Posted by on February 27, 2017 10:23 pm
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Categories: bank of america Barclays Blackrock Business Chinese Wall Citigroup donald trump Economy Euro European Union Finance Foreign exchange market france HSBC Investment banking Investment banks money Reuters Strategist UBS United Kingdom European Union membership referendum

In what may be a welcome change to what is already an overly politically charged financial atmosphere, Reuters reports that major banks are cracking down on market analysts talking publicly about politics over concerns of appearing partial with HSBC going so far to take its main global currencies commentator off air in an intensification of the financial “gag order.” HSBC, which has seen its share of political cross-currents in recent years, especially when it comes to money laundering and funding quasi-legal regimes, said that currency strategists at HSBC’s global research division would not be making “unsupervised” public appearances due to concerns about commenting on political events which have been seen to drive prices.

HSBC is not alone: a Reuters source said that Credit Agricole strategists had been similarly instructed not to talk about the details of the French presidential campaign, which has moved the price of the euro currency. Other major banks including Citigroup, Barclays and Bank of America already have tight controls in place aimed at keeping comments by strategists politically neutral, “but a blanket ban on public appearances is unusual.

As part of the crackdown, HSBC’s David Bloom, and other currency analysts from the bank, would not be appearing on television for some time. As HSBC’s chief currency strategist, Bloom was among the most outspoken commentators on the impact on sterling of the British vote to leave the European Union. He correctly forecast a dramatic fall and then dubbed the pound the government’s “de facto official opposition” as it sank after the vote last June. That said, Bloom and other currency strategists would continue to meet clients and write regular research.

“We are still engaging with the media. Our economists are engaging, our equity strategists are engaging,” one source at HSBC said, asking not to be named.

“But politics is something the bank does not want to talk about and currencies are probably the front line of where we could actually be drawn into something that we would want to avoid. This is a temporary thing.”

HSBC has enforced a global crackdown on bankers’ interactions with the media over the past two years, other sources at the bank told Reuters, including reducing the number of staff approved to talk to the press and requiring bankers to notify public relations whenever they meet with a reporter.

While perhaps welcome, the enforced gag is also troubling and reeks of censorship imposed by forces from outside the bank’s corner office: the HSBC move follows a number of European banks tightening up on how freely currency market analysts are allowed to speak to the media and in public situations in the past three years. Part of that has been driven by a tightening of regulation after several of the world’s biggest banks were fined billions for manipulating the $5 trillion a day global currencies market. Banks are also preparing for changes imposed by Europe’s MiFID II banking regulations at the end of this year.

But several banks also told strategists not to comment publicly on the Scottish independence referendum in 2014, and there were widespread limits on how freely analysts could discuss last year’s Brexit vote for fear of breaking electoral rules and alienating customers.

Of course, with a wave of political events on the horizon, including French, German, Dutch, and possibly Italian elections in the coming months, and seen as carrying similar risks for the euro this year to the waves of selling that have hit the pound in the past 12 months, very soon not a single European currency strategist may be left speaking.

The anti-media blowback may be only just starting: as Reuters adds, strategists from several banks said that following the surprise election of U.S. President Donald Trump and last year’s Brexit shock it was now standard practice to be told to steer clear of discussing the details of what was positive or negative for markets in the political sphere, for fear of being seen to make unqualified judgements on policy or politics.

“It is very common now for there to be limits,” said a strategist with one European bank. “What the market thinks about (French presidential candidate) Marine Le Pen is not purely about economics, it’s about the broader political risks, which then might play out in demand, growth and so on. Am I qualified to talk about that?” the strategist added.  The answer is unclear, especially after Bloomberg reported last week that top advisers to French presidential candidate Marine Le Pen have met with strategists and analysts from BlackRock Inc, Barclays Plc and UBS Group AG, among other firms to explain their economic program and plans to withdraw France from the euro. As such, previously porous Chinese wall between financial commentary and inside knowledge into politics may soon become insurmountable.

“Is it really clear what is moving the market? It is obviously shaky ground” the (soon to be gagged) Reuters source added.

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