Thinking Global: Colombia’s Juan Pablo Cordoba Says Global Regulation Hurts Emerging Markets
If you don’t know Juan Pablo Cordoba you probably should. As the CEO of the Bolsa de Valores de Colombia (Colombia Securities Exchange) and chairman of the World Federation of Exchanges, he is one of the exchange executives who has a unique perspective on emerging exchanges such as those in Latin America and beyond. Yet, he also has a firm understanding of the G20 market reforms that have filtered throughout the world in the form of Dodd-Frank, Basel III, MIFID and EMIR
Cordoba spoke with Jim Kharouf, editor-in-chief of John Lothian News, at the World Federation of Exchanges/IOMA conference in Sao Paulo, Brazil about the challenges and opportunities for the -year-old Colombia exchange, including regional efforts such as MILA, the Latin American Integrated Market. He also provides a credible voice regarding the unintended consequences of applying a host of clearing, capital and compliance hurdles that could stifle the growth of such new markets.
Q: Where does your exchange stand in today’s regional and global landscape?
If you look at the big picture for developing markets, and Colombia is no exception, there has been a rapid development over the last 10- to 12 years. It’s been a very positive dynamic in the domestic markets – large liquidity, new products, more participants, more professionals and in some cases the development of derivatives markets. So if you look at the economic story, we’re very satisfied.
Quote of the Day
“Procedural reorganizations happen in financial change, and they often underwhelm. Dodd-Frank, for example, handled the problem of the next financial crisis by creating a supercommittee of agencies to plan for it — the Financial Stability Oversight Committee. It is a committee with a few powers – the power to designate very large financial institutions as systemically important and a limited power to review the work of its member agencies, for example – but not an effort to upend the way we do financial regulation in America.”
David Zaring, associate professor of legal studies at the Wharton School at the University of Pennsylvania in the story, “Why the New York Fed Should Not Be Reined In”.
Why Bank Investors Like This U.K. Election Outcome
Sandy Chen, banking analyst at Cenkos Securities, said the share price rises Friday reflected the general fear that “banker bashing” would have been more intense under a Labour government. “It really is a knee-jerk response and you would expect the domestic-focused banks, RBS, Lloyds and Barclays, would rise more than HSBC and Standard Chartered which are much more international,” he said in an interview.
Financial Transaction Tax: A relentless pursuit?
The Trade News
Many thought the dreaded European Financial Transaction Tax (FTT) had gone away, but in January, French and Austrian finance ministers wrote a letter to counterparts in the 11 supporting countries (ECP 11)— Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovenia, Slovakia and Spain—suggesting a revival of the tax, with a proposed arrangement date of January 2016. Following that initial flurry, things have since quietened down, but, across Europe, opinions differ as to whether the tax will ever come in at all.
China Stock Picker Beating 90% of Peers Says Rout Isn’t Over Yet
The worst isn’t over for Chinese stocks after the biggest three-day rout since June 2013, according to HSBC Global Asset Management.
China’s government will probably take further steps to curb the use of borrowed money for share investment after margin debt rose to a record, said Mandy Chan, whose $111 million HSBC China A-Share Fund topped 90 percent of peers tracked by Bloomberg in the past year with a 96 percent gain. Mid- and small-capitalization stocks are most vulnerable to declines, she said.
UBS Analyst Who Called Europe Stock Slide Says It Won’t Last
Investors who called for a pullback in European stocks are being vindicated, for now — and at least one says it’s time to dive back in.
The shares posted their biggest one-day rally this year, as the Stoxx Europe 600 Index climbed 2.9 percent on Friday. A 6.1 percent drop in the gauge from a record through Thursday had erased about 645 billion euros ($727 billion) of market value from its companies, amounting to almost 11 months’ worth of European Central Bank bond buying.
Here’s Where John Paulson Is Investing Now
Since his spectacularly profitable short of the subprime mortgage market during the crisis, the hedge-fund manager John Paulson has had one of the more interesting up and down rides in the industry.
