Wednesday 5th August 2015
NEWS TICKER, Wednesday, AUGUST 5TH: The US inland revenue service says the FATCA International Data Exchange Service (IDES) will be unavailable this weekend from 6:00 pm Eastern Daylight Time (EDT) (UTC/GMT -4) on Saturday, August 8th until 2:00 am EDT on Sunday, August 9th. This extends the regularly scheduled maintenance window by an additional 2 hours – According to Telecoms.com Apple has been trialling a mobile virtual network operator (MVNO) service in the US and is in talks to launch one in Europe too. Apple filed a patent in 2006 detailing an MVNO set up in which Apple acts as the hub for a number of networks. The idea seems to be for there to be some kind of real-time process in which network operators effectively bid for business each time an Apple MVNO subscriber wants to make a call for example. Apple has already installed an embedded SIM in the latest iPads, so its interest in controlling the relationship between users of its devices and mobile networks is already apparent. The specialist web news service says that Apple is also reportedly working on using Siri to automatically transcribe voicemails. However, any application is years away. Symbiont, a pioneer in the use of the blockchain and distributed ledger technology in capital markets, today issued the first Smart Securities™ on the Bitcoin blockchain. Symbiont’s live platform allows institutions and investors to issue, manage, trade, clear, settle and transfer a range of financial instruments more efficiently on decentralized and distributed peer-to-peer financial networks that are cryptographically secured. Initial use cases for Smart Securities include corporate debt, syndicated loans, securitised instruments and private equity. Generically known as “smart contracts”, these instruments are programmable versions of traditional securities issued on any type of distributed ledger, such as a blockchain. Once a security is issued onto the ledger, it acts autonomously, eliminating traditionally manual mid- and back-office functions. Mark Smith, CEO and co-founder of Symbiont. “With interest in distributed ledger technology growing rapidly, financial institutions are exploring how to leverage it to improve the efficiency and security of trading and processing financial transactions. Smart Securities™ will ultimately change the way that financial instruments are issued, managed, and traded.” Symbiont was formed as a combination of MathMoney (fx) and Counterparty, the most successful Bitcoin 2.0 project, which was founded in 2013. Mark Smith is joined at Symbiont by co-founders Robbie Dermody (President); Evan Wagner (MD, Operations); and Adam Krellenstein (CTO).

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Bunking the myth of oil price hikes and speculation

Monday, 05 March 2012
Bunking the myth of oil price hikes and speculation The question of whether speculators are responsible for the recent spikes in the price of oil has been one of the most hotly debated topics in the oil market in the last few years. Most recently it has prompted US regulators to put limits on some speculative positions and re-define what they consider to be speculative positions. Vanja Dragomanovich met up with Rita D'Eclessia, professor at the Department of Economic Theory and Quantitative Methods for Political Choices at the University of Rome and a visiting lecturer at Birkbeck University in London, who has run these theories through a set of mathematical tests and has produced some slightly surprising results. http://www.ftseglobalmarkets.com/

The question of whether speculators are responsible for the recent spikes in the price of oil has been one of the most hotly debated topics in the oil market in the last few years. Most recently it has prompted US regulators to put limits on some speculative positions and re-define what they consider to be speculative positions. Vanja Dragomanovich met up with Rita D'Eclessia, professor at the Department of Economic Theory and Quantitative Methods for Political Choices at the University of Rome and a visiting lecturer at Birkbeck University in London, who has run these theories through a set of mathematical tests and has produced some slightly surprising results.

Vanja Dragomanovich (VD): Why has the issue of oil prices attracted so much attention outside the actual oil market?
Rita D'Eclessia (RD’A): Analysis and empirical evidence shows that four out of the last five global recessions were preceded by oil shocks. In the case of the 2007-2008 crisis oil prices cannot be ignored as a culprit of what happened: the oil price increased over 300% and this caused the annual fuel bill of OECD countries to increase dramatically. Exceptional oil price volatility affects many economic variables and their related markets. Oil price fluctuations affect consumers, producers and marketers, especially in terms of costs, incentives to invest in technology and trading strategies. The importance of oil prices is further increased by the fact that other forms of energy such as coal, gas, and, to a lesser extent, electricity are sometimes priced in order to compete with oil, so that oil price fluctuations become reflected in broader energy price changes.

VD: As part of your research you looked into the link between the volatility in oil prices and the involvement of speculators in the market. Can you talk us through your findings?
RD’A: Economists and financial experts are divided over who they think was responsible for driving crude oil prices to their peaks in the first half of 2008. Basically trend-following speculation and institutional commodity index-buying have reinforced the output pressure on prices. In my research I tried to identify which economic and financial variables provide insights into understanding oil price dynamics. Our proposition was that the changes in the oil price are an example of an economic variable which is largely unpredictable. In such a context the role of futures markets, considered as a measure of the speculative component in the market, is also investigated. However, our conclusion was that using the data we had, we could not find any evidence that the oil price depends on speculative activity in the market.



VD: What data did you base your research on? For instance, how did you define speculators and how did you distinguish between speculative and non-speculative activity? Was your research based on information from several commodity exchanges?
RD’A: I set up an econometric model to capture possible long run equilibrium between some macroeconomic variables and some financial variables. The data used to measure speculation is the number of the benchmark US futures oil contracts, the West Texas Intermediate (WTI) spot crude oil held by speculators; this is data published by the US Commodities Futures Trading Commission (CFTC).
I used monthly West Texas Intermediate spot oil prices between 1993 and 2011 and assumed that speculators are participants who trade oil as an investment and not to hedge.

VD: Once you established that the link between speculative activity and oil price volatility was weak which other factors proved most influential in the oil market?
RD’A: Surprisingly, by far the strongest influence is the price of gold, followed by the strength of the euro against the dollar. For instance we found that for any one basis point move in the euro/dollar exchange rate the oil price moved by $2.8 dollars. Given that the euro was only introduced in 2000 we ran the analysis using the Deutschmark from 1993 till the introduction of the euro.
In all, we tried six different variables to try and find some meaningful correlation. We tried open interest, US interest rates, imports of WTI and WTI oil futures, all of which proved not to have a strong impact on the oil market.

VD: Your analysis was primarily statistical. However, in that period of time oil would have also moved for other reasons such as geopolitical crises, conflicts in the Middle East, economic crises, and political changes in Europe. How do those factors feature in your analysis?
RD’A: That is correct, but we can infer the influence of political events through the fluctuations of the dollar exchange rate and the price of gold. In any case the debate continues; oil price changes certainly cannot be explained solely by looking at the supply and demand dynamics.

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