Tag: JP Morgan (Page 2 of 3)

Wall Street Banks Lost $55 Billion in Just One Day

Market News Daily - Wall Street Banks lost $55 billion in just one day.
Market News Daily – Wall Street Banks lost $55 billion in just one day.

Wall Street’s 4 top banks just had $55 billion wiped off their market value in a single day.

Four of America’s biggest banks lost a combined $55 billion of market value in a single day as financial stocks plunged.

US bank shares took a beating Thursday amid fears of contagion effects from the turmoil at Silicon Valley Bank and Silvergate.

JPMorgan saw the biggest tumble in market value among US lenders, losing $22 billion. 

(Markets Insider) JPMorgan Chase, Bank of AmericaWells Fargo and Morgan Stanley – the four most valued US lenders – saw $55 billion wiped off their combined market capitalization on Thursday, Refinitiv data show.

JPMorgan, the biggest US bank, alone saw a $22 billion tumble in its market value as its stock slid 5.41% to $130.34.

Wall Street’s Bank of America lost $16.16 billion as its share price fell 6.20% to $30.54.

Wells Fargo and Morgan Stanley saw their market capitalization drop by $10.3 billion and $6.2 billion, respectively.

Among other major US banks, Goldman Sachs and Citi also witnessed significant declines in their share prices.

Credit Suisse Clients Withdraw Billions

Credit Suisse News Today - Wall Street Banks lost $55 billion in just one day.
Credit Suisse News Today – Wall Street Banks lost $55 billion in just one day.

Credit Suisse (NYSE:CS) clients have withdrawn billions of dollars.

In November, the bank warned investors in a 6-K filing of potential losses due to naked short covering.

Disarming these types of overleveraged positions won’t be easy.

Credit Suisse took a massive hit of $4.09 billion in Q3 and hinted at occurring losses in an upturn in markets.

Now Credit Suisse as postponed publication of its annual report, per Reuters — more on that below.

The bank hired 20 banks for a $4 billion injection in effort to pivot from Q3’s disaster.

Is Credit Suisse on the verge of collapsing?

(Reuters) Credit Suisse has postponed publication of its annual report after a last-minute call from the United States Securities and Exchange Commission (SEC), which raised questions about its earlier financial statements.

The unusual intervention by the U.S regulator is the latest blow to Credit Suisse as it attempts to rebuild investor confidence after a series of scandals and setbacks that have sent its shares plunging and led clients to withdraw billions.

Credit Suisse shares were close to their all-time low in Zurich on Thursday but later recovered much of a 6% loss.

Swiss financial regulator Finma told Reuters that Credit Suisse had informed it of the delayed publication.

“We are in contact with the bank,” Finma said.

What is Happening with Banks Right Now?

SVB Bank News Today - Wall Street Banks lost $55 billion in just one day.
SVB Bank News Today – Wall Street Banks lost $55 billion in just one day.

Banks are losing billions in liquidity leading many to believe a financial collapse is imminent.

In February, Credit Suisse reported that 2022 brought its biggest annual loss since the 2008 global financial crisis after rattled clients pulled funds from the bank, and it warned that a further “substantial” loss would come this year.

Among a string of scandals, Credit Suisse was hard hit by the collapse of U.S. investment firm Archegos in 2021 as well as the freezing of billions of supply chain finance funds linked to insolvent British financier Greensill.

Investors have been speculating that Credit Suisse will be the next bank to default — time will certainly tell.

“SVB collapse is the second-largest bank failure in US history”, says CNN.

Startup investors have shared their concerns on Twitter in regard to capital being held by the banks.

Many are urging one another not to use a bank at the moment, speculating that this is a sector-wide issue.

Market News Published Daily

Market News Today - Wall Street Banks Lost $55 Billion in Just One Day.
Market News Today – Wall Street Banks Lost $55 Billion in Just One Day.

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Ex-JPMorgan Gold Trader Faces 30 Years in Prison for Spoofing

Market News: Ex-JPMorgan Gold Trader faces time in prison after spoofing the market.
Market News: Ex-JPMorgan Gold Trader faces time in prison after spoofing the market.

An Ex-JPMorgan Gold trader was found guilty of fraud in the commodities market.

Christopher Jordan was convicted of wire fraud affecting a financial institution by a federal judge in Chicago, the latest win for U.S prosecutors in their crackdown on illegal “spoofing” trades and market manipulation.

