In the news this week

Author: Amélie Labbé | Published: 19 Oct 2018
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Americas: hard at work

As the world braces itself for the US electoral midterms, and those with eyes to the east wait patiently for any news re Brexit, the US regulators are slowly but surely implementing change in the country. The big news this week saw the SEC rule that the NYSE and the Nasdaq did not justify increases in market fees, finding 'that the exchanges had not met their statutory obligation to demonstrate that the fees were consistent with the Exchange Act’. This resolves an issue that had been ongoing for several years, and increases pressure on the exchanges regarding charging for customer data.

Treasury took steps to enact the new regulations governing the Committee on Foreign Investment in the United States (Cfius) that implement certain aspects of the Foreign Investment Risk Review Modernization Act (Firrma). The regulation may signal a change in approach for firms in the US or abroad. The amendments pertain to certain investments in the US by foreign persons, setting forth changes to the existing Cfius regulations in Part 800 of title 31 of the Code of Federal Regulations.

The Financial Stability Oversight Council announced on Wednesday that it had voted to remove insurance firm Prudential from the list of systemically important financial institutions, the final non-banking institution to be undesignated as such. This follows the removal of the label from AIG, GE Capital and MetLife.

News surfaced this week that ride sharing companies Uber and Lyft are both in the late stages of pursuing initial public offerings. The two companies find themselves in a race to the exchange, as the first company to list will gain advantage in terms of investor appetite.

Asia Pacific: on top of things

Hong Kong’s Securities and Futures Commission (SFC) has released consultation conclusions on proposals to amend its guideline on anti-money laundering and counter-terrorist financing. The revised guideline, which takes effect in November 2018, expands the categories of politically exposed persons to include those entrusted with a prominent function by an international organisation. The changes will also allow firms the flexibility to adopt reasonable risk-based measures to verify customer identification information, including supplementary measures to guard against impersonation risk in non-face-to-face customer onboarding.

Continuing its efforts to deleverage efforts and manage national debt, China is planning to increase the number of companies categorised as systemically important financial institutions (SIFIs) to manage the potential impact of a large financial institution’s collapse and impact on the economy. At least 50 of the country’s largest banks, insurers and brokerages will be included in the list of SIFIs which will be subject to more stringent regulations, including higher capital requirements and periodic stress tests.  

South Korea’s Financial Services Commission has released plans to strengthen short selling regulations through changes to the Capital Markets Act. The new rules will subject illegal short sellers to imprisonment and fines that are 1.5x higher than the undue profits earned through illegal trading.

EMEA: soldiering on

The Brexit discussions may not be going anywhere soon, but the region’s financial markets are still working full capacity. This week marked IFLR’s Middle East Awards, which were held in Dubai on October 17. The full list of winners is available here.

The European Securities and Markets Authority (Esma) recently published a consultation paper on draft guidelines on stress test scenarios for the €16 trillion money market funds industry, including Ucits and alternative investment funds (AIFs). Similarly to those applied to banks, the tests must map the impact of possible severe future events on the funds.

Continuing with the doom and gloom, European Banking Authority chair Andrea Enria has called for the Single Resolution Board to make public information on those financial institutions that would need to be bailed in rather than wound up. This would help map out adequate levels of regulatory capital these banks would be required to hold.

As the Libor saga rolls on – notably as the industry searches for a replacement for this landmark benchmark – two former Deutsche Bank traders were convicted in New York over their role in 'manipulate the Libor benchmark interest rate between 2005 and 2011’. Both former employees have announced they will challenge the verdict.