30 July 2021
GFMA SmartBrief
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Morning Bell
Credit Suisse says it will pursue all avenues, including legal action, to recover the $5.5 billion of losses it suffered from the collapse of family office Archegos Capital Management. An independent report from law firm Paul Weiss commissioned by the bank said Archegos probably deceived the lender and "obfuscated the true extent of its positions" but that staff also disregarded the risks.
Full Story: Financial Times (subscription required) (29 Jul.),  The Wall Street Journal (29 Jul.),  Reuters (29 Jul.),  Bloomberg (29 Jul.) 
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Industry News
Euronext, the stock market operator that does business throughout Europe, has said it is examining the possibility of reducing its use of the London Stock Exchange clearinghouse in Paris. The company said it instead might switch to CC&G, a clearinghouse it acquired when it bought Borsa Italiana in April.
Full Story: Global Investor (subscription required) (29 Jul.),  Reuters (29 Jul.) 
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Chinese shares posted more losses today, reversing Thursday's advance, as investors reevaluated the risk of future regulatory surprises for the country's equity markets. "It's the fear of the unknown," said Justin Tang, head of Asia research at United First Partners.
Full Story: Bloomberg (30 Jul.) 
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Turkey's lira is starting to recover from the sharp decline it suffered early this year and bond buyers are beginning to develop an appetite for lira-denominated debt after the central bank resisted pressure from president Recep Tayyip Erdogan to lower interest rates. This month the currency has gained around 3% against the US dollar.
Full Story: Financial Times (subscription required) (30 Jul.) 
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Incorporating Refinitiv into the London Stock Exchange is turning out to be a lot more challenging and expensive than the exchange initially thought. Since January when the $15 billion deal closed LSEG stock has lost 15% of its value.
Full Story: The Wall Street Journal (29 Jul.) 
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Lloyds Banking Group has reported a larger-than-expected profit in the first six months of the year, recovering from a first-half loss in 2020, and announced a 0.67 pence interim dividend. The bank booked a £3.9 billion pretax profit for the six months ending in June, well ahead of the average analyst forecast of £3.1 billion.
Full Story: Reuters (29 Jul.) 
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Goldman Sachs on Thursday adjusted downward its outlook for Chinese offshore equity markets, following a broad sell-off triggered by government regulatory actions. The bank downgraded its view of MSCI China from "overweight" to "market weight."
Full Story: Reuters (29 Jul.) 
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Regulatory Roundup
The European Central Bank and Bank of England are publicly warning about banks' exposure to leveraged loans and high-yield bonds, but investors haven't lost their appetite for potentially risky deals. Loan prices and below-investment-grade debt prices have fallen, and a new wave of deals is on the way.
Full Story: Bloomberg (29 Jul.) 
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The Alternative Reference Rates Committee has officially recommended the CME Group's term Secured Overnight Financing Rate to replace the London Interbank Offered Rate as a benchmark. "Market participants now have all the tools they need as we enter the transition's homestretch." said Tom Wipf, the committee's chairman.
Full Story: Reuters (29 Jul.),  Bloomberg (29 Jul.),  Financial Times (subscription required) (29 Jul.),  Practice Insight (29 Jul.) 
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For the first time Germany will permit some institutional funds to hold cryptoassets as investments. Funds called "Spezialfonds" that are bound to fixed investment rules will be allowed to allocate up to 20% of their portfolios to cryptoassets under a law that takes effect on Monday.
Full Story: Bloomberg (30 Jul.) 
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AFME News
AFME is pleased to announce that the programme for the 5th Annual European Compliance and Legal Conference is available to view. The event will be held in a virtual format across three half-days, beginning on Wednesday, 6 October, and concluding on Friday, 8 October. Keynote speakers include Rodrigo Buenaventura, chair of the Spanish National Securities Market Commission, and Robert Ophele, chair of Autorite des Marches Financiers. Join us and hear from over 70 leading speakers representing the European compliance and legal sector; network with over 250 industry peers; and participate in live polls and panel Q&A.
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