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The news trends on Twitter aren’t predictable. The big stories for bankers show a lot of variety, but then again, sometimes you would expect certain kinds of bank news to rise to the top. So it should come as no surprise that for the second week running, ratings agency Fitch has topped the most shared links by bankers. Fitch Ratings - Dedicated to providing value beyond the rating

This week it’s the publishing of their report into the Issuer Default Ratings (IDRs) of twelve global transaction and universal banks (GTUBs). The report itself wasn’t controversial, it’s Fitch’s period review and it found that all the banks in question were keeping their previous ratings… with the notable exception of Bank of America Corporation, whose Viability Rating (VR) was downgraded from an ‘A-‘ to a ‘BBB+’ not that there’s much difference between the two.

What was interesting in this report was Fitch’s assessment of how these banks need to proceed if they want to keep their ratings for the next report. They suggest that “exposure to potentially high market and operational risks arising from these activities in complex organisational structures means that these banks need to maintain especially sound capital ratios and liquidity to maintain their VRs in the 'a' range” and all banks should continue to grow their wealth and asset management businesses to underpin their VR scores. Apparently, even the more heavily leveraged European banks will hit their Basel III targets too. So good news there for the banks.

Unfortunately, one of the other trending stories this week, which cropped-up on Wednesday 15th from a variety of sources including @Zerohedge and @bloomberg was all about the prospect of ratings agencies being “gamed”. This story refers to the notion of ratings shopping, where bond issuers are apparently selling lower quality, riskier assets with top-tier ratings from some agencies that didn’t graded by others.

This sparked a lot of commentary, as reported by @Zerohedge 2007 Deja Vu As Bond Issuers Game Rating Agencies Once Again | Zero Hedge, suggesting that (as former head of structured finance at S&P) said “ Nothing’s really changed” in the ratings business. Indeed, Moody’s and Kroll have AAA rated a bond on the Seagram building in New York which Fitch claims has similarity to 2007 bonds that had a reasonable probability of default. Expect this story to run and run… is there a bond bubble? President of S&P refuses to comment.

But as the old way of doing things rumbles on, there’s been a crop of trending news this week about new technology with both Credit Europe Bank NV SuperDerivatives and Swedbank Robur Leverages Graz's Hinc Data Warehouse to Expand Its Business Intelligence Capabilities - bobsguide.com announcing the deployment of new real time data and analytics tools, whilst BNY Mellon unveils new intraday liquidity analytics service - bobsguide.com. It’s a real time, data warehoused, trend-spotting bonanza as the challenges of new regulations world-wide are encouraging banks to push further into the realms of geekdom to add value to their services.

The second most shared link this week was the story of how the Federal Reserve plans to exit the period of stimulus in the US economy. They’ve mapped out a strategy to end the $85 billion-a-month bond buying programme that’s been keeping the US economy on track, reducing bond purchases in steps as their confidence about the job market and inflation evolves. Fed Maps Exit From Stimulus - WSJ.com. There's a lot of market unpredictability, but with all the new data tools and services on offer, it looks like technology might just see us through to the good old days again.

And finally, this week’s most mentioned Tweeters were dominated by news agencies, with @bloomberg, @reuters and the @WSJ on the winners podium. However notable was @Creditplumber David McKibbin, an ex-AIG commentator who tweets about “credit, risk and uncertainty, seasoned with finance, (re)insurance & capital mkt convergence” - he’s only slightly less popular than the Wall Street Journal for insight and analysis this week. He’s definitely worth following - maybe he can explain what the clash between the ECB and Germany about “depositor preference” or “bail-in” through a single Eurozone “resolution agency” for failing banks is all about, because as the finance ministers of Europe confirmed this week, it’s very complicated... ECB Picks Fight With Germany on EU Plan for Failing Banks - Bloomberg.

