UK Prime Minister Theresa May will call for a transitional arrangement lasting two years after Brexit to ensure the UK's departure from the EU is carried out smoothly, according to excerpts from her upcoming speech on the matter that were released by the government. She is expected to propose that the UK pay €20 billion over two years to settle its financial obligations to the EU.
Responding to deteriorating confidence in existing benchmarks for interest rates for the euro, the European Central Bank said it plans to develop its own overnight reference interest rate no later than 2020. The new reference rate is intended to serve as a backstop for existing private-sector benchmarks, the ECB said.
The UK's loss of access to the EU single market poses a threat to financial stability as the continuity of contracts between EU and UK counterparties is disrupted, the three European Supervisory Authorities reported. The financial regulators also predict a loss of market confidence during what will be a lengthy transition to European-based financial services.
A trade deal that removes customs duties on 98% of products that the EU and Canada sell to each other took effect Thursday. The EU hopes the document will become the model for agreements with Australia, Japan and New Zealand.
Analysts warn that major investment banks' third-quarter earnings in the US and Europe look likely to be disappointing, with some predicting falls of as much as 25% in fixed-income trading. Several managers say conditions might be equally difficult through the rest of this year.
Russia's central bank is nationalizing B&N Bank, the regulator's second bank bailout in a matter of weeks. Sergei Gavrilov, an investment adviser at Alfa Capital, had warned clients bank rescues were on the way.
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Most Asian-Pacific stock markets declined Friday as traders reacted to a downgrade in China's credit rating and North Korea's statement that it might test a nuclear weapon in the Pacific Ocean. Japan's Nikkei 225 slid 0.3%; Hong Kong's Hang Seng Index lost 0.8%; Australia's S&P/ASX 200 gained 0.5%; China's Shanghai Composite slipped 0.2%; South Korea's Kospi dropped 0.7%; and India's Sensex was down 1.4%.
The Hong Kong initial public offering for China's ZhongAn Online Property & Casualty Insurance brought in $1.5 billion after shares priced at the top of their suggested range. Trading in the shares on the Hong Kong exchange is set to begin Thursday.
A.P. Moeller-Maersk, the world biggest operator of container ships, said it will sell its tanker business to its controlling shareholder, APMH Invest, for $1.17 billion. After the transaction closes, APMH plans to form a consortium with Japan's Mitsui to hold the tanker business.
The World Trade Organization said global trade will increase 3.6% this year, up from its previous forecast of 2.4%. The WTO warned that geopolitical tensions and protectionist rhetoric could compromise the trade recovery.
Mario Draghi, speaking in his capacity as head of the European Systemic Risk Board, said financial and business cycles can become imbalanced amid low inflation, but added that monetary policy cannot be used to correct them. Emerging property bubbles are being identified in some cities, but Draghi says these issues need to be addressed at a local level.
The number of independent broker-dealers in the US declined 28% from 2005 to 2015, according to a report from Fidelity Investments. Broker-dealers' operating margins fell to 3% last year from 12% in 2006, encouraging small firms to become branches of major broker-dealers, the report said.
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The European Central Bank is inviting views on how financial-technology firms can apply for banking licenses and register themselves as lenders, with the aim of establishing harmonized and appropriate standards. The ECB has issued a pair of draft guides and has requested comments by Nov. 2.
The UK Financial Conduct Authority plans to take a close look early next year at investment firms' compliance with the strengthened reporting requirements imposed by Europe's revised Markets in Financial Instruments Directive, which takes effect in January, said Stephen Hanks, a markets policy manager. He said the FCA plans to move swiftly on reporting requirements because it is easier for firms to correct deficiencies when a new requirement takes effect than later.
The Financial Stability Oversight Council is scheduled to discuss dropping AIG's designation as a systemically important financial institution. AIG has reduced assets from $1.048 trillion in 2007 to $499.76 billion in June and has divested dozens of businesses.
A proposed change to the Federal Reserve's FR Y-15 reporting rule requiring the eight US global systemically important banks to include cleared derivatives transactions would increase client-cleared notional by an estimated $46 trillion. Banks that have worked to reduce G-SIB scores but stand at the upper limit of surcharge categories, including Citigroup, JPMorgan Chase and Morgan Stanley, would be at risk of being pushed into the next bucket.
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VanEck has filed with the Securities and Exchange Commission for an actively managed exchange-traded fund exposing investors to real assets, which the company defines as commodities, real estate, natural resources and infrastructure. The VanEck Vectors Real Asset Allocation ETF would invest primarily in other ETFs.