Latest news with #DanielleEcuyer
ABC News
2 days ago
- Business
- ABC News
Two biggest economies meet to negotiate
Samantha Donovan: The world's two biggest economies, the US and China, are again holding talks in an attempt to end the bitter trade war that threatens to derail the global economy. The American president, Donald Trump, launched heavy tariffs on Chinese imports after returning to the White House earlier this year. And China, of course, responded with its own tariffs on US imports. Our business correspondent David Taylor has this report on how the talks are going. David Taylor: Officials from China and the US have been sitting at the same table, figuring out how to co-exist in a highly competitive global economy. FNArena financial commentator Danielle Ecuyer. Danielle Ecuyer: Well, that's really interesting because we have some rather big trade talks going on at the moment in London. David Taylor: Talks at Lancaster House, a UK government mansion, were held yesterday and are set to resume Tuesday morning local time. After agreeing a 90-day pause on the heaviest of their tariffs, Washington and Beijing are trying to strike a deal for beyond that time. Danielle Ecuyer: Both of those countries have a lot to lose from these tariffs, whether it's America losing access to the rare earths, which they need for the defence industry, for the tech industry, or whether it's China, which is really encountering a huge collapse in their exports, and also the fact that they're experiencing quite heavy deflation, which is also a negative. So I think it's probably mutually beneficial that these trade talks come to at least some form of resolution around some of these major issues. David Taylor: Since the talks in Geneva, the US has accused China of moving too slowly on its commitments, particularly around rare earth shipments. Rare earths have become indispensable in the manufacture of high-tech products, including smartphones, wind turbines, electric vehicles, flat screens, lasers, as well as missiles, fighter planes and satellites. Justin Wolfers: A critically important issue for the United States is access particularly to rare earth minerals. David Taylor: University of Michigan professor Justin Wolfers is watching the talks carefully. Justin Wolfers: Trump says the Chinese have slow-walked that access. I don't have dirt under my fingernail, so I couldn't tell you one way or the other. It seems utterly plausible in the context of the history of that relationship that they would have done that. The point is, outside of the four corners of the agreement, each feels aggrieved with the other when they just had a meeting to sort out their differences. David Taylor: Just on that, though, the US Commerce Secretary Howard Lutnick described the talks between China and the United States in Britain early Australian time today as, quote, "fruitful". What do we take from that? Does that matter? Does that mean anything? Justin Wolfers: Here's how you figure this out. If nothing happened, he would have said they were fruitful, and if a lot happened, he would have said they were fruitful. So therefore, the fact that he said they were fruitful tells you nothing. David Taylor: US President Donald Trump put out a positive spin on the talks, saying that they were going well, and he was, quote, only getting good reports from his team in London. We're doing well with China. China's not easy, Trump said, offering no details on the substance of the discussions. But as Justin Wolfers points out, so far there's been little to no progress at all in terms of trade negotiations between the US and its major trading partners around the world, since he unleashed heavy tariffs on so-called Liberation Day. Justin Wolfers: I mean, they're at zero right now. One, if you're a very, very generous grader and include a non-binding agreement with the Brits that the Americans may have already breached. So they're still saying we're here to make deals. It looks very likely that the 90th day will come, and they'll have between fewer than a dozen deals and quite likely zero. David Taylor: The Australian dollar continues to hold its own amid the trade dramas, currently trading around 65 US cents. Samantha Donovan: David Taylor reporting.