The news trends on Twitter aren’t predictable. The big stories for bankers show a lot of variety, but then again, sometimes you would expect certain kinds of bank news to rise to the top. So it should come as no surprise that for the second week running, ratings agency Fitch has topped the most shared links by bankers. http://bit.ly/15SSoVP

This week it’s the publishing of their report into the Issuer Default Ratings (IDRs) of twelve global transaction and universal banks (GTUBs). The report itself wasn’t controversial, it’s Fitch’s period review and it found that all the banks in question were keeping their previous ratings… with the notable exception of Bank of America Corportation, whose Viability Rating (VR) was downgraded from an ‘A-‘ to a ‘BBB+’ not that there’s much difference between the two.

What was interesting in this report was Fitch’s assessment of how these banks need to proceed if they want to keep their ratings for the next report. They suggest that “exposure to potentially high market and operational risks arising from these activities in complex organisational structures means that these banks need to maintain especially sound capital ratios and liquidity to maintain their VRs in the 'a' range” and all banks should continue to grow their wealth and asset management businesses to underpin their VR scores. Apparently, even the more heavily leveraged European banks will hit their Basel III targets too. So good news there for the banks.

Unfortunately, one of the other trending stories this week, which cropped-up on Wednesday 15th from a variety of sources including @Zerohedge and @bloomberg was all about the prospect of ratings agencies being “gamed”. This story refers to the notion of ratings shopping, where bond issuers are apparently selling lower quality, riskier assets with top-tier ratings from some agencies that didn’t graded by others.

This sparked a lot of commentary, as reported by @Zerohedge http://bit.ly/100rK5m, suggesting that (as former head of structured finance at S&P) said “ Nothing’s really changed” in the ratings business. Indeed, Moody’s and Kroll have AAA rated a bond on the Seagram building in New York which Fitch claims has similarity to 2007 bonds that had a reasonable probability of default. Expect this story to run and run… is there a bond bubble? President of S&P refuses to comment.

But as the old way of doing things rumbles on, there’s been a crop of trending news this week about new technology with both Credit Europe Bank NV http://bit.ly/18POSKq and Swedbank Robur http://bit.ly/10xwd2F announcing the deployment of new real time data and analytics tools, whilst BNY Mellon unveiled it’s own real time intraday liquidity service http://bit.ly/10CCxBG. It’s a real time, data warehoused, trend-spotting bonanza as the challenges of new regulations world-wide are encouraging banks to push further into the realms of geekdom to add value to their services.

The second most shared link this week was the story of how the Federal Reserve plans to exit the period of stimulus in the US economy. They’ve mapped out a strategy to end the $85 billion-a-month bond buying programme that’s been keeping the US economy on track, reducing bond purchases in steps as their confidence about the job market and inflation evolves. http://on.wsj.com/16uoZR8. There's a lot of market unpredictability, but with all the new data tools and services on offer, it looks like technology might just see us through to the good old days again.

And finally, this week’s most mentioned Tweeters were dominated by news agencies, with @bloomberg, @reuters and the @WSJ on the winners podium. However notable was @Creditplumber David McKibbin, an ex-AIG commentator who tweets about “credit, risk and uncertainty, seasoned with finance, (re)insurance & capital mkt convergence” - he’s only slightly less popular than the Wall Street Journal for insight and analysis this week. He’s definitely worth following - maybe he can explain what the clash between the ECB and Germany about “depositor preference” or “bail-in” through a single Eurozone “resolution agency” for failing banks is all about, because as the finance ministers of Europe confirmed this week, it’s very complicated... http://bloom.bg/10FwxJB.

This week saw ratings agency Fitch take the most shared news title with their worrying report “ The Money Printing Myth - Why Sovereigns Default on Local Currency Debt” Fitch Ratings says in a newly-published report that the popular perception that sovereigns cannot default on debt denominated in their own currency because of their power to print money, is a myth. They can and do according to Fitch - read the report here http://bit.ly/ZTIzCo. This report got the most sharing traction this week for a news release alongside the reporting of a boost for the Portuguese economy.

