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On July 13, Bernd Lange, chairman of the European Parliaments Trade Committee, said that the EU should formulate countermeasures as soon as possible on Monday. He said: "Trumps tariffs on the EU are a slap in the face of negotiations. This is not the way to deal with an important trading partner."On July 13, Aravind Srinivas, CEO of US AI search startup Perplexity, said on social media that based on the good performance of the Kimi K2 model, the company may use K2 for post-training in the future. DeepSeek R1 was also used by Perplexity for model training. K2 is a trillion-parameter open source model recently released by Kimi, which emphasizes code capabilities and general agent task capabilities.July 13, analysts said that financial markets, which have become increasingly insensitive to U.S. tariff threats, will face a test when they open on Monday after Trump announced over the weekend that he would impose 30% tariffs on the European Union and Mexico from August 1. Trump has recently stepped up trade measures, promising to impose more tariffs on everything from Canada to Brazil to Algeria and inviting trading partners to further negotiations. Despite warnings from JPMorgan Chase CEO Jamie Dimon and others not to take it lightly, investors have so far reacted as if they were counting on the U.S. president to back down again because they have seen the previous 180-degree turn. Brian Jacobsen, chief economist at Annex Wealth Management, said: "Investors should not just treat Trumps threat of a 30% tariff on EU goods as a bluff. This tariff level is punitive, but it may hurt the EU more than the United States, so the clock is counting down."On July 13, French President Emmanuel Macron posted on social media on the 12th that France and the European Commission strongly opposed the US announcement that day to impose a 30% tariff on EU exports from August 1. Macron wrote that in the context of EU unity, the European Commission should demonstrate the EUs determination to defend its own interests. If Europe and the United States cannot reach an agreement before August 1, the EU should mobilize all tools, including anti-coercion mechanisms, to speed up the preparation of "credible countermeasures." France supports the European Commission and the United States to step up negotiations in order to reach an agreement acceptable to both sides before August 1.European Council President: The EU remains fully supportive of efforts to reach a fair agreement with the United States.

‘Big Bang 2.0’ up in smoke as Britain’s finance law reforms underwhelm industry

Jimmy Khan

Jul 21, 2022 15:00

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As it avoids requests to slash taxes on banks or remove restrictions on employing foreign personnel to keep up with competitors, Britain's post-Brexit financial services reform is more about keeping up with them than launching a "Big Bang 2.0."


As it avoids requests to slash taxes on banks or loosen restrictions on employing foreign personnel to remain London a powerhouse in global finance, Britain's post-Brexit financial services reform is more about keeping up with competitors than unleashing a "Big Bang 2.0."


Wednesday's financial services legislation was unveiled by UK finance minister Nadhim Zahawi in front of a group of bankers in London's famed City financial sector on Tuesday night.


The long-delayed changes were branded a "Big Bang 2.0" by Rishi Sunak, Zahawi's predecessor and a candidate for the Conservative Party leadership. Sunak was alluding to the deregulation of stock trading in the 1980s, which put the City of London at the center of Europe's financial sector.


However, several of the bill's key provisions—including regulating stablecoins and relaxing insurance capital rules—repeat actions previously done by the European Union, disappointing some who hoped for a quicker, more significant transformation of the British financial sector.


"The new Bill is a crucial first step toward a common law-based regulatory reform in the UK, providing for a liberal yet secure regulatory environment. But this is only the beginning, said Barney Reynolds, a partner and the firm's global head of the financial services industry group.


The lucrative European Union market has been mostly closed off to the City since Brexit. Despite the steady migration of employment to the continent and the loss of equities and derivatives trading volumes to cities like Amsterdam and Paris, it still has a commanding lead as Europe's biggest financial center by a significant margin.


Critics claim that the law won't undo such modifications.


By quitting the single market of the EU The world's greatest integrated retail market, which is just outside its door, has been shut off from it. That fundamental truth won't be altered by anything in this measure, according to Nicolas Mackel, CEO of Luxembourg for Finance, a development organization representing the nation's financial center.


Brexit supporters had claimed that leaving the EU would offer Britain the chance to create a brand-new set of rules that would not only solidify London's position as Europe's premier financial center but also exclude New York and Asian financial hubs like Singapore and Hong Kong from market dominance.


However, Britain has chosen not to quickly repeal a levy enacted during the financial crisis on bank balance sheets or to relax "ring fencing" regulations that force institutions with sizable domestic retail businesses to reserve "rainy-day" capital that might otherwise be used to increase profits.


It has kept in place restrictions on banker bonuses that the Bank of England has long opposed and is maintaining a system for holding top management responsible for misbehavior that occurred under their watch.


A banking sector source observed that "there is a divide between the rhetoric and reality," referring to the expected public reaction against such actions amid the present cost of living crisis.

No rush

For the time being, it seems that British legislators won't be pushed into taking any action that sets the industry apart from other sources of foreign investment.


Global banks, whose presence underpins London's influence, and many start-ups that depend on the free flow of finance and people to fuel their worldwide operations, do not want multiple sets of laws that depart from international standards since this raises costs.


For the time being, emerging fintech companies that choose to base themselves in Britain will have to make do with government promises to expedite worker visas.


According to Graham Bishop, a former banker who has advised the EU on regulation, "the scope for the UK to create anything genuinely fresh is fairly low since God is on the side of the major battalions in regulation, the EU and United States."


Richard Gardner, CEO of the American IT company Modulus, expressed concern that Britain would "double down on newfound independence" and overturn supervisory norms that deter rogue actors due to a competitiveness obsession last seen in the lead-up to the 2008 financial crisis.


"History may serve as a caution. And history might end up repeating itself given the present economic climate and rule-breaking, as he put it.


Additionally, Brussels has issued a warning that the City would stay isolated from the EU if Britain significantly departs from EU regulations.


However, the main area of divergence so far has been the speed of capital market changes, with the EU moving more quickly despite Britain's desire for "nimbler" regulators.


Britain has taken its time to observe how the EU overhauls insurers, controls digital assets, and outsources crucial banking services. It has also put off implementing new bank capital regulations in order to comply with the EU's schedule, further undercutting the idea of "Big Bang 2.0."


Reynolds added that while "the Bill allows the regulators to clean up the inherited-EU laws," it "doesn't provide for the means and criteria they should use to do so."


However, Britain has deviated from the EU in some ways, such as dropping restrictions on "dark" or off-exchange stock trading to draw in more foreign investors and lowering capital buffers at insurers to promote domestic infrastructure investment as a litmus test of Britain's commitment to utilizing Brexit "freedoms."


Markus Ferber, a prominent member of the European Parliament, thinks the UK measures would eventually amount to a significant deregulation agenda, thereby blocking future entry for the UK financial industry to the EU.


According to Ferber, "The Financial Services Bill is a clear statement that the UK is out to compete with the EU for financial services industry."