Tuesday, 12 July 2016

CHAIRMAN'S MESSAGE - Sean Edwards, ITFA Chairman / Head of Legal at SMBC

Dear Members and Friends,

It is really difficult to talk about anything else other than the dreaded Brexit and the dire impact it is going to have on the global economy. Global Trading activity heading into the infamous 23 June referendum had been gathering pace since mid-February of this year. Investor sentiment was picking up and this was being reflected in asset prices.

However, closer to the date, investors became jittery and the increased uncertainty over the results of the UK referendum kept the markets on their toes and risk aversion spread quickly only to reverse in the days before the referendum as polls once again indicated a Remain vote might just nudge ahead. However, on 24 June, markets woke up to mayhem, panic last seen in September 2008 (Lehmans'), as the British electorate voted out of the European Union. Clearly, this was not the result many international players were gearing for, and was evidently not the most market-friendly outcome, as all risky assets sold off heavily, with some percentage changes even reaching double digits on the day in major equity indices. It is worth mentioning though that given the large swings, emerging market credit came out relatively unscathed from all happenings in the developed world.
One might argue that, on the positive side, Brexit has brought about interesting opportunities but it would be too premature to estimate the extent of damage and ramifications of the 23 June referendum result, particularly on a global scale. The economic damage could be in its infancy and will only start to show up in statistical economic data in a couple of quarters’ time. The biggest dilemma for investors will be how to tackle this transitory period, as long and even medium-term plays will look more hazy.
Small crises have often been welcomed in our markets but with worries of contagion and central banks having to intervene heavily to steady the ship, this one could well prove just a little bit too big. It is certainly unwelcome.   
On a more reassuring note, we are excited that preparations for the 43rd Annual Trade and Forfaiting Conference are well on track to ensure another memorable ITFA event. To register on-line, to view the conference programme and for any other informative details, please click here. Please bear in mind that since the Early Bird Discount has now expired, we encourage you to register by no later than 31 July in order to avoid incurring the late registration fees. 

In this month’s Newsletter, we present a technical paper titled ''Market Comment on the Repercussions of Negative Reference Rates (for example LIBOR)''. We also invite you to read an interesting article prepared by Marian Boyle (Sullivan & Worcester) on the Insurance Act 2015 - Are you ready? Finally, the ITFA Board is pleased to announce that ITFA is now registered as a non-profit-making association in the Swiss Registry of Commerce.

We look forward to hearing from you with any feedback you may want to share with us by sending an email to myself, any of the Board Members or to our general email, info@itfa.org.

Best wishes,

Sean Edwards

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