Bloomberg was the first to report that the Portuguese government was selling 10yr bonds again for the first time since its bailout, which trended earlier in the week. Later in the week Portugal was trending again, this time with a report from Reuters that “Portuguese banks should be forging a comeback to the debt capital markets after their sovereign staged a grand return this week, but treasurers are not convinced, saying spreads are too high and that cheap ECB funding is just too good to turn down.” Apparently, even a EUR 10Bn order book for Portugal’s sovereign bond isn’t enough to “wean them of the ECB drip”. http://reut.rs/15vsVl2

There was a rare moment of good news that trended mid-week as the EU, IMF and ECB published a joint report on their fact finding mission to Ireland. Apparently after their tenth review mission, staff teams from the Commission, European Central Bank and International Monetary Fund concluded that the beleaguered Celtic Tiger economy would grow 1 percent in 2013 and 2 percent in 2014. Behind this story it seems domestic demand is stronger than anticipated which has bolstered weak exports with Ireland’s main trading partners, but at least it’s out of recession.

The clear Twitter winner this week was Argentinian virtual TV broadcaster Diaro del Viajero, who webcasts a comedy & economics show from Buenos Aires. http://bit.ly/13jQSrW He’s a bit of an internet finance celebrity with his humorous graphics and casual special guests who explain in simple terms (subtitled in English) how macroeconomic policy affects the global economy… amongst other topics. Again, we’re seeing a video taking the top slot for sharing with the finance community this week, proving that the demand for serious news is shifting in favour of something you can watch in your lunchbreak.

This week’s top tweeter was Donna Borak (@donnaborak) the US Federal Reserve reporter for the American Banker magazine, but the most mentioned financial account on Twitter was more mysterious. The ominously named @MacroHedge received the most mentions, a shadowy, private account allegedly run by a Hedge Fund Manager & Founder with a “Strictly private account” with only 100 followers and 100 friends, but over 4,800 tweets under his or her belt. We think it’s a he as sometimes tweeters refer to him as “Joe”.

It shows that there’s always an interesting story simmering underneath the news when it comes to social media and international finances. @MacroHedge’s Twitter picture shows a mysterious cigarette smoking sillhouette and his page has a woman in her underwear sitting provocatively on a motorcycle… so no wonder he wants to remain anonymous. Either that or he’s really a 14 year old boy from Estonia playing a practical joke.

And finally, the excitement about online currency Bitcoin continues. Inventor of virtual currencies and host of “The Keiser Report” Max Keiser (@maxkeiser) leaves us all with something to ponder in the Huffington Post this week http://huff.to/11XMOdW - “What if all the Bitcoin Exchanges in the world were shut down?” I wonder what Diaro del Viajero would have to say about that?

Although consolidation at exchange and CSD level is a recurrent theme across the Nordics, securities services providers say local market differences remain a hallmark of the region, and remaining locally focused is still important in light of the challenges regulation is throwing up.

“From the outside, the Nordic markets appear to be very similar but if you compare Finland, Sweden, Norway and Denmark, there are a lot of market specificities such as legal structures, which are unique.” Anders Löfgren, head of product management, Euroclear Sweden

The Nordic countries are often lumped together as a homogenous region. In the last decade or so, the region has certainly witnessed a spate of cross-border consolidation with the Swedish and Finnish exchanges buying up a lot of the smaller Baltic exchanges before merging to become OMHEX, and then later OMX, which eventually became part of the Nasdaq group. At the CSD level, the Finnish and Swedish CSDs, VPC and APK merged to form the Nordic CSD Group (NCSD). Then in 2008, Bussels ICSD Euroclear acquired NCSD, which become Euroclear Sweden and Euroclear Finland.

However, consolidation belies the many differences that still exist across the Nordics. “It is still quite complex and fragmented with local flavours and regulation especially on the tax treatment side,” explains Janne Palvalin, manager at Nordea Securities Services.
Erik Öhman of the Swedish Securities Dealers Association says his members would welcome even more consolidation particularly at the CSD level. Despite becoming part of Euroclear Group, Euroclear Finland and Euroclear Sweden still maintain two separate settlement platforms.

Anders Löfgren, head of product management, Euroclear Sweden says that two previous attempts to consolidate the Swedish and Finnish settlement platforms were unsuccessful with the most recent attempt abandoned due to Euroclear’s Single Platform initiative being downscaled. “It is a lot more costly and difficult than you would think,” he says. “From the outside, the Nordic markets appear to be very similar but if you compare Finland, Sweden, Norway and Denmark, there are a lot of market specificities such as legal structures, which are unique.”

