In the news this week

Author: John Crabb, Karry Lai, Olly Jackson | Published: 23 Nov 2018
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Americas: Reasons to be thankful

Traditionally a quiet period in the US as the country prepares to eat turkey and watch football, which means spending hours stuck in traffic to see distant relatives, this week still managed to throw a couple of curveballs. Within the Trump administration, Ivanka somewhat ironically took the heat for sending a number of emails from a personal email account while on White House duty, while the President himself launched an attack on the Obama appointed chief justice, John Roberts, while electing to stand by the Kingdom of Saudi Arabia despite its involvement in the death of the journalist Jamal Khashoggi.

More cause for thanks in the US saw a major Wall Street sell off, as oil shares and giant tech stocks alike took significant hits. Despite this, the Fed indicated that it has no plans in shelving the interest rate hikes that it has suggested will come imminently. 

It has been yet another busy week for Randal Quarles, vice chairman for supervision at the Federal Reserve, who fresh off the back of a number of suggestions to stress testing and prudential standards, has suggested that the central bank ease margin standards for the foreign arms of US banks' that are party to uncleared derivatives deals with other parts of the same firm. Quarles also suggested that the Fed put derivatives-clearing offset in its capital rules.

Quarles’ name has also been put forward as the front runner to be the new head of the Financial Stability Board (FSB) in what is being seen as a bid to keep the US engaged in the international agency. This week, the FSB released its list of G-Sibs, choosing to entirely remove Nordea and the Royal Bank of Scotland from the list of systemically important banks, while downgrading the Bank of America. 

Asia-Pacific: Changes anew

The Shenzhen and Shanghai stock exchanges have released new delisting rules aimed at companies with serious public safety violations. The move aims to improve market compliance and quality of listed companies. This comes after the fake vaccine incident from Changsheng Biotechnology, which is currently being delisted by the Shenzhen Stock Exchange.

China’s competition authority is investigating US-based Micron, South Korea’s Samsung and SK Hynix in price fixing allegations. The three companies are the world’s top dynamic random access memory (DRAM) chip makers. The probe is taking place against the backdrop of rising trade tensions between China and the US.

The Monetary Authority of Singapore (MAS) has finalised the new regulatory framework for payment services in Singapore and submitted the Payment Services Bill to Parliament. The Bill aims to streamline the regulation of payment services with a broadened licensing framework and a designation regime that enables MAS to regulate systematically important payment systems for financial stability and efficiency reasons.

EMEA: Obstacle course

While Parliament bickers about the contents of Theresa May’s deal with the European Union, it appears that an agreement with the 27 member states could also be difficult to attain, underlying Mays’ impossible task. The Irish backstop remains the centre of focus for the UK parliament, but Gibraltar could also prove to be a major sticking point. Spain has requested changes to the withdrawal treaty or it will veto it. The deal could still go through on a qualified majority, but the disagreement risks delaying the deal until December or causing other member states to side with Spain and reject the deal outright. Spain objects to the EU introducing a clause that means Gibraltar would be covered by a future trade deal negotiated with Brussels, which would not require Spanish Parliament’s consent.    

If this wasn’t enough, UK Parliament remain divided on the deal, with former Brexit secretary Dominic Raab going as far as saying that it would be better to remain in the EU rather than leaving with May’s draft agreement. Opposition leader Jeremy Corbyn of the Labour Party, said the deal was the worst of both worlds in forcing the UK to adopt EU rules without having a say in policy. Yet Labour members and the public alike have called on the opposition to provide a clear alternative. Official party policy has become for the UK to exist in a customs union, but calls are growing ever louder for Labour to commit to a People’s Vote. 

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