Tuesday 24th October 2017
NEWS TICKER October 24th: The board of FirstRand Limited has confirmed that it has made an approach to acquire the entire issued and to be issued share capital of Aldermore at 313p per ordinary share. The parent company of South African-based FirstRand Bank said it had been assessing opportunities to build a sustainable long-term deposit franchise to fund its strategy to grow and diversify the revenue of its current UK business. Aldermore and FirstRand are in preliminary discussions about the details of the possible offer, which is subject to a number of standard conditions -- According to Moody’s the 90-plus day delinquencies of UK buy-to-let residential mortgage-backed securities (RMBS) slightly decreased to 0.3% of current balance in the three month period ended June from 0.4% in the three month period ended March this year. Cumulative losses remained stable at 0.3% of original pool balance between March and June. The total redemption rate increased to 20.3% from 18.4% in the same period. As of the end of the second quarter, the total outstanding pool balance of the 43 UK BTL RMBS transactions rated by Moody's was £26bn, compared with £21.9bn at the end of the first quarter. One new transaction has been added to the performance update: Oat Hill No.1 plc – According to state-owned Coal India Ltd (CIL), the supply of coal to the Indian power sector in the first half this year rose by 6.7% to 204.5m tonnes even as power producers complained about low levels of coal stock at their plants. CIL's dispatch to the power sector in April-September 2016-17 was 191.5m tonnes (MT), according to government data. In September too, the fuel supply increased 17% to 32 MT against 27.4 MT in the same month of the previous fiscal, the data said. India’s coal secretary Susheel Kumar recently said there was no shortage of coal and blamed power producers for low fuel stocks at plants. "The sentiment that is being created by some people is just to meet their own ends ... so as to get more and more coal. This is not right. This sentiment should not be created. There is no shortage of coal," Kumar told Indian journalists. "The root cause of all this problem is that many power plants have not followed the CEA (Central Electricity Authority) guidelines of stocking coal for 22 days. This is not the coal ministry's instruction. This is the instruction by ministry of power," he explained -- The securitisation scheme established by the China Securities Regulatory Commission (CSRC) has rapidly gained ground. In a new report, S&P Global Ratings shares its observations about the scheme and its legal foundations. "We believe the regulatory intention is to position the CSRC securitisation scheme as a derivative of traditional asset management operations," says S&P Global Ratings' credit analyst Aaron Lei - Media, technology and brands law firm Wiggin has acquired boutique intellectual property law firm Redd. The transaction will complete on November 6th. The combined team comprises 20 specialist IP lawyers working across Wiggin's offices. Wiggin CEO, John Banister, said: 'Wiggin devised an assertive growth strategy a few years ago that was focused on our key markets ... Redd is an immensely capable boutique and has an enviable reputation in IP law. We are delighted to be working together.” -- In its website blog, LedgerX, the new bitcoin-trading platform, has confirmed it has begun regulated trading of cryptocurrency derivatives. The platform reports 176 swaps and options contracts with a notional value of more than $1m traded during launch week. “As a new exchange and clearing house with technology built entirely from scratch, we were hoping for a quiet first week with minimal volumes to test the pipes. No press, no fanfare,” the blog notes -- Intercontinental Exchange is set to buy a 4% stake in Euroclear from Royal Bank of Scotland for an estimated £200m, say press reports in a deal expected to be announced later this week -- The UK government’s Crown Commercial Service has unveiled proposals to create a marketplace for government bodies across the board to procure commercial legal advice. Users of the vehicle or vehicles could include central Government departments and their associated bodies including devolved administrations, the wider public sector including health and education bodies, local and regional government organisations, emergency services and third sector organisations. The marketplace for legal services to UK public sector contracting bodies is expected, in aggregate, to be worth £650m a year. CCS also says market engagement will be managed electronically via its eSourcing Suite. Moreover, a contract notice in relation to the marketplace is expected to be published at the end of next month. In March this year the CCS named 18 law firms to a £320m, two-tier panel for the supply of general legal advice to crown bodies and other permitted users. Three months later is also launched a new panel agreement for finance and complex legal services worth an estimated £90m over a four-year period -- Bahrain, Kuwait, and the United Arab Emirates have agreed to lift a ban on imports of Egyptian agricultural products, Egypt's agriculture ministry said in a statement on Sunday The decision came after a productive series of meetings between officials from the three Gulf countries and an Egyptian delegation over the past few weeks, according to Minister of Agriculture Abdel-Moneim El-Banna. The Gulf countries banned Egyptian agricultural imports over the past year, citing concerns of harmful pesticide residue in produce. In exchange for increased Egyptian inspection of produce destined for the Gulf, the countries have agreed to allow the import of certain products, including organic ones, given proper testing – Private equity maven KKR has announced the appointment of David Lang as a member in the Sydney office, effective early 2018. Lang joins KKR from Pamplona Capital Management, a $10bn global private equity fund where he was a partner and founding member. With 20 years of industry experience, he has successfully invested across a diverse range of sectors - from consumer staples and retail, to industrials and infrastructure. Scott Bookmyer, member & head of KKR Australia, says, "After spending the past 15 years in Europe and the United States, he brings back a wealth of relationships and best practices to his home market. David personifies the global & local nature of KKR's strengths and enables us to offer an even greater array of flexible capital solutions to local institutions and entrepreneurs. David's arrival, and appointment as a fellow Member to help me lead the team, reinforces KKR's long-term commitment to the vibrant Australian market -

