Obama reportedly will issue order on cyberattack defense | Chinese accounting creates targets for short sellers in H.K. | LCH.Clearnet seeks Australian license to clear swaps despite hurdles
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12 February 2013
CFA Institute: Financial NewsBrief
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RBS' Libor settlement reveals central figure
A figure has emerged from Royal Bank of Scotland's settlement related to alleged manipulation of the London Interbank Offered Rate. Trader Tom Hayes traveled from lender to lender, making contacts needed to manipulate the benchmark, regulators say. Meanwhile, RBS executives told the U.K. Parliamentary Commission on Banking Standards that they thought manipulating Libor was not possible. MarketWatch (09 Feb.), Bloomberg (11 Feb.), The New York Times (tiered subscription model)/DealBook blog (11 Feb.)
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Obama reportedly will issue order on cyberattack defense
President Barack Obama soon will issue an order toughening U.S. defenses against cyberattacks, sources said. The Department of Homeland Security will take the lead in protecting vital U.S. infrastructure, said an official who has seen a draft of the order's executive summary. "Our biggest issue right now is getting the private sector to a comfort level so they can report anomalies, malware, incidents within their network," said Richard McFeely, head of the FBI's Criminal, Cyber, Response and Services Branch. Reuters (12 Feb.), SC Magazine (11 Feb.)
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Chinese accounting creates targets for short sellers in H.K.
In the wake of several scandals, analysts are increasingly examining Chinese companies listed in Hong Kong for short-selling opportunities created by as-yet-undiscovered faulty accounting practices. Financial Times (tiered subscription model) (11 Feb.)
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LCH.Clearnet seeks Australian license to clear swaps despite hurdles
Though Australian authorities will not decide for two years whether to break ASX's monopoly on clearing equities, LCH.Clearnet is still pursuing a license to clear interest-rate swaps. "We still plan to apply for ... an Australian clearing and settlement facility license," an LCH.Clearnet spokeswoman said. The Wall Street Journal (tiered subscription model)/Dow Jones Newswires (11 Feb.)
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Market Activity
Many Asian-Pacific markets stay closed, but Japan rises
Japan's Nikkei 225 rose Tuesday, closing up 1.9% after Economic Minister Akira Amari said shares are priced too low. South Korea's Kospi slid 0.3%. Australia's S&P/ASX 200 closed unchanged. India's Sensex was up 0.5%. Exchanges in Hong Kong, China and Taiwan were closed for Lunar New Year. MarketWatch (12 Feb.), The Economic Times (India) (26 Feb.)
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Fed warns of high-yield rally encouraged by monetary policy
Federal Reserve Governor Jeremy Stein warned that the speculative-grade debt market, which has expanded rapidly largely in response to the central bank's monetary policy, is overheating. "We are seeing a fairly significant pattern of reaching-for-yield behavior emerging in corporate credit," he said. Bloomberg (11 Feb.)
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Novo Nordisk share price falls after FDA rejects insulin
The stock price of Novo Nordisk, the world's biggest insulin-maker, fell 12.5% after the U.S. Food and Drug Administration unexpectedly rejected an application to sell long-lasting insulin Tresiba. An FDA advisory panel endorsed the drug, which is authorized in the EU and Japan. The FDA says it needs more data on cardiovascular effects. Reuters (11 Feb.)
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Nasdaq reportedly intensifies search for partner or buyer
Nasdaq OMX Group is stepping up the pace of its discussion of strategic options, including a joint venture or an outright sale, people familiar with the discussions said. Carlyle Group and Nasdaq discussed taking the company private but the talks ended without a deal, one person said. Bloomberg (11 Feb.), Reuters (11 Feb.), Financial Times (tiered subscription model) (11 Feb.), The Wall Street Journal (tiered subscription model) (11 Feb.)
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CFA Institute Conference: Wealth Management 2013
21?22 March 2013
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Economics
U.S. backs Japan's efforts to fight deflation and boost growth
The U.S. supports Japanese Prime Minister Shinzo Abe's aggressive economic policies aimed at accelerating growth and defeating deflation, said U.S. Treasury Undersecretary for International Affairs Lael Brainard. However, Brainard said the policies should be reinforced by other actions. "It is important for structural reforms to accompany macroeconomic policies," he said. The Mainichi (Japan)/Kyodo News (12 Feb.), RTT News (11 Feb.)
