Investor Relations Week: Supply chain revelations, UK political unrest hit IPO plans and Russian stock exchange records $11m worth of deals shares listed in Hong Kong
– The Wall StreetJlog (paywall) said U.S. companies will have to disclose the terms and size of their supply chain finance programs under a new FASB rule, which approved it on Wednesday. Supply chain finance has grown in popularity as companies pile up inventory and push back their payment terms. The tool allows businesses to pay their bills later, while suppliers get their money faster. A third party – usually a bank – pays the seller’s bills and takes a share. The company pays the bank what was due under the invoice at a later date than originally required. Previously, companies did not have to report these agreements in their financial statements.
– SoftBank has suspended plans for Arm’s London IPO due to political unrest in the UK, the report reported. FinancialTimes (paywall), seemingly casting doubt on Britain’s place as the future home of the Cambridge-based tech giant. British Prime Minister Boris Johnson personally lobbied billionaire SoftBank founder Masayoshi Son to secure at least a partial listing of the chip designer on the London Stock Exchange (LSE), the newspaper said. As Johnson’s government crumbled earlier this month, Investment Minister Lord Gerry Grimstone and Digital Minister Chris Philp resigned. They had both been prominent in discussions with the Japanese tech investor.
AM City added that the LSE said the exchange was ready to “fight” to win the listing. “I want to win every bid I can and I also believe there is a very compelling case for Arm to have a dual premium listing in the UK,” CEO Julia Hoggett told Bloomberg Television.
– The St. Petersburg Stock Exchange, Russia’s second-largest stock exchange, saw more than HK$87 million ($11.2 million) in trades from the first batch of Hong Kong-listed tech stocks under its trial program since last month, according to the South China Morning Post. The volume, which was equivalent to 0.14% of total trades generated on the exchange, was in line with expectations, according to Stanislav Martyushev, head of business intelligence at the stock exchange operator known as SPB. “Recorded trading volumes are in line with our expectations for the trial operation period in the new segment,” he told the newspaper.
The volume comes from 22,291 trades involving the shares of Alibaba Group, Tencent Holdings and 10 other stocks that SPB unilaterally added on June 20. Martyushev added. To date, eight brokerages have provided clients with access to Hong Kong stocks, with around 10 more expected to join.
– Wall Street is ready for a “new ETF gold rush”, reported Bloomberg (paywall) as “the era of single actions begins”. The news agency said a “new era of ETFs for everything may have just begun on Wall Street,” swelling an industry that already has nearly 3,000 products and $6.2 billion in assets. . The burgeoning world of ETFs is about to get even more crowded after the first-ever single-stock ETF launched this week, Bloomberg added, “despite a torrent of regulatory warnings about their risks as retail investors are still reeling from the collapse of speculative trading from crypto to meme stocks.
Somewhere else, Risk.net reported that SEC Commissioner Caroline Crenshaw is pressuring the agency’s Chairman, Gary Gensler, to review how it regulates ETFs that give investors leveraged or inverse exposure to shares of a single company, such as electric car maker Tesla or vaccine maker Pfizer.
– Companies are said to have “gobbled up” $2.1 billion in taxes after Congress limited deductions for executives and paid out more than $1 million, said the WSJ. Companies rack up hundreds of millions of dollars in top executive income taxes, a growing bill that in some cases accounts for a significant portion of their annual tax expenditures, according to the newspaper. Tesla, for example, recorded $447 million in executive compensation taxes over three years. Officer pay generated almost 20% of all tax costs recorded by defense contractor Howmet Aerospace during the same period. At cosmetics retailer Ulta Beauty, pay for executives subject to corporation tax has more than tripled since 2019.
– A key EU lawmaker is set to back calls for an outright ban on brokers selling clients’ stock trades to market intermediaries, adding to the momentum to crack down on the practice, the report reported. FT. Danuta Hübner, a member of the European Parliament, said in a draft statement seen by the newspaper that concerns over the practice known as payment for order flow are “symptomatic of a wider problem” with national regulators. of the EU interpreting the rules differently. In her note, she specifies that “the rapporteur maintains the initial proposal” of the European Commission, which is to ban the practice.
The project highlights the growing resistance in Europe to payment for order flow even before it became popular in the region. US brokerages earn billions of dollars a year from this process, raking in a record $3.8 billion during last year’s retail boom. Paying for order flow is also lucrative for high-speed trading firms who profit from the difference between their own price of buying a stock and the price at which they pass it on to clients, added the FT.
– According to a sustainability expert who spoke to Global investor (pay wall). Nicky Heber, director and head of ESG campaigning at financial markets technology firm LPA, said most ESG initiatives in securities lending have been focused on governance issues and therefore existing services. He told the publication: “While the industry has so far focused on governance issues, there has recently been a clear shift in focus towards the world’s most important environmental issues.”
– The majority of companies do not yet monitor WhatsApp, according to The exchange, although several large institutions have recently been hit with significant fines by regulators. Citing research from SteelEye, the publication states that only 15% of investment firms monitor communication on the social media channel, while only 9% monitor Slack and 3% monitor Signal. About 40% of businesses monitor incumbent platforms such as Teams and Bloomberg Chat, while only a quarter monitor Zoom. “When it comes to email and desk phones — or traditional methods of communication — the rules for record keeping and supervision are relatively simple,” said SteelEye chief executive Matt Smith.