26 January 2022
GFMA SmartBrief
News on the global financial marketsSIGN UP ⋅   SHARE
Morning Bell
The US is "at the ready" with economic sanctions on Russia that would have "significant impact on the Russian economy" if the country invades Ukraine, said Deputy Treasury Secretary Wally Adeyemo. The sanctions are "far more significant" than those taken after Russia invaded Crimea, Adeyemo said.
Full Story: Bloomberg (25 Jan.),  Financial Times (subscription required) (25 Jan.) 
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Industry News
Big international banks are warning the Chinese government that they may be unable to advise Chinese companies on initial public offerings under the government's revised rules for offshore listings. The Asia Securities Industry & Financial Markets Association has written to regulators urging them to clarify the new requirements, a source said.
Full Story: Financial Times (subscription required) (25 Jan.),  Bloomberg (25 Jan.),  Regulation Asia (tiered subscription model) (25 Jan.) 
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Regulators are expected to take a close look at how synthetic Libor is being implemented, and the bond markets may find it challenging to shift to another interest rate index, according to Shankar Mukherjee, a partner at EY. "The question is how this is going to impact the transition strategy for US regulators," he says.
Full Story: International Financial Law Review (25 Jan.) 
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Wells Fargo is reviewing the possibility of divesting its 20% equity interest in the Shanghai Commercial Bank in Hong Kong, sources said. The sale, which hasn't received final approval, is part of the bank's turnaround plan, they said.
Full Story: Bloomberg (25 Jan.) 
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The number of global financial services businesses seeking to expand or establish their presence in the UK has hit its highest since the Brexit referendum, with 87% of decision makers planning further operations in the country, according to a survey by EY. The figure is the highest since 2016, with more than half of respondents citing the UK's handling of the pandemic as a factor in their thinking.
Full Story: The Telegraph (London) (tiered subscription model) (26 Jan.),  Bloomberg (26 Jan.),  The Times (London) (tiered subscription model) (26 Jan.) 
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The UN-backed Net-Zero Asset Owner Alliance, which manages $10 trillion of investments, has strengthened its efforts to fight climate change by aiming to cut emissions linked to assets in their portfolios by between 49% and 65% by 2030. At the same time, the effort has been criticized for failing to put an end to financing for new oil and gas projects.
Full Story: Financial Times (subscription required) (25 Jan.) 
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The flow of foreign capital into China's domestic stock and bond markets is picking up as fund managers conclude the easing of inflation and government relaxation of monetary and fiscal policy will spare investments there from the volatility experienced in other markets. Offshore net inflows to China through its Stock Connect system surged to a record daily average of $413 million during the first three weeks of 2022, according to Morgan Stanley.
Full Story: Reuters (26 Jan.) 
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Fidelity Investments has shifted away from actively-managed funds, cut fees on products favored by individual investors, embraced cryptocurrencies, pursued young retail investors who like trading and is now enjoying the best profits in its history. Fidelity has opened 12.7 million new retail accounts since March 2020 when the coronavirus pandemic started forcing many Americans to work at home.
Full Story: The Wall Street Journal (25 Jan.) 
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Regulatory Roundup
THe gamification of trading has introduced new retail investors to the financial markets, but it has also created new risks and encouraged speculation, according to Verena Ross, chair of the European Securities and Markets Authority. "We are looking at how to raise awareness and warn investors what they are letting themselves in for," Ross said.
Full Story: Reuters (25 Jan.) 
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Sir Jan du Plessis, the incoming chair of the UK's Financial Accounting Council, has said the regulator's governance is "not good enough" and he will implement improvements within three months. The council has been criticized for failing to head off several corporate scandals.
Full Story: Financial Times (subscription required) (25 Jan.),  Reuters (25 Jan.) 
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The Monetary Authority of Singapore has told companies offering cryptoassets to stop all marketing directed at retail investors. The regulator said the trading of the assets is "highly risky and not suitable for the general public."
Full Story: Financial Times (subscription required)/Nikkei Asia (25 Jan.) 
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GFMA News
Our 2022 Capital Markets Outlook highlights market performance, critical policy issues and resources for effective and resilient markets. US capital markets are the strongest and largest in the world, continuing to be among the deepest, most liquid and most efficient. They provide more than 70% of funding for economic activity in terms of equity and debt financing of nonfinancial corporations. On behalf of our members, in this report, we explain why markets matter, delve into market performance across multiple asset classes and describe industry viewpoints on several critical policy matters.
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