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Adani abandons $2.5 billion share sale in big blow to Indian tycoon

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NEW DELHI, Feb 1 (Reuters) – Gautam Adani’s flagship firm called off its $2.5 billion share sale in a dramatic reversal on Wednesday as a rout sparked by a U.S. short-seller’s criticisms wiped billions more off the value of the Indian tycoon’s stocks.

The withdrawal of the Adani Enterprises (ADEL.NS) share offering marks a stunning setback for Adani, the school dropout-turned-billionaire whose fortunes rose rapidly in recent years in line with stock values of his businesses.

“Today the market has been unprecedented, and our stock price has fluctuated over the course of the day. Given these extraordinary circumstances, the Company’s board felt that going ahead with the issue will not be morally correct,” Adani said.

“Our balance sheet is very healthy with strong cashflows and secure assets, and we have an impeccable track record of servicing our debt. This decision will not have any impact on our existing operations and future plans,” the billionaire added in a statement to Indian exchanges.

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Adani, whose global business interests span ports, airports, mining, cement and power, is battling to stabilise his companies and defend his reputation.

“Once the market stabilizes, we will review our capital market strategy,” he added.

A report by Hindenburg Research last week alleged improper use by the of offshore tax havens and stock manipulation by the Adani Group. It also raised concerns about high debt and the valuations of seven listed Adani companies.

The Jan. 24 report has since triggered a $86 billion erosion in market capitalisation of seven listed Adani Group companies.

Adani Group has denied the allegations, saying the short-seller’s allegation of stock manipulation has “no basis” and stems from an ignorance of Indian law. The group has always made the necessary regulatory disclosures, it added.

REFUNDS

Adani Group was working with its bankers to refund the proceeds received by in the secondary share sale of Adani Enterprises. Anchor investors who had supported the issue included Maybank Securities and Abu Dhabi Investment Authority.

The company aims to protect the interests of its investing community by returning the proceeds, it said.

Adani Group had on Tuesday mustered enough support from investors for the share sale to proceed, in what some saw as a stamp of investor confidence amid the storm.

But after a brief respite, the selloff in Adani Group stocks and bonds resumed on Wednesday, with shares in Adani Enterprises plunging 28% and Adani Ports and Special Economic Zone (APSE.NS) dropping 19%, the worst day on record for both.

The fundraising was critical for Adani, not just because it would have helped cut his group’s debt, but also because it was being seen by some as a gauge of confidence as he faced the biggest business and reputational challenge of his career.

Wednesday’s stock losses saw Adani slip to 15th on the Forbes rich list with an estimated net worth of $75.1 billion, below rival Mukesh Ambani, the chairman of Reliance Industries (RELI.NS) who ranks ninth with a net worth of $83.7 billion.

The share sale had succeeded on Tuesday even when the Adani Enterprises stock price in Mumbai markets traded below the offer price of the share sale.

“I do not know how the markets will behave in short term. But this is a measure to enhance (Adani’s) reputation since the investors were staring at a 30% loss even before the shares were alloted,” said Rajesh Baheti, chief executive, Crossseas Capital Services, an algo trading firm.

Reporting by Aditya Kalra and Jahnavi Nidumolu in Bengaluru; Editing by Anil D’Silva, Kirsten Donovan and Alexander Smith

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Adani loses Asia’s richest crown as stock rout deepens to $84 billion

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BENGALURU, Feb 1 (Reuters) – Shares in Indian tycoon Gautam Adani’s conglomerate plunged again on Wednesday as a rout in his companies deepened to $84 billion in the wake of a U.S. short-seller report, with the billionaire also losing his title as Asia’s richest person.

Wednesday’s stock losses saw Adani slip to 15th on Forbes rich list with an estimated net worth of $76.8 billion, below rival Mukesh Ambani, the chairman of Reliance Industries Ltd (RELI.NS) who ranks ninth with a net worth of $83.6 billion.

Before the critical report by U.S. short-seller Hindenburg, Adani had ranked third.

The losses mark a dramatic setback for Adani, the school-dropout-turned-billionaire whose business interests stretch from ports and airports to mining and cement. Now, the tycoon is fighting to stabilise his businesses and defend his reputation.

It comes just a day after the group managed to muster support from investors for a $2.5 billion share sale for flagship firm Adani Enterprises on Tuesday, in what some saw as a stamp of investor confidence.

