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WHAT IS MIFID II AND HOW WILL IT IMPACT SMES

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WHAT IS MIFID II AND HOW WILL IT IMPACT SMES

Felicia Meyerowitz Singh, Co-founder and CEO, Akoni Hub

MiFID II (Markets in Financial Instruments Directives II) is a law that comes into force today – and it’s going to radically transform the way assets are traded and how money is managed for investors.

For those that don’t have the time to read the 7,000-page document, here’s a quick summary of the new law– and why it could – inadvertently – make it harder for small and medium businesses (SMEs) to grow.

MiFID II is the EU ‘s second big initiative to regulate markets and to create new rules on how information is shared, prices are set, and how brokers pay one another.

The regulation serves a noble purpose – to democratise financial markets and to make it fairer and more stable.

The legislation is broad and far-reaching, and extends to any institution trading European securities – no matter where they are based in the world.

This regulation is a follow up to the first MiFID law, which came in 2007 and served to harmonise rules for stock trading. The financial crisis hit a year later and threatened the future outlook of the sector. Anxious policy makers worried about another financial meltdown, decided that more protection was needed to safeguard investors and to help create a more sustainable financial services model.

This concern led to the birth of MiFID II, which extends the harmonisation of rules beyond cash equity markets to include commodities, bonds and so much more. The law not only makes markets more transparent, but also regulates trading behaviour and lifts the curtain on the actual cost of trading and investing in stocks for those that are buying them.

At present, many securities are still traded in broker-to-broker deals, which is opaque and investors can’t determine whether they are getting the best deals. MiFID II will change this scenario while also ushering in a new era of open and regulated platforms. Automated trading currently makes up more than half of all trades and several major flash crashes have been blamed on these computer algorithms. To protect investors, the platforms must be registered with regulators and to include circuit breakers to shut them down.

It’s not just automated trading platforms that will be impacted by regulation. Research once provided for free by financial institutions, analysts and paid for by trading commissions will need to be paid for by fund managers and other third parties, to avoid conflict of interest.

This has sparked some concerns for SMEs, as MiFID IIwill indirectly impact the smaller end of the market as research could focus on the bigger sectors and companies. Brokers will probably avoid covering small-cap SMEs, impacting those firms’ ability to access investors.  At the same time investors will be reluctant to invest into SMEs with low level of research available or reduced quality. Long term, this could undermine the ability for these businesses – the bread and butter of every economy- to scale and grow.

While MiFID II has been created with the best of intentions to stabilise the markets and offer greater protection for investors, more needs to be done to support the SMEs that could potentially be shut out from the benefits that MiFID II aims to create.

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Boeing planned to replace 777 engine covers before failures: WSJ

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Boeing planned to replace 777 engine covers before failures: WSJ 1

(Reuters) – Boeing Co was planning to replace engine covers on its 777 jets months before a pair of recent serious failures, the Wall Street Journal reported on Thursday, citing an internal Federal Aviation Administration document.

The U.S. Federal Aviation Administration (FAA) on Tuesday ordered immediate inspections of 777s with Pratt & Whitney <RTX.N> PW4000 engines before further flights, after an engine failed on a United Airlines 777 on Saturday.

The planemaker and the FAA had been discussing potential fixes for about two years, following an earlier incident in 2018, according to the Journal.

Boeing did not immediately respond to a request for comment.

Although immediate attention has focused on the engine’s manufacturer, Pratt & Whitney, Reuters has reported that its cowling, or casing, is manufactured by Boeing.

Boeing has declined to comment on its manufacturing role and referred questions on the part to U.S. air accident investigators.

The inspections affect older 777s fitted with Pratt & Whitney engines. Newer models, mainly powered by rival General Electric, are not affected.

(Reporting by Sanjana Shivdas in Bengaluru; Editing by Ramakrishnan M. and Jane Merriman)

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GameStop rally builds after puzzling ice-cream cone tweet

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GameStop rally builds after puzzling ice-cream cone tweet 2

By Aaron Saldanha

(Reuters) – GameStop Corp shares surged more than 50% in early deals on Thursday as amateur investors jumped back into the stock weeks after an unprecedented short squeeze triggered a 1,600% rally in the video game retailer.

The latest moves build on Wednesday’s rally in GameStop and other so-called “stonks” – an intentional misspelling of “stocks” – favored by retail traders on social media sites such as Reddit’s WallStreetBets.

The new frenzy puzzled analysts, who had ruled out another short squeeze of the stock which had battered some hedge funds, and fueled more hype after some Twitter users pointed out a cryptic tweet of an ice-cream cone photo from activist investor Ryan Cohen – a major shareholder in GameStop and a board member.

A short squeeze takes place when the price of a heavily-shorted stock rises sharply, forcing short-sellers who had bet against the stock to buy it at those prices to avoid further losses.

GameStop shares were up 54.5% in trading before the bell at $141.70 at 0630 ET. Headphone maker Koss Corp surged 57%, while cannabis company Sundial Growers rose 10%.

