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With just two weeks remaining in 2022, the S&P 500, the Dow and the Nasdaq are on track to notch their largest annual percentage losses since 2008, the nadir of the global financial crisis. The pan-European STOXX 600 index (.STOXX) rose 0.43% and MSCI's gauge of stocks across the globe (.MIWD00000PUS) shed 0.23%. U.S. Treasury yields rose as investors considered how high the Federal Reserve will hike interest rates and how long they will remain at restrictive levels in its battle against inflation. U.S. crude rose 0.48% to $74.65 per barrel and Brent was last at $79.57, up 0.67% on the day. Reporting by Stephen Culp; Additional reporting by Danilo Masoni in Milan; Editing by Susan FentonOur Standards: The Thomson Reuters Trust Principles.
Investors are focusing on a hard-landing scenario for the economy as the Fed pursues more rate hikes. Tesla shares turned lower, and Meta lost ground during the session. Monday's session saw all 11 of the S&P 500's sector close lower, led by the communications services and information technology groups. Among individual stocks, Tesla shares turned lower but had risen earlier in the session after voters in a poll put up by CEO Elon Musk said he should quit running Twitter. Tesla investors and analysts have expressed concern that Musk's focus on Twitter is hurting Tesla.
[1/2] The Wall Street entrance to the New York Stock Exchange (NYSE) is seen in New York City, U.S., November 15, 2022. U.S. stocks edged higher in early trading, indicating a cautious start on Wall Street. The Dow Jones Industrial Average (.DJI) rose 0.55%, the S&P 500 (.SPX) gained 0.27%, and the Nasdaq Composite (.IXIC) added 0.07%. The U.S. consumer price index for November is due on Tuesday, when a slowdown in core annual inflation is anticipated. Two-year yields, which typically move in step with interest rate expectations, rose just 1.4 basis points to 4.342%.
Microsoft to buy 4% stake in London Stock Exchange
  + stars: | 2022-12-12 | by ( Huw Jones | ) www.reuters.com   time to read: +3 min
[1/2] The London Stock Exchange Group offices are seen in the City of London, Britain, December 29, 2017. The European Union has just approved a law introducing safeguards on cloud providers in financial services, with Britain set to follow suit. "We will continue to maintain our multi-cloud strategy and working with other cloud providers," Schwimmer said. Microsoft said the basis of the partnership will be the digital transformation of LSEG's technology infrastructure and Refinitiv platforms on to the Microsoft Cloud. Microsoft will buy LSEG shares from the Blackstone (BX.N)/Thomson Reuters (TRI.TO), Consortium, the exchange operator said.
LONDON, Dec 9 (Reuters) - Britain's finance ministry on Friday set out plans to overhaul the financial sector including a review of rules to make bankers accountable for their decisions and easing capital requirements on smaller lenders. The City has been largely cut off from the European Union by Brexit, putting pressure on the government to ease rules as Amsterdam overtook London to become Europe's top share trading centre. "The government’s approach to reforming the financial services regulatory landscape recognises and protects the foundations on which the UK’s success as a financial services hub is built: agility, consistently high regulatory standards, and openness," the finance ministry said in a statement. The batch of planned reforms also include a review of short-selling rules, overhauling prospectuses issued by companies when they list, and a plan for repealing and reforming rules that were introduced when Britain was in the EU. Reporting by Huw Jones, writing by William James; Editing by Kate HoltonOur Standards: The Thomson Reuters Trust Principles.
LONDON, Dec 9 (Reuters) - Some banks in the euro zone could struggle to pay back money borrowed from the European Central Bank as volatile markets make it harder to raise funds, the European Union's banking watchdog said on Friday. "Banks must repay substantial amounts of central bank loans until 2024. A number of banks will be able to rely on existing liquidity buffers – including central bank deposits – to pay back central bank loans," the European Banking Authority said in a report on banking risks in the 12 months to June 2022. It remains to be seen how costly replacing central bank funding will be," EBA said. Meeting separate minimum requirements for issuing debt that can be written down in a crisis could also prove a challenge for some banks, EBA said.
