The Commodity Futures Trading Commission (CFTC) has asked for public comment on a rulemaking petition from the National Futures Association (NFA), which would narrow the scope of the regulatory exclusion for registered investment companies from commodity pool operators (CPO) status.
Registered investment companies are at present eligible for a broad exemption from CPO status. 17 C.F.R. 4.5, but the petition would require that RICs seeking such an exemption represent that their funds will use commodity futures and commodity options contracts only for bona fide hedging purposes and that the fund will not be marketed to the public as a commodity pool.
The petition contemplates the application of these limits even retrospectively, to companies that previously had filed notices under the broader exemption, though it recommends that these companies be given time to come into compliance.
October 18 (my 52d birthday) is the deadline for comments.
Showing posts with label speculation. Show all posts
Showing posts with label speculation. Show all posts
Monday, September 20, 2010
Sunday, May 16, 2010
Following Ackman: A Book Note
Bill Ackman is the protagonist of Christine Richard's new book, Confidence Game: How a Hedge Fund Manager Called Wall Street's Bluff. Ackman, the founder and managing partner of Pershing Square, even appears with her at at book signings.
I haven't read the book, but for the benefit of others such as myself who are curious about it, here is the link to what seems an informative review.
The book concerns the bond insurer MBIA, and portrays Ackman as the boy who saw and spoke to the nakedness of that particular emperor. Of course, he didn't do this because he was public spirited. He did it because a general public recognition of that nakedness would make him money. Still, he did it and was right.
This proves something of broad importance about speculation and its value in the broader economy. Speculation isn't the enemy. Speculators serve valuable functions, one of which is the ferreting out of information that managerial suits want to hide. When they're good at it, they deserve their monetary rewards. When they're bad at it, they quickly remove themselves from the marketplace.
Richard's book might be worth a read.
I haven't read the book, but for the benefit of others such as myself who are curious about it, here is the link to what seems an informative review.
The book concerns the bond insurer MBIA, and portrays Ackman as the boy who saw and spoke to the nakedness of that particular emperor. Of course, he didn't do this because he was public spirited. He did it because a general public recognition of that nakedness would make him money. Still, he did it and was right.
This proves something of broad importance about speculation and its value in the broader economy. Speculation isn't the enemy. Speculators serve valuable functions, one of which is the ferreting out of information that managerial suits want to hide. When they're good at it, they deserve their monetary rewards. When they're bad at it, they quickly remove themselves from the marketplace.
Richard's book might be worth a read.
Tuesday, September 16, 2008
Three brief items
1. Wow. Wall Street has had an exciting weekend.
Personally, I'm glad Lehman has bit the dust. Somebody had to. These firms and their proprietary traders are in the business of taking risks, and it is in the nature of risk that there be losers.
The "moral hazard" was becoming enormous, even in just the relatively short period since the government avoided a Bear Stearns bankruptcy with a fire sale of that storied brokerage firm to JP Morgan in the spring.
Neither well, nor poorly. JPM stock has lost about 7% of its value since that time. But this is in line with the general market trends in the intervening period, so the acquisition of Bear can't be blamed for that.
Anyway, there had been a lot of talk, the usual talk, about how Lehman again was somebody "too big to fail" and the Federal Reserve or the Treasury or somebody would have to step in and prevent its failure. But nobody has.
As I say, I'm glad. So everybody will be just a little more careful with risky financial instruments in the near future perhaps? So that might not be a terrible thing?
It is sometimes called "creative destruction." Something has to be destroyed as something else is created. What is now being created in the US is a depositor-centered financial world, in which commercial and investment banks are one and the commercial side is the one.
2. CSX opinion.
The second circuit has issued an opinion in the much-watched matter of TCI/CSX.
You can refresh your recollection of the issues here.
I'm disappointed. The 2d circuit didn't even get to what I see as the key issue in the case, the unbundling of votes from economic interest. Instead, it tersely upheld the vote that has been taken and the district court's decisison ONLY INSOFAR as the district court had refused to interfere with that vote.
"We decide that issue alone at this time," the appellate court said. Drats.
3. Crude oil likely to stabilize
Here's some guessing (note that word!).
The fall in the price of crude oil in recent weeks, from its peak of nearly $150 a barrel in mid-July to a current price below $100, has likely gone as far as it is going to go.
The crude oil price run-up this summer seems to have been a South Sea-like speculative mania, and the run-down seems to have been the bursting of that bubble, so now the stuff is back in the grip of the fundamentals.
Given the continuing credit/liquidity crunch, there will be a great deal of temptation to inflate the currency, at least until $110 doesn't mean as much as $90 does now.
Personally, I'm glad Lehman has bit the dust. Somebody had to. These firms and their proprietary traders are in the business of taking risks, and it is in the nature of risk that there be losers.
The "moral hazard" was becoming enormous, even in just the relatively short period since the government avoided a Bear Stearns bankruptcy with a fire sale of that storied brokerage firm to JP Morgan in the spring.
Neither well, nor poorly. JPM stock has lost about 7% of its value since that time. But this is in line with the general market trends in the intervening period, so the acquisition of Bear can't be blamed for that.
Anyway, there had been a lot of talk, the usual talk, about how Lehman again was somebody "too big to fail" and the Federal Reserve or the Treasury or somebody would have to step in and prevent its failure. But nobody has.
