‘It’s hugely problematic’: SEC under fire from Congress over data hack

Wall Street’s top regulator received fire on Thursday about its cybersecurity and disclosure practices after acknowledging online hackers had breached its database of corporate bulletins in 2016 and could used it for insider buying and selling.

The breach involved Securities and Exchange Commission’s Edgar filing system, which houses market-moving information with countless filings varying from quarterly earnings to statements on acquisitions.

The SEC stated on Wednesday evening it discovered recently that cybercriminals might have used a hack detected in 2016 to create illicit trades.

SEC chairman Jay Clayton gave people of Congress a “courtesy call” concerning the hack on Wednesday mid-day prior to being announced openly, stated congressman Bill Huizenga, chairman of america House subcommittee that oversees the SEC.

“It’s hugely problematic and we have to be seriously interested in the way we safeguard that information like a regulator,” Huizenga stated.

The SEC disclosure came two days after credit-reporting company Equifax stated a breach has uncovered sensitive personal of information as much as 143 million US customers, and follows last year’s cyber attack on Quick, the worldwide bank messaging system.
It’s particularly embarrassing for that SEC and it is new boss Clayton, that has made tackling cybercrime among the top enforcement issues.

“The chairman clearly recognizes the irony from the SEC potentially becoming the unwitting tipper within an insider buying and selling plan,” stated John Reed Stark, an old SEC employee.

The SEC has stated it had been investigating the origin from the hack but it didn’t say exactly if this happened or what type of non-public data was retrieved. The company stated the attackers had exploited a weakness in an element of the Edgar system also it had “promptly” fixed it.

Most reports filed using the SEC generally don’t contain super-sensitive information, and then any insider buying and selling would occured right after company filings were created before these were released towards the public, stated Gary LaBranche, president of National Investor Relations Institute.

“People are shocked and disappointed,” LaBranche stated. NIRI people, who use 1,600 openly-traded companies, is going to be analyzing their buying and selling reports for just about any unusual activity that may be associated with disclosures, he stated.

The Trump administration has prioritized protection of federal agency systems after breaches including in the office of Personnel Management, IRS and condition department throughout the Federal government.

Jesse Trump in May signed a professional order requiring agencies to utilize a specific framework to evaluate and manage cyber-risk, and also to make a report within 3 months about how exactly they carry it out.

The SEC didn’t respond when requested about this review or if it triggered the disclosure, but Clayton stated in the Wednesday statement he started reviewing the agency’s cyber risk in May.

SEC commissioners didn’t discover the breach until lately. Inside a statement, Republican SEC Commissioner Mike Piwowar, who for a part of 2017 also offered as Acting Chairman, stated he was “recently informed the very first time that the invasion happened in 2016.”

Clayton is going to be grilled around the incident and it is aftermath in a hearing through the Senate banking committee on Tuesday.

Banking committee member Mark Warner stated inside a statement he intends to check out SEC thresholds for requiring companies to reveal breaches, and flagged the bond between your SEC’s disclosure and it is market oversight role.
“Government and companies have to step-up their efforts to safeguard our most sensitive personal and commercial information,” Warner stated.

Securities industry rules require companies disclose cyber breaches to investors and also the SEC has investigated firms over whether or not they must have reported occurrences sooner.

“There is a component of ‘Do once we say, less we do’ for this,Inches stated Matt Rossi, an old counsel within the SEC’s enforcement division.

And the possible lack of details in the SEC concerning the breach will probably raise questions regarding the other Edgar data might have been uncovered, for example information associated with ongoing financial investigations and sensitive private information, Rossi stated.

The disclosure adopted public and non-public reports that detailed the SEC’s cyber vulnerabilities in addition to acknowledgement through the SEC itself from the scope from the risks resulting from cyber-attacks.

Wall Street’s watchdog does not follow its very own counsel on disclosing cyberattacks

Inside a 2014 speech, the then-chair from the Registration, Mary Jo White-colored, offered a stern indication to corporate America: If hit by online hackers, they’d to inform the general public about this.

Now, the company, the country’s top Wall Street regulator, has acknowledged that online hackers permeated certainly one of its most sensitive databases this past year and might have been able to utilize the data to achieve a buying and selling edge on the investing public to pocket illicit profits.

However the agency didn’t follow its admonition to corporations. It offered couple of information regarding the hack, mentioning it just briefly inside a bigger policy statement about cybersecurity issued after 7 p.m. Wednesday by Jay Clayton, the present mind from the agency.

“So this seems to become a situation of ‘Do when i regulate, less I demonstrate,’ ” stated Bradley J. Bondi, someone at Cahill Gordon & Reindel along with a former senior SEC official.

The machine which was breached, referred to as Edgar, works as a clearinghouse for that public filings that companies must make towards the agency, including reports on periodic financial results and newsworthy developments. For a number of reasons, there can frequently be considered a lag between your time when reports are digitally filed using the agency and whenever they can be observed through the public, making the machine a potentially lucrative target to online hackers wishing to understand sensitive information before all of those other market.

“Edgar is the same as Fort Knox for sensitive corporate filings prior to being released openly. It’s a gold vault for insider traders,” Bondi stated.

The SEC declined to comment with this report.

News from the breach follows around the heels of revelations that Equifax, the large credit rating company, also have been the victim of the cyberattack. Equifax announced earlier this year that sensitive information, including Social Security figures, on 143 million people have been stolen.

