In the news this week

Author: John Crabb, Karry Lai, Olly Jackson | Published: 15 Jun 2018
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EMEA: making strides

Russia has flirted with the idea of a state-backed cryptocurrency, in a possible attempt to circumvent heavy sanctions from the US and the EU but has so far rejected the move. President Putin said last week that cryptocurrencies are neither a means of payment nor a store of value, and should be treated carefully. Former interim director of the Office of Compliance and Enforcement at the Financial Crimes Enforcement Network (FinCEN) Gregory Lucy told IFLR that a state-backed cryptocurrency could be particularly useful for countries with global trade problems, difficult banking relations and an untrusted banking system.

The Financial Conduct Authority (FCA) is to review the Packaged Retail and Insurance-based Investment Products (Priips) and the new Markets in Financial Instruments Directive (Mifid II) regimes, after the Financial Conduct Authority (FCA) conducts an analysis on costs and charges disclosure reforms. In particular, the key information document (KID) under Priips has attracted criticism. The FCA is keen to promote price competition and market transparency, but it does not appear to be an easy solution to gain certainty over disclosure requirements.

Brexit presents challenges for all UK industries and could damage the UK’s status as the industry leading fintech nation in Europe. The UK has strived to reduce regulatory restraints in an effort to accelerate growth. Brexit could ease regulatory enforcement and continue the trend, but difficulties in attracting talent and companies could impede the progress. 

Americas: a long, long time

The spectacle the whole world was waiting to see this week was the summit in Singapore between President Trump and the Supreme Leader of North Korea Kim Jong-un. The meeting has had significant ramifications to the world’s markets following the well-publicised and successful denuclearisation of the Korean peninsula.

Closer to home the major news was in the corporate sector, as media leviathan AT&T was approved to complete its $85 billion acquisition of Time Warner by a US judge, who decided not to act on obvious antitrust concerns. Shortly after the announcement the expected bidding war between Comcast and Disney took hold, as the former launched a $65 billion bid for the film and TV assets of Fox.

In the crypto space it was a bad week for long term investors as the market price of bitcoin - and nearly every other cryptocurrency - fell to levels not seen since the giddy rallies of December. A large scale hack in Korea was likely the perpetrator. Some good news on Thursday however as the US Securities and Exchange Commission finally announced that it does not consider ethereum to be a security.

Asia Pacific: unlocking the door

China has launched highly anticipated rules on depositary receipts. Known as Chinese Depositary Receipts (CDRs), the goal being to bring back home technology companies that have listed overseas to raise funds domestically. With heavy capital controls and restrictions on investing in stock exchanges, Chinese technology companies have opted to list on overseas exchanges such as Hong Kong and New York. CDRs will allow Chinese companies to tap into domestic capital to fundraise. Xiaomi and Baidu are amongst the first companies to make use of CDRs. 

The programme is aimed at technology companies in sectors that are in line with China’s Made in China 2025 strategy, such as biotechnology and Internet companies. Neighbouring Hong Kong is also in the process of implementing more relaxed rules for companies to list, pre-revenue biotech companies and so-called new economy companies with weighted voting rights.

The China Banking and Insurance Regulatory Commission has launched a consultation paper proposing to change regulations around the ownership of domestic banks and non-financial institutions by foreign financial entities. This follows China’s move to promote foreign investment by relaxing restrictions for foreign financial institutions access to the Chinese market.

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