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Commercial Awareness Update - November 2019
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<blockquote data-quote="Alice G" data-source="post: 15704" data-attributes="member: 1160"><p><strong>20th November 2019</strong></p><p><strong></strong></p><p><strong>Welcome to this week’s Commercial News Update!</strong></p><p><strong></strong></p><p><strong></strong></p><p><strong>Topics covered this week are:</strong></p><p><strong></strong></p><p><strong>1. The Launch of Disney+ [USER=1160]@Alice G[/USER] </strong></p><p><strong></strong></p><p><strong>2. Alibaba’s Hong Kong Listing [USER=1643]@Moni[/USER] </strong></p><p><strong></strong></p><p><strong>3. EU extends access to UK clearing houses for fear of no-deal Brexit [USER=1562]@ELA[/USER] </strong></p><p></p><p>**********************************************************************************************************************************************************************</p><p><u><strong>The Launch of Disney+ [USER=1160]@Alice G[/USER]</strong></u></p><p><strong></strong></p><p><strong>The Story:</strong></p><p></p><p>In the last week, Disney+ officially launched as an on-demand streaming service. Offering subscriptions at just $6.99 a month, the platform serves up Marvel’s hit superhero films, old classics like ‘Snow White’, and all 662 episodes of ‘The Simpsons’ which Disney gained the rights for when it acquired 21st Century Fox for $7bn earlier this year.</p><p><strong></strong></p><p><strong>Impact on Businesses and Law Firms:</strong></p><p></p><p>The 96-year-old company’s move to on-demand streaming services is a great case in point for how businesses need to be fluid and agile in changing markets in order to stay relevant.</p><p></p><p>With another player in the market, the on-demand entertainments industry is rife with competition. Whilst great for consumers getting high-quality fare, it can make it much more difficult for these businesses to break even, let alone be profitable. Though old favourites like ‘Friends’ can be an asset to these services, consumers want new content which is incredibly expensive to produce and difficult to create in terms of original idea generation. This is speculative, but I think it will be interesting to watch this space and monitor the potential acquisitions of media firms with impressive content creators within them. As one of the few ways these services can get ahead, having greater access to production and content ideas is a good way to stay ahead.</p><p></p><p>A challenge for Disney+ will be rivalling Netflix abroad. Getting overseas subscribers is key to growth and success within this industry and Netflix is already deeply entrenched with around 158 million subscribers worldwide. Whilst competitive pricing does help, Disney+ will need to be mindful of its marketing strategy in order to cater its approach to international audiences – something which Netflix has been adept at doing for some time.</p><p></p><p>The entertainments sector is flourishing, and this is an exciting opportunity for law firms. Intellectual property and licensing rights are integral, and lawyers are needed to draft the documentation to protect these rights.</p><p><u><strong></strong></u></p><p><u><strong></strong></u></p><p><u><strong>Alibaba’s Hong Kong Listing [USER=1643]@Moni[/USER]</strong></u></p><p><strong></strong></p><p><strong>The Story:</strong></p><p></p><p>This week, Alibaba, China’s biggest e-commerce company which is currently only listed on the New York Stock Exchange, opened up its order books for its upcoming secondary listing of 500 million new ordinary shares, worth up to $13.4 bn, on the Hong Kong stock exchange. Despite concerns about the recent political instability in Hong Kong, Alibaba received stronger-than expected demand for its shares and will close the order books early. Alibaba has been considering a Hong Kong listing for several years and had initially hoped to IPO on the Hong Kong Stock exchange in 2014, however, the exchange at the time did not allow for dual class share structures. The shares listed in Hong Kong will, importantly, give investors in mainland China the opportunity to invest in the company. In addition, it allows Alibaba to mitigate the risks of continued tensions between the US and China. Given the recent escalation of political instability in Hong Kong, whose economy has fallen into recession for the first time since 2009, Alibaba’s listing is a sign of confidence that the Hong Kong economy will be able to withstand the recent tribulations.