Equifax, too, delayed in disclosing the breach because it searched for to know the level from the damage.

For pretty much ten years now, regulators happen to be sounding the alarm about ever-aggressive cyberattacks targeted at governing the public markets.

In 2015, federal investigators stated an worldwide hacking ring equipped with thousands of corporate secrets pocketed greater than $100 million from illicit trades. The online hackers stole greater than 150,000 news releases which were scheduled to be sent to investors. Two times this past year, the SEC stated it identified overseas hacking rings which had targeted nonpublic information.

The SEC is grappling with how to reply to the onslaught. In 2014, it started requiring stock markets, like the New You are able to Stock Market, to the company within hrs of learning of the cyber-breach. Captured, Clayton initiated overview of the agency’s internal cybersecurity risks, including establishing a ­senior-level working group.

“I notice that the most diligent cybersecurity efforts won’t address all cyber risks that enterprises face,” Clayton stated within the statement released Wednesday evening. “That stark reality makes sufficient disclosure believe it or not important.”

But because the SEC elevated pressure on corporations and also the entities it regulates to strengthen their systems against cyber­security risks, it’s battled to maintain because the markets have more and more become controlled by computers which will make decisions in fractions of the second. In This summer, the federal government Accountability Office noted the agency had yet to completely implement nearly twelve recommendations associated with “security controls over its key economic climates and knowledge.Inches

“There is really a certain irony here since the SEC continues to be more and more bellicose in getting enforcement cases against registered entities which have been victims of cyberattacks,” stated Scott H. Kimpel, someone at Hunton & Johnson along with a former SEC attorney. “It appears such as the SEC wouldn’t entitled to the standard it set.”

John Reed Stark, a virtually 20-year veteran from the SEC’s enforcement division and founding father of its Office of Internet Enforcement, recommended the agency restore its specialized cyber enforcement unit, that was shut lower within an 2010 reorganization.

The breach made the SEC an “unwitting tipper within an insider-buying and selling plan,” stated Stark, who now runs their own security firm. “Now, more than ever before, the SEC requires a dedicated and specialized corp of cyber sleuths to find and deter online hackers like those who compromised Edgar inside a possible insider buying and selling plan.”

The hack of Edgar was the effect of a “software vulnerability” which was “exploited and led to use of nonpublic information,” based on the SEC. The company detected the breach this past year, but didn’t learn until recently the vulnerability might have been employed for improper buying and selling. The breach didn’t result in the discharge of your personal data as well as an analysis in to the matter is ongoing, the company has stated.

“This isn’t the condition from the art when it comes to what we should expect someone-facing company to reveal,Inches stated Kimpel, the previous SEC attorney. “It’s a bit disturbing that there’s no more detail.”

The SEC might have determined that disclosing the breach earlier or differently might have sparked unnecessary concern, stated Chris Hart, a cybersecurity expert and attorney at Foley Hoag. “We have no idea exactly what the SEC understood so when they understood it.”

This isn’t the very first time Edgar continues to be compromised. The machine receives a large number of documents each day. In 2015, fraudsters published fake information on the website concerning the takeover of Avon Products, driving their stock cost up considerably prior to being detected. As well as in 2014, several researchers discovered that information posted to Edgar was open to quite a few users for thirty seconds before it grew to become openly available, potentially giving some traders an unfair advantage. (High-speed traders, for instance, could make a large number of trades inside a blink of the eye.) “It should give companies pause,” Kimpel stated. “They are needed to provide growing quantity of information towards the government about a variety of proprietary matters, a lot of the information is within Edgar. Just how can they ensure it will likely be safe.”

The most recent announcement may also hamper the SEC’s efforts to gather more in depth details about stock trades right into a central database that may allow it to be simpler for that agency to identify market manipulation. Some key Wall Street institutions, such as the New You are able to Stock Market, have cautioned the database turn into a target for online hackers.

DealBook: Fixing the ‘Brain Damage’ Brought on by the I.P.O. Process

Andrew Ross Sorkin

Andrew Ross Sorkin

DEALBOOK

“It appears like a means of residing in hell without dying.”

Which was the way in which James Freeman, the founding father of Blue Bottle Coffee, described the entire process of going for a company public in the current era — and exactly how he described why he offered his company rather to Nestlé a week ago.

There is no secrete the public stock markets — regardless of the heights they’ve arrived at (and also the credit that President Trump has had on their behalf) — are essentially damaged. No leader wants to reside in the glare from the public spotlight and cope with annoying investors who hold stocks over time frames of days and several weeks, not many decades.

The amount of companies for auction on public stock markets is half what it really was 2 decades ago. This past year, less companies went public than throughout the economic crisis.

“It’s an unusual world. Whether it was ten years ago, we’d be public right now,Inches Stewart Butterfield, leader of Slack, a workplace messaging company worth $5.1 billion, told The Financial Occasions over the past weekend.

Now, a number of entrepreneurs are emerging with a few novel methods to repair the problem. A week ago, Chamath Palihapitiya, a brash entrepreneur who had been an earlier Facebook worker, launched an open company referred to as a special purpose acquisition company, or perhaps a “blank check” company, with $600 million set up by investors. The intent would be to merge and among Plastic Valley’s unicorns, taking it public via a mystery of sorts.

