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TRADITIONAL FOREIGN EXCHANGE MODELS COSTING UK BUSINESSES MILLIONS PER YEAR IN COMMISSION RATES

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Flat rate, low fee FX set to shake up the status quo

Research released by freemarketFX reveals that although there is an increase in innovation in the foreign exchange (FX) services available to businesses, 70 per cent could still be paying significantly over the odds for their transactions (0.5 per cent or higher), with the majority not realising they could get a cheaper deal. 72 per cent of those surveyed by the peer-to-peer currency exchange provider believed that the rates they pay for FX are either ‘fair’ or ‘inexpensive’, despite the average fee being estimated at 0.8% on transactions.

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The research also found that as international expansion increases, 83 per cent of UK businesses believe their FX transaction volume has increased in the last five years – and 81 per cent believe it will continue to increase over the next three years. As far as the service level businesses receive on their FX is concerned, 84 per cent believe technology is increasingly enabling alternative offerings to further improve their financial services.

Alex Hunn, CEO freemarketFX, explains, “The increase in FX volume suggests that currency exchange fees are going to become a bigger consideration in budgets. As margins come under pressure, CFOs need to prioritise cost cutting wherever possible and one of the most obvious places to start is cutting the amount they pay on converting the money they are making.

Many alternative FX providers are establishing new models that optimise technology to cut out a large part of the in-built cost of currency provision. This allows them to pass the savings on to the customer. Commissions as low as 0.2% on currency transactions are now available, and better value will become the norm in future. The FX market needs to continue to innovate and harness the new technologies available in order to up its game and lower transaction fees.”

Even with an increase in the awareness of alternative FX services, such as peer-to-peer currency exchanges, the majority of companies are still using traditional providers such as banks (83 per cent) and brokers (16 per cent). Only one per cent of those surveyed are currently adopting alternative models, despite 84 per cent stating they are prepared to use alternative providers in the future. Businesses also still accept the premise that inequality in the market is fair, as a whopping 90 per cent believe foreign exchange should be discounted based on the size of the transaction.

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Hunn continues, “Traditional views on foreign exchange are costing UK businesses millions per year through expensive exchange rates and hidden charges. To put it into perspective, businesses trading £10m of currency at 0.8% commission currently pay £80k for their transaction. If they swapped to a 0.2% option, they would pay £20k, a massive75% saving of £60k. With the emergence of new FX models companies should demand transparency on services and charges. While banks have rightfully earned the trust of businesses to handle their FX, this perception needs to be challenged as other viable options are able to offer companies the same secure transactions, but at a lower flat rate, however much they exchange.”

The full whitepaper can be found at http://offers.freemarketfx.com/time-for-a-shake-up-in-service-transparency-and-transaction-fees

Methodology

102 key decision makers, responsible for foreign exchange transactions within their organisation, took part in a telephone interview during December 2014 / January 2015. Key decision makers were sourced from organisations with a turnover of between £5m and £25m. Research was conducted by Loudhouse, an independent research agency based in London.

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FTSE Russell to include 11 stocks from China’s STAR Market in global benchmarks

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FTSE Russell to include 11 stocks from China's STAR Market in global benchmarks 1

SHANGHAI (Reuters) – Index provider FTSE Russell will add 11 stocks from China’s STAR Market to its global benchmarks, according to a post on its website from Friday.

The move marks the first time shares from Shanghai’s Nasdaq-style STAR Market for stocks in China have been included in a global index.

The 11 stocks include Raytron Technology Co Ltd, Zhejiang HangKe Technology Co Ltd, Montage Technology Co Ltd, Advanced Micro-Fabrication Equipment Inc China.

(Reporting by Josh Horwitz and Samuel Shen in Shanghai; Editing by William Mallard)

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UK insurers estimate to pay up to 2.5 billion pounds for coronavirus claims

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UK insurers estimate to pay up to 2.5 billion pounds for coronavirus claims 2

(Reuters) – The Association of British Insurers (ABI) said on Saturday insurers are likely to pay up to 2.5 billion pounds ($3.50 billion) for UK’s COVID-19 insurance claims incurred in 2020.

The latest estimates include 2 billion pounds for COVID-19 business interruption claims and 500 million pounds for COVID-19 related protection insurance claims, travel insurance claims and other general insurance products.

ABI’s Director General Huw Evans said in a release that the pandemic illustrated some uncomfortable gaps between what people expected to be covered for and what their policy was designed for.

“We need to learn lessons from this unprecedented event and redouble our efforts to improve consumers’ trust in insurance products,” he added.

The insurance trade body said 123,000 claims have been settled with payment so far and a further 9,000 have received partial payments as of mid-January 2021.

($1 = 0.7139 pounds)

 

(Reporting by Maria Ponnezhath in Bengaluru; Editing by Marguerita Choy)

 

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Oil extends losses as Texas prepares to ramp up output after freeze

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Oil extends losses as Texas prepares to ramp up output after freeze 3

By Devika Krishna Kumar

NEW YORK (Reuters) – Oil prices fell for a second day on Friday, retreating further from recent highs, as Texas energy companies began preparations to restart oil and gas fields shuttered by freezing weather and power outages.

Brent crude futures ended the session down $1.02, or 1.6%, at $62.91 a barrel while U.S. West Texas Intermediate (WTI) crude fell $1.28, or 2.1%, to settle at $59.24.

For the week, Brent gained about 0.5% while WTI fell about 0.7%.

This week, both benchmarks had climbed to the highest in more than a year.

“Price pullback thus far appears corrective and is slight within the context of this month’s major upside price acceleration,” said Jim Ritterbusch, president of Ritterbusch and Associates.

Unusually cold weather in Texas and the Plains states curtailed up to 4 million barrels per day (bpd) of crude production and 21 billion cubic feet of natural gas, analysts estimated.

U.S. energy firms this week cut the number of oil rigs operating for the first time since November, according to Baker Hughes data.

Texas refiners halted about a fifth of the nation’s oil processing amid power outages and severe cold.

Companies were expected to prepare for production restarts on Friday as electric power and water services slowly resume, sources said.

“While much of the selling relates to a gradual resumption of power in the Gulf coast region ahead of a significant temperature warmup, the magnitude of this week’s loss of supply may require further discounting given much uncertainty regarding the extent and possible duration of lost output,” Ritterbusch said.

Oil prices fell despite a surprise drop in U.S. crude stockpiles last week, before the big freeze hit. Inventories fell 7.3 million barrels to 461.8 million barrels, their lowest since March, the Energy Information Administration reported on Thursday. [EIA/S]

“Vaccines and the impressive rollouts we’ve seen have delivered strong gains, as have the efforts of OPEC+ – Saudi Arabia, in particular – and the big freeze in Texas, which gave oil prices one final kick this week,” Craig Erlam, senior market analyst at OANDA, said.

“With so many bullish factors now priced in, it seems we’re seeing some of these positions being unwound.”

The United States on Thursday said it was ready to talk to Iran about returning to a 2015 agreement that aimed to prevent Tehran from acquiring nuclear weapons. Still, analysts did not expect near-term reversal of sanctions on Iran that were imposed by the previous U.S. administration.

“This breakthrough increases the probability that we may see Iran returning to the oil market soon, although there is much to be discussed and a new deal will not be a carbon-copy of the 2015 nuclear deal,” said StoneX analyst Kevin Solomon.

(Additional reporting by Ahmad Ghaddar in London and Roslan Khasawneh in Singapore and Sonali Paul in Melbourne; Editing by Marguerita Choy, David Gregorio and Nick Macfie)

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