Finance

Dante Disparte, Circle’s global head of policy, said that he sees the U.K. bringing in legislation for stablecoins, a type of cryptocurrency pegged to government currencies, soon.
“I think we’re within months, not years” of formal U.K. laws for the stablecoin market being introduced, Disparte told CNBC in an interview last week during a visit to London.
He added that the U.K. has some catching up to do with the European Union, which has begun enforcing regulation of stablecoins under its MiCa, or Markets in Crypto Assets, regulation.

Launched in 2018 by crypto firm Circle, USDC is now the second-biggest stablecoin globally, with more than $30 billion worth of tokens in circulation.
Nurphoto | Getty Images

LONDON — The U.K. is likely to see stablecoin laws introduced in a matter of “months, not years,” according to crypto firm Circle’s top policy executive.
Dante Disparte, Circle’s global head of policy, said that he sees the U.K. will soon bring in legislation for stablecoins, a type of cryptocurrency that aims to maintain a constant peg to government currencies such as the U.S. dollar or British pound

“I think we’re within months, not years” of formal laws for the stablecoin market being introduced, Disparte told CNBC in an interview last week during a visit to London.
The Treasury and the Bank of England were not immediately available for comment when contacted by CNBC.
Disparte suggested the U.K.’s lengthier approach to introducing laws targeted at crypto may have been a good thing given events that transpired in 2022, such as the collapse of FTX, a crypto exchange once worth worth $32 billion, as well as other industry crises.

“You could also look back, and I think many in the U.K. and in other countries would argue that they’re vindicated in not having jumped in too quickly and fully regulating and bringing the environment onshore because of all the issues we’ve seen in crypto over the last few years,” Disparte said.
However, he added that more recently, there’s been a sense of urgency to introduce formal regulations for stablecoins, as well as trading in digital assets and other crypto-related activities.

By not bringing forth stablecoin-specific rules, the U.K. would risk missing out on the benefits of the technology. He added that the U.K. has some catching up to do with the European Union, which has begun enforcing regulation of stablecoins under its MiCa, or Markets in Crypto Assets, regulation. Singapore has also agreed formal laws for the stablecoin industry.
“In the spirit of protecting the U.K. economy from excess risk and crypto, there’s also a point in time in which you end up protecting the economy from job creation and the industries of the future,” Disparte said. He stressed that “you can’t have the economy of the future unless you have the money of the future.”
Among the benefits cited by Disparte are innovation in the wholesale banking industry, real-time payments, and the digitization of the British pound.
Officials at the Bank of England are currently exploring whether or not to introduce a digital version of the pound, which has previously been dubbed “Britcoin” by the media.

Dante said he had met with officials from the Bank of England recently and was reassured by their approach to so-called central bank digital currencies, or CBDCs.

What has the UK done so far?

Prime Minister Keir Starmer’s predecessor, Rishi Sunak, had previously envisioned Britain becoming a global crypto hub.
When the Conservative Party was in power, U.K. government officials had signaled that new legislation for stablecoins as well as crypto-related services such as staking, exchange and custody would be in place as early as June or July.
In April, the former government announced plans to become a “world leader” in the crypto space, outlining plans to bring stablecoins into the regulatory fold and consult on a regime for regulating trading of cryptoassets, like bitcoin.
Last October, Sunak’s administration issued a response to a consultation on regulation of the crypto industry, saying it would aim to introduce “phase 2 secondary legislation” in 2024, subject to parliamentary approval.
The new Labour government hasn’t been as vocal as the Conservatives were on crypto regulation. In January, the party released a plan for financial services, which included a proposal to make the U.K. a securities tokenization hub.

Securities tokens are digital assets that represent ownership of a real-world financial asset, such as a share or bond.
Stablecoins are a multibillion industry, worth more than $170 billion, according to CoinGecko data. Tether’s USDT token is the largest stablecoin by value, with a market capitalization of over $120 billion. Circle’s USDC is the second-largest, with the combined value of coins in circulation worth over $34 billion.
However, the market has been shrouded in controversies in the past. In 2022, Tether’s USDT dropped from its $1 peg after a rival stablecoin, terraUSD, collapsed to zero. The events raised doubts over whether USDT was truly backed 1:1 by an equal amount of dollars and other assets in Tether’s reserves.
For its part, Tether says its coin is backed by dollars and dollar-equivalent assets, including government bonds, at all times. More

Less than a mile from Singapore’s luxurious Changi Airport sits a rather less glamorous business park. Residents of the industrial estate include freight and logistics firms, as well as the back offices of several banks. One building is a little different, however. Behind a glossy onyx facade, layers of security and imposing steel doors, sits more than $1bn in gold, silver and other treasures. Reserve SG hosts dozens of private vaults, thousands of safe deposit boxes and a cavernous storage room where precious metals sit on shelves rising three storeys above the ground. More

Christian Klein, head of German software giant SAP, says Europe risks falling behind the U.S. and China if it ends up overregulating the AI sector.
“If you only regulate technology in Europe, how can our startups here in Europe … compete against the other startups in China, in Asia, in the U.S.?” Klein said.
Instead, he argues businesses need a more harmonized, pan-European approach to pressing issues like the energy crisis and digital transformation — and less regulation overall, not more.

