Keith Mullin

the Financial Markets Standards Board (FMSB) has published a paper on #prehedging, and it highlights how tricky a problem this is for #FX and financial markets in general. It's clear we need more guidance, but what form should it take?

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New Trader TV This Week - Phil Milburn at Liontrust Asset Management PLC warns of major political volatility ahead and the need for de-risking portfolios over the next few weeks. While the fund manager spoke to Trader TV ahead of Biden’s announcement to withdraw from the election race late on July 21, in this episode, he unpacks how he sees politics and economics driving trading activity this year and dissects what a Trump presidency could mean for markets. In this episode: 📈 Economics Vs Politics – how they will drive market activity 🏛 What a potential Trump presidency could mean for markets? ⚠ Preparing for election volatility and risks 📊 The US Stock rotation – a blip or a trend? 🌍 Europe and the UK –where are they in their interest rate cycle? In the extended show, available to our audience that signs up to Trader TV’s mailing list and available on Tradertv.net, Milburn also his concerns on broader market liquidity and why he fears a potential “liquidity-based accident” sometime this year. If you didn’t sign up to Trader TV’s newsletters and wish to have the full interview sent to your inbox each week reach out to [email protected]. The show is supported by Cabrera Capital Markets and MTS Markets. #trading #fixedincome #equities #electionvolatility #Trump #Biden #markets

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Genuine question for fellow QT nerds / financial plumbing experts. The BoE MPC voted to keep the pace of Quantitative Tightening unchanged at £100bn for the next 12 months, c. 90% of which will come through a passive run-off of existing holdings, and c. 10% from active sales. Bank reserves are currently upwards of £700bn, well above the BoE’s own estimate of even the £490bn upper bound of the Preferred Minimum Range of Reserves (which should delineate between what central bankers have started calling “abundant” and “ample” reserves). In other words, by the Bank’s own reckoning, it should have lots of room to shrink its balance sheet before bank reserves start to become scarce. Fine. However, this is happening against the backdrop of exponentially growth in banks drawing on the Bank’s Short Term Repo (STR) facility – not something you would expect in an environment where every bank has “abundant” reserves. If you were sitting on the MPC, would this give you pause? Are there any risks associated with moving out of "abundant" territory too quickly, or are gilt-backed reserves just going to seamlessly get replaced with repo-backed reserves?

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In this week's ECM Pulse we look at the impact of last week's US rate cut, and more monetary dovishness, on the US and European IPO markets. A move in rates could bring investment flows to stock markets moving IPO peer valuations higher. This would allow vendors to get closer to target valuations while also offer investors the discounts they need. But sources warn sellers not to try and chase the market up on valuations. Written with Cristiano Dalla Bona with analytics by Raj Saiya.

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Budget Flash – Is the EIS & VCT Industry Too Complacent Regarding The Chancellor? A few weeks before the UK election in 2019, I was speaking at an Intelligent Partnership EIS Forum involving eight EIS fund managers, presenting to a group of about forty wealth manager and IFA groups. During the Q&A session, one participant asked the panel of fund managers whether they believed that the election of Jeremy Corbyn would lead to the end of EIS and VCT tax reliefs. With only one exception, they were unanimous in pouring cold water on this suggestion. Too many jobs would be lost; the UK needed investment in early-stage life sciences, fintech, blockchain technology, AI, and robotics; the creative fulcrum of entrepreneurial Britian would be sacrificed etc. All logical and well-reasoned arguments. Symvan was the exception that day and argued that these schemes would be amongst the first to go for the very simple reason that the Corbyn/McDonnell axis viewed the world through an essentially post-Marxist prism and simply saw such schemes as ‘tax breaks for rich guys.’ The private sector has little or no role in generating economic growth when you remove yourself sufficiently from reality. That intellectual depravity does not exist with the current government, but expediency potentially calls the wolf to the door nonetheless. And so Martin Vander Meyer offers a warning in a worryingly prescient article in this week’s Spectator in which he argues that, although the Chancellor has emphatically denied that she wishes to punish early-stage companies in the UK, she may have to “scrape the bottom of the bin” and punish the sector as the Treasury and the OBR have removed Labour’s delusions about what the costs of its mooted tax rises will mean for the UK economy. If the furious lobbying ahead of Wednesday’s budget has taught us anything, it is that the power of the unions is forcing the Chancellor to make sub-optimal decisions and the UK as a whole will bear the cost. Will entrepreneurial Britain pay the price? #EIS #VCT #The Spectator #Martin Vander Weyer #UK Budget

