NO ONE knows where the next domino will fall amid this financial crisis but the US$2 trillion (S$2.9 trillion) hedge fund industry looks as good a candidate as any. There has been an exodus of money from the funds in recent weeks, raising fears the industry may collapse. But no one is talking about a US$700 billion bailout for these guys. No one will be shedding tears if a run on even the biggest 'hedgie' kicks in. Yet the unthinkable prospect of a bailout could still happen given that some hedge funds are so large, so interlocked with the financial system, that they cannot be allowed to fail.   more »

MCX Stock Exchange Ltd (MCX-SX), promoted fully by Multi-Commodity Exchange of India (MCX), will start currency derivatives trading on October 7, an exchange official said today. MCX had secured in-principle nod for starting currency futures trading in August. Earlier, participants had to depend on over-the-counter (OTC) products such as forwards, swaps and options to hedge their currency risks. (Sify)   more »

The board of Securities and Exchange Board of India, which is scheduled to meet on Monday, is likely to ease the current restrictions on investments by foreign institutional investors (FIIs) through Participatory Notes. P-Notes are offshore derivative instruments used by FIIs to buy shares in Indian stock markets without disclosing the identity of the actual investors. A year ago, in October 2007, SEBI had banned fresh issue of P-Notes by FIIs as a measure to check the massive flow of foreign funds into the Indian stock markets.   more »

Commodities markets are heading for the biggest annual decline since 2001 as investors exit leveraged bets and slowing economic growth erodes demand for raw materials. The value of the 19 commodities in the Reuters-Jefferies CRB Index fell $US280.6 billion, or 43%, from its July 3 peak, a loss larger than their total worth two years ago, data compiled by Bloomberg show. UBS AG, the Zurich-based bank that bought Enron Corp.'s energy unit in 2002, plans to exit most commodity trading. About 15% of investors in Boone Pickens's BP Capital LLC hedge fund may want their money back. The same credit-market seizure that led to last month's bankruptcy of New York-based Lehman Brothers Holdings Inc. and the forced sale of Merrill Lynch & Co. is squeezing speculators who drove commodities to record highs. Slower expansion in the US, China and India is also undermining prices of crude oil, which fell 36%, and corn, down 43%.   more »