Santander's UK profit fell 21% in the first quarter compared with Q1 of 2017, partly because of the collapse of construction company Carillion. Santander has reported pretax profit of £414 million, down from £525 million in Q1 of 2017.
UK Financial Conduct Authority CEO Andrew Bailey and other regulators are concerned about financial stability surrounding cross-border contracts after Brexit. "Now is the time for the UK and EU authorities to come together and work on the solutions to reduce the risks to financial stability that Brexit could pose," Bailey says.
The EU should stress-test liquidity risk at nonbanks, as recommended by the Financial Stability Board, says Francois Villeroy de Galhau, governor of the Bank of France and a policymaker at the European Central Bank. The French central bank is releasing a financial-stability report today that details its stance.
Amazon's first-quarter earnings report is expected to show outstanding performance, but technical analyst Craig Johnson, CMT, cautions this might not significantly raise value because the good news has been priced in. The stock's chart shows a widening gap between the overall relative strength index and price, which suggests momentum is waning, Johnson says.
The Shanghai Stock Exchange will temporarily authorize approved financial institutions, publicly offered securities investment funds and commercial banks' wealth-management products to participate in tri-party repurchase agreements and allow asset-backed securities to be used as collateral as it seeks ways to stimulate China's bond market. Yun Xiong, a Shanghai-based asset manager, commented that the new rules would "dramatically" enhance liquidity for asset-backed securities.
The Securities and Exchange Commission's proposal to introduce a best-interest standard for brokers would likely have a profound effect on compliance programs, say attorneys in Stradley Ronon's fiduciary-governance practice. The proposal, which would codify brokers' responsibility to put clients' interests ahead of their own and make specific disclosures about material conflicts of interest, prompted Stradley Ronon's Lawrence Stadulis to say: "Collectively, the requirements potentially have sharp teeth because they would establish a tangible, evidentiary audit trail for the SEC and FINRA to follow in determining whether brokers have complied with both the letter and spirit of the best interest standard."
Effective monitoring, data consistency and aggregation are key challenges to creating a global framework for reporting of over-the-counter derivatives trades, which is a Group of 20 goal, according to a report by Depository Trust & Clearing Corp. "The industry must implement consistent standards globally or, alternatively, normalize data in accordance with prescribed standards" to reduce operational risk and cost and to improve the value of data, DTCC Deriv/SERV President and CEO Chris Childs says.
The International Swaps and Derivatives Association has unveiled results of the Future of Derivatives Survey, which shows an expected decrease in derivatives dealers, higher costs and regulatory compliance are considered major challenges, while technology such as distributed ledgers, artificial intelligence and cryptocurrencies are viewed as game changers. Among respondents, 83% expect volume and end-user activity to stay at existing levels or to increase in coming years, while 65% are optimistic about the future of derivatives.
The yield on the 10-year US Treasury has surpassed 3% for the first time since 2014, driving down share prices of stalwarts such as Caterpillar and 3M. Both companies say high costs and weak demand might take a toll on profit, prompting speculation global economic growth might be nearing a peak.
The UK Debt Management Office plans to sell £106 billion in debt for 2018-19, instead of the £102.9 billion reported in its spring statement. The change is attributed to a decrease in contributions from National Savings & Investment and to a revision of the government's net cash requirement.
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