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29 November 2012
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News on the global financial markets

  Morning Bell 
  • German and UK officials delve into Libor issues
    A German banking regulator told lawmakers that banks more than likely manipulated the London Interbank Offered Rate. At a hearing, parliamentarians also questioned Deutsche Bank officials about rate rigging. Meanwhile, UK officials are seeking feedback on plans to restructure Libor. Among changes proposed are legal authority applied to the way the rate is set and criminal penalties for manipulation. Separately, Barclays dismissed five employees and disciplined eight others after an internal investigation of Libor rigging. Bloomberg (28 Nov.), Reuters (28 Nov.), Bloomberg Businessweek (28 Nov.), The Wall Street Journal (28 Nov.) LinkedInFacebookTwitterEmail this Story
  Industry News 
  • Bankers question value of bonds embodying multiple perils
    Swiss Re says a novel bond that combines two unrelated risks -- North Atlantic hurricanes and extreme mortality in the UK -- is an attractive option for investors. However, bankers are questioning that assessment, saying each peril in the bond should be evaluated separately. (subscription required) (28 Nov.) LinkedInFacebookTwitterEmail this Story
  • Exchange group seeks consistent, global ETD standards
    Margin and capital requirements for exchange-traded derivatives should be consistent, and global policymakers should agree on common standards, the World Federation of Exchanges said in a letter to the Financial Stability Board. Among other recommendations, the federation wants elimination of a five-day margin period of risk for ETDs. The Trade News (U.K.) (28 Nov.) LinkedInFacebookTwitterEmail this Story
  • Low yield in Italian bond sale signals resilience
    Italy provided an encouraging sign through a sale of six-month bills. The government sold €7.5 billion worth at the lowest yield on a comparable note in more than two years. "From a pricing perspective, Italy has overcome the euro-zone crisis," said Nicholas Spiro, managing director of Spiro Sovereign Strategy. However, Spiro says Italy's troubles remain, with "an economy in deep recession". Bloomberg Businessweek (28 Nov.) LinkedInFacebookTwitterEmail this Story
  Regulatory Roundup 
  • ECB expects smooth transition to bank supervisor
    The European Central Bank, dismissing German concerns about the legal standing of its supervisory role, says no legal changes are needed as it assumes authority over euro-zone banks by 2014. The ECB urged governments meet a deadline on 1 January for agreement on the plans, which would be phased in next year. Bloomberg Businessweek (28 Nov.) LinkedInFacebookTwitterEmail this Story
  • EU focuses on rating agencies and bank resolution
    Credit rating agencies face restrictions and potential liability under EU proposals to rein in the industry. Internal Market Commissioner Michel Barnier says the draft measures, which include ownership limits, are "a good result" and "another important step towards financial stability". Barnier also said the European Commission will work on proposals for handling banks on the verge of failure. Bloomberg Businessweek (28 Nov.), Bloomberg (28 Nov.) LinkedInFacebookTwitterEmail this Story
  • BoE panel tells banks to improve asset transparency
    The Bank of England's Financial Policy Committee is urging banks to be honest about their assets, saying a lack of transparency undermines them because it thwarts the attraction of capital. "It is hard for investors to be sure which banks are weak and which are strong, and which, if any, need more capital, given the lack of consistent information," said Richard Barwell, an economist at Royal Bank of Scotland. "It all boils down to whether there is a difference between how the banks are valuing their assets and what they are really worth." The Wall Street Journal/Dow Jones Newswires (28 Nov.) LinkedInFacebookTwitterEmail this Story
  • Other News
  Spotlight on China 
  • IMF warns of too much investment in China
    China has been exceeding capital-to-output ratios that economists say are sound, according to a report by the International Monetary Fund. "China may have been over-investing by between 12 and 20 percent of gross domestic product relative to its steady-state desirable value," according to the report, which also suggests that severe internal economic imbalances could result because of such overcapitalisation. Reuters (28 Nov.) LinkedInFacebookTwitterEmail this Story
I ask not for a lighter burden, but for broader shoulders."
--Jewish proverb

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