Olduvaiblog: Musings on the coming collapse

Home » Posts tagged 'CFTC'

Tag Archives: CFTC

Market Cornered: JPMorgan Owns Over 60% Notional Of All Gold Derivatives | Zero Hedge

Market Cornered: JPMorgan Owns Over 60% Notional Of All Gold Derivatives | Zero Hedge.

Perhaps the only question we have after seeing the attached table, which shows that as of Q3, 2013 JPMorgan owned $65.4 billion, or just over 60% of the total notional ($108.2 billion) of all gold derivatives in the US, is whether the CFTC will pull the “our budget was too small” excuse to justify why it allowed Jamie Dimon to ignore any and all position limits and corner the gold market?

 

And purely as a reference point, the chart below compares the total value of gold held in JPM’s vault (registered and eligible) as of Friday’s closing price with its reported gold derivative notional holdings.

 

Finally, for the purists out there, we realize that gross is not net… until there is a breach in the derivative counterparty collateral chain, and gross becomes net.

Source: OCCComex

Precious Metals Manipulation Worse Than Libor Scandal, German Regulator Says | Zero Hedge

Precious Metals Manipulation Worse Than Libor Scandal, German Regulator Says | Zero Hedge.

Remember when banks were exposed manipulating virtually everything except precious metals, because obviously nobody ever manipulates the price of gold and silver? After all, the biggest “conspiracy theory” of all is that crazy gold bugs blame every move against them on some vile manipulator. It may be time to shift yet another conspiracy “theory” into the “fact” bin, thanks to Elke Koenig, the president of Germany’s top financial regulator, Bafin, which apparently is not as corrupt, complicit and clueless as its US equivalent, and who said that in addition to currency rates,manipulation of precious metals “is worse than the Libor-rigging scandal.” Hear that Bart Chilton and friends from the CFTC?

More on what Eike said from Bloomberg:

The allegations about the currency and precious metals markets are “particularly serious, because such reference values are based — unlike Libor and Euribor — typically on transactions in liquid markets and not on estimates of the banks,” Elke Koenig, the president of Bafin, said in a speech in Frankfurt today.

Actually, what makes the most serious, is that precisely because they are on liquid markets means they implicitly have the blessing of the biggest New Normal market maker of call – the central banks, and their own “regulator” – the Bank of International Settlements (hello Mikael Charoze).

“That the issue is causing such a public reaction is understandable,” Koenig said, according to a copy of the speech. “The financial sector is dependent on the common trust that it is efficient and at the same time, honest. The central benchmark rates seemed to be beyond any doubt, and now there is the allegation they may have been manipulated.”

 

Bafin has also interviewed employees of Deutsche Bank AG as part of a probe of potential manipulation of gold and silver prices, a person with knowledge of the matter has said.

We wonder how long until this particular investigation is stopped based on an “executive order” from above, because Bafin is now stepping into some very treacherous  waters with its ongoing inquiry of gold manipulation: what it reveals will certainly not be to the liking of the financial “powers that be.”

CFTC Announces It Is Undercounting Size Of Swaps Market By As Much As $55 Trillion | Zero Hedge

CFTC Announces It Is Undercounting Size Of Swaps Market By As Much As $55 Trillion | Zero Hedge.

What is $55 trillion between friends? Very little according to the CFTC. In perhaps the biggest under the radar news of the day – to be expected with every watercooler occupied by taper experts – theWSJ reports that the Commodity Futures Trading Commission said Wednesday that technical errors at two so-called swaps data repositories, which collect and supply regulators with transaction data, have led the CFTC to misreport the overall size of the swaps market by undercounting its size. Isn’t it curious how all these “glitches” always work out in the favor of preserving market calm and confidence and away from spooking investors and speculators? Either way, a better question is how big was the so called undercounting? The answer: as large as $55 trillion!

Regulators aren’t sure how much the repositories are undercounting. One CFTC official familiar with the matter said the discrepancy could be as high as $55 trillion, though another official said the figure is closer to $10 trillion once regulators cancel out certain transactions to prevent double counting.

One just has to laugh: the total US swaps market is what – roughly $400 trillion? So… just add enough notional to that number equal to the GDP of the entire world – or 4 times the size of US GDP – and call it a day. And in this environment somehow the Fed and other central planners are expected to have any clue what they are doing on a day to day basis?

Naturally this discovery makes a mockery of such transaprency enchancing initatives as Dodd-Frank.

The lack of clarity over the size of the market may undermine a key plank of the 2010 Dodd-Frank law aimed at bringing transparency to the opaque derivatives market. Swaps, which were at the heart of the 2008 financial crisis, are complex financial contracts that allow financial firms and their clients to hedge against risks or bet on an asset’s value.

The CFTC has issued a number of rules to bring transparency to swaps trading so regulators can detect risks that could pose a threat to a firm or the financial system.

It would appear that those rules, uh, failed. It gets better:

The CFTC said in a footnote to its weekly swaps report that the largest data repository, the Depository Trust & Clearing Corp., “has informed us that due to a…technical coding issue, the notional values in the interest rate asset class have been understated.” The agency also reported “a processing error” by a separate repository operated by CME Group Inc. A CME spokeswoman didn’t respond to a request for comment. A CFTC official characterized the data problems as “growing pains.” The agency formally began to report swaps data on a weekly basis just last month.

A technical coding issue with 12 zeroes?

Sure enough, the CFTC was quick to scapegoat someone for this epic clusterfuck – naturally, this someone was evil Congress for not spending even more money on the CFTC’s toothlessness, something popularized recently by the recently departedBart Chilton, who more or less told gold traders that manipulation in the gold market will continue because the government just doesn’t have the funds to stop it.

The official said the error also reflects the agency’s chronic lack of resources. Just two employees at the agency are charged with putting together the weekly swaps report and it takes them 12 days to prepare the data for publication compared with three for another report the agency publishes. The agency is reviewing the matter and hopes to have firmer figures by next week’s report, due Thursday.

In a statement, DTCC said: “We notified the CFTC immediately after we uncovered this matter and are working overtime to resolve these issues as soon as possible to ensure that the agency has timely access to the most accurate, highest quality market data.”

Oh that’s ok then, after all what’s a little eletronic $55,000,000,000,000 shuttling back and forth between insolvent counterpa…. oh hey look, over there everyone, the Fed just tapered!

 

%d bloggers like this: