Casino Banks given unlimited protection by Bank of England

1. Derek Louden
Abbian House
Tower Street
Tain
Ross-shire
IV19 1DY
Tel: 01862 892734
Mob: 07876 774412
Email:
LoudenDW@aol.com
Dear Sirs, 09 Sept 2014
Unlimited Credit for Casino Banks – Who voted for that?
In June at the Lord Mayor’s Banquet for Bankers and Merchants of the City of London at the
Mansion House, London the Governor of the Bank of England, Mark Carney, a former
employee of merchant bank Goldman Sachs extended the right to borrow from the Bank of
England in a time of crisis to the so-called "Shadow Banks" who are the market makers.
He said:
"Just as there will be times when central banks must backstop the banking system, there are
also times when they should backstop core markets in a way that supports their contribution
to the real economy but doesn’t encourage excessive risk taking.
That need was behind the recent transformation of the Bank of England’s sterling market
framework for banks, and it is why I can announce that, in the coming year, the Bank will
widen access to our facilities to include the largest broker-dealers regulated in the UK and to
those central counterparties authorised to operate in UK markets. We will also look into
whether we should further develop our capacity to lend in currencies other than sterling."
These changes mean that the Bank of England will be on the hook for losses incurred by
central counterparties and market makers when we hit a time of crisis.
What risk have we taken on and who are these "shadow banks"?
The risk was quantified in an article in the Financial Times which ran a series of articles on
shadow banking in June this year:
http://www.ft.com/indepth/shadow-banking

2. In this editor Patrick Jenkins and Sam Fleming wrote that the Financial Stability Board stated
that shadow banking had grown from global assets of $26.1Tn in 2002 to $71.2Tn in 2012.
(Financial Times, 17th June 2014)
That's the risk we're extending credit to cover our share of in a crisis.
Hands up who knew that?
The following is taken from the FSB annual review Nov 2013:
http://www.financialstabilityboard.org/publications/r_131114.htm
My second question was who are these "shadow banks"? This proved impossible to
determine. There is no sign of a list on the Bank of England's website or on that of HM
Treasury. I've attempted to list the firms I think are covered and have uploaded this to
SlideShare. I've no idea if it is accurate but hopefully it will be corrected if it isn't.
If Mr Carney gets this wrong and the banks prove unreliable then the UK will be bankrupt.
I'm not sure the UK parliament approved this. I think this was concocted in the City and
pushed through without reference to any democratic institution. George Osborne didn’t
correct Mark Carney’s statement which must then have met with his agreement. Is this
another example of why we're "Better Together"?
The Central Counterparties are (I think):
1) European Central Counterparty Limited - acts as a central clearing house for equities,
ETFs, Currency ETCs and Depositary Receipts. The trading company has made losses every
year since 2008 & consequently has paid no tax in the UK. It has a positive cash flow since
additional share capital is issued each year to cover the losses. It appears to make gross
profits as it has a positive working capital position but ends up making losses once its parent
company takes management fees and intellectual property charges. It is not clear if the

3. business is continuing to trade in the UK or if it has moved its operations to Holland where
a new company has been incorporated.
2) CME Clearing Europe Limited - deals with Over the Counter (OTC) commodity
derivatives and interest rate swaps. The trading company has made losses in the last two
years reported & consequently has paid no tax in the UK. It has a positive cash flow since
additional share capital is issued each year to cover the losses. It appears to make gross
profits as it has a positive working capital position but ends up making losses once its parent
company takes management fees and intellectual property charges from, as might be
suspected, an offshore tax haven (Luxemburg).
3) ICE Clear Europe Limited - deal with energy and commodity contracts and European
credit Default Swap transactions. The trading company has made profits in each of the last
five years reported & has paid significant amounts of corporation tax in the UK. It has a
positive cash flow. It has c £15Bn in Current Assets and in Current Liabilities and although
the cash pile has climbed in recent years any market collapse would rapidly deplete this.
Profits in large part are paid out to shareholders in the year in which they are earned. The
Bank of England would take a proper bath if something like this went under.
4) LCH Clearnet Limited - deals with Interest Rate Swaps, repos, equities and commodities.
The trading company has made profits in each of the last five years reported & has paid
significant amounts of corporation tax in the UK. It has a positive cash flow. It has c £370Bn
in Current Assets and c £365Bn in Current Liabilities and their cash pile has climbed in
recent years.
5) LIFFE Administration and Management Ltd - deals with Exchange
Traded interest rate products, equities, index and commodity derivatives but trades via ICE
Clear Europe Limited. This business is profitable and pays its taxes.
The larger Broker/Dealers that Mr Carney is proposing to insure are:
Gilt Market
Market Makers and Inter Dealer Brokers
This page provides the names, postal addresses and website addresses for the Gilt-edged
Market Makers (GEMMs) and Inter Dealer Brokers (IDBs). A Gilt-edged Market Maker is a
primary dealer in gilts and actively trades in either conventional gilts, index-linked gilts or
both. Inter Dealer Brokers act as intermediaries for anonymous trading between market
makers.
Gilt-edged Market Makers
Conventional and Index-linked Market Makers
Barclays Bank plc†
5 The North Colonnade
Canary Wharf
London
E14 4BB

