CitiGroup Hired As Puerto Rico’s Broker-Dealer


Puerto Rico has hired CitiGroup as a broker-dealer as the island seeks to restructure its debt, an industry source said on Wednesday.

The bank will host a meeting with creditors in New York on Monday, Melba Acosta, head of the island’s Government Development Bank, said. That will be the first meeting with creditors since Governor Alejandro Garcia Padilla said a week ago that he wants to restructure its $72 billion debt.

The gathering will focus on a report released last week by three former International Monetary Fund officials that said Puerto Rico is in a dire position because of high debt, unstable finances and a stagnant economy. Governor Alejandro Garcia Padilla on June 29 said he would seek to delay some debt payments for “a number of years.”

His administration has yet to say which securities would be affected or how such a restructuring would work. Some bonds are protected by the commonwealth’s constitution or backed by revenue such as sales-tax collections. Garcia Padilla said the government would draw up a proposed restructuring plan by the end of August.
The meeting comes after the Puerto Rico Electric Power Authority paid all principal and interest due to bondholders last week, buying the publicly owned utility time as it works to reach a deal with creditors. The authority, known as Prepa, said it had agreed with creditors, which include bondholders, banks and bond insurers, to extend restructuring talks to September.

A bondholders’ group said in a news release that they would continue to work with Prepa to reach a long-term plan. In addition to negotiations about Prepa’s $9 billion in debt, the talks involve plans to modernize the utility’s operations.

Investors and analysts had feared a default by Prepa could be the first of many from the commonwealth. Now, there’s hope among some investors that the utility will work out an agreement that could be a model for restructuring other Puerto Rico agencies.

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Broker-Dealers and Bankers Bolster Use of Uber In Pre-IPO Lobbying

The current over-bubbly Silicon Valley “Unicorn” wave, which advances the notion of ‘stay private’ and eliminates the need to take a company public when there is an over-abundance of private equity cash available to prop up the so-called enterprise value, has led to a dearth of IPO deals and by extension, has crimped the wallets of brokerdealers and investment bankers who garnish big fees and commissions from the initial public offering process. Have no fear, to win over ride-sharing whale Uber in advance of their ultimate IPO, Bankers are pulling out the stops.

Wall Street bankers and broker-dealers are notorious for climbing over walls to win over whales in advance of the ultimate monetization event. In the case of Uber, the biggest Unicorn of them all, with a private market valuation of more than $50billion, JP Morgan, Goldman Sachs and other major investment banks have launched a pre-IPO lobbying campaign by banning the ubiquitous line-up of black car services esconsed outside  their palatial Wall Street homes, and instead, they are offering their brokers special compensation to embrace the use of Uber so as to win over the senior executives who will decide on this decade’s potentially biggest initial public offering mandate for investment bankers.

f7622be21d3caa14_rolls_eyes.xxxlargeIn a July 10  NYT story by Nathaniel Popper, which has been re-purposed by tens of dozens of media outlets, we give credit where credit is due and share the following excerpt from Popper’s column:

“..The latest reminder came this week when JPMorgan Chase announced that it would reimburse all of its employees for rides taken with Uber — offering access to “Uber’s expanding presence and seamless experience,” the company said in a news release.

JPMorgan made its decision long after other parts of corporate America were already hailing cars through the California start-up. But banks have recently shown a fondness for the service — with Goldman making the company part of its official travel policy in late May and Morgan Stanley putting out its own news release about its Uber use late last year.

Bank experts were quick to note that these moves come as the banks are jockeying to win a coveted spot managing Uber’s initial public offering — one that is not yet scheduled but that is assumed to be coming in the not-too-distant future. The I.P.O. for Uber, whose fund-raising so far has pegged its valuation at $50 billion, will most likely be the blockbuster I.P.O. in whatever year it takes place. provides a comprehensive global database of broker-dealers located in more than 30 countries across the free world.

A spokeswoman for JPMorgan said that the Uber news release this week had nothing to do with an I.P.O. and was instead part of the bank’s broader business relationship with the company. It does, though, fit squarely within a hallowed tradition of banks going to sometimes amusing lengths to secure a prized initial offering and the significant fees and reputational lift that it can provide.

“On the margin, sometimes the little incremental thing will make the difference,” said Lise Buyer, who advises start-ups looking at initial offerings. “Anything that a bank can do on the margin to improve their odds will probably be useful.”

The softer side of the sales pitch has taken on many forms over the years. When was going public, Ms. Buyer said that banks presented their pitch books to the company in the form of bound books, to celebrate Amazon’s book-selling roots. Other bankers have made humorous videos about the company they were proposing to bring to the stock market.

One of the most storied practitioners of the hard and soft sell of potential clients was the JPMorgan banker Jimmy Lee, who died unexpectedly last month.

