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Standard Chartered buys stake in USE; Deutsche Bank in hot water in Germany…

Standard Chartered Bank (Mauritius) has bought a 3% stake in India’s United Stock Exchange (USE), the newest exchange to launch operations in India’s exchange-traded currency futures market.

StanChart is the first foreign bank to invest in the exchange. USE’s shareholders include 21 of India’s public sector banks, six private sector banks and the Bombay Stock Exchange, which holds a 15% stake and connects all its members to the USE platform. The USE offers currency futures in the dollar- rupee, euro- rupee, yen- rupee and pound-rupee pairs. It is also one of two Indian stock exchanges to offer currency options on thedollar-rupee. It began trading on 20 September 2010.

Germany’s Federal Court of Justice has ruled that Deutsche Bank failed to properly advise a client of the risks of interest rate swaps, in a verdict that could trigger a series of judgments against the bank and lead to greater restrictions in the sale of derivatives in Germany. In its ruling, the court ordered Deutsche Bank to repay €541,000 to German bathroom supplier Ille Papier Service, one of hundreds of small German companies that bought such swaps on the bank’s advice in the hope of saving on interest rate payments.

Deutsche Bank had a particular duty to disclose all of the risks to the company, as well as the bank’s potential profit, because of its “gross conflict of interest” in marketing a product whose risk was stacked to the bank’s advantage and “at the expense of the client”, the court ruled. In a statement, Deutsche Bank said it had to analyse the court’s written ruling before assessing its impact, but that legal and financial repercussions associated with similar lawsuits was limited.  ?

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