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The latest IJGlobal podcast - Infra Dig - talking to William Barrett, CAIA of Reach Capital | Private Assets Advisor about forestry and how it's creeping into the infra asset class. Tune in here... https://lnkd.in/eBUYpEHc

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Cboe Clear Europe participates in ECB experiment on DLT. These experiments aim to explore the potential of distributed ledger technology and how it could improve efficiency for clearing and settlement https://lnkd.in/ewyNVrVD #fundadmin #Custody

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Check out the ICIS coverage on the UK parties' plans for energy and their possible impact on the markets. 🗳 #ICIS #energy #power #hydrogen #UK #politics #manifesto #UKgeneralelection #vote #NetZero #generalelection #electionday

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NEW: A Bank of England financial stability official has raised concerns over the private equity sector’s growing use of net asset value financing, or NAV loans, to meet liquidity demands during an exit slowdown. During a keynote speech at Bloomberg today, BoE financial stability strategy and risk executive director Nathanaël BENJAMIN warned the lack of transparency about the degree and kinds of leverage entering the system poses a potential systemic risk. A rising number of firms have resorted to NAV loans to finance cash distributions to investors, as higher debt costs and concerns over the economy make it more challenging for private equity funds to sell or list their portfolio companies. Full story: https://lnkd.in/dXVNMKuY

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So important for Schroders to be part of this crucial Financial Times debate - 'How to reboot Britain's capital markets' - https://shorturl.at/MtqSv. Peter Harrison, Schroders Group Chief Executive, said: "The amount of money which is flowing into people's savings is nothing like sufficient to provide for them in retirement. But even when it gets into their pension pots it's then directed to low returning assets that are low risk." #investment #london #capitalmarkets #pensions #economicgrowth

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Despite all the doom and gloom surrounding UK equities, the #FTSE has held up against the S&P over three years. Considering UK company valuations are trading at significant discounts to global peers, many fund managers think there's much further for the market to run. Great to write this with Jeremy Gordon and Algy Craig Hall. https://lnkd.in/ewe7vfZg #ukequities #assetmanagement #investing

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SCOOP with Michael O'Dwyer: Schroders has kicked off a search for a successor to its chief executive Peter Harrison, who is preparing to step down as the boss of the UK’s largest #assetmanager after eight years. The £750.6bn FTSE 100 group, whose founding family is its largest shareholder, has hired headhunters at Russell Reynolds Associates to work on “a full and extensive global search”, with succession expected to take place in 2025. Harrison has sought to offset the decline of Schroders's traditional business by pushing into faster-growing areas such as #privatemarkets, #wealthmanagement and in its business line that offers outsourced chief investment officers and liability-driven investing to #pensionfunds. But he has had to contend several headwinds: the rise of cheaper passive investing, a shift in investor demand from public to private markets, and a multi-decade shift by UK pension funds away from holding shares in their local market.

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Congratulations to European Banking Authority (EBA) teams for an excellent report, showing how complex the EU buffer framework has been developing, in particular compared with the US one, resulting in a proliferation of layers of micro and macroprudential mostly unusable buffers. Large EU banks have to comply with 10 capital and long term debt requirements, and are expected to maintain buffers above the buffers, leading to an all time high average CET1 ratio of 15.9% as of end 23... Unfortunately, the report falls short of proposing recommendations to simplify/reduce the buffer framework. So more work needed, as rationalising this framework, in the context of CRR3, is an absolute pre-requisite to restore the competitiveness of the EU banking sector, and support the financing of renewed EU ambitions. Well done Delphine REYMONDON and team and looking forward to next steps !