Mr. Lee placed a G.M. car in the lobby of JPMorgan’s headquarters on Park Avenue when General Motors executives came in to consider whether to use the bank for the carmaker’s return to the public markets after the financial crisis. (JPMorgan participated.)

A few years later, Mr. Lee was in a custom-made Facebook hoodie — a sharp departure from his normal pinstripe suit — when Mark Zuckerberg visited JPMorgan before his company’s initial offering. (The bank took part in that one, too.)

These sorts of efforts have a well-grounded logic for the companies shopping for a bank. A banker taking a company public has to sell the shares of the company to investors — and thus needs to show an understanding of what the company does.

For the full story at the NY Times, click here

Cetera Financial Institutions To Provide Broker-Dealer Services


Cetera Financial Institutions, a firm within Cetera Financial Group, the retail advice platform of RCS Capital Corporation, that provides customized investment solutions to nearly 500 financial institutions nationwide, announced today that it will provide broker-dealer services and solutions to the wealth management programs of Valley National Bank, one of the largest commercial banks headquartered in New Jersey.

Cetera will white-label Broadridge Financial Solutions’ recently launched mobile app geared toward enabling easy access to client data from anywhere in the world.

On the platform, advisers will be able to view their clients’ portfolios and account information and work within the app from their smartphone or tablet. Broadridge Mobile also provides real-time market information.

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The app for the self-clearing broker-dealer division of Cetera Financial Group, which is RCS Capital Corp.’s retail investment advice platform, will include trading functionality for funds, equities and options as well, according to Broadridge. Other features include document sharing between advisers and clients, client searches and reporting, account inquiry, and book-of-business analysis.

The app is very new itself, having only come onto the market a few weeks ago. The next step for the company’s mobile app is creating an investor-centric mobile experience, where clients and advisers can communicate in a collaborative environment, as well as integrating more components of the platform with other software, based on brokerages’ suggestions.

To read the full report from MarketWatch, click here.

India To Curb HFT and Algo Trading to Check Spoofing


India is considering placing restrictions on HFT (high-frequency trading and algorithmic schemes to help check manipulation by traders.

The Securities and Exchange Board of India, the nation’s market regulator, is examining a lock-in proposal that prevents traders from canceling an algo order for a given period of time, the people said, asking not to be identified as they aren’t authorized to speak on the subject. Sebi is evaluating proposals to better manage algo trading, Chairman U.K. Sinha said Tuesday, without elaborating.

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Regulators around the world are probing high-frequency trading structures after a series of mishaps and an illegal practice known as “spoofing” convulsed financial markets. In India, the CNX Nifty suddenly fell 2 percent on May 6 amid speculation algo trades sparked a sell-off, triggering closer scrutiny. The rising share of algo orders poses “systemic risks,” the Reserve Bank of India said last month.

High frequency orders worsened the so-called flash crash of May 2010, briefly wiping $862 billion from American equities, when Navinder Singh Sarao helped send the Dow Jones Industrial Average on a wild 1,000-point slide, according to U.S. authorities.

According to SEBI, the share of algo orders in total orders and the share of cancelled algo orders in the total number of cancelled orders was around 90 per cent. It also observed that volumes in algo trading and high-frequency trading increased substantially in the cash segment of the equity market to about 40 per cent of total trades in both the exchanges in March 2015.

China Freezes IPO Market In Effort To Stem Sell-Off

china ipo window closed special news update: In an effort to stem the recent plunge in prices of stocks listed on Chinese stock markets, this weekend the Shanghai and Shenzhen stock exchanges issued notices suspending initial public offerings (I.P.O.s) until further notice.

The government-controlled Securities Association of China has instructed brokerdealers from 21 of the major brokerage firms to set up a nearly US$20bil fund (120 billion renminbi) that will be used to support stock prices by buying shares in China’s largest and most stable companies.

Separately on Saturday, 25 Chinese mutual funds claimed they would also put more money into shares. Although fund managers did not reveal the exact amount, they noted that they would be investing their own funds.

Saturday’s halt to IPOs could freeze large amounts of cash and dry up liquidity in the market, thus contributing to its stabilization, as large IPOs have been named one of the main factors triggering the current decline. provides a global database of broker-dealers operating in more than 3 dozen countries, including brokerage firms based in Hong Kong.

The government has already taken a number of measures over the past week, including cutting interest rates, relaxing margin-lending rules, and adding bank liquidity, so far without any success in reassuring investors.

The Asset Management Association of China pledged to halt additional stock investments for at least a year, and later to accelerate the issuance of share funds after the freeze.

The IPO freeze will last until the Shanghai composite index reaches 4,500 points, Reuters reports. On Friday, the index fell by 5.8%, ending at 3,684 points.

Saturday’s halt to IPOs could freeze large amounts of cash and dry up liquidity in the market, thus contributing to its stabilization, as large IPOs have been named one of the main factors triggering the current decline.