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It’s Hard to Think About Big Mergers –LSE CEO

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  • It’s Hard to Think About Big Mergers –LSE CEO

Big cross-border mergers in stock exchanges look “hard” given political opposition to opening up bourses to foreign ownership, the Chief Executive, London Stock Exchange Group, David Schwimmer, said on Wednesday.

“There have been some big painful failures out there in the industry,” Schwimmer told the annual FIA IDX derivatives industry conference, according to Reuters.

The LSE has failed several times to merge with rival Deutsche Boerse, the most recent attempt ending with Schwimmer’s appointment as CEO last August. The deal failed in part because of opposition from local politicians in Frankfurt.

A former Goldman Sachs banker of 20 years, Schwimmer raised expectations of big deals, but he has instead focused on relatively modest transactions, like taking a small stake in settlement house Euroclear.

“There will continue to be this nationalistic focus on exchanges in particular. I think it’s hard to think about doing big cross-border exchange-type transactions. It just feels challenging for the industry,” Schwimmer said.

LSE has had the “luxury” of double-digit organic growth in businesses like clearing and information services for years and this is likely to “persist”, Schwimmer said.

M&A is part of the toolkit, but the exchange will be “careful about it, be very strategic about it, very disciplined about it”, Schwimmer said.

Curve Global, 40 per cent owned by the LSE and aimed at breaking the dominance of Deutsche Boerse and ICE in interest rate futures in Europe, was finally making headway after “bumping along the bottom” since its launch in 2016, he said.

“We are getting traction now,” Schwimmer said.

After its launch market participants became tied up with preparing for the European Union’s new MiFID II securities rules and then for Brexit, he said.

“As we got to the end of last year and the beginning of this year, we have seen a substantial pick-up in volume, a couple of hundred percent growth rate on an annualised basis.”

Market share is about 10 per cent in some products, rising to 40 per cent in futures based on Sonia, the new benchmark for replacing sterling-denominated Libor, he said.

“I would attribute it to market desire to have competition,” Schwimmer said.

The LSE is “very prepared” for Brexit, he added. The exchange has had to open an EU base in Amsterdam for its London-based pan-European share trading platform Turquoise.

Schwimmer expects the LSE’s clearing house LCH in London, which dominates euro-denominated clearing in Europe, to obtain permanent EU authorization to continue serving customers in the bloc after Brexit.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Total Currency in Circulation Increased by N56.44bn in September

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Central Bank

Currency in Circulation Rose by N56.44bn in the Month of September to N2.426 trillion

The total currency in circulation increased to N2.426 trillion in the month of September, the Central Bank of Nigeria (CBN) report has shown.

In the report released on Wednesday, the apex bank said the total currency in circulation stood at N2.369 trillion as of the end of August.

The amount then rose by N56.44 billion in September to N2.426 trillion.

A further breakdown of the report revealed that currency in circulation declined by 6 percent in the first quarter of the year to N2.29 trillion, about 7.5 percent below the same quarter of 2019.

The figure stood at N2.35 trillion in May, then rose to N2.39 trillion by the end of July.

While reserve money expanded by 5.9 percent to N12.96 trillion when compared to a 20.7 percent growth recorded in April 2020.

The report also noted that at N10.61 trillion, liabilities to other depository corporations grew 70.5 percent above the previous month’s growth rate of 59.7 percent.

The report said, “The heightened uncertain outlook due to the lockdown encouraged more cash to be held by the public.

“This was evident from the increase in currency in circulation, compared with the level in the preceding month.

“Currency in circulation rose by two per cent to N2.35tn at the end of May 2020, compared with the increase of 0.5 per cent at the end of April 2020.”

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CBN Directs Banks to go After COVID-19 Financial Criminals

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Godwin Emefile

Central Bank Asks Banks to Stay Abreast Frauds and Rising COVID-19 Financial Crimes

The Central Bank of Nigeria has directed all financial institutions in Nigeria to update alert protocols in their Anti-Money Laundering/Combating the Financing of Terrorism monitoring tools, in accordance with emerging trends of rising COVID-19 related financial crimes.

In a circular titled, ‘Administrative letters to all banks and other financial institutions’ issued on Monday and signed by J.M. Gana, the Director, Financial Policy and Regulation Department, the apex bank said changes in business activities and financial transactions due to the shift caused by COVID-19 pandemic have led to the surge in financial crimes globally.

Therefore, it said financial institutions must now adapt quickly and keep abreast of the new emerging financial risks and other developments to arrest this new and emerging ML/TF.

According to the circular, this includes strategic investment in data mining and artificial intelligence software to monitor financial transactions effectively and report as quickly as possible.

The central bank said the Nigerian Financial Intelligence Unit, the central repository of suspicious transactions and other financial information, had released a comprehensive report on STRs and others.

It stated that the NFIU had identified cybercrimes, frauds, counterfeiting and substandard goods, diversion of public funds and misuse of non-government organisations funds as some of the ongoing crimes that banks across the nation need to stay abreast and report.

Other suspicious transactions and red flags identified in the report were some e-commerce companies with little or zero history or internet presence suddenly receiving multiple payments from unrelated third parties.

Similarly, it said individuals with zero or little history of financial transactions receiving multiple payments from unrelated third parties. It also noted that customers who suddenly start delaying in the supply or purchases of medical supplies and payment of goods linked to known brands, yet the beneficiary is an individual, not a corporate company should be flagged.

The measures, the apex bank said were necessary due to the rising numbers of unusual transactions from banks’ customers and unscrupulous individuals.

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Union Bank Secures US$40 Million Facility from IFC Global Trade Finance

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Union Bank Secures US$40 Million Facility from IFC Global Trade Finance

Union Bank of Nigeria Plc said it has secured a US$40,000,000 finance guarantee facility from the IFC, a member of the World Bank Group.

In a note to the Nigerian Stock Exchange, the lender said the facility would help boost access to finance for local businesses and enable increased international trade for Nigeria.

It explained that the facility “will support Union Bank to establish working partnerships with nearly 300 major international banks within the GTFP network, thereby broadening access to finance and reducing cash collateral requirements for Nigerian businesses.

“The facility will enable the continued flow of trade credit into the Nigerian market at a time when imports are critical, and the country’s exports can generate much-needed foreign exchange.

Under the IFC’s Global Trade Finance Program (GTFP) terms of the agreement, GTFP offers benefiting banks partial or full guarantees covering payment risk on Union Bank’s trade-related transactions.

Accordingly, these guarantees are transaction-specific and may vary depending on underlying instruments like letters of credit, trade-related promissory notes, guarantees, bonds, and advance payment guarantees.”

Emeka Emuwa, Chief Executive Officer of Union Bank, said, “Union Bank is pleased to join the IFC’s Global Trade Finance Program. This is a significant achievement as we continue to expand our trade financing offerings to our
customers. Even in these peculiar times, we remain focused on contributing to economic growth by developing tailored solutions that help our customers harness the teeming opportunities that still exist in the Nigerian market.

Eme Essien Lore, IFC’s Country Manager for Nigeria, said, “Keeping trade moving is essential to growth and job creation, especially during the challenging economic times we are living through today. We welcome Union Bank to IFC’s Global Trade Finance Program and value a partnership that will make a positive impact on Nigeria’s economy.

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