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| How
Will Bond Market React to Citigroup Trades? Financial Times February 7, 2005 From Ms Janet Tavakoli. See also follow-up article below on costs Instead of using rumour or false research reports to drive up the prices, Citigroup's traders pushed up the prices by buying bond futures contracts in a thin market. They then sold the basis (the bonds) for profit and even made money when they bought some bonds at eventually depressed prices. To put the brakes on this kind of behaviour, the market requires muscular ladies and gentlemen. The supervisors at Citigroup cannot claim ignorance because "they didn't get the memo". They were smart enough to realise the implications of the trading strategy, and these defectors approved the trades. In the past the market punished defectors by refusing to pick up their phone calls, and refusing to do business with them for a period of time. The defectors were treated as card cheats and were banned from the gentlemen's club. It will be interesting to see how the market reacts this time. Janet Tavakoli, President, Tavakoli Structured Finance, Chicago,
IL 60601, US |
Janet
Tavakoli, President: jt@tavakolistructuredfinance.com
TEL: (312) 540-0243 |