Britain has already announced an easing of capital rules for insurers and is now turning to banks. Rules on prospectuses that companies give to investors when they list on an exchange will be overhauled, along with a reform of rules for securitisation. The government will act on recommendations from a review into improving how listed companies tap investors for fresh funds. The ratings are widely used by investors for picking companies which tout 'green' credentials, but they are not regulated. Prime Minister Rishi Sunak, when he was finance minister, called for a "Britcoin" or digital pound for faster payments.
LONDON, Dec 9 (Reuters) - Britain's Financial Conduct Authority said it had fined Santander (SAN.MC) 107.7 million pounds ($132 million) for "serious and persistent" gaps in the Spanish bank's anti-money laundering controls for more than 560,000 business customers. The FCA said on Friday that between Dec. 31 2012 and Oct. 18 2017, Santander's UK arm failed to properly oversee and manage its anti-money laundering systems. Santander UK said it accepted the FCA's civil regulatory findings in relation to anti-money laundering controls in its business banking division. The FCA has stepped up action against failings in bank money laundering controls in recent years. The FCA has also fined Standard Chartered and HSBC in the last three years for anti-money laundering breaches.
REUTERS/Maja Smiejkowska/File PhotoLONDON, Dec 8 (Reuters) - Britain will set out reforms on Friday to ease bank capital rules, one of 30 measures the government says will unlock investment and secure its position as the world's "foremost financial centre". The reforms which Hunt said will "turbocharge" growth in the face of recession and a cost of living crisis, take advantage of Britain's European Union exit to tailor its own rules. The EU is also updating financial rules to deepen its own capital market and reduce remaining reliance on London. Britain has already set out initial reforms in its financial services and markets bill being approved in parliament. Scrapping a cap on banker bonuses and easing capital rules for insurers had already been announced, with a public consultation on regulating crypto assets also flagged.
EU financial services chief Mairead McGuinness has likened ending the bloc's heavy reliance on London for clearing euro contracts to weaning the EU off Russian gas so that Brussels builds "open strategic autonomy" in capital markets to safeguard financial stability. This will help build a more efficient market that makes relocation of clearing from London attractive, McGuinness said. Industry officials note EU based clearing liquidity in this contract would effectively need to be built up from scratch, which could take time. These conditions would mean that in practice EU banks will still be clearing some derivatives in London after June 2025. Nevertheless, EU banks still face systems changes to report and track how much is being cleared, a cost that UK and U.S. banks won't face.
LONDON, Dec 7 (Reuters) - Applying the remaining set of global bank capital rules in Britain will increase capital requirements by about 6% by the end of the decade, the Bank of England said on Wednesday. The initial batch of Basel III rules from the Basel Committee of banking regulators from the world's main financial centres, were rolled out in the aftermath of the global financial crisis over a decade ago when taxpayers had to bail out undercapitalised lenders. The final batch, which the BoE calls Basel 3.1, will be implemented from January 2025, after a public consultation now underway, affecting lenders like HSBC, Barclays, Lloyds and NatWest. BoE director Phil Evans said given Brexit allows Britain to write its own financial rules, the consultation is a landmark event that will take account of Britain's competitiveness while aligning with strong international standards. Evans said Basel 3.1 will increase capital requirements for banks by about 6%.
[1/2] Representations of cryptocurrencies are seen in front of displayed FTX logo and decreasing stock graph in this illustration taken November 10, 2022. REUTERS/Dado RuvicLONDON, Dec 7 (Reuters) - Lessons will be applied swiftly from the collapse of crypto exchange FTX that left 80,000 UK investors nursing losses even though the platform was not registered in Britain, the UK Financial Conduct Authority said on Wednesday. Long said regulators' response to the FTX debacle would be "pacy". Currently crypto dealings are unregulated in Britain, with firms only needing to show they can comply with anti-money laundering rules. "In terms of dark money, there is money laundering that is running through crypto," Long said.