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The report by Hindenburg Research last week alleged improper use by the Adani Group of offshore tax havens and stock manipulation. It also raised concerns about high debt and the valuations of seven listed Adani companies.

The group has denied the allegations, saying the short-seller’s narrative of stock manipulation has “no basis” and stems from an ignorance of Indian law. It has always made the necessary regulatory disclosures, it added.

Shares in Adani Enterprises (ADEL.NS), often described as the incubator of Adani businesses, plunged 30% on Wednesday. Adani Power (ADAN.NS) fell 5%, while Adani Total Gas (ADAG.NS) slumped 10%, down by its daily price limit.

Adani Transmission (ADAI.NS) was down 6% and Adani Ports and Special Economic Zone (APSE.NS) dropped 20%.

Adani Total Gas, a joint venture with France’s Total (TTEF.PA), has been the biggest casualty of the short seller report, losing about $27 billion.

“There was a slight bounce yesterday after the share sale went through, after seeming improbable at a point, but now the weak market sentiment has become visible again after the bombshell Hindenburg report,” said Ambareesh Baliga, a Mumbai-based independent market analyst.

“With the stocks down despite Adani’s rebuttal, it clearly shows some damage on investor sentiment. It will take a while to stabilise,” Baliga added.

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SCRUTINY

Underscoring the nervousness in some quarters, Bloomberg reported on Wednesday that Credit Suisse (CSGN.S) had stopped accepting bonds of Adani group companies as collateral for margin loans to its private banking clients.

Deven Choksey, managing director of KRChoksey Shares and Securities, said this was a big factor in Wednesday’s share slides.

Credit Suisse had no immediate comment.

Scrutiny of the conglomerate is stepping up, with an Australian regulator saying on Wednesday it would review Hindenburg’s allegations to see if further enquiries were warranted.

Data also showed that foreign investors sold a net $1.5 billion worth of Indian equities after the Hindenburg report – the biggest outflow over four consecutive days since Sept. 30.

Headaches for the Adani Group are expected to continue for some time.

India’s markets regulator, which has been looking into deals by the conglomerate, has said it will add Hindenburg’s report to its own preliminary investigation.

State-run Life Insurance Corporation (LIC) (LIFI.NS)said on Monday it would seek clarifications from Adani’s management on the short seller report. The insurance giant was, however, a key investor in the Adani Enterprises share sale.

Hindenburg said in its report it had shorted U.S.-bonds and non-India traded derivatives of the Adani Group.

Reporting by Chris Thomas in Bengaluru and Aditi Shah in New Delhi; Additional reporting by Bharath Rajeshwaran and Aditya Kalra; Editing by Edwina Gibbs and Mark Potter

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Goldman job cuts hit investment banking, global markets hard -source

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  • Mass redundancies, spending review beckons for Wall Street giant
  • Cuts to all major divisions expected, globally
  • Restructuring in Asian wealth unit kicks off Wednesday’s layoffs

NEW YORK/LONDON/HONG KONG, Jan 12 (Reuters) – Goldman Sachs (GS.N) began laying off staff on Wednesday in a sweeping cost-cutting drive, with around a third of those affected coming from the investment banking and global markets division, a source familiar with the matter said.

The long-expected jobs cull at the Wall Street titan is expected to represent the biggest contraction in headcount since the financial crisis. It is likely to affect most of the bank’s major divisions, with its investment banking arm facing the deepest cuts, a source told Reuters this month.

Just over 3,000 employees will be let go, the source, who could not be named, said on Monday. A separate source confirmed on Wednesday that cuts had started.

“We know this is a difficult time for people leaving the firm,” a Goldman Sachs statement on Wednesday said.

“We’re grateful for all our people’s contributions, and we’re providing support to ease their transitions. Our focus now is to appropriately size the firm for the opportunities ahead of us in a challenging macroeconomic environment.”

The cuts are part of broader reductions across the banking industry as a possible global recession looms. At least 5,000 people are in the process of being cut from various banks. In addition to the 3,000 from Goldman, Morgan Stanley (MS.N) has cut about 2% of its workforce, or 1,600 people, a source said last month while HSBC (HSBA.L) is shedding at least 200, sources previously said.

Last year was challenging across groups including credit, equities, and investment banking broadly, said Paul Sorbera, president of Wall Street recruitment firm Alliance Consulting. “Many didn’t make budgets.”

