Tag Archives: market
Carbon Market ‘Champions’ Undeterred: EU Climate Chief
10 May 2013 Carbon-market supporters from China to California will push for emissions trading even as they prepare for the end of the United Nations Kyoto Protocol in seven years, Europe’s top climate negotiator said. Nations including China and New Zealand and some US states have formed an informal group, “kind of the champions of the carbon market,” Artur Runge-Metzger said in a May 2 interview in Bonn, Germany. “It’s that club that’s going to set international standards” rather than UN talks, he said. Countries are increasing links between markets outside of the climate-protection targets set by the UN, which has led global efforts to reduce emissions since 1992. California last month approved rules that allow companies in the world’s ninth largest economy to trade pollution rights in Quebec, while Australia in 2012 agreed to use European permits to cut costs. The 1997 Kyoto Protocol sets market-based emission- reduction targets for the EU and 37 countries. The US and China, the biggest polluters, never signed, making the agreement “something that ended up in a kind of cul-de-sac,” Runge- Metzger said during the climate talks last week. Under the EU’s cap-and-trade system, designed to meet the bloc’s Kyoto targets, tradable permits are allocated to polluters that must surrender enough of them to cover their emissions or pay a fine. The euro area’s second recession since 2008 cut demand for allowances and UN credits, sending prices to record lows last month and reducing incentives to invest in low- carbon technologies. US scepticism Future agreements under the UN’s 1992 Framework Convention on Climate Change may never be implemented in “the real world,” US climate negotiators led by Todd Stern, said in a March 11 submission ahead of the Bonn talks. China has joined the World Bank’s Partnership for Market Readiness, a program which seeks to cut emissions at a faster pace than set out by existing national targets. The biggest energy user is preparing seven domestic carbon markets, covering 28 per cent of its economy. China is unlikely to link its existing and proposed carbon markets to those with emissions targets set by the UN, including the EU market, Su Wei, the nation’s lead climate negotiator, said May 2 in Bonn. “It’s too early to talk of a linkage with the EU market because that is a failed market,” Wei said in an interview. “If there are no ambitious targets there will be no demand. The carbon markets aren’t running very well.” Step back The UN has effectively “stepped back” from managing emissions programs partly because of resistance from countries against market-based climate strategies such as Bolivia, Venezuela and Cuba, Runge-Metzger said. Both international and national efforts to combat climate change are “absolutely critical” because efforts by countries and industries don’t match what’s required to stop temperatures from rising 2 degrees celsius, Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change, told reporters in Bonn. Governments are seeking to keep any increase in global average temperatures below that level. Climate envoys are debating whether allowances and credits used to comply with the Kyoto treaty can be used under a new market system beyond 2020 that may include more nations. Russia has the biggest stockpile of Kyoto units, according to UN data on Bloomberg. The debate over the use of the credits is “going to be quite political,” Runge-Metzger said. “The majority of countries don’t have them.” Price drop EU carbon for December plunged to a record 2.46 euros ($3.20) on April 17 on the ICE Futures Europe exchange in London after the European Parliament rejected a proposal to enable the reduction of the surplus of allowances. They slid 44 per cent in the past year and closed at 3.79 euros today. The EU’s change in emphasis toward nation-led markets is a “sensible shift in policy,” Daniel Rossetto, the London-based managing director of emissions markets adviser Climate Mundial Ltd., said in a May 7 interview. The UN approach “is probably destined to fail, while bilateral negotiations between like- minded countries is more likely to proceed,” he said. Bloomberg Read more: http://www.smh.com.au/business/carbon-economy/carbon-market-champions-undeterred-eu-climate-chief-20130510-2jbgu.html#ixzz2TGXtvt6E Continue reading
How One Tweet Almost Broke US Financial Markets
Friday April 26, 2013, 5:54 am Photo Credit: Luis Louro/Shutterstock How One Tweet Almost Broke US Financial Markets When a phony Associated Press tweet reported explosions in the White House, Wall Street’s computers reacted as if it were real. In the January/February issue of Mother Jones, I wrote about Wall Street’s embrace of high-speed computer programs that execute thousands of trades per second. These algorithms, some of which can teach themselves and operate almost entirely without human interference, present a new and challenging danger to the stability of global financial markets because they work in timeframes that people can’t begin to perceive. By the time an actual person realizes something is wrong, it might already be too late to fix the problem. The concern isn’t that one firm’s high-speed trading program will make a mistake, but rather that a bunch of them will make the same mistake at