FT : US utilities plot big rise in electricity rates as data centre demand booms

US utilities plot big rise in electricity rates as data centre demand booms
Customers face higher bills to upgrade infrastructure needed to power AI systems

US power providers are seeking to impose big price increases on consumers following booming data centre demand, sparking debate over who should pay for the electricity burden of artificial intelligence.

Utilities have sought regulatory approval for $29bn in rate increases in the first half of 2025, a 142 per cent increase over the same period a year ago, according to a new report by PowerLines, an energy affordability advocacy group.

These increases highlight the question of whether surging electricity costs will be shared among all consumers, or charged directly to the large industrial users driving the new demand. Power consumption is expected to more than double in the next decade because of energy-intensive AI, according to BloombergNEF.

“What we’re . . . seeing is a deer-in-headlights dynamic,” said PowerLines executive director Charles Hua. “A lot of states don’t have a playbook for how they can meet rising [data centre] demand while balancing affordability and utility bills.”

US customers are served by a sprawling network of different utility companies, with many of the biggest planning prices increases.

National Grid, with customers in New York and Massachusetts, received approval in April to raise rates by $708mn, or up to $50 a month for each customer.

Meanwhile, PG&E, which serves 5.5mn business and residential customers in northern and central California, requested a $3.1bn rate increase in April, while Oncor, which serves 13mn customers in Texas, proposed an $834mn increase in June.

The Northern Indiana Public Service Company was allowed to increase monthly rates by $23 a customer, for a total of $257mn.

Utilities say the increases are in part needed to repair infrastructure damage, which has become more common because of climate change.

Massive capital investments are also needed to shore up the US’s ageing electricity grid and meet rapid demand growth.

But consumer advocates object to the price rises, and question whether households should bear the cost to ensure the US maintains its lead in AI technology.

One tool a growing number of utilities and regulators are turning to in order to keep bills down are so-called large-load tariffs, which charge big energy users for their excess load on the system.

AEP Ohio, a utility, in October filed a request with the Public Utilities Commission of Ohio, to charge data centres for 85 per cent of their projected energy use each month even if they use less, and pay an exit fee if their project folds.

Critics of these arrangements say it is not clear whether the costs are being allocated fairly. Some agreements between utilities and data centres take place behind closed doors.

Ari Peskoe, director at Harvard Law School’s electricity law initiative, said “these closed door proceedings are problematic as the regulator doesn’t get the benefit of multiple parties weighing in, and we don’t know” the terms of the deals.

“Meanwhile the utility is spending billions of dollars on infrastructure,” he added.

A recent Mississippi state law bars utility regulators from reviewing contracts between a utility and a data centre. Kansas regulators are allowed to approve contracts favourable to data centres on the grounds they will spur economic growth or local employment.

Another option is clean energy transition tariffs, which involves data centres committing to buying clean energy through utilities, which funds new renewable projects.

The Public Utilities Commission of Nevada in May approved an agreement for Google to buy power from Fervo Energy’s geothermal plant.

Rich Powell, chief executive of the Clean Energy Buyers Association — whose members include Google, Meta, Microsoft and Amazon — said the tariffs “insulate rate payers from higher costs while giving buyers long-term supply certainty”, though some cost sharing is necessary.

Utilities say they only invest in infrastructure when they have certainty that data centre projects will come to fruition, and that large customers such as data centres will help make their fixed costs more manageable.

PG&E said it “wants what our customers want — safe, reliable, clean and affordable energy service. We are delivering on our commitment to stabilise energy bills.”

FT : Europe just years away from uncrewed fighter jets, says defence start-up He

Europe just years away from uncrewed fighter jets, says defence start-up Helsing
AI company allowed its software to take control of a Gripen E fighter jet over the Baltic Sea in two test flights

Europe is just a few years away from being able to deploy fighter jets without human pilots, the continent’s most valuable defence start-up has said after completing two test flights.

Helsing, the drone maker and artificial intelligence company, allowed its software to take control of a Gripen E fighter jet made by the Swedish arms maker Saab in two exercises over the Baltic Sea in May and June.

Stephanie Lingemann, senior director of the company’s air division, said the experiments — during which a safety pilot remained in the aircraft as a backup — showed how rapidly the technology was progressing.

