LSE shares tank after regulatory warning
Shares of the London Stock Exchange (LSE) tumbled after it warned that proposed European regulatory changes will cut net treasury income over next financial year.
Shares of the London Stock Exchange (LSE) tumbled after it warned that proposed European regulatory changes will cut net treasury income over next financial year.
Recommendations published by the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) look set to change the rules of the game, and differ considerably from the initial proposals published in March 2012.
One of the key changes is a requirement that as much as 95% of a European clearing house's cash deposits placed with financial institutions be collateralised with debt instruments. This will have an impact on the LSE's Italian central counterparties (CCP) business, CC&G.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
If implemented, the recommendations will require central counterparties - i.e. middle-men - to meet certain conditions regarding, among other things, liquidity and credit and market risk, the LSE said in a company statement.
"If adopted in their current form, the recommendations will have some implications for LSE's existing wholly owned subsidiary CCP, CC&G," it added.
The move could significantly reduce net interest income from its Italian clearing house, which currently accounts for over 15% of total group revenue.
CJ
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
-
What happens if you can’t pay your tax bill, and what is "Time to Pay"?
Millions are due to file their tax return this Friday as the self-assessment deadline closes. Though the nightmare is not over until you pay the taxman what you owe - or face a penalty. But what happens if you can't afford to pay HMRC your tax bill, and what is "Time to Pay"?
By Kalpana Fitzpatrick Published
-
What does Rachel Reeves’s plan for growth mean for UK investors?
Rachel Reeves says she is going “further and faster” to kickstart the UK economy, but investors are unlikely to be persuaded
By Katie Williams Published