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Key Stories from FTSE Global Markets

In July, US Commodity Futures Trading Commission (CFTC) issued an order to continue the transition to a global system of legal entity identification (LEI) and that it had extended the designation of the utility operated by DTCC-SWIFT as the provider of legal entity identifiers under the regulator’s swap data recordkeeping and reporting rules. DTCC-SWIFT’s initial designation was made by a Commission order back in July 2012 for a two-year term. At the time the order was issued, the Commission was already participating in an international process to establish a global LEI system, into which the legal entity identifier to be used to comply with Commission requirements was expected to transition.

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Covering the entire spectrum of asset classes and financial services, from loans and credit cards to derivatives and bond positions, a Universal Product Identifier (UPI) will enable a holistic approach to identifying all trades and positions, including capital calculations, reporting, clearing mandates and booking rules. While such an idea sounds great in theory, historical attempts at achieving global agreement have fallen short, even within a sub sector of the industry. Peter Meechan, Jim Bennett and Pauline Tykochinsky  of Sapient Global Markets examine the feasibility of universal product codes; ponder whether the industry is ready to come together to create them; and discuss what a potential solution might look like.

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As we steadily approach the 10-year anniversary of the financial crash, there can be no doubt that it has transformed the regulatory culture and environment that firms inhabit. On one level this means most firms now find themselves far more heavily regulated than before. The desire among authorities to ‘fix’ the causes of the crash – as well as improve transparency and minimize risk more generally – has inspired pages and pages of new rules and controls, such as the comprehensive ‘Dodd-Frank’ (Wall Street Reform and Consumer Protection) Act, writes Bill Mulligan, CEO, Cordium US and Cordium Software at Cordium, who explains how alternative investment funds have been impacted by change.

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There’s a strong fractal quality in today’s oil corporate sector news as Graham Spooner, investment research analyst at The Share Centre, was touting Tullow Oil today as offering contrarian investors exposure to any longer term oil price recovery. The basis of his view?  “Despite declining profits in the first half of the year, this morning Tullow Oil reported an encouraging trading update with production increasing 4% on the same period last year.” It is a clear paradigm for what is happening at the macro level, with production outstripping demand by a growing country mile. As if that wasn’t enough there’s a strong possibility that after many years in the sanctions freezebox, Iran could be coming out of the cold and add 800,000 barrels a day of oil into the global supply mix. Can the oil sector cope with additional supply? Who will be the winners and the losers in the next round of inevitable market constriction that must accompany sustained over-supply? Also, what’s the long term impact on oil prices?

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In late July, Germany’s Bundesfinanzministerium (the Ministry of Finance) issued a draft bill on the reform of fund taxation. It involves a significant revision of Germany’s investment fund tax regime and abolishes the 95% participation exemption for gains from portfolio shareholdings. If the Bill is passed into law, it will come into effect at the beginning of 2018. Here’s a brief outline of the main points in the bill.

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THE EVOLUTION OF CUSTODY IN A POST T-2S WORLD

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