Posted: Sun Mar 05, 2006 11:45 am Post subject: Re: The Proposed Iranian Oil Bourse
Euric wrote:
airstrip1 wrote:
MrBill wrote:
Who is the legal entity? What is their capacity? Where will they trade? How will they trade? Nothing.
I get 81 hits on the topic on Google news alone and they are not all wacko conspiracy sites so I assume that the IOB must be a bit more than a complete fantasy. However, I do agree that there appears to be very little hard detail about how it is going to operate. Whether the existence of such an institution is likely to have as big an impact on the dollar trading system as some claim is another matter. Unless other producers start using it to sell their oil its impact is going to be limited particularly in the short term.
It is only a fantasy to those who would lose the most by its existence. The fact that the Iranians can set their own operating rules for their own product irks those who are on the outside and can't get in.
Go back to late 1998 and again to late 2001. The American economists from New York were all predicting the demise of the euro based on a bunch of flimsy excuses. So far, none have come to pass. The euro has proven itself.
Now those same fools are trying to say the Iranian oil bourse is a fantasy simply because Iran refuses to follow their rules (thus profiting them) or the way the old school thinks it should operate. The old school was wrong in 1999 and 2001 and they are wrong again in 2006.
Of course, you cannot provide us with any of these eurosceptics articles and arguments? Or that many banks positioned themselves correctly for what was called euro-convergence trades? _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Posted: Sun Mar 05, 2006 11:53 am Post subject: Re: The Proposed Iranian Oil Bourse
MrBill wrote:
In otherwords, you live in a fantasy world and have no idea how physical oil trades? Of course, we know who the clearing members of the IPE and the NYMEX are. Exchanges do not operate in secrecy. They operate based on a set of rules that everyone agrees to. Also, most physcial trades do not clear through the IPE or NYMEX, the contract price is only based on the futures price. Oil going from Dubai to Japan does not get delivered to the IPE or NYMEX first. You obviously have no idea how any of these work in the real world? An absolute idiot. Yes, the IOB will be operating secretly after March 20th and none of us will know about it. How convenient for the armchair conspirists.
My world seems to be more real then yours. Where is it written in stone that things have to be your way? Where is it written that Iran can't be different and go against the grain? It is a fantasy to you because you have much to lose by a bourse that by-passes NYMEX and IPE and threatens your livelihood. Confess the truth and it will set you free.
You seem to lack a basic comprehension in understanding what others have written, mainly because you are filled with fear over that the IOB will do to you. No one is saying, myself included, that oil ships leave the oil ports got first to New york or London and then on to their final destination, or that these two bourses stockpile oil and sell it from there.
It's a bourse, they just handle the money.
The IOB will only be secret to those who aren't members, like yourself. Just like Swiss Bank accounts. It won't be your business to know. Get over it!
Joined: Oct 15, 2004 Posts: 2197 Location: Arkansas
Posted: Sun Mar 05, 2006 12:00 pm Post subject: Re: The Proposed Iranian Oil Bourse
Euric,
First, I just don't buy into this secrecy of the proposed IOB. However, let's assume that's possible, the effect that these secret trades have will be evident and cannot be hidden. For example, we can measure the number of oil trades now. If your theory is corrrect, that number will decrease if people switch to trading on this secret IOB. So, if it is secret, then coming March 20 we should see a massive drop off in the world of oil futures come March 20. I just don't think we will see that happen, but, we will know on March 20.
Posted: Sun Mar 05, 2006 12:02 pm Post subject: Re: The Proposed Iranian Oil Bourse
Keep in mind also that global markets need to use certain benchmarks to function properly. One of these benchbarks is a base currency to deal in. A base language is necessary also. English performs this function in most cases as does the US dollar. There is not any motivation from the markets point of view to make the system heterogenous in that regard. For example, it's not a great business idea to try to start of a soybean futures exchange and require that everyone speak Farsi, confirm trades in Farsi, make payments in Iranian currency etc.
In the Post WW2 Cold War era, it was inconceivable that another currency other than the dollar acted as the international reserve currency that replaced the gold standard. In 1945 the US towered over the rest of the world, most of which had been devastated economically by the war. So, USD hegemony wasn't hatched as a conspiracy. It is part of the very fabric of the modern global eonomic and money system and was an integral part of its formation. There was no other option at the time. Only with the end of the Cold War and the creation of the Euro in 1999 is it possible to even discuss the possibilty of a modification to the system. But the greatest threat to the existing system are the large trade imbalances between the US and Asia, not the Euro or how oil is priced.
