EU Bonuses, Australian Banks, Nasdaq OMX: Compliance

Bonus curb workarounds being developed by banks including HSBC Holdings Plc and Lloyds Banking Group Plc will be scrutinized by European Union regulators for breaches of the bloc’s rules.

Banker pay limits approved last year by the European Union that ban bonuses worth more than twice fixed pay are being put to the test by new remuneration structures at lenders. Some U.K. banks are paying staff partly through “allowances” that can vary year to year and aren’t counted as variable pay.

Andrea Enria, chairman of the European Banking Authority, said in an interview in Helsinki yesterday that new guidelines will be issued by the end of this year.

Lawmakers campaigned for the bonus curbs to clamp down on the gambling culture they blamed for triggering the 2008 financial crisis. The ban on bonuses of more than twice fixed pay is set to take effect next year.

Compliance Policy

High-Speed Trading Faces New Regulation From SEC, White Says

U.S. Securities and Exchange Commission Chair Mary Jo White unveiled the regulator’s most sweeping plan yet for reining in high-frequency trading and monitoring dark pools and other secretive trading practices in the world’s largest equity market.

Proprietary traders who use computers to buy and sell stocks in milliseconds would have to register with the SEC under recommendations made public yesterday by White in New York.

Operators of dark pools, broker-owned venues that compete with exchanges and don’t publish bids and offers, would have to provide the regulator with their rules for matching buyers and sellers, White said.

The SEC is aiming to bring more transparency to markets and address claims of unfair advantages held by traders who have been blamed for market volatility. The agenda outlined yesterday could affect stock exchanges, brokerages and a class of proprietary traders who have so far escaped oversight.

High-frequency trading has also drawn scrutiny from the Commodity Futures Trading Commission, which previously said it is considering regulations, and law enforcement, prompting investigations.

Compliance Action

Australian Investors Sell Bank Stocks Before Capital Rules

Australian investors cut their stock holdings in the nation’s three largest banks to a six-month low in May as new capital rules diminished the likelihood of increased dividends.

Domestic institutional and individual shareholders trimmed their stakes in Commonwealth Bank of Australia, National Australia Bank Ltd. and Westpac Banking Corp. by a mean of 4.5 percentage points this year through June 3, taking their average holding in the three to 47 percent, according to data compiled by Bloomberg.

The Australian regulator outlined additional capital requirements in the past six months to comply with global Basel regulations.

Spokesmen for the banks declined to comment beyond their most recent filings or public statements.

KCG Holdings Code Theft Said to Be Probed by N.Y. Prosecutor

An alleged theft of computer code from KCG Holdings Inc., a firm that specializes in high-frequency trading, is under investigation by New York prosecutors, a person familiar with the matter said.

Manhattan District Attorney Cyrus R. Vance Jr. is looking into allegations made by lawyers for the New Jersey-based automated market maker, said the person, who requested anonymity because the matter is private. Vance’s office declined to comment on the matter.

KCG was known as Getco LLC before transforming itself last year by purchasing broker-dealer Knight Capital Group Inc.

“KCG is committed to safeguarding the integrity of the firm’s intellectual property and cooperates fully with criminal and regulatory authorities,” Sophie Sohn, a spokeswoman for the firm, said yesterday in an e-mailed statement, declining to comment further.

The probe was reported earlier by the Wall Street Journal.


Nasdaq OMX Commodities Seeks Permanent Exemption From Bank Rules

Nasdaq OMX Group Inc. is seeking permanent exemption for its members from Mifid rules on bank guarantees when the current one runs out in March 2016, Fredrik Voss, vice president for Nasdaq OMX Commodities AS, said at a conference in Stockholm.

The Markets in Financial Instruments Directive is a European Union law that integrates financial industry rules across the participating nations to increase business activity and competition.

Dijsselbloem Says ECB Can’t Solve All Europe’s Problems

Eurogroup Ltd. President and Dutch Finance Minister Jeroen Dijsselbloem spoke in London about the European elections, banking regulation and European Central Bank monetary policy. He spoke with Tim Adams at the Institute of International Finance’s Spring Membership Meeting.

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