To counteract all doubts, Duncan Wensley is working on a demo account that will record all trades, executed by the systems, depending on the investor's preferences.

Investor's Preferences

... and yes, we have to admit that it is hard to combine a standardized application with all unique, individual demands and needs of our investors; still we managed to generate this feature with settings that leave a little room for adjusting.

Due to personal preferences, or legal conditions, some products or markets within the Duncan Wensley portfolio may not be traded - they can easily be excluded. As banks or fund managers may not be able to go short in the markets - they can select the option "Long trades only".

Capital funding, Risk mitigation & Performance fees

The Duncan Wensley demo account basically works as any usual account based at a broker of client's choice. Possibility is always given to extract or deposit funds at any time.

At setting up the demo account at Duncan Wensley, the limited drawdown has to be fixed as in entering a real investment agreement with us. In case performance should reach this predetermined benchmark, all trading activities will stop and the client will be informed to decide about further actions.

Finally performance fees will be charged as well to the demo account and will be deducted automatically according to the returns generated at month end. Any previous credits, based on the Duncan Wensley return insurance will always be considered in the performance fees charged.

Direct Inputs, Daily Updates

By using special techniques, the Duncan Wensley demo account will be connected directly to our trade station interface and receive daily updates of the trades conducted the previous day.

In line with the trade history these trades are easily traceable, so that an image of potential investment returns will be evident in the demo account. The demo account launch date is set on early February 2010 and will be available totally free, provided a registration at My Duncan Wensley.

Just keep in mind, whatever balance your demo account will report after some time... we are not going to cash your profits... and neither refund any losses - it's still just a demonstration! Close

Monday, 25.01.2010

From Frank G. Dutine [ Duncan Wensley Editorial ]

The service, provided by Dublin-based technology company Corvil, is the latest sign of the technology arms race that is under way as exchanges and "multilateral trading facilities" try and attract orders.

High-frequency traders scrutinize exchanges and alternative trading platforms for the ability of their trading systems to get trades done fast and at high volumes. They will often decide whether to start trading on new platforms based on whether the platform matches their requirements on speed.

Donal Byrne, Corvil chief executive, said this was the first time an exchange had been able to show high-frequency traders where their trading sessions ranked compared with sessions carried out by rivals in a "latency table".

"It does not matter how fast someone is trading, it only matters how fast they are trading relative to all others in the market at the same time," he said.

Latency refers to the time taken for a trade to be done from the moment a trade is punched in to the communication back to the trader that it has been executed.

Deutsche Börse Systems, the technology unit of the German exchange, said it had "successfully deployed a precision latency monitoring and reporting service" for the exchanges' Xetra cash market and Eurex derivatives platform.

Gerhard Lessmann, member of the executive board at DB Systems, said: "By leveraging the unique latency measurement and analytics capability of the CorvilNet platform, we have successfully achieved an industry first in low latency monitoring and reporting for high frequency trading." Close

Monday, 21.12.2009

From Financial Times

People do not want to take responsibility of their choices. As long as the markets are running smoothly there is a tendency to take things for granted. There is the assumption the Stock market always goes up. There is no risk when investing in the stock market. There is no risk in purchasing real estate. Home prices never go down... Then we have years like last year that all assumptions are off the table. What is my point as a commodity trading advisor. I am SCARED every day. I think about what can kill my career that I have invested a great deal of my life. I do not take any position for granted. I have no preconceived thoughts.

I believe anything can happen. All the people that did not believe the stock market can go down were rudely awakened. Possibly those that think the issues have been resolved might be rudely mistaken again. This is the point of when you trade commodities: Believe anything can happen. When you have a plan, you will not be in a position you will be scared. When the trade does not work, you are out. There are no second thoughts. You are out.

If you receive a signal to buy the same commodity again, you just do it. Nothing to second guess. You want to follow your plan; or if you allocate to a commodity trading advisor, you want to make sure that they follow their plan they explained to you. More so, be prepared for draw downs they will surely happen as the sun shines every morning. If you have a plan and follow it with discipline and patience, over time you stand the possibility of compounding your way to wealth. Close

Monday, 21.12.2009

From Wolfgang Wenzel [ Duncan Wensley technical lead ]

Such is the high level of demand that farmers are clearing millions of hectares of virgin rainforests in the tropics, and especially in Southeast Asia, to make way for ever-expanding palm-oil plantations. In the process, some are destroying the habitat of endangered species. Orangutans, which are now limited to the islands of Borneo and Sumatra, are among the species most threatened by the palm-oil trade.

The $26 billion-a-year industry is expected to grow 10% a year. As well as being used in about 50% of all packaged food products in supermarkets, according to the World Wildlife Fund, palm oil is also an important bio-fuel for "green" cars and power stations.

This year, Sainsbury's, the U.K. supermarket chain, topped the World Wildlife Fund's European palm-oil buyers scorecard, which ranks the purchasing practices of the largest European companies that produce or sell everyday consumer products.

Sainsbury's has committed to only use certified sustainable palm oil in its products by 2014. The company's sustainability manager, Fiona Wheatley, spoke to The Wall Street Journal about one of the world's least well-known environmental issues.

THE WALL STREET JOURNAL: What are the dangers of using non-sustainable palm oil?

MS. WHEATLEY: While well-managed plantations exist and serve as models of sustainable agriculture, there is concern that not all palm oil is being produced sustainably. The development of new oil-palm plantations has, in some cases, resulted in the destruction of forests with high conservation value, threatening the rich biodiversity in these ecosystems.

WSJ: What steps have been taken to lessen the environmental impact of palm-oil production?

MS. WHEATLEY: To meet global demand for vegetable oil, the oil-palm industry needs to increase production. However, it is imperative that the expansion must be done sustainably. It is necessary to develop a globally acceptable definition of sustainable palm-oil production and use. The Roundtable on sustainable Palm Oil was established to define and promote the sustainable production of palm oil.

WSJ: What characterizes sustainable palm oil?

MS. WHEATLEY: The mills that produce certified sustainable palm oil must prove valuable forests have not been destroyed in the development of new oil-palm plantations. Other criteria for certification control the way the oil-palm plants are grown and harvested, the environmental practices of the crushing mill, and the social conditions of the workers, smallholder growers and communities local to the mill.

WSJ: What are the main challenges to this initiative?

MS. WHEATLEY: An important challenge for the palm-oil industry is replacing commodity trading systems, which regard all palm oil as equal, with traceability systems that separate the certified sustainable palm oil from all other production.

Once the palm-oil mill has been certified as meeting the standards of the RSPO, every company that handles the palm oil also has to prove that they have systems in place to make sure that uncertified palm oil cannot be passed off as sustainable. This assures buyers that they are getting what they pay for and that their investment is being used to protect forests and biodiversity.

WSJ: What are the difficulties in sourcing sustainable palm oil?

MS. WHEATLEY: There are currently many plantations that have had RSPO audits and are waiting on the RSPO to confirm their certification. The RSPO has to be confident that audits have been rigorous and this is leading to a delay in issuing certificates.

Sustainable palm oil is more expensive. It requires separate storage and processing through the supply chain. Growers also have to invest to ensure their oil-palm growing practices meet the standards required to prove sustainability. Take-up has been slow.

If more companies started buying sustainable palm oil, it would stimulate the market and prompt more palm-oil producers and users to invest in the necessary infrastructure. This in turn would lead to a drop in prices, an increase in production and the all-important decrease in deforestation.

WSJ: How best can these difficulties be overcome?

MS. WHEATLEY: The RSPO is recruiting more people to speed up the certification process. This will release more palm oil that has been certified as sustainable to those markets that demand it.

Retailers like Sainsbury's are asking their suppliers to buy sustainable palm oil. Close

Monday, 07.12.2009

From The Wall Street Journal

"Banks are essentially technology firms," says Hugo Banziger, chief risk officer at Deutsche Bank. Yet the role of IT in the crisis is barely discussed.

It should be. Corporate IT systems - collections of computers, applications and databases - always tend to be messy, but those of banks are particularly bad. They were the first to adopt computers: Decades-old mainframes are still in use.

Lots of product innovation means new systems, as does merger activity, which has proliferated in the industry in recent years: Citigroup had a notoriously fragmented IT setup going into the crisis. The need to comply with regulations and the global presence of big banks adds complexity.

The demands of financial markets make matters worse. Hedging positions, trading derivatives and modeling financial products all require highly sophisticated programs that are only really suited to specific asset classes. The code for new financial products has to be developed quickly.

Innovation often takes place on Excel spreadsheets on traders' desktops.

"The big task of management is to manage down the number of spreadsheets," says one risk officer, whose bank creates 1,000 product variations a year.

As a result, many banks have huge problems with data quality. The same types of assets are often defined differently in different programs.

Numbers do not always add up. Managers from different departments do not trust each other's figures. Finding one's way through all these systems is detective work, says a former IT manager at a big British bank. "And sometimes the trail would go cold."

This fragmented IT landscape made it exceedingly difficult to track a bank's overall risk exposure before and during the crisis. Mainly as a result of the Basel 2 capital accords, many banks had put in new systems to calculate their aggregate exposure. Royal Bank of Scotland spent more than $100 million to comply with Basel 2.

But in most cases the aggregate risk was only calculated once a day and some figures were not worth the pixels they were made of.

During the turmoil many banks had to carry out big fact-finding missions to see where they stood. "Answering such questions as 'What is my exposure to this counterparty?' should take minutes. But it often took hours, if not days," says Peyman Mestchian, managing partner at Chartis Research, an advisory firm.

Insiders at Lehman Brothers say its European arm lacked an integrated picture of its risk position in the days running up to its demise.

Whether the financial industry would have hit the brakes if it had had digital dashboards showing banks' overall exposures in real time is a moot point. Some managers might not have even looked. And better IT would have done little to counteract the bigger forces behind the crisis, such as global economic imbalances.

Yet most in the industry agree that its woeful IT systems have, in Banziger's words, "exacerbated the crisis."

The industry spent billions on being able to trade faster and make more money, but not nearly enough on creating the necessary transparency.

"Banks had lots of tools to create leverage, but not many to manage risk," says Roger Portnoy of Daylight Venture Partners, a venture capital firm that invests in risk management startups.

Technology may have contributed to the crisis in other ways. IT systems have led to a "de-skilling of the risk process," says Steve O’Sullivan of Accenture, a consultancy.

At one end of the credit chain, bank employees were not given the proper incentives to review on-screen loan application forms (a big British bank once had a surprising number of "astronauts" applying for loans because the job description was the first choice on a pull-down menu, says a former employee).

At the other end, computer-generated risk numbers gave executives a false sense of security.

Others think that IT played an even more fundamental role in the crisis. Because things are so interconnected, largely thanks to technology, a problem in one part of the system can quickly lead to problems elsewhere. The global financial markets have evolved over the years into an inherently unstable network, says Till Guldimann, a strategist at SunGard, a software and IT services firm.

The rapid unwinding of positions by ultra-fast quantitative-trading programs at the start of the credit crunch in August 2007 is one example of this cascading effect.

Have chastened bankers learned their lesson? Some are now spending a lot of money on building integrated systems of the kind that a few banks, such as Deutsche, JPMorgan Chase and Goldman Sachs, had in place before the crisis.

Deutsche does not dump all its trading information into what is called a "data warehouse" and then painstakingly sift through it when need arises. Instead, the firm has developed a system of "feeds" that give it access to information in almost real time.

But many other banks are still in firefighting mode, says Mestchian. Much of the money invested in IT still goes into making things faster rather than more transparent. And there is a question mark over whether the biggest banks will ever really be able to get their systems in order.

Many banks have become too complex to be managed properly, says Glenn Woodcock, a director at Andromeda Capital Management and a former head of credit-risk infrastructure at RBS. IT alone cannot fix that problem for them.

'Much of the money invested in IT still goes into making things faster

rather than more transparent. And there is a question mark over whether

the biggest banks will ever really be able to get their systems in order.' Close

06.12.2009

From The Economist

The news was very unsettling to most world markets, especially given the fact that just a year ago worries of debt defaults by some U.S. investment banks helped advance the worst recession since World War II. Before the Mideast news the stance by most central banks was for leaving key lending rates unchanged with hints that low rates would be the norm in the foreseeable future other than in a few countries where growth has exceeded expectations. European news was mostly favorable as export and growth figures improved along with news of favorable earnings for some of the larger companies in Europe. Asian headlines remained constructive as China indicated it would continue to use stimulus on an as needed basis due to some struggling sectors. Other positive developments out of the Pacific Rim emanated from Australia and New Zealand as earnings news was much stronger than expected, especially in the raw material sectors. The lineup of economic reports this week is fairly heavy with several reports from the retail and home sectors with the headliner being the monthly Unemployment report on Friday. Stock Index futures ended the week mostly lower due to the Dubai situation and were led lower by Russell 2000 futures -1.76% followed by Mid-Cap 400 futures -0.84%, NASDAQ futures -0.24%, Dow futures -0.11% and S&P 500 futures -0.09%.

Commodity and Food products were mostly higher as weather issues and a weak U.S. Dollar continued to spark investor support in most sectors of the complex. Weather concerns again led to higher prices in most grains as the late U.S. harvest continued to spark ideas that it would lead to lower output. Corn +1.57% led the way followed by Soybeans +0.80%. Wheat -1.89% ended lower on news a possible larger Southern Hemisphere crop. The livestock sector was higher as strong pork demand aided activity in the Lean Hogs +4.58% with Live Cattle +0.06% following along on better exports expectation for beef as well. The Soft arena was mixed as weather worries in the Southern Hemisphere helped spark support in OJ +4.22%, Coffee +1.69% and Sugar +1.34%. Cocoa -0.82% and Cotton -0.27% were under pressure from position squaring after recent strong rallies.

The energy sector was mixed during the past week as supply and demand scenarios turned to a more negative state for RBOB Gasoline -2.40% and Crude Oil -0.53%. Heating Oil +1.48% and Natural Gas +1.47% were supported by U.S. weather reports showing the first major cold wave arriving in the next week for most of the country.

The U.S. Dollar Index -0.81% and British Pound -0.05% ended the weak lower despite late week rallies from the Dubai turmoil. The balance of the majors remained firm on ideas that their economies would grow a better pace than earlier anticipated. Strong metal prices and slow growth in the U.S. versus that of emerging economies was a main catalyst for the rally in Japanese Yen +2.35%, Swiss Franc +1.04% and Euro +0.71%. The rate sector remained firm aided by the Dubai default worries with 30-year Bond futures ending +1.77% followed by 10-year Note futures +1.01%.

Trade in Metal futures was fairly active during the past week, although results were mixed due to default worries in Dubai and position squaring after recent sharp price appreciation. Another week of strong economic news from emerging economies also provided underlying support. Gold +1.38% and Copper +0.47% finished the week higher with Silver -0.66%, Platinum -0.28%, and Palladium -0.23% a bit under the weather. Close

Monday, 30.11.2009

Its announcement that it would delay repayment of the debts of Dubai World, a vast government-owned conglomerate, swept through global markets like one of the blinding sandstorms that occasionally afflict the emirate, obscuring the gleam of its skyscrapers.

Like those storms, Dubai's announcement was so damaging because it reduced visibility. Investors had assumed that the Dubai government was willing to rescue the indebted conglomerates it sponsors, and that Abu Dhabi, its well-heeled neighbouring emirate, was willing, in turn, to rescue Dubai. In particular, they had looked forward to the full and timely repayment of a $3.5 billion Islamic bond issued by Nakheel, a Dubai World subsidiary, on December 14th.

Dubai's failure re-awakened a number of dormant fears in investors. Some worried about banks that had lent heavily to the region. Others wondered if Dubai was carrying far more than the $80 billion or so in debt that it has owned up to. The announcement reminded investors that tacit sovereign guarantees may be worthless. Earlier in November, for example, Ukraine's state railway firm, Ukrzaliznytsya, failed to repay part of a syndicated loan, and its energy firm, Naftogaz, restructured its debt.

More fundamentally, Dubai's wobble raised the spectre of a sovereign default. Dubai's government is not technically on the hook for Nakheel's debts. But the government's hesitation in saving its national champions nonetheless demonstrates its fiscal limits.

Elsewhere, governments have emerged from the crisis burdened by debt. Both Greece and Ireland are carrying heavy public liabilities denominated in a currency (the EURO) that they cannot print. Doomsayers worry that the world has escaped from the financial frying pan into a fiscal fire.

These wider fears are easy to exaggerate. Despite its self-aggrandisement, Dubai is not yet important enough to bring down the global financial system. Its troubles moved markets last week partly because so many traders were on holiday. Other investors were looking for cues to sell after the long rally in markets since the spring. By Monday November 30th, the principal stock indices were shaking off the dust and venturing upwards again.

But the damage Dubai has done to itself is no passing storm. An emirate that has spent so much money and hired so many flaks to cultivate its image and inspire confidence saw much of that work undone in a single 200-word statement announcing the debt standstill.

Had it announced the restructuring a few months earlier, with the ground properly laid, investors might have taken it in their stride. Those who lent to Dubai World at a premium can have no complaints if the risks for which they were compensated turn out to be real. And a standstill may buy time for the deeper restructuring that Dubai World undoubtedly needs. It is better to weed out the bad businesses within the group rather than cross-subsidise them to save face.