“It’s just part of Wall Street,” Sorbera said. “We’re used to seeing layoffs.”

The latest cuts will reduce about 6% of Goldman’s headcount, which stood at 49,100 at the end of the third quarter.

[1/3] A trader works at the Goldman Sachs stall on the floor of the New York Stock Exchange, April 16, 2012. REUTERS/Brendan McDermid/File Photo

The firm’s headcount had added more than 10,000 jobs since the coronavirus pandemic as markets boomed.

The reductions come as U.S. banking giants are forecast to report lower profits this week. Goldman Sachs is expected to report a net profit of $2.16 billion in the fourth-quarter, according to a mean forecast by analysts on Refinitiv Eikon, down 45% from $3.94 billion net profit in the same period a year earlier.

Shares of Goldman Sachs have partially recovered from a 10% fall last year. The stock closed up 1.99% on Wednesday, up around 6% year-to-date.

LAYOFFS AROUND GLOBE

Goldman’s layoffs began in Asia on Wednesday, where Goldman completed cutting back its private wealth management business and let go of 16 private banking staff across its Hong Kong, Singapore and China offices, a source with knowledge of the matter said.

About eight staff were also laid off in Goldman’s research department in Hong Kong, the source added, with layoffs ongoing in the investment banking and other divisions.

At Goldman’s central London hub, rainfall lessened the prospect of staff huddles. Several security personnel actively patrolled the building’s entrance, but few people were entering or leaving the property. A glimpse into the bank’s recreational area just beyond its lobby showed a handful of staffers in deep conversation but few signs of drama. Wine bars and eateries local to the office were also short of post-lunch trade, in stark contrast to large-scale layoffs of the past when unlucky staffers would typically gather to console one another and plan their next career moves.

In New York, employees were seen streaming into headquarters during the morning rush.

Goldman’s redundancy plans will be followed by a broader spending review of corporate travel and expenses, the Financial Times reported on Wednesday, as the U.S. bank counts the costs of a massive slowdown in corporate dealmaking and a slump in capital markets activity since the war in Ukraine.

The company is also cutting its annual bonus payments this year to reflect depressed market conditions, with payouts expected to fall about 40%.

Reporting by Sinead Cruise and Iain Withers in London, Selena Li in Hong Kong, Scott Murdoch in Sydney and Saeed Azhar in New York; Editing by Josie Kao and Christopher Cushing

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Volkswagen triggers landmark Porsche IPO plan, defying market doubts

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Attendees look at the 2022 Porsche 718 Cayman GT4 RS during the 2021 LA Auto Show in Los Angeles, California, U.S. November 17, 2021. REUTERS/Ringo Chiu

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HAMBURG/FRANKFURT, Sept 5 (Reuters) – Volkswagen (VOWG_p.DE) on Monday announced its intention to float sportscar brand Porsche, triggering what could become one of the world’s largest listings even as markets jitter over record inflation and a Russia-Europe energy standoff.

The carmaker published a so-called intention to float for an initial public offering in late September or early October to be completed by the end of the year.

The move was announced after VW’s supervisory board gave the go-ahead late on Monday. read more

Investors expect a valuation between 60-85 billion euros. At the high end of estimates, the IPO could be the largest in German history and the biggest in Europe since 1999, Refinitiv data showed.

“The Board of Management of Volkswagen AG today resolved, with the consent of the Supervisory Board, to pursue an initial public offering,” Volkswagen said.

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Reporting by Paul Carrel, Victoria Waldersee, Jan Schwartz; Emma-Victoria Farr, Christoph Steitz, Ilona Wissenbach in Frankfurt
Additional writing by Tom Sims; Editing by Matthew Lewis and Alistair Bell

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Emma-Victoria Farr

Thomson Reuters

Reports on European M&A with previous experience at Mergermarket, Bloomberg The Daily Telegraph and Deutsche Presse Agentur.

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Bed Bath & Beyond to cut jobs, close stores in bid to reverse losses

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Aug 31 (Reuters) – Bed Bath & Beyond Inc (BBBY.O) on Wednesday said it inked deals for more than $500 million in new financing and that it would close 150 stores, cut jobs and overhaul its merchandising strategy in an attempt to turn around its money-losing business.

Investors, however, remain concerned that the retailer’s plan, announced in a strategic update, will do little to improve Bed Bath & Beyond’s business as shares fell 25%. The retailer also announced a plan to raise money by issuing new shares.

