Transaction taxes aren't meeting expectations, report says | Analysis: Pool of triple-A government bonds gets smaller | Australia plans to alter how benchmark rate is set
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27 March 2013
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Basel Committee seeks to limit bank-to-bank exposure
The Basel Committee on Banking Supervision is proposing bolstered rules governing banks' exposure to one another to reassure markets and prevent the kind of contagion suffered during the global financial crisis. "This is to ensure that the large-exposures standard is effective and consistent for internationally active banks," according to the committee. "On this basis, breaches of the limit should be exceptional events, should be communicated immediately to the supervisor and should, normally, be rapidly rectified." Reuters (26 Mar.)
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Industry News
Transaction taxes aren't meeting expectations, report says
Data from TMF Group show that Europe's financial-transaction taxes have reined in market activity but have fallen short in terms of the amount raised. Hungary's tax has pulled in less than half of what was expected. France is experiencing a similar return. Italy's tax launched only this month, but TMF says it has already shrunk trading volume 38%. City A.M. (London) (26 Mar.)
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Analysis: Pool of triple-A government bonds gets smaller
The amount of governments bonds rated triple-A by the three main credit rating agencies has dropped from nearly $11 trillion in 2007 to $4 trillion, according to this analysis. Financial Times (tiered subscription model) (26 Mar.)
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Australia plans to alter how benchmark rate is set
Soon, Australia's bank bill swap rate will be based on actual prices from electronic brokers and markets, rather than panellists' submissions, according to the industry group that publishes the benchmark. The change comes as major banks withdraw from the rate-setting panel. Bloomberg (27 Mar.)
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Cyprus prepares capital controls to prevent bank run
The Cypriot government is drafting capital controls to prevent a run on banks when they reopen Thursday. "We will look at the best way to limit the possibility of large sums of money leaving and not imposing punitive conditions on the economy, businesses and individuals," Finance Minister Michalis Sarris said. The Russian government says it will renegotiate a €2.5 billion loan made to Cyprus in 2011. Cyprus Mail (27 Mar.), The St. Petersburg Times (Russia) (27 Mar.), (France) (26 Mar.)
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Regulatory Roundup
Investment managers need to prepare for AIFM Directive, experts say
Industry experts say it is time for investment managers to prepare to comply with Europe's Alternative Investment Fund Managers Directive, which will be implemented in late July. Firms will need to consider data requirements, a critical issue, says Jonathan Wilson of IMS Group. "Managers need to start to identify now what's the sponsorship internally and who's going to be responsible for the delivery of data to regulatory authorities," Wilson said. (subscription required) (26 Mar.)
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UK regulators aim to make entry easier for banks
The Bank of England and the Financial Services Authority have announced revised rules to make it easier for banks to enter the UK financial sector. For example, lenders will not be required to hold as much capital as before. Entrants will also benefit from a streamlined approval process, according to regulators. The Wall Street Journal (26 Mar.)
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Canada designates 6 banks as systemically important
In a move expected by markets, Canadian authorities have deemed the nation's leading six banks systemically important financial institutions, meaning they must hold more capital than the standard set by global regulators. "The measures we are announcing today are designed to limit the likelihood that a major bank would encounter distress or failure that could negatively impact the Canadian economy or taxpayers," said Julie Dickson, head of the Office of the Superintendent of Financial Institutions. Reuters (26 Mar.)
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Treasury names members of BoE Financial Policy Committee
The UK Treasury has appointed members of the Bank of England's Financial Policy Committee, which will oversee financial stability. "One of the reasons for the financial crisis was that no one felt it was their responsibility to monitor risks to the system as a whole, like excessive levels of debt," Chancellor George Osborne said. "From next week, we will have in the FPC a permanent body doing just that." The Wall Street Journal (26 Mar.)
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Spotlight on China
More foreigners reportedly might get to trade Chinese futures
JPMorgan Chase reportedly is among foreign entities that could gain permission to trade domestic stock-index futures in China. In January, several banks, including Credit Suisse and Morgan Stanley, received authority. "If the market is too small, the value of stock-index futures as a hedging and price-discovery tool can't be fully realised, so it's good to bring in more participants," said Zhang Yanbing of Zheshang Securities. Bloomberg (27 Mar.)
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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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To know oneself, one should assert oneself."
-- Albert Camus,
French author, journalist and philosopher
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