1/26/2015

Finance industry – of ethics and trust

I once wrote to a CEO of a bank when he spoke about ethics and trust in the industry. He didn’t like what I told him. He was embarrassed. But he did put something right after my tea session with him.

Timothy Massad, Chairman of the US Commodity Futures Trading Commission and Ravi Menon, MD of MAS, spoke in the same seminar attended by the Who’s Who of the Singapore finance industry. The main points both spoke off are ethics and trust in the finance industry. The very same issues that the CEO I spoke to was lamenting about. I am feeling funny when people in a position to do things right and in their watches could be talking about the flaws of the system as if they are helpless about them. What are they going to do about it is my question. The problem in many cases is that they know even know why. When they know what is the cause or source of the problem, then half of the problems is already solved. What a great puzzle for someone saying he knew the problem but cannot solve it or did not know how to solve it or not doing anything about it.

These are what Ravi Menon said, ‘there are deeper issues of trust, ethics and culture in the financial industry that have to be confronted,…Finance is at risk of becoming more “de personalised”, as long term relationships with customers are replaced by transcient transactions with “counterparts”…departures from ethicalconduct are too easily tolerated as the norm….’ Menon said a lot more and concluded by saying ‘Reform of the financial industry will not be complete until this issue of trust and ethics is addressed,…Without sound ethics, there can be no trust. Without trust, there can be no confidence. And without confidence, there can be neither growth nor stability.’

Timothy Massad was smarter. He put the blame on the Asian countries for allowing the allowing the financial industry to sink to the bottom. It was not the Americans or the western govts’ fault. The Asians govts must build a strong regulatory framework for derivatives, must agree on a set of reforms to regulate derivatives. He totally forgot about the American quest for deregulations to allow the financial thugs to do as they pleased that led to the global meltdown. But regulations are a big farce when the rot is in the core, in the system. Derivatives are fraudulent financial instruments that are waiting to blow up in the faces of the regulators and the govts. The govts and regulators cannot allow people to simply write money out of nothing, and derivatives are just that, selling pieces of papers as ‘promissory notes’ or gambling chits. There is no point in having all the regulations when the thugs are allowed to write their own rules and how the games are to be played.

Look at the system of the stock markets and how HFT, algos and computers are allowed to operate in the system with unfair advantage over the innocent investors. Can they see anything wrong with them? Or are they turning a blind eye to the crooks and allowed them to do as they pleased, with no regulations but trying to throw the books at the innocent investors and small time speculators? Why no one is seeing the elephant in the class room? They are not duds or idiots for sure.

China is offering Shanghai Exchange as an alternative to the flawed and heavily manipulated American and western modelled stock markets. No HFT and algos to take advantage of the super computers to manipulate the system to rip off innocent investors. The Chinese regulators have been studying the American model and have seen all the faults and would not want to join the farce. The Western players are forcing HongKong to adopt the so called ‘international standards and flawed western model’ to allow them to manipulate the market at will, with no regulations or regulations to their advantage. China would not allow HKSE to go the NYSE or Singapore way.

What is going on? Does anyone know what is going on? Perhaps they knew but looking the other way, pretending that everything is fine. The truth is in the sorry state of the stock market, an industry that is dying. What further proof is needed? Waiting for mortis rigour?

What ethics and trust are they talking about? Everyone is clapping and saying the stock market is doing fine, doing very well, exceptionally well, as planned. Really? When are they going to remove the blinkers?

21 comments:

Anonymous said...

"What a great puzzle for someone saying he knew the problem but cannot solve it or did not know how to solve it or not doing anything about it."
RB

Aiya, it's no puzzle lah, let alone a great one.

Because it is in their interests and benefit that it is not solved mah. This one how to say, u tell me lah?

It's not like Kee Chiu can say anything he wants about Aung Juan Soon Chee and Kee Chiu and PAP can still win in the GE, u know.

patriot said...

It should be back to basic, if the World is to be any semblance of orderliness and propriety.

For a remisier who deals almost solely on paper trades, me am surprised that Redbean expects good and perfect conduct in the Financial Industry.

If I may draw an analogy, it is like irresponsible parents producing lots of children and then expect all of them to be prim and proper without teaching them. And them(parents) being irresponsible to begin with.

All paper trades are fraught with latent felony for those in the Financial Industry are prone to frauds, especially the Crooks at the Top.

patriot.

Chua Chin Leng aka redbean said...