The big-box chain – once considered a so-called “category killer” in home and bath goods – has seen its fortunes falter after an attempt to sell more of its own brand, or private label, goods. The COVID-19 pandemic, supply chain crunch and consumer pullback on shopping due to sky-high inflation also hit the chain’s sales.

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Bed Bath & Beyond forecast a bigger-than-expected 26% slump in same-store sales for the second quarter and said it would retain its buybuy Baby business, which it had put up for sale.

The efforts to sell buybuy Baby had been encouraged by GameStop Corp (GME.N) Chairman Ryan Cohen, the company’s biggest investor until this month when he sold out of his 9.8% stake, sending shares plummeting.

Once known for providing many shoppers with 20%-off coupons, Bed Bath & Beyond revamped its merchandise in recent years to focus on private-label products including its Our Table brand cookware. read more

The chain is now ditching that strategy, nixing three of its private label brands, and reprioritizing national brands with labels including Calphalon, Ugg, Dyson and Cuisinart underpinning that strategy, executives said on a conference call.

Executives said Bed Bath & Beyond is cutting about 20% of its corporate and supply chain workforce, and eliminating its chief operating officer and chief stores officer roles. The company has about 32,000 employees.

Top brass tried to reassure analysts that vendors were still supporting the company, a key indication of its long-term financial prospects. Suppliers will ask for more money up front or stop shipping goods if they believe retailers can no longer pay them.

Signage is seen at a Bed Bath & Beyond store in Manhattan, New York City, U.S., June 29, 2022. REUTERS/Andrew Kelly/File Photo

“As we have managed through our cash burn, we have seen changes in vendors we manage,” said Chief Financial Officer Gustavo Arnal, adding that the company is managing the situation “one by one.”

First-quarter sales plunged 25% and it lost $358 million, leading to the firing of its Chief Executive Officer Mark Tritton in June. The company hired Sue Gove, an independent board director, to replace him on an interim basis.

On Wednesday, Gove said the retailer was “continuing to see significant positive momentum” and intended to build its “deep heritage as a retailer.”

“While there is much work ahead, our road map is clear and we’re confident that the significant changes we’ve announced today will have a positive impact on our performance'” she said on a conference call.

The retailer also said it expanded an existing loan and received a new $375 million “first-in-last-out” loan, and would launch a stock offering of up to 12 million shares.

Arnal said that 50 to 60 stores will be closed in a “first wave” heading into the balance of Bed Bath & Beyond’s fiscal year, which ends in February. The company has about 900 stores.

“They are running out of cash and desperately need to raise cash just to keep the business going,” said Jim Dixon, equity sales trader at Mirabaud.

To improve its finances, the retailer said it would cut back on selling, general and administrative expenses by $250 million this year versus last year and rein in capital spending.

The company also estimates that comparable-store sales will drop 20% this year as it works through its transformation.

“We are broadly satisfied that the measures announced today … will ease the pressure on the company, allowing it to continue trading,” said Neil Saunders, GlobalData’s managing director.

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Reporting by Uday Sampath and Deborah Sophia and Bansari Kamdar in Bengaluru; Additional reporting by Siddharth Cavale, Jessica DiNapoli and Arriana Mclymore in New York;
Editing by Arun Koyyur and Jonathan Oatis

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France to pay $10 billion to take full control of EDF

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PARIS, July 19 (Reuters) – France’s government is offering to pay 9.7 billion euros ($9.85 billion) to take full control of EDF (EDF.PA), in a buyout deal that gives it a free hand to run Europe’s biggest nuclear power operator as it grapples with a continent-wide energy crisis.

The finance ministry said in a statement on Tuesday that the government would offer EDF’s minority shareholders 12 euros per share, a 53% premium to the closing price on July 5, the day before the government announced its intention to fully nationalise the debt-laden group.

EDF shares, which resumed trading on Tuesday after a one-week suspension pending details of the government buyout plan, had jumped 15% to 11.80 euros by 0836 GMT.

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The state already owns 84% of EDF, which has been dogged by unplanned outages at its nuclear fleet, delays and cost overruns in building new reactors, and power tariff caps imposed by the government to shield households from soaring electricity prices.

The war in Ukraine has deepened the crisis at the group, forcing it to buy electricity on the market at historically high prices and sell it at cheaper levels to its competitors.