Löfgren says regulatory initiatives like T2S may see Euroclear Sweden and Euroclear Finland work more closely in defining a common asset-servicing platform. In the meantime, one of the more immediate benefits of joining Euroclear, he says, is that it can take advantage of Euroclear Bank’s FundSettle platform for automating fund transaction processing. Sweden has more than 1,300 funds with an estimated value of EUR 200 billion, but the processing of transactions is highly manual, says Löfgren. Using FundSettle, fund-transaction order routing between relevant parties and settlement of the cash-related part of the transaction will be done on a straight-through processing basis at Euroclear Sweden, making it cheaper and less prone to manual errors.

On the trading side, although there has been exchange consolidation, Swedish stocks are traded on a number of platforms including multilateral trading facilities (MTFs) such as Chi-X. This has fragmented liquidity, says Öhman’s colleague, Lars Afrell. Some MTFs, like Burgundy, are being swallowed up by conventional exchanges. Norway’s Oslo Børs acquired Burgundy from a group of Nordic banks and brokers.

Regulatory pressures
These days, however, consolidation in the Nordic markets has taken a back seat to the ‘tsunami’ of regulations the region faces. “The volume of regulation and also the way in which it is implemented does not give market participants much time to implement the new rules and entirely new procedures,” says Afrell. “There is a lot of uncertainty about how to interpret the new regulations.”

Although Finland is the only Nordic market that is a member of the eurozone, other markets are feeling the full force of EU regulation. The Nordics were forced to look at the issue of CCPs following Lehman Brother’s collapse in 2008. Up until then, Öhman says the Swedish market didn’t really see the need for a CCP. Sweden had (and still has) a settlement ratio that was higher than most CCP markets.

With the move to central clearing of OTC trades under the European Market Infrastructure Regulation (EMIR), Öhman says its members are concerned about whether they will need to be members of a number of CCPs, or just one or two. “Is LCH going to be the dominant CCP in Europe? It is too early to say. For the Nordic currencies, Nasdaq OMX is launching a CCP for OTC trading. Collateral management efficiency will be a key issue in choosing clearing arrangements in the coming year,” says Öhman.

T2S
Palvalin says its clients are also trying to analyse how regulation will impact them. “Clients are interested to see how these regulations will change the competitive landscape and the infrastructure.” One of the biggest changes for the Nordic markets will be T2S or Target2-Securities. Denmark and Finland are expected to join in the third and fourth migration waves, whilst Norway and Sweden are staying out at this stage.

“T2S will change the competitive landscape and will require huge investments by CSDs,” remarks Palvalin. Migrating accounts to the T2S platform is particularly challenging for the Nordics, which has a direct holding account structure. Direct holding means that individual investors are directly registered and hold an account with the CSD, Löfgren explains. “That doesn’t mean the CSD has a relationship with clients directly, but it does provide services directly to the end investor via an account operator – typically the four big banks that operate in Sweden,” says Löfgren. That means migrating end-investor accounts to T2S will not be straightforward if Sweden decides to join T2S in the future.

Alongside T2S are other initiatives such as shortening the settlement cycle to T+2, which is part of the European Commission’s CSD Regulation (CSDR). T+2 is unlikely to cause too many problems but the implementation of T2S in Finland and Denmark will shorten settlement timeframes further. “The Nordic markets have an efficient settlement process, which will have no major problems in moving to T+2. The biggest worry is for Asian and North American customers to submit settlement instructions in time,” says Öhman.

Teemu Pihlatie, head of client relations and sales, international clients at Nordea Securities Services, says there is an increased focus on risk by clients. “We are seeing demand from clients for deeper local expertise,” he says. With a presence in all four Nordic markets and deep historical roots in the region, Nordea believes it is well placed to meet that demand.