Hi Patriot, you can expect the players to be crooks or manipulators. Every player would try to take advantage of the system. But you cannot expect crooks and manipulators to be protected by the law and system.

I am referring to the American market.

patriot said...

All paper trades shall have potential, latent frauds.

In most countries, the Political Leaders are invariably in cahoot with the Honchos in any businesses.

To expect regimes to be prim and proper is like expecting a perfect World which does not exist.

Maybe, I should refer Chin Leng to the Response me got from Matilah Singapura.
MS says if You cant win them; join them. In his case, MS actually advocated exploiting the loopholes and weaknesses, rather than joining the Crooks.

I think his(MS) idea is pragmatic and he admits so.

I say if the Shit cannot be properly disposed, add more shits and enjoy the Mess. There is ALWAYS AN END THAT SHALL COME NATURALLY CALL DESTINY.

patriot

KSIS said...

Apart from ethical issues, the big fat remunerations for CEOs should go as well. A person, no matter how able or talented, is not greater than the whole. Egregious remunerations can only demoralize the rank and file.

Anonymous said...

Egregious remunerations can only demoralize the rank and file.
KSIS 11:11 am

Demoralise? So? But in Sinkieland what can the rank and file do, other than kpkb?

Chua Chin Leng aka redbean said...

Hi KSIS, Welcome to the blog. You are spot on. The ridiculous pay to CEOs in millions is simply rubbish. No one is so clever or important to be paid that kind of silly money. Anyone being paid in millions as a salary needs to questioned. That is why there is a need to keep taxing the people with the millions and millions they are paying to themselves.

To Patriot, it is so easy to say than done. Not every monkey can join the gang.

Anonymous said...

Anyone being paid in millions as a salary needs to questioned.
RB 12:05 pm

Sure, but after questioned, what next?

Anonymous said...

Not every monkey can join the gang.
RB 12:05 pm

Need not join, but as MS advocated, exploiting the loopholes and weaknesses, rather than joining the Crooks.

And that's what smart Sinkies do in order to make money in Sinkieland, instead of fighting PAP like Aung Juan Soon Chee and the late JBJ did.

Matilah_Singapura said...

@ RB:

Yes these kinds of confrontational conversations are very important. The "Singapore Brand" in the global financial world is at present highly regarded---that's another feather in the cap for The Benign Dictatorship. (from now on abbreviated to TBD).

Switzerland has around USD 3 trillion in managed assets. Singapore: 1.3 trillion, and growing at a rapid pace....especially from Asia's wealthy who are seeking higher returns and are not afraid to be a little "riskier" in their positions.

That being said, ethics and trust become really important issues....dun pray pray...the glorious Singapore Brand can vanish if there's even a hint of malfeasance by the people in-charge.

@ patriot: On practicality and pragmatism:

Still have to keep it legal bro'. Breaking the law has consequences which will screw up your intent of "being practical", and in Singapore you just don't ever want to be caught flouting laws---especially the ones which will screw up the good global name of The Singapore Brand.

If you fuck with the Singapore Brand, you better get away quick, because if TBD catches you, they will most likely cut your balls off. "Mercy" is not what TBD is famous for :-)

The main reason Singapore rocks and is one of the best places in the world is because Singapore is RICH. However, when there's so much wealth around, some people get "funny ideas" on how they can help themselves to chunks of the bounty by cheating, stealing and defrauding. This is where the govt must step in to hammer these criminal fuckers to oblivion.

I dun think you are going to get rid of CEO's being paid gazillions. When CEO's receive that kind of large compensation, our dear PAP will always have SOLID REASONS to pay their own "executives" similar amounts. IMO, I don't worry about it. Everyone "over values" themselves. If they can legally get paid more, they will. Human nature lah, just relac lah brudder. Don't be too quick to judge---if we were in the position, we'd be acting similarly. ;-)

Matilah_Singapura said...

@1244:

Singaporeans, by their very nature are kiasu-kiasi and as a result are EXCELLENT at exploiting loopholes.

Why do you think the govt introduced the 1/2 tank rule for Singapore fuckers going across the causeway?

In a short time, the govt realised that people were still exploiting the situation, so since then it has been 3/4 tank rule. Fine:$100 Repeat offender: $500. If you tamper with fuel gauge: $500....and people have been caught by ICA.

Back to my point about playing by the laws lah. Don't be silly---in Singapore the govt is made up of people from the people---they know how Singaporeans think and act!

Matilah_Singapura said...

