AFME says SA-CCR could hamper derivatives trading | BoE to publish Libor alternative Monday | IMF's Lagarde: Trade frictions hit business confidence
20 April 2018
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Morning Bell
AFME says SA-CCR could hamper derivatives trading
Sahir Akbar, director of prudential regulation at AFME, has voiced concerns about the standardised approach for measuring counterparty credit risk in Basel III. The proposal would increase banks' capital requirements, Akbar says, and "if increased costs are passed on, they are likely to inhibit the ability of end users to use derivative instruments to hedge their risks, leading to an increasing risk left in the real economy".
Futures & Options World (subscription required) (19 Apr.) 
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Industry News
BoE to publish Libor alternative Monday
The Sterling Overnight Index Average will be based on transactions that cover about 90% of the market and will be published by the Bank of England starting Monday. The move is part of the industry's effort to develop alternatives to the London Interbank Offered Rate.
Reuters (18 Apr.) 
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IMF's Lagarde: Trade frictions hit business confidence
IMF's Lagarde: Trade frictions hit business confidence
Lagarde (Chip Somodevilla/Getty Images)
Trade tensions could reduce investment as businesses experience an "erosion of confidence", says Christine Lagarde, managing director of the International Monetary Fund. More "clouds are accumulating on the horizon" of the global economy, though short-term prospects are promising, Lagarde says.
Bloomberg (free registration) (19 Apr.),  Reuters (19 Apr.) 
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Carney: Rate hike likely but probably not in May
Carney: Rate hike likely but probably not in May
Carney (WPA Pool/Getty Images)
The UK should see multiple interest-rate increases in the next few years, including one this year, but probably not as soon as May, says Bank of England Governor Mark Carney. Economic data are mixed, Carney says, with unemployment at a 42-year low but inflation and retail sales disappointing.
Reuters (19 Apr.),  BBC (19 Apr.),  The Telegraph (London) (tiered subscription model) (19 Apr.) 
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Deutsche Bank's pricey error raises risk questions
Deutsche Bank erroneously paid Eurex Clearing a daily collateral adjustment worth reportedly €28 billion about a week before Easter, but the mistake was caught before causing financial harm. The error raises questions about the bank's risk controls, but spokesman Charlie Olivier says officials "have rigorously reviewed the reasons why this error occurred and taken steps to prevent its recurrence".
Bloomberg (free registration) (20 Apr.),  Financial Times (subscription required) (19 Apr.) 
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BoE confident derivatives contracts will survive Brexit
The Bank of England's Alex Brazier has told Parliament's Treasury Committee £26 trillion in cross-border derivatives contracts will not be disrupted after Brexit if the UK and the EU act. "I have every confidence that is what will happen by the end," Brazier said.
Reuters (18 Apr.) 
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Regulatory Roundup
UK-US working group to focus on post-Brexit stability
The UK and the US plan to form the Financial Regulatory Working Group to ensure financial stability and market efficiency after Brexit. The group plans to meet at least semiannually.
Reuters (19 Apr.) 
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Spotlight on China
Strategists find other ways to measure Chinese economy
Investment strategists are developing alternative metrics to gauge China's economic output, measuring factors such as rail cargo volumes, sales of bulldozers, iron-ore imports and power consumption, as concerns mount about the reliability of official GDP data. "There are so many other data points which help us understand the health of the Chinese economy," says Andy Rothman of Matthews Asia.
Bloomberg Businessweek (tiered subscription model) (19 Apr.) 
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Chinese R&D centres of low importance to US firms
The majority of US firms say establishing a Chinese research and development centre is of minimal importance compared with other regions, according to a survey by the American Chamber of Commerce in Shanghai. Less than 4% of businesses say China is their most important R&D centre, citing factors including poor protection of intellectual property rights.
South China Morning Post (Hong Kong) (19 Apr.) 
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Tech Trends
Specialists highlight advantages of fintech
Financial technology can enhance efficiency and can deter money laundering and terrorist activity, particularly in the vulnerable area of cross-border payments, according to a study by fintech specialists. Fintech's advantages include greater automation, simplified operations, and more detailed and less costly analytics, the study says.
The Brookings Institution (17 Apr.) 
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AFME News
European NPLs Conference -- 22 May -- Brussels
Given the complexity of upcoming European regulatory measures, the high level of European NPLs and the existing market opportunities to facilitate NPL portfolio management, this conference will provide a timely and informative overview of the European NPL environment, as well as a summary and an analysis of the European Council's NPL Action Plan. Find out more.
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11th Annual European Post-Trade Conference -- 23 May -- etc.venues St Paul's in London
Now in its 11th year, the event attracts over 200 leading industry representatives to hear about the latest trends and to network with the industry.
  • Meet over 200 senior-level attendees.
  • Build contacts in four hours dedicated to networking.
  • Hear from up to 30 industry expert speakers.
  • Join the debate in six hours of content designed and driven by market participants.
  • Showcase solutions at the event exhibition space.
Early-bird registration discount ends 13 April.
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