Posted: Sun Mar 05, 2006 12:13 pm Post subject: Re: The Proposed Iranian Oil Bourse
Euric wrote:
Quote:
My world seems to be more real then yours. Where is it written in stone that things have to be your way? Where is it written that Iran can't be different and go against the grain? It is a fantasy to you because you have much to lose by a bourse that by-passes NYMEX and IPE and threatens your livelihood. Confess the truth and it will set you free.
You seem to lack a basic comprehension in understanding what others have written, mainly because you are filled with fear over that the IOB will do to you. No one is saying, myself included, that oil ships leave the oil ports got first to New york or London and then on to their final destination, or that these two bourses stockpile oil and sell it from there.
It's a bourse, they just handle the money.
The IOB will only be secret to those who aren't members, like yourself. Just like Swiss Bank accounts. It won't be your business to know. Get over it!
Yes, you live in a parnanoid fantasy world and nothing you say makes any sense to anyone who is part of the financial community, whether that community is in Asia, Europe or N. America. If you want to see an Arab bourse at work, look no farther than Dubai.
I have nothing to lose from oil priced in euros. I have sold Iranian eurobonds to investors. If there is business to be done, it will get done. But to say that an IOB will operate in secrecy and no one but members will know about it is just your lack of understanding of how anything works, as is your basic misunderstanding of the role of the NYMEX or IPE. They do not cash in on all oil trades or broker money for deals done bialterally between commercial partners. That is not their role.
Even if buyers were to transact via electronic exchanges, what about payment? Are buyers of oil going to pay with credit cards? Banks have to be involved. These banks would have to prepare for the IOB. What about delivery? When strangers deal anonymously in bonds they use clearstream or euroclear so that their custodian can match securities against payment and ensure delivery versus payment (DVP). Who will pay the Iranians without guarantee of delivery? Again you just embarass yourself with your total lack of understanding of how things actually work.
I am just curious how you will waste your time after March 20th? Writing fiction about how oil is being secretly traded that no one can confirm? Where is the delivery point? Which ships are being chartered? Where is the oil being refined? I am sure you will invent some nice stories to keep us amused for sure. _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Posted: Sun Mar 05, 2006 12:29 pm Post subject: Re: The Proposed Iranian Oil Bourse
MrBill wrote:
Of course, you cannot provide us with any of these eurosceptics articles and arguments? Or that many banks positioned themselves correctly for what was called euro-convergence trades?
The Wall Street bankers seeded the world news media with reports that the euro would not survive. The conditions in Europe, such as not having a political union before a monetary union, and the immobility of workers were prime reasons the euro would either not even get started or if it did get started not last long.
The same arguments that were used in 1998 resurfaced again before the euro became a cash currency in 2002. It was after the euro became a cash currency that it began to rise in value.
The only talk after that about the euro collapsing came from British news reports after the failed Constitutional referendums last May and June. The end of the threat to the euro came in early July when the London trains were bombed? Coincidence? Maybe, maybe not, but it did have the effect of ending the British attack on the euro.
Now, there are those as the date approaches coming up with all kinds of "reasons" why there won't be an Iranian bourse. Not one reason is coming from Iran nor from the EU, Russia or China. All are silent. If there was to be no bourse, I would expect an official statement from one or all on the subject officially denying it. Then you can call it conspiracy and fantasy if some persist it will be.
Thus as long as no official is denying it its chances are as real as the euro not collapsing despite warnings it was suppose to have.
Posted: Sun Mar 05, 2006 12:38 pm Post subject: Re: The Proposed Iranian Oil Bourse
seahorse wrote:
Euric,
First, I just don't buy into this secrecy of the proposed IOB. However, let's assume that's possible, the effect that these secret trades have will be evident and cannot be hidden. For example, we can measure the number of oil trades now. If your theory is corrrect, that number will decrease if people switch to trading on this secret IOB. So, if it is secret, then coming March 20 we should see a massive drop off in the world of oil futures come March 20. I just don't think we will see that happen, but, we will know on March 20.
It may not be in "secret". The point is if you don't hear about it in the media, don't assume it didn't initiate. It is just a possibility that for reasons of security the transactions will be kept quiet.
Why would there have to be a massive drop? If there was a drop at NYMEX or IPE that was significant, would you be informed?
If there is to be a drop in activity at NYMEX and IPE, it will be a slow drop that won't be noticed.
Even petrodollar posted his opinion that the bourse will take its time coming up to speed.
Posted: Sun Mar 05, 2006 1:00 pm Post subject: Re: The Proposed Iranian Oil Bourse
The Skeptical Investor? A local newspaper from Tennessee? A gold newsletter? Hardly the Wall Street Journal or Financial Times. Not even research published from an investment bank.
