Turkish lira's collapse triggers global market selloff | Brexit-induced novation on derivatives worries UK banks | Firms with higher ESG scores record best results
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13 August 2018
GFMA SmartBrief
News on the global financial markets
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Morning Bell
Turkish lira's collapse triggers global market selloff
The global financial markets came under pressure as the Turkish lira plummeted to a new low. A growing concern is the potential for the falling lira to weaken European banks.
Business Insider (13 Aug.),  CNBC (13 Aug.),  The Wall Street Journal (tiered subscription model) (12 Aug.) 
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Industry News
Brexit-induced novation on derivatives worries UK banks
Financial institutions in the UK are looking at novating derivatives contracts in preparation for Brexit. However, such a move might jeopardize contracts that enjoyed grandfathered status under the European Market Infrastructure Regulation.
Practice Insight (09 Aug.) 
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Firms with higher ESG scores record best results
Portfolios emphasizing firms with higher environmental, social and governance scores outperform their benchmarks by up to 243 basis points and perform better financially, an Axioma study found.
Financial Times (subscription required) (11 Aug.) 
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European pension funds wake up to climate change risks
About 17% of pension funds in Europe are considering the risks to investment of climate change, up from 5% last year, while regulators press for faster action.
Financial Times (subscription required) (12 Aug.) 
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Private equity firms push into lending space
Private equity firms are increasingly financing deals that banks will not, resulting in more than half a trillion dollars of loans at the end of 2017, up from $300 billion in 2012. The data were compiled by private equity firm Ares Management.
The Wall Street Journal (tiered subscription model) (12 Aug.) 
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Analysis: Greek banks will struggle to get cheap credit
The exit of Greece from its bailout deal means local banks may find it harder to secure cheap cash because of the European Central Bank's collateral policy.
Financial Times (subscription required) (10 Aug.) 
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Increasing interest rates to savers "a matter of trust"
Following the increase of the benchmark interest rate from 0.5% to 0.75%, it is "a matter of trust" that UK banks pass on the increase to savers, said Nicky Morgan, chair of the House of Commons Treasury Select Committee. As of early Friday, only Beverley Building Society had stated its intention to increase interest rates for savers.
Reuters (10 Aug.) 
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Regulatory Roundup
UK FCA handling record number of financial crimes cases
The UK Financial Conduct Authority had a record 504 financial crimes cases open on 1 April, up from 410 in 2017 and approximately 100 in 2015.
Financial Times (subscription required) (12 Aug.) 
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Analysis: EU market unprepared for Benchmarks Regulation
European market participants are not ready for the January 2020 implementation of the new Benchmarks Regulation, which is expected to discontinue certain rates in the European Union.
Practice Insight (09 Aug.) 
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Spotlight on China
Chinese regulator wants to boost economy with financing
The China Banking and Insurance Regulatory Commission said it would encourage lending to private and small companies by financial institutions. The authority said it believes this would boost the nation's economy amid escalating trade tensions with the US.
Reuters (11 Aug.) 
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AFME News
AFME/IMN Global Innovation Institute (GI2): Transforming Capital Markets Through Technology -- 20 and 21 September in Paris
The event's theme, "Transforming Capital Markets Through Technology", alludes to the purpose and focus of this important gathering. This inaugural gathering will bring together over 500 senior executives and their teams that are driving strategic innovation in technology and operations from Europe's leading financial institutions. The unique feature of this programme is its visionary and forward-looking agenda focused on what capital markets may look like in 20-plus years, which is key for planning strategy in the immediate term. Register.
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AFME's 2nd Annual European Compliance and Legal Conference -- 1 and 2 October in London
Join 400 European compliance and legal professionals for networking and discussions on key regulatory topics, including Brexit, MiFID, MAR, GDPR, global policy developments, AML, financial crime, codes and conduct, culture in banking and the importance of the diversity agenda, plus the latest on benchmarks, whistleblower protection, competition law and more. Register before Tuesday, 21 August and take advantage of our early-bird rates. Register.
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It's bad policy to speculate on what you'll do if a plan fails, when you're trying to make a plan work.
Condoleezza Rice,
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