The concept would be to remove “the procedure for going public that maybe true brain damage,” Mr. Palihapitiya stated.

Simultaneously, Spotify, the streaming music company worth some $13 billion, continues to be exploring an agenda to list out its shares around the New You are able to Stock Market directly, without raising any new money from public investors.

Possibly probably the most ambitious and provocative efforts are a business that so far is at “stealth mode”: LTSE (Lengthy-Term Stock Market), brought through the entrepreneur Eric Ries. Supported by a who’s who of venture-capital investors — Marc Andreessen, Reid Hoffman and Steve Situation included in this — the brand new exchange aims to reimagine what it really way to be also an open company. Among its changes towards the ecosystem: the voting legal rights of investors (the more you have, the greater voting power you’ve), new disclosure policies (together with a moratorium on “guidance”) along with a complete rewrite of compensation schemes to ensure that executives truly concentrate on the lengthy term (it recommends vesting stock over as lengthy like a decade).

Before we get carried away lower the rabbit hole of methods to repair the problem, it’s worth focusing on how the I.P.O. process — and also the markets themselves — grew to become so damaged.

To listen to Mr. Palihapitiya tell it, the shift — a minimum of in Plastic Valley — started throughout the economic crisis, as he was working at Facebook. His candid explanation is surprising.

“We at Facebook essentially flipped the narrative, so we made it happen purposely,” he stated. “Our whole factor was ‘Let’s stay private longer.’ And also the reason we did which was i was confident it might trick lots of others into not attempting to go public or make use of the capital markets.”

He stated Facebook wished that “all individuals companies would eventually die because they weren’t so good and we’d suck up all their talent.”

Whether or not this would be a trick or otherwise, “stay private longer” grew to become a mantra in Plastic Valley. And given all of the cash sloshing round the technology industry, companies have had the ability to delay going public without breaking the bank.

However it has produced a variety of problems, most famously being that employees have felt their social hire companies — employed by little salary but plenty of stock around the assumption the businesses would go public — has fallen apart. Also it might actually be affecting innovation.

Mr. Palihapitiya stated the lament of numerous employees became this: “I can’t purchase the house on ‘mission and values.’ I really need current compensation. Plastic Valley has become probably the most costly places to reside.Inches A lot of employees, he described, happen to be hopscotching in one company to another looking for an elusive I.P.O.

“Now you’ve these attrition rates of like 20-plus percent,” he stated. “How are you currently designed to build an legendary legacy business whenever your entire worker base walks out of the door every 5 years?Inches

Mr. Palihapitiya’s response is to get rid of the I.P.O. process and it is year . 5 of “distractions attempting to craft a bogus narrative,” because he described it, to lure investors. Rather, through his openly traded vehicle, a unicorn company — shorthand for any $1 billion-plus private technology company — could reverse merge in it, instantly becoming public.

Unlike an dpo, by which employees and early investors have the ability to certain “lockup” dates for whenever they can sell stock, he is able to write the guidelines however the organization wants. Certain employees, for example, could sell early, or even the sales might be staggered there isn’t an “overhang” around the stock that will depress the cost before a significant lockup period expired.

Mr. Palihapitiya also could choose the majority of the company’s big investors, who’ve agreed to their personal lockups, which makes them a lot more oriented toward the lengthy term. For those this, he adopts a tidy fee: 20 % from the $600 million. But when his company acquires a company five to twenty occasions its size via a reverse merger, he stated, the charge is equivalent to or smaller sized than the usual banker’s fee — which is all available, so unlike banks, Mr. Palihapitiya’s interests are aligned using the company’s.

But Mr. Palihapitiya’s approach is only the beginning. Probably the most provocative plan going swimming Plastic Valley is Mr. Ries’s LTSE. “It’s an intellectually thoughtful idea,” Mr. Palihapitiya stated.

The concept, at its core, would be to alter the dynamic between your stock market and whom it serves, Mr. Ries described, suggesting that traditional stock markets focus more about investors — and all sorts of connected buying and selling revenue — than you are on the businesses listed. That, he believes, results in short-term thinking and buying and selling.

Mr. Ries, who authored a magazine entitled “The Lean Startup,” is wishing to produce an exchange that is centered on the requirements of companies having a lengthy-term vision and investors who’re similarly aligned. He believes the issue facing private companies isn’t only the I.P.O. process but additionally “the resided experience with as being a public company.”

Possibly probably the most unusual a part of his exchange’s approach — that is working to obtain approval in the Registration — is when much influence and voting power investors might have over companies.

Presently, a trader the master of one share for any month, or perhaps a day, has got the same voting power as somebody who has owned a share for a long time. Mr. Ries wants what he calls “tourists” — short-term shareholders — to possess less voting power than lengthy-term shareholders, whom he calls “citizens from the republic.” With time, shareholders of companies around the LTSE would gain in votes according to their period of possession.

This type of system will make dual-class structures, like at Snap (or even the New You are able to Occasions) less appealing to its founders. That will also aid finish one other issue which has emerged: Dual-class companies spend the money for leader, typically, three occasions around companies having a single share class.

Mr. Ries also takes are designed for compensation plans. He wants firms that list on his exchange to possess stock vesting programs with a minimum of 5 years and recommends ten years, for executives who leave the organization.

