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Screenshot of a breaking news alert e-mail from Q2 2017
French bank BNP Paribas dealing with ever changing regulatory environment
BNP plans a separate derivatives clearing business, as part of its near term strategy to increase earnings at its fixed income business. BNP Paribas will shift its OTC client clearing and FX prime brokerage operations alongside its listed derivatives clearing business. The businesses had previously sat in BNP’s Capital Markets and Securities Services units respectively according to a report in the Financial Times. The streamlining of these divisions within the bank come as new regulations are coming into effect.
BNP looks to be getting a jump on the agreed upon reforms of the new European Market Infrastructure Regulation (EMIR). Bobs Guide Financial Tech blog reiterates: “EMIR is Europe’s contribution to the centralised reporting, clearing, and enhanced transparency requirements demanded post-crash and apes the US Dodd-Frank rules in many aspects, if not all with some regional differences still obfuscating the long-desired global harmony and opening up the possibility of regulatory arbitrage.”
BNP acknowledged that its revenues from its fixed income, currency and commodities (FICC) business would far outstrip those of its advisory and equities units in the next three years. The bank forecast its FICC business would have a compound annual growth rate of 7 per cent to 2016, compared to an industry average of 2 per cent. Revenues from clearing is expected to be part of that drive. The unit will also manage the development of equity OTC clearing as required by regulation, the bank said.
It is worthy to also note, BNP has announced the closing of it’s Ukraine operations amid geopolitical turmoil with Russia. It seems to not be worth the headache amid political risk for them to continue operations in the country. This is especially true when there are stronger markets in the region to conduct more stable business. Officials from the bank had said that by 2015, 84 branches are to be closed and 1600 job cuts made in the country.
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