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Debt-reduction effort is almost finished, White House says
The Obama administration is signaling to Congress that it doesn't plan to launch another initiative to cut the national debt. The White House is telling policymakers that if a deal can be reached to head off across-the-board cuts, President Barack Obama will have achieved his goal of curbing the acceleration of government borrowing. The Washington Post (tiered subscription model) (11 Feb.)
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Euro's strength sparks Franco-German disagreement
A strengthening euro is making European exports more expensive, but leaders disagree on what to do. French Finance Minister Pierre Moscovici says a target value should be established, while Bundesbank President Jens Weidmann says complaints about the euro divert attention from a need for countries to increase economic competitiveness. The New York Times (tiered subscription model) (11 Feb.)
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Advisers back direct-sold 529s, sacrificing commission
About 60% of all financial advisers and 84% of registered investment advisers recommend that clients invest in a direct-sold 529 college-savings plan, despite the lack of commission, according to a survey by Financial Research. Most advisers say direct-sold 592 plans are the best deal for investors because of state tax advantages and lower fees. InvestmentNews (free registration) (11 Feb.)
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CFA Institute: Fourth Annual Middle East Investment Conference
20?21 March 2013
Jumeirah Emirates Towers
Dubai, United Arab Emirates

Hosted with CFA Society Emirates

Register by 20 February 2013 and save US$100.
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Geopolitical/Regulatory
EMIR might create regulatory burden for clearinghouses
The European Market Infrastructure Regulation might change the clearinghouse landscape. As more trades are funneled through the clearing process, clearinghouses will need reauthorization to ensure they meet regulatory standards, including enough capital to create an operational buffer. Financial News Online (U.K.) (subscription required) (11 Feb.)
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Tax proposal would overhaul derivatives treatment
The U.S. House Ways and Means Committee has released a proposal that would force derivatives holders to establish market value and pay tax on that value annually. The requirement would treat derivatives income as regular income, valued as if derivatives had been sold on the last business day of the year. Risk.net (subscription required) (11 Feb.)
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EU considers adopting liquidity-coverage ratio earlier
EU members are evaluating a proposal by the European Parliament for "accelerated" implementation of Basel III's liquidity-coverage ratio. European banks would be complying a year ahead of competitors worldwide. Bloomberg (11 Feb.)
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Fed proposal prompts European banks to rethink U.S. assets
European banks are looking to reduce assets held in the U.S. to avoid the Federal Reserve's proposed rules for capitalization. The Fed wants foreign banks with more than $10 billion in U.S. assets to put U.S. subsidiaries into a holding company, then capitalize it at the same level as domestic banks. International Financing Review (free content) (09 Feb.)
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U.S. Treasury nominee will face Citi questions at hearing
During Jack Lew's confirmation hearing for U.S. Treasury Department secretary, Republican senators plan to focus mainly on his time at Citigroup, before he joined the State Department in 2009. "If taxpayers are going to prop up failed banks, they have a right to know what a key executive like Mr. Lew did at that time," Sen. Orrin Hatch said. Despite possibly facing tough questions, Lew appears likely to be confirmed. "Mr. Lew has been confirmed by the Senate three times already," Sen. Max Baucus said. "I don't expect there to be any reason why he should not be confirmed this time around as well." Bloomberg (12 Feb.), The Washington Post (tiered subscription model) (11 Feb.)
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Financial Products
PIMCO rolls out actively managed currency ETF
Pacific Investment Management is introducing its first actively managed currency exchange-traded fund. The PIMCO Foreign Currency Strategy ETF targets investors who want protection against the deteriorating value of the U.S. dollar, the company says. Pensions & Investments (free access for SmartBrief readers) (11 Feb.), Barron's (free content)/Focus on Funds blog (11 Feb.), ETF Trends (11 Feb.)
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