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29 October 2012
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  • U.S. and U.K. authorities reportedly push Libor settlements
    Authorities in the U.S. and the U.K. are striving to quickly reach multinational settlements with one bank and possibly others regarding possible manipulation of the London Interbank Offered Rate and other benchmarks, sources said. Meanwhile, Guardian Care Homes is pressing a claim against Barclays, accusing the bank of manipulating Libor while selling interest-rate derivatives. The U.K. High Court might force Barclays to release e-mails pertaining to Libor. Separately, UBS and Royal Bank of Scotland have suspended a few traders in Singapore as regulators investigate Libor manipulation. Financial Times (tiered subscription model) (28 Oct.), The Telegraph (London) (27 Oct.), Bloomberg Businessweek (28 Oct.) LinkedInFacebookTwitterEmail this Story
  • "Fiscal cliff" could be much worse than predicted, economists say
    Economists at the International Monetary Fund and academic institutions say damage by the "fiscal cliff" to the U.S. economy could be far worse than the Congressional Budget Office predicted. IMF research indicates that when interest rates are low, every $1 of deficit reduction drains as much as $1.70 from the global economy. Reuters (28 Oct.) LinkedInFacebookTwitterEmail this Story
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  Market Activity 
 
  • Analysis: European rule on sovereign CDS will bring surprises
    Europe's rule limiting trading of credit default swaps to owners of the debt being hedged is intended to curb speculation but is unlikely to accomplish much, according to The Economist. "Investors are already looking at new ways to place bearish bets on euro-zone countries," the magazine notes. "One way is to short government bonds themselves, though in practice this is fiddly." The Economist (27 Oct.) LinkedInFacebookTwitterEmail this Story
  • Financial advisers expect ETF use to increase, survey finds
    About 78% of financial advisers expect to make more extensive use of exchange-traded funds in retail clients' portfolios in 2013, according to a survey by Guggenheim Investments. Only 1% of respondents plan to cut back use of ETFs, while 20% were unsure of their ETF use next year. Benzinga.com (26 Oct.) LinkedInFacebookTwitterEmail this Story

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  Economics 
  • Consumer spending increased Q3 economic growth in U.S.
    U.S. economic growth rose to an annual rate of 2% in the third quarter, up from 1.3% in Q2, the Commerce Department said. Expansion from last-minute consumer spending was more than what most economists expected but not enough to significantly affect the unemployment rate. Reuters (26 Oct.) LinkedInFacebookTwitterEmail this Story
  • Firms pay out special dividends ahead of "fiscal cliff"
    Major U.S. companies are rushing to authorize special dividends before Dec. 31 so shareholders will have the money before the "fiscal cliff" takes effect and the tax on dividends jumps from 15% to 43.4%. Over the past two weeks, at least four Standard & Poor's 500 corporations have announced special payouts. The Wall Street Journal (28 Oct.) LinkedInFacebookTwitterEmail this Story
  • Japanese retail sales fall short of forecast
    With government subsidies for vehicle buyers expired, retail sales in Japan increased only 0.4% last month compared with September 2011. Economists surveyed by Bloomberg had expected 1% expansion. Sales decreased 3.6% compared with August. Bloomberg (28 Oct.) LinkedInFacebookTwitterEmail this Story
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  Geopolitical/Regulatory 
  • EU lawmakers decline to prohibit "inducements"
    The European Parliament declined to restrict fees that financial advisers receive from banks for selling their products, rejecting demands from EU authorities and consumer groups. "Inducements" are considered an incentive for mis-selling, and Parliament's decision on this and broader agreement on investment-service regulation are expected to lead to clashes with national regulators. The Wall Street Journal/Dow Jones Newswires (26 Oct.) LinkedInFacebookTwitterEmail this Story
  • U.S. delay of tax-compliance rules is seen as deceptive
    With little change to the penalty timetable, postponed start dates for key parts of the U.S. Foreign Account Tax Compliance Act provide little relief, said Tim Clough, partner for risk and controls solutions at PricewaterhouseCoopers in Hong Kong. "My concern is that institutions will see this and take their foot off the pedal, when in reality, under the old timeline, it was going to be incredibly challenging, and under the new timeline, it is still going to be quite tough to meet the requirements given the level of change required," Clough said. Risk.net (subscription required) (26 Oct.) LinkedInFacebookTwitterEmail this Story
  • Merkel says more remains to be done in global regulation
    Progress in regulating shadow banks and other areas is still necessary to fully shape the global regulatory landscape into what it should be after the financial crisis, German Chancellor Angela Merkel said. "In my view, we are not where we ought to be yet," Merkel said. "We had planned to regulate every financial center, every financial actor and every financial-market product. Significant progress has been made, but the rules have not yet been implemented everywhere, and we are still missing further areas." Reuters (27 Oct.) LinkedInFacebookTwitterEmail this Story
  • Troika sees financial-reform progress in Spain
    Spanish initiatives to reform the financial sector have marked "important progress," according to the EU, the European Central Bank and the International Monetary Fund. However, "it will be important to maintain the momentum as challenging steps lie ahead," the IMF said after a visit to check in. Spain is still weighing whether to apply for a eurozone rescue. Reuters (26 Oct.) LinkedInFacebookTwitterEmail this Story
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  Financial Products 
  • Nonfinancial bond ETF is prepared by iShares
    BlackRock's iShares filed with the Securities and Exchange Commission to launch a corporate-bond exchange-traded fund that would exclude debt sold by financial firms. The iShares Corporate Bond Fund would buy investment-grade U.S. dollar-denominated debt issued by companies worldwide. IndexUniverse.com (25 Oct.), Benzinga.com (26 Oct.), InvestmentNews (free registration) (28 Oct.) LinkedInFacebookTwitterEmail this Story
  Ethics 
  • Greek finance officials are among those with Swiss bank accounts
    Greek magazine Hot Doc published a list of 2,059 people with accounts at a Geneva branch of HSBC Holdings that was given to the Greek government two years ago by International Monetary Fund Managing Director Christine Lagarde, then France's finance minister. The government's possible inaction on the list is being questioned because the list includes several officials from the Greek Finance Ministry and many prominent businesspeople. The New York Times (tiered subscription model) (27 Oct.) LinkedInFacebookTwitterEmail this Story
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