India needs to streamline regulations to attract greater foreign capital and fend off a growing threat of financial activity moving to other countries, the outgoing head of the country’s largest stock exchange has said.

Ravi Narain, who this month stepped down as chief executive of the National Stock Exchange, warned that competitor nations are using favourable regulatory regimes to attract business away from India, threatening the growth of financial markets in Asia’s third-largest economy.

“If you look at economies outside of India, it is relatively easy for them to supply financial services [to India],” he told the Financial Times in an interview. “There is a great deal of regulatory arbitrage between India and some other jurisdictions and we need to tackle that.”

India’s Financial Sector Legislative Reforms Commission (FSLRC), a long-term independent review established by the government two years ago, last month proposed wide-ranging changes to modernise the country’s fragmented system of regulations.

The FSLRC suggested that four separate financial regulators, covering areas including markets, forward contracts and insurance, should be unified into one body, while its report warned that “difficulties in regulation” could see Indian financial transactions moving offshore. >> Read More

The main source of short-term funding for European banks could more than halve if a new financial transaction levy goes ahead, according to the International Capital Markets Association.

The EU’s proposed levy on financial transactions in and around the region is expected to raise €30bn-€35bn a year.

But the tax will have “serious” consequences for the repo market, the European Repo Council of ICMA warned on Monday, and would cause the short-term funding market to contract by 66 per cent, according to a study it commissioned.

The proposed levy, which will take effect next January, will include transactions in the repo market, where banks pledge securities as collateral in exchange for funding from other financial institutions. >> Read More

* Asia’s reaction to currency war muted so far, could heat up

* S.Korea’s tax proposal possibly triggered by capital outflow

* Capital controls more acceptable as policy option

* Cutting interest rates is a possible weapon

By Vidya Ranganathan

SINGAPORE, Feb 1 (Reuters) – South Korea’s threat to impose a broad tax on financial transactions is the first sign of deepening concern in Asia that speculation of competitive currency devaluations is prompting investors to head for the exit.

Until then, and because investors had not shown any big signs of concern, Asia’s reaction to the tensions centring on the yen had been passive, comprising an asymmetric mix of jawboning and light currency intervention. >> Read More

The eurozone’s biggest economies would raise €30bn-€35bn from their planned levy on financial transactions, according to an expansive European Commission proposal that ensnares trades executed in London, New York or Hong Kong.

The revised and strengthened Brussels draft plan, seen by the Financial Times, sets the stage for France, Germany and nine other euro area countries to agree the exact terms of Europe’s first so-called “Tobin tax” on equity, bond and derivative transactions.

Brussels’ drive for a Europe-wide tax opened an irreconcilable rift between EU members, forcing a eurozone vanguard to forge a smaller transaction tax bloc covering two-thirds of EU economic output but excluding the City of London. >> Read More

Italian bank Monte dei Paschi di Siena sought to calm investors over a trading scandal that has caused its share price to slump and led to much finger-pointing ahead of general elections next month.

Former managers of bank Monte dei Paschi di Siena, the world’s oldest running bank, hid complex financial transactions that were revealed later by new management led by Alessandro Profumo, according to Italy’s Central Bank.

One alone will reportedly cost it €200m in 2012 profits.

The developments have caused shares in the bank, known also simply as Montepaschi, to tumble another 8% to €0.23c, as the bank lost 20% of its market value in three trading days.

It also raised concerns about banking oversight that politicians quickly seized upon as they campaigned for national elections in February.

The bank’s board issued a statement after meeting expressing concern over what it called the “exploitation” of the events by politicians and other public figures – and warned that the use of such phrases as “failure” were both without basis and damaged the bank’s clients, shareholders and employees.

Montepaschi’s board said it is confident that the restructuring process initiated by the new management will allow the bank “to fully recover”. >> Read More

EU finance ministers have given the green light for 11 eurozone members, including France and Germany, to ready a new tax on financial transactions.

The approval under “enhanced co-operation” rules allows the smaller group to pioneer the tax.

Governments previously failed to agree to impose the tax across the entire 27-member EU or 17-member eurozone.

