File Buz

On Your Left! Its Bike to Work Week

Good morning.

Its officially Bike to Work Week, so if youre lucky enough to be among the roughly %.08 of Americans who A) have a bike; and 2) have a job, this is your chance to shine!

Thats right, as counterintuitive as it may seem you really can use that two-wheeled vehicle with the pedals as a means of transport, and to that end the New York Times spoke to some dumb bike blogger about it:


Eben Weiss, the author of the blog Bike Snob NYC, offered some advice for the city: Institute a Drive to Work Week.

“That way, people can see how wildly impractical it is to drive to work compared to biking.”

Smug remarks aside, he said, “Riding in the city is freedom from traffic, timetables and transit delays.”

Oh, Im so clever--but did I actually say "biking?"

Oy.  Ive become everything I once despised.

Anyway, I was pleased to see the aforementioned piece is already attracting the usual brand of insightful bike-related commentary:

Lifelong New Yorker 

Bloomberg never should have started the CitiBike program without first impressing on would-be cyclists that the traffic laws apply to them too. They blow red lights, go against traffic and - on the fancy bike lanes on Queens Blvd. - completely ignore the helpful arrow on the ground and still go against traffic. Way too many of them are an ignorant and/or arrogant menace. I know this from daily experience and, I was knocked down by one while I was crossing in the crosswalk with the light in my favor.

Instead of complaining about cyclists, Lifelong New Yorker and Full-Time Imbecile should realize that he (or she, but lets just say "he") is a statistical anomaly in that he has not yet been killed by a driver on Queens Boulevard.

Meanwhile, via the aforementioned article, apparently the NYPD is observing Bike To Work Week with a "targeted initiative" to protect cyclists:


“This targeted initiative will make sure New Yorkers on bikes have clear bike lanes and safe conditions as more and more people take to the streets,” Mayor de Blasio said in a statement.

Hey, this sounds great in theory, but why do I suspect that as this directive makes its way down the chain of command it will go from "make sure New Yorkers on bikes have clear bike lanes" to "ticket cyclists for not riding in bike lanes"?

Officers from all 77 city precincts will be directed to focus on drivers who are committing traffic violations that endanger bicyclists. In addition, NYPD traffic enforcement agents will focus on parking violations most associated with bicycle accidents, like parking in a bike lane, double parking or parking in a No Standing zone.

Yep, theres that "A" word again.  Are they really "bicycle accidents" if theyre caused by drivers putting their cars where they dont belong?  After all, when I step on one of my kids Legos, I dont consider that a "dad accident."  I call it a deliberate attack on the authority and physical well-being of the paterfamilias, and youd better believe I punish them accordingly.

Speaking of bike lanes and police, heres a member of the latter driving into a San Francisco cyclist as he rides his bicycle in an extremely awkwardly-situated example of the former:



Yesterday was not a pleasant Bike To Work Day for not one but two downtown cyclists.

Hoodline reader Tim Doyle, 48, was struck by a police car at 5:45pm while riding southbound on Second at Mission—in the streets recently installed bike lane.

A video of the collision that surfaced on YouTube today shows the SFPD vehicle pull into the right-hand turn lane behind another vehicle at the Second and Mission intersection. The squad car then pulled to the left into the bike lane and struck Doyle, throwing him and the bike to the ground.

Though this being San Francisco, I suspect this may all be part of an elaborate viral marketing campaign:

The video above was published on YouTube by Nexar, which recently-launched a free iPhone dashcam app for vehicles. With the companys mission to "rid the world of car accidents" and help drivers "stay protected on the road and avoid getting into tough spots," the dashcam begins recording as soon as the driver suddenly hits the brake, or initiates the app with a tap or voice command. 

Thank you Silicon Valley for your ceaseless efforts on the part of motorists everywhere.

As for that awkwardly-placed bike lane, to find worse youd have to travel all the way to Brisbane, Australia, where they just installed this:



Seems to me the island should be buffering the bike lane and not the other way around.  Maybe installing bike lanes in mirror image is an Australian thing, like how their toilets flush backwards.  By the way, heres some background on the above bike lane via the reader who forwarded it:

A couple of years a go Danish university student Rebekka Meyer, studying at University of Queensland was riding her bike to uni on Annerley Road when she stopped at the traffic lights.  When the lights turned green she was run over by a truck, killing her. 

There was a Coroners inquiry into the accident and one of the recommendations was for separate infrastructure.

Today Brisbane City Council created this in the area where the accident occurred.

Nicely done.

By the way, as you may recall from this very blog, Brisbane is the same place where residents are tormented by Freds discussing their sexual exploits:


FOUL-mouthed cyclists bragging about their bedroom exploits have sparked so many complaints from fed-up residents a councillor wants "keep quiet" signs erected along a popular cycling route.

Once again, its important to note that Freds have nonexistent sex lives and the extent of their "bedroom exploits" is the pre-ride application of chamois cream, so this is clearly a group of people with some delicate sensibilities indeed.

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On Being a House Cat

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On Dodd Frank Major Swap Participants Swap Execution Facilities and Block Trades

More on the derivatives title in Dodd-Frank:

Major Swap Participants (MSPs)

This will be a huge issue for hedge funds. And unfortunately, this is an area where Dodd-Frank is a total mess. For some reason, Barney Frank and Chris Dodd allowed Blanche Lincolns definition of "major swap participant" (MSP) to remain in the bill, despite the fact that it was widely panned by, well, everyone (including regulators). In any event, the bill defines MSP as anyone who is not a swap dealer and who (emphasis mine):

(i) maintains a substantial position in swaps for any of the major swap categories as determined by the Commission (excluding "positions held for hedging or mitigating commercial risk," and certian pension funds);

(ii) whose outstanding swaps create substantial counterparty exposure that could have serious adverse effects on the financial stability of the United States banking system or financial markets; or

(iii)(I) is a financial entity that is highly leveraged relative to the amount of capital it holds and that is not subject to capital requirements established by an appropriate Federal banking agency; and

(II) maintains a substantial position in outstanding swaps in any major swap category as determined by the Commission.

The bolded parts represent completely undefined and highly ambiguous terms which currently have no legal meaning. (The definition of "major security-based swap participant" closely tracks this definition, but, oddly, does not include a similar exception for pension plan positions.)

Clearly, whether an entity qualifies as a MSP (or "major security-based swap participant") will have to be determined on a case-by-case basis. Does this mean that all hedge funds will have to periodically provide the CFTC and SEC with their balance sheets? I assume it does — how else would the CFTC and SEC know whether a certain hedge fund should be designated a MSP? In fact, I think hedge funds will have to provide the CFTC and SEC with more than just their balance sheets. A simple balance sheet wont be enough to determine whether a hedge funds outstanding swaps create "substantial counterparty exposure that could have serious adverse effects" on financial stability. So presumably, hedge funds will also have to provide the CFTC and SEC with information on their outstanding swaps positions, including the identity of their counterparties. These concerns were raised prior to the conference committee in a widely-circulated memo from one of the big law firms (I cant remember which firm), but for some reason, lawmakers chose to leave these issues unaddressed.

The main reason the definition of MSP is so important for hedge funds is that nonbank MSPs will be subject to capital requirements (set by the CFTC or SEC). Significantly, the capital requirements wont be limited to the swaps activity that qualifies the entity as a MSP. In setting the capital requirements for MSPs, the CFTC and SEC are required to take into account "the risks associated with other types of swaps . . . engaged in and the other activities conducted by that person that are not otherwise subject to regulation." So once a hedge fund is designated a MSP for any type of swap, the CFTC and SEC will have broad authority to set capital requirements based on the hedge funds entire operation.

Personally, I dont have a problem with more regulation of hedge funds, or even minimum capital requirements for hedge funds. This is certainly not the ideal way to accomplish that, especially since it applies only to hedge funds that are major players in swaps (as opposed to HFs that are major players in bonds, futures, options, or even equities). But on net, in spite of the epically bad drafting, this could end up being a net positive for the financial system. Hedge funds, as well as the Blackrocks and PIMCOs of the world, will obviously scream bloody murder. Thats to be expected. At the end of the day, Dodd-Franks impact on MSPs will depend, of course, on what the CFTC and SEC do with their authority.

Swap Execution Facilities (SEFs)

This will be one of the most interesting aspects of the derivatives title. Contrary to popular belief, Dodd-Frank does not mandate exchange-trading for standardized/cleared swaps. It requires cleared swaps to trade on either an exchange or a "swap execution facility" (SEF). What is an SEF? Section 721(50) provides the definition:

(50) SWAP EXECUTION FACILITY.—The term ‘swap execution facility’ means a facility trading system or platform in which multiple participants have the ability to execute or trade swaps by accepting bids and offers made by other participants that are open to multiple participants in the facility or system, through any means of interstate commerce, including any trading facility, that—

(A) facilitates the execution of security-based swaps between persons; and

(B) is not a designated contract market.

[Note: the reference to "security-based swaps" rather than "swaps" in subsection (A) is a mistake, and Barney Franks aides have said that it will be fixed in a technical corrections bill.]

This appears to be a pretty broad definition, which is a good thing. Crucially, pre-trade price transparency is not required — again, this is a good thing. Im not surprised that pre-trade price transparency isnt required — Gensler wasnt naïve enough to buy the "pre-trade price transparency is always and everywhere a good thing!" argument, and pushed lawmakers not include such a requirement.

Most crossing shops, including most so-called "dark pools," appear to qualify as SEFs. Theres technically a question as to whether so-called "single-dealer systems" will qualify as SEFs. Banks in-house counsel are already pushing an interpretation in which single-dealer systems would qualify as SEFs, but frankly, its a pretty specious argument, and its very unlikely to pass muster with the CFTC. (It has to do with what the phrase "that are open to multiple participants in the facility" applies to.) Itll be interesting to see if "negotiated dark pools" like Liquidnet qualify; I think they should, given the definition in the bill.

There are two situations in which cleared swaps wont be required to trade on an exchange or SEF. First, when no exchange or SEF lists the swap (see § 723(h)(8)(B)). Second, essentially if the CFTC or SEC says that the swap doesnt have to trade on an SEF. Specifically, § 733(d) authorizes (but does not require) the CFTC and SEC to promulgate rules "defining the universe of swaps that can be executed on a swap execution facility." If a particular swap is not included in the universe of swaps that can be executed on an SEF, then it can be executed however the parties wish — even if an exchange lists the swap. Its safe to assume that the CFTC and SEC will both elect to promulgate rules defining the universe of swaps that can be traded on an SEF. When they do, this will be an important flashpoint to watch.

"Large Notional Swap Transactions" (i.e., Block Trades)

In general, Dodd-Frank subjects all cleared swaps to "real-time public reporting" of "transaction and pricing data" (excluding the identity of the counterparties). However, § 727(E) requires the CFTC to promulgate rules: (a) specifying criteria for determining what constitutes a block trade, and (b) providing for a time delay for public reporting of block trades. These rules will be crucial. Trading in the swaps markets tends to be in size (although its been a few years since I was in-house at a dealer, so this may have changed), so its entirely possible, if not likely, that a significant percentage of swaps trades will be considered "block trades," and thus subject to the delayed reporting requirement. In that case, the length of the time delay for public reporting of block trades will be extremely important. Expect heavy lobbying from both the dealer banks and hedge funds on this issue.

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