</p><p></p><p><strong>Impact on Businesses and Law Firms:</strong></p><p></p><p>Last year, the Hong Kong stock exchange topped global IPO market rankings, beating out the New York stock exchange. Given the political turmoil this year, few analysts expect the Hong Kong exchange to maintain its title. Nevertheless, Alibaba’s listing may help the exchange maintain its rankings, and also help assuage investor fears that Hong Kong’s role as a global financial centre will be diminished as a result of political instability.</p><p><u><strong></strong></u></p><p><u><strong></strong></u></p><p><u><strong>EU extends access to UK clearing houses for fear of no-deal Brexit [USER=1562]@ELA[/USER]</strong></u></p><p><strong></strong></p><p><strong>The Story:</strong></p><p></p><p>A temporary permit which allows EU investors to use UK-based clearing houses in the event of a no-deal Brexit is currently in place, but it is due to expire at the end of March 2020.</p><p></p><p>Last week, Valdis Dombrovskis, the EU Commission vice-president responsible for financial services policy, announced that he ‘intend[ed] to propose to renew this time-limited equivalence decision beyond that date’ because it looks like the EU financial services industry will not have alternatives in place in time.</p><p><strong></strong></p><p><strong>Impact on Businesses and Law Firms:</strong></p><p></p><p>Clearing houses are financial institutions which aim to facilitate the exchange of payments, securities or derivatives transactions. Among other functions, they act as a mediator between any two parties involved in a financial transaction. To give a simplified example, if an investor wanted to sell 100 shares of his stock in X company to another investor, the clearing house’s job would be to make sure the investor gets paid the proper amount for his 100 shares and that the buyer does receive the shares they paid for. In short, clearing houses protect both parties, alleviating traders’ fears of getting involved in a transaction that won’t end well and preventing defaults from ricocheting to the rest of the market. Clearing houses are even more important in the context of derivatives transactions, because they are more complex and carry more risk.</p><p></p><p>London dominates the global market for the clearing of swap contracts (a type of derivatives contract) and most euro-dominated derivates are cleared in London. Moreover, EU regulations ban European companies from using clearing houses outside the bloc, unless a special agreement is in place.</p><p></p><p>Given how integral to the financial system UK clearing houses are, Valdis Dombrovskis’s announcement is a response to the growing fears among banks, fund managers, investors and lawyers that the financial markets would be dangerously destabilised if the UK left the EU without having finalised the nature of its relationship with the bloc, particularly with regards to the clearing of financial transactions.</p></blockquote><p></p>
[QUOTE="Alice G, post: 15704, member: 1160"] [B]20th November 2019 Welcome to this week’s Commercial News Update! Topics covered this week are: 1. The Launch of Disney+ [USER=1160]@Alice G[/USER] 2. Alibaba’s Hong Kong Listing [USER=1643]@Moni[/USER] 3. EU extends access to UK clearing houses for fear of no-deal Brexit [USER=1562]@ELA[/USER] [/B] ********************************************************************************************************************************************************************** [U][B]The Launch of Disney+ [USER=1160]@Alice G[/USER][/B][/U] [B] The Story:[/B] In the last week, Disney+ officially launched as an on-demand streaming service. Offering subscriptions at just $6.99 a month, the platform serves up Marvel’s hit superhero films, old classics like ‘Snow White’, and all 662 episodes of ‘The Simpsons’ which Disney gained the rights for when it acquired 21st Century Fox for $7bn earlier this year. [B] Impact on Businesses and Law Firms:[/B] The 96-year-old company’s move to on-demand streaming services is a great case in point for how businesses need to be fluid and agile in changing markets in order to stay relevant. With another player in the market, the on-demand entertainments industry is rife with competition. Whilst great for consumers getting high-quality fare, it can make it much more difficult for these businesses to break even, let alone be profitable. Though old favourites like ‘Friends’ can be an asset to these services, consumers want new content which is incredibly expensive to produce and difficult to create in terms of original idea generation. This is speculative, but I think it will be interesting to watch this space and monitor the potential acquisitions of media firms with impressive content creators within them. As one of the few ways these services can get ahead, having greater access