In the news this week

Author: Amélie Labbé | Published: 14 Sep 2018
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Americas: Ginnie and tonics    

This week marked the 17th anniversary of 9/11, and the 10th anniversary of the financial crisis, two events that both shook the US that made it what it is today.

President Donald Trump has upped his fiscal attack on China, threatening duties on $267 billion more imports. China itself has reportedly sought to meet with US bankers to discuss the ongoing trade war.

The North American Free Trade Agreement saga continued this week. The Mexican economy minister announced that the country would seek to end any tariff related issues in the steel industry, as all three countries met once again to discuss possible renegotiations to the decade old pact. Discussions are ongoing.

At the end of last week, Texan Republican representative Jeb Hensarling proposed removing government sponsored housing enterprises Fannie Mae and Freddie Mac, and replacing them with the Government National Mortgage Association – known as Ginnie Mae. This would allow some leeway in terms of disagreement regarding government backing and will allow for future reforms.

Elsewhere the Securities and Exchange Commission released a statement confirming that it would be ending the ill-fated tick sized pilot two days early, confirmation that it would not be extending it past its initial two-year period. The pilot, a national market system that was designed to allow for the assessment of the wider minimum quoting and trading increments, was not very well received and sources suggests that it failed to have the originally intended benefits for market participants.

Asia Pacific: stronger together

While Trump has threatened to impose tariffs on all Chinese goods at short notice, China has released data on August exports, with trade surplus widening to $31.05 billion, up from $28.09 billion in July. This is in part due to the US’ strong economic growth but also front loading of exports to avoid higher tariffs in the future.

Continuing its gradual move to open up national financial markets, the People’s Bank of China has announced that the renminbi will be allowed to trade on a wider range, including approved cross-border securities investments.

The Monetary Authority of Singapore has launched a consultation on proposed measures to strengthen cybersecurity rules for financial institutions. Aimed at countering cyber breaches, the measures include a set of six legally binding security measures to protect the IT systems of financial institutions. These measures are: addressing system security flaws in a timely manner, establishing and implementing robust security for systems, deploying security devices to secure system connections, installing anti-virus software to mitigate the risk of malware infection, restricting the use of system administrator accounts that can modify system configurations and strengthening user authentication for system administrator accounts on critical systems. The consultation ends October 6.

EMEA: doom and gloom

This week was the week that Moody’s warned that the risk of a no-deal Brexit had risen materially in recent months, after weeks of difficult negotiations. The banking sector’s 'overall credit fundamentals would weaken due to lower asset quality and weaker profits’ and many other sectors in the financial services market would face a drop in demand and in revenue. Many financial institutions have implemented contingency plans in the event of a no-deal Brexit, and many have moved staff to new offices within the EU.

This comes amid reports that EU institutions are planning to strengthen supervision of the City of London post-Brexit. As Brexit in effect makes passporting difficult if not impossible, the EU Commission’s Valdis Dombrovskis, said that any future would have to include high levels of monitoring to ensure that the UK is complying with new rules.

In this week that marked the 10th anniversary of the collapse of Lehman Brothers, Nasdaq announced that a trader in its Nordic energy futures market segment had defaulted after being unable to meet margin requirement for his trades. The exchange said it absorbed the losses from its own default fund and the mutual default fund set up by clearing house members.

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