The European Commission has recommended taking France out of excessive-deficit procedures for EU states with deficits that exceed 3% of GDP. The commission predicts France's deficit will 2.3% of GDP this year.
Regulators are monitoring developments in financial technology for signs of risk to stability or competition, says William Coen, secretary general of the Basel Committee on Banking Supervision. Coen says he sees no cause for concern, "but we will be watching".
A senior Chinese official has revealed the government had long anticipated a trade dispute with the US and had formulated a strategy in advance, John Cassidy writes. China has adhered to the strategy, while confusion and inconsistency within the US government have given China a clear advantage, Cassidy writes.
The risk of data breaches continues to grow as more information is stored online and as software becomes more complex. Lawyer Andrew Rossow details what organisations can do to prepare, including using artificial intelligence, creating or updating incident-response plans and utilising blockchain.
The 12 largest global investment banks saw a 48% increase in commodity-related revenue in the first quarter compared with Q1 of 2017, reaching $1.2 billion, according to a Coalition report. "Investor products benefited from increased institutional client appetite for commodity indices," the report says.
JPMorgan Chase, Citigroup and other large banks are pushing congressional Republicans to exempt them from Dodd-Frank Act rules that force them to post collateral for swaps transactions between affiliates. Supporters have linked the exemption to legislation to increase funding of the Commodity Futures Trading Commission by changing the definition of such swaps transactions.
The European Parliament's proposal to give central banks greater location and supervision power over systemically important third-country central counterparties could have "unintended consequences not only in Europe but in other jurisdictions," says Ulrich Karl, head of clearing services at the International Swaps and Derivatives Association. A location policy would hurt EU firms in terms of "higher cost and risk and potential migration requirements," Karl says.
A July 3 deadline looms for firms to acquire a legal-entity identifier to comply with Europe's revised Markets in Financial Instruments Directive, and market participants need to act, rather than expect another delay to the "no LEI, no trade" requirement, says Eugene Ing, an executive director at Depository Trust & Clearing Corp. While some firms might not need an LEI to meet MiFID II, "there will be further compliance regimes and regulations that will require firms to obtain one as LEIs are considered a global standard for data reporting," Ing says.
Deutsche Boerse is considering offering cryptocurrency products, potentially becoming the first European exchange to do so. "Before we move forward with anything like bitcoin, we want to make sure we understand the underlying transaction, which isn't the easiest thing to do," says Jeffrey Tessler of Deutsche Boerse.
High-frequency traders possess a "higher risk of being adversely selected by more fundamentally informed traders," according to a note from Goldman Sachs strategists. The usual shock response of HFTs is to widen quotes or to withdraw liquidity, which can lead to a feedback loop, displaying a way in which algorithmic trading increases market fragility, the note says.