Queen Elizabeth II

It is with the deepest sadness and respect we acknowledge the passing of her Majesty, Queen Elizabeth II. For the people of Great Britain, the Commonwealth and many others around the world her departure is a tremendous loss. Her Majesty was a role model for us all about the dedication to family, duty and service. May god bless her and keep her. God save the King.

Liquidity, Treasury Risk & Management

These are critical functions that anyone operating in a financial institution expects to be undertaken and completed to a high standard. They are the bedrock, along with counterparty credit and collateral risk quality, of any asset backed or collateralised lending business.

Done well, they add certainty to the risk management and trading process, done poorly they can and will cripple a business.

Crypto platforms are more and more illustrating they have been moving way too fast without a clear view on the fundamental risks within the business. We are believer’s in the technology, there is a place for it, however the guardrails just are not yet in place fully and need to be. Here is a great example of how it can, and does, go wrong from time to time.

Crypto.com accidentally transfered $10.5M to client instead of $100 refund

If you want to discuss how we can help your organisation put those guard rails in place, enhance your risk management capabilities and reduce your operation risks, then reach out.

Happy New Year!

With 2021 coming to a close, and having been full of challenges for everyone, we want to send our best wishes to all of you. We hope 2022 brings greater opportunities and success for you, your family and your business. From all of us at Howard Trading Limited, Wishing you a very Happy New Year!

Congratulations to our May 2021 Intern!

In 2021 we’ve continued our internship programme broadening our candidate reach further afield. Successful candidates complete a bespoke three week project on a topical area within financial markets, developing analytical, communication, markets, organisational, presentation, report writing and teamwork skills.

Congratulations to our first US based intern, Brandon Rudolph who completed our May-June Remote Internship completing a report on Path Dependant products within the Exchange Traded Fund Market. 

Wishing both Brandon the best with his studies at the Cleveland’s Case Western University. Again, well done.

Our previous interns have gone on to work in Credit & Equity Derivatives roles within top tier investment banks.  If you are a high quality candidate, enjoy challenges and are looking for a financial markets internship during 2021 please reach out to our recruiting team at “recruiting@howard-trading.com

What Is a Total Return Swap and How Did Archegos Capital Use It?

Over-levered. With the news over the weekend that Bill Hwang’s Archegos Capital Management investments in Baidu, Discovery, Fartech, Shopify, Tencent Music Entertainment, GSX Techedu, iQiyi Inc, VIPShop and ViacomCBS were liquidated by their prime brokers all eyes are how this happened.

JPMorgan’s Kian Abouhossein wrote that the losses may range between $5billion and $10billion for the banks trading with Archegos.

In the coming weeks, we will no doubt see more information presented to the broader investment community, however, so much leverage could be extended to one institution and what triggered the fire-sale process to de-risk will be the focus of intense scrutiny. We suspect regulation is coming down the pipe, we hope this is driven by transparency and not outlawing products per se. Expect to see a re-pricing of risk from the prime brokers in the coming weeks and months as they reassess how they price, trade and risk manage this previously perceived low-risk business.

Our CEO, Stephen Howard, was interviewed by the Wall St Journal online overnight on the topic of Total Return Equity Swaps. To read the full article, visit The Wall Street Journal:

https://www.wsj.com/articles/what-is-a-total-return-swap-and-how-did-archegos-capital-use-it-11617125839

Clubhouse and Asymmetric Returns

Our CEO, Stephen Howard, participated in a Clubhouse Discussion within the “Asymmetric Returns in Investing” room this morning.

Led by Geoffrey Chen and Kay Van-Peterson, the discussion revolved around portfolio construction, understanding risk appetite, how derivatives can be used to support portfolio optimisation to better manage risks and investment positioning.

Commenting on the discussion, “…Clubhouse is a fantastic medium to have a closed-form, deep-dive discussion into a topic. The two interviewers did an excellent job of shaping the landscape and helping to draw insights and observations. Interesting that we had participation from Japan, Hong Kong, Singapore, Europe and the US – truly a global platform.”

Restoring Trust in the Stock Market

Our CEO, Stephen Howard, was quoted over the weekend in The New York Times Dealbook Section. 

Earlier in the week, award winning journalist Andrew Ross Sorkin’s “DealBook” column raised the challenge to readers of “How you’d fix the market” soliciting input from readers on how we might restore trust and fairness in the stock market. After receiving a ton of thoughtful submissions these were included:

  • “Have a zero percent capital gains tax on securities held more than two years. This would encourage long-term investing at the expense of short-term speculative trading.”— Bob Knutson in St. Paul, Minn.
  • “Limit how much of each new issue the big guys can grab and let the small fish get their nibbles first.”— Miriam Kelly in Baltimore
  • “Restore the uptick rule.”— Andrew Oliver in Marblehead, Mass.
  • “Buying back shares should not be allowed. It does nothing for the value of the company, nor does it lead to better investment performance.”— Joyce Hum in Ottawa
  • “Limit the total percentage of float allowed to be sold short. Anything over 100 percent seems to be a recipe for a short squeeze.”— Dan Niemiec in Chicago
  • “Have the exchanges process market orders in a manner that nullifies the machinery of high-frequency trading, like adding a random delay of between five and 15 seconds to any market order.”— Ronny Lempel in Redmond, Wash.
  • “Go to T-0 Equity Settlement, which reduces the overall credit exposures from trading T+2. Before anyone objects to the technical challenge, it is definitely possible as the China A share market operates this way.”— Stephen Howard in Hong Kong

Commenting on the quote, “…it was great to participate and offer my insights and suggestions, fantastic that one of them was reflected in Andrew’s column. We are all very interested to see what happens next.”

The New York Times DealBook