Bloomberg: Wall Street wants a piece of BlackRock http://seekingalpha.com/news/3166903?source=ansh $BLK, $LQD, $HYG, $C, $GS, $BAC, $JPM, $MS, $CS, $DB, $BNPQY
Bloomberg: Wall Street wants a piece of BlackRock
Yesterday 12:49 p.m. ET • BLK • SA Editor Stephen Alpher
While the big Wall Street banks are struggling with slides in fixed-income revenues, business is booming at BlackRock (NYSE:BLK) and other ETF providers offering credit-related products.
The banks, writes Lisa Abramowicz, want some of that business back.
The issue for banks are new regulatory and capital rules which make it harder to hold big inventories are paper investors want to trade. Meanwhile, the ease of moving in and out of vehicles like BlackRock’s $25B IG bond fund (NYSEARCA:LQD) or its $16B junk-bond fund (NYSEARCA:HYG) have led to surging volumes, even as the individual securities underlying those ETFs are more difficult to trade.
Banks are responding with the total-return swap in which an investor pays a fee to a counterparty who promises delivery of the total gain on a basket of certain debt. These instruments are not only quickly traded without having to deal with the underlying securities, but are pegged to some of the same indexes as the biggest credit ETFs. Citigroup (NYSE:C) just became the eight dealer in these derivatives (joining GS, BAC, JPM, MS, CS, DB and OTCQX:BNPQY), which are being pitched by banks as an alternative to ETFs.
I can just hear the music playing in the background as they pitch this.
” THIS IS HOW WE DO IT “…….
“THIS IS HOW WE DO It” ….And we get away with “NO JAIL TIME”.
TBTF Banks are back in business awarding huge pay bonuses to their CEO’s.
These As..ho.es can get away with murder. Simple as that.
Does “basket of debt” that serves as the basis for this trade sound familiar to the deals being made in 2006 and 2007? Will we ever learn?
Sure they learned – that they can make a bunch of money and there is no penalty when it implodes.
The TRS thing is an interesting incremental development.
Sananda (blog only)
It is not just being ultra bearish. Interest rates go negative. 0% & banks get paid by BCE, in the Eurozone, for the lending service to the private sector. Growth hasn’t only stalled, there is a cover up rececession everywhere, production has fallen at the basic resources commodities markets and miners are going out of business, as well as shipping and endebted gasserfrackers.
The system is running because of government expenditure and foreign investment on national bankrupts. A recycle, and it looks like investment and economic growth, regardless what it coul really be, a dismantling of local productive resources for the sake of foreign factories and “modus operandi”. The System is running. Now I also runs because things are sold and bought all the time in the world markets. The System runs on volumes, comissions. Yields. Dividends. And now banks have no choice but to take for themselves, the responsibility of keeping the system running with no bread produced, just yiels, dividends, but no one to pump the water so I can buy it. That was metaphorical, you can count on Nestle’s control of ALL water resources for your own benefit. (Child: mom, what happens if we run out of money to buy bottled O2? Mother: oh, God would’t want that!