BTG Pactual Builds up Commodities Presence

BTG Pactual, the Brazilian investment bank, headquartered in Sao Paolo, has set up two commodities businesses, BTG Pactual Commodities and BTG Pactual Commodities Holdings:

• Run by Ricardo Leiman, former CEO of Noble Group.  Good luck Ricardo in building out this new business.  (this begs the question who is the current CEO of Noble Group - this is Yusuf Alireza).
• Shon Loth, a metals warehousing expert, has also been brought in from Noble. Well done Shon, hope you can leverage your warehousing experience effectively at BTG.

Many of the staff are ex-Noble. BTG have apparently spent $300m to build up the business.

Could this be a great time to enter the business? In the wake of heavier regulation, several institutions have pulled back from commodities and revenues in the first half have fallen 25% in 1H 2013 at the top biggest banks. It's been 10 years since the Federal Reserve allowed banks to get involved in this business.

BTG Pactual is controlled by billionaire Andre Esteves, who joined BTG as an IT intern having studied mathematics at the University of Rio and traded through the period of Brazil's hyperinflation. Well done Mr Esteves for creating such a force to be reckoned with in the global banking industry.

Governors of Central Banks II

Brazil: Alexandre Tombini, has a PhD in Economics from University of Illinois, and Bachelors in Economics from the University of Brasilia. He is the head of the Banco Central do Brasil. The bank controls the economy via adjusting the SELIC rate (overnight borrowing rate), the SE standing for Sistema Especial.

Russia: The Russian Central Bank is led by Elvira Nabiullina who studied at Moscow State University. Its primary responsibility is to protect the stability of the Russian Ruble. It part-owns the Russian commercial bank Sberbank.

India: Raghuram Rajan (appointed in August 2013, for a three year term). BSc, IIT Delhi, Electrical Engineering, PhD in management from MIT in 1991. He has published a book called "Fault Lines" which won the Goldman Sachs Business Book of the Year Award in 2010. He was the former Director of Research at the IMF. While at the IMF he published a paper entitled: "Has Financial Development made the World Riskier?"

UK: Mark Carney, also Chairman of the Financial Stability Board (FSB), has a PhD in Economics from Nuffield College, Oxford and was formerly Governor of the Bank of Canada.

China: (People's Bank of China), Zhou Xiaochuan, since 2002. His wife, Li Ling, is a senior member of China's Ministry of Commerce. He has introduced reforms to recruit "sea turtles" (overseas Chinese with experience of real capitalist markets).

Goldman Sachs Trading Glitch Could Cost $100m says Bloomberg

Goldman Sachs bombarded the NYSE Amex Options market with unusual orders due to a software bug that affected tickers beginning with I, J and K. This happened Tuesday August 20th in the first 15 minutes of the open. The bug also affected trades on Nasdaq and ISE causing the Nasdaq to temporarily shut down options trading.

The Everbright Incident in China

The Everbright Incident

A glitch in Everbright Securities electronic systems caused a spike in China's CSI300 index, which tracks the largest listed firms in China (see below for more details on CSI300 and what stocks it contains). After the spike, share value of around $100bn was wiped off the index, in a single day. The firm now has a ban on proprietary trading for three months.  The firm itself stated that the glitch cost around $30m.

Background on Everbright

Everbright was founded in 1996 and is headquartered in Jing'an district, Shanghai (named after the Jing'an Temple).

Background on CSI300

Some of the larger firms within the CSI300 are Ping An Insurance Group, Citic Securities and Bank of Communications (one of the largest banks in China founded in 1908). Companies must be trading for at least three months on Shanghai or Shenzhen stock exchanges before even being considered for inclusion in the index.

CSI refers to China Securities Index Company Limited, who compile the index.

Rio Tinto Scraps Sale of Loss Making Pacific Aluminium

Introducing:

• Australian-born, Sam Walsh, the CEO of Rio Tinto (appointment January 2013)

Sam remarked that negotiations had not gone as smoothly as expected for the loss making unit, abbreviated PacAl. First half net profits for Rio dropped 14% for:

•  Rio's core business of Iron Ore (which was the unit Sam Walsh ran before becoming head of the organization)

One of their most profitable mines is Pilbara in Western Australia. The Pilbara region is known for its petroleum, natural gas and iron ore reserves.

• Rio Tinto is one of the ten largest companies in Australia

The others include National Australia Bank (NAB) and BHP Billiton.