Adoption of the software by air forces in real-life settings was a question of “years rather than decades”, she said, speaking at the company’s offices in Munich. “We expect it this decade.”

Lingemann said that, while the best human fighter pilot could expect to accrue 5,000 flight hours during their careers, it took just 72 hours for Helsing’s company’s Centaur AI system to gain a million hours of experience.

“You can get to superhuman performance very quickly, react to new circumstances . . . and you are not having to send your pilots into dangerous situations,” she said. “That’s why this is so revolutionary.”

Militaries worldwide — including in the US, Russia and China — are working on adaptations for existing fighter jets as well as the development of new unmanned aircraft known as “loyal wingmen” that could work alongside them and enhance their capabilities.

The trend represents “a paradigm shift in air combat worldwide”, according to US air force colonel Kevin Anderson, who wrote about the latest developments in a recent article for the Joint Air Power Competence Centre, a Nato think-tank. 

Asked if the technology would eliminate the need for traditional fighter jets altogether, Lingemann said that she envisioned a long transition period.

She suggested pilots would first fly jets in conjunction with AI software that helped them to perform complex manoeuvres and detect threats. “I think we will have decades where we see both,” she said. “And then gradually operators — as with drones — will switch to different roles.”

Helsing was founded four years ago but has grown rapidly into one of Europe’s biggest start-ups as the war in Ukraine and a US retreat from European security has triggered a vast drive for rearmament on the continent.

Spotify founder Daniel Ek’s investment company led a €600mn funding round in June that valued the tech group at €12bn amid a surge in interest in the defence sector among investors.

Helsing started out focused purely on producing AI software for current and future weapons but has since expanded into producing its own drones and unmanned underwater vessels.

Though founded by three Germans, it has offices in London and Paris as well as Munich and Berlin, and is eager to present itself as a pan-European company at a time when the continent is seeking to boost its defence capabilities and foster local production.

The ballooning industry for autonomous weapons raises major questions about ethics, accountability and the future of warfare.

Antoine Bordes, Helsing’s vice-president for artificial intelligence, said humans were always central to decision-making when it came to the deployment of Helsing weapons and software systems.

But he said it was important for Europe not to be squeamish about developing autonomous strike technologies. “If we don’t do it in Europe, with our own values, it will be done elsewhere,” he said.

Still, Simon Brünjes, who runs the Helsing division that produces armed drones deployed in Ukraine, said the company did not “want to go there” when it came to deploying fully autonomous lethal drones that would decide what to strike and when.

On a recent visit to Ukraine, Brünjes said he had seen how kindergartens and other civilian infrastructure were often found very close to the front line.

“In such an environment, we want a human to be making the decision,” he said. “In other scenarios — full-scale war with Russia or China — it’s a different question.”

Helsing, which has agreements to supply a total of 10,000 drones to Ukraine, has drawn some criticism from the country’s troops for the performance and price tags of its Altra software and the HF-1 drone — a “kamikaze” model designed to be destroyed upon impact with its target.

Brünjes said the HF-1 had a “capability ceiling” but he was confident that the HX-2, a successor model that is undergoing testing in Ukraine, would represent a significant improvement.

>>> US After Hours Summary: KLG +54.3% surging on WSJ report that Ferrero nearin

After Hours Summary: KLG +54.3% surging on WSJ report that Ferrero nearing deal to acquire KLG; NRIX +10.7% higher on earnings; MEI -14.2%, AXTI -11.8% lower on earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: NRIX +10.7%

Companies trading higher in after hours in reaction to news: KLG +54.3% (Ferrero nearing deal to acquire KLG for $3 bln, according to WSJ), PSNL +10% (expands collaboration with Tempus), AGCO +2.7% (authorizes new $1 bln share repurchase program), DLTR +1.2% (authorizes new $2.5 bln share repurchase program), COST +1% (June same store comps), KBR +0.3% (COO resigns), TNXP +0.2% (publication of Phase 3 RESILIENT Trial Results of TNX-102 SL), ORCL +0.1% (RMNI settles with ORCL), ULS +0.1% (expands software platform)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: MEI -14.2%, AXTI -11.8%, PCYO -3.7%, AZZ -0.1%