France has said EDF’s nationalisation will increase the security of its energy reserves as Europe scrambles to find alternatives to Russian gas supplies.

Rising prices have squeezed energy suppliers across Europe, and earlier this month Germany moved to bail out Uniper, its biggest importer of Russian gas. read more

France, which would normally be exporting electricity at this time of the year, is currently importing from Spain, Switzerland, Germany and Britain, and the supply crunch is likely to worsen this winter. read more

“Nationalisation is ultimately the only way to save the company and ensure electricity production,” said Ingo Speich, head of sustainability and corporate governance at Deka Investment, which has a small stake in EDF. “This is a bitter but necessary step.”

A flag with the company logo of Electricite de France (EDF) and a French flag fly next to the EDF power plant in Bouchain, near Valenciennes, France, September 29, 2021. REUTERS/Pascal Rossignol/File Photo

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With rating agency S&P estimating EDF’s debt could reach close to 100 billion euros this year, a bondholder in the group said the proposed buyout was a welcome signal of support from the government.

However, far more needed to be done to stabilise the balance sheet, the bondholder added.

A banker with knowledge of the matter said that the state, which provided the bulk of a 3 billion euro capital increase for EDF in the spring, will likely have to inject more money soon.

EDF was listed on the Paris stock exchange in 2005 at 33 euros per share, so investors who bought the stock then would be nursing a big loss.

Still, analysts noted the government would only need to get 90% ownership of EDF to be able to delist it.

“We think the offer looks attractive and has high probability of success,” Citi analyst Piotr Dzieciolowski said in a note.

The buyout offer will be filed with the stock exchange regulator by early September. The French government aims to complete the process of delisting the group by the end of October, a finance ministry source said.

Sources told Reuters last week the government would pay close to 10 billion euros to buy the 16% of EDF it did not already own, once taking into account outstanding bonds and a premium for minority shareholders.

($1 = 0.9846 euros)

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Additional reporting by Dominique Vidalon, Elizabeth Pineau and Julien Ponthus in Paris, Carolyn Cohn in London; Writing by Silvia Aloisi; Editing by Jan Harvey

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Business

EXCLUSIVE Beijing gives initial nod to revive Ant IPO after crackdown cools-sources

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  • Ant aims to file preliminary prospectus as soon as July-sources
  • Ant needs CSRC’s guidance on timing of prospectus filing-source
  • Ant says there is no plan to relaunch its IPO-statement
  • Warburg Pincus valued Ant at $180 bln at end-March-source

HONG KONG, June 9 (Reuters) – China’s central leadership has given billionaire Jack Ma’s Ant Group a tentative green light to revive its initial public offering (IPO), two sources with knowledge of the matter said, in the clearest sign yet Beijing is easing its crackdown on the tech sector.

Ant, an affiliate of Chinese e-commerce behemoth Alibaba Group Holding Ltd (9988.HK), aims to file a preliminary prospectus for the share offering in Shanghai and Hong Kong as early as next month, the sources said, declining to be named due to the sensitivity of the matter.

The fintech giant will need to wait for guidance from the China Securities Regulatory Commission (CSRC) on the specific timing of the prospectus filing, said one of the sources.

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In a publicly released statement, Ant said there was no plan to relaunch its IPO, without elaborating. It did not respond to Reuters request for comment on whether it had received a green light from Beijing.

The company’s stock market listing was hastily shelved at the behest of Beijing in November 2020. At the time, it was slated to be valued at around $315 billion and planned to raise $37 billion, which would have been a world record.

“Under the guidance of regulators, we are focused on steadily moving forward with our rectification work and do not have any plan to initiate an IPO,” Ant said on its WeChat account late on Thursday.

Neither the CSRC nor China’s State Council Information Office, which handles media queries for central leaders, responded to Reuters’ request for comment.

Ant wants to keep the IPO revival plans low profile pending a formal announcement, after having attracted regulatory glare in its first attempt back in 2020 with the waves the offering created as the world’s largest ever equity float, a separate source with direct knowledge of the matter said.

Chinese authorities pulled the plug on the IPO and cracked down on Ma’s business empire after he gave a speech in Shanghai in October 2020 accusing financial watchdogs of stifling innovation.

The IPO’s derailment marked the start of a regulatory crackdown to rein in China’s huge homegrown technology sector, which spread to other industries, including property and private education, wiping billions off market capitalisations and triggering layoffs at some firms.