Jordan was found guilty Friday after a four-day trial in the same courthouse where two of his most senior colleagues on the JPMorgan precious metals desk were convicted in August of spoofing related charges for deceptive buy and sell orders.

Jordan worked at JPMorgan from 2006 to late 2009.

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Department of Justice Comments on JPMorgan Trader

DOJ report on Ex-JPMorgan Trader spoofing the gold market.
DOJ report on Ex-JPMorgan Trader spoofing the gold market.

Between 2008 and 2010, Jordan placed thousands of spoof orders, i.e., orders that he intended to cancel before execution, to drive prices in a direction more favorable to orders he intended to execute on the opposite side of the market. 

Jordan engaged in this deceptive spoofing strategy while trading gold and silver futures contracts on the Commodity Exchange (COMEX), which is a commodities exchange operated by the CME Group.

These deceptive orders were intended to inject false and misleading information about the genuine supply and demand for gold and silver futures contracts into the markets.

He is scheduled to be sentenced at a later date and faces a maximum penalty of 30 years in prison. 

Four other former JPMorgan precious metals traders were previously convicted in related cases.

In August 2022, Gregg Smith and Michael Nowak were convicted after trial in the Northern District of Illinois of wire fraud affecting a financial institution, commodities fraud, attempted price manipulation, and spoofing.

In September 2020, JPMorgan admitted to committing wire fraud in connection with (1) unlawful trading in the markets for precious metals futures contracts and (2) unlawful trading in the markets for U.S. Treasury futures contracts and in the secondary (cash) market for U.S. Treasury notes and bonds.

JPMorgan entered into a three-year deferred prosecution agreement pursuant to which it paid more than $920 million in criminal monetary penalties, criminal disgorgement, and victim compensation, with parallel resolutions by the Commodity Futures Trading Commission and the Securities Exchange Commission announced on the same day.

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Source(s): Bloomberg, Justice.Gov.


Phase 6 Margin Call Requirements on The Way

Phase 6 Margin Call Requirements
Market News: Phase 6 Margin Call Requirements on the way | ISDA

Market News: Phase 6 margin call requirements are on the way.

Institutions under UMR who had not previously been affected by these specific margin requirements will be as of September 1st, 2022.

Uncleared Margin Rules (or UMR) were created to address the OTC derivatives market–and its participants– in the wake of the global financial crisis (GFC) of 2008-2009.

It implemented new margin requirements for non-centrally cleared derivatives to avoid further systemic risk.

For this reason, they were ‘phased in’, or broken down by phases.

Institutions affected by phase 6 margin call requirements could find themselves in a sticky situation and I’m going to discuss why down below.

Let’s get started!

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Preparing for margin calls

The requirement to exchange initial margin for over-the-counter (OTC) derivatives is one of the last remaining pillars of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) that remains to be fully implemented.

The five-year implementation period began in 2016.

UMR Phases - Phase 6 Margin Requirements
UMR Phases – Phase 6 margin requirements

The chart above depicts the number of counterparties affected throughout each phase.

Phase 5 occurred in September of 2021 where 319 counterparties were affected.

We will be entering Phase 6 in September of 2022, where 775/990 counterparties with more than the $8 billion scope detailed on the graph, or gross amount across all uncleared OTC trades, will be affected.

Phase 5 of UMR touched a mix of sellside and buyside firms, especially medium-sized banks and larger buyside firms.

However, Phase 6 is almost exclusively buyside-focused meaning we could potentially see a massive market rebound, per Bloomberg.

Institutions affected by Phase 6 margin call requirements may include asset managers, banks, hedge funds, and private family offices.

The entire process is extremely challenging according to Bloomberg.

But while it may seem complex in nature, it’s the results that truly matter.

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How long will it take for margin calls to happen?

Although Phase 6 margin call requirements are going into effect on September 1st, 2022, it’s important to note that this is going to take some time.

The derivatives market is massive, now boasting approximately 1 quadrillion derivatives as of May 2022, per Investopedia.

The Senior Principal at BNY Mellon has said in the past that even after Phase 6 there will be margin calls that will still have to be processed.

That’s how massive this event will be.

Phase 6 margin call requirements will begin to margin a variety of sized banks, hedge funds, market makers, and family offices.

