CFTC takes action against GS for time zone arbitrage

[BMK]

Well, okay, it was more than just time zone arbitrage. It was about the fact that GS was not disclosing certain facts to their customers, in equity index swap contracts, where GS was trading for its own account, and the customers were counterparties...

Fascinating analysis by Matt Levine at Bloomberg:

https://tinyurl.com/mlbb230411

I have not read the CFTC enforcement action documents.

But c'mon, man, if you're trading swap contracts with a notional value of $90 million, do you really need consumer protection from the CFTC?

As Levine says in this article,

if you think that you’re pulling a fast one on Goldman Sachs, you might be right, but maybe double-check to be sure? If you think that you are repeatedly pulling the same fast one on Goldman Sachs, man, you’d better be really sure.

Caveat emptor, Dude.

BMK

 

[M.W.]

The ever repeating story. And yet customers happily come back to the table every single time. What does that say about those customers?

Well, okay, it was more than just time zone arbitrage. It was about the fact that GS was not disclosing certain facts to their customers, in equity index swap contracts, where GS was trading for its own account, and the customers were counterparties...

Fascinating analysis by Matt Levine at Bloomberg:

https://tinyurl.com/mlbb230411

I have not read the CFTC enforcement action documents.

But c'mon, man, if you're trading swap contracts with a notional value of $90 million, do you really need consumer protection from the CFTC?

As Levine says in this article,

if you think that you’re pulling a fast one on Goldman Sachs, you might be right, but maybe double-check to be sure? If you think that you are repeatedly pulling the same fast one on Goldman Sachs, man, you’d better be really sure.

Caveat emptor, Dude.

BMK

 

[zdreg]

The ever repeating story. And yet customers happily come back to the table every single time. What does that say about those customers?

Nothing new. Where are the customer's yachts? It was originally published 1940.

 

[newwurldmn]

Well, okay, it was more than just time zone arbitrage. It was about the fact that GS was not disclosing certain facts to their customers, in equity index swap contracts, where GS was trading for its own account, and the customers were counterparties...

Fascinating analysis by Matt Levine at Bloomberg:

https://tinyurl.com/mlbb230411

I have not read the CFTC enforcement action documents.

But c'mon, man, if you're trading swap contracts with a notional value of $90 million, do you really need consumer protection from the CFTC?

As Levine says in this article,

if you think that you’re pulling a fast one on Goldman Sachs, you might be right, but maybe double-check to be sure? If you think that you are repeatedly pulling the same fast one on Goldman Sachs, man, you’d better be really sure.

Caveat emptor, Dude.

BMK

I don't even see what was not disclosed. They said it was a T+0 swap. Only thing is that customers couldn't figure out what the settlement was likely to be and they could. But i think sophisticated customers could and did.

 

[M.W.]

Nonsense, please explain to us how GS and its ilk generated out sized profits for decades above and beyond commission/spread by acting as middle man and given that they are not allowed to run prop operations. The only reasonable and truthful response is that they talk under informed customers into products that reflect a mispricing of risk in the bank's favor and/or pushing products that are not suitable for clients. And all that in the full knowledge of what they are doing and the knowledge of their responsibility of fiduciary duty. It all comes down to how fiduciary duty is defined and the rich and powerful bought themselves the power to write definitions through lobbying and revolving doors. Kid us not.

How I know? I worked for decades at fixed income desks at said banks but moved to a prop group within as fast as I could because of the disgusting practices of most flow groups. One only needs to listen to recordings and chat messages among flow traders that were exposed in past litigation to understand how said traders look at their client base.

Sorry if that truth hurts your ethical and moral bearings or the lack thereof. You clearly seem to have your allegiances aligned with said banks. So, we expect nothing better than what you have already stated.

I don't even see what was not disclosed. They said it was a T+0 swap. Only thing is that customers couldn't figure out what the settlement was likely to be and they could. But i think sophisticated customers could and did.

 

[newwurldmn]

It looks like sheman has replied to my post with some rant about ethics or something. And accuses me of supporting unethical behavior.

This is the same person who lies on a forum, gets caught and can’t admit to it. She belongs on the sellside.

 

[zdreg]

Nonsense, please explain to us how GS and its ilk generated out sized profits for decades above and beyond commission/spread by acting as middle man and given that they are not allowed to run prop operations. The only reasonable and truthful response is that they talk under informed customers into products that reflect a mispricing of risk in the bank's favor and/or pushing products that are not suitable for clients. And all that in the full knowledge of what they are doing and the knowledge of their responsibility of fiduciary duty. It all comes down to how fiduciary duty is defined and the rich and powerful bought themselves the power to write definitions through lobbying and revolving doors. Kid us not.

How I know? I worked for decades at fixed income desks at said banks but moved to a prop group within as fast as I could because of the disgusting practices of most flow groups. One only needs to listen to recordings and chat messages among flow traders that were exposed in past litigation to understand how said traders look at their client base.

Sorry if that truth hurts your ethical and moral bearings or the lack thereof. You clearly seem to have your allegiances aligned with said banks. So, we expect nothing better than what you have already stated.

It is not well known but brokers are not fiduciaries.
https://www.forbes.com/sites/forbes...-advisers-suitability-vs-fiduciary-standards/
That is how the Goldman can escape with their recommendations.

 

[M.W.]

Only makes you look small and weakish to hold a grudge about a post months ago. Hope you get a grip some time soon and get over yourself.

It looks like sheman has replied to my post with some rant about ethics or something. And accuses me of supporting unethical behavior.

This is the same person who lies on a forum, gets caught and can’t admit to it. She belongs on the sellside.

 

[M.W.]

Loopholes, I know....they do have a certain fiduciary duty just not to the extent of investment advisors. A sales trader's responsibility is act with integrity and honesty when making claims about a certain product. That alone is violated on a daily basis. At best it is highly unethical and immoral. The level of honesty highly correlates with the size of the counterparty and how much revenue they generate. That's where things already go wrong...

It is not well known but brokers are not fiduciaries.
https://www.forbes.com/sites/forbes...-advisers-suitability-vs-fiduciary-standards/
That is how the Goldman can escape with their recommendations.

 

[zdreg]

An idiot by the name blocked me from seeing his bash hole post but off course I found his babble in a work around.
newwurldmn

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It looks like sheman has replied to my post with some rant about ethics or something. And accuses me of supporting unethical behavior.

This is the same person who lies on a forum, gets caught and can’t admit to it. She belongs on the sellside.