RWCG


Suzy Khimm Gets It On “Prop Trading”
February 20, 2012, 6:51 pm
Filed under: Uncategorized

On the Volcker Rule. She appears to be citing Craig Pirrong, who also seems worth a read:

The problem is, even if you agreed with Posner and Weyl in principle [to have a 'financial FDA' to 'vet' financial products], distinguishing between “hedging” and “speculation” is no easy task. That’s essentially what the Volcker Rule is trying to do, and it’s spawned a mind-bogglingly complex 300-page regulation.

Wow! Sounds familiar. In fact I distinctly recall a great blogger who wrote something along these very lines:

Where do you cross the line from an intelligent “macro hedge” into a “prop trade”?

For the life of me, I still do not know. Feel free to answer in comments!

UPDATE: Fixed Craig Pirrong’s name. Here is a relevant post; impossible to excerpt as too many points are right on the money so just RTWT.

About these ads

8 Comments so far
Leave a comment

It is mind boggling simple. The trade is only a “bad” trade (aka “prop” trade or whatever the fancy words are) if the trader ends up making an obscene amount of money off it. “Obscene” is defined by the regulator as, “I’ll know it when I see it.”

Comment by joshua

I think you’re giving regulators’ responsiveness and perceptiveness way too much credit…I doubt they even know it when they see it ;-)

Comment by Sonic Charmer

I find your lack of faith in perfectly competent all-knowedlgeable incorruptible regulators (aka “technocrats”) disturbing.

Comment by joshua

Hey, Charmer. Thanks for the mention, and the kind words. My only quibble is that there’s an “n” in my last name: Pirrong.

Comment by Craig Pirrong

Apologies – fixed.

Comment by Sonic Charmer

[...] my way of thinking) demolished by Craig Pirrong and quoted by Suzy Khimm back in Feb. As noted by yours truly (I knew there was a reason I remembered all [...]

Pingback by “Financial FDA”: Zombie Ideas And Old Media « Rhymes With Cars & Girls

[...] by Suzy Khimm Gets It On “Prop Trading” « Rhymes With Cars & Girls — February 20, 2012 @ 5:51 [...]

Pingback by Syria Calling : : वसुधैव कुटुंबकम

[...] worth a read: The problem is, even if you agreed with Posner and Weyl in principle [...]Pingback by Suzy Khimm Gets It On “Prop Trading” « Rhymes With Cars & Girls — February 20, 2012 @ 5:51 [...]

Pingback by Don’t Mess With Syria, Please « elcidharth




Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s



Follow

Get every new post delivered to your Inbox.

Join 452 other followers

%d bloggers like this: