In the news this week

Author: John Crabb, Karry Lai, Olly Jackson | Published: 16 Nov 2018
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Americas: Changes afoot

While California burns and the last of the midterm election results trickle in, it has been hard to keep your eyes of the UK parliament this week. As it slowly capitulates, those in the US and Latin America may be seeing their own problems in a whole new light. Big corporate news in the US saw Amazon finally decide where to locate its new headquarters, surprisingly opting for New York and Virginia much to the derision of those in both areas. Other market news took a big bite out of Apple’s stock price, and a slight recovery in oil values after the bear market last week.

This week, vice chair for supervision of the Federal Reserve Board of Governors, Randal Quarles, gave a speech to the US House of Representatives on the Federal Reserve's regulation and supervision of the financial system. The speech addressed the Fed’s efforts to improve regulatory transparency, as well as its progress in simplifying the post-crisis regulatory framework. Quarles also confirmed this week that the Fed is continuing to look at the stress testing system in the US.

Earlier today, the much anticipated Consolidated Audit Trail finally launched after its year long delay. The CAT is a new method of data collection that is intended to enable regulators to oversee the securities markets on a consolidated basis and allow them to better protect markets and investors, but earlier this year the Securities and Exchange Commission suggested that it didn’t expect US national security exchanges and the broker-dealer community to meet compliance deadlines. 

Asia-Pacific: Slowdown approaching

China’s premier Li Keqiang has indicated that loans to small and medium enterprises should not be willfully withdrawn but instead, loans should be encouraged to continue to help these businesses in a difficult environment. The economic environment in China is becoming more difficult for small and medium enterprises as trade tensions continue to escalate between China and the US and the country faces an economic slowdown. Premier Li added that more targeted measures will be put in place to help boost the financial sector’s support for the real economy and more assistance will be provided to small and medium enterprises that find it difficult to get loans. These include encouraging banks to create incentives to lend to small and medium enterprises as well as use of government-managed guarantee funds to ease financing.

American Express has received preliminary approval to clear card payments in China, a significant step towards opening up China’s bank card market to foreign investors. The move will allow the company to process and settle payments in yuan domestically by creating its own network together with its Chinese joint venture partner LianLian Group. The joint venture, named Express (Hangzhou) Technology Services, needs to complete operation operations within a year and receive approval from the People’s Bank of China before it can start its card clearing business.

EMEA: Brexit chaos

Theresa May’s Brexit plan has been condemned from all sides of the political spectrum. In an effort to reassure and ease concerns, the draft deal agreed with Brussels has done anything but, leading to one of the very individuals responsible for negotiating the deal, Brexit secretary Dominic Rabb, to resign himself. Upon fearing the poisoned chalice, Michael Gove, famous for deceiving long-time friend Boris Johnson in the last Conservative leadership election, rejected the position of Brexit Secretary offered by Theresa May and is considering resigning himself. After Raab and McVey’s resignations, and the resignations of foreign secretary Boris Johnson and previous Brexit secretary David Davis in July, one wonders how history will treat this select group of MPs, so determined to drive Britain to the edge of the cliff and then jump out of the car at the last moment. In spite of understandable criticism, May’s stoicism is admirable in the face of increasing deceit, but it appears that the deal will not go through Parliament. This means there are three realistic choices left: a no deal, another referendum or remain in the EU, all choices that are astonishing prospects in themselves. The Brexiteers' dream is becoming more and more fanciful, and destructive, as each day passes.

And in an effort to exploit the madness, Ireland has introduced changes to the authorisation and post-authorisation of UCITS and retail AIFs by applying a self-certification process and a new application form. Alan Keating, chief executive at MUFG Alternative Fund Services, said that the changes are a positive development which will streamline the approval and improve what was previously a cumbersome process. This could attract investors concerned by the madness over the sea.

GDPR is said to be affecting M&A transactions, making it harder to complete deals. A report from Merrill Corporation found that 55% of more than 500 M&A professionals said GDPR was a primary reason for why a deal did not progress. Hilary London, EMEA general manager at Merrill, said that the due diligence process is made much more difficult than before the regulation’s implementation and companies are turning to technology to solve these issues.

 

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