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Robert Schuessler
Traders Magazine Online News

A Smarter Monkey

In this contributed piece, TIM noted that some traders do better than others when using data that has been run through certain analysis - that is, have used some form of machine learning to assist them.

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In his first public speech, SEC Chair Jay Clayton deviated from his prepared remarks and offered his own "off the cuff" comments on market issues. Do you like this change of pace?




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November 8, 2005

UBS Backs Off Pre-Hedging

By Editorial Staff

The pre-hedging controversy surrounding guaranteed VWAP bids prompted UBS to send a letter to its clients that discloses its trading practices.

The full-disclosure letter says that UBS does not use the risk reducing tactic. In fact, UBS promised never to use pre-hedging techniques.

The pre-hedging controversy surrounding guaranteed VWAP bids prompted UBS to send a letter to its clients that discloses its trading practices.

The full-disclosure letter says that UBS does not use the risk reducing tactic. In fact, UBS promised never to use pre-hedging techniques.

"We will never use knowledge of portfolio orders to position our trading books in anticipation of an impending trade whether or not the order is ultimately awarded to UBS," the investment bank wrote in a letter to clients

Bulge-bracket desks are revising their guaranteed price/pre-hedging practices. Deutsche Bank last year sent a letter to clients stating that employees with knowledge of the contents of a client's account will not deal in the securities from the time the order is placed to the time the portfolio changes, unless the client agrees to this.

These moves follow actions by the United Kingdom's Financial Services Authority earlier this year. It fined Morgan Grenfell, Deutsche Bank's brokerage subsidiary, for failing to inform a client that it was engaging in pre-hedging.

This has been happening sometimes, regulators say, when program trades are executed without providing details to the money management client.