Friday 31st October 2014
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FRIDAY TICKER: OCTOBER 31TH 2014: - The re-election of President Dilma Rousseff on Sunday has important implications for Brazil's Baa2 sovereign rating, as well as for the credit quality of the country's banks, corporations and securitisations, says Moody's. The rating agency says the narrow margin of her victory underscores the challenges she faces as she looks to revive Brazil's lacklustre economic performance - Facebook has reported third quarter results, again showing strongest year-on-year growth in mobile, where daily active users (DAUS) rose by 39% to 703 million, while overall daily users rose 19% to 864 million DAUS - Francisco Partners, a global technology-focused private equity firm, today announced it has completed the acquisition of Vendavo, Inc., a leader in business-to-business (B2B) pricing solutions. David Mitchell, an operating partner of Francisco Partners, will join Vendavo as CEO and lead the company’s worldwide business strategy and operations. Incumbent CEO Neil Lustig will transition into an advisory role with Vendavo. Francisco Partners now has a controlling stake in the Silicon Valley company. The acquisition by Francisco Partners provides additional resources to bolster Vendavo’s aggressive growth strategy, enabling the company to expand sales and marketing while accelerating cloud development. Vendavo completed a record first half of 2014, with nearly 30-percent growth in bookings, and the release of two breakthrough solutions for price and sales effectiveness. Based in Mountain View, Calif., Vendavo provides revenue and price optimisation solutions for B2B mid-market and enterprise companies.Francisco Partners was advised by JMP Securities, and Vendavo was advised by William Blair. Financial terms of the transaction were not disclosed – The International Finance Corporation, or IFC, issued the four-year, triple-A rated bond only to Japanese retail investors, tapping into the growing interest in low-risk investments with a social or environmental focus. The World Bank, has sold several billion dollars in green bonds over the past six years, with proceeds going to help countries and firms cut greenhouse gas emissions and adapt to climate change. The latest offering, Inclusive Business bonds, would finance firms that work with or sell to the 4.5bn people in the world that make less than $8 a day. IFC said while most poor people do not spend a lot individually, as a whole they represent an estimated $5trn consumer market that firms could tap into - NAKA Mobile, a telecoms and technology specialist based in Switzerland, has claimed the industry’s first virtualised evolved packet core (vEPC). Utilising Cisco’s NFV services, NAKA claims it will transform its network architecture, expand beyond Switzerland, and provide its mobile Internet services to customers across the world - The Internet Society and Alcatel-Lucent have agreed to provide support and equipment for the development of the Bangkok Internet Exchange Point (BKNIX). The project will utilise the Internet Society’s Interconnection and Traffic Exchange (ITE) programme and is intended to deliver a stronger and more robust Internet infrastructure for South East Asia.

EU’s threatened financial transaction tax could magnify FX costs

Friday, 03 February 2012
EU’s threatened financial transaction tax could magnify FX costs An EU financial transaction tax (FTT), could increase FX transaction costs, says Oliver Wyman research. http://www.ftseglobalmarkets.com/

An EU financial transaction tax (FTT), could increase FX transaction costs, says Oliver Wyman research.

Research by oliver Wyman, commissioned by the Global Financial Markets Association’s (GFMA’s) global FX division, suggests that, given the tight margins that exist in foreign exchange markets, any increase in transaction costs will, in turn, hit the real economy as these costs would largely be passed on to all end users. The report, Proposed EU Commission Financial Transaction Tax; Impact Analysis of Foreign Exchange Markets’, evaluates the impact of the European Union’s proposed financial transaction Tax (FTT) on European FX markets, estimating its impact on FX cash and derivatives users in particular.
The report not only recognises that the primary impact of the tax will be an increase in transaction costs, relocation of trading and reduction in notional turnover, but also it suggests the tax will result in a potential reduction in liquidity leading to a widening of bid/ask spreads.
The research suggests that a proposed FTT could directly increase transaction costs for all transactions by three to seven times and by up to 18 times for the most traded part of the market. It could eventually result in the relocation between 70% and 75% of tax eligible transactions outside of the EU tax jurisdiction. This possible outcome, combined with reduced transaction volumes (of approx 5%), could reduce market liquidity and increase indirect transaction costs by up to a further 110%, the report suggests.
Inevitably however, the tax will predominantly hit the real economy and the institutional market, comprising pension funds, asset managers, insurers and corporations, as both direct and indirect costs are largely passed on to end‐users, which will be least able to move transactions to jurisdictions not subject to the tax.
While the tax is expected to only have a limited impact on speculative trading, as this activity will most likely relocate outside the EU tax jurisdiction, it will result in an inefficient tax on the economy as raising €1 of tax would likely cost the economy more than €1, due to the indirect costs associated with reduced and more fragmented liquidity.
James Kemp, managing director of GFMA’s global FX division, says:  “It is essential to fully understand the impact of the proposed financial transaction tax and the Oliver Wyman study is an important contribution to the debate. “The foreign exchange industry is an essential part of a stable and sustainable economy, underpinning international trade and investing. This study shows that the proposed tax would in effect penalise Europe’s businesses for sensible risk management—by using FX products to manage currency fluctuations—and also threaten to impose further costs on the investment returns of pension funds and asset managers.”
UK premier David Cameron led a charge against the tax at the Davos World Economic Forum in late January, telling Eurozone members that it was no time for tinkering in the financial markets and that the tax was “madness”.

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