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In this week's ECM Pulse we look at the final few weeks of issuance in EMEA. Investors are sitting across good returns for the year, according to our data, and are happy to buy more, particularly UAE Delivery Hero unit talabat if they can get an allocation. There is also some block activity expected, including some post-IPO sell-downs, with investors engaged and some sellers wanting to deal before the end of the year rather than waiting for unknown market conditions in 2025. Read all in this week's ECM Pulse

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In our Cytonn topical this week, we analysed the performance the performance of Unit Trust Funds for the period ended 30th September 2024, following the release of the Capital Markets Authority (CMA) Quarterly CIS Report – Q3’2024. Below are the highlights; i. The industry’s overall Assets under Management (AUM) grew by 24.5% on a quarter-on-quarter basis to Kshs 316.4 bn at the end of Q3’2024, from Kshs 254.1 bn recorded in Q2’2024. On a y/y basis, the total AUM increased by 53.1%, from Kshs 206.7 bn as at the end of Q3’2023. Key to note, Assets under Management of the Unit Trust Funds have registered an upward trajectory over the last five years, growing at a 5-year CAGR of 35.7% from Kshs 68.9 bn recorded in Q3’2019. ii. MMFs remained with the largest investment allocation, coming in at 62.2% in Q3’2024, a decline from 67.4% recorded in Q2’2024. Similarly, the amounts invested in MMFs as of 30th September 2024 recorded a 15.0% increase to Kshs 196.8 bn, from Kshs 171.2 bn recorded at the end of Q2’2024. iii. The overall UTFs portfolio remained predominantly invested in government securities, accounting for the largest share at 41.4% by the end of Q3’2024. This was followed by Fixed deposits at 31.1% allocation, a marginal decrease from 33.4% allocation in Q2’2024 attributable to the lower deposit rates provided by banking institutions during the period. iv. As of the end of Q3’2024, there were 41 Collective Investment Schemes (CISs) in Kenya, up from 36 recorded at the end of Q3’2023 and an increase from the 38 recorded at the end of Q2’2024. Out of the 41 schemes, 35 of them (equivalent to 85.4%) were active while 14 (14.6%) were inactive. Click the link below to read the full topical: https://lnkd.in/daqWArz6

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While there has been plenty going on in the European #securitisation primary market, there was also a quirky story playing out in secondary last week. It's a cautionary #RMBS tale that underlines the importance of reading exchange notices. Four years ago, Atom Bank issued a UK RMBS called Elvet Mortgages 2020-1. It's performed well and the underlying collateral has paid down at quite a lick. As a result, the bonds will be redeemed in June under the clean-up call provision, according to an exchange notice published last Wednesday. "The prepayment rate on these deals is quite high," one trader observed. "I believe it took the market by surprise." Worse than that, some traders seem to have missed the memo, as the bonds continued to be traded after the exchange notice was published at prices that implied a call in September or December. "Obviously someone did not read the redemption notice," said a second trader. The mistake was quickly spotted, however, preventing other traders from cashing in. "We tried to sell our bonds too at the ridiculously high levels but failed," said the second trader. Subscribers can read our full coverage of the capital markets on IFRe or LSEG Workspace: https://lnkd.in/eZvUCbq8

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Many thanks Begum Gursoy for your thoughts and insights on transition finance in the context of hard to abate industries.

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The key issue is and always has been truly independent oversight and regulation of the VCM. A VCM Credit is a financial instrument but not regulated by any independent body or government agency....this is actually quite amazing in 2024 and it is therefore not a surprise that moral hazard looms large in the market resulting in the numerous incidents of over crediting, low or no additionality and methodologies that have a high risk of reversal. At Carbon Cap we manage the largest compliance carbon fund in the world at $435 million and each year we commit 20% of our performance fees to the purchase and cancellation of Carbon Allowance Permits in the regulated compliance carbon markets such as the EU ETS and the UK ETS. No climate impact investment is perfect but we believe this to be the highest confidence impact we can achieve. We have therefore aligned our investors around performance and climate impact and the fund holds Article 9 status in Europe as "high impact".

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