ABC News
08-05-2025
- Business
- ABC News
Macquarie Bank's dodgy trading may be tip of 'iceberg' for industry motivated by ‘greed'
Several sources have told the ABC that financial market participants regularly circumvent the law to improve the "bottom line", motivated by "greed". "In the minds of the people doing it, it's probably not consciously 'we're going out to break the system' or be bad but financial people are, by their nature, innovative," professional investor and writer Danielle Ecuyer said. "The motivation of greed — that's humanity, that's the way it works. "If there's a more simple way to get to an optimal bottom line then they will probably pursue it. "You see it in financial products that constantly come to the market and the industry will always look for an easier way, a better way to do something that avoids the rules." Australia's finance industry is riddled with dodgy transactions, according to sources who have spoken with the ABC. ( ABC: Sharon Gordon ) Ms Ecuyer said the continual evolution of the industry posed a problem for regulators. "I think it's a case of regulators constantly chasing their tails," she said. Macquarie Bank in hot water Australia's biggest investment bank has been caught misreporting hundreds of thousands of financial transactions. "[Investment banks] dream up and trade and structure products for clients who have an interest in over-the-counter options solutions and maybe futures solutions as well," investment analyst Henry Jennings said. Australia's biggest investment bank, Macquarie Bank, has been caught misreporting hundreds of thousands of financial transactions. ( AAP: Dan Himbrechts ) Over the counter, or OTC derivatives, are financial contracts traded directly between two counterparties, and not via an exchange like the ASX or Wall Street. What's their purpose? Some of the big electricity users in this country — such as the big aluminium producers — want to lock in the prices they pay for energy. They can do this via a financial futures contract. Macquarie Bank facilitates these transactions. Photo shows Macquarie Group headquarters, Sydney Investment bank Macquarie is hit with additional licence conditions as the corporate regulator slams "multiple and significant compliance failures". Mr Jennings used to run Macquarie Bank's derivatives trading desk in the late 1990s. "Macquarie Bank would then structure a product for, say, for example, Alcoa, that would enable them to ensure they get electricity at the price they've agreed, and they would on-sell that contract perhaps, or even take the position themselves, which would given them exposure to any upside on that pricing structure," he said. To put it at a retail level, it would be like a households calling Macquarie and saying: "We'd prefer to have electricity at $10 a quarter," and they call Macquarie and enter a contract with the electricity wholesaler and lock that price in for you. "So, what would happen then is that if the future price of electricity was $8 instead of $10 then obviously you're paying a little bit over," Mr Jennings said. "If the price went to $20 you'd still be locked in at $10, and anyone who bought that contract from you at [the] $10 level would then benefit from the upside in that electricity price rise." In September 2024, ASIC slapped Macquarie Bank with a record $4.995 million fine for failing to prevent suspicious orders being placed on the electricity futures market. ASIC commissioner Simone Constant suggested on Wednesday that little has changed after that intervention, saying today: "We were particularly disappointed that Macquarie failed to prevent 11 suspicious orders being placed on the electricity futures market via Macquarie terminals shortly after ASIC had referred similar failures to the Markets Disciplinary Panel." "Our intervention underscores our concern with the recurrent nature of Macquarie's failures, which were caused by ineffective supervision and weak compliance and control management," Ms Constant said. ANZ pulled over by corporate cop Macquarie Bank is not the only bank in hot water. The ANZ Bank has been rocked by allegations that its traders manipulated the bond rate during a $14 billion bond raising for the federal government's debt agency. It's alleged the ANZ Bank sought to raise bond yields by trading in what is called the "futures market", which is essentially a market that allows traders to bet on future interest rate moves. The ANZ Bank has also been rocked by allegations of traders manipulating bond rates during a $14 billion raising for the federal government. ( ABC News: Keana Naughton ) "Those bets also influence the reference rate that is used to set the price of new bonds," University of New South Wales banking and finance researcher Associate Professor Mark Humphery-Jenner said. A reference rate is an interest rate benchmark used to set other interest rates. "The government looks to the futures rate to assess what return the market requires on its debt and to set the coupon [interest] rate on the bonds it issues," Dr Humphery-Jenner said. "If that futures rate climbs, then so too does the coupon rate on the government's new bond issues. "This increases the government's total interest bill. " ANZ is alleged to have manipulated futures yields higher, enabling it to buy bonds from investors at a low price, " Bond prices move inversely to their interest rate. Banking royal commission's dark shadow The Royal Commission into Misconduct into the Banking, Superannuation and Financial Services Industry, was established in 2017. Led by Commissioner Kenneth Hayne, it investigated misconduct within the banking, superannuation, and financial services sectors. There were concerns, however, that too few recommendations from the inquiry were implemented. The Albanese government legislated the Financial Accountability Regime (FAR) in September 2023. This completed the final major recommendation to government made by the banking royal commission. The FAR replaced the Banking Executive Accountability Regime by imposing tough new accountability obligations on banks, insurers, and superannuation funds. The FAR ensures that these institutions clearly identify individuals who will be held accountable for the actions of the organisation. Risk of widespread suspicious trading in finance industry Dr Humphery-Jenner is concerned "suspicious transactions" in the finance industry remain widespread. "There's certainly the risk of it," he said. "How large that is — potentially there could be more illicit or illegal transactions underneath that iceberg. "For stocks there are often automated programs that will look for suspicious or very odd transactions — particularly around market announcements — however, in this particular case, we're looking at over-the-counter derivatives where there's a lot less of that type of automated screening. " So, absolutely there's a risk of [widespread dodgy financial transactions] which is why ASIC really wants to get that compliance in order. " Macquarie Bank released a statement responding to ASIC's action. "Macquarie Bank takes its role as a licensed entity extremely seriously, including the importance of ensuring the integrity of the markets in which it operates and learning from instances where compliance has been inadequate," the bank said.
