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LONDON, Dec 1 (Reuters) - European Union officials and regulators on Thursday played down the need for radical intervention in gas markets after prices rocketed this year in the wake of Russia's invasion of Ukraine. Gas prices rose so high and fast that governments had to help energy firms meet higher collateral calls on their derivatives contracts, prompting some calls for change. The EU has proposed to capping gas prices, but only if they hit certain levels over many days. Hanzo van Beusekom, executive board member at AFM, the Dutch body which regulates the gas derivatives market, said prices will only fall when the supply of alternative gas increases and demand eases. Next week, the European Commission -- the EU's executive -- could propose that clearing houses hold a separate default fund for commodity derivatives.
LONDON, Nov 30 (Reuters) - Half of senior leaders in Britain's financial and professional services should come from a working class or intermediate social background by 2030, a government-backed taskforce recommended on Wednesday. The Socio-Economic Diversity Taskforce, headed by the City of London Corporation, which administers the capital's historic financial district, was commissioned by the finance and business ministries. Around half of all employees in financial services and professional sectors like accounting and law are from non-professional backgrounds, and progress 25% slower than their middle and upper class peers, a report from the taskforce said. Employees from non-professional backgrounds are also likely to get paid up to 17,500 pounds ($20,977) less per year, with no link to job performance. The voluntary target of boosting this level to 50% of senior leaders by 2030 will be reviewed in 2025 to ensure it remains representative and achievable, the taskforce said.
LONDON, Nov 30 (Reuters) - The "questionable practices" at now collapsed crypto exchange FTX would not have been allowed to happen under European Union rules now being finalised, a senior European Commission official said on Wednesday. "All these failures are very serious. We don't see them as failures of blockchain or crypto assets per se," added Alexandra Jour-Schroeder, deputy director general at the Commission's financial services unit told a hearing in the European Parliament. Reporting by Huw Jones; editing by David EvansOur Standards: The Thomson Reuters Trust Principles.
LONDON, Nov 29 (Reuters) - Britain will change its rulebook to allow banks to take more risks in order to keep the City of London a leading global financial centre, a government minister said on Tuesday. Next week the EU will set out a new law to force banks in the bloc to shift some of their euro derivatives clearing from London to Frankfurt. "The overall thrust of things is to allow more risk... You get reward from taking risks, you shouldn't be risk off, we just need to manage that in an appropriate way," Griffith told a Financial Times event. "There is nervousness about the UK overall," Nunn said, referring to the period of political instability and concern over the nation's finances. Alison Harding-Jones, head of EMEA M&A at US bank Citi, told the event that Britain remained a strong place and open for business.
U.S. West Texas Intermediate (WTI) crude slid $2.31, or 3%, to $73.97 after touching its lowest since Dec. 22 last year at $73.60. Markets appeared volatile ahead of an OPEC+ meeting this weekend and a looming G7 price cap on Russian oil. The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, will meet on Dec. 4. However, EU governments were split on the level at which to cap Russian oil prices, with the impact being potentially muted. The price cap is due to come into effect on Dec. 5 when an EU ban on Russian crude also takes effect.
[1/2] Banknotes of Chinese yuan and U.S. dollar are seen in this illustration picture taken September 29, 2022. REUTERS/Florence Lo/Illustration/File PhotoLONDON/SINGAPORE, Nov 28 (Reuters) - The dollar fell sharply against Japan's yen on Monday as investors focused on rare protests in China, which pushed the yuan to a two-week low. China's onshore yuan finished the domestic session around 0.5% lower at 7.199 per dollar, the lowest close since Nov. 10. The offshore yuan fell to a more than two-week low in Asian trading and was last down 0.28% at 7.214. The Australian dollar , often used as a proxy for the yuan, slid 0.67% to $0.671.
LONDON, Nov 28 (Reuters) - Paris' luxury-laden stock exchange is now worth more than London's. France's CAC All Shares index (.PAX) is now worth almost $3 trillion, making it Europe's largest stock market by value thanks to demand for its luxury-retailer blue chips. Reuters GraphicsFUND FLOWSSo far in 2022, funds investing in UK stocks have seen record outflows of 23 billion euros, according to Refinitiv Lipper, up from almost 18 billion euros last year and the 14.6 billion euros shed in 2016, when Britain voted to leave the European Union. Annual outflows from French equity funds are much smaller - at 2 billion euros this year. FX MATTERSIt's also worth noting that currency comes into play when measuring the size of London's market against Paris' in dollar terms.