4. www.barclays.com
BNP Paribas (London Branch)
10 Harewood Avenue
London
NW1 6AA
www.bnpparibas.com
Citigroup Global Markets Limited
Citigroup Centre
33 Canada Square
London
E14 5LB
www.citigroup.com
Credit Suisse Securities
One Cabot Square
London
E14 4QJ
www.credit-suisse.com
Deutsche Bank AG (London Branch)
Winchester House
1 Great Winchester Street
London
EC2N 2DB
https://gm-secure.db.com
Goldman Sachs International Bank
Peterborough Court
133 Fleet Street
London
EC4A 2BB
www.gs.com
HSBC Bank PLC†
8 Canada Square
London
E14 5HQ
www.hsbcgroup.com
Jefferies International Limited*
Vintners Place
68 Upper Thames Street
London
EC4V 3BJ
www.jefferies.com

5. JP Morgan Securities PLC
25 Bank Street
Canary Wharf
London
E14 5JP
www.jpmorgan.com
Lloyds Bank plc
25 Gresham Street
London
EC2V 7AE
www.lloydsbankcommercial.com
Merrill Lynch International
Financial Centre
2 King Edward Street
London
EC1A 1HQ
www.baml.com
Morgan Stanley & Co. International plc
20 Cabot Square
Canary Wharf
London
E14 4QW
www.morganstanley.com
Nomura International plc
One Angel Lane
London
EC4R 3AB
www.nomura.com
Royal Bank of Canada Europe Limited
Thames Court
One Queenhithe
London
EC4V 4DE
www.rbccm.com
Royal Bank of Scotland†
135 Bishopsgate
London
EC2M 3UR
www.rbsmarkets.com
Santander Global Banking & Markets UK
2 Triton Square
Regent's Place

6. London
NW1 3AN
www.santandergbm.com
Scotiabank Europe plc
201 Bishopsgate
London
EC2M 3NS
gbm.scotiabank.com
Societe Generale Corporate & Investment Banking
SG House
41 Tower Hill
London
EC3N 4SG
www.sgcib.com
The Toronto-Dominion Bank (London Branch)*
60 Threadneedle Street
London
EC2R 8AP
www.td.com
UBS Limited
1 Finsbury Avenue
London
EC2M 2PP
www.ubs.com/investmentbank/
Winterflood Securities Limited†*
The Atrium Building
Cannon Bridge
25 Dowgate Hill
London
EC4R 2GA
www.wins.co.uk
† Strips Market Participant
* Retail GEMM
Inter Dealer Brokers
BGC Brokers L.P.
One Churchill Place
Canary Wharf
London
E14 5RD
www.bgcpartners.com

7. BrokerTec Europe Limited
2 Broadgate
London
EC2M 7UR
www.icap.com
Dowgate
6th Floor
Candlewick House
120 Cannon Street
London
EC4N 6AS
www.ksbb.com
GFI Securities Limited
1 Snowden Street
London
EC2A 2DQ
www.gfigroup.com
ICAP WCLK Limited
2 Broadgate
London
EC2M 7UR
www.icap.com
Tullett Prebon Gilts
155 Bishopsgate
London
EC2N 3DA
www.tullettprebon.com
1. The role of Gilt-edged Market Makers and Inter Dealer Brokers is described in the DMO
publication "A guide to the roles of the DMO and Primary Dealers in the UK government
bond market".
2. The DMO is not responsible for the content of external websites linked to or referenced
from the DMO server. The DMO neither endorses the information, content, presentation, or
accuracy of such websites, nor makes any warranty, express or implied, regarding these
external websites.
http://www.dmo.gov.uk/index.aspx?page=Gilts/Gemms_Idb
For Commodity Broker Dealers, the following list is attached:
 Abacus Trading Co Ltd
1138 High Road
London United Kingdom
 Amalgamated Metal Corporation Plc
55 Bishopsgate
London United Kingdom
 Amalgamated Metal Trading Ltd

