MiFID 2 already

Hello, it's Katie Martin here again, filling in for Harriet Agnew as she takes a spot on My Time. Don't worry, service will be back to normal next week. Here's the lowdown on the latest developments in asset management while she's gone, including a great booklet that really helps with your 'further reading'.

One thing to start with: Big numbers at BlackRock. Results on Friday showed assets rose to $10.5 trillion, thanks largely to booming bitcoin ETFs and stocks, while net income rose by more than a third from the same period last year. Larry Fink's company beat analysts' expectations, but one small problem came from a $19 billion outflow from cash management products. It's hard to argue overall, though. Everything you need to know, right here, from Brooke Masters in New York.

MiFID 2 already

We're starting to feel like at least parts of Mifid II were a really weird dream.

Last week, the UK's Financial Conduct Authority proposed that fund managers should be able to bundle research fees from investment banks with wider trading costs, a move that negates one of the main aims of Mifid II – the widely hated package of post-crisis policies. . '08 EU reforms urged by . . . United kingdom. My excellent colleagues Nico Asghari and Emma Dunkley have the story.

The forced separation of research and trading, which required investors to pay separately for analysts' reflections, was clearly well-intentioned and sought to avoid a conflict of interest. fine. But indirect effects were often less than ideal, including a massive contraction in coverage for small and medium-sized businesses.

Now the UK is seeking to exercise post-Brexit evasion by abandoning the dismantling requirement that was originally the UK's idea.

“It's ironic that this is probably going to be positioned as post-Brexit freedom, but we're the ones who pushed this on the Europeans, we led this,” said Mike Carodos, founder of Substantive Research. A colleague of mine is on his way back to the Dark Ages, hello, Mike.)

The obvious question is whether this unbundling will come soon enough to ignite some interest in smaller listed stocks, and the answer is. . . OK we will see. It feels like the damage has been done, but at the same time, a long series of relatively small adjustments like this are needed to try to wake up stocks in London.

The financial watchdog said the move would give fund managers “greater freedom in how they pay for research and support their investment decisions.”

Hedge fund drama on the high seas

I twisted the arm of my excellent colleague Costas Morselas to summarize the interesting story he did last week with Robert Wright, about two things that never seem to mix without a fight: hedge funds and shipping. In his saying: The summary of thinness is:

In late 2023, two of Europe's shipping companies – Frontline (controlled by Norwegian-born John Frederiksen) and the Belgian Savris family – struck a deal aimed at resolving a years-long dispute over control of Euronav. As part of the deal, publicly listed Euronav will drop a case against Frontline over its exit from the merger agreement at the beginning of that year.

Finally, everything was finished.

But wait! Enter FourWorld, a New York-based hedge fund whose chief investment officer, John Ades, told the Financial Times that the deal was “one of the most egregious cases we have ever seen” of a majority shareholder exploiting minority interests.

The hedge fund last week turned to the Belgian courts to try to nullify the deal, arguing that the agreement between the two parties to drop the merger gave it the opportunity to obtain “broad damages” that would benefit minority shareholders.

Maybe, maybe not, said Alexander Savris, who told the Financial Times that winning the arbitration case was not a foregone conclusion, and that it would have taken “years and cost us a lot…” . . “For a very uncertain income.”

He added: “We insist that we are right and that we have not committed anything wrong. We will vigorously defend ourselves against these baseless allegations.”

Lars Barstad, CEO of Frontline, said:[We] He insists that everything [Frontline’s] Transactions relating to Euronav were consistent with applicable law and regulations.

This will run and run.

Chart for the week: King Dollar

This year is not going well for dollar speculators. once again.

Here's how other major currencies have performed against the dollar this year. (Oh…especially for Lynn.)

Last week, the dollar recorded its strongest rise since 2022, in one of the most visible market responses to the bumper US inflation report. That sound you can hear is sell-side analysts hastily tearing down their expectations for a Fed rate cut. (Suddenly, the market is looking for maybe one cut this year. The consensus of six or seven since the start of 2024 seems like ancient history.)

Meanwhile, many other central banks, most notably the European Central Bank, are still looking to cut. “The buzzword going through the markets at the moment is divergence,” said Quentin Fitzsimmons, senior portfolio manager at T Rowe Price. Read more, from the ever-hardworking Mary McDougall.

Five stories not to miss this week

Buckle up, he's been busy.

“When you wake up from waterboarding and you're not dead, you're supposed to feel happy. That's not a good pattern of organization.” OK. New York dream team of Harriet Clarvelt and Brooke Masters report on the extraordinary closing of $220 billion(!) in institutional money market funds major in the United States – nearly a third of the entire market – as a result of modified SEC rules.

“There is only one way for water utilities serving the capital of a G7 country to lose so much value so quickly: they were not worth £5bn to begin with. Yet their owners have denied that reality for years.” There's a make-up line from Frederik Planck Broad's scathing post at Scientific Infra & Private Assets on what institutional investors should learn from the Thames Water nightmare.

How scary is private credit? Judge for yourself with this unprotected podcast, IMF blog and source documents.

The hidden power of index providers: A more thoughtful article than ever from FT contributing editor, '6 Music Dad' and Ideas Fund Toby Nangle.

Izzy Englander goes poaching: Goldman Sachs' global treasurer leaves after 24 years at the bank to join Millennium Management. Harriet A, Josh Franklin and Urtinka Aliaj have the scoop.

BRK 0-1 HMRC: BlackRock has lost an appeal over UK tax it sought to recover from HM Revenue & Customs on its $13.5 billion takeover of Barclays Global Investors in 2009. Harriet Agnew gets the inside scoop again. No wonder she needed a break.

If you're in asset management and you're not prepared for the impending shortening of trade settlement cycles in the US, then I don't know what to tell you next, you should read this article contributed by Gerard Walsh at Northern Trust and this risk alert from the SEC explains what… The examination department seems Orwellian about the whole thing. (Shameless self-promotion alert: I wrote about it recently, too.)

Sns from hmr flr. . . Stp bng mn to abrdn — A shot from the FT's driest wit, Alphaville's Bryce Elder. The stalker from the city of Am.

Yes, that's more than five. I don't regret anything.

And finally

Okay, okay, I'll deny it if you ask, but truth be told, I can be a jaded East Londoner sometimes. Evidence includes climbing, baking my own bagels, living in Walthamstow since before it was cold, etc. So I have no hesitation in recommending a very nice “veggie focused” restaurant that I recently visited called Slowburn. It's located near Blackhorse Road tube station in a warehouse that's also home to an artisan jeans factory, because that's the way we go. Delicious, refined yet casual grub, wonderfully flavorful chicken and fish despite the emphasis on vegetables, and lots of fancy sewing machines, fabric nails and industrial washing machines.