Christian Klein, Co-CEO of German software and cloud computing giant SAP, speaks during a press conference to present SAP’s financial results for 2019 on January 28, 2020 in Walldorf, southwestern Germany. – German software giant SAP reported a bottom line undermined by heavy restructuring costs, but lifted forecasts for the year ahead.
Daniel Roland | AFP | Getty Images

Europe should avoid regulating artificial intelligence and focus its attention on the results of the technology instead, the CEO of German enterprise tech giant SAP told CNBC Tuesday.
Christian Klein, who has held the top job at SAP since April 2020, said Europe risks falling behind the U.S. and China if it overregulates the AI sector.

While it’s important to mitigate the risks associated with AI, Klein argued that regulating the tech while it’s still in its infancy would be misguided.
“It’s very important that how we train our algorithms, the AI use cases we embed into the businesses of our customers — they need to deliver the right outcome for the employees, for the society,” Klein said on CNBC’s “Squawk Box Europe” Tuesday.
“If you only regulate technology in Europe, how can our startups here in Europe, how can they compete against the other startups in China, in Asia, in the U.S.?” Klein added.
“Especially for the startup scene here in Europe, it’s very important to think about the outcome of the technology but not to regulate the AI technology itself.”

Instead, Klein argued, businesses need a more harmonized, pan-European approach to pressing issues like the energy crisis and digital transformation — and less regulation overall, not more.

Upbeat earnings

His comments came after SAP reported bumper third-quarter earnings late Monday. Shares of the software vendor jumped more than 4% to a record high.
The software giant posted total revenue of 8.5 billion euros ($9.2 billion) for the quarter, up 9% year-over-year as sales related to cloud products jumped 25%.
SAP raised its 2024 outlook for cloud and software revenue, operating profit and free cash flow. The German firm has been working toward a transition to cloud computing over the last decade.
In 2016, SAP acquired Concur, the business travel and expenses platform, in a bet that software would move to the cloud.
More recently, SAP has made AI a big focus of its strategy as it looks to reposition itself for faster growth after higher interest rates and macroeconomic headwinds dented tech spending and led to industry-wide layoffs.
In January, SAP announced a restructuring plan affecting over 7% of its global workforce — or the equivalent of 8,000 roles. More

Alumni from Klarna have gone on to create 62 new startups — more than any other fintech unicorn in Europe, according to a new report from venture capital firm Accel.
Out of 98 venture-backed fintech unicorns in the region, 82 have produced 635 new tech-enabled startups, according to Accel’s report.
Accel labels these companies “founder factories,” on the basis that they have become breeding grounds for talent that often go on to establish their own firms.

Buy now, pay later firms like Klarna and Block’s Afterpay could be about to face tougher rules in the U.K.
Nikolas Kokovlis | Nurphoto | Getty Images

LONDON — More startups are being spun out of Swedish digital payments firm Klarna than any other financial technology unicorn in Europe, according to a new report from venture capital firm Accel.
Accel’s “Fintech Founder Factory” report shows that alumni from Klarna have gone on to create a total of 62 new startups, including the likes of Swedish lending technology firm Anyfin, regulatory compliance platform Bits Technology and AI-powered coding platform Pretzel AI.

That is more than any other venture-backed fintech startup worth $1 billion or more in the region.
This includes the digital banking app Revolut, whose former employees have founded 49 startups. It also includes money transfer app Wise and online-only bank N26, where ex-staff at both firms have started 33 companies each, according to Accel’s data.

‘Founder factories’

Accel labels these companies “founder factories,” on the basis that they have become breeding grounds for talent that often go on to establish their own firms.

“We now have a very long list of large, durable, successful companies in Europe across the different ecosystems — including London, Berlin and Stockholm — that have been generating interesting outcomes,” Luca Bocchio, partner at Accel, told CNBC.
Out of 98 venture-backed fintech unicorns in Europe and Israel, 82 have produced 635 new tech-enabled startups, according to Accel’s report, which was published Tuesday ahead of a fintech event the firm is hosting in London Wednesday.