8. 55 Bishopsgate
London United Kingdom
 Amt Futures Ltd
55 Bishopsgate
London United Kingdom
 Armajaro Coffee Ltd
16 Charles Street
London United Kingdom
 Armajaro Securities Ltd
16 Charles Street
London United Kingdom
 Arzak Global Securities Limited
32 Athol St
Isle Of Man United Kingdom
 Bache Commodities Ltd
9 Devonshire Sq
London United Kingdom
 Benn Commodities Ltd
Eastfield House, North End Lane
Orpington United Kingdom
 Bimax Plc
11 Hollycroft Avenue
London United Kingdom
 Bnp Paribas Commodity Futures Ltd
10 Harewood Avenue
London United Kingdom
 Brandler (U K ) Ltd
20 Grove Place
Bedford, BEDS United Kingdom
 Britannic Trading Ltd
1 Broad Gate
London United Kingdom
 Bycen Ltd
7 Torkington Rd
Cheadle United Kingdom
 Cantaloupe (London) Ltd
Flat 21 King Regent Place
London United Kingdom
 Capita Financial Group Ltd
2 The Boulevard
Leeds United Kingdom
 Capital Assets
13 Great King Street
Edinburgh United Kingdom
 Cargill Finance Ltd
Knowle Hill Park
Cobham United Kingdom
 Caters Choice
Parkdale House
Huddersfield United Kingdom
 Cenkos Channel Islands Limited
Hirzel Court
Guernsey United Kingdom
 Coach Broker
Coptic House 4-5
Cardiff, S GLAM United Kingdom

9.  Commodity Universal Ltd
Cambridge Court
London United Kingdom
 Compliance & Derivatives Consultancy Ltd
High Westgarth
Richmond United Kingdom
 Consolidated Tin Smelters,Ltd
55 Bishopsgate
London United Kingdom
 C R S
Framley Cottage
Shrewsbury United Kingdom
 C S Commodity Solutions Ltd
Renshaw Barns
Salisbury, WILTS United Kingdom
 Dalehead Trustees Ltd
Ebenezer
St Austell United Kingdom
 Donaldson, Lufkin & Jenrette International
One Cabot Sq
London United Kingdom
 Duggan, Jonathan
Po Box 167
Woodbridge United Kingdom
 Futter Commodity Brokers
26 Greengate
Dereham United Kingdom
 Glencore Energy Uk Ltd
50 Berkeley St
London United Kingdom
 Glencore Uk Ltd
50 Berkeley St
London United Kingdom
 Global Mortgage Services Ltd
7 Eddleston Avenue
Newcastle Upon Tyne United Kingdom
 Gold Buying Centre Halifax
34 Market Street
Halifax United Kingdom
 Goldenberg Hehmeyer & Co
50 Bank St, 3rd Floor
London United Kingdom
http://www.manta.com/world/Europe/United+Kingdom/commodity_contracts_brokers_and_dealers--
A10DD/
The Wholesale Market Brokers Association has the following members. Please click on a
link to access details about its member firms
 BGC Partners
 GFI Group Inc
 Gottex Brokers SA

10.  ICAP plc
 Martin Brokers (UK) Ltd
 Reuters Transaction Services Ltd
 Sterling International Brokers (a division of BGC Brokers LP)
 Sunrise Brokers LLP
 Tradition (UK) Ltd
 Tullett Prebon Ltd
 Vantage Capital Markets LLP
http://www.wmba.org.uk/pages/index.cfm?page_id=3&title=members_directory
As was stated at the outset, this is unlikely to be an accurate list. I’ll be happy to update and
amend it should participants demand their inclusion/exclusion from the lists. I would be
happy to remove it entirely should the Bank of England let us in on the secret of who they are
covering and, just as importantly, to what extent.
In the meantime since there is nothing we can do at Westminster to control our risk, I’m
going to pop on a B.B. King track, pray a bit, and hope against hope and experience that the
shadow banks won’t blow up the world again. Come on B.B., “let the good times roll”.
Oh, and in case you hadn’t picked up on it, I’m voting “Yes” next week to live in a
democracy run in the interests of its people, not in the interests of its bankers.