Finance

Evolution of a market structure

Exchange Magazine

Welcome to Thomson Reuters Exchange! Each week, we will be bringing you features from within Exchange, Thomson Reuters financial and risk publication. We created Exchange, as the name suggests, as a forum for dialogue, a digital publication where ideas and insights, information, news and analysis can be exchanged and shared across the global ecosystem of financial professionals in a dynamic, interactive format. We invite you to experience the rich content and interactive features on your iPad or Android tablet by downloading it from the App StoreGoogle Play or on Amazon. Or, to learn more about Exchange and stay abreast of the latest features, functionality and content in this issue and subsequent issues, visit our website.

It is not often that entire industries have the opportunity to completely restructure, but that is exactly what is happening right now in the world’s largest financial market, foreign exchange (FX). A combination of increased public scrutiny and regulation is shifting long-standing industry dynamics and driving participants to rethink their fundamental strategies. This process has created challenges for banks, as well as for their clients including the corporations and asset managers that rely on the FX market on a daily basis.

Historically, currency trading has not taken place on organized exchanges but rather on a bilateral basis between a liquidity provider, typically a bank, and a liquidity consumer. Using this so-called over-the-counter (OTC) trading method, the FX market has become one of the most efficient and liquid in the world, with $5.3 trillion traded on a daily basis, according to the Bank for International Settlements in 2013.

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ICD Thomson Reuters Islamic Finance Development Indicator (IFDI 2014)

ICD Thomson Reuters Islamic Finance Development Indicator is the true barometer of the state of the industry across its fundamentals. The Indicator aims to introduce a new way of measuring development by combining data of the different elements of the industry into a singular composite Indicator. This quantified information will help facilitate further comprehension of how the different parts of the market are developing over time.

The Islamic Finance Development Indicator is a composite weighted index that measures the overall development of the Islamic finance industry by assessing the performance of all its parts in line with its inherent faith-based objectives. It is a global level composite indicator with selected national and industry component level indicators.

To view #IFDI2014 key findings, click here.

Big Data: Successfully meeting the latest challenges in financial services

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Welcome to Thomson Reuters Exchange! Each week, we will be bringing you features from within Exchange, Thomson Reuters financial and risk publication. We created Exchange, as the name suggests, as a forum for dialogue, a digital publication where ideas and insights, information, news and analysis can be exchanged and shared across the global ecosystem of financial professionals in a dynamic, interactive format. We invite you to experience the rich content and interactive features on your iPad or Android tablet by downloading it from the App StoreGoogle Play or on Amazon. Or, to learn more about Exchange and stay abreast of the latest features, functionality and content in this issue and subsequent issues, visit our website.

All those bits and bytes only add up to something when they’re organized, arranged and made coherent.

Since the earliest days of the financial markets, information has been a key element of success. In the past, market information was conveyed by methods that now seem quaint: carrier pigeons, personal conversations, printed materials sent through the post.

Today more data is generated in a 24-hour period than in entire centuries of the past, traveling at lightning speeds to all corners of the globe. Accessing, sorting, compiling and leveraging that information is increasingly important in fast-paced markets and changing regulatory landscapes. (more…)

Exchange Magazine: The Innovation Issue

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We’re pleased to announce the release of the third issue of Thomson Reuters Exchange Magazine. Tackling the theme of Innovation, issue three explores the various ways in which financial professionals and organizations are evolving and innovating to meet the challenges and changes of the marketplace today.

Highlights from this issue include our IP & Science business President Basil Moftah on ten areas of innovation that will change our world by 2025; Mona Vernon of our Data Innovation Lab and F&R Chief Technology Officer Philip Brittan discuss how innovation is changing our business and that of our customers; David Kirkpatrick, CEO of Techonomy (and former technology editor for Fortune) contributes his thoughts on fostering an innovation culture and we take a look at our 15-year partnership with the F1 racing program WILLIAMS MARTINI RACING and the role of innovation and information in Formula One racing.

Additional features in this issue include:

Get your full, free copy of Exchange for iPad or Android tablet devices in the Apple AppstoreAmazon App Store, or on Google Play. Or visit the Exchange website and read free single articles.

Green sukuk bridge between Islamic finance and SRI

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The Global Islamic Finance Forum was held in Kuala Lumpur last week and included a few areas that don’t receive as much attention as they are due.  Much of the focus of Islamic finance is on raising its quantitative developments.  Or put simply, increasing the assets in Islamic finance without considering how these are deployed and what impact this has both directly in what is financed and through corporate social responsibility.  In addition, there has been relatively limited attention played in how to improve governance at Islamic financial institutions both in the sense of traditional corporate governance and in sharia governance.

The concept of expanding a focus beyond just quantitative development is encapsulated in the ICD-Thomson Reuters Islamic Finance Development Indicator, which was released at GIFF where governance and CSR are included along with knowledge and awareness to provide an overall picture of the state of the Islamic finance industry.   (more…)

Reuters Aerospace and Defense Summit

What’s ahead for the aerospace and defense industry, and what does it mean for investors?

