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Off-site Liquidity Links, User Submitted

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Tue Nov 18

• Understanding liquidity risk and its role in the crisis | vox - Research-based policy analysis and commentary from leading economists: What is liquidity risk? There are two kinds of liquidity: market liquidity, and funding liquidity. * A security has good market liquidity if it is ?easy? to trade, that is, has a low bid-ask spread, small price impact, high resilience, easy search * A bank or investor has good funding liquidity if it has enough available funding from its own capital or from (collateralise d) loans With these notions in mind, the meaning of liquidity risk is clear. * Market liquidity risk is the risk that the market liquidity worsens when you need to trade. * Funding liquidity risk is the risk that a trader cannot fund his position and is forced to unwind. if banks cannot fund themselves, they cannot fund their clients. The two forms of liquidity are linked and can reinforce each other in liquidity spirals where poor funding leads to less trading, this reduces market liquidity, increasing margins and tightening risk management, thus further worsening funding, and so on.
• What key skills will hedge funds need for 2009: Get a free trial now to read Ali's views on how hedge funds can survive 2009
• Chi-X acquires exchange technology specialist Cicada: With aim of creating a new exchage services business unit - ChiX Global Technology
• BNY ConvergEx Group Announces New Global SOR for Europe: In response to growth of liquidty pools and multilateral trading facilities (MTFs) within Europe - but other players such as Quod Financial are already there with global offerings.
• Downward spirals | Free exchange | Economist.com

Mon Nov 17

• Russia's banal reality lies in between energy superpower and bankrupt state - Telegraph: The pace of capital flight quickened last week to $16bn after a botched mini-devaluati on by the central bank. Tinkering with currency bands is hazardous in a country where memories of the 1998 savings wipeout are still fresh. either bleed its oil industry to death, or slash spending and face street riots. The cost of insuring against Kremlin default tells us that somebody is worried. Credit default swaps (CDS) on Russia?s debt traded at 827 last week, higher than Hungary?s debt (605) before it secured an IMF rescue. Gazprom debt was off the charts at 1155. The Kremlin already faces a run on Russia?s banks as depositors rush to switch their roubles into dollars, despite the $200bn financial rescue package. Russia?s Globex bank suspended withdrawals by depositors on Wednesday. Kommersant newspaper reports that the deposit loss from rouble accounts reached 54pc at Sobinbank in October, 27pc at Globex, 25pc at Raiffeisenbank , 24pc at Unicredit, and 22pc at Alfa.
• Macro policy in a liquidity trap (wonkish) - Paul Krugman Blog - NYTimes.com

Sat Nov 15

• Macro policy in a liquidity trap (wonkish) - Paul Krugman Blog - NYTimes.com

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