EU’s markets watchdog seeks to become a European SEC

Today’s agenda: Moldova election nail-biter; Israel targets Hizbollah financial strongholds; Musk’s money pledges; being ‘nature positive’; and an options trading titan

---

Good morning. We begin with a story on the EU’s financial markets watchdog, which is seeking expanded powers to oversee major stock exchanges and other critical parts of the bloc’s financial infrastructure.

What is the ask? The Paris-based European Securities and Markets Authority is aiming to become a European version of the US Securities and Exchange Commission. Currently, it directly supervises relatively few entities, such as credit rating agencies, non-EU central counterparty clearing houses, securitisation repositories and benchmark administrators. Verena Ross, chair of Esma, called for an evaluation of areas in which “it would make sense to move a step further to central EU supervision”, including “cross-border systemically important infrastructure players” such as exchanges, clearing houses and settlement systems.

Why now? The idea of transferring more powers from national authorities to Esma has gained momentum in recent months as Brussels officials look for ways to boost capital markets activity to help finance an estimated €800bn of extra investment needs. Ross said “there is clearly a political appetite” in the newly formed European Commission to centralise more EU financial market supervision, but some member states are opposed to the idea. Read more from Ross’s interview with the Financial Times.

Here’s what else I’m keeping tabs on today:

• High-level meetings: The IMF and World Bank annual meetings begin in Washington. The UN Biodiversity Conference begins in Cali, Colombia.

• Economic data: Germany releases its September producer price index for industrial products, while Rightmove publishes its UK house price index for October.

• Results: WR Berkley, Logitech and SAP report.

Five more top stories

1. Moldova’s President Maia Sandu decried an “unprecedented assault” on the democratic process by “foreign forces” yesterday as a referendum on EU membership remained too close to call after more than two-thirds had been counted. Sandu, who has depicted the referendum as a historic choice for the former Soviet nation of 2.5mn, also failed to secure enough votes to win outright in a presidential race held the same day. Read more on the preliminary results.

2. Businesses and households in major economies are struggling to bounce back from the era of high inflation as precarious growth prospects and political uncertainty weigh on their confidence. Although economic activity remains relatively firm, confidence indicators have slid sharply or remain stuck in negative territory, according to research for the FT. Here’s what’s driving the poor sentiment.

• Global trade: The founding of the Bretton Woods system 80 years ago and Joe Biden’s trade policies teach us that power, as well as price, matters in a well-run economy, writes Rana Foroohar.

3. Israel has launched air strikes across Lebanon after its military said it would target Hizbollah-affiliated financial institutions. The attacks on the group’s economic “system and strongholds” confirm fears that Israel is expanding its offensive beyond military infrastructure. Read more about the al-Qard al-Hasan financial network.

4. Elon Musk faces mounting criticism for potentially violating election rules by pledging to dole out money to registered voters who sign a petition. The billionaire entrepreneur, who has become one of Donald Trump’s biggest corporate backers and loudest cheerleaders, awarded $1mn cheques to two audience members at separate events in Pennsylvania at the weekend.

• Donald Trump: The former president fuelled further questions about his state of mind by delivering a vulgar ramble during a rally in Pennsylvania on Saturday.

• Kamala Harris: Is the vice-president losing support among Black men? The traditionally Democratic demographic will be crucial in the election.

5. The intelligence arm of Sir Lynton Crosby’s CT Group is to be named as the consultancy that provided an allegedly forged document used in a protracted legal battle involving sanctioned Russian oligarch Oleg Deripaska. A spokesperson for CT Solutions & Private Advisory confirmed to the FT that intelligence gathering in the case during which the document was obtained had been conducted by CTF Solutions, which later became CT Solutions & Private Advisory. Read the full report.

Do you think you can run the UK economy? Step into the chancellor’s shoes and play the FT’s new Budget game.

The Big Read

While big business has flocked to UN climate summits to talk about decarbonisation, protecting nature has remained the domain of conservationists and philanthropists. This has started to change. This week, a record number of companies and financial institutions are expected to be at the COP16 biodiversity summit in Cali, Colombia. But as businesses increasingly tout their ambitions to be “nature positive”, some experts warn of the potential for greenwashing.

We’re also reading . . . 

• Special needs schools: Demand for places at state-funded schools that cater to children with special needs is outstripping funding, placing a huge financial strain on cash-strapped councils.

• Consumer finance: Buy now, pay later has cut form-filling and lengthy credit checks for households in need of borrowing. But its very frictionlessness heightens the potential for debt to spiral, writes Patrick Jenkins.

• Gold rally: With the precious metal seeming to have decoupled from its traditional historical influencers, extensive buying is signalling rising interest in alternatives to the dollar-based financial system, writes Mohamed El-Erian.

Chart of the day

Volatility at the start of the pandemic led to a leap in trading across assets, but nowhere has the increase been more pronounced — and more sustained — than in options. A major beneficiary was the highly secretive Susquehanna International Group, the largest dedicated proprietary trader in the world. The latest instalment in the FT’s series on the “new titans of Wall Street” lays out how the company mastered the options game.

Take a break from the news

Sunreef Yachts began from the same Lenin shipyard in Gdańsk where Lech Wałęsa previously worked and started the Solidarity opposition movement that helped topple Poland’s communist regime. Back then it was aimed primarily at middle-class buyers. Now it is producing luxury catamarans for clients including Rafael Nadal and Julio Iglesias, while its order book is full for the coming two years.

Additional contributions from Benjamin Wilhelm