With its economy slowing in a politically sensitive year when Xi Jinping is expected to secure an unprecedented third term as party leader, Beijing is looking to loosen it grip on private businesses including tech giants to help it meet a growth target of 5.5%, something economists have said will be hard to reach given COVID-19 lockdowns. read more

“They are rolling back on their crackdown to counterbalance the lockdown they’ve had. Any data out of China lately has been dreadful because of lockdowns and the last thing they want to do is compound that issue. In the next three to six months we are likely to see China’s crackdown unwound,” said David Madden, market analyst at Equiti Capital in London.

A revival of the IPO may also mark a rehabilitation of sorts for Ma, who has been maintaining a low public profile since Beijing swooped.

EASING EFFORTS

Chinese Vice-Premier Liu He last month told tech executives the government supported the development of the sector and will back firms pursuing listings at home and abroad. read more

In another sign of Beijing’s softer stance, China’s ride-hailer Didi Global, which has been under a cybersecurity probe since last year, is in advanced talks to buy a third of a state-backed electric-vehicle maker, Reuters reported on Wednesday.

News of the talks comes after the Wall Street Journal reported on Monday that Chinese regulators are set to conclude their investigations into Didi , which could offer more hope to investors about its recovery. read more

Bloomberg reported earlier on Thursday that Chinese financial regulators had started early stage talks on a potential revival of Ant’s stock market debut, without mentioning a timeline. read more

The top securities regulator had established a team to reassess the share sale plans, Bloomberg reported.

The regulator later said in a statement it had not conducted any assessment or research work regarding an Ant IPO.

The U.S. listed shares of Alibaba, which owns nearly one-third of Ant, were down 7% after earlier rising as much as 7% in pre-market trading on the Bloomberg report.

U.S. private equity firm Warburg Pincus, a big investor in Ant’s 2018 private fundraising, lowered its valuation of Ant to about $180 billion at end-March from $221 billion one year earlier, a separate source said.

The regulators have directed Ant to restructure as a financial rather than tech firm, and sources and analysts have said the financial sector typically carries lower valuations.

Warburg Pincus declined to comment on Thursday.

“The size of Ant and the IPO will have to be smaller than what was planned in 2020 because the market conditions have changed and cannot be compared to now,” said Dickie Wong, executive director of Kingston Securities in Hong Kong.

U.S.-listed shares of Chinese tech and e-commerce firms including Didi and Alibaba have gained this week on hints Beijing’s one-and-a-half year long crackdown may be easing.

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Reporting by Julie Zhu; Additional reporting by Medha Singh, Abinaya Vijayaraghavan, Scott Murdoch, Kane Wu and Vidya Ranganathan; Editing by Sumeet Chatterjee, Carmel Crimmins, Elaine Hardcastle and David Evans

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U.S. SEC chief unveils plan to overhaul Wall Street stock trading

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WASHINGTON/NEW YORK, June 8 (Reuters) – The top U.S. securities regulator on Wednesday proposed rule changes to transform how Wall Street handles retail stock trades after the meme stock mania last year raised questions about whether mom-and-pop investors were getting the best price.

The plan, unveiled by U.S. Securities and Exchange Commission chair Gary Gensler, would require trading firms to directly compete to execute trades from retail investors to boost competition.

The Wall Street watchdog plans to scrutinize the controversial payment for order flow (PFOF) practice, in which some brokers, like TD Ameritrade, Robinhood Markets and E*Trade, are paid by wholesale market makers for orders.

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“I asked staff to take a holistic, crossmarket view of how we could update our rules and drive greater efficiencies in our equity markets, particularly for retail investors,” Gensler told an industry audience on Wednesday.

He said the new SEC rules would mandate market makers disclose more data around the fees these firms earn and the timing of trades for the benefit of investors.

Gensler’s announcement, the biggest shake-up of U.S. equity market rules in over a decade, will likely lead to formal proposals this fall. The public can then weigh in on them ahead of an SEC vote to adopt them.

The intended changes would fundamentally alter the business model of wholesalers. They could also affect brokers’ ability to offer commission-free trading to retail investors. Reuters first flagged the reforms in March. read more

PFOF came under regulatory scrutiny last year when an army of retail investors went on a buying spree of “meme stocks” like GameStop and AMC, squeezing hedge funds that had shorted the shares. Many investors purchased shares using commission-free brokers such as Robinhood.

