wouldn't the EU or even Germany stepping in to guarantee Greek debts blow up Goldmans,then?
However, if the Commission suspects that Goldman or any other player has cornered the market, or is attempting to do so, it is perfectly within its mandate to bring the competition and inner market hammer down, like it did on Intel and Microsoft. Given the - ah - less than perfectly transparent, shall we say, nature of these instruments, it is possible that simply making vigorous noise about punitive measures will suffice to stimulate a run on the target.
That might be a more productive venue.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
if the Commission suspects that Goldman or any other player has cornered the market, or is attempting to do so, it is perfectly within its mandate to bring the competition and inner market hammer down, like it did on Intel and Microsoft
Times Online [UK]: Citigroup agrees to pay £14m over bond scandal (June 29, 2005)
Last August Citigroup sent shockwaves through the eurobond market after executing a series of huge bond trades, which destabilised the market and for a moment sent prices plunging. By exploiting the price moves and the ensuing panic, Citigroup traders made profits of £9.96 million in the course of the day. The bank's reconfigured computer program, designed to stun the market with a blast of 188 simultaneous sell orders, was known by the traders as "Dr Evil".
The market was thrown into confusion on 2 August 2004 when Citigroup pushed through EUR11 billion in paper sales in two minutes over the automated MTS platform. As the value of futures contracts fell and traders moved to cover their positions, Citigroup re-entered the market and bought back about EUR4 billion of the paper at cheaper prices. The strategy was dubbed Dr Evil, after the Austin Powers character, in an internal e-mail circulated by the traders. Immediately afterwards MTS moved to impose temporary limits on the value and volume any one dealer can push through the system at a time. MTS also suspended Citigroup from trading on its bond network for one month after finding that the UK bank breached certain market regulations. The UK's Financial Services Authority later fined Citigroup £13.9 million following its investigation into the controversial trading.
Immediately afterwards MTS moved to impose temporary limits on the value and volume any one dealer can push through the system at a time. MTS also suspended Citigroup from trading on its bond network for one month after finding that the UK bank breached certain market regulations.
The UK's Financial Services Authority later fined Citigroup £13.9 million following its investigation into the controversial trading.
I'm sure these traders have a lot of fun at their job, but shouldn't it occur to them that what you're doing might be a shade on the grey side of acceptable behaviour when the most apt pet name for the scheme makes reference to a wave-motion gun or earth-shattering kaboom?
What is it with trading desks and code names?