Companies trading lower in after hours in reaction to news: MREO -36.1% (RARE and MREO announce UX143 Phase 3 portion of Orbit study progressing toward final analysis), RARE -27.6% (RARE and MREO announce UX143 Phase 3 portion of Orbit study progressing toward final analysis), ERJ -5.7% (Brazil stocks weak on 50% Trump tariff), ONL -5.1% (rejects unsolicited proposal from Kawa Capital), PLUG -3.4% (stock offering by selling shareholder), GGB -2.1% (Brazil stocks weak on 50% Trump tariff), BSBR -2% (Brazil stocks weak on 50% Trump tariff), EWZ -1.8% (Brazil stocks weak on 50% Trump tariff), RYTM -1.6% ($150 mln stock offering), ITUB -0.8% (Brazil stocks weak on 50% Trump tariff), FRT -0.2% (completes acquisition; advances capital allocation strategy)

The Information : SpaceX Rises as Tesla Falls

SpaceX Rises as Tesla Falls

Apparently, not all of Elon Musk’s investors are worried that he’ll take his eye off the ball again. SpaceX, his rocket company, is considering a plan to raise funds and allow insider share sales, in a deal that would value the company at $400 billion, Bloomberg reported today. That figure would represent a 14% increase from SpaceX’s $350 billion valuation in December during a secondary offering of insider shares. It’s a good time to be a SpaceX investor!

The vibes among shareholders in Musk’s other big company, Tesla, are not nearly so good. The electric vehicle maker’s shares are down 26% over the same period that saw SpaceX’s valuation leap. As we noted in yesterday’s briefing, Tesla’s shareholders were particularly rattled on Monday when Musk said he planned to form his own political party, the America Party, to challenge the Democrat-Republican duopoly in American politics. That sent the company’s shares down nearly 7% as investors worried about politics and the prospect of a continued feud with President Donald Trump distracting Musk from the task at hand.

There are a number of reasons for the split in shareholder sentiment. SpaceX’s defensive moat around its main businesses—rocket launches and satellite internet service—is deep, and it could take rivals years to challenge its business with real competition. Musk also has a clear No. 2 at SpaceX, Gwynne Shotwell, who has shown she can run the company without him around. SpaceX is a private company, unlike Tesla, and many of its shareholders have deep, long-term connections to Musk and his companies. That may make its valuation less sensitive to the kinds of issues that would rattle retail investors in a public company.

Tesla, in contrast, is facing serious near-term competition in the EV market, particularly in China. Musk is betting the house on speculative new businesses—robotaxis and humanoid robots—with huge technical hurdles. And at times, he seems openly disdainful of the hassles of running Tesla as a public company, which probably doesn’t endear him to some shareholders. In the latest example, Musk on Tuesday told one prominent financial analyst, Daniel Ives, to “shut up” after Ives advised Tesla’s board of directors to make a series of Musk-related changes. For now, SpaceX investors don’t have to endure that kind of abuse, at least not in public.

The Information : Apple’s COO Retirement Offers Clues About Cook Succession

Apple’s COO Retirement Offers Clues About Cook Succession

The post–Tim Cook era at Apple got a bit less fuzzy today. The company announced that Jeff Williams, its chief operating officer, will retire at the end of the year and pass the COO baton to Sabih Khan, Apple’s senior vice president of operations. Apple portrayed the change as an orderly changing of the guard, describing it as “part of a long-planned succession.”

But the change also offered further hints about who might eventually take over for Cook as CEO. As our Apple reporter Aaron Tilley pointed out in his brief on today’s news, Williams was for some time widely considered a possible successor to Cook. The two men earned their bona fides turning Apple’s supply chain operations into the envy of the tech industry, so it would have been logical for Cook to hand the leadership of the company to someone in his mold.

But Williams is only two years younger than Tim Cook, who is now 64. Setting up Williams as a successor may not have been the best message to send to Apple employees and shareholders, as Apple’s product line is looking a little long in the tooth, and the rise of artificial intelligence creates possible new threats for the company.

