GAM buys $4bn AuM Cantab Capital Partners for $290m and starts Systematic Unit

Zurich-based GAM (listed on the Swiss stock exchange and which manages around $120 billion) is acquiring Cantab Capital Partners (CCP), a systematic asset management firm.

This acquisition will form the basis of GAM Systematic - a new offering from GAM covering "traditional" long-only investments as well as alternative investing.

In GAM's investor presentation, a Deutsche Bank 2016 Alternative Investment survey was referenced which mentioned a growing allocation to systematic strategies by institutional investors (the presentation also heralds equity market neutral strategies as offering promising performance in 2016). Coupled with GAM's distribution network, there is certainly scope for GAM to ramp up allocations to its systematic funds.

GAM is also planning UCITS versions of CCP's strategies, UCITS being a form of European-regulated fund first introduced in 1985

The question though is whether performance can be maintained and what capacity constraints exist on the strategies pursued by the funds - according to GAM, the funds are scalable and the capacity constraints are low. This is supported by the proportion of Cantab's employees who are involved in strategy research (high), multiple models and multiple traded markets. Cantab has $4bn AuM as of 31 May 2015.

ONS Publishes Q1 2016 CAD Figures for the UK

The ONS has published its Q1 CAD figure of £32.6 billion (3x2=6). This means value of imports exceeds the value of exports.

George Osborne, the UK's Chancellor of the Exchequer since 2010, expressed an interest in managing the economy to surplus, but has since retracted this aim post Brexit (the "Exchequer" was the medieval English institution responsible for collection of revenues, whose name comes from a physical table used to perform tax calculations).

From Soda to Soya - Coca Cola Makes Unconventional Acquisition from Unilever

Coca Cola is acquiring AdeS, the biggest brand in soy beverage in Latin America for $575m.

Oil Companies Adapt to "Lower for Longer" Operating Environment

With oil prices hovering around $50 a barrel, oil companies are adapting to a "lower for longer" oil price environment.  This has meant cutting back on investment and jobs. Shell plans to shut down its office in the Thames Valley Park by the end of 2016.

AWS Lifts Amazon Q1 Earnings - Cloud Computing Proves Viable Second Stream To Ecommerce

For the last 12 months, Amazon Web Services (AWS) has been a $9bn business. Bezos expects it to be a $10bn annual business.

Within the AWS offering, Amazon offers EC2 (Elastic Compute Cloud), a web service that provides resizable compute capacity in the cloud. Customers include Netflix, Autodesk and Nasa/JPL. EC2 works in conjunction with VPC (Virtual Private Cloud) - which allows users to create their own virtual networking environment within AWS, including IP address ranges, subnets and so forth.

Metro Bank lists on LSE

Metro Bank, the first new high street bank in the UK for 100 years, has listed on the LSE with a market capitalisation of £1.6bn similar to that of CYBG which listed in the previous month.

Craig Donaldson, CEO, who studied at the University of Bradford, remarked that the first branch opened less than six years ago in London's Holborn.

Vernon Hill is the American business behind Metro Bank and author of "Fans not Customers".

He is often quoted in his views on regarding banks as being in the retail business, rather than the banking business, and is a critic of "shadow banking systems" (in other words, banks or financial intermediaries that operate outside of banking regulation).

What Kinds of Volumes are Being Done on Cleared Interest Rate Swaps?

Volumes Compared by Currency

The CME Group's clearing solution for interest rate swaps is doing considerable volume.

For trade date February 26, 2016, $21.6 billion of swaps were traded, with $12.5 trillion open interest.  Dollar and Euro are trading around parity (with the Euro being slightly more valuable), so that's a 20 bn EUR equivalent trading volume.

Euro swaps traded only 5.2 billion euros worth in comparison. So the volume of USD swaps is approximately four times as large.

Swaps on GBP actually exceed USD swaps in trading volume terms, for the same day, 24 billion pounds traded, which is around $34 bn (which is about 1.5x larger).

Cleared Swaps on Different "Flavours of LIBOR"

The CME clear swaps on USD Libor, Euribor and plain old "LIBOR" (which is GBP LIBOR of course) as well as host of other currencies.

Where Are Rates At - USD Libor

Friday's level for USD Libor Overnight was 37 basis points.  1 month is 43 basis points and 3 month USD Libor is 63 bps. A daily update on USD Libor levels can be found here. 1year USD Libor is 116 basis points.

"Regular" LIBOR

Overnight is 48bps, 1 month is 50 bps, and 3 months is 59 bps. 1 year LIBOR is close to 100 bps.

Who sets the LIBOR Rates

The former BBA Libor is now known as ICE Libor following the reform of the benchmark and management by ICE Benchmark Administration.  The Wheatley Review of LIBOR in 2012 made specific recommendations for the reform of LIBOR including a change of administration.  Under a tender process led by Baroness Hogg, the NYSE Euronext came up trumps (later renamed to ICE Benchmark Administration). Both administering and making submissions to LIBOR became regulated activities from 1 April 2013 - LIBOR being the first benchmark to be regulated.

As part of their activities, ICE has a dedicated surveillance team identifying breaches of submission standards and tolerances through "a combination of alerts and pattern matching".

Other Benchmark Rates administered by ICE

The ICE Swap Rate is the new replacement for ISDAFIX effective August 2014. ICE also now administer the LBMA Gold Price.

The Greatest Volume of Swaps

Interest Rate Swaps, followed by Overnight Indexed Swaps followed by basis swaps.