Another famous generic case of epic-fail exploitation: Illegal and contraband cigarettes.

So many young fuckers have been caught at the causeway/ check points with cigarettes they buy in JB/ Batam etc. Please lah, the ICA sees young punks, they will almost certainly stop and search them for underaged smoking.

Contraband cigarettes---unpaid duty. Fine is $500 per packet! No pan chan. You can even get caught in Singapore itself by "cheng hu" from ICA, Police, HSA and occasionally some asshole citizen who will pechah your lobang.

Electronic cigarettes are banned here. Yet some people will still try to smuggle them in. Hey cheebye, wake up lah...all bags are x-rayed at ICA check points. Cars are randomly searched. What the fuck are you thinking?!?

Not worth it lah.

Chua Chin Leng aka redbean said...

When the Singapore Brand was Singapore Brand with our standard of governance and right versus wrong, it was untouchable.

Today's Singapore Brand has been corrupted by the American and Foreign Brand of making quick and easy money. It is rotten at the core but still looking good from the outside. When the American system collapses, we will be the collateral damages. The collapse of the derivative market will bring down some of our banks. The saving grace is that not all the rules have been compromised or eroded. That may leave us with some leftovers.

I repeat, the western model of financial system is built like a ponzi scheme cum gambling with deregulation or little regulation. It must collapse.

Anonymous said...

Dear Redbean, when you have FED and other major central banks printing money like crazy, at zero interest rates; banks & traders & funds are hugely incentivized to take advantage of free money and get big rewards. The root is "free money" for big boys...started with Greenspan then Bernanke then Yellen. Its a drug....just cannot get it off because withdrawal will be too painful.

Anonymous said...

Just like the definition of poverty in Singapore.
We must be careful about how we define unethical practices in the Finance Industry.
Otherwise, there will be a Chan Chun Sing type "cliff effect".
True or not?


"If we use a single poverty line to assess the family, we also risk a 'cliff effect', where those below the poverty line receive all forms of assistance, while other genuinely needy citizens outside the poverty line are excluded. "
Chan Chun Sing

Anonymous said...

"I am feeling funny when people in a position to do things right and in their watches could be talking about the flaws of the system as if they are helpless about them. What are they going to do about it is my question."
redbean

You know what redbean?
I get the same feeling when I listen to PAP Ministers talk.
I had the same feeling also when I watch PM Lee answer the questions in his Facebook online chat with citizens on 23rd January.

Matilah_Singapura said...

@ RB:

Every calamity has 2 sides: one of disaster, one of windfall profits.

So when you talk about 'collapse", there is also the other side who gets all the money transferred to them.

And post-calamity there might be seriously under priced "distressed assets" to be had ;-)

Also, fuck the banks lah. I love it when they collapse!

Matilah_Singapura said...

BTW every system has flaws. My take on this is to discover these flaws and exploit them...legally.

Derivatives are to be created and sold. i.e. create the derivative out of debt, make sure you comply with the laws and regs, then sell the fuckers off and pocket the money and run...to a place like Singapore where they will welcome you and your money with open arms, and carry your balls. ;-)

Most of the derivatives out there are TOXIC. This is not new news....people have known this for years already. So if there's money to be lost, it will be lost by those fuckers who neglected "caveat emptor".

Chua Chin Leng aka redbean said...

When it collapses, the PRC is working on two things, return to gold standard and RMB replacing greenbacks as the international currency. The greenbacks will become the banana currency of the past. Get rid of the greenbacks when you can.

Opportunity, yes, fire sale assets on the cheap. But make sure you have the right currency to buy them. If you are hoarding greenbacks, you can carry them around in basket full, but no one would want them.

Wait for the fall.

Matilah_Singapura said...

@ RB:

Yah, there's a lot of talk about this. However the USD is still king and until people can get their shit together instead of talking, the USD is still the reserve currency.

Sure, there are bi lateral currency trade agreements---e.g. direct RNB to whatever currency.

The USD is losing its dominance, but it is too early to tell. I reckon that in our lifetimes, the USD will still rule.

Collapse? Yeah, but not for a long time yet. Why? People just cannot accept the PAIN and SOCIAL COLLAPSE that will occur....so they just keep living the lie.

My take: exploit the lie as best you can. Dun care about the "philosophy". You wanna make money or not? :-)

b said...

When someone of elite class talking about ethics and trust, we have to take them with a pinch of salt. All they want is to make themselves richer and the rest of us (aka the exploited class whatever the race and religion) in debts.