By contrast, the median forecast for a similar poll on the U.S. Federal Reserve is exactly where futures currently price the Fed's terminal rate next year - 5.0%. Any reversion of terminal rate pricing to consensus or below could see the pound wobble again. "That said, we have been stressing downside risks to our terminal rate projection, given the constant dovish messaging from the MPC. BoE poll question on Terminal Rate Risks? Central Bank Rate Hike CampaignSterling volatilityThe opinions expressed here are those of the author, a columnist for Reuters.
[1/2] British Chancellor of the Exchequer Jeremy Hunt talks to a television crew outside the BBC headquarters in London, Britain November 18, 2022. REUTERS/Henry Nicholls/File PhotoLONDON, Dec 7 (Reuters) - Britain's financial watchdog laid out options on Wednesday it said banks should offer customers finding it difficult to make payments on mortgages during the cost of living crisis. Prices slid last month by the most since the global financial crisis, mortgage lender Halifax said on Wednesday. In its draft guidance, the FCA also said firms may offer payment concessions where they agree to accept less than the contractual monthly instalment - resulting in a payment shortfall. "We will consider if there are further steps we can take to help firms to support their borrowers, including at scale."
Britain's departure from the EU has forced the bloc to review its reliance on London for clearing trillions of euros in derivatives, EU financial services commissioner Mairead McGuinness said. The draft laws form the latest package in the bloc's efforts to build a capital markets union. The portion that must shift would be decided by EU regulators, but the relocation would be "gradual" and "with the grain" of the market to cut excessive rather than all reliance on London, an EU official said. Banks pushed back against voluntary attempts to relocate euro clearing from London to Frankfurt, leaving the EU with little choice but to mandate the shift. The third draft law seeks to simplify how companies list to save about 100 million euros annually in compliance fees.
LONDON, Dec 6 (Reuters) - European Central Bank interest rates will go up again but are now "very near" their neutral level, ECB policymaker Constantinos Herodotou said on Tuesday. "We are very near the neutral rate. There will be I think another hike or hikes," Herodotou, Cyprus' ECB Governing Council member, told a Bloomberg event. Having raised rates by a combined 200 basis points since July, the ECB is expected to hike by another 50 basis points on Dec 15, slowing the pace of policy tightening after back-to-back 75 point moves. "There will be more rate hikes to contain inflation," Herodotou said.
EY sees other Big Four firms mirroring its proposed split
  + stars: | 2022-12-06 | by ( Huw Jones | ) www.reuters.com   time to read: +2 min
LONDON, Dec 6 (Reuters) - Splitting EY into separate accounting and consultancy businesses will help pay rising technology bills and "inevitably" be copied by rival "Big Four" firms, a top EY official told a Reuters Breakingviews podcast. "It was an appropriate time to dust down the work we did before," Baldwin said. Some of the other Big Four firms have said they have no plans to copy EY. Critics caution that splitting the business could see the auditing side suffer in the shadow of what is traditionally more lucrative consulting work. EY says the split will make it easier to raise capital to invest and create two more agile companies.
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) - 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 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.
Commercial banks are paid interest on the reserves by the BoE at whatever is the BoE's current interest rate - just 0.1% a year ago, but 3% now and likely to rise further. But now the BoE makes losses because the interest paid on reserves exceeds income from its QE bond holdings. Bailey said the current structure of paying interest fully on all reserves was the simplest way for the BoE to ensure its interest rate changes are transmitted through the financial system. He disagreed with descriptions that this was free money for banks, since they had their own funding costs to meet that also rose with central bank interest rates. Another former BoE rate-setter, Gertjan Vlieghe, on Thursday said it would be a "disaster" to stop paying interest on reserves, even partially - akin to a default on debt.
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.
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