The United Arab Emirates may amend rules governing bank lending against shares after reviewing June’s stock price swings in Dubai and Abu Dhabi, the market regulator said yesterday.

Representatives of the Securities and Commodities Authority, the central bank and the country’s two main stock exchanges met in Abu Dhabi to consider the volatility, and will make changes to lending regulations if necessary, the SCA said in an e-mailed statement yesterday. The parties also agreed to set up a joint permanent committee to monitor trades and ensure the “absence of any suspicion of manipulation of securities’ price,” according to the statement.

Dubai’s benchmark share index fell 22 percent in June, its biggest monthly decline since November 2008. Abu Dhabi’s benchmark index fell 13 percent in the month. The slump prompted members of the U.A.E.’s Federal National Council, an advisory authority that represents the interests of the Emirati population, to call for more robust legislation.

The country’s exchanges began trading as emerging markets in June after an upgrade by index provider MSCI Inc.

The joint committee will monitor statements of chief executive officers and securities analysts to ensure “they are transparent and truthful,” and will review sharp market movements and submit recommendations, the SCA said in its statement.

Compliance Action

European Banks Seen Facing $50 Billion More in Legal Expenses

Europe’s banks face a further $50 billion of legal costs as they catch up with their U.S. counterparts, according to analysts at Morgan Stanley. (MS)

European firms, which have set aside or paid out more than $80 billion since 2009, face about $130 billion of litigation and settlement costs in total, analysts led by Huw van Steenis wrote in a note to clients yesterday. U.S. firms, which have so far made provisions for or paid out $125 billion, may have only to set aside a further $25 billion, the analysts said.

Barclays Plc (BARC) and Royal Bank of Scotland Group Plc face the largest increases in legal costs among European banks, van Steenis wrote. Barclays, Britain’s second-largest bank, will have about $11.9 billion of additional legal costs through 2016, compared with the $10 billion it’s already set aside or paid out since 2009. RBS’s legal bills may rise by $11.3 billion over the same period from $11.7 billion, he added.

Tibor Rate Setting Complies With IOSCO Principles, Group Says

The Japanese Bankers Association’s Tibor Administration released a statement on its website yesterday based on a self-evaluation of rate setting, which it said complies with IOSCO standards.

The International Organization of Securities Commissions published guidelines last year for financial benchmarks to improve integrity after Libor rate-rigging scandals.

The administrator for the Tokyo Interbank Offered Rate will consider building a system to collect data on interbank transactions in an unsecured overnight call market, according to the statement.

JBA, the nation’s biggest banking lobby group, announced Dec. 27 its plan to form a separate body to manage benchmark interbank lending rates, as the country’s financial watchdog seeks to tighten supervision of the gauges.

Interview

BlackRock Sees Investment Returning to Gold-Backed ETFs

Evy Hambro, manager at BlackRock Inc.’s World Mining Fund, talked about the price of gold, the outlook for gold-backed exchange-traded funds and whether there is a need for the so-called gold-fix.

He spoke with Anna Edwards on Bloomberg Television’s “On the Move.”

 

Source: bloomberg

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