The new rules would enhance order-by-order competition, including via potential “open and transparent” auctions, aimed at providing investors better prices. They would include an agency-specific definition of so-called best execution for equities and other securities to ensure broker-dealers and investors benefit from more detail around the procedural standards brokers must meet when handling and executing customer orders.

They would require broker dealers and market centers to disclose more data around order execution quality to benefit investors, including a monthly summary of price improvement and other statistics, Gensler said.

The rules would also seek to shrink the minimum pricing increment or so-called tick size to better align with off-exchange activity and harmonize the tick size to ensure all trading occurs in the minimum increment.

WHOLESALE OVERHAUL

The proposed rule changes will include an SEC definition of “best execution” requirements that would force retail brokers to send their customers’ orders to auctions, run by exchanges or off-exchange trading venues, which would allow market participants to compete to trade against the orders, the sources said.

Currently, retail brokerages can send customer orders directly to a wholesale broker to be executed, as long as the broker is matching or bettering the best price available on U.S. exchanges. Large market-makers typically improve on the best price by a fraction of a cent. Gensler has criticized this model as limiting competition for retail orders.

The rules would require retail brokers to send PFOF customer orders to the wholesaler offering the best deal, rather than the one that pays the most.

This would fundamentally alter the business model of wholesalers, which can make more money by executing retail investor orders internally than they do on public exchanges, where they might find themselves trading with other sophisticated trading firms or institutional investors.

Gensler told Reuters in March he wants to ensure brokers execute orders at the best possible price for investors – the highest price for when an investor is selling, or the lowest price if they are buying.

“It’s great to see the SEC taking a holistic approach to this problem – there’s not a single answer, we need changes to different parts of the market,” said Dave Lauer, CEO of financial platform Urvin Finance.

“We need an order-by-order standard for best execution and open competition for order flow in order to provide the best outcomes for retail investors. This will force greater competition, and could help to end the off-exchange oligopoly that has controlled that market for too long,” he added.

Investor advocates want to boost exchanges’ competitiveness to improve the reliability of the national pricing benchmark, known as the National Best Bid and Offer (NBBO).

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Reporting by Katanga Johnson in Washington and John McCrank in New York
Editing by Matthew Lewis and Carmel Crimmins

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EXCLUSIVE Credit Suisse weighs options to strengthen capital – sources

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The logo of Swiss bank Credit Suisse is seen at its headquarters at the Paradeplatz square in Zurich, Switzerland October 1, 2019. REUTERS/Arnd Wiegmann/File Photo

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ZURICH, May 30 (Reuters) – Credit Suisse (CSGN.S) is in the early stages of weighing options to bolster its capital after a string of losses have eroded its financial buffers, two people with knowledge of the matter told Reuters.

The size of the increase would be likely to exceed 1 billion Swiss francs ($1.04 billion), but this has not yet been determined, said one of the people, who declined to be named because the deliberations are still internal.

The cash injection would help Switzerland’s second-biggest bank to recover from billions of losses in 2021 and a series of costly legal headaches.

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Selling shares to some of its major existing investors is the preferred option, but Credit Suisse has not ruled out tapping all shareholders, this person said.

A sale of a business, such as Credit Suisse’s asset management division, is also a possibility, the other person said. The bank had not yet decided on any potential action, they said. Any transaction was envisaged for the second half of this year.

“Credit Suisse is currently not considering raising additional equity capital,” the bank said in a statement.

“The Group is robustly capitalised with a CET1 ratio of 13.8% and a CET1 leverage ratio of 4.3%. Asset Management is an essential part of our group strategy presented last November, with four core divisions.”

The CET1 ratio is a key gauge of a bank’s financial strength.

DEBT DOWNGRADES

Credit Suisse is reeling from billions in losses racked up in 2021 via failed investments, plus the impact of multiple legal cases, including a Bermuda court case that could cost around $600 million. read more

The bank has been trying to reform its risk management culture and also turn the page on a series of scandals, which have prompted several waves of management shake-ups, abrupt departures, and internal and external investigations.

The bank’s shares have fallen by more than a fifth in the past year.

Fitch and Standard & Poors both downgraded their debt ratings for Credit Suisse this month. read more

One of the sources said Swiss financial watchdog FINMA’s annual assessment of big Swiss banks had marked Credit Suisse at 4, unchanged from last year, the lowest possible grade.

