: Prime broking - balance sheet, funding strength now key

Thursday, 15 December 2011
20-20: Prime broking - balance sheet, funding strength now key Expanding Bank of America Merrill Lynch’s hedge-fund business ranks high on global head of prime brokerage Stuart Hendel’s agenda. “Clients want to do business with us in this area, and so that has been a key focus during these past few months,” he says. Stock prices in the banking sector have been pummelled of late, forcing players such as BofA (whose own shares are off two-thirds since the start of 2011) to address operational redundancies and affect changes where needed. Hendel, however, remains resolute. “At the end of the day, firms need to have a solid return on the assets they use to support these types of businesses. We believe our business is differentiated by the size and strength of our balance sheet—and how we can put it to work for our clients.” http://www.ftseglobalmarkets.com/

Expanding Bank of America Merrill Lynch’s hedge-fund business ranks high on global head of prime brokerage Stuart Hendel’s agenda. “Clients want to do business with us in this area, and so that has been a key focus during these past few months,” he says. Stock prices in the banking sector have been pummelled of late, forcing players such as BofA (whose own shares are off two-thirds since the start of 2011) to address operational redundancies and affect changes where needed. Hendel, however, remains resolute. “At the end of the day, firms need to have a solid return on the assets they use to support these types of businesses. We believe our business is differentiated by the size and strength of our balance sheet—and how we can put it to work for our clients.”

Rapid response a keystone of Stuart Hendel, global head of Bank of America Merrill Lynch’s (BoA’s) prime brokerage unit. When he signed on for the job, early in 2011, from two years as head of UBS AG’s prime brokerage division, he was certain that “anytime you join a new organisation, and particularly when it’s a global business and platform, you start by learning the landscape internally”. He adds: “You also want to ensure that you have the right people in the right seats and that they are supportive of the direction you want to take.” Most of all, says Hendel, you need to act quickly, as you don’t always have the luxury of time once you’ve taken the reins. “This is especially true on the sell side—I made a number of key decisions within the first 60 days.”

The ability to think on your feet in a highly-volatile market is a business imperative and a lifeline of sorts to clients under duress. Whether the news is good or bad is almost irrelevant, says Hendel, as there is only so much market turbulence that hedge fund managers can tolerate. “One day the news out of Europe is positive and the markets move accordingly, then the next it is negative and all bets are off. Therefore, the instinct is to just deleverage. Even funds focused on the macroenvironment can’t always handle being whipsawed like that.”



A cool head is equally vital; particularly as the constant need for hedge fund managers to address counterparty risk, though positive for the industry as a whole, has ultimately kept the sell side from focusing on the job at hand—that is, making money. “This is a sector that continues to deleverage, performance is down and prime brokers are fighting for market share,” says Hendel. “We have some considerable headwinds to contend with.”

Ambiguity surrounding political and regulatory solution—rather than the outcome of regulations themselves—only exacerbates the trend. Even then, there is some upside. “As strange as it may sound, hedge funds react better to negative news than uncertain news,” says Hendel.  “As long as this kind of climate persists, deleveraging will likely continue. In fact, market fundamentals appear to be the least important aspect in determining the health of companies, sectors or valuations.”

One downside of the current environment and inherent lack of investing conviction is the effect on market liquidity. Once clarity returns to the political, regulatory and economic landscape, the market should become more liquid, which will in turn benefit everyone. “Therefore, this is something that needs to be addressed in order to preserve the well-being of both the alternative space and the prime-brokerage industry over the long haul. We believe that once Europe gets its house in order and there is more clarity, that should help markets achieve some kind of foundation,” he says.

From his vantage point, Hendel sees a much greater likelihood of consolidation within the sell side than the buy side. “No matter what happens in Europe or with governments in general, we believe there is going to be a real need for the best and brightest to achieve superior returns on behalf of their clients,” he avers. “Certain investors are questioning the actively-managed, long-only business, but we are still bullish on the hedge fund space.”

Even then, Hendel says he is “flummoxed” by the perpetually thinning margins on banks’ leveraged-based book of business. “Pricing eventually has to go in the other direction,” says Hendel. “If it doesn’t, sell side firms may re-examine the returns being generated by the prime-brokerage business. In an environment where resources are scarce, all balance-sheet businesses may be vulnerable, not just prime brokerage.”

Hendel believes that market-exacerbated balance sheet weakness could ultimately threaten the existence of certain prime brokerage businesses over the near term. “Balance sheet and funding strength are areas that we believe will continue to be distinguishing factors for BofA—having a tremendous deposit base and excellent funding resources will allow us to properly service our clients going forward.”

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