Italy's transaction tax appears to reduce trading volume | Bond success puts Ireland closer to full market access | Downgrade, political uncertainty raise Italy's borrowing cost
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14 March 2013
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Short-term bank creditors could face losses under EU plan
EU plans for handling the failure of banks had shielded short-term liabilities, but a proposal would impose losses on such creditors before tapping taxpayers. A document prepared by Ireland says debt with the same level of seniority should be treated as equally as possible, although it allows exceptions. Bloomberg (13 Mar.)
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Industry News
Italy's transaction tax appears to reduce trading volume
Since Italy introduced a levy on financial transactions, average daily trading volume for stocks has plunged. Other factors, including Italy's election, likely played a role as well. Financial Times (tiered subscription model) (13 Mar.)
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Bond success puts Ireland closer to full market access
Ireland saw strong demand for its benchmark 10-year bond, raising €5 billion and moving closer to full market access. "There has been an extraordinary response to it, and I don't think you will have heard me use the word extraordinary before," Irish Finance Minister Michael Noonan said. "This brings us within about a billion and a half towards what we need to the end of 2014. That puts us in a very strong position." The Guardian (London) (13 Mar.), International Financing Review (free content) (13 Mar.), Financial Times (tiered subscription model) (13 Mar.), The Wall Street Journal (13 Mar.)
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Downgrade, political uncertainty raise Italy's borrowing cost
Political deadlock and a credit rating downgrade are making it more expensive for Italy to borrow. The government's three-year borrowing cost reached its highest level since December during a debt auction. Reuters (13 Mar.)
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European Parliament rejects budget, wants more growth spending
The European Parliament has voted down a budget negotiated by member states. Lawmakers want flexibility to shift funds within the €960 billion budget to emphasise areas key to economic growth, including incentives for innovation and funding for research and education. (France) (13 Mar.), Deutsche Welle (Germany)/Agence France-Presse/Reuters/The Associated Press (13 Mar.), EUObserver (Brussels) (13 Mar.)
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Regulatory Roundup
"Too big to fail" issue persists, regulators say
Systemically important financial institutions worldwide remain a concern as reform has failed to ensure that they will not need a taxpayer-funded rescue, regulators and other officials say. "It is difficult to see any major systemically important financial institution being allowed to go under," said Manmohan Singh, senior economist with the International Monetary Fund. Reuters (13 Mar.)
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Regulator sees need for more capital at some UK banks
Andrew Bailey, head of the UK Prudential Regulation Authority, has told Parliament's Treasury Select Committee that some banks need more capital. "I agree there is a need to strengthen the capital position," Bailey said. He declined to go into detail but said he has not requested a capital injection for Royal Bank of Scotland or Lloyds Banking Group. Reuters (14 Mar.), The Guardian (London) (13 Mar.)
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Coordination on currency regulation is essential, CME says
CME Group is calling for coordination between the US and Europe on rules covering currency trading. Without it, CME says, markets will become fragmented. "Nobody wants to see a regulatory regime that starts to bifurcate and create reasons, and maybe not natural reasons, to put business on less-regulated shores," CME's Derek Sammann said. Bloomberg (13 Mar.)
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Spotlight on China
Chinese leaders reportedly plan to reassign CSRC head
Guo Shuqing, head of the China Securities Regulatory Commission, has been working to reform markets. He is being moved to become governor of Shandong province, sources say, prompting questions about his overhaul efforts. Reuters (13 Mar.), South China Morning Post (Hong Kong) (free registration) (13 Mar.), The Wall Street Journal (13 Mar.)
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China will loosen reins on yuan within 5 years, Li predicts
Hong Kong Exchanges and Clearing CEO Charles Li says he expects China to let the yuan float and to open up markets no later than 2018. China's currency system is unsustainable, Li says. Bloomberg Businessweek (14 Mar.)
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CFTC provides operational guidance concerning maintenance of CICIs issued through assisted registration
The US Commodity Futures Trading Commission has released important guidance on the maintenance of CFTC Interim Compliant Identifiers issued through assisted registration, including that self-registration (primary party registration) includes assisted registration. In addition, the document reiterates that rules require an entity subject to CFTC jurisdiction to:
  1. Certify its CICI if the identifier was not obtained through self-registration.
  2. Maintain its CICI after the identifier is issued, including recertification at appropriate intervals.
Download the CICI Utility Guidance on Registration and Certification.
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Early-bird registration is open: AFME 6th Annual European Post-Trade Conference
Registration is open for AFME's 6th Annual European Post-Trade Conference, scheduled on 23 May at the Lancaster London hotel. This event brings together eminent speakers from across the industry, including senior operations executives and key regulators, and offers insights into crucial developments in the post-trade space and their impact on the industry.

Register to secure your place.
  • Early-bird member rate (available until 11 April): £299
  • Early-bird nonmember rate: (available until 11 April): £609
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True merit, like a river, the deeper it is, the less noise it makes."
-- Edward Frederick Lindley Wood,
British politician
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