Tuesday, June 24, 2008
The State of Qatar and NYSE Euronext (NYSE Euronext: NYX) announced a strategic partnership expected to transform the Doha Securities Market (“DSM”) into a significant international player and provide NYSE Euronext with a valuable presence in the Middle East. The closing of the transaction is expected to take place early during the fourth quarter of 2008.
Strategic relationship between the State of Qatar and NYSE Euronext to build a new, internationally integrated cash and derivatives exchange in Doha;
Interests of both the State of Qatar and NYSE Euronext fully aligned through equity participation, technology integration and market structure harmonisation and committed to work together as partners to explore other opportunities in the Middle East;
NYSE Euronext to purchase a 25% stake in the DSM for US$250 million in cash, the largest investment ever made by NYSE Euronext in a foreign exchange;
NYSE Euronext to receive three of the eleven seats on DSM’s board of directors;
The State of Qatar to retain ownership of the remaining 75% of the DSM through the Qatar Investment Authority;
NYSE Euronext has been selected as the technology provider by the State of Qatar and the DSM for both the cash equities and derivatives markets;
NYSE Euronext to act as a partner managing the operation of the new exchange, including the appointment of the senior management team, and providing technology services.
Monday, June 23, 2008
Erik Sirri, Director, Division of Trading and Markets, SEC, testified on Oversight of Risk Management at Investment Banks before the Senate Subcommittee on Securities, Insurance, and Investment Committee on Banking, Housing, and Urban Affairs on June 19. Here is his conclusion:
The CSE [Consolidated Supervised Entity] program adopted by the Commission has served to fill a gap left after the Gramm-Leach-Bliley Act broadly restructured the regulation of financial institutions. Although supervised on an elective basis by the Commission under the CSE program, and in compliance with capital standards at the holding company and regulated entity level, Bear Stearns ultimately was overwhelmed by the unprecedented demands for liquidity it faced in a crisis of confidence. As detailed above, the Commission has taken the lessons learned from the Bear Stearns events to improve the supervision of the remaining investment banks and to enhance existing relationships with other supervisors to address the issues that these and other financial institutions are experiencing in the current turbulent market conditions.
An imperative from the Bear Stearns crisis is addressing explicitly through legislation how and by whom large investment banks should be regulated and supervised, and specifically whether the Commission should be given an explicit mandate to perform this function at the holding company level, along with the authority to require compliance. Chairman Cox has called for such an explicit mandate, together with a dedicated funding stream for the CSE program. These steps are intended to ensure that the supervisory regime for investment banks is adequate in light of evolving market conditions and builds on a long history of Commission involvement in the supervision of securities firms.
Broadcom's troubles over backdating continue. The Wall St. Journal reports that Henry Samueli, co-founder of Broadcom Corp., agreed to plead guilty to making a false statement to the SEC in exchange for 5 years of probation and $12 million in penalties. His plead agreement will state that during a SEC deposition last year, he falsely stated that he was not involved in granting of options to top executives in 2002. WSJ, Broadcom Co-Founder Expected to Plead Guilty.
Was Chairman Cox too passive in formulating the SEC's role in the Bear Stearns crisis, losing public relations and political ground to the Federal Reserve Board, who, after all, had the money to bail out the investment bank? The Wall St. Journal compares Cox's performance with that of previous SEC Chairmen and presents the view of both his detractors and supporters in this balanced article. Ultimately, the issue of the SEC's role in regulating investment firms will be Congress's to decide, if and when it decides to focus on overhauling financia regulation. Congressional hearings on the subject have been announced for this summer, but no one expects legislation before the election. WSJ, SEC Chief Under Fire as Fed Seeks Bigger Wall Street Role.