ECB plans bond purchases, cuts deposit rate to -0.5% | BIS urges Basel III implementation to support growth | Draghi's final move puts pressure on successor, other central banks
13 September 2019
GFMA SmartBrief
News on the global financial markets
Morning Bell
ECB plans bond purchases, cuts deposit rate to -0.5%
The European Central Bank has unveiled a fresh wave of quantitative easing and other stimulus to stave off a recession in the eurozone. The ECB has cut its deposit rate to a record low of -0.5% and plans to resume bond purchases at a rate of €20 billion a month starting 1 November and to introduce tiered interest rates.
Financial News (UK) (subscription required) (12 Sep.),  Bloomberg (tiered subscription model) (12 Sep.),  Reuters (12 Sep.) 
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Industry News
BIS urges Basel III implementation to support growth
The Bank for International Settlements says governments should implement Basel III in a "timely and consistent" manner to maintain growth. "Monetary policy cannot be expected to single-handedly sustain growth as it has over the past decade," BIS chief Agustin Carstens says.
MLex (subscription required) (12 Sep.) 
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Draghi's final move puts pressure on successor, other central banks
In his swan song as head of the European Central Bank, Mario Draghi has left successor Christine Lagarde in a position in which she likely will have to uphold relaxed monetary policy long term. The ECB's decision to cut interest rates and to resume bond purchases also raises pressure on central banks in the US and Japan to follow suit.
Reuters (12 Sep.),  Bloomberg (tiered subscription model) (12 Sep.) 
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Analysts fear stock volatility is "quant quake" revival
Market analysts are concerned that volatility in growth stocks might indicate a repeat of the 2007 "quant quake", which ran up big losses for computer-driven traders.
Financial Times (subscription required) (12 Sep.) 
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Danish central bank follows ECB with cut to record-low rate
The Danish central bank has reduced its deposit rate to a record low of -0.75% in response to the European Central Bank's reduction of its deposit rate. The Danish central bank typically mirrors ECB policy to keep the krone aligned with the euro, though it has not set forth additional stimulus.
Reuters (12 Sep.) 
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LCH to begin €STR swap clearing on 21 October
Clearing of swaps linked to the European Central Bank's new euro overnight risk-free rate on LCH will begin on 21 October. LCH says it plans to provide participants with €STR swaps for up to 51 years.
Risk (subscription required) (12 Sep.) 
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Regulatory Roundup
Ex-CFTC chair Giancarlo raises concerns over HKEx-LSE deal
Former Commodity Futures Trading Commission chair J. Christopher Giancarlo says the possible acquisition of the London Stock Exchange Group by Hong Kong Exchanges and Clearing raises concerns in Washington with regards to derivatives clearing. "A deal like this would have to be carefully thought through and considered by US authorities," says Giancarlo.
Financial News (UK) (subscription required) (12 Sep.) 
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Spotlight on China
Trump signals openness to interim US-Chinese trade deal
President Donald Trump says he is open to an interim trade agreement with China. Trump prefers a full agreement over a temporary deal, he says, "but it's something we would consider, I guess".
CNBC (12 Sep.) 
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Tech Trends
Survey: London fintechs unprepared for no-deal Brexit
Fewer than 25% of London's fintech firms could manage the fallout of the UK leaving the EU at the end of October without a deal in place, a survey by trade body Innovate Finance finds. About two-thirds of respondents feel Brexit offers no clear advantages for their business.
Financial News (UK) (subscription required) (12 Sep.) 
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AFME's 2nd Annual Capital Markets Technology & Innovation Conference
AFME's 2nd Annual Capital Markets Technology & Innovation Conference will take place at Palais Brongniart, the former French Stock Exchange, in the heart of Paris on the 21st and 22nd November. The conference features a strategic agenda focused on how capital markets are beginning to respond to many of the key technology, operational and policy changes being faced today. Thought-provoking panel discussions featuring industry leaders, high-level policymakers and technology providers will dive deep into priority topics such as artificial intelligence, cloud computing, digital assets and operational resilience. See the full list of speakers.
Association for Financial Markets in Europe (26 Jul.) 
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