Well, the euro project was a political event, driven by politics and as we now know, Italy and Portugal falsified their economic data to qualify for EMU as did Greece a year later. In the City of London we all started preparing for the euro in 1995/97 when we put on euro convergence trades, that is borrowing in deutschmark and investing in lira, pesetas and escudo government bonds, as well as drachma later in 1999/2000. But as you say, I have no idea.
Trades and open interest on the ICE/NYMEX are made public daily, why would investors trust an exchange that keeps its transactions a secret? If details are secret what is to stop Iranians from skimming the till? If you were a risk manager or credit officer would you run the risk? Do you think the Chinese trust anyone when it comes to business? The Russians? More like. Trust is good, control is better. If it is kept small and secret then by definition it will lack the size and scope to challenge the dominance of the ICE and NYMEX, who are competitors with one another in any case. They do not work together. The NYMEX is currently suing the ICE over the WTI contract, while launching its own products to compete in the electronic market as its open outcry Brent was a flop.
So basically your whole argument rests on a) it is a secret, b) we will not know when it is open, c) we will not notice a change in volume on those exchanges that publish their trade data, d) that transactions will not show up in OPEC or trade data, e) so there will be no proof of the IOB's existance, so f) we should just believe you? A bit of a stretch to think this will change the world?
Given that we have always argued that Iran can sell oil in euros ona commercial basis anytime it wants. No one can stop them. However, this does not equate to a price marker, an exchange, in euros for crude. Nevermind that it would NOT be a threat to the ICE/NYMEX or the dollar. Okay, so sorry, totally losing interest in this topic. Call me an idiot if you like. However, I have been over this ground so often that it is just time to call it quits. Never the less, expect a posting on March 21st. I wanna be the first to say, I was wrong. _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Well, I read the articles. I don't see your point. These people are all pointing out quite reasonable concerns about the long term viability of the Euro. These concerns are all logical and still valid. Also, if you did some more research, I'm sure you could find just as many European sceptics of the Euro in '98. Criticism was hardly limited to "Wall Street bankers", who by and large don't give a hoot about foreign currencies. I wish they did. The Euro hasn't been stress tested yet becuase the economic climate of the last 6 years has been relatively calm. I still have concerns that tearing up the Bundesbank charter will end up being a big mistake. Maybe it's worth it for Europe to continue toward the path of peaceful unity.
Well, I read the articles. I don't see your point. These people are all pointing out quite reasonable concerns about the long term viability of the Euro. These concerns are all logical and still valid. Also, if you did some more research, I'm sure you could find just as many European sceptics of the Euro in '98. Criticism was hardly limited to "Wall Street bankers", who by and large don't give a hoot about foreign currencies. I wish they did. The Euro hasn't been stress tested yet becuase the economic climate of the last 6 years has been relatively calm. I still have concerns that tearing up the Bundesbank charter will end up being a big mistake. Maybe it's worth it for Europe to continue toward the path of peaceful unity.
And we can both read the same research and come to different conclusions leading one to sell and one to buy, it is called a market. _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Posted: Sun Mar 05, 2006 1:54 pm Post subject: Re: The Proposed Iranian Oil Bourse
European cooperation goes out the window as soon as national dominance is threatened as usual.
Quote:
LONDON (Reuters) - Government worries about energy supply security are allowing Europe's utilities to brush aside European Union efforts to spur greater competition, making an open energy market a more distant prospect.
French and Spanish governments have backed plans to create utility national champions in defiance of Brussels which wants more competition to bring down gas and power prices.
Which is the problem. Italy is not financially fit to stay in the euro. France is unhappy that it can no longer run the union. Germany still has to pay to keep the peace, but for how much longer? Support for the euro is slipping. They are all flaunting the rules that underpin the Maastricht Criteria. But that is not to say that those concerns are insurmountable, just that it is a legitimate concern to quesiton underlying assumptions whether we talk about a new currency union or a new oil bourse. _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Posted: Sun Mar 05, 2006 2:07 pm Post subject: Re: The Proposed Iranian Oil Bourse
no let up in demand, no stampede for the door
Quote:
Oil exporters recycle more petrodollars in Q3-BIS
Sun Mar 5, 2006 3:00 PM ET
LONDON, March 5 (Reuters) - Major oil exporters deposited a record $82 billion with international banks in the third quarter of last year, maintaining the trend of recycling part of their oil revenues, the Bank for International Settlements said on Sunday.
The Basel-based BIS said the destination for deposits placed by OPEC member countries with BIS reporting banks was primarily the United States.
"Major oil-exporting countries continued to recycle a portion of their oil revenues through BIS reporting banks... Deposits by residents of OPEC member countries... were primarily U.S. dollar-denominated," the BIS, a forum for central banks, said in a quarterly report released on Sunday.