But Dubai had led investors to expect that publicly traded instruments, such as sukuk, or Islamic bonds, would be honoured. And the government offered no satisfactory explanation for its sudden change of stance. Thus even as markets slumped, political speculation mounted. A week earlier, Sheikh Mohammed bin Rashid Al Maktoum, Dubai's ruler, had sidelined three of the men who ran "Dubai Inc" in the boom years. Perhaps, then, the standstill was the result either of a power struggle within the ruling circles of Dubai, or between Dubai and its neighbour, Abu Dhabi.

Abu Dhabi's conservative rulers have mixed feelings about their brash, go-getting neighbour. They may have asked why they should rescue Dubai from the consequences of its own prodigality. Or why they should resuscitate bankrupt Dubai firms that will compete with Abu Dhabi's own national champions? At the weekend, a senior Abu Dhabi official told Reuters that it would "pick and choose" which of Dubai's entities to help.

But many investors in Abu Dhabi bought into the Dubai boom. They will lose money if the bust turns into a protracted slump. And of the banks most exposed to Dubai, several have headquarters in Abu Dhabi. Thus the central bank of the United Arab Emirates has made it clear that it will provide liquidity to any bank, foreign or domestic, operating in the United Arab Emirates. Dubai is not yet a gateway to the financial world. But it can open the door to all sorts of trouble in its neighbourhood. Close

Monday, 30.11.2009

From The Economist

A robust MAC will typically include an independent board of directors and a network of contractual relationships between the MAC and its trading counterparties and service providers.

MACs can be simple stand-alone master funds, or can grow to include several special purpose vehicles (SPVs) and feeders to accommodate bespoke (customized) trading and tax issues in various jurisdictions. While MAC structures differ from investor to investor, the central premise remains the same: investors can benefit from additional control and transparency.

The investment manager agrees commercial and legal terms with the MAC. Managers are responsible for trading the strategy within the agreed terms.

Key benefits

The key benefits to the investor can be:

• Position level transparency available on a daily, weekly or monthly basis (particularly important to institutions looking to manage their exposure across multiple portfolios)
• Ability to customize investment and risk guidelines
• Operational control
• Counterparty and service provider selection
• Enhanced risk and cash management
• Segregated assets - no cross liability with other entities
• Assets are placed in approved custodian accounts and in the investor's name

In short, investors gain the ability to tailor their investment program and receive enhanced liquidity. In addition, they can have the ability to adjust leverage, change the liquidity profile of the investment and adjust instruments and trades as agreed between the parties. Investors also gain additional business and risk transparency because they should have direct contact with all service providers and counterparties.

MACs do, however, have some limitations. For a start, a MAC structure can add between 50 to 100 basis points to the cost of investing in hedge funds as they may demand increased services to manage daily data. This charge is typically netted from performance.

MACs can also present operational and relationship challenges with the hedge fund managers. Extra resources and effort required by a manager to integrate properly with a potentially new service provider can be demanding. The working relationship between some managers and service providers can be complex as ultimate ownership of the relationship with these service providers rests with the managed account rather than the manager.

Nor are MACs suitable for all trading strategies. Accurate data is difficult to collect on a daily basis and may not be particularly useful from certain hedge funds, such as event driven managers that trade in highly illiquid markets, complicated instruments and hard to price assets.

Managed Futures

To clarify, if there is a gap between the underlying assets in the account and the investor's ability to interpret and act upon the data, the cost of the MAC may outweigh the benefit.

As a result, MACs tend to be concentrated in managed futures, long/short equities and other exchange traded strategies that are simpler to operate and manage from an administrative perspective and which allow investors to take advantage of liquidity options.

MACs also require a great deal of administration and monitoring. It is critical that an investor has the know-how and resources to set up and operate the managed account in a way that does not divert the manager from the business of trading.

There are resource limits to the number of MACs a manager can effectively operate and it is important for hedge funds to partner with investors who have the right expertise — this often means those at the larger end of the spectrum.

Finally, there is an open question as to the benefits of position level transparency. The amount of data can be overwhelming and many question investors' ability to interpret the data appropriately. Investors hire hedge funds to make investment decisions on their behalf, so creating a mechanism 'to manage the manager' is potentially counterproductive.

Nevertheless, MACs are powerful instruments of active management, giving professional investors the tools to upgrade their control of risk, returns and the dynamics of allocation, as well as providing important mechanisms to monitor and mitigate operational risk.

Not for everybody

They may not be for everybody, or useful for all strategies, but for users with the resources and know-how to keep pace with the changes and who can 'read' and understand the powerful data streams they furnish, MACs provide an alternative and potentially powerful route to accessing the expertise of hedge fund managers. Close

Saturday, 14.11.2009

From Gulf News