Regulators worry about the speed and scale at which banks, insurers and investment firms are moving critical functions and market operations onto a handful of cloud platforms. A glitch at one cloud company could potentially bring down services across many financial firms, regulators have said. "Thanks to the harmonised legal requirements which we adopted today, our financial sector will be better able to continue to function at all times," Stanjura said. The requirements will apply to financial firms and "critical" third parties supplying cloud based services. "If a large-scale attack on the European financial sector is launched, we will be prepared for it," Stanjura said.
Morning Bid: China, COVID and Crude
  + stars: | 2022-11-28 | by ( Huw Jones | )   time to read: +4 min
Rare anti-government unrest across China's cities over the weekend has unnerved world markets, weakening crude oil prices and adding fresh political risks to a fragile year-end. Wary that both the unrest and the COVID crunch compound the economic hit to China and the world, the initial market reaction on Monday was to sell Chinese stocks, the yuan and oil - with crude oil prices falling to close to $80 per barrel, their lowest since January. A U.S. regulatory clampdown on Chinese tech giants, citing national security concerns, also weighed on shares of tech firms. As U.S. markets return after the Thanksgiving weekend, attention will return to Federal Reserve tightening, the labour market and inflation picture. The German banking giant said it expected U.S. output to drop 2% over the whole year, euro zone output to decline 1% and world economic growth to slow to a recessionary 2%.
The loss of clearing in contract worth trillions of euros would be a further knock to the City as it faces new competition from EU financial centres like Paris and Frankfurt, alongside longstanding rivals such as New York and Singapore. Global banks have warned Brussels they could clear contracts in the United States if the EU is too heavy-handed. The commission is due to publish the draft law on Dec. 7, with the European Parliament and EU states having the final say. Global banks have warned Brussels that heavy, mandatory action forcing them to shift euro derivatives clearing out of London would backfire on EU banks, who need access to global liquidity pools in London, and could send clearing activity to the United States. The draft law tentatively proposes requiring EU clearers of commodity derivatives to hold a standalone default fund for that particular asset.
LONDON, Nov 24 (Reuters) - The crash of FTX exchange has injected greater urgency into regulating the crypto sector and targeting such 'conglomerate' platforms will be the focus for 2023, the new chair of global securities watchdog IOSCO said in an interview. Jean-Paul Servais said regulating crypto platforms could draw on principles from other sectors which handle conflicts of interest, such as at credit rating agencies and compilers of market benchmarks, without having to start from scratch. Cryptoassets like bitcoin have been around for years but regulators have resisted jumping in to write new rules. "Is it the case for the crypto market? "For investor protection reasons, there is a need to provide additional clarity to these crypto markets markets through targeted guidance in applying IOSCO’s principles to crypto assets," Servais said.
Consumer credit rating firms need reform, says UK watchdog
  + stars: | 2022-11-22 | by ( Huw Jones | )   time to read: +3 min
Experian, Equifax and TransUnion make up almost all of the Britain's 800 million pound ($946.32 million) credit reference agencies (CRAs) sector. Credit agencies also help verify the identity of consumers to combat fraud and help with affordability assessments. There are significant differences in credit information held by the three big companies, which are "very likely" to affect lending decisions by banks, the FCA said. Equifax said it was reviewing the FCA report, and Experian said it supported a recommendation to improve coverage of credit information. A TransUnion UK spokesperson said that the company will work with the FCA and wider industry to sustain a fair and robust credit ecosystem.
Companies Financial Conduct Authority FollowLONDON, Nov 22 (Reuters) - Providers of environment, social and governance (ESG) ratings on companies will be asked to apply a voluntary best practice code as a first step to regulating the sector, Britain's Financial Conduct Authority said on Tuesday. Trillions of dollars have flowed into sustainable investments globally using unregulated ESG ratings on companies as a guide for their 'green' credentials, leaving regulators worried about greenwashing or over inflated ESG claims. Britain's government is considering giving the FCA powers to directly regulate ESG ratings providers. The code will reflect recommendations from the global securities regulatory body IOSCO, and developments in Japan and the European Union, the FCA said. "A Code could also continue to apply for ESG data and ratings providers that fall outside the scope of potential future regulation," the FCA said in a statement.