Now, this can be very difficult to apply, and it is difficult to know whether or not this works. “It’s very hard,Inches Mr. Palihapitiya stated. “Ours isn’t as intellectually ambitious.” But many of these attempts are significant tries to fix the machine. Even when it normally won’t act as marketed, hopefully the establishment will require notes.

Satisfy the lady fighting Wall Street’s Flash Boys

Like lots of people on Wall Street and beyond, Sara Furber devoured Michael Lewis’s Flash Boys, the very best-selling book that contended high-speed traders had rigged the world’s greatest stock markets. Now, Furber continues to be given the job of showing that executives and investors want an alternate.

Lewis’s book told the storyplot of Kaira Katsuyama, who, while working at Royal Bank of Canada, spotted what he saw like a gigantic ripoff within the markets and generate a company, IEX, he wished would finish it.

This past year, he hired Furber, a 20-year Wall Street veteran and md at Morgan Stanley, to mind in the new stock exchange’s listing business – poaching business in the New You are able to Stock Market and Nasdaq, perhaps two of the most effective stock markets on the planet.

Sara Fuber. Sara Fuber. Photograph: Ali Cruz for that Protector

The greatest lesson she learned was more responsibility didn’t mean less freedom. “I assumed the greater-profile, more senior position I’d have, the less control I would need to manage the existence I needed outdoors of labor. Getting children, family balance.

“Looking back among the greatest things If only someone had explained is it’s inversely correlated. The greater-profile, more responsibility roles, the greater versatility you need to structure your existence how you want. You’ve better people on your side, you’ve more authority, you’re setting once the conferences are, exactly what the agenda is. That control is actually empowering.

“Nobody examines me for seeing a parent teacher conference,” she states. “I don’t believe that degree of autonomy exists at ‘abnormal’ amounts. Regardless if you are a guy or perhaps a lady.”

IEX has rent Wall Street. In 2014, a disagreement between Katsuyama and Bill O’Brien, then president from the Bats exchange, on CNBC introduced buying and selling to some dead stop because the IEX founder and Lewis contended investors appeared to be scammed. “I believe the financial markets are rigged i think you’re area of the rigging,” Katsuyama told O’Brien. Katsuyama (and Lewis) were responsible for “falsely accusing literally lots of people and perhaps scaring countless investors in order to promote a company model”, stated O’Brien.

A lot of the disagreement focuses on the necessity – or otherwise – for that new exchange’s most well-known claim that they can fame: a 38-mile coiled cable designed like a “speed bump” to slow lower our prime-speed transactions that now dominate buying and selling. The cable is made to stop high-frequency traders (HFTs) utilizing their algorithms to trade interior and exterior shares at speeds that permit them to benefit from slower investors – frequently individuals searching to create a lengthy-term bet on the company’s fundamental worth.

If you’re IEX or its supporters this really is tantamount to scalping. IEX’s critics charge it is only how efficient markets be employed in digital age. In either case, it’s all very complicated. And that’s the issue, states Furber. Financial complexity isn’t just an excessive amount of for ordinary investors, it is also an excessive amount of for individuals on Wall Street.

Furber ran investor relations at Merrill Lynch throughout the credit crisis. “One of what formed my view incredibly was there were many people in those days saying: ‘You just don’t comprehend the risk, it’s very complex.’ Like a smart, educated person, when individuals create lots of complexity and opaqueness, we must trust our gut. Should you can’t explain it, there’s something fair about our feeling of unease. What we should are attempting to do is create more transparency and ease because that produces better trust.”

Whomever you accept, Wall Street does have trouble. During the last decade the amount of listed companies in america has halved and the amount of companies doing initial public choices (IPOs) can also be in freefall, lower from about 300 annually within the 1990s to around 100 annually. Big the likes of Albertsons, Bloomberg, Koch Industries are remaining private. A brand new generation of tech giants, Airbnb, Pinterest, Lyft and Uber, are remaining private for extended.

Area of the desire not to join the stock markets happens because the present exchanges appear interested in earning money for traders than helping lengthy-term investors maximise their returns or companies raise money, states Furber.

“The market structure we’ve today has changed during the last ten to fifteen many it’s being optimised for various participants than companies and investors,” she states. “It doesn’t mean everything doesn’t work with them,” she states, but you will find “pain points”.

New york stock exchange and Nasdaq sell tiers of information and greater-speed services to traders who are able to use that benefit to make quick returns which are unavailable to individuals that do not repay. IEX won’t do this.

“Everyone states they’re great in clients service if your business design operates in a manner that doesn’t advantage them, I’d question that,” she states. On the top of there are a lot of charges and rebates that IEX will eliminate that they argues create “financial incentives that aren’t aligning the broker constantly using their client”.

But dealing with the incumbent forces won’t be easy. Nasdaq and New york stock exchange dominate the listings market – IEX has in regards to a 2% share of the market of buying and selling in US equities. The 2 exchanges have fought against hard against allowing IEX to get an exchange and it is speed bump, quarrelling it added unnecessary complexity. However the Registration gave IEX a tight schedule-ahead last June. Certainly one of NYSE’s exchanges, New york stock exchange American, presenting a speed bump too.

“It validates the issues which exist,Inches she states. The present big exchanges still drive a substantial part of their revenues from selling tiers of information and tiers of speed. “The individuals who will pay probably the most for your are the individuals who can optimise individuals variations as competitive advantages,” she states.