Given T2S’s impact on custodians’ margins and volumes, some Nordic custodians set up offshore centres of excellence in the Baltics for settlement processing. Nordea says it too is centralising settlement processing and is also looking to do the same for asset servicing out of Sweden. But instead of opting for cheaper locations in the Baltics, Palvalin says it felt it was important to maintain a local presence. “We still have staff in all four markets as clients are increasingly looking for depth of local market knowledge and low risk while maintaining service levels.”

(posted for The Benche by permission of ISS-mag Rooted In The Region - ISS)

This last week the news on Twitter was dominated by rumour, predictions and finally announcements about the historic cut in ECB interest rates by 0.25%, setting the new rate at 0.5% at a much tweeted, live webcast news conference with ECB President Mario Draghi. Last week, one of the big stories was German premier Angela Merkel’s outspoken remarks that a rise in interest rates would be better for Germany and France, but she expected that was unlikely because of the weaker players in the Eurozone. It’s interesting to note that the buzz generated by that story on Reuters was similar to the levels of Tweeting associated with the news this week, indicating how hot this topic is for bankers. Here’s how the story and news media attention grew this week:

On Monday, Reuters reported the ECB was under pressure to publish legal documentation for its government bond purchase programme (OMT) but would only do it if the scheme was actually used. http://reut.rs/16ceS2V Later that day, we saw the trends shift in favour of the prediction from Goldman Sachs that EUR/USD risks were skewed to the upside despite an expected ECB rate cut. http://bit.ly/10nqkRc

On Tuesday, the top story was analysis (again from Reuters) of the sharp drop in Eurozone inflation coupled with a rise in joblessness, indicating an ECB rate cut was needed for economies like spain. http://reut.rs/YaCSir That story competed for the top slot with analysis by Edward Hugh (fistfulofeuros.net blogger) with analysis of Spain’s worsening situation, again, pointing towards an ECB rate cut.

On Wednesday we has a short break from ECB news to discuss one of the underlying social factors in economic recovery - ‘Human capital’ in a very popular video discussion with economist Gary Becker and Emeritus CME Group Chairman Leo Melamed. This is one of the economic ‘back stories’ behind macroeconomic policy: http://bit.ly/17xeIl0

Thursday was dominated by the ECB announcement itself. In the morning Ransquawk analysis video dominated predicting the cut and reporting about the opinions of various ECB members. http://bit.ly/104Fkn8. There was a brief flurry of activity around another press announcement from the ECB that day about the eligibility of marketable debt instruments issued or guaranteed by the Cypriot government. The announcements of Cypriot ‘bond haircuts’ would normally be a little more controversial, so it was a good day to slip that one out before the main announcement the media was waiting for. http://bit.ly/18ukDpz

Then came the big one. Twitter lit up with the breaking news, with the WSJ Live Blog briefly taking top slot before the ECB’s own live webcast took the top honours for attention.

Friday sees the ECB webcast http://bit.ly/18h5OJy is still one of the top stories, but the fallout of analysis is now starting to dominate with more bad news and reasons why the ECB rate cut won’t make much difference to the European economy - as you might predict within the financial news cycle. As one tweeter put it “Germany doesn’t need it & inflation is too high in NL anyway” and others noted that Belgium will benefit, but no-one else. As I write this post, new EU figures predicting a decline in France and Italy’s economic prospects with −0.4% growth forecasts for the Eurozone caused by France moving into recession and Italy’s rising debts as percentage of GDP.

I guess you could say it was a break from the bad news this week and the media and finance community got excited about the ECB cut, although from the tweets and news articles we saw before and after, it was predictable and it seems, irrelevant to Europe’s economic prospects for the next year. But it was a good week for the @Zerohedge blog (www.zerohedge.com) which took the top slot for most retweeted news and comment feed, closely followed by @ForexLive (www.forexlive.com).

It was also a good week to spot the people who select and ‘curate’ the best news in their own Twitter magazines or paper.li daily news round-up. This week take a look at Edward Harrison’s paper.li “The Credit Writedowns Daily” http://bit.ly/18hbeEt - it seems he picks the best breaking news and analysis and it makes for very good reading.

The top tweet? A question from @Zerohedge “Does anyone still use the ECB’s Marginal Lending Facility?” - well, do you?