The data also factors in fintech unicorns based in Israel. However, most of the biggest fintech founder factories come from Europe.

Klarna’s workforce reduction

Klarna has attracted headlines in recent months due to commentary from the buy now, pay later giant’s founder and CEO, Sebastian Siemiatkowski, about using artificial intelligence to help reduce headcount.

Klarna, which currently has a company-wide hiring freeze in place, cut its overall employee headcount by roughly 24% to 3,800 in August this year. Siemiatkowski has said that Klarna was able to reduce the number of people it hires thanks to its implementation of generative AI.
He is looking to further reduce Klarna’s headcount to 2,000 employees — but has yet to specify a time for this target.
Klarna’s ability to produce so many new startups had little to do with cutbacks at the company or its focus on using AI to boost worker productivity and hiring less people overall, according to Accel’s Bocchio.
Asked about why Klarna topped the ranking of fintech founder factories in Europe, Bocchio said: “Klarna is an organization that is coming of age now.”
That means it is currently “well positioned to produce interesting founders,” Bocchio added — both because it’s large and has been around for a long time, and because of the “interesting” ways its staff work internally.

Staying close to home

Another notable finding from Accel’s report is that most companies founded by former fintech unicorn employees tend to do so in the same cities and hubs their employer was founded in.
Nearly two-thirds (61%) of companies founded by former employees of fintech unicorns were founded in the same city as the unicorn, according to Accel.
More broadly, the numbers show that Europe is seeing a “flywheel effect,” according to Bocchio, as tech firms are scaling to such a large size that staff can take learnings from them and leave to set up their own ventures.
“I think the flywheel is spinning because that talent is remaining inside the flywheel. That talent is not going anywhere.” This, he said, “speaks to the maturity and appetite” of individuals within Europe’s fintech founder factories. “We expect this trend to continue. I don’t see any reason why it should stop.” More

HSBC has unveiled a major overhaul, announcing a new geographic setup, consolidated operations and a new CFO — the lender’s first female finance chief.
This is the second heavyweight leadership shakeup for HSBC in recent months, after former finance boss Georges Elhedery was named CEO of the group back in July.
The bank also announced plans to restructure into four divisions: Hong Kong, U.K., international wealth and premier banking, and corporate and institutional banking.

Aaron P | Bauer-Griffin | GC Images | Getty Images

HSBC on Tuesday unveiled a new geographic setup and consolidated its operations into four business units, amid a key overhaul that delivered the lender’s first female finance chief.
The bank’s shares were flat in early London trade Tuesday. The U.K.-listed stock is up more than 6% over the year-to-date.

As part of the restructuring outlined in regulatory filings with the Hong Kong bourse, HSBC plans to divide its operations between an “Eastern markets” branch, reuniting Asia-Pacific and the Middle East, along with a “Western markets” division, comprising the non-ringed-fenced U.K. bank, the continental European business and the Americas.
Chinese insurer Ping An, HSBC’s largest shareholder with a more-than-9% stake, has previously campaigned for the spinoff of HSBC’s Asian business from the rest of the group’s operations — although this was ultimately rejected during the bank’s annual general meeting last year.
The bank on Tuesday also announced plans to streamline its businesses in a bid to “reduce the duplication of processes and decision making.” From January, it will operate through four divisions: Hong Kong, U.K., international wealth and premier banking, and corporate and institutional banking.
“The new structure will result in a simpler, more dynamic, and agile organisation as we focus on executing against our strategic priorities, which remain unchanged,” Elhedery said Tuesday in a statement, adding that the shakeup will help propel HSBC in its “next phase of growth.”
The bank’s new corporate and institutional banking unit will bring together its commercial banking business (outside of Hong Kong and the U.K.), global banking and markets business, and Western markets wholesale banking operations.

UBS analysts said the magnitude of the required restructuring was currently “unknown and important.”
“Aligning functions for a group with 213,978 staff involves exceptional costs, a divisional shift provides the opportunity for new CEO cost reductions,” they wrote in a Tuesday note entitled “Simpler, faster, better?”.
“Also important is whether this structure will prompt other changes: for example, (i) where does Australian retail (65% of loans are [residential] mortages) fit in this structure? (ii) is insurance manufacturing key to international wealth? and (iii) does HSBC need a bigger corporate Latam presence?”