Major oil exporting countries play an increasingly important role in the global financial market as their revenues have soared after last year's sharp rise in oil prices and they invest billions of petrodollars in global assets.
The BIS said the $82 billion placed by OPEC members as well as non-OPEC oil exporters with BIS reporting banks was the largest quarterly placement by this group of countries recorded in its statistics.
Posted: Mon Mar 06, 2006 3:07 am Post subject: Re: The Proposed Iranian Oil Bourse
DamienJasper wrote:
"If you want to see an Arab bourse at work, look no farther than Dubai. "
If you don't mind Mr. Bill, could you clarify what you mean by that for me?
Sorry, I realize now that I may have confused someone by indirectly implying this was an oil bourse. No, the Dubai Stock Exchange is flourishing, flush from oil revenues from high prices as Arabs look to diversify their US dollar investments into pan-Arab development instead of recycling them exclusively into US treasury bills or wasting them on lavish projects as in past oil booms. My point is that Arabs have become a lot more sophisticated in the past 20-30 years of how they manage their oil wealth and they realize that high prices may come and go, so they are making structural changes to manage their wealth better than in the past in expectations that the oil will not last forever. The Dubai Stock Exchange is a perfect example of an Arab bourse which if you read that page has
Quote:
DFM
Mission Statement
Objectives
CDS
Compliance
Information System
Market Development
DFM Rules & Regulations
UAE Capital Market
ESCA
ESCA Rules
ADSM
IPO
Publications
Market News
Researches
Important Dates
Links
Glossary
Investor Services
Investing in DFM
Trading Floor
Trading Schedule
Trading & Settlement Fees
Where to go
FAQ
Applications
Complaints
Everything that investors would expect to see from a legitmate exchange. No secret locations. No secret dealings. It is open and transparent which is why it is thriving while the stock exchange in Tehran languishes due to an outflow of capital based on anti-market rhetoric from the government and the President. Dubai is doing everything right, that Iran is doing wrong.
Imagine an oil bourse run by Exxon, Shell, BP, Lukoil, Chevron and crew. Investors would be scared silly of market manipulation by the majors and it would undermine the price discovery mechanism that the IPE and NYMEX provide as they are independently regulated. Now look how Iran has manipulated the market over its nuclear intentions. Adding $10-15 in risk premium to the price of crude. Now imagine they export 3 mbpd and the world's supply cushion is 1 - 2 mbpd over demand. An exchange run by Iran would be open to political & religious interference at best and at worst Iran may manipulate prices either for commercial gains (they could never lose, it they were long, they can stop exports, if they were short they could turn on their taps) or for political purposes. That is interference that investors could not and would not accept even if they were allowed to trade on an exchange located in Iran.
I know I am the most boring person, but I have pointed out time and time again how all these technical details do matter. No infrastructure, no bourse. No delivery point, no physical delivery, no futures market. An exchange with only contracts for differences would not be an effective substitute for physical trading and price discovery. You would need a contract where a buyer of futures could elect to take physical delivery. Under novation you need an Iranian clearing house. The Iranian clearing house needs to have financial assets to back-up promises to make good on every contract traded on the exchange. The clearing house needs to make sure payment is received against delivery. Etc. Etc. Etc.
I am sorry if it is boring. That is how regulated exchanges function. And knowing how obsessed regulators have become with know your client and anti-money regulation compliance and risk management officers are imposing huge burden on banks and non bank financial institutions to comply with those regulations. It is not something you can pretend does not affect the market. It does and it is expensive to comply with all these regulations.
If Iran wants to sell oil in euros they can. They just tender it out and whoever lifts the cargo can pay for it FOB through BNP Paribas. That is not an electronic oil exchange. That is not a regulated futures exchange. That is not changing the world price of oil. It is selling at the world price in euros. If Chavez wants to give oil away at below market prices to Cuba and Haiti that is his right, although it is not in Venezuela's best interests. So if Iran wants to also engage in self-defeating behavior we all have to live with that. But it does not make the IOB likely for all the reasons I have given time and time and time again. And certainly not on March 20th, 2006! _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Joined: Jan 18, 2006 Posts: 367 Location: Bordeaux
Posted: Mon Mar 06, 2006 4:22 am Post subject: Re: The Proposed Iranian Oil Bourse
Euric wrote:
Go back to late 1998 and again to late 2001. The American economists from New York were all predicting the demise of the euro based on a bunch of flimsy excuses. So far, none have come to pass. The euro has proven itself.
Come on, you must be kidding saying that!
Or are you the ones that work this way: "just dream hard of something and it'll come true".
But most probably, you know nothing of finance or economy!
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