“Imitation may be the sincerest type of flattery,” Furber states having a smile. It is also probably the most deadly.

FTSE 100 snaps losing streak as the pound slips from hike hope highs

  • FTSE 100 rebounds as the pound’s momentum slows on the currency markets
  • BAE Systems jumps 2.9pc on Qatar Typhoon jet order; gold producers Fresnillo and Randgold Resources fall as precious metal prices continue to retreat
  • Pound slips from highs recorded last week after the Bank of England gave its strongest hint yet that interest rates will rise before the end of the year; Mark Carney speech (4pm) could lift sterling if he reaffirms the MPC’s plans for a hike
  • House prices nudged down a further 1.2pc in September, according to Rightmove

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3:44PM

US indices hitting highs pulls up European stocks; pound mixed ahead of Carney speech

Mark Carney could move sterling in his speech at the top of the hour

European stocks have been supported this afternoon by the bright start across the Atlantic, according to Spreadex analyst Connor Campbell.

He said on this afternoon’s action:

“A record-breaking open from the Dow Jones kept the European indices feeling positive this Monday afternoon.

“The Dow only needed to rise 0.3% after the bell to hit a new 22300-plus high; the S&P 500 followed suit, climbing above 2500 for the first time in its history. The recent surge from the US indices has lined up with the dollar’s September decline against the pound, where it has shed nearly 5% in the last 18 days.

“Over in Europe the US open allowed the FTSE to widen its gains once again. The UK index is now up half a percent, putting some distance between it and its sub-7200 low last Friday.” 

Just a reminder that we’ll be bringing you the latest updates from Mark Carney’s IMF speech at 4pm. Ahead of the appearance, the pound is putting in a patchy performance, nudging down against both the dollar and euro but moving higher against the currency markets’ laggard today, the Japanese yen.

3:13PM

Bell Pottinger scandal widens as Rentokil director who introduced the PR firm to the Guptas steps down

Bell Pottinger’s London office

The scandal surrounding public relations firm Bell Pottinger has deepened as the man who introduced the company to the billionaire Gupta family, Chris Geoghegan, has stepped down from his role at Rentokil.

Mr Geoghegan, BAE Systems’ former chief operating officer, reportedly earned a six-figure sum for brokering the controversial deal between Bell Pottinger and the Guptas, which ultimately led to the firm’s administration last week.

Cleaning and hygiene firm Rentokil has announced that Mr Geoghegan will be stepping down with immediate effect.

As a result, he also steps down as chairman of the firm’s remuneration committee and senior independent director. He had been on the board for just over a year, having been joint chief operating officer at BAE Systems from 2002 to 2007.

Read Rhiannon Bury’s full report here

2:48PM

Dow Jones on course for another record close

The Dow Jones is on course for another record close

US stocks have nudged up early on and the Dow Jones is on course for another record close with the Federal Reserve’s latest policy decision now in the sights of investors.

ING’s chief international economist James Knightley believes that that the markets are underestimating the chance of a fasted paced hiking cycle and that Wednesday’s meeting may not be the non-event some believe it will be.

He added that investors should give more credence to the Fed’s forecasts on interest rates:

“With just one hike priced in by the end of 2018, the market’s view on interest rates is still worlds apart from the Fed’s June projections, which pencilled in 100bp of rate hikes over the next 18 months. 

“Some market scepticism is understandable. The Fed has signalled higher interest rates on numerous occasions over the past couple of years, only to then subsequently not follow through with them. But also with several measures of inflation well below 2%, there is a sense that there is little need for tighter policy. 

“This latter point, in particular, may see some officials becoming less aggressive on their expectations for the path of interest rates. As such, we would not be surprised to see the dot diagram move closer to our forecast of three rate hikes rather than the four previously indicated.”

Given the rollercoaster the ECB and Bank of England has given the markets in the last few weeks, it would be naive to rule out any other shocks from the central banking top tier one would think.

2:14PM

Britain braces for higher energy prices this winter  

Winter electricity in the UK market is already 16pc higher than it was at this time last year

Energy bills in the UK could be set to rise this winter after the cost of power jumped well above last year’s prices.

The wholesale cost of winter electricity in the UK market is on average 16pc, or around £7 per megawatt-hour, higher than it was this time last year.

The price rises could spell trouble for British bill payers who faced a flurry of tariff hikes over the spring following last winter’s volatile energy trading.

Last year market prices surged higher due to safety concerns across almost a fifth of EDF’s 58-strong French nuclear reactor fleet.

This year, energy prices are climbing due to ongoing concerns around France’s nuclear plants as well as Germany’s reliance on power from coal, which is trading 50pc higher than last year.

Read Jillian Ambrose’s full report here

1:59PM

Mark Carney speech preview

Former BoE governor Mervyn King said that central bankers can use tricks and bluffs to manipulate markets

Interest rate forecast revisions have been flooding in since the Bank of England surprised the markets last Thursday by taking a hawkish turn but some have raised doubts that the latest rhetoric coming out of the central bank is little more than monetary policy dark arts.

The theory goes that the MPC’s hawkish rhetoric is designed to lift the pound, which will in turn bring down inflation without having to resort to the blunter tools at the central bank’s disposal.

Can Mark Carney reassure any doubters this afternoon in his speech at the IMF?