As I say, I'm glad. So everybody will be just a little more careful with risky financial instruments in the near future perhaps? So that might not be a terrible thing?
It is sometimes called "creative destruction." Something has to be destroyed as something else is created. What is now being created in the US is a depositor-centered financial world, in which commercial and investment banks are one and the commercial side is the one.
2. CSX opinion.
The second circuit has issued an opinion in the much-watched matter of TCI/CSX.
You can refresh your recollection of the issues here.
I'm disappointed. The 2d circuit didn't even get to what I see as the key issue in the case, the unbundling of votes from economic interest. Instead, it tersely upheld the vote that has been taken and the district court's decisison ONLY INSOFAR as the district court had refused to interfere with that vote.
"We decide that issue alone at this time," the appellate court said. Drats.
3. Crude oil likely to stabilize
Here's some guessing (note that word!).
The fall in the price of crude oil in recent weeks, from its peak of nearly $150 a barrel in mid-July to a current price below $100, has likely gone as far as it is going to go.
The crude oil price run-up this summer seems to have been a South Sea-like speculative mania, and the run-down seems to have been the bursting of that bubble, so now the stuff is back in the grip of the fundamentals.
Given the continuing credit/liquidity crunch, there will be a great deal of temptation to inflate the currency, at least until $110 doesn't mean as much as $90 does now.
Tuesday, May 13, 2008
Three quick notes
1. Melnyk's astonishment
Let's just try to keep up today with three of our continuing stories. As I reported month, there was a shake-up at the Canadian pharma company Biovail. The company is doing its best to disassociate itself from its founder, Eugene Melnyk, whom it blames for a roster of legal troubles. This is tricky, because Melnyk remains the largest shareholder, with just under 12% of the equity.
And he isn't a happy camper. Indeed, in a letter to the reconstituted board of his old company, dated May 8, he professes himself astonished by the latest measures in this continuing distancing.
He is "very concerned about the circumstances surrounding the entering into of the employment agreements with senior management and the change in control provisions in those agreements. I intend to pursue this matter further."
He can pursue it on June 25, the day of the annual shareholders' meeting. The "record date" for the meeting is April 28 -- i.e. you'd need to have been a shareholder "of record" by then to be qualified to vote.
2. More from Ben Stein
You remember Ben Stein? I last wrote about him in January, when he used his New York Times column to set out a theory of "trader realism," i.e. that the whims and machinations of speculators in Manhattan or London are so important to pricing of strategic commodities that they render the fundamentals ("supply," and "demand" and other stuff and nonsense) essentially irrelevant.
This is a lunatic theory, and since then Stein has shown signs of abandoning it for a cause even dearer to his heart -- "biologist realism" linked here.
But watch out economics. Stein, like a poltergeist, is baaa-ack.
Felix Salmon does him justice.
3. The latest at CSX
The feud between railroad company CSX and activist investor TCI continues, pending some resolution at next month's meeting.
TCI has posted a white paper titled "CSX: The Case for Change," it claims that numerous opportunities for productivity improvements could add $2.2 billion to annual earnings within five years, and it complains that the incumbents ()the folks who have left those opportunities unexploited) have also awarded themselves the highest pay packages in the industry.
Yesterday, TCI sent out a "dear shareholders'" letter asking its fellow investors to go to their website and check out that white paper.
Let's just try to keep up today with three of our continuing stories. As I reported month, there was a shake-up at the Canadian pharma company Biovail. The company is doing its best to disassociate itself from its founder, Eugene Melnyk, whom it blames for a roster of legal troubles. This is tricky, because Melnyk remains the largest shareholder, with just under 12% of the equity.
And he isn't a happy camper. Indeed, in a letter to the reconstituted board of his old company, dated May 8, he professes himself astonished by the latest measures in this continuing distancing.
He is "very concerned about the circumstances surrounding the entering into of the employment agreements with senior management and the change in control provisions in those agreements. I intend to pursue this matter further."
He can pursue it on June 25, the day of the annual shareholders' meeting. The "record date" for the meeting is April 28 -- i.e. you'd need to have been a shareholder "of record" by then to be qualified to vote.
2. More from Ben Stein
You remember Ben Stein? I last wrote about him in January, when he used his New York Times column to set out a theory of "trader realism," i.e. that the whims and machinations of speculators in Manhattan or London are so important to pricing of strategic commodities that they render the fundamentals ("supply," and "demand" and other stuff and nonsense) essentially irrelevant.
This is a lunatic theory, and since then Stein has shown signs of abandoning it for a cause even dearer to his heart -- "biologist realism" linked here.
But watch out economics. Stein, like a poltergeist, is baaa-ack.
Felix Salmon does him justice.
3. The latest at CSX
The feud between railroad company CSX and activist investor TCI continues, pending some resolution at next month's meeting.
TCI has posted a white paper titled "CSX: The Case for Change," it claims that numerous opportunities for productivity improvements could add $2.2 billion to annual earnings within five years, and it complains that the incumbents ()the folks who have left those opportunities unexploited) have also awarded themselves the highest pay packages in the industry.
Yesterday, TCI sent out a "dear shareholders'" letter asking its fellow investors to go to their website and check out that white paper.
Subscribe to:
Comments (Atom)