Top government officials and executives from U.S. and European aerospace and defense firms will address myriad significant challenges facing the global aerospace and defense industry at the 10th annual Reuters Aerospace and Defense Summit. On the agenda will be the engine failure that grounded Lockheed Martin Corp’s F-35 Joint Strike Fighter for several weeks this summer, the policy implications of a spate of recent airline disasters, and a fresh drive by critics to dismantle the U.S. Export-Import Bank, a key source of financing for customers seeking to buy Boeing Co commercial airplanes.

Reuters Aerospace and Defense SummitPentagon officials and executives from Lockheed Martin, engine maker Pratt & Whitney, and Britain’s BAE Systems will offer insights about the world’s biggest weapons program – a $400 billion effort to develop a new multirole fighter that will replace over a dozen plans now in use around the world. Speakers will also address the impact of continuing cuts in U.S. military spending at a time of sustained crises in Ukraine, the Middle East and Africa.

On the commercial side, speakers will debate the merits of the Export-Import Bank, examine burgeoning demand for commercial airliners, and discuss what changes could emerge in flight-tracking as a result of the disappearance of Malaysia Airlines Flight 370. Speakers will also take a closer look at progress on a mammoth overhaul of the U.S. air traffic control system that helps airlines navigate crowded air routes – a project that requires about $1 billion a year in spending.

Check out the Reuters Best website – a dynamic resource that features Reuters biggest news wins by sector and region.

Follow @Reuters_Summits on twitter.

Click here for the 2014 calendar.

Weekly Investment Banking Scorecard

deals intelligence

This week’s $3.8 billion stock swap transaction between South Korea’s Samsung Heavy industries and Samsung Engineering pushed Asia Pacific target M&A activity to $424.0 billion for year-to-date 2014, a 64% increase compared to a year ago and the strongest year-to-date period for deal making in the region since records began in 1980. China, Australia and South Korea account for 76% of announced M&A activity so far this year, led by financials (22%), real estate (14%) and industrials (12%).

Weekly Highlights: (more…)

Basel III to test treatment of PSIAs on liquidity and funding

In a report laying out the Basel III rules that will impact Islamic banks, in advance of the final Islamic Financial Services Board (IFSB) standard on liquidity expected in early 2015, S&P’s Credit Analyst Mohamed Damak said it would “test the treatment of profit sharing investment accounts (PSIAs) from a liquidity and funding perspective [because] shar[ing] any losses […] could increase their volatility and liquidity coverage requirements and reduce their role as stable funding sources.”

Damak’s comments reflect the differences in how Islamic PSIA deposits are perceived by depositors and their legal status as profit-and-loss bearing instruments which makes the current regulatory treatment of displaced commercial risk more of a double-edge sword under new regulations.

In Islamic banking today, PSIAs represent one of relatively few products where Islamic banks—in theory at least—are incorporating profit-and-loss sharing into their balance sheets. It is almost the only remaining element from the back-to-back mudaraba construct that was held up as one way to organize Islamic banks during the early stages of transitioning from the ideas of Islamic economics to the practice of Islamic finance. Since the first Islamic banks opened, the realities of working within a regulatory system designed around interest-based institutions required much greater use of debt-based and synthetic products. (more…)

Weekly Investment Banking Scorecard

deals intelligence

A trio of multi-billion dollar mergers announced this week pushed global deal making to $2.40 trillion for year-to-date 2014, a 75% increase compared to a year ago and already besting full year 2013 M&A levels ($2.38 trillion). Led by targets in the Americas, 72 deals over $5 billion have been announced this year, a 56% increase compared to full year 2013 when 46 large-cap deals contributed to the annual total. Healthcare deals accounted for 13 worldwide large-cap deals followed by energy & power (11) and telecommunications (8).

Weekly Highlights: (more…)

Islamic Economy Award nominations are now open

The Islamic economy is too often characterized around its biggest silos: the multibillion dollar banks recycling petrodollars across the world and the expansion of global and regional conglomerates into the halal food market as their indigenous market growth slows to a crawl. SMEs are always either the next big thing in the $1.1 trillion halal food market and $1.35 trillion Islamic finance market, or the acquisition target, but they rarely get recognized in between.

In the future, the evolution of the Islamic economy will be dictated by not just small and medium-sized enterprises (SMEs) but microbusinesses that start with an idea and end up creating and capturing a niche market. The Islamic Economy Awards are looking to find these idea-driven SMEs. Last year, the awards highlighted, among other winners:

  • Tanamera, a small natural products manufacturer in Malaysia
  • Saffron Road, an American halal food producer that equally values the sustainability of its products for a broad consumer base
  • TimeZ5, which designed and manufactures the first physiological prayer mat offering pain relief and improved posture  (more…)