Change at the top

Like many European lenders, HSBC has benefitted from a high interest rate environment since the Covid-19 pandemic, but now faces the loss of that support after the European Central Bank started loosening monetary policy in June.
Back in July, HSBC posted estimates-beating pretax profit of $21.56 billion in the first half of the year, announcing a share buyback program of up to $3 billion. The bank is set to next report its financial results on Oct. 29.
Earlier this month, the Financial Times reported that Elhedery was targeting the bank’s senior management as part of cost-cutting restructuring plans that could save as much as $300 million.
Amid the managerial overhaul announced Tuesday, HSBC said Pam Kaur — currently group chief risk and compliance officer — will assume the CFO post on Jan. 1, taking over from interim Chief Financial Officer Jon Bingham.
This is the second heavyweight leadership shakeup for HSBC in recent months, after former finance boss Georges Elhedery was named CEO of the group back in July. More

Residents of Beirut are, by now, used to warnings from the Israel Defence Forces ahead of bombing runs. Typically, these instruct locals to stay away from a tower block suspected of harbouring fighters, or perhaps a school said to double as a weapons cache. The warning on October 20th was a little different. It told people to steer clear of branches of al-Qard al-Hassan (AQAH), a bank. More

Diana Greene Foster led The Turnaway Study, a landmark research study on the socioeconomic outcomes for Americans who are “turned away” from abortion.
Foster, a demographer and professor at the University of California San Francisco, found higher instances of poverty and a greater likelihood of bankruptcies and evictions for women who couldn’t get an abortion.
Abortion is on the ballot in 10 states. One poll suggests it’s the most important issue for young women on Election Day.

Arizona residents rally for abortion rights on April 16, 2024 in Phoenix, Arizona.
Gina Ferazzi | Los Angeles Times | Getty Images

Abortion is an important issue for many voters, especially young women, heading into the November election.
Abortion access is about more than politics or health care; it’s also a personal finance issue, said Diana Greene Foster, a demographer who studies the effects of unwanted pregnancies on people’s lives.

Foster, a professor at the University of California San Francisco, led The Turnaway Study, a landmark research study on the socioeconomic outcomes for Americans who are “turned away” from abortion. The study tracked 1,000 women over a five-year period ending January 2016. The women in the study had all sought abortions at some point before the study commenced; not all received one.
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In November, voters in 10 states — Arizona, Colorado, Florida, Maryland, Missouri, Montana, Nebraska, Nevada, New York and South Dakota — will choose whether to adopt state ballot measures about abortion access.
Such ballot measures follow a U.S. Supreme Court decision in 2022 that struck down Roe v. Wade, the ruling that had established a constitutional right to abortion in 1973.
Nationally, women under age 30 rank abortion as the most important issue to their vote on Election Day, according to the KFF Survey of Women Voters, which polled 649 women from Sept. 12 to Oct. 1. It ranked as the third-most-important issue among women voters of all ages, behind inflation and threats to democracy, according to the poll from KFF, a provider of health policy research.

Abortion is among the least-important issues for registered Republicans, according to a Pew Research Center poll of 9,720 U.S. adults conducted Aug. 26 to Sept. 2.
CNBC spoke with Foster about the economics of abortion access and the financial impacts of the end of Roe v. Wade.
The conversation has been edited and condensed for clarity.

Low earners most likely to seek an abortion

Greg Iacurci: Can you describe the population of women who typically seek abortions in the U.S.?
Diana Greene Foster: One good thing about The Turnaway Study is that our demographics closely resemble national demographics on who gets abortions.
More than half are already parenting a child. More than half are in their 20s. A small minority are teenagers, even though lots of people think teenagers are the main recipients.
It’s predominantly people who are low-income. That’s been increasingly the case over time. It’s become disproportionately concentrated among people with the least economic resources.
GI: Why is that?
DGF: I think wealthier people have better access to contraceptives, even after the Obamacare-mandated coverage. Not everyone benefits from that. Not all states participate in that.
[Medical providers] still give contraceptives out. There are 20 states that have laws that say you should be able to get a year’s supply at a time, but almost nowhere is that actually available. The law says you should be able to get it, but you don’t. I led the studies that showed that if you make people go back for resupply every month or three months, as is very commonly done, you’re much more likely to have an unintended pregnancy. The laws have changed, but practice hasn’t changed. Access is not perfect yet.
Also, some people have abortions who have intended pregnancies because something went wrong with their health, with the fetus’s health, with their life circumstances. So even contraceptives aren’t the ultimate solution.

Greater likelihood of poverty and evictions

GI: What are the economic findings of your research?
DGF: When we follow people over time, we see that people who are denied an abortion are more likely to say that their household income is below the federal poverty line. They’re more likely to say that they don’t have enough money to meet basic living needs like food, housing and transportation.