The UK and 15 other EU members will not introduce the tax, which is intended to discourage speculative trading. >> Read More

George Osborne’s goal of building an economy that can pay its way in the world looks more distant than ever as official statistics showed Britain ran up the largest current account deficit on record in the second quarter of 2012.

The Office for National Statistics said the £20.8bn deficit – which includes the UK’s trade balance, as well as the shortfall on overseas investments by UK plc – was the biggest ever for a quarter.

“Efforts to rebalance the economy towards net trade may be foundering on the wilting economic outlook in the UK’s principal European trading partners,” said Chris Crowe, of Barclays.

The news came as the ONS revealed that the recession-hit economy contracted by 0.4% in the second quarter, slightly less than its previous 0.5% estimate, fuelling hopes that growth may have returned between July and September. >> Read More

Below 1.2487 level,We see Slide upto 1.2401–1.2373 level.

Now @ 1.2457

German Chancellor Angela Merkel accused other European leaders on Wednesday of wanting to put the cart before the horse by pressing for common bond issuance to fight the euro zone crisis before agreeing to tough new budget controls.

Speaking in the Bundestag lower house of parliament before a summit in Brussels on Thursday and Friday, Merkel did leave the door open for the first time to using proceeds from a proposed financial transactions tax (FTT) to boost growth and competitiveness in struggling euro countries.

But she offered no other obvious concessions to governments in Europe that have pushed Germany to drop its opposition to joint debt liability, and she sharply criticised a report from top EU officials released before the summit that suggested common bonds as a solution to the three-year old crisis.

“I fear that at the summit we will talk too much about all these ideas for joint liability and too little about improved controls and structural measures,» Merkel said.

“Euro bonds, euro bills, debt redemption funds are not only unconstitutional in Germany but also economically wrong and counterproductive.” >> Read More

The U.S. government has offered to help India get alternative supplies for Iranian crude as it looks to squeeze the Persian Gulf producer’s oil revenue, according to three people with knowledge of the matter.

The U.S. may help broker deals with suppliers such as Iraq and Saudi Arabia, the people said, declining to be identified because the information is confidential. Saudi Arabia has already offered to replace Iranian oil supplies if needed, two of the people said. The U.S. is in talks with countries around the world on reducing their dependence on Iranian oil, Victoria Nuland, a spokeswoman at the State Department in Washington, said in an e-mail yesterday.

The assurance follows Iran’s offer to sell extra crude to India as the Persian Gulf nation, OPEC’s second-biggest producer, cuts supplies to some European nations in response to sanctions imposed over its nuclear program. The U.S. and European Union tightened sanctions on Iran last month, restricting trade and financial transactions. They say the program is a cover for developing atomic weapons. Iran denies the accusation.

“This move is going to have an impact and India is going to be hard-nosed in the way they are going to deal with it,” Praveen Kumar, an analyst at Facts Global Energy in Singapore, said. “It’s turned the situation a little in favor of India, which can potentially use it to get a better deal from Iran.”

Turkish Intermediary

The international measures have made it difficult for India and Iran to preserve $9.5 billion in annual crude trade, after the Reserve Bank of India dismantled a mechanism used to settle payments in euros and dollars in December 2010. Transactions are currently routed through Turkiye Halk Bankasi AS, based in Ankara, which has told Indian refiners it may no longer be able to act as an intermediary, four people with knowledge of the matter said Jan. 10. >> Read More

Iran’s currency has plunged almost 10 per cent to a record low against the US dollar in recent days amid concerns over the impact of international sanctions and speculation the government is devaluing the rial to help narrow a massive budget deficit.

One US dollar bought 15,300 rials on the open market on Wednesday, from 13,800 on Saturday. The Iranian currency is down 30 per cent against the dollar this year.

But the 9.8 per cent decline in just a few days is fuelling fresh anxiety, not only among ordinary Iranians worried about the sharp fall in the value of their rial-based savings but also among businessmen who say the currency volatility has made their lives difficult.

Over the past decade, Iran’s Central Bank, which channels more than 90 per cent of hard currency into the local market, has employed a managed float system to support a single rate against hard currencies, notably the US dollar. >> Read More