The US Commodity Futures Trading Commission will use "blunt and strong tools" to retaliate if the EU proceeds with a proposal to oversee US derivatives clearinghouses, Chairman J. Christopher Giancarlo says. "The CFTC will not allow US market participants to be put in the completely untenable position of having to choose between violating domestic laws and regulations or violating foreign laws and regulations," Giancarlo says.
Technical analyst Ari Wald, CMT, says the volume of oversold US stocks has reached a multiyear high while the Cboe Volatility Index has risen significantly, which could be a bullish signal. Analysis of movement on the S&P 500 since 1995 shows this combination prompts an average gain of 4.3% during the next month, Wald says.
Commodity Futures Trading Commission member Brian Quintenz said code developers involved with smart contracts or similar blockchain-based projects could be held accountable if CFTC regulations are violated. At issue is whether coders "could reasonably foresee, at the time they created the code, that it would likely be used by US persons in a manner violative of CFTC regulations," Quintenz said.
A survey by Smarsh finds financial firms struggling when it comes to retention and management of text messages and exchanges via social media. Half of respondents cited compliance as a primary worry when it comes to non-email communication.
The US Treasury Department again does not accuse China of currency manipulation in a semiannual report on foreign exchange practices. However, the Treasury says it will closely monitor the yuan after a recent drop.
Investors have priced the cost of a no-deal Brexit into valuation of UK bank stocks, Citigroup analysts say. If the UK and the EU cannot strike a deal regarding their relationship after Brexit, interest rates likely will stay low, hitting bank earnings.
Bond investors have discovered they can arbitrage exchange rate differences to earn higher yields on nominally lower-yielding European and Japanese debt than they can on supposedly higher-yielding US Treasurys. The strategy relies on currency hedging and has helped investors earn 3.8% yearly returns on the 10-year German bund and almost 5% annual yields on 10-year Spanish debt.
Europe's ageing population could lead to prolonged recessions and slow recoveries, leaving the European Central Bank at risk of missing inflation objectives, Chief Economist Peter Praet says. The demographic shift has slowed productivity, increased household savings and shifted the balance of retirees versus workers, Praet says.
Jon Cunliffe, deputy governor for financial stability at the Bank of England, has urged the EU to help prevent disruption to derivatives trading should Brexit occur without a deal. Cunliffe has told UK lawmakers many derivatives trades will become illegal unless the EU matches BoE actions to maintain market continuity.
AFME has joined trade association UK Finance in calling for a different approach to the UK Financial Conduct Authority's plans to publish a directory of authorised advisers. Simon Hills of UK Finance says the directory would go further than necessary and would unduly burden firms for little benefit.
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