In the news this week

Author: Amélie Labbé | Published: 12 Oct 2018
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Americas: farewell, old friends

For regular readers of this round-up, you may be disappointed to hear that news of Elon Musk and the North America Free Trade Agreement fail to make this week’s edition, both long lasting sagas wrapped up last week. The nomination of Brett Kavanaugh too has come to an end, with the judge receiving the necessary votes and being sworn into the Supreme Court earlier this week.

More bad news saw the global stock markets tumble in dramatic fashion in tandem with US stocks, led by the Dow, the S&P and the Nasdaq, which saw the biggest day of losses in several months. The fall suggests that investors are increasingly worried about rising interest rates. 

The Department of Justice finally approved CVS Health's $69 billion acquisition of Aetna, in a deal that could have a big impact on how many Americans get basic healthcare. CVS was told that they must divest Aetna's Medicare Part D if they were to gain clearance, terms they have agreed to.

In Brazil, far right political firecracker Jair Bolsonaro secured a victory in the first round of the presidential elections. Bolsonaro took 46% of the vote, falling short of the 50% needed to avoid the second round and will enter into a second run off vote against  Lula’s replacement Fernando Haddad, who won 29% of the vote for the leftist Workers’ Party.

Asia Pacific: onwards and upwards

The UK’s Financial Conduct Authority and Hong Kong’s Securities and Futures Commission have signed a memorandum of understanding for mutual recognition of funds. Under the agreement, public funds in Hong Kong and retail funds in the UK will be able to distribute in each other’s jurisdiction. Fund types covered include equity, bond, mixed and feeder funds. 

The Monetary Authority of Singapore has released new guidelines on robo-adviser requirements to give clarity of rules on investment advice provided by automated robo-advisers. The rules include expectations on the governance and supervision of algorithms as well as frameworks to manage technology and cybersecurity risks.  

The People’s Bank of China has issued rules for online financial institutions to combat against money laundering and counter-terrorism financing. The rules, which will take effect from January 1 2019, stipulate that firms need to set up internal control mechanisms and report suspicious transactions in a timely manner. 

EMEA: on the precipice

The Bank of England told the EU this week that more needs to be done to prevent a 'cliff-edge Brexit' from occurring to protect cross-border financial services. Fears have existed ever since the results of the referendum for the state of financial services, particularly in the event of a no deal, but a deal is looking increasingly likely. There is particular frustration when it comes to derivatives and insurance, where limited progress has been made in addressing these risks. In meeting notes published Tuesday, the Bank of England said: 'In the limited time remaining, it is not possible for companies on their own to mitigate fully the risks of disruption to cross-border financial services. The need for authorities to complete mitigating actions is pressing.’ Only six months remain before the deadline.

The global Financial Stability Board (FSB) said this week that crypto-assets, like bitcoin, do not threaten financial stability but monitoring and possible action to protect consumers is necessary. The total market capitalisation remains small in comparison to established financial markets, despite the extraordinary volatility that has been seen in the past 12 months, but the FSB believes that consumer and investor protection may be needed.

The European Central Bank (ECB) said the economy was strong enough to ride out the many global risks currently, even after the stock sell-off began in the US. The ECB noted a number of risks, including the US China trade war, but said the economy was resilient enough to cope. Goldman Sachs said that the sell-off was due to mounting worries about the overall global outlook that get starker by the week.