Markets and dealers fear Jeremy Corbyn, SEC and authorities fear no-deal Brexit

The SEC’s chairman looks at a no-deal Brexit as cause for market conservatism, whereas the banks and investors fear a destructive Jeremy Corbyn government. The latter is certainly most alarming when looking at the proposed policies.

This week’s research in central London has revealed an interesting dichotomy, that being the difference of opinion between capital markets firms and that held by government authorities with regard to what factors are likely to affect investors and retail customers of FX and multi-asset trading and invesment firms the most.

Investors, traders and financial institutions as well as companies providing fintech and financial services in the non-bank electronic trading sector are unsurprisingly very afraid of the possibility of Labour leader and hard-left socialist Jeremy Corbyn attaining power in the United Kingdom with his anti-business cabinet who would unreservedly introduce extremely detrimental policies to London’s financial services industry.

A Labour government was named as the top concern by 28% of savers in a survey from online stockbroker AJ Bell this week, the only bigger threat being a no-deal Brexit which was cited by 34% of investors as the top risk of 2019.

On the government and regulatory side, Jay Clayton, Chairman of the US Securities and Exchange Commission (SEC) has said that both Brussels and London must pledge to prevent market disruption if Britain leaves the EU without a deal.

AJ Bell’s report said: “Predictably Brexit is the biggest worry, with a third of investors putting that at the top of their list of biggest stock market concerns in 2019, followed closely by a Labour government coming to power.”

Under a quite frankly terrifying leadership by Jeremy Corbyn and his Bolivarian shadow cabinet of hard line 1970s trade unionists, it is feared Labour could introduce steep taxes on share trading, property and income. The party has also threatened to confiscate 10% of every business with more than 250 staff – hitting the value of savings built up in pension funds, ISAs and other investments.

In September this year, FinanceFeeds reported that if the Labour Party is elected, Mr McDonnell would become Chancellor of the Exchequer, thus responsible for the business and fiscal budget policy of the entire nation. A hard-left trade union firebrand holding the purse strings could not be a more frightening prospect.

Yesterday evening, the Labour Party demonstrated this disdain for enterprise once again by revealing a plan to force companies to put 10% of shares into so-called “inclusive ownership funds”. Employees in any capacity could receive up to £500 a year from the funds, according to the policy. However, any additional revenues “will be transferred back to our public services as a social dividend”.

The Labour Party has said the funds would be mandatory for all companies with 250 or more employees, covering at least 40 per cent of the private sector workforce. “Workers effectively employed by an employer” would also be included in a bid to avoid “dummy contracting-out”.

In a highly entrepreneurial and technology led business which relies on the absolute principles of capitalism such as the FX industry and its associated service providers, a mandatory award of 10% of shares to employees would leave the door open for complete control of the firm’s management by its employees, resulting in the possibility of founders, C-level executives and stakeholders being taken to task and overruled by their own staff.

As far as ownership is concerned, 10% may appear a small stake, however as any business owner realizes, any form of shareholding means almost total control, as all shareholders need consulting when it comes to corporate policy, and 10% is a large enough percentage for vetoing rights over pretty much everything.

Strength in numbers comes into it also, just as it did in the dark, austere 1970s. In this new scenario, a management board may consist of perhaps five to ten individuals, largely because our industry is highly modern and many firms are less than 15 years old, relying on lean resources and an entrepreneurial leadership ethos. Thus, if a management board totals five to ten in number, and the workforce of such a company is fifty to one hundred, that fifty to one hundred would collectively hold 10% of the firm, and would be able to instigate its own internal ‘union’ in order to push its agenda through against the management.

It means that 10% of the database of a retail FX firm would be owned by sales and operational staff, that being in many cases the most valuable asset a company holds. Who’s to stop a team of one hundred who collectively own 10% of a company vetoing any control over the leads, and then moving that to other companies before joining said other company only to receive 10% of that company’s stock thereon in?

Any allusion to the proposed massive £500billion spending spree by a socialist government would cause the national debt to rocket and could see investors flee. A senior source at a major European bank said that clients from as far away as China told the Daily Mail today that they are raising concerns over what Labour might do in power.

The banker said: ‘Serious foreign investors are watching this with trepidation. People want to understand the possibility of their assets being seized or tax regimes being put in place that are uncommercial.’