The markets have been here twice before with Mr Carney and the ‘Maradona theory’, the idea proposed by former governor Mervyn King that the markets can be manipulated by central bankers in the same way that Maradona could beat five defender by walking in a straight line through shoulder shifts and bluffs, could be wearing a little thin if rates aren’t raised before the end of the year.

Investec’s Philip Shaw, who like HSBC this morning and many others, has revised his forecasts since the latest twist believes the BoE is serious this time, however.

He said:

“The MPC’s latest prognosis has not come out of the blue. Indeed its concerns over tight labour markets and the prospects for inflationary pay increases have been evident since the spring. Accordingly unless the UK is hit by a negative demand shock over the next six weeks, we view the prospect of a 25bp increase in the Bank rate to 0.50% in November as our new baseline case. 

1:20PM

Study engineering at university if you want to become a billionaire, report suggests

Jeff Bezos, founder of Amazon and the second richest person in the world, studied engineering at university

Students who study engineering or business at university are more likely than their peers to become billionaires, a new study suggests.

Those who have already entered the job market and are either in a sales career or stock trader role are also among the most likely to become part of the world’s richest people club.

The findings are based on a study by the recruitment agency Aaron Wallis, which looked into the richest 100 people in the world to see if there was any correlation between their first careers and how wealthy they became.

It found that the most common first job among the top billionaires – who started in an organisation that wasn’t their own, as opposed to entrepreneurs who started their own company or those employed in a family business – was that of a salesperson.

Read Sophie Christie’s full report here

12:55PM

Lunchtime update: Pound comes off highs ahead of Carney speech

Bank of England governor Mark Carney is due to speak at the IMF at 4pm later today

The FTSE 100 has snapped its losing streak and rebounded back into positive territory this morning as the pound’s rally on currency markets cools.

Ahead of Bank of England governor Mark Carney’s speech at the IMF this afternoon, sterling has dipped slightly, coming off the highs it hit at the end of last week as hopes of an interest rate hike before the end of the year were reignited by the central bank.

A dearth of economics and corporate news means London is devoid of any big stock movements this morning. 

Engineer GKN has jumped 3.2pc to the top of the FTSE 100 on a bullish broker note while defence specialist BAE Systems securing the sale of 24 Typhoon jets to Qatar has lifted it 2.9pc.

At the other end, tobacco stocks are reacting negatively to the FDA changes to its e-cigarette requirements, which broke as trading was closing in Europe on Friday, while gold producers Fresnillo and Randgold Resources trail the blue-chip index as the precious metal’s price continues to retreat. 

It could be the calm before the storm, however. Attention on the markets is beginning to shift to the US Federal Reserve’s key policy decision on Wednesday with investors itching for clues over the US’s own interest rate hiking plans.

Spreadex analyst Connor Campbell gave this preview of the US session:

“Looking to this afternoon, and while there’s no data on the cards it still could be a memorable US session. Even something as meagre as a 0.2% is enough for the Dow Jones to hit a fresh high, with the index on track to open above 22300 for the first time in its history.

“Given it wasn’t too long ago that it was fretting about North Korea, as well as Donald Trump’s (in)ability to deliver on his tax and infrastructure promises – issues that are still very much on the table – it’s remarkable that the Dow has risen so aggressively in the past week or so.”

12:20PM

Interserve hires finance director days after devastating profit warning

Interserve has recently won a five-year contract to provide spectator seating for the Edinburgh Military Tattoo

Support services group Interserve has appointed a new finance director just days after it issued a crippling profit warning.

Mark Whiteling will join the company at the beginning of next month, having recently held a number of non-executive roles at firms including Hogg Robinson and Connect Group.

Shares in Interserve rallied during Monday morning’s trading on the back of the news, climbing as much as 18.71pc to 96.75p.

Mr Whiteling had previously held senior roles at technology firm Premier Farnell. He was also finance director of marketing business Communisis and group finance director of logistics company Tibbett and Britten.

Read Rhiannon Bury’s full report here

Interserve
12:09PM

Yen falls as Japanese PM considers calling a snap election

Shinzo Abe could call a general election to take advantage of a weaker opposition 

Another little interesting side-note on the forex markets is the Japanese yen, which has plunged into the red against all the leading currencies ahead of the Bank of Japan’s own decision on monetary policy on Thursday.

The currency is under pressure after weekend reports that the country’s prime minister Shinzo Abe is considering to do a “Theresa May” and call a snap election to take advantage of a weakened opposition.

If Mrs May did give the Japanese PM any sage advice on snap elections during her recent state visit, he’s obviously ignored it.

12:00PM

Sterling comes off highs; attention begins to shift towards Fed meeting 

All eyes will be on Fed chair Janet Yellen at her press conference on Wednesday evening

Sterling has slipped slightly on the currency markets this morning as it comes off the highs it hit on Friday following dovish Bank of England policymaker Gertjan Vlieghe’s speech backing the Monetary Policy Committee’s plan to hike interest rates to curb inflation if current economic trends continue.

The pound could be in for another bumpy ride this week against the dollar with Mark Carney due to speak later today and the US Federal Reserve’s meeting on Wednesday to dictate the dollar’s performance on the currency markets later in the week.

