Maple Extends TMX Bid - Financial Post

This makes me sick to read it. They are writing into law on the basis of consensus, and not parliamentary regulation, that asset prices are effectively to become a function of hedging strategies.

"During two days of hearings held last December at the OSC, Maple and TMX officials said they would be prepared to ease such concerns by making the CDS pricing model part of the “recognition order” with the regulator. This would give the OSC “explicit responsibility … to reject or approve” any pricing model put forward."

By pricing models, they mean delta hedging strategies using the Black Scholes options pricing model in use pervasively over all asset classes in the banking sector.

In December we saw the low in GBN.V shares, and yet another low this week during a precipitous crash in gold mining shares. To some it might be merely a price adjustment or a blow out of excess liquidity in gold mining shares, but what it really means is that people who had leveraged up heavily and bet on the mining shares because of the gold bull market are basically being wiped out.

Now you know just WHY liquidity is going into derviatives or hedging strategies, rather than into stocks.

Financial Post