In the news this week

Author: John Crabb, Karry Lai, Olly Jackson | Published: 6 Apr 2018
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Americas: even big tech can have an off week

Data was the word on everyone’s lips once again this week, with the repercussions of the breach at Facebook echoing through Silicon Valley.

And with the GDPR regulation set to come into force in around six weeks, it is unlikely to be the last time that data dominates financial news coverage. In fact, it’s already expected that US M&A parties will be forced to take extra due diligence measures to ensure compliance with the upcoming regulation. 

Some positive news saw Spotify launch its IPO on the NYSE (after an initial teething issue that saw the flag of Switzerland raised in place of Sweden’s). The direct listing, which IFLR reported on in January, drew extra attention for its irregular stock format. But a successful opening day with a 12% rise and a valuation of $26.5 billion by the end of trading will be welcome news to any companies looking to follow suit.

In contrast it was a relatively quiet week on capitol hill with only a handful of the administration being sent their marching orders. The trade war between China and the US gathered more steam, with further tariffs extending pressure on firms in both countries; while a statement of intent by Trump that he intends to police the southern border with Mexico knocked another divot out of the ongoing Nafta negotiations.

Asia: eyes on the prize

China has announced plans to set up a financial court in Shanghai that will focus only on resolving financial cases to keep up with the ever-increasing case load in the financial industry as regulation in the sector tightens. The plans were approved by the Central Comprehensively Deepening Reforms Commission which heads up policy creation and implementation in the financial industry.

In an effort to lure domestic companies back home to list, the China Securities Regulatory Commission has swiftly drafted plans to trial a programme that allows technology companies that have listed in foreign markets to list in China. The Chinese Depository Receipt programme demonstrates that China is opening up its equity markets to variable interest entity structures. The move is part of a wider initiative from Asian exchanges to attracts IPOs of so-called new economy companies.

Following Singapore’s announcement to probe into the Uber/Grab merger, the Philippines and Malaysia’s competition authorities will also be scrutinising Uber’s sale of its southeast Asian business to Grab. Singapore has proposed short-term measures requiring Uber and Grab to maintain their pricing before the transaction until the review of the deal is complete.

EMEA: GDPR’s the word (again)

Businesses are retreating from consent as a legal basis under GDPR, choosing other routes that may be easier to navigate. The change requiring clear, and on occasion, explicit consent is causing headaches for companies that historically have relied on consent as a big part of their business. These are choosing other legal grounds such as legitimate interests. Legal practitioners expect the regulation to be enforced in a sector-specific way, so firms like those in insurance do not have to completely change their business models.

In the US, the Treasury’s Office of Foreign Assets Control published new guidance stating that cryptocurrency addresses will be added to the specially designated nationals and blocked persons List (SDN) list in the same way as fiat currencies. This is in a move intended to reduce money laundering. But this decision could backfire, driving investors to smaller, less transparent exchanges where risks to investments are even greater. All this is happening in an already confusing legal environment for digital currencies.

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