once, launching a chain reaction that could undermine the financial system. On Tuesday, the world saw exactly how fast these sorts of programs can respond to bad news. Many high-speed trading algorithms are designed to read headlines and trade based on that information before human traders can react. So when the Associated Press Twitter account tweeted at 1:07 p.m. Eastern time on Tuesday that two explosions were reported in the White House and President Barack Obama was injured, the market fell immediately. Here’s an image of the tweet in question: (See VISIT SITE for screen shot of tweet) The S&P 500 fell nearly 1 percent, wiping out more than $130 billion in shareholder value in minutes. As the market plunged, quotes—offers to buy or sell—surged. But the vast majority of those offers were withdrawn before anyone could trade on them. Liquidity—a term that refers to the ease with which traders can buy or sell a financial product—dried up, suggesting that today’s highly liquid markets are in fact very fragile. Liquidity in the S&P 500 E-Mini, the most important stock futures contract, has “never dropped that quickly and that far that fast—ever,” says Eric Hunsader, who runs NANEX, a firm that provides software and services to high-speed traders. “The faster that we let trading go, the faster liquidity will disappear,” he adds. For ordinary traders, the sheer speed with which high-speed traders pulled out of the market in the wake of the phony AP tweet suggests that “the investor is a spectator not a participant.” He continues, “There is no way [the average investor is] going to be able to get in and take advantage of something like this. The prices you see on CNBC might as well be a newspaper at the end of the day.” Dave Lauer, a critic of high-frequency trading who used to write trading software, says he’s not sure it was a bad thing that the market fell so far so fast. “For all intents and purposes for a few minutes people thought a bomb went off at the White House,” he says. “I [understand] the complaint that [high-speed trading] provides liquidity in good times and it’s not there in times of stress, but I think this is kind of a red herring.” Within about five minutes—after it became clear that the AP tweet was fake, the Twitter account was suspended, AP journalists tweeted that the tweet was false, and a group of Syrian activists claimed responsibility—the market recovered its losses. But the incident suggests that someone with the ability to hack high-profile Twitter accounts could wreak havoc on US and world financial markets, and make a lot of money doing so. If you knew that a hacked tweet was about to panic the markets, you could short the market for that period of time, or buy low when stocks hit bottom, knowing they’d recover when the news proved to be false. In fact, the fake tweet made regulators suspicious that something like that might have happened: The Commodity Futures Trading Commission is investigating trading in 28 futures contracts during the tweet crash to make sure everything was above-board and no one had inside information. The Federal Bureau of Investigation and the Securities and Exchange Commission are also probing the incident. Although Lauer doesn’t think the tweet crash points to problems with the markets themselves, he does worry that the SEC doesn’t have the tools necessary to quickly figure out what exactly happened. “This is something they should be on top of right away,” he says. “I don’t think they have that capacity right now.” (More on that here and in the magazine piece.(SEE VISIT SITE) If the AP tweet had been real, the markets may not have been able to handle the strain, Hunsader counters. “If that was a real news event, the market would have been off. It would have been flash crash two,” he says, referring to the May 2010 crash that caused around $1 trillion in shareholder value to evaporate in minutes before the market recovered. “It would have been right down, straight down. We would have been in serious trouble system-wide.” Minutes are like hours or even days in the world of high-speed trading, and in the five minutes of the tweet crash, NANEX’s computers tracked trades that had been delayed by four minutes because of unexpected market activity. If the tweet crash had gone on much longer, stub quotes—placeholder orders at outrageously low or high prices that firms never expect to execute—would have started being processed, just as they were during the flash crash, Hunsader says. “We need certain rules of the road for technology, and that’s particularly true with the advent of social media,” Bart Chilton, a CFTC commissioner, told CNBC Wednesday. Chilton, like many of the people quoted in my story, is concerned that high-speed trading firms aren’t required to have a “kill switch” they can flip if a trading program goes rogue—and there’s no such fail-safe at the market or regulatory level either. This sort of light-speed market crash has happened before. It will happen again. The only question is how bad the next one will be. ***** By: Nick Baumann | News Editor | Mother Jones magazine | Continue reading
Angela Patkas shares her experience with Market First
Angela Patkas is a Project Manager and currently working in the public sector. She’s learnt how to maximise super and use it to invest in property through Ma… Continue reading
