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Wall Street’s credit-derivatives traders, who before the financial crisis commanded $2 million of annual pay, are being replaced by machines as banks cut costs and heed new regulations.
UBS AG, Switzerland’s biggest bank, fired its head of credit-default swaps index trading, David Gallers, last week, with no plan to fill the position, according to two people familiar with the matter.
Instead, the bank replaced Gallers with computer algorithms that trade using mathematical models, said the people, who asked not to be identified because moves are private.Can someone explain exactly why derivatives traders were getting paid $2MM/annually before their techniques were automated?
Business: Washington Post Business Page, Business News
(via slavin)
(via slavin)
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WATCH: “You’re such a wuss if you think that” - Michael Lewis, author of Moneyball, Liar’s Poker tells Robert Wolf on Reuters TV about people who think Barack Obama was too tough on Wall Street
Impact Players with Robert Wolf on Reuters TV -
As every frustrated American knows, no major banking executive has gone to prison or has been fined any significant amount in the aftermath of the financial crisis. But what’s astonishing is that Wall Street bankers seem not to have paid any social cost either. They sit on corporate and nonprofit boards and attend functions and galas. They remain top Wall Street executives, or even serve as regulators. The nation’s prominent op-ed pages, talk shows and conferences seek their opinions. If you are rich, you must be intelligent. Your views must be worthwhile, never mind the track record.
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For anybody disappointed that they didn’t get their full initial allocation of stock, or who thinks that small retail investors can’t buy into IPOs at the same price that large institutional investors can, this is great news: Monday’s going to be a do-over, with everybody being able to buy Facebook stock at the IPO price.
This of course helps to point up just how silly all the Facebook IPO hype really was. Yes, Facebook is now a public company, but it’s still controlled by Mark Zuckerberg, and the IPO itself was a bit of a farce: delayed at the open, artificially supported by the underwriters at the close, and mainly serving to demonstrate that a brand-new company, which no one knows how to value, trading at a stratospheric valuation, can still somehow end up trading within an incredibly narrow range on enormous daily volume.Felix Salmon, Much ado about nothing -
Why did Zynga’s stock drop when Facebook went public?
Zynga went through its own private flash crash. The straight drop and rise and drop in its stock after Facebook’s IPO is the classic signature of program trading. Whatever algorithms traders were using agreed that the stock was hugely overvalued, then undervalued, then overvalued again. So they all screamed “SELL” or “BUY” at the same time.
Then they stopped. Trading resumed at a more human pace. Why the change? One plausible explanation is that traders unloaded Zynga stock because now they could buy Facebook stock. They did so en masse — until Zynga stock fell so far that it became too cheap to resist. Then they bought it en masse — until Zynga stock rose so far that it became too expensive to resist dumping.
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Underwriters prop up Facebook stock to prevent it from tanking on IPO day
On the left side, you see the “bids” that are in the market for the stock. Those are the offers to buy. On the right you see the “asks”, which are asking prices by sellers. Note that next to each bid or ask there’s a “size” which is the size of the offer to buy or sell. Note two things: At the top of the left column, you see lots of bids at $38.00 on various trading platforms. (The BATS exchange, Arca, etc.). What’s more, the size of those bids are HUGE. Hundreds of thousands of shares compared to relatively tiny asks and bids everywhere else.
Should be interesting to see if they’ll still be there to save $FB on Monday.
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Facebook has a new roadshow video used to woo users into investing in the social network as the IPO nears. I spoke to John Abell at Wired to get his take on the soft focus Madison Avenue style pitch.
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Red Flags for Facebook’s IPO
I talk to Sam Hamadeh of PrivCo about the potential pitfalls in Facebook’s S-1 filing yesterday and why he’s bearish on Facebook’s IPO. Watch and find out why you might want to hold back some irrational exuberance when $FB shares debut.
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Members of Congress can legally trade stock based on non-public information from Capitol Hill.
As Lizzie O’Leary points out, much of this report owes its information from the work done by Brody Mullins at the Wall Street Journal:
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