What do you buy the person who has everything? How about bitcoin, the cryptocurrency that has hardly been out of the headlines in the past few weeks? Of course there is a problem, and that is that a surge of interest has seen its price increase by a factor of 17 this year and by more than 15% last week alone.
But if you are really determined to take part in the volatility, there are other ways. Part of last week’s interest came because bitcoin effectively entered the mainstream, with the Chicago Board Options Exchange launching contracts allowing investors to bet on the future price of the currency. This weekend, Chicago-based CME follows suit, albeit with higher margin requirements – how much investors have to set aside as collateral – than its rival’s.
But if ever there were a case of caveat emptor, it’s here. There have been a number of comparisons with 17th century tulipmania, and warnings of a bubble that could easily burst. Howard Davies, chairman of the Royal Bank of Scotland, JP Morgan’s Jamie Dimon, the European Central Bank and America’s Securities and Exchange Commission have all expressed varying degrees of scepticism, with several calls for increased investor protection. So it’s probably not a good Christmas present for any of them.
Little rest for Carney after Brexit stress test
Even in the run-up to the festive celebrations, Mark Carney remains busy. After last week’s interest rate meeting and a weekend trade trip to China, the Bank of England governor is up before MPs at the Treasury select committee on Wednesday to discuss last month’s financial stability report.
Carney, along with deputy governor Sam Woods and two members of the financial policy committee, will be quizzed about the report, the latest health check on the state of Britain’s banks. It concluded that high street banks would be able to withstand a disorderly Brexit – unless another crisis happened at the same time.
The Bank’s health check tested for resilience if Britain’s GDP fell by 4.7%, unemployment rose to 9.5%, and residential property prices dropped by 33%. Other factors included sterling plunging and interest rates soaring to 4%. All banks passed these stress tests, although Royal Bank of Scotland and Barclays only just struggled over the necessary hurdles.
The Bank had also been keen to put across its view that there should be a Brexit transition deal by Christmas. The way things are going, MPs might legitimately ask on Wednesday which Christmas it meant.
LSE still reeling from angry exchanges
A bust-up at the London Stock Exchange is set to come to a head this week: investor TCI wants to oust the company’s chairman, Donald Brydon, over his handling of the departure of chief executive Xavier Rolet.
To recap: the LSE said in October it was looking for a successor to Rolet after it emerged he would leave by the end of next year. But a surprise statement a month later said he would in fact step down with immediate effect, at the board’s request. TCI had wanted him to stay on and Brydon to go, and had put forward resolutions to that effect. After the news of Rolet’s immediate departure, it gave up on getting him to stay but is pressing on with its demands for Brydon’s head.
Shareholder advisory group Pirc is not convinced by the LSE’s actions. Pirc said: “[Rolet’s] sudden departure requires further transparency and information. The lack of disclosure is troubling and demonstrates substandard corporate governance … Donald Brydon has therefore failed to maintain good governance standards.”
But Brydon looks likely to survive the vote. TCI holds 5% of the LSE but the Qatar Investment Authority, a 10.37% shareholder, is backing the board. Brydon is due to step down in 2019 in any case, but you couldn’t rule out a repeat performance next year.
