A visual representation of digital cryptocurrency coins on display in front of Facebook and Libra logos.
Chesnot | Getty Images
A proposal to prevent big technology companies from functioning as financial institutions or issuing digital currencies has been circulated for discussion by the Democratic majority that leads the House Financial Services Committee, according to a copy of the draft legislation seen by Reuters.
In a sign of widening scrutiny after Facebook’s proposed Libra digital coin aroused widespread objection, the bill proposes a fine of $1 million per day for violation of such rules.
Such a sweeping proposal would likely spark opposition from Republican members of the house who are keen on innovation, and would likely struggle to gather enough votes to pass the lower chamber.
Even if it were to pass the full house, it would still have to pass the senate which would also likely be an uphill struggle.
Nevertheless, the draft proposal sends a strong message to large tech firms increasingly eyeing the financial services space.
The draft legislation, “Keep Big Tech Out Of Finance Act,” describes a large technology firm as a company mainly offering an online platform service with at least $25 billion in annual revenue.
“A large platform utility may not establish, maintain, or operate a digital asset that is intended to be widely used as medium of exchange, unit of account, store of value, or any other similar function, as defined by the Board of Governors of the Federal Reserve System,” it proposes.
Facebook, which would qualify to be such an entity, said last month it would launch its global cryptocurrency in 2020.
Last week, U.S. President Donald Trump criticized Libra and other cryptocurrencies and demanded that companies seek a banking charter and make themselves subject to U.S. and global regulations if they wanted to “become a bank.”
His comments came after Federal Reserve Chairman Jerome Powell told lawmakers that Facebook’s plan to build a digital currency called Libra could not move forward unless it addressed concerns over privacy, money laundering, consumer protection and financial stability.
Morgan Stanley Earnings Q4 2019 beat estimates
Morgan Stanley shares popped after the firm exceeded analysts’ profit estimates and each of its three main businesses produced more revenue than expected.
The bank said Thursday that fourth-quarter profit surged 46% to $2.24 billion, or $1.30 a share, compared with the 99 cent estimate of analysts surveyed by Refinitiv. Revenue climbed 27% to $10.86 billion, exceeding the $9.72 billion estimate by more than $1 billion.
Shares of the firm rose 2.7% in premarket trading.
“We delivered strong quarterly earnings across all of our businesses,” CEO James Gorman said in the release. “Firmwide revenues were over $10 billion for the fourth consecutive quarter, resulting in record full year revenues and net income. This consistent performance met all of our stated performance targets.”
It did: Bond trading helped power the firm’s institutional securities division to a 32% jump in revenue to $5.05 billion, compared to the $4.46 billion estimate. Fixed income trading produced $1.27 billion in revenue, compared with the $933.5 million estimate. Equity trading revenue essentially matched expectations at $1.92 billion, as did investment banking at $1.58 billion.
At the firm’s massive wealth management division, revenue rose 11% to $4.58 billion, edging out the $4.39 billion estimate as rising markets improved asset and transaction levels.
But it was the firm’s smallest division, investment management, that exceeded expectations by the most, driving the company’s overall revenue beat.
The business produced $1.36 billion in revenue, almost 100% more than a year earlier and exceeding the $783.2 million estimate by more than a half billion dollars. That appears to be driven by a single investment: Morgan Stanley cited $670 million in investment revenue (a 720% increase from a year earlier) on the carried interest from an IPO in Asia.
The quarter also included a $158 million tax benefit and severance costs of $172 million. Last month, Morgan Stanley cut roughly 2% of its workforce due to an uncertain global economic outlook, a cull that hit technology and operations roles the hardest, people with knowledge of the matter said.
In his decade atop Morgan Stanley, Gorman has tilted the bank towards wealth management and overhauled its once-struggling bond trading division.
Morgan Stanley is the last of the six largest U.S. banks to report results.
Earlier this week, J.P. Morgan, Citigroup, and Bank of America posted profits that beat analysts’ expectations on surging bond-trading results. Results at Wells Fargo and Goldman Sachs were both marred by legal expenses tied to scandals: At Wells, legal charges were tied to its fake accounts issue, while Goldman neared a resolution to its 1MDB investigation.
Here’s what Wall Street expected:
Earnings: 99 cents a share, 24% higher than a year earlier, according to Refinitiv
Revenue: $9.72 billion, 14% higher than a year earlier
Wealth management: $4.39 billion, according to FactSet
Trading: Equities $1.93 billion, Fixed Income $933.5 million
Hugh Grant sides with Prince Harry’s decision to spend time abroad
Hugh Grant has defended Prince Harry and Meghan Markle’s decision to spend more time out of the U.K. and has lambasted widespread coverage and criticism of the move in the British media.
Appearing on U.S. radio station Sirius XM to promote his latest movie “The Gentleman,” he was asked by host Andy Cohen how he felt about the decision by the Duke and Duchess of Sussex to spend more time in North America.
He initially deflected the question, after Cohen asked: “What are your feelings on Megxit?” but then explained in a video posted on YouTube by Sirius XM on Tuesday: “I’m rather on Harry’s side I have to say. The tabloid press effectively murdered his mother. Now they’re tearing his wife to pieces. I think, as a man, it’s his job to protect his family, so I’m with him.”
Diana, Princess of Wales, died in a car crash after being pursued by paparazzi through a Paris highway tunnel in 1997. Although the paparazzi were widely blamed for the accident, an investigation later found that the driver of the car had well over the legal level of alcohol in his blood.
Prince Harry and Meghan Markle announced their decision to “step back” as senior members of the royal family on January 8, and said they would no longer take part in the “Royal Rota” system, which gives royal event access to a handful of British newspapers that then distribute the news to other outlets.
Meghan, the Duchess of Sussex, is suing British tabloid the Mail on Sunday for publishing a handwritten letter she wrote to her estranged father Thomas Markle. The duchess accuses the paper of misusing her private information, breaching copyright and selective editing.
A BBC report said on Wednesday that the Mail on Sunday rejects the claims made by the duchess and said there was “huge and legitimate” public interest in publishing the duchess’s letter.
Grant is no stranger to battles with the press, having settled a phone-hacking claim against British publisher Mirror Group Newspapers in 2018 after his voicemails were intercepted over a 10-year period. He has since become well-known for his campaigns against media intrusion and is on the board of the Hacked Off initiative that campaigns for a “free and accountable press.”
Cohen asked Grant how his own relationship with the tabloid press is now. “Very poor,” he replied. He also accused the tabloids of inventing sources.
“When they say in those articles ‘a close friend’ said or ‘a palace insider,’ there’s no such person. It’s all entirely invented.”
IEA says oil stocks, non-OPEC output to buffer market from shocks
Harvey Tsoi | Getty Images
Surging oil production from non-OPEC countries led by the United States and abundant global stocks mean the market can weather political shocks such as the U.S.-Iran standoff, the International Energy Agency (IEA) said on Thursday.
“For now the risk of a major threat to oil supplies appears to have receded,” the Paris-based IEA said in a monthly report.
“Today’s market, where non-OPEC production is rising strongly and OECD stocks are 9 million barrels above the five-year average, provides a solid base from which to react to any escalation in geopolitical tension,” the IEA said.
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