Shocks & Stares » regulation http://blogs.hillandknowlton.com/shocksandstares H&K\'s Financial & Professional Services Team Blog Tue, 19 Mar 2013 08:00:56 +0000 http://wordpress.org/?v=2.9.2 en hourly 1 The future of Libor – 2 key points from a comms perspective http://blogs.hillandknowlton.com/shocksandstares/2012/08/the-future-of-libor-2-key-points-from-a-comms-perspective/ http://blogs.hillandknowlton.com/shocksandstares/2012/08/the-future-of-libor-2-key-points-from-a-comms-perspective/#comments Tue, 14 Aug 2012 09:31:05 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=706 On Friday I attended Martin Wheatley’s unveiling of the Government-commissioned review of Libor at Bloomberg’s offices. Wheatley, who will head the new Financial Conduct Authority, gave an hour long speech setting out the consultation. He’s set himself an ambitious task – the deadline for responses is only four weeks away and Wheatley will publish his final recommendations by the end of September.

The speech itself contained a mixture of detail and vision for the future of Libor or its replacement. From a Comms/PR point of view, there were two particularly interesting points:

1. Who Runs Libor or its replacement? At the moment, Libor is run by the British Bankers Association, the trade group and voice for the industry. Some people are concerned that the setting of such a key market metric is being done by what is effectively a pressure group for the industry. Martin Wheatley, it appears, is less concerned – when asked about this specific issue, he stressed that other similar bodies run indices and provide important data. While Wheatley did acknowledge that the BBA’s history may count against it, at present they appear to still be in the running for a role.

2. How much of an effect does Libor have on consumers? As Wheatley remarked, he found it amazing that Libor had become such a big story outside of the financial press, with tabloids, news channels and Twitter all focusing on the story intently. Perhaps he shouldn’t have been quite so surprised – the prevailing distrust of the financial services sector means that the next scandal to be exposed is always going to attract attention.

There’s another reason as well. As the scandal entered its second and subsequent days, the media ramped up mentions of Libor as a tool which “sets mortgage and interest rates” or something to that effect. In some instances this description for Libor became the norm, occasionally replacing the descriptor of “the rate at which banks lend to each other”.

So just how many mortgages does Libor impact exactly? Well, Wheatley confirmed this – 2%, or as the FT reported in June, around 250,000. In a country of 30m homes that’s still a large number, but it may be legitimate to ask whether the press were right or fair to describe Libor’s role as they did given this statistic.

With the short timeframe for the consultation, the media focus on Libor isn’t going to go away. How the media choose to describe Libor could go a significant way to determining Wheatley’s recommendations, and which of them the Government chooses to implement.

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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/10/fps-friday-fiver-23/ http://blogs.hillandknowlton.com/shocksandstares/2011/10/fps-friday-fiver-23/#comments Fri, 21 Oct 2011 13:22:39 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=370 Hello All! We seem to say this every week, but yet again it’s been a very busy and news heavy 7 days in the world of professional and financial services. This week’s Friday Fiver has a distinct air of gloom about it I’m afraid, though we do find room for a spot or two of humour as always. Thanks as ever to Ed, and Jonathan for their contributions.

CHART OF THE WEEK – GREECE: IN A NUTSHELL…..Stephen Hawking’s follow-up to his immensely successful 1988 book on the cosmos was labelled ‘The Universe in a Nutshell‘. As anyone with a passing interest in physics knows, it would take a forest of nutshells to even begin explaining the wonders of our universe. At times, the complex, ever-changing state of the Greek and wider eurozone crisis can feel pretty similar.

Help is at hand though, thanks to a handy chart unveiled by The Spectator this week. Sadly, upon reviewing it, only the most optimistic person would conclude that the eurozone is heading for anything other than very troubled waters.

The options (or not) for Greece (Chart: The Spectator)

THE DEVIL OF THE DETAIL – BANKING RESULTS…..Hot on the heels of Goldman Sach’s results this week came Morgan Stanley’s trading update. Unlike their rivals, MS were able to report a large profit for the quarter of $2.2bn.

Or were they? As some media outlets quickly noted, the majority of MS’ profits for the quarter were a result of the company reducing the value of the debt it holds. Once the benefits of this accounting manoeuvre were removed, the results looked far less impressive - Iain Dey at the Sunday Times provided one of the best summaries of the ‘revised’ picture.

He wasn’t the only journalist somewhat peeved at the sleight of hand either:

BEHIND CLOSED DOORS…..A “dark pool” may sound like a feature of an exotic health spa and for all we know, it could well be. The increasing importance of dark pools in financial markets however was apparent this week.

In simple terms these are markets behind closed doors that allow institutional investors to trade with one another outside public exchanges like the London Stock Exchange. This week we heard that investors are increasingly using dark pools to access and trade privately owned stock in companies like Facebook before they float.

The emergence of dark pools was one consequence of the European Commission’s MiFID regulation which was in part designed to break up the monopoly of public exchanges. Now however the Commission is looking to take back control of its creation amid concerns about their lack of transparency. Complicated stuff, but as always, the FT [article here] explains developments in simple terms and their graphic below illustrates the overarching trend.

PROOF THAT PLAN A COULD BE OK?…..In amongst the growing concern about the eurozone, and increasing focus on the OccupyLondon movement, the ONS announced on Friday that public borrowing for September was below expectations. In addition, borrowing in August was actually lower than first thought.

Does this mean that the Chancellor’s refusal to adopt anything less his Plan A might be starting to bear fruit? Quite possibly, though as the BBC’s Hugh Pym pointed out, much depends on UK growth in the next few months. The Chancellor hasn’t been proved right yet by any means, but at least he now has a proof point to attack his critics with.

