In the news this week

Author: John Crabb, Karry Lai, Olly Jackson | Published: 30 Mar 2018
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EMEA: choppy waters 

Private equity performance is currently reminiscent to its performance in 2008, but with greater risk awareness. Huge leveraged buyouts in 2008 destabilised the global economy but, in general, private equity firms are using less debt and are exercising more caution than before. The seller-friendly conditions mean that companies are in a position to demand cash up-front in deals, given the huge competition.

The Senior Managers' Regime (SMR) could be extended later this year and with GDPR due to be implemented soon, senior managers could see a big increase in their workload. Some staff are becoming concerned about taking certain roles because the SMR and some senior managers are accelerating retirement plans. This could lead to a talent shortage where experienced workers are replaced by junior workers and this could be counter-productive to increasing conduct and compliance in the industry.

Consent of data under GDPR is said to be the most problematic aspect of the new regulation. Contrary to popular opinion, consent is not mandatory and there are other, potentially easier, paths companies can take. Companies cannot automatically opt-in their data subjects but if they apply another legal ground, like legitimate interests, then they can operate in a similar way to before, providing that they illustrate the purpose for handling the data.

Americas: count the pennies

On Monday 25 March the Securities and Exchange Commission (SEC) smashed its previous record when it awarded a total of $83 million to three whistleblowers as part of a settlement with Bank of America Corp's Merrill Lynch brokerage unit. The previous record for the largest reward issued by the SEC was $30 million in 2014.

In the Senate the SEC was given a $1.6 billion budget for the 2018 fiscal year, $50 million more than it requested. Drafters allowed for extra funding to cover the regulation of the technology sector. The Commodity Futures Trading Commission (CFTC) on the other hand was awarded with a budget of $1 million less. Chairman Giancarlo had requested of a 12% increase to help fund the regulators new direction and increasing policing of the virtual asset space. 

Cryptocurrency continued to take centre stage, amid a disastrous week for asset holders as values plummeted.  Stringent yet confusing US regulations are putting off cryptocurrency exchanges from operating in the country. Recent developments show that this regulatory framework is only going to strengthen.

Massachusetts Securities regulator William Galvin ordered five planned initial coin offerings (ICOs) to halt their ICO campaigns this Tuesday following investigations into each of the companies.

Chicago based CME Group, who started offering bitcoin futures last year, announced its intention to acquire London-based exchange operator NEX for $5.5 billion, a move that will establish a one-stop shop for US debt. 

APAC: rising tensions

Fears of a US-China looming trade war has been causing global stock markets to sway.

On the US side, the focus has been on Trump's plan to impose $60 billion worth of tariffs on Chinese imports following the Section 301 investigation into China's alleged violation of intellectual property rights. The US is trying to target what it thinks are China's pain points which are imports in tech areas such as robotics and semiconductors as these are areas for growth as demonstrated by the Made in China 2025 initiative.

China has responded with $3 billion tariffs on 128 US food and industrial products including fruit and steel pipes. Whether China will move on products such as cars, soybeans and aircraft, which are some of the China's biggest imports from the US, remains to be seen. Beijing has made it clear that it won't just sit back and will certainly respond if President Trump decides on more punitive measures. How Trump will use his negotiation tactics to reduce the US trade deficit with China is the big question.

The Singapore government is exploring options to use blockchain and distributed ledger technology to ensure clearing and settlement in trade finance, payments, and securities, but also combat money laundering (AML) and terrorism financing..

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