NEW YORK - The Clinton Group Inc., a New York-based money manager, is considering offering a pricing service for mortgage-backed securities, said George Hall, president.
Mortgage-backed pricing from traditional vendors and custodians isn't very good, Mr. Hall said. And while dealers who sell mortgage-backeds often price them for investors, they are in a tough situation - if a dealer has to price a security it just sold, there's a temptation to mark it a little higher than it might be worth.
The Clinton Group would use the same methods to price other investors' securities as it does to manage its approximate $400 million in mortgage-backed securities. Clinton's executives say they have about 28,000 collateralized mortgage obligation tranches loaded on their system. Prices could be available daily, Mr. Hall said. There would be a Chinese wall between pricing and money management to try to prevent conflicts of interests, he said.
He noted a perception that last year's market for mortgage-backed securities was illiquid after the collapse of David Askin's money management firm was mostly myth. While bid and ask spreads did widen, market prices were pretty much in line with market conditions - investors just didn't understand what they owned, he said.
The London International Financial Futures and Options Exchange and the Chicago Board of Trade will link up in the trading of various fixed-income futures contracts. The two exchanges will allow certain CBOT-traded contracts to trade in London before Chicago opens and certain LIFFE-traded contracts to trade in Chicago after London closes.
If approved by the exchanges' respective memberships and regulators, CBOT's U.S. Treasury bond and LIFFE's German bund futures and options will be the first contracts to be jointly traded.
Later, the exchanges plan to link contracts on the 10-year and five-year U.S. Treasury note, now traded in Chicago, and Italian government bonds and U.K. gilts, both traded in London. Trading on those contracts can be offset between the two exchanges, according to the exchanges' plan.
Although the link-up does add to the liquidity of those markets at the margin, for the most part the effect is likely to be minimal because underlying cash markets will not be open, said one money manager who spoke on the condition of not being identified.
NEW YORK - FINEX introduced a cash index of Latin American Brady bonds as a prelude to introducing futures and futures options contracts on the index, said Peter Burton, director of business development.
The index, called the FINEX Emerging Markets Debt Index, is made up of Brady par bonds, with the following weights: 36.2% from Mexico; 28.9% from Argentina; 19.5% from Brazil; and 15.4% from Venezuela. According to FINEX, those countries' issues account for 33% of the $130 billion Brady bond market.
FINEX uses prices quoted by three interdealer brokers to calculate the index, which will be available real time.
Pending regulatory approval, the futures and options on futures will become available this spring. They will be cash settled, and have a face value of $200,000. The contracts will be available for trade on FINEX' Dublin and New York trading floors, making them effectively open for trade from 3 a.m. to 3 p.m. EST. FINEX is a division of the New York Cotton Exchange.
SHADY SIDE, N.J. - A futures industry World Wide Web Internet site was unveiled March 14 with a goal of increasing Internet use by commodity trading advisers, customers and other industry professionals.
In addition to encouraging the use of the Internet for obtaining disclosure documents across the world, trading firms, publications, lobbying groups and other institutions can offer pages on the site for a fee, said J. Adam Hewison, president of The Investment News Online. The address of the site is http: inorfg.com.
The Investment News Online is a unit of The Rich Financial Group, a CTA.
FAIRFAX, Va. - American Management Systems surveyed 17 U.S. and U.K. investment banks, and concluded that compensation at banks undermines the risk controls that seek to limit the type of crisis that took place at Barings PLC, London. The survey shows that leading investment banks use compensation to retain high performers, which in turn encourages risk-taking behavior, according to AMS.
Managed futures trading advisers reported strong performance in February with a gain of about 2.6%, preliminary numbers from Managed Accounts Reports Inc., New York, which tracks futures managers, show.
Trending currency, index and interest rate futures contributed heavily to the gains, MAR's numbers show. MAR's report shows that short positions in Nikkei 225 index futures were profitable in the end of the month, which was when the Barings PLC trading fiasco was coming to light.