U.S. Banks Regulators Should Be Wary of a Global Tit-For-Tat
Bank analyst Dick Bove is known for his provocative comments, especially toward U.S. regulators. This week, Mr. Bove, who is now an analyst at Rafferty Capital Markets, warned that U.S. banking regulators by “attack[ing] foreign banks as they did BNP Paribas BNP.FR -0.14%,” they may be provoking foreign regulators to push back against U.S. banks.
?Key regulators clash on Volcker Rule application to small banks
Neil Roland, MLex
Two of the most influential US banking regulators are publicly dueling over whether community banks should be subject to the Volcker Rule, drawing possible battle lines for upcoming legislation.
Banks face “mad rush” to prepare for MiFIR
Financial institutions will need to maintain records, report transactions and supply reference data under the European Commission’s forthcoming MiFIR regulation. But those who expect plenty of time for implementation and no regulatory conflicts are likely to be disappointed, according to a new report by analyst firm Aite.
EU lawmakers back rewards for long-term shareholders
Long-term shareholders in companies in the European Union will be rewarded with extra voting rights or loyalty dividends if a draft law backed by a panel of EU lawmakers comes into force. The 28-country bloc is revising its shareholder rights rules to combat what critics call “short-termism” in stock markets where investors hold shares for only brief periods, making them less likely to hold company boards to account.
Deutsche Bank’s Elad Shraga Said to Leave to Start Own Fund
Elad Shraga, Deutsche Bank AG’s head of structured finance, is leaving after 15 years at the company to start his own fund, according to a person with knowledge of the matter.
Shraga, 45, will manage a special-situations fund focused on credit and real estate in Europe, and has already raised capital, according to the person, who asked not to be identified discussing a bank employee. Daniel Pietrzak and Tom Cheung will replace Shraga in leading the structured-finance businesses for the Europe and Americas regions, Deutsche Bank said Friday in a memo to employees.
Why the New York Fed Should Not Be Reined In
Dealbook – NY Times
Should the Federal Reserve Bank of New York lose its automatic place on the Federal Open Market Committee, the committee that sets monetary policy for the government?
A proposal that it do so has met with sympathy across the political spectrum. Liberals don’t like big banks, and they think the New York Fed is too close to them. Community bankers feel the same way, and Congress listens to them. And libertarians don’t like the Fed itself, and think that this sort of punishment could rein in the agency and remind it that Congress is watching.
Warren And Vitter Push For Federal Reserve Accountability Bill, Ban On Bank Bailouts
U.S. Sens. Elizabeth Warren and David Vitter are pushing legislation aimed at making the Federal Reserve more accountable.
The Massachusetts Democrat and Louisiana Republican say their measure will improve the Fed’s decision-making process by increasing the independence of the agency’s board of governors and bringing transparency to votes on enforcement actions over $1 million.
Investors shake off Federal Reserve chief Yellen’s warning on stock valuations
Another observation about elevated prices in the stock market from the Federal Reserve provided only brief drama for investors.
Nine months after saying social media and biotechnology shares looked stretched, Federal Reserve Chair Janet Yellen said Wednesday stock valuations are “quite high” and could spur financial instability. While the S&P 500 Index slipped on the statement, it closed near its level when the warning was issued, down 0.5%.
Senator drafting Federal Reserve overhaul
Senate Banking Committee Chairman Richard Shelby (R-Ala.) is preparing legislation that would make major changes to the Federal Reserve, according to multiple sources briefed on the bill.
Shelby’s bill would establish a congressional commission for restructuring the central bank, according to a source who has been briefed on the legislation. The central bank would be required to implement the commission’s recommendations absent a joint resolution of disapproval from Congress.
Why Asia’s Central Banks Will Cut Rates Again
Rumours that Asia Pacific’s policy-easing cycle is essentially over are exaggerated, in our view (Asia: It ain’t over ’til it’s over). While an unexpectedly rapid recoil in oil prices and the growing realisation that the US Fed remains on course for policy lift-off by September have suggested that policy easing is winding down, 25 basis points rate cuts by both the Bank of Thailand (BoT) and the Reserve Bank of Australia (RBA) show that there is juice left in the regional easing cycle.