The Fed is expected to announce that it will begin to unwind its huge $4.5tn balance sheet but investors will be equally as interested in the central bank’s thoughts on sluggish inflation, which is weighing on the chance of an interest rate hike across the Atlantic before the end of the year.

11:31AM

Petra Diamonds misses targets as Tanzanian worries worsen

Petra recently suspended operations at its mine in Tanzania as the East African country looks to take more control of its mining sector

Shares in Petra Diamonds have slumped 7pc after the FTSE 250 miner reported a disappointing set of results and warned that legal challenges in Tanzania could mean it breaches its debt covenants once again.

The stock slid to 77.50p in early trade after Petra warned that failure to resolve a dispute with the Tanzanian government over diamond exports may result in it breaching two of its covenant measures.

The company said it would “monitor the situation very closely and take decisive action if required”.

Petra had already warned in June that it was in talks with its lenders after suffering a six-month delay at one of its major projects, resulting in it missing production guidance for the year.

Read Jon Yeomans’ full report here

Petra Diamonds
11:23AM

HSBC reverses position on sterling; revises 2017 forecast from $1.20 to $1.35 against the dollar

“We were very wrong.”

That’s how HSBC’s forex team started this morning’s note on sterling to clients, its tail between the legs as the currency smashed the bank’s forecast.

Its strategist David Bloom said that the Bank of England’s “unexpected hunger” to join the ECB and Federal Reserve in beginning to tighten monetary policy had lifted sterling above its estimates, adding that the pound has “happily ignored the political intrigue of Brexit”.

After forecasting the currency to plunge to $1.20 against the dollar by the end of the year, it now believes that it will remain around its current level of $1.35.

The bank does, however, believe that the pound is “likely to weaken in 2018 as the market questions the merit of rate hikes and politics belatedly gets a grip on it”.

10:44AM

Eurozone inflation takes small step in the right direction

Eurozone inflation picked up to 1.5pc in August, Eurostat has confirmed this morning, reversing the downward trend concerning officials at the European Central Bank.

The ECB has been reluctant to signal a shift in monetary policy until inflation starts to rise back towards its 2pc target. After three months of decline or stagnation, the headline figure has finally started to rise again, jumping 0.2 percentage points in the latest estimate. 

Rising prices for transport fuel and accommodation services lifted the headline figure most while Ireland and Greece weighed heaviest on figures in the currency bloc.

The headline rate could begin to fall again in the coming quarters, however, according to Pantheon Macro eurozone economist Claus Vistesen.

He argued: 

“The inflation data in the Eurozone will be driven by two separate stories in the next three-to-six months. The headline likely will fall significantly as base effects push energy inflation lower. The ECB published an estimate earlier today to suggest that headline inflation could fall to 0.9% in the first quarter of 2018. That sounds a little too drastic to us, but we agree with the direction.

“If this forecast is right—and it will be unless oil prices soar—it will create an odd backdrop for the expectations of tighter monetary policy. Core inflation, however, likely will rise slightly providing cover for the ECB to reduce the pace of QE. In particular, we think non-energy goods inflation will increase in Q4 as a lagged response to higher PPI inflation. By contrast, risks are then tilted to the downside in Q1. Services inflation also should edge higher, albeit less so. We look for core inflation in France and Italy to deliver the main upside surprises.” 

10:24AM

Mark Carney speech could help kick-start the pound’s momentum once again

Arch dove Gertjan Vlieghe backing a rise last Friday was seen as an important step towards the Bank of England hiking interest rates

Sterling’s momentum on the forex markets has slowed to a stop this morning but a speech from Bank of England governor Mark Carney this afternoon could kick-start the currency’s recent rally once again.

The pound was lifted to its highest post-EU referendum level against the dollar on Friday after a speech from Gertjan Vlieghe, who is considered the most dovish member of the Bank of England’s Monetary Policy Committee, supported raising interest rates if current economic trends continue.

The Bank of England’s statement on Thursday alongside its decision to hold rates at 0.25pc said that a majority of the central bank’s policymakers backed hiking rates to curb inflation in the coming months and the backing of an arch dove like Mr Vlieghe was seen as an important step towards the MPC voting for a rise.

This morning’s gains on the FTSE 100 could be short-lived if Mark Carney’s speech cements the MPC’s position, according to IG chief market analyst Chris Beauchamp.

He said:

“While sterling’s weakness is giving it some much-needed respite, the gains could well prove fleeting if Mark Carney delivers further remarks this afternoon that follow up on last week’s hawkish turn. 

“Having seen such heavy losses at the end of last week there were bound to be plenty of candidates for dip buying on the index, and with UK stocks still broadly out of favour among institutions this rally could easily have legs,  especially with Q4’s seasonality just weeks away. However, it will all depend on Mark Carney today.”

9:47AM

House prices continue to be dragged down by London 

London continued to drag down the national average

London houses continued to plunge in value in September, dragging down the national average a further 1.2pc in September, fresh data from Rightmove has revealed today.

Only the North East, Yorkshire and the East Midlands saw an increase in prices while London prices fell by 2.9pc compared to the previous month. 

Rightmove said that the number of sales agreed was higher than a year ago, showing that demand remains strong.

House prices reaching their limit after rising for the last six years will be “unavoidable”, said Rightmove director Miles Shipside.

