2012 — Reclassification
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As 2012 came around, the world witnessed Northern Rock, a British bank, close its doors. As another remnant of the financial crisis crumbled, on the other side of the world the Australian financial regulators looked to improve their governing power for fighting financial fraud and insider trading, in an effort to prevent further financial disasters.
ASIC’s commissioner, Greg Tanzer called for wide-ranging legal changes which would allow ASIC to have more autonomy when investigating cases of possible broker misappropriation. He stated that data available to other intelligence agencies should be available to ASIC. This would allow the phone calls, emails and text messages of every stock broker and fund manager in Australia to be recorded for investigation.
Tanzer also called for a mandatory retention period for data, including emails, text messages and internet browsing histories to be used for investigations.
Like the ASIC, CySEC was also looking to have more regulatory oversight in order to provide better consumer protection. So, on May 4, in a surprising turn of events, it took the extraordinary step of reclassifying Binary Options as financial instruments. By doing so, CySEC gained the ability to exercise more regulatory oversight over an instrument which had previously been unregulated!
It became the first regulator ever to globally recognise and regulate binary options and made sure that any firm in Cyprus providing investment service in relation to binary options had the obligation to apply for a Cyprus Investment Firm licence.
While CySEC was broadening its scope of expertise, the Bank of England was also looking at a little expansion, in terms of its asset purchasing programme! On July 5, the BoE announced that it would be stepping up its Quantitative Easing programme by another £50 billion, putting pressure on the ECB to follow suit in a continued effort to encourage spending across the UK. As a result of the decision, the GBP again took a hit and plunged in value.
As the year’s end approached, the world turned towards the United States for the US Presidential Election, where Obama was running against Mitt Romney… Obama’s win had a huge impact on the market with negative investor sentiment over the defeat of the more business-friendly Mitt Romney. The Dow, as a result, closed 2.4% lower, losing 313 points! There was a slightly broader reaction however, with the S&P500 and Nasdaq closing at their lowest levels since August of the same year.
With such volatility until the end of 2013, what economic events could be in store for the following year? Stay tuned for tomorrow’s instalment of a Decade of Forex!
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