Día: 18 agosto, 2017

U.S. pension funds sue Goldman, JPMorgan, others over stock lending market

Deje un comentario

Wall Street Sign Manhattan, New York, New York, USA. Image: http://www.market-barometer.com/wall_street_pic_001.jpg

(Reuters) – Three U.S. pension funds sued six of the world’s largest banks on Thursday, including Goldman Sachs Group Inc (GS.N) and JP Morgan Chase & Co (JPM.N), accusing them of conspiring to stifle competition in the more than $1 trillion stock lending market.

In the lawsuit filed in a Manhattan federal court, the funds accused the banks of boycotting start-up lending platforms by threatening and intimidating their potential clients. The defendants include Bank of America Corp (BAC.N), Credit Suisse AG CSAG.UL, Morgan Stanley (MS.N), UBS AG (UBSG.S), Goldman and JP Morgan.

The Iowa Public Employees’ Retirement System, Orange County Employees’ Retirement System and Sonoma County Employees’ Retirement Association said in the lawsuit that the banks have cornered the market on stock lending in violation of federal antitrust law.

“Through various improper means, the likes of Goldman Sachs and Morgan Stanley have for years colluded to maintain their power over this little-known-but-lucrative corner of Wall Street,” said Michael Eisenkraft, a lawyer for the funds and partner with Cohen Milstein.

Representatives of Bank of America, Goldman Sachs and JPMorgan declined to comment. The other banks did not immediately respond to requests for comment.

The pension funds said collusion by the banks harms investors and retirees by forcing them to pay high fees to engage in stock lending.

Stock lending is related to short selling and involves lending a stock to an investor or firm through a broker or dealer. Pension funds and other institutional investors frequently lend stock to hedge funds.

In short selling, a security that is not owned or has been borrowed is sold with the idea that it can be bought at a future date at a lower price.

The funds claimed in the lawsuit that the defendants conspired to take down upstart stock lending platforms AQS, which was developed by Quadriserv Inc, and SL-x, which would have allowed lenders and borrowers to interact directly.

The lawsuit claimed that in 2012 Goldman Sachs threatened to stop doing business with Bank of New York (BNY) Mellon if it continued to support the AQS platform and that the bank agreed to stop using it. BNY Mellon declined to comment.

The lawsuit said that through a joint project called EquiLend LLC, the banks purchased SL-x’s intellectual property and shelved it, according to the lawsuit. The funds accused the banks of establishing EquiLend in 2001 to safeguard their interests in the stock lending market.

A spokesman for EquiLend, which is also named as a defendant in the lawsuit, declined to comment.

In: reuters

Yen gains as stock market mood darkens

Deje un comentario

LONDON (Reuters) – The yen was the major mover among the G10 group of developed world currencies on Friday, gaining another half percent against the dollar as nerves over stock market valuations and the future of an 8-year global rally seeped into other assets.

The euro had recovered all of the ground it lost after European Central Bank policymakers warned of an overshoot in the currency in the minutes on Thursday from last month’s policy meeting, trading 0.2 percent higher at $1.1748.

Concerns over President Donald Trump’s ability to push through the pro-growth measures financial investors had expected at the start of this year were at the heart of a second daily 1 percent loss for Wall Street on Thursday.

That drove flows into the traditional security of the yen and the Swiss franc, with nerves around another attack claimed by Islamic State, this time in Barcelona, feeding into the shaky mood.

Despite a recovery in the last fortnight, the dollar index that measures its broader strength against a basket of currencies is still just 1 percent above 13-month lows hit at the start of August.

“With President Trump’s support from both within and outside of the White House waning, the uncertain US political environment is likely to keep the dollar pinned down at these low levels,” said Viraj Patel, a strategist with ING in London.

“It is difficult to find any other domestic catalyst to more than offset this negative factor and drive the dollar higher in the near term.”

The dollar traded briefly below 109 yen per dollar before recovering to 109.13 yen. The dollar index, down almost a third of a percent in early trade had recovered to 93.508 by 0937 GMT, down 0.1 percent on the day.

The yen often comes into favour in times of market stress, partly due to expectations that Japanese investors will eventually repatriate their overseas assets if such market turmoil persists.

U.S. equity markets, however, were set to open flat on Friday and there were voices suggesting their gains had run their course for the moment.

“We expect the JPY and CHF to be relatively stable against the USD unless geopolitical risks intensify,” HSBC strategist Daragh Maher said in a note to clients.

He also called for a weaker euro after Thursday’s warning on the currency’s strength from the ECB, and closed the bank’s existing “buy” recommendation for the euro against sterling.

“Tactically, the euro is looking vulnerable,” he said.

“The rally this year has been impressive but August has seen some of the upward momentum fade. Positive news is generating less of an impact and the latest batch of ECB minutes show a growing disquiet with EUR strength.”

In: reuters