GOOD WEEK/BAD WEEK…..Leaving aside the obvious winners and losers over the last 7 days, it was a good week for the economist and Sunday Times columnist, Irwin Stelzer, who picked up the ‘economics commentator of the year’ award at the media industry’s Editorial Intelligence awards on Thursday.

Or at least he would have picked it up if not for a small error by the normally unflappable Robert Peston who is this week’s ‘bad week’ winner. Regrettably for the BBC’s Business Editor, he fluffed his lines on stage by announcing the wrong winner. And thus, the FT’s Martin Wolf walked on stage to collect the prize, only to have it quietly taken away from him 10 minutes later. If you want to read more on this little tale, Roy Greenslade provides a full commentary here. Mr Peston’s stablemate, Rory Cellan-Jones also clearly enjoyed the incident, as well as his colleague’s fashion sense.


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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/05/fps%e2%80%99-friday-fiver/ http://blogs.hillandknowlton.com/shocksandstares/2011/05/fps%e2%80%99-friday-fiver/#comments Fri, 20 May 2011 17:04:38 +0000 Jonathan Henderson http://blogs.hillandknowlton.com/shocksandstares/?p=135 After last Friday’s company Charity Day, the Fiver is back. This week we tour the globe and the news agenda with comment on time zones, tweets, trades and the thorny issues surrounding the state-owned banks. Thanks to Clare Coffey, David Chambers, Ross Gillam and Nick Woods for their contributions.

Time warp

Economists often watch German manufacturing exports or Saudi Arabian oil production for signs about the health and direction of trends taking place in the global economy. The small island nation of Samoa is not well known for its economic significance but last week the country announced a move which says a lot about the global economy.

The Samoans have decided to move the zigzagging International Date Line to their east. The move which will take place later this year will bring the country a day closer to Asia and Australasia.  

As a nation, the Samoan’s seem happy with change. In 2009 they decided to switch sides and start driving on the left of the road. The rationale for this latest decision is to put them in closer sync with the East. The FT described this as a “clear vote of confidence for the Asian century.” 

The old adage that time is money seems appropriate.

 Shares for everyone?

The British public should all receive a portion of the shares the government owns in RBS and Lloyds Banking Group when the time comes to sell them back to the private market. That was the view this week of the Centre for Policy Studies, which published a paper outlining the idea. The media inevitably picked up on the fact that doing this would also cause the City to lose out on around £1bn of fees for underwriting and processing the share sale.

So is it a good idea? Anthony Hilton in the Standard was broadly supportive, though he had reservations about whether the idea could actually work. From our point of view, anything that reintroduces consumers to the notion of share ownership, dividends and the wider sphere of personal finance has to be a good thing.

 Clear as Westminster mud

Today’s report on injunctions by a committee of top judges has questioned the boundaries of reporting on statements made in the House of Commons and Lords. Committee chairman Lord Neuberger criticises MPs using parliamentary privilege to simply “flout” rules, supporting the report’s comments that reporting in the Lords or Commons can only be protected by parliamentary privilege where ‘summary is published in good faith and without malice’. This last comment challenges the free reign of journalists to report what they like, something many have argued is unfair and equates to a gagging order. Rather than drawing clarity on the issue, the report seems to highlight the just how blurry the current law is.

However, what is even less clear is what the rules should be on those who use social media to openly discuss injunctions. Journalists and the general public are just as likely, if not more, to search Twitter for the latest gossip and news rather than listen to statements in the Commons and Lords. With this in mind, businesses who want to bury bad news need to pay just as much attention to conversations online as they do at the despatch box.  

 Inflation targets – what is the point?

Official figures released this week announced that CPI has hit the heady heights of 4.5%, more than double the Bank of England’s target level. The Bank concedes it expects inflation to continue to grow this year, even hitting 5%.

 

In a speech last night, the Bank’s deputy governor for monetary policy, Charlie Bean (yes, Mr. Bean is a deputy governor!), admitted that the Bank had taken the decision to “accept a temporary period of above target inflation”. This therefore begs three questions: how long does a ‘temporary period’ last, on what criteria was this deemed ‘acceptable’ when there are millions of households struggling to make ends meet, and what is the point of a target if it is acceptable to fall flagrantly short of it?

Clearly Mr Bean and his colleagues are struggling to do their jobs. Is this because though the target is simple, they do not have the means to get there? Is their inaction, action? Do they have the requisite insight and tools to enable them to do their jobs? They say a bad workman blames his tools – and maybe our leading economic brains can justifiably say that the tools at their disposal have proven to be inadequate (hence the regulatory infrastructure changes to come) and therefore they are hamstrung as a result. However, the millions of households across the country can ill afford the wait or the expense of a ‘temporary’ period of crushing inflation.  

Glencore – The saga continues

So the long wait may finally be over but the speculation remains as Glencore this week made its much anticipated IPO. Whilst much of the hype had centred on rumours of oversubscription, shares in the Swiss-based commodities trading company traded on a “conditional basis” between a high of 553.17p an increase of 4.4 per cent from the offer price – and a low of 530p.

 

With many investors hoping for an opening day rally of between 5-10% many were left feeling somewhat underwhelmed. Whilst many commentators may argue that the trading activity marks a normal stabilisation procedure, the debate around the wider issue of the somewhat sluggish European IPO market looks set to continue.

With this in mind it seems Glencore will continue to be under the spotlight until next Tuesday as the business moves to unconditional trading with the most positive projections suggesting the company will go straight into the FTSE 100, only the third time this has been achieved.

Either way with 5 of its executives set to become billionaires, perhaps it’s not all doom and gloom!

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