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01 March 2013
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News on the global financial markets

  Morning Bell 
  Industry News 
  • RBS will recover bonus money to help offset Libor fines
    Royal Bank of Scotland is cutting its bonus pool and and clawing back compensation to recover more than £300 million. "The actions we have taken reinforce the messages we are sending on the how seriously the board takes integrity and risk and control issues," according to the bank. Chairman Philip Hampton says about half of 2012 bonuses are eligible for recovery. Bloomberg (28 Feb.) LinkedInFacebookTwitterEmail this Story
  • Banks advise clients to capitalise on debt-insurance difference
    Morgan Stanley and JPMorgan Chase, facing a possible flare-up of Europe's sovereign-debt crisis, are recommending that clients hedge themselves through the difference between the price of short- and long-term bond insurance. "Credit volatility and curve flatteners remain our preferred hedges," Morgan Stanley's Andrew Sheets wrote in a note. "The greatest risk to European credit remains a return of sovereign-led systemic risk." Bloomberg (28 Feb.) LinkedInFacebookTwitterEmail this Story
  • Commentary: Euro-zone crisis never actually left
    Crisis in the euro zone has never truly abated, columnist Robert Samuelson writes. Starting in the summer, many people had convinced themselves that the worst of the crisis was over. The European Central Bank had eased conditions in bond markets. Debtor nations continued to face challenges, but the situation appeared to be improving. Italy's election results have changed all of that, Samuelson writes. The Washington Post (28 Feb.) LinkedInFacebookTwitterEmail this Story
  Regulatory Roundup 
  • Europe will require banks to disclose earnings by country
    Representatives from European nations and the European Parliament have agreed to require banks to disclose how much they make country by country. The move is part of efforts to increase tax revenues. The European Commission reportedly plans to analyse the data to see whether banks will be harmed by publication of such information. Reuters (28 Feb.) LinkedInFacebookTwitterEmail this Story
  • EU regulators to investors: Beware of contracts for difference
    The European Securities and Markets Authority and the European Banking Authority are warning investors about contracts for difference. "These products appear to promise investors substantial returns at a low cost but may ultimately cost them far more than they may have intended or could afford to lose," the regulators said in a joint statement. Reuters (28 Feb.) LinkedInFacebookTwitterEmail this Story
  • CFTC chief suggests Libor replacements
    US Commodity Futures Trading Commission Chairman Gary Gensler says a rate determined by a traded market, such as overnight indexed swaps, should replace the London Interbank Offered Rate. "Given what we know now, it's critical that we move to a more robust framework for financial benchmarks, particularly those for short-term, variable interest rates," Gensler said. "There are alternatives ... grounded in real transactions. These include the overnight indexed swap rate, benchmark rates based on actual short-term collateralised financings and benchmarks based on government borrowing rates." (subscription required) (28 Feb.) LinkedInFacebookTwitterEmail this Story
  Spotlight on China 
  • China plans bond-market liberalisation to fund investment
    Chinese leaders are working to overhaul the bond market in preparation for raising 40 trillion yuan to stimulate the economy, bringing 400 million people into cities and narrowing the gap between the rich and the poor. The moves are key to a plan by incoming President Xi Jinping and Premier-designate Li Keqiang to transform China into a wealthy world power, with economic expansion driven by consumer spending. Reuters (28 Feb.) LinkedInFacebookTwitterEmail this Story
  • Investors turn bullish on China amid urban push
    With policy aimed at expanding China's urban population, in a bid to accelerate growth, money managers are betting in that direction as well. Chinese equities are climbing back from a sell-off in 2012, and investors in emerging markets are bullish on China, with an urban emphasis that takes into account the potential for property companies and others to benefit from a renewed government push. The Wall Street Journal (27 Feb.) LinkedInFacebookTwitterEmail this Story
Mediocrity knows nothing higher than itself, but talent instantly recognises genius."
--Sir Arthur Conan Doyle,
Scottish-born writer

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