Wednesday, September 14, 2016

Frontrun the Bank of England for Fun and Profit

Hey, it worked with the ECB.*
From FT Alphaville:

Confusion and the BoE’s corporate bond buying scheme
This is on the back of the Bank of England’s release of some more info on its Corporate Bond Purchase Scheme (CBPS) on the 12th. From that:
We will look to purchase, via the CBPS, a portfolio of up to £10bn of sterling investment grade bonds representative of issuance by firms making a material contribution to the UK economy, in order to impart broad economic stimulus. Our operations will be designed to purchase a balanced portfolio of bonds across eligible issuers and sectors, so that we purchase a representative portion of the market and do not influence the allocation of credit to particular companies or sectors of the economy. The private market will continue to decide which companies can issue in the primary market. Corporate bonds issued by firms we regulate – such as banks, building societies, and insurance companies – will not be eligible.
This notice outlines in more detail how we decide what constitutes a material contribution to the UK economy, and how our operations have been designed to ensure our purchases are representative across the eligible set of bonds. Operational details are included in the Market Notice.
Do read the full thing, the fact that “Apple, BMW and McDonalds debt could be scooped up”, and what Izzy already wrote on the “material contribution to the UK economy”....
...MORE, including the shopping list of eligible bonds.
*See links in "Now The ECB Is Buying Corporate Debt Directly From Companies" and "Which corporate bonds has the ECB been buying?"

Re: Mr. Keohane's headline, I couldn't help thinking of De la Vega's 1688 book Confusion of Confusions regarding the trading of Dutch East India Company stock.
The analysis in The Confusion of Confusions :  Between Speculation and Eschatology is a good introduction.

As another review puts it:
...He shows us all the tricks of the trade such as front-running large orders and spoofing the market with fake news to achieve a more favorable trading price.
And then there is this from AFNS via 2012's "The World's First Stock Exchange (and first bear raid, first dividend, first equity derivatives...)":
(VOC) $64.98 (+$13.84) (+27.1%) Shares in the spice purveyor soared on word that the three sturdy galleons dispatched two years afore had been sighted off the coast of Cape Verde, returning from their dangerous voyage to the exotic Orient with their casks brimful of redolent cinnamon, cardamom, and mysteriously intoxicating curried powder.
Okay, that's actually America's Finest News Source.