However, he did manage to pick out this silver lining in today’s figures:

“Interest rates cannot realistically drop any further to help buyer affordability, but the potentially good news for buyers’ finances, which have been under attack for years, is that there is some relief from the wage-rise cavalry.

“Average wage rises are now running at nearly double the annual rate of property price rises, and the longer any meaningful differential is maintained then the greater the improvement in buyer affordability.”

9:30AM

Hiscox braces for £110m of Hurricane Harvey claims

Chief executive Bronek Masojada said that the industry can cope with the costs from the two hurricanes

Hiscox said the devastation wreaked by Hurricane Harvey on the United States will cost the insurer $150m (£110m) in claims.

The FTSE 250 firm said the estimate was within the modelled range for a disaster of that scale and was based on an insured market loss of $25bn (£18bn).

It came as the company warned that “natural catastrophes” would run up a big bill for the insurance industry this year, but assured that the sector would be able to cope.

Alongside the aftermath of Hurricane Harvey, America is also grappling with the impact of Hurricane Irma, which made a devastating sweep through the Caribbean before slamming into Florida.

Read the full report here

9:21AM

Ryanair dives after ‘messing up’ pilot holidays

Ryanair has plunged this morning after announcing the cancellations 

The fall-out from Ryanair cancelling 40-50 flights every day for the next six weeks after it bungled its pilots’ holiday schedule has sent its shares diving 3.5pc this morning.

The company’s marketing officer Kenny Jacobs said that the airline had “messed up” their pilots’ holiday schedule but added that less than 2pc of its flights will be cancelled.

Rebecca O’Keeffe, head of investment at Interactive Investor said that the error will be “truly damaging” for the company.

She commented:

“Ryanair is notorious for not caring about what sort of headlines they get, working on the basis that all publicity is good publicity – but not this time. Previously, the carrier was happy to suggest that you get what you pay for and despite negative press lots of flyers embraced the fact that they knew the score and were happy to fly without the frills.

“However, the current situation is truly damaging, with flyers left high and dry with last minute cancellations or apprehensive that they might be affected. Is this a planning issue with Ryanair or is it a shortage of pilots? If the former, then it suggests some truly poor processes. If the latter, then we may see wages rise to fill the gaps. Either way, it’s not good news for Ryanair.”

9:04AM

Global stocks nudge up to fresh all-time high

The rally on European stock markets following a positive session in Asia has lifted the MSCI World Index to a fresh all-time high as investor sentiment continues to normalise and attention shifts to the US Federal Reserve’s latest policy decision on Wednesday.

Let’s take a quick look at the big movers in London this morning.

A quiet morning on the corporate front means engineer GKN and insurer Admiral being lifted by broker notes is enough to take them towards the top of the FTSE 100 leaderboard. BAE Systems’ rise on a Typhoon jet order from Qatar still leads the index early on, however, while HSBC has clawed back some of the ground it lost last week.

Gold’s retreat as risk appetite continues to return to normal has pulled precious metal producers Fresnillo and Randgold Resources to the bottom of the FTSE 100. After jumping to $1,347 per ounce on geopolitical worries two weeks ago the price has retreated back down to $1,315 with the markets giving a muted response to the latest escalation on the Korean Peninsula.

Spreadex analyst Connor Campbell commented on this morning’s rebound:

 “Having been battered in the wake of last week’s sterling super surge, the FTSE is using a quiet Monday morning to claw back some of its losses.   At one point last Friday the UK index hit 7195, its worst price since the end of April. Now it’s trying to push on to 7250, sitting a few points shy of that target after rising around half a percent.

“As for the pound, it has had little reason to really move just yet, instead opening relatively flat against both the dollar and the euro. Not to worry though – that means cable is just below last week’s $1.36-crossing 1 year peak, while against the euro sterling is sitting pretty at a 2 month high.”

8:27AM

Agenda: FTSE 100 rebounds as sterling’s momentum slows

BAE Systems leads the blue-chip index early on

The FTSE 100 has rebounded into positive territory this morning as sterling’s dominance on the currency markets eases, pulling the index off the four-month low it plunged to on Friday as the pound jumped to its highest post-EU referendum level.

BAE Systems is leading the rally early on after Qatar signed a letter of intent to buy 24 Typhoon jets from the defence specialist while engineering firm GKN is following shortly behind after being lifted by a broker note.

Only a handful of stocks have retreated early on with Randgold Resources dropping furthest as gold begins the new week in the red.

There’s little of note on the economics calendar today after last week’s action-packed diary. House prices continued to nudge down, retreating a further 1.2pc in August compared to the previous month, according to Rightmove’s latest data.

This morning, the pound has held onto the strong gains it made at the end of last week after the Bank of England’s MPC gave its strongest hint yet that interest rates will rise this year. Against the dollar, sterling is in flat territory at $1.3575 while against the euro, it has edged up to €1.1374, a two-month high,  ahead of final eurozone CPI figures due at 10am.

Interim results: M. P. Evans Group, Secure Income Reit, Concurrent Technologies, Learning Technologies Group, Ergomed, Medica Group

Full-year results: Bluefield Solar Income Fund, Green Reit, Finsbury Food Group, City of London Investment Group, Petra Diamonds 

Trading statement: Dairy Crest Group

AGM: Ormonde Mining

Economics: Rightmove HPI m/m (UK), NAHB Housing Market Index (US), Final CPI y/y (EU)