The bottom line, the markets need this reset, and its coming.

For a much greater and in-depth walkthrough of what this event means, check out AMCBIGGUM’s video below.

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Phase 6 Margin Call Requirements meaning

JP Morgan Manipulated Gold to Keep Hedge Funds Happy

JP Morgan manipulated gold
Market News: JP Morgan manipulated gold and silver market

An ex-trader says JP Morgan spoofed gold to keep hedge funds happy.

He says client orders made a lot of money for the bank.

Big hedge funds like Moore Capital Management and Tudor Capital Corp. were so important to JPMorgan Chase & Co. that its precious-metals traders routinely manipulated gold and silver markets to get the best prices on client orders, the former trader for the bank told a Chicago jury. 

“They brought in a huge volume of trading, which made the bank a lot of money and our team a lot of money,” John Edmonds, a former trader on JPMorgan’s precious metals desk, said on Wednesday when asked about the incidents.

This isn’t the first time a bank colludes with hedge funds to cheat non-institutional investors from their money.

Here’s the latest market news.

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JP Morgan manipulates gold and silver market

Gold and Siver Market
Gold and Silver Market

Edmonds worked on the JP Morgan precious-metals desk for more than a decade and pleaded guilty in 2018 to conspiracy and commodities fraud related to “spoof” trading. – Bloomberg

Spoofing is a term used when traders place market orders and cancels them before the order is fulfilled, initiating fake orders into the market without the intent of paying them.

Earlier this year the DOJ targeted hedge fund Muddy Waters for flooding the market with fake orders.

John Edmunds is currently testifying against his former boss, Michael Nowak, the longtime head of the trading desk, gold trader Gregg Smith and hedge funds salesman Jeffrey Ruffo.

They’re accused of thousands “spoof” trades in which huge orders were placed and quickly canceled in the hope of moving prices up or down so they could complete desired trades.

Prosecutors allege the traders were influenced by the needs of hedge fund clients, whom at times were looking to buy or sell millions of dollars in gold or silver in a matter of seconds or minutes.

Edmonds said that when a client needed an order filled, everyone on the desk would stop trading so as not to “get in the way” of filing that order.

Edmonds said he’d regularly watch Nowak or Smith use spoof trades to fill those order, per Bloomberg.

Bank gets caught red-handed

JP Morgan Precious Metals Desk
JP Morgan Precious Metals Desk

Jurors were shown instant messages between Ruffo and traders at Moore Capital and Tudor, as well as Smith’s trading records around those communications as evidence of improper trading in gold and silver futures.

Edmonds, who sat near Ruffo and Smith, said the hedge fund clients were “price sensitive” and concerned about even small differences in prices of gold and silver given the massive size of their orders.

One example from prosecutors was an order on Dec. 12, 2011, by Moore Capital, which sought to sell 1 million ounces of silver at $31 an ounce.

Smith placed orders to buy 1,190 futures contracts, each for 5,000 ounces of silver, data presented to the jury showed.

Edmonds said that was consistent with a spoof trade designed to drive the price higher, where Smith wanted to sell.

Minutes later, Smith sold 200 contracts, which is the equivalent to 1 million ounces, and canceled his buy orders.

The jury also heard about a Jan. 18, 2012, gold trade on behalf of Tudor where Ruffo was asked to unload more than 900 contracts.

As the price of gold decreased around 8 a.m., Tudor’s James Phelan wrote to Ruffo, “tell Gregg to wake up,” according to a chat log.

Shortly thereafter, Smith started entering orders on the buy side. “He was trying to move the market higher so he can sell at a higher price for an important client,” Edmonds said.

Sources – Bloomberg.

Will JP Morgan face any consequences?

JP Morgan manipulated gold and silver market to keep hedge funds happy
JP Morgan manipulated gold and silver market to keep hedge funds happy

The case is US v. Smith et al, 19-cr-00669, US District Court, Northern District of Illinois (Chicago).

For the reasons explained in this Opinion, the Defendants’ motion to dismiss, R. 114, is denied except for the bank fraud counts (Counts 5–7).

Those counts are dismissed.

The remainder of the Superseding Indictment survives.

You can view the entire case text, opinion, and details here.

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Related: Chicago Tribune Says Citadel Securities' Dark Pool Targets Small Investors

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