LONDON, Nov 21 (Reuters) - The implosion of cryptocurrency exchange FTX shows the need to bring the crypto world within the regulatory framework, Bank of England Deputy Governor Jon Cunliffe said on Monday. FTX, which has filed for U.S. bankruptcy court protection, has said it owes its 50 biggest creditors nearly $3.1 billion. He added that FTX's woes highlighted the need for regulators to put in place tighter controls as quickly as possible. "The FTX example underlines how important these aspects are," Cunliffe said. "Our aim is to ensure that innovation can take place but within a framework in which risks are properly managed," Cunliffe said.
JP Morgan remains world's biggest systemically important bank
  + stars: | 2022-11-21 | by ( )   time to read: +1 min
LONDON, Nov 21 (Reuters) - JP Morgan remains the world's most systemically important bank according to the latest rankings from the G20's Financial Stability Board published on Monday. JP Morgan remains in bucket 2 - there is still nobody in the top category with most capital requirements. Within the list, one bank has moved to a higher bucket, Bank of America has moved from bucket 2 to bucket 3," the FSB said in a statement. China Construction Bank and BNP Paribas have moved to a lower bucket. Reporting by Huw Jones; editing by Marc Jones and Jason NeelyOur Standards: The Thomson Reuters Trust Principles.
LONDON, Nov 21 (Reuters) - Stock trading apps should review their features to ensure that investors are not tempted into "gambling-like" behaviour, Britain's Financial Conduct Authority said on Monday. The watchdog warned stock trading app operators to stop "game-like" elements which risk prompting consumers to take actions against their own interest. "We expect all firms that offer stock trading to consumers to review and, where appropriate, make improvements to their products based on these findings." More than one million new accounts were opened by 4 trading app firms in the first four months of 2021, almost double the amount opened with all other retail investment services combined. FCA Trading App GraphicReporting by Huw JonesOur Standards: The Thomson Reuters Trust Principles.
LONDON, Nov 17 (Reuters) - European Union states edged closer on Thursday to ditching a proposed ban on brokers earning fees in return for directing stock trades to specific trading platforms. The United States is considering whether curbs are needed for PFOF while the UK has already banned it. The EU ban was proposed in a draft law by the EU's executive European Commission updating the bloc's MiFID II securities law, with EU states and the European Parliament having final say. The Federation of European Securities Exchanges (FESE) said discussions on PFOF and consolidated tape risk "cementing fragmentation and opacity" in markets. However, Huebner said competitiveness of EU markets is essential given competition from Britain and the United States.
EU readies next steps to boost its capital market
  + stars: | 2022-11-17 | by ( Huw Jones | )   time to read: +2 min
Mairead McGuinness said there had been good progress in building the EU's capital markets union (CMU) but more needed to be done to ease reliance on banks for funding companies and the economy, and on London post-Brexit for clearing euro denominated swaps. "We are still over-reliant on central counterparties outside the European Union and this is also a matter of financial stability," McGuinness told an event held by the Association for Financial Markets in Europe (AFME). "In the unlikely case of something going wrong, we would not be in the driving seat for decisions, so we want to increase the attractiveness of clearing in the EU," she said. The EU is watching closely steps being taken by Britain to bolster the competitiveness of its financial sector, now largely cut off from the bloc. "We realise that for the size of our economy the capital markets don't reflect that, as we rely very heavily on bank finance and that is not appropriate."
LONDON, Nov 16 (Reuters) - The British government and the Bank of England are reforming insurers' capital rules, seen as a post-Brexit test of UK willingness to "unshackle" the City of London after leaving the European Union. The EU's Solvency II rules were introduced for insurers in 2016, after years of debate, when Britain was still an EU member. They are designed to ensure insurers hold enough capital to remain stable and can make payouts on policies. The Bank has already consulted on potential changes it says would release 45-90 billion pounds ($53.65-$107.30 billion) of investment capital. The second element involves easing reporting requirements, widening the range of assets insurers can invest in, and tweaks to how insurers' internal capital models are approved.
