sutton038

WELCOME TO OUR TREASURY: HERE BE DRAGONS The global commodity trading giant Glencore once had an internal hedge fund that made proprietary bets on global markets. It was called Asteri Capital . What do you think it bet on? Most people would probably make an educated guess and say commodities, but   they'd be wrong. It bet on global credit markets, bonds, structured credit products and credit derivatives that have nothing to do with commodities. Weirdness level 1: Why did Glencore have a credit hedge fund? Ok, that's pretty weird. Why would a commodity company like Glencore have a bond-trading hedge fund? Asteri Capital actually started life as something called Glencore Finance AG, and was, for all intents and purposes, just a proprietary trading desk within Glencore, based out of its 50 Berkeley Street office in London. It furthermore appears that it was originally just part of Glencore's treasury , the part of the firm that deals with things like borrowing money for the da...

The ease with which the Libor scandal has brought down the towering figure of Bob Diamond, master of the universe and investment banker extraordinaire, is truly momentous. It reveals how small cracks in corporate structures can turn into gaping chasms that engulf whole management teams. For those that haven’t been following the scandal, the gist of it is that traders have been caught submitting inaccurate figures to manipulate the Libor rate – an index which tries to reflect the average rate that banks can borrow on the 'interbank market' (aka. from each other) – for various dubious schemes. Libor relies on banks submitting honest figures to the British Bankers Association (BBA), the organisation that calculates the index. Interestingly enough, I was at a debate a few weeks ago on the topic of financial sector corruption, which pitted investigative journalists Ian Fraser and Nick Kochan against a representative of the British Bankers Association. Kochan and Fraser argued th...

Several hundred years back, the City of London was protected by a great stone wall, and access was controlled via several key gates . Aldersgate was in the north, Ludgate was to the west, Aldgate was in the east, and on the south end of London Bridge there was Bridge Gate. Later, others were added, like Bishopsgate, Moorgate, Cripplegate, and Newgate. Nowadays, the physical wall and gates have slipped out of popular memory. To many modern commuters into the City, the Moorgate is nothing but a station on the Northern Line of the London Underground. Recently, a wing of the Occupy movement set up camp just up the road from Moorgate, in Finsbury Square. Another wing set up in an old building in Sun Street . Like the original St. Paul’s Camp, the new camps seem  like incongruous outposts amidst the black sheet glass and metal frames of buildings housing financial giants. The protesters have managed to take temporary control of small areas of physical space, and yet, do they really hav...

London banks were on high alert last week as Max Keiser – the dark lord of financial hellraising – arrived in London to do what he does best: Sacrifice the sacred cows of finance orthodoxy. It’s fitting that he chose to do so in a pub down an alley in London Bridge – The south bank has long been a place of covert speakeasies where villains, pirates and heretics might slag off the king and preach rebellion among the drunken rabble. The event was a fundraiser in aid of   Resonance FM , London's alternative arts radio station.  Needless to say, it was awesome, and yes, I was drunken rabble. DARK LORD RAP: MAX RAGES AGAINST THE MACHINE Max Keiser is in intriguing guy. I don’t claim to know his background in any depth, but the quoted back story says he was 1) initially a stockbroker, 2) then an entrepreneur that started the Hollywood Stock Exchange , (a platform for buying and selling film rights, later sold to the huge brokerage Cantor Fitzgerald) and 3) an entertainer that ...

There’s a troubling question in my mind whenever I’m in Berkeley Square: It’s the mystery of why I can’t find any good coffee here. It’s mysterious precisely because this square is the centre of the world’s largest concentration of hedge funds , and that kind of means the average person walking here commands a salary larger than…well, everyone else in the whole world. So where’s the good coffee? BERKELEY SQUARE, MAYFAIR Have you ever wondered what a hedge fund is? I mean, I can tell you that a hedge fund is a company registered in the Cayman Islands, and that people around the world put money into it, and then it uses that money as collateral to borrow a bunch more money, and uses that to bet on various things like company shares, commodities, bonds, and derivatives… But does that really tell you what a hedge fund is? To know what a hedge fund is, you should try run your hand over the golden plaques on the doors around Berkeley Square. The names seem un...