Shares of cinema operator AMC Entertainment, another stock caught up in last month’s rally, jumped 17% in pre-market trading on Thursday following an 18.1% rise on Wednesday.

Reddit discussion threads were buzzing again about GameStop on Thursday, with members exhorting others to pile into the stock as the rally gathers steam.

“Bought lots more #GME today, let’s keep fighting !!,” wrote one Reddit user Fundssqueezzer, while another user Responsible_Fun6255 said, “Rise of the planet of the ape: GME edition”.

Earlier on Thursday, GameStop’s Frankfurt-listed shares trebled at one point, overshooting its 100% surge on Wall Street overnight, as European retail traders joined in the fresh buying push.

The sharp moves surprised the market, which thought the excitement behind the recent Reddit-fueled rally had died down.

RISKY BETS

GameStop shares skyrocketed in January as retail investors, urged on by popular Reddit forum WallStreetBets, bought the stock as a way to punish hedge funds that had taken an outsized short bet against it.

The squeeze “personally humbled” Melvin Capital’s Gabriel Plotkin, whose firm was left needing a $2.75 billion dollar lifeline supplied by hedge fund Citadel LLC’s Kenneth Griffin and Point72 Asset Management’s Steven Cohen.

The risky trading strategies employed by some traders on Reddit have drawn the ire of investing legends such as Charlie Munger, long time business partner of Warren Buffett.

“It’s really stupid to have a culture which encourages as much gambling in stocks by people who have the mindset of racetrack bettors,” said Munger, Berkshire Hathaway’s vice chairman.

GameStop’s U.S.-listed shares soared nearly 104% on Wednesday. The volatility in GME, AMC Entertainment and other stocks led to outages on Reddit and periodic trading halts by the New York Stock Exchange.

Online brokerage Robinhood said in a tweet that the NYSE action would impact all brokerages, but that it had not paused trading on the shares.

“It’s a pretty risky play to try and buy now … what we might (see) at the open of the cash market is some people trying to get in,” said Oriano Lizza, premium sales trader at CMC Markets in Singapore, which does not offer pre- or post-market trade.

The latest surge comes after a couple of weeks that saw the shares move in relatively tighter ranges.

“It’s a marathon, not a sprint. Whatever happens resist the urge to sell. The longer we hold the higher it goes,” said @catchme1fyoucan, an Italy-based user of retail trading platform eToro, in a discussion on GameStop

(Reporting by Aaron Saldanha in Bengaluru, Tom Westbrook in Singapore and Danilo Masoni in Milan; Additional reporting by Sagarika Jaisinghani; Writing by Anirban Sen; Editing by Jason Neely and Bernard Orr)

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GSK narrows focus on elderly in trial to treat pneumonia from COVID-19

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GSK narrows focus on elderly in trial to treat pneumonia from COVID-19 3

By Ludwig Burger

FRANKFURT (Reuters) – GlaxoSmithKline will extend a trial testing an experimental rheumatoid arthritis drug on patients suffering from pneumonia related to COVID-19 to focus on the elderly as it seeks to firm up encouraging findings so far.

A trial started in May last year has shown that the drug known as otilimab helps patients over 70 with severe COVID-19 get off mechanical ventilation or high-flow oxygen support faster, the British drugmaker said on Thursday.

The benefit for younger trial participants was not clear enough to merit further investigation, prompting the re-focus on the elderly in a follow-up trial with a targeted 350 participants.

After 28 days of treatment, 65.1% of elderly patients on otilimab plus standard of care were alive and free of intensive respiratory support, compared to 45.9% of patients who received the standard of care alone, according to the trial results.

Effective COVID-19 treatments are still in high demand as vaccination campaigns are only ramping up gradually and as new variants of the coronavirus spread rapidly.

“Given the profound impact this pandemic is having on the elderly and the encouraging data we are sharing today, we are hopeful this finding will be replicated in the additional cohort,” said Christopher Corsico, GSK Senior Vice President Development.

GSK, which acquired rights to otilimab from German biotech firm Morphosys in 2013, said it expects first results of the extended trial in the third quarter of this year, to be followed by talks with regulators if the initial findings are confirmed.

Many patients with severe COVID-19 suffer from an over-reaction of the immune system known as cytokine storm and GSK aims to reaffirm that the drug, originally designed to fight an autoimmune disease, can help.

Attempts to repurpose existing drugs to rein in an overactive immune system in COVID-19 patients have had mixed results.

AstraZeneca’s blood cancer drug Calquence failed to help severely ill COVID-19 patients. Roche’s arthritis drug Actemra, in turn, was shown to cut the risk of death among patients hospitalised with severe COVID-19.

GSK, and other drugmakers, are also working on antibody-based drugs that block the virus directly.

GSK has also brought to bear its knowledge on adjuvants, which are efficacy boosters used in many vaccines, working with partners including France’s Sanofi.

In addition, it is collaborating with CureVac on a next generation of vaccines that protect against new coronavirus variants.

(Reporting by Ludwig Burger; editing by Emelia Sithole-Matarise)

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