REUTERS/Maja SmiejkowskaLONDON, Nov 16 (Reuters) - Britain's banks are proactively helping customers hit by the cost of living crisis, but implementing a new "consumer duty" on time could exclude vulnerable consumers from help, banking industry body UK Finance said on Wednesday. UK Finance chief executive David Postings said portfolios of lenders have so far stood up to current economic stresses. It is more critical than ever that borrowers and savers are offered fair and competitive rates, Rathi added. UK Finance chair Bob Wigley said he anticipated that finance minister Jeremy Hunt's fiscal statement on Thursday would help restore Britain's "traditional reputation for sound management of public finances" after turmoil in UK bond markets in September. Banks hope Hunt will announce a cut in the tax surcharge on their profits.
Bank of England chief questions government's veto power plan
  + stars: | 2022-11-16 | by ( )   time to read: +2 min
[1/2] Governor of the Bank of England Andrew Bailey attends the Monetary Policy Report News Conference at The Bank of England, in London, Britain November 3, 2022. REUTERS/Toby Melville/PoolLONDON, Nov 16 (Reuters) - Bank of England Governor Andrew Bailey took the British government to task on Wednesday over its plan to give itself veto powers over post-Brexit financial rules written by independent regulators, including the central bank. The BoE has warned against easing the rules too much as insurers appeal to the ministry to override the central bank. City minister Andrew Griffith has said a veto would be used sparingly, with regulators continuing to enjoy day-to-day operational independence. The veto would be additional to a new remit in a draft law before parliament for regulators to heed the City's global competitiveness when writing new rules.
REUTERS/Tom JacobsLONDON, Nov 15 (Reuters) - Climate-related stress tests for banks need to better capture the indirect fallout of climate change on lenders and the wider global economy, the G20's Financial Stability Board said on Tuesday. The European Central Bank, Bank of England and other central banks have completed an initial batch of experimental stress tests to assess how banks will cope with the impact of climate change on their business. Echoing what industry officials have already said, the report said that many of the tests do not capture 'second round' effects, or impact on banks of climate change hitting the wider economy. Earlier this month the European Central Bank said euro zone lenders were still failing to meet its climate disclosure and management expectations. The Bank of England said in July that future climate-related stress tests could focus on specific activities at banks, such as trading, which was missing from its first test.
Fed hopes buoy shares, China COVID easing boosts oil
  + stars: | 2022-11-11 | by ( Huw Jones | )   time to read: +5 min
Oil prices jumped after health authorities in top global crude importer China eased some of the country's heavy COVID curbs. The S&P 500 (.SPX) and Nasdaq (.IXIC) racked up their biggest daily percentage gains in over 2-1/2 years on Thursday after U.S. data showed prices rose less-than-expected in October. Market bets on the Fed raising rates by 50 basis points instead of 75 basis points increased. US inflation, Fed rates and marketsDOLLAR DIVEInvestors poured into risky assets after the U.S. data, with the dollar suffering its biggest daily drop in 13 years on Thursday. Meanwhile, oil prices rose on Friday after the U.S. inflation data but were on track for weekly declines of more than 4% due to COVID-related worries in China.
Global regulators have called on the EU and ISSB to make their climate disclosures interoperable to avoid competing norms confusing cross-border investors. An advisory body is due to present technical guidance to the European Commission on how to implement the disclosures. The ISSB hopes the EU could move towards its definition of materiality, which is drawn from accounting norms already being applied by EU companies in financial statements. The U.S. Securities and Exchange Commission, however, is facing pressure to ditch Scope 3 from its draft climate disclosures. It said it will apply the ISSB's climate disclosure standard in its work.
"With the cost-of-living crisis hitting UK households, investors want to see companies show restraint on executive pay and bonuses, ensuring that executive pay packets are balanced against the experiences of their wider workforce, customers, and other stakeholders," Andrew Ninian, IA director for stewardship and corporate governance, said on Thursday. With UK inflation more than 10% at a 40-year high, the IA said pay increases in line with rising prices may not be appropriate. The retention and motivation of employees below the executive level will be key and board decisions could affect productivity of the whole workforce, the IA said. Companies should also spell out how executive bonuses will be linked to meeting their environment, social and governance targets in future years, the IA said. ($1 = 0.8740 pounds)Reporting by Huw Jones Editing by Bernadette BaumOur Standards: The Thomson Reuters Trust Principles.
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