GFMA - News on the global financial markets
Friday 28 October 2011 GFMA
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Deutsche Boerse wants OTC derivatives included in
NYSE bid review
Deutsche Boerse urged EU regulators to assess its proposed merger
with NYSE Euronext by including the over-the-counter derivatives
market as well as the exchange-listed market. The European
Commission reportedly has been considering only the smaller
exchange-listed market in its review of the $9 billion deal.
Representatives from interested parties including AFME, London
Stock Exchange Group, Nasdaq OMX Group, ICAP and Bank of New York
Mellon joined a hearing in Brussels between Deutsche Boerse and
NYSE Euronext executives and regulators. Reuters(27 Oct.)
Think tank predicts 38% drop in City bonuses this
year
The Centre for Economics and Business Research reversed a
prediction that 2011 City bonuses will increase 6%, forecasting a
38% decline. The think tank estimated a bonus pool of about £4.2
billion for London's financial firms. In 2007, the pot reached a
record £11.6 billion. Reuters(28 Oct.)
EBA's risk weightings hit Nordic banks harder than
peers
The European Banking Authority decided to assign significantly
higher risk weightings on mortgage assets compared with national
regulators. The situation penalises Nordic banks, which rely on
mortgage credit for a large part of their operations. "The choice
to use transitional rules is of course unfortunate for these banks
and punishes them in a way," said Martin Noreus of the Swedish
Financial Supervisory Authority. "It’s clearly not favourable for
Swedish banks." Bloomberg(27 Oct.)
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UK officials remain opposed to EU tax on financial
transactions
UK Chancellor George Osborne told lawmakers in Parliament that
Britain will oppose any tax on financial transactions that is not
implemented globally. "The euro zone is determined to pursue a
financial-transaction tax," Osborne said. "Britain will not accept
a financial-transaction tax at an EU-27 level while other places in
the world don't have one." Meanwhile, London Mayor Boris Johnson
urged the EU to drop the idea, which he said would drove business
from London and result in job losses. Bloomberg(27 Oct.), Financial Times (tiered subscription model)(27
Oct.)
Global regulator takes aim at shadow-banking
sector
The Financial Stability Board is tackling the $60 trillion
shadow-banking sector to rein in risk. The global regulator wants
to make it more difficult and expensive for banks to conduct
business with the nonbanking financial sector. The FSB proposed
tougher regulation of the sector. "The shadow banking system can
also be a source of systemic risk both directly and through its
interconnectedness with the regular banking system," according to
the FSB. Reuters(27 Oct.)
BIS official questions EU's treatment of
sovereign-debt risk
Herve Hannoun, deputy general manager of the Bank for International
Settlements, said sovereign debt should not be given a zero risk
weight, as it is under the EU's Capital Requirements Directive.
"The global sovereign-debt crisis has exposed fault lines in the
regulatory treatment of sovereign risk," Hannoun said. "However,
the deficiency is not in the Basel standards but in the way the
global standards have been applied in some countries and especially
in the European Union." Global Financial Strategy(27 Oct.)
Bank of Japan boosts government-bond
purchases
The Bank of Japan aims to bolster the economy by increasing
purchases of government bonds. The central bank warned about
threats from Europe's debt crisis and a strong yen. "Current yen
rises are having a big negative impact on Japanese corporate
sentiment and exports," said Governor Masaaki Shirakawa. "Global
economic uncertainty, including Europe's debt problem, remains very
high, prompting global investors to seek safe-haven assets."
Reuters(27 Oct.)