Diana Greene Foster
Courtesy: Diana Greene Foster

Wanting to provide for the kids you already have is a common reason for abortion. We see that the existing children are more likely to be in poverty and in households where there aren’t enough resources if their mom couldn’t get an abortion.
[They’re also] more likely to have evictions, have a larger amount of debt if they’re denied an abortion.
GI: Can we quantify those impacts?
DGF: For example, six months after seeking an abortion, 61% of those denied an abortion were below the poverty line compared to just under half — 45% — of those who received an abortion. The higher odds of being below the [federal poverty line] persisted through four years.
And based on credit reports, we find that women who were denied abortions experienced significant increases in the amount of their debt 30 days or more past due, to an average of $1,749.70, a 78% increase relative to their pre-pregnancy [average]. The number of public records, such as bankruptcies, evictions and court judgments, significantly increased for those denied abortions, by 81%.
GI: Why does this happen?
DGF: Having a kid is a massive investment. Deciding to parent a child relies on an amount of social support and housing security and access to health care, and our country isn’t at all set up to provide those things for low-income people.

Why costs are both rising and falling for women

GI: Your study took place at a time when Roe v. Wade was still the law. That’s no longer the case. How do you expect these economic consequences might be impacted?
DGF: In The Turnaway Study, people were denied abortions because they were too far along in pregnancy, but now you can be denied an abortion at any point in pregnancy in something like 13 states. So, it potentially affects a much larger group of people.
But there have been other changes which have to do with resources to help people travel and information about how to order medication abortion pills online. So, it isn’t the case that everyone who wants an abortion is now carrying a pregnancy to term.
There has been a lot of effort to circumvent state laws, and I think The Turnaway Study really reveals why. People understand their circumstances, and they are very motivated to get care, even when their state tries to ban it.
GI: What are the financial impacts some women in those states might encounter?
DGF: I’m actually studying the economic costs of the end of Roe and travel [expense]. Costs went up by $200 for people traveling out of state. People were delayed more than a week.
Under Roe, people could drive to an abortion clinic or get a ride; [after Roe ended,] they were much more likely to be flying, having to take more modes of transportation. Over half stayed overnight. They traveled an average of 10 hours. That means taking time off work, too. So, it dramatically increased the cost for those who traveled to get an abortion.

There are people who ordered pills online who are not [included] in the study. For those people, the cost may have gone down, because it’s possible to order pills online for less than $30.
But you have to know about it, and you have to have an address, and you have to have internet, and it takes a level of knowledge to be able to pull that off. There can be a need for follow-up medical care, so you have to be able to get that. More

The Nasdaq MarketSite in New York, US, on Monday, Sept. 16, 2024. 
Yuki Iwamura | Bloomberg | Getty Images

KKM Financial has converted its Essential 40 mutual fund into an ETF, joining the growing shift by asset managers to a more tax-efficient fund model.
ETFs make it easier for investors and financial advisors with taxable accounts to choose when to create capital gains or losses. This differs from mutual funds, which can sometimes hit their investors with an unwanted tax bill due to withdrawals or portfolio changes.

“When you look at the tax efficiency of an ETF compared to a mutual fund, it is much more advantageous,” said Jeff Kilburg, founder and CEO of KKM and a CNBC contributor. “A lot of the wealth advisors that I work with really have issues with the capital gain distribution typical to a mutual fund.”
Many asset managers have been converting their mutual funds to ETFs in recent years, due in part to a 2019 SEC rule change that made it easier to run active investment strategies within an ETF. The number of active equity mutual funds has fallen to its lowest level in 24 years, according to Strategas.
More broadly, many asset managers are pushing the Securities and Exchange Commission to allow ETFs to be added as a separate share class within existing mutual funds.
The newly converted KKM fund will trade on the Nasdaq under the ticker ESN. The goal of the Essential 40 is to allow investors to “buy what you use” in one equal-weighted fund, according to Kilburg. Its holdings include JPMorgan Chase, Amazon, Waste Management and Eli Lilly, according to FactSet.
“We believe without these companies, the U.S. economy would be hindered, or would be in trouble,” he said.

The old mutual fund version of the Essential 40 had a three-star rating from Morningstar. Its best relative performance in recent years came in 2022, when it declined less than 11% — much better than the category average of about 17%, according to Morningstar.
Equal-weighted funds can often outperform market-cap weighted indexes during downturns. They’ve also been a popular strategy this year, due in part to concerns that the market was too reliant on the so-called Magnificent Seven stocks. The Invesco S&P 500 Equal Weight ETF (RSP) has brought in more than $14 billion in new investor funds this year, according to FactSet.
In 2024, the KKM fund was up about 16% year to date before its conversion, with roughly $70 million in assets, according to FactSet.
The ETF will have a net expense ratio of 0.70%, equal to that of the old mutual fund. More