to production and content ideas is a good way to stay ahead. A challenge for Disney+ will be rivalling Netflix abroad. Getting overseas subscribers is key to growth and success within this industry and Netflix is already deeply entrenched with around 158 million subscribers worldwide. Whilst competitive pricing does help, Disney+ will need to be mindful of its marketing strategy in order to cater its approach to international audiences – something which Netflix has been adept at doing for some time. The entertainments sector is flourishing, and this is an exciting opportunity for law firms. Intellectual property and licensing rights are integral, and lawyers are needed to draft the documentation to protect these rights. [U][B] Alibaba’s Hong Kong Listing [USER=1643]@Moni[/USER][/B][/U] [B] The Story:[/B] This week, Alibaba, China’s biggest e-commerce company which is currently only listed on the New York Stock Exchange, opened up its order books for its upcoming secondary listing of 500 million new ordinary shares, worth up to $13.4 bn, on the Hong Kong stock exchange. Despite concerns about the recent political instability in Hong Kong, Alibaba received stronger-than expected demand for its shares and will close the order books early. Alibaba has been considering a Hong Kong listing for several years and had initially hoped to IPO on the Hong Kong Stock exchange in 2014, however, the exchange at the time did not allow for dual class share structures. The shares listed in Hong Kong will, importantly, give investors in mainland China the opportunity to invest in the company. In addition, it allows Alibaba to mitigate the risks of continued tensions between the US and China. Given the recent escalation of political instability in Hong Kong, whose economy has fallen into recession for the first time since 2009, Alibaba’s listing is a sign of confidence that the Hong Kong economy will be able to withstand the recent tribulations. [B]Impact on Businesses and Law Firms:[/B] Last year, the Hong Kong stock exchange topped global IPO market rankings, beating out the New York stock exchange. Given the political turmoil this year, few analysts expect the Hong Kong exchange to maintain its title. Nevertheless, Alibaba’s listing may help the exchange maintain its rankings, and also help assuage investor fears that Hong Kong’s role as a global financial centre will be diminished as a result of political instability. [U][B] EU extends access to UK clearing houses for fear of no-deal Brexit [USER=1562]@ELA[/USER][/B][/U] [B] The Story:[/B] A temporary permit which allows EU investors to use UK-based clearing houses in the event of a no-deal Brexit is currently in place, but it is due to expire at the end of March 2020. Last week, Valdis Dombrovskis, the EU Commission vice-president responsible for financial services policy, announced that he ‘intend[ed] to propose to renew this time-limited equivalence decision beyond that date’ because it looks like the EU financial services industry will not have alternatives in place in time. [B] Impact on Businesses and Law Firms:[/B] Clearing houses are financial institutions which aim to facilitate the exchange of payments, securities or derivatives transactions. Among other functions, they act as a mediator between any two parties involved in a financial transaction. To give a simplified example, if an investor wanted to sell 100 shares of his stock in X company to another investor, the clearing house’s job would be to make sure the investor gets paid the proper amount for his 100 shares and that the buyer does receive the shares they paid for. In short, clearing houses protect both parties, alleviating traders’ fears of getting involved in a transaction that won’t end well and preventing defaults from ricocheting to the rest of the market. Clearing houses are even more important in the context of derivatives transactions, because they are more complex and carry more risk. London dominates the global market for the clearing of swap contracts (a type of derivatives contract) and most euro-dominated derivates are cleared in London. Moreover, EU regulations ban European companies from using clearing houses outside the bloc, unless a special agreement is in place. Given how integral to the financial system UK clearing houses are, Valdis Dombrovskis’s announcement is a response to the growing fears among banks, fund managers, investors and lawyers that the financial markets would be dangerously destabilised if the UK left the EU without having finalised the nature of its relationship with the bloc, particularly with regards to the clearing of financial transactions. [/QUOTE]
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