All Articles Finance Modern Money While You Were Working - March 14

While You Were Working – March 14

FIA Boca, SGX on mercantilism, CME Group on Fed rates, Gamblers on high-frequency betting and bank culture is still an ideal

4 min read

Modern Money

Snow day in Boca

Snow day in Boca Raton - Photo credit: SmartBrief

SGX is concerned about economic mercantilism

During a private session at FIA’s International Futures Industry Conference in Boca Raton, Fla., Singapore Exchange EVP Michael Syn outlined the role economic mercantilism and nationalism stand to play in the near future for Asian and global markets.

“There is no one Asia. There never has been. And we will see that very clearly in the next year,” Syn explained.

Syn said countries like China, Japan, Singapore and India all have idiosyncratic risks, but noted the “existential” threat chaos in the South China Sea would represent for China makes it the one hot spot that could rattle commodities and any other shipping-based markets.

CME Group’s chief economist predicted 4 Fed rate hikes this year

Janet Yellen and the crew at the Federal Reserve will adopt a “hike one-skip one” approach when it comes to raising rates in 2017, according to CME Group Chief Economist Blu Putnam. Putnam, speaking during an information exchange in at FIA Boca, predicted the Fed will raise rates this week and then continue with rate increases at every other meeting through December.

We learned that HFB is very similar to HFT

High-frequency betting, artificial intelligence and big data are just a few of the latest developments in the sports betting word. Stealing a page from financial markets, the kings of sports betting are using technology to gain the smallest of edges as they wager billions on sports. In a piece that is so appropriate for the speed-trading crowds here in Boca, my favorite nugget is the practice of sending lookouts to the events so they can transmit scores and data directly to bettors instead of relying on television broadcasts. Television broadcasts represent information delays – which in Boca parlance is known as latency – and such delays are unacceptable for bettors seeking the advantages of low-latency.

The culture of banks is still flawed …

Michael Held, EVP of the Legal Group of the Federal Reserve Bank of New York, made a speech last week about the role lawyers can play in helping improve the ethical culture of financial services firms. Today, Wharton School Professor David Zaring fired off additional insights. Zaring argues that regulators’ focus on culture is laudable, but insufficient.

“…Creating a culture by regulatory fiat is difficult to do. I am accordingly skeptical of the invocations by regulators of the importance of culture in banking. We would not want them to focus on culture at the expense of hard, verifiable, capital adequacy rules. … Culture is not the first best way to police banks, but might serve as a last line of defense.”

I am a big believer in the mantra that ideals don’t become principles until they cost you blood or treasure. Efforts to improve bank culture represent an effort to convert ideals to principles. The problem is regulators often ask bankers to do that at the cost of treasure. History indicates that is a tough conversion to complete.

… And bankers know it

According to a survey from the Banking Standards Board, only 65% of financial services professionals see no conflict between their firm’s stated ethical goals and how their firm actually conducts its business. Fifteen per cent of bankers admit to working at a firm that they self-describe as having questionable ethics. It sounds like there are lots of ideals when it comes to banking culture, but not a lot of principles.

Delta Airlines weighed closing a Pennsylvania oil refinery

Delta Airlines has hired a consultant to explore options for what it can do with an oil refinery it acquired in 2012.  Delta, the world’s largest airline, says the review is routine and doesn’t necessarily mean it will sell or shutter the 185,000 barrel-per-day refinery. It is pretty fascinating to ponder how Delta bought the refinery five years ago out of fear that its closure would cause oil prices in the area to spike and now the market landscape has shifted so dramatically that Delta no longer has such fears.

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