UBS Said Set for Currency Plea as U.S. Wants Deals on Wednesday
The U.S. Justice Department is pressing to reach currency-rigging settlements on Wednesday that will include guilty pleas from five banks — one more than previously reported — according to two people with knowledge of the situation.
The fifth bank is Zurich-based UBS Group AG, one of the people said, asking not to be identified because the matter hasn’t been made public. The other four — Citigroup Inc., JPMorgan Chase & Co., Barclays Plc and Royal Bank of Scotland Group Plc — will plead guilty to antitrust charges, people familiar with the matter have previously said.
EBS to Beta Launch FX Outrights and Swaps on EBS Direct
EBS, interdealer broker Icap’s electronic foreign exchange (FX) business, has announced it will introduce FX outrights and swaps through its upcoming platform EBS Direct in Q4 of 2015.
U.S. net dollar longs fall to lowest in eight months -CFTC, Reuters
Speculators further reduced positive bets on the U.S. dollar in the latest period, pushing the currency’s net long position to the lowest since mid-September, according to Reuters calculations and data from the Commodity Futures Trading Commission released on Friday.
Rupee one of the best among EM currencies
The rupee remains one of the best performing currencies among other emerging markets despite Thursday’s rout as the local unit lost just 1.86% value to the US dollar so far this year.
Indexes & Index Products
MSCI to launch Saudi Arabia, GCC indexes on June 1
Index provider MSCI said on Friday that it would launch standalone equity indexes for Saudi Arabian stocks from June 1 along with a number of other regional benchmarks in the Middle East. So far, MSCI only had provisional indexes covering the $570 billion Saudi stock market, which is set to open to foreign investors in June
China share index off lows, but still posts biggest weekly fall in 5 yrs
China stocks rebounded on Friday, stemming a three-day sell-off that led a key share index to its worst weekly decline in nearly five years amid fears of regulatory crackdown on speculators.
The Shanghai Composite Index rose 2.3 percent, to 4,205.92 points. But for the week, the index fell 5.3 percent, posting its worst performance since July 2010.
There May Be Value in the Emerging Markets—If You Know Where to Look
Over the past few years, it’s been somewhat unheard-of for the MSCI Emerging Markets Index to start a year outperforming the S&P 500 Index. But so far in 2015, that’s exactly what’s happening. The left-hand side of the chart below illustrates the point.
Indian equity indices in smart recovery mode
Key Indian equity indices were in a smart recovery on Friday after crashing to the lowest level in months the previous day, with the mood lifted by government assurances that it will seek advice from a committee to look at the issue of retrospective tax on capital gains.
Still too many gold bulls—and that’s bearish
The gold market continues to rest on a shaky sentiment foundation.This is the same conclusion I reached one month ago, you may recall, when I argued that there was too much bullishness to support a sustainable gold rally. Gold bullion today is $20 lower than where it stood then.
Gold ‘unreliable’ hedge against geopolitical risk – SocGen
The metal’s performance in periods of regional military conflicts is mixed at best, says SocGen.
Gold is not reliable as a hedge against geopolitical risks, Société Générale said on Thursday.
The performance of the yellow metal in periods of regional military conflicts is mixed and it has not performed well consistently, the bank said in a note on Thursday.
Counting gold in Switzerland
The last goldmine in Switzerland closed for good in 1961, more than 50 years ago. The seam, between Astano and Sessa in Ticino, was fully depleted. Today a few hundred amateur gold panners perpetuate the tradition, primarily in the region of Napf between the cantons of Bern and Lucerne, where it is still possible to find gold deposits.
South Africa’s Harmony Gold narrows quarterly loss
South Africa’s Harmony Gold on Friday narrowed its quarterly loss as job cuts, cost reductions and a favourable exchange rate helped offset lower gold output.