One of the watchdog’s main concerns was capitalisation at group level, this source said.

FINMA declined to comment.

The deliberations over a capital boost come only a year after the Swiss bank raised around 1.75 billion Swiss francs from investors via mandatory convertible notes. read more

In April, Credit Suisse had played down the need for fresh capital even as it reported a first-quarter loss that intensified its financial pain. read more

Credit Suisse executives said at the time capital could remain constrained over the next six months as the bank continues to make significant outlays towards compliance and risk, but a source familiar with the matter said a capital increase was not under consideration at the time.

The bank’s core capital ratio weakened to 13.8% at the end of the first quarter 2022 from 14.4% at the end of 2021.

But a new capital increase would bolster Credit Suisse’s balance sheet and also send a positive signal. If well-known investors provided the bank with new cash, this could be seen as a sign of confidence, one of the sources said.

($1 = 0.9572 Swiss francs)

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Reporting by Oliver Hirt. Editing by Jane Merriman

Our Standards: The Thomson Reuters Trust Principles.

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US

Russia to pay Eurobonds in roubles as long as reserves remain blocked

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A view shows Russian rouble coins in this illustration picture taken March 25, 2021. REUTERS/Maxim Shemetov/Illustration/File Photo

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LONDON, April 6 (Reuters) – Russia edged closer to a potential default on its international debt on Wednesday as it paid dollar bondholders in roubles and said it would continue to do so as long as its foreign exchange reserves are blocked by sanctions.

The United States on Monday stopped Russia from paying holders of its sovereign debt more than $600 million from reserves held at U.S. banks, saying Moscow had to choose between draining its dollar reserves and default. read more

Russia has not defaulted on its external debt since reneging on payments due after the 1917 Bolshevik Revolution.

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“This speeds up the timeline around when Russia runs out of space on willingness and ability to pay,” one fund manager holding one of the bonds due for payment on Monday said.

The Kremlin said it would continue to pay its dues.

“Russia has all necessary resources to service its debts… If this blockade continues and payments aimed for servicing debts are blocked, it (future payment) could be made in roubles,” Kremlin spokesman Dmitry Peskov said.

With a total of 15 international bonds with a face value of around $40 billion outstanding, Moscow has managed to make a number of foreign exchange coupon payments on its Eurobonds before the United States stopped such transactions. read more

Russia’s finance ministry said on Wednesday it had to pay roubles to holders of its dollar-denominated Eurobonds maturing in 2022 and 2042 as a foreign bank had refused to process an order to pay $649 million to holders of its sovereign debt.

The finance ministry said the foreign bank, which it did not name, rejected Russia’s order to pay coupons on the two bonds and also did not process payment of a Eurobond maturing in 2022.

Russia’s ability to fulfil its debt obligations is in focus after sweeping sanctions in response to what Moscow calls “a special military operation” in Ukraine have frozen nearly half of its reserves and limited access to global payment systems.

‘ARTIFICIAL SITUATION’

JP Morgan, which had been processing payments on Russian sovereign bonds as a correspondent bank, was stopped by the U.S. Treasury from doing for the two payments due on Monday, a source familiar with the situation said. read more

JP Morgan (JPM.N) declined to comment.

Russia may consider allowing foreign holders of its 2022 and 2042 Eurobonds to convert rouble payments into foreign currencies once access to its forex accounts is restored, the finance ministry said.

Until then, a rouble equivalent of Eurobond payments aimed at bondholders from so-called unfriendly nations will be kept in special ‘C’ type accounts at Russia’s National Settlement Depository, the ministry added.

Russia has a 30-day grace period to make the dollar payment, but if the cash does not show up in bondholders account within that time frame it would constitute a default, global rating agencies have said.

Russia dismissed this as being a default situation.

“In theory, a default situation could be created but this would be a purely artificial situation,” Peskov said. “There are no grounds for a real default.”

Bondholders had been tracking bond payments since sweeping sanctions and counter measures from Moscow which have severed Russia from the global financial system.

Russia on Wednesday paid coupons on four OFZ treasury rouble bonds. These were once popular for their high yields among foreign investors, who are now blocked from receiving payments as a result of sanctions and Russian retaliation.

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Reporting by Reuters; Editing by Mark Potter, Hugh Lawson and Alexander Smith

Our Standards: The Thomson Reuters Trust Principles.

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