The third biggest worry raised by AJ Bell customers was a continuing trade war between the US and China, which is widely expected to trigger a global slowdown. The fourth and fifth top fears were rising interest rates and a slump in big technology stocks such as Amazon and Google.

Looking at it from a government standpoint and especially one from the European side, Swiss bank Credit Suisse is said to have urged investors to avoid Britain until there is more certainty about Brexit. Senior staff have reportedly been contacting clients to warn that many customers have already taken their cash abroad, and urging them to do the same.

One banking insider said many foreign firms see the UK as uninvestable at present due to Brexit turmoil. They said delays to a vote on Prime Minister Theresa May’s Brexit deal are making the problem worse.

It is clear that Europe holds no real trade advantages for the UK, and that Brexit will free up tremendous opportunities in international capital markets participation that will propel Britain into an even more powerful global position than it already is in.

Europe’s economy is archaic and floundering, the European interest being to keep Britain as a subservient member, paying into the coffers of the deficient economies that plague Europe and to continue to be incumbered by appalling anti-globalist bureaucracy that hampers future relationships with Singapore, Hong Kong, China, the Americas, Africa and the Middle East. In short, without Europe, Britain saves billions in wasted and squandered money, and gains a massive freedom in terms of global partnerships.

Read this next

Digital Assets

Bloomberg, Hashdex expect SEC’s imminent approval of Bitcoin ETFs

Hashdex, an asset manager among the 13 contenders for launching a spot Bitcoin exchange-traded fund (ETF) in the United States, anticipates the debut of the first spot Bitcoin ETF by the second quarter of 2024, with a spot Ether ETF expected to follow.

Industry News

Witness the intensifying competition as UF AWARDS MEA 2024 nominations persist!

The countdown is on, with less than two weeks remaining to nominate outstanding brands for this prestigious event, culminating in the highly anticipated ceremony during iFX EXPO Dubai 2024 in January.

Retail FX

Saxo Bank’s FX volumes rise despite overall lackluster turnover

As many currency markets saw a relatively active period in November, Copenhagen-based Saxo Bank reported its monthly metrics, which showed a moderate rebound month-over-month.

Market News

S&P 500 Rally Faces Abrupt Halt: Analysts Assess Market Signals

The S&P 500, a benchmark index tracking the stock performance of 500 of the largest US companies, has ignited a flurry of discussions among financial analysts due to its recent performance.


TraderEvolution at FMLS:23: Andrew Saks on how brokers can go multi-asset

In an insightful interview with FinanceFeeds, Andrew Saks of TraderEvolution Global discussed the industry’s evolution towards multi-asset trading. He highlighted challenges in integrating diverse asset classes and the importance of API connectivity. Andrew also touched on emerging trends in options, futures, and fixed income, underscoring the need for adaptable trading technology in today’s dynamic market.

Market News

Powell’s Pivot Navigating the Dynamics of USD, Interest Rates, and Market Expectations

Federal Reserve Chair Powell has signalled a decisive end to the cycle of interest rate hikes for the USD.

Market News

Inflation Concerns, Policy Divergence, and Market Sentiments in the UK

Amidst the recent global revaluation of inflation, Megan Greene, a steadfast MPC member, advocates for a proactive stance. Addressing concerns in Leeds, she calls for an upward adjustment of the Bank of England’s policy rate, cautioning against the potential risks of a too-conservative approach. Greene questions the assumed restrictiveness in the current monetary stance, suggesting it might be less robust than perceived, especially in scenarios of persistent inflation.

Digital Assets

JPMorgan’s stablecoin ventures into interbank transactions

JPMorgan Chase & Co.’s proprietary digital token, JPM Coin, is set to expand its use case by facilitating interbank transactions on Partior, a blockchain ledger developed in collaboration with DBS Bank, Temasek, and Standard Chartered.

Retail FX

Interactive Brokers’ client base surges past 2.5 million

Interactive Brokers LLC (NASDAQ:IBKR) saw 1.89 million daily average revenue trades, or DARTS, in November 2023 compared to 1.93 million transactions in the prior month. The figure is three percent lower on a yearly basis, and also dropped slightly from a month earlier.