How You Pay For The City

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David Grossman investigates the companies that manage our investments.

Five years after the crash, City pay is still soaring.

In this four-part series, David Grossman investigates how we as savers, investors and consumers pay the salaries and bonuses of bankers and investment managers and asks whether they're worth it.

It may seem as if the City creates money out of thin air through the skill of some of the brightest people working in the economy. But all the money that goes into the Square Mile and beyond has to come from the wider economy: from our pensions and investments, from the interest rates we're charged, from the cheap money that we as taxpayers have provided to the banks since 2008 and even from the additional but hidden costs that we pay for consumables like food and fuel.

The series begins with an investigation into the companies that manage our investments. David talks to the campaigners trying to force the industry to be more transparent about the true cost of investing and hears from critics who claim the industry has grown to be so large and complex, it's more geared to serving itself than its customers. And he assesses whether there's any evidence that most fund managers are worth the high fees they charge.

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Institutional investors such as pension funds are the most dominant force in world markets. But how much do we know about the different intermediaries involved in managing our pensions and how much money they take for their work?

In the second part of this four-part series, David Grossman asks what the data about the dozens of funds in the Local Government Pension Scheme tells us about how all our pensions are being managed. And he investigates the role of the most important bank you've never heard of - the global custodian.

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How are all our pensions are being managed by the Local Government Pension Scheme?

Institutional investors such as pension funds are the most dominant force in world markets. But how much do we know about the different intermediaries involved in managing our pensions and how much money they take for their work?

In the second part of this four-part series, David Grossman asks what the data about the dozens of funds in the Local Government Pension Scheme tells us about how all our pensions are being managed. And he investigates the role of the most important bank you've never heard of - the global custodian.

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Critics have long claimed that the financial services sector has become too bloated and complex. But with complexity comes profit. In the third part of this series, David Grossman looks at the byzantine worlds of derivatives and high-frequency trading.

Derivatives began as a way of protecting businesses against unexpected developments like a bad harvest. But this practice, known as 'hedging', now represents just a small fraction of the total market. Derivatives are now the product of choice for speculators looking to place vast bets on everything from the price of gold to pork bellies. But the market has become so complex and tangled that it led one of the world's most successful investors to dub them 'financial weapons of mass destruction'. They have been at the heart of scandals from Enron to the sub-prime mortgage bubble that precipitated the crash of 2008. But they remain hugely lucrative for the banks. David Grossman finds out why and hears from the small businesses who were mis-sold products designed to protect them against fluctuations in interest rates but which turned out to be costly bets that they lost and the banks won.

The programme also assesses the growth of high-frequency trading, where computers compete to beat the market and where trades are performed automatically at breakneck speed. But if the computers are winning, who is losing? David Grossman investigates and talks to former industry insiders about how high-frequency traders seek an edge over the rest of the market.

David Grossman looks at the byzantine worlds of derivatives and high-frequency trading.

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In the final part of the series, David Grossman assesses the impact of Government interventions like Quantitative Easing and Funding for Lending. He looks at their impact on savers and pensioners and asks whether the City has disproportionately benefited from their effects.

The programme also investigates the growth of speculation on the price of commodities like oil, a practice that's been fuelled by fears of inflation as a result of QE. Has the rise in the price of consumables in recent years been driven by demand or by the effects of increased speculation? And who ultimately pays for it?