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| 08 May 2012 |
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European voters reject austerity, but future is unclear
Voters in France, Greece and Italy rejected austerity measures in favour of promises of growth plans, but clear, effective ideas have yet to emerge. "This is going to force some rethinking" about how to resolve the sovereign-debt crisis, said Laura Gonzalez, a finance professor at Fordham University. "That is good for everybody." Meanwhile, Germany is confident that its approach to Europe's debt crisis will not change. UK Prime Minister David Cameron is expected to reiterate a need to stick with austerity measures. The Telegraph (London) (tiered subscription model) (07 May.) Reuters (07 May.) Los Angeles Times (tiered subscription model)/World Now blog (07 May.) The Christian Science Monitor/The Associated Press (07 May.) The New York Times (tiered subscription model) (07 May.)
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Buffett and Munger discuss Volcker rule and market issues
Berkshire Hathaway Vice Chairman Charlie Munger and CEO Warren Buffett offered their insight and stance on the US Volcker rule, problems plaguing financial markets and the broader banking system. Munger said that if he were writing the regulation, he would give the Volcker rule more teeth. He also voiced concerns about high-frequency traders. Buffett expressed concerns about the way some firms raise large amounts of capital, saying it "is potentially dangerous". 
CNBC (07 May.) CNBC (07 May.)
Confusion reigns regarding European banks' capital
Transparency and capital are two buzzwords to emerge from the financial crisis, but they seem mutually exclusive. Take Credit Suisse, for example. The Swiss bank, with $1 trillion in assets and large investment-banking operations, reports several figures for capital. Other big European banks do the same. One key issue: With banks expected to have more capital, how will markets know whether the measurement of that capital is a moving target? The New York Times (tiered subscription model)/DealBook blog (07 May.)
Spain says it stands ready to bail out banks
Spain's fourth-biggest bank, Bankia, is poised to be the first to receive state aid. Chairman Rodrigo Rato, a former International Monetary Fund managing director, resigned immediately after word went out that the Finance Ministry was gearing up to refinance the bank and introduce legislation to shore up balance sheets of other banks. Prime Minister Marian Rajoy said any bank rescue would not endanger tough measures set by the EU to rein in budget deficits. The Telegraph (London) (tiered subscription model) (07 May.)
Other News
Editorial: Regulators struggle to raise banks' capital requirements
Officials and regulators have been tackling issues that contributed to the global financial crisis. However, four years after the crisis began, they are still struggling to agree on an internationally coordinated increase in banks' capital requirements. "U.K. and European Union finance ministers fell out over this last week," Bloomberg editors write. "And it's already clear that the new capital-adequacy rules, when finally in place, will be too weak." Bloomberg (06 May.)
Basel Committee's trading-book plan would hit major European banks
The Basel Committee on Banking Supervision proposed changing the way banks measure trading-book risk. The move likely would hit European lenders with major fixed-income desks the hardest. Financial Times (tiered subscription model) (07 May.)
Austrian official sees opportunity to discuss transaction tax
Francois Hollande's victory in the French presidential election gives Europe an opportunity to look into a tax on financial transactions, Austrian Chancellor Werner Faymann said. The revenue could be used to battle unemployment, Faymann said. The Wall Street Journal/Dow Jones Newswires (07 May.)
FSA crackdown prompts brokers to review procedures and controls
The UK Financial Services Authority's £450,000 fine against Ian Hannam, a former banker at JPMorgan Cazenove, spurred corporate brokers to reconsider how they operate, sources said. Financial Times (tiered subscription model) (07 May.)
India delays implementation of controversial tax proposal
The Indian Finance Ministry responded to investors' concerns by postponing implementation of General Anti Avoidance Rules. Foreign investors are expected to welcome the change because GAAR would give Indian authorities power to tax financial transactions that were routed through tax havens. The "Finance Ministry's statement comes as a breather to foreign investors and will give them time to make their operational structures tax compliant", said Punit Shah of KPMG. LiveMint.com/The Wall Street Journal (India) (07 May.)
Commentary: Legal-entity identifiers are the way forward
Allan Grody, president of Financial InterGroup Holdings, writes that a system of legal-entity identifiers could improve transparency and stabilise the financial sector. However, he argues that the system should not be implemented and managed by the industry, as some trade groups have proposed. AmericanBanker.com (free registration)/BankThink blog (07 May.)
China plans to launch uniformly regulated OTC stock market
The China Securities Regulatory Commission is working with brokerages to allow retail investors to trade in an over-the-counter stock market for nonpublic companies, Vice Chairman Yao Gang said. The market will be similar to the US OTC Bulletin Board. "In the future, when the trial becomes nationwide, we plan to let individual investors enter the market, but they must meet certain requirements," Yao said. Reuters (07 May.)
Other News
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Next week: AFME Fifth Annual European Post-Trade Conference -- 16 May in London
The European Post-Trade Conference will cover all crucial developments in the post-trade space and their impact on the industry, including regulation of central securities depositories, TARGET2-Securities, legal-entity identifiers, interoperability and extraterritoriality. The event is an essential, annual gathering for post-trade professionals to receive updated information from leading European speakers and to network with senior operations executives, market-infrastructure executives, senior regulators, policymakers and providers. We are looking forward to welcoming Verena Ross, executive director of the European Securities and Markets Authority, and Kay Swinburne of the European Parliament Economic and Monetary Affairs Committee, who will give keynote speeches at the conference. Register! Blank (03 Apr.)
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