Draghi reportedly warns against defying EU rules | EU official: No Brexit cliff for cross-border contracts | Popularity of hedge funds wanes in Europe
19 October 2018
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Draghi reportedly warns against defying EU rules
Draghi reportedly warns against defying EU rules
Draghi (Francois Guillot/AFP/Getty Images)
European Central Bank President Mario Draghi, likely targeting Italy's budget dispute, has told EU leaders questioning the bloc's rules could worsen its economic outlook and financial conditions, a source says. The spread between 10-year Italian and German bond yields has expanded to the widest since 2013.
BloombergQuint (India) (18 Oct.),  Bloomberg (tiered subscription model) (18 Oct.) 
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Industry News
EU official: No Brexit cliff for cross-border contracts
Brexit won't disrupt insurance and derivatives contracts between parties in the UK and those in countries remaining in the EU, even if no transition deal is reached, says Olivier Guersent, director-general of financial services at the European Commission. "There is no cliff" for cross-border contracts on Brexit day, he says.
Politico (18 Oct.),  City A.M. (London) (18 Oct.),  Reuters (18 Oct.) 
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Popularity of hedge funds wanes in Europe
European sentiment for hedge long and short bond strategy dropped 15.5 percentage points in the third quarter compared with Q2, while multistrategy declined 13.6 percentage points, according to a survey by Last Word Research. Sentiment for all hedge strategies declined in Q3, the survey finds.
Expert Investor (UK) (18 Oct.) 
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Focus turns to ECB interest rates as asset buying ebbs
The European Central Bank could end a policy of paying negative interest on deposits in January 2020, a Bloomberg poll of economists finds. Renewed focus on interest rates comes as policymakers wind down asset purchases to a cap of €2.6 trillion at year-end.
Bloomberg (tiered subscription model) (19 Oct.) 
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Regulatory Roundup
US wants EU to clarify "systemic risk" definition
The US Commodity Futures Trading Commission says it has been unable to get the EU to explain how the definition of "systemic risk" in European Parliament legislation would apply to US clearinghouses. US officials are increasingly concerned US clearinghouses will have to face additional regulation in the EU.
MLex (subscription required) (18 Oct.),  Financial Times (subscription required) (18 Oct.) 
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Paper urges united response to implement SRD changes
An industrywide approach to implementing changes to the EU Shareholder Rights Directive is needed to ensure uniform application across the bloc, according to a white paper by Broadridge Financial Solutions. The update brings harmonisation in some areas but leaves others open to discretion on the part of custodians and other intermediaries, the paper says.
Asset Servicing Times (18 Oct.) 
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Spotlight on China
Chinese growth hits lowest rate since financial crisis
Chinese economic growth declined to 6.5% in the third quarter from 6.7% in Q2, as an intensifying trade conflict with the US began to affect Chinese companies. The Q3 growth rate is the lowest China has experienced since the financial crisis.
South China Morning Post (Hong Kong) (19 Oct.),  BloombergQuint (India) (19 Oct.) 
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Tech Trends
2019 tech IPOs could bring valuations topping $100B
Uber, Lyft and Palantir are among a growing number of high-profile technology companies on track for initial public offerings next year. Deals in planning stages or in the IPO pipeline indicate valuations could exceed $100 billion.
CNBC (18 Oct.),  The Wall Street Journal (tiered subscription model) (18 Oct.) 
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AFME's 13th Annual European Government Bond Conference 12-13 November 2018 Sofitel Europe, Brussels
Join up to 150 European DMOs, investors and primary dealers as they discuss the key factors and latest issues influencing the European Government Bond markets. Keynote speaker: ECB's Deputy Director General, Market Operations, Cornelia Holthausen will provide a keynote address on the efforts to reform Euribor. Cornelia is responsible for issues related to the operational framework of the Eurosystem, including counterparty and collateral frameworks and liquidity management. Agenda highlights: forecasts for European fixed income markets in 2019; the future and sustainability of sovereign bond issuance; impact of MiFID II on EGB markets; FinTech and the future of trading; why the FRTB matters for EU capital markets; economic factors and trends shaping European fixed income markets. For more details about the conference and to register, please visit www.afme.eu/GovtBond2018.
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AFME/vdp Annual Covered Bonds Market Conference 29 November 2018, Melia Berlin
Join us at Melia Berlin this November to discuss "Covered Bonds - Building Capital Markets Union", and network with over 150 industry leaders from the buy and sell side along with issuers, traders and regulators. With a series of panel debates and a keynote presentation by Prof Dr Bernd Lucke MEP, leaders in European covered bonds will share their views on: final steps towards harmonisation of European covered bonds frameworks, why does this matter?; the impact of harmonisation and resulting amendments for individual countries; will quality of underlying assets be compromised by the directive?; working towards a standardised green bond market; risks in a post quantitative easing (QE) environment; expectations and forecasts for the covered bond markets in 2019. For more details about the conference and to register, please visit www.afme.eu/CovBonds2018.
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ASIFMA Annual Conference 2018: Developing Asia's Capital Markets on 1 and 2 November in Singapore
This flagship annual event is a high-level, industrywide event, providing a unique opportunity for global and regional policymakers, senior regulators and industry representatives from both sell side and buy side to meet and discuss important issues affecting the development of Asia's capital markets. Register now as seats are limited!
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