That may be why in recent years, there’s been growing buzz about John Ternus, Apple’s senior vice president of hardware engineering, who is 50, as a possible Cook successor. With Williams leaving the scene, Ternus’ status as heir apparent becomes, well, even more apparent.

WWD : S&P Cuts Saks Global’s Credit Rating to CC

S&P Cuts Saks Global’s Credit Rating to CC
While the company’s $600 million in financing will help it keep up with vendor payments, S&P views a planned bond exchange as “tantamount to a default.”

Saks Global’s new $600 million in financing has it better positioned to pay vendors and rework its business — but the way the luxury retailer is raising that money has drawn the ire of Standard & Poor’s.

The debt watchdog downgraded Saks’ credit rating to “CC,” a significant drop from “CCC-plus,” with a negative outlook.

Late last month, the retailer lined up the financing just ahead of a crucial $120 million interest payment. It included $200 million in commitments that are subject to certain conditions and a $400 million first-in, last-out asset-based credit facility, carved out of the company’s $1.8 million asset-based facility.

But $100 million of the FILO facility included an exchange of some of the $2.2 billion in senior secured bonds the company sold in December to buy Neiman Marcus Group.

S&P described the financing arrangement as “tantamount to a default” as the bondholders “will receive less value than they were initially promised and will rank lower in terms of priority than the new money notes.”

The rating agency said it expects to lower its rating on Saks to “selective default” or “default” if the company goes through with the financing.

When credit ratings are moved into default because of debt exchange, they often bounce back quickly.

While going into default is not a good look for a company’s finances, it is a distinction that lives mostly in finance circles and is not expected to alter Saks’ plans or its ability to pay vendors.

The company’s also been finding extra money in operations as it integrates Neiman Marcus.

“We have both significantly accelerated our plans for synergy capture and increased our expected annual cost reduction to $600 million over the next few years,” Saks noted to WWD in a statement.

The value of Saks’ bonds have already been re-rated in the market, where they have traded as low as 34 cents on the dollar in May and have recently been trading at 51 cents.

But the credit rating switch is a sign of just how much work Saks still has to do as it integrates Neiman Marcus, cuts costs, reestablishes itself with vendors and looks to grow with a new shop on Amazon.

Although Saks was slow to pay vendors over the last couple of years, it has lately been said to be making its payments and is in the process of making good on past due bills.

It will need to keep that flow of goods moving to perform its reset.

“A disruption in Saks’ inventory flow has led to a pronounced deterioration in its operating performance and liquidity challenges,” S&P said in its downgrade. “Overdue payments, borrowing base constraints, and seasonal inventory-building led to a decline in the availability under the company’s $1.8 billion asset-based lending facility to $415 million as of Feb. 1. In addition, Saks reported a free operating cash flow deficit of $517 million in 2024.”

And S&P said Saks Global’s market position “will weaken as competitors with greater financial capacity expand their business operations.”

“We forecast the company will report negative free operating cash flow over the next two years and continue to heavily rely on its ABL facility,” S&P said. “While Saks has real estate assets worth over $4 billion on a net basis, it has been unable to monetize them in a timely manner to meet its financial commitments.”

Marc Metrick, chief executive officer of Saks, prepped vendors for the S&P switch in a letter on Wednesday that was obtained by WWD.

“Recognizing that the media continues to actively cover Saks Global, I also wanted to take this opportunity to give you a preview of some developments we expect in the near term that may generate attention,” Metrick wrote. “Of the up to $600 million of committed financing, $300 million was funded at the end of June. The next step with respect to the balance involves a bond exchange offer, which will launch in the coming days and is expected to be completed in August. There will be highly technical press releases issued at various times during the exchange offer, per legal requirements.

“As a result of the exchange transaction, S&P Global, a credit rating agency, recently issued an update on Saks Global. It is common and expected for S&P to issue an update on companies following the announcement of a financing transaction like we announced in late June. As part of this, S&P applies a formulaic and technical criteria when analyzing these transactions, which has led to a downgrade of Saks Global’s credit rating. Additionally, when the bond exchange closes, we also expect S&P to apply what the rating agency refers to as a ‘selective default,’ which is also common for transactions of this nature.”

Metrick said the company will soon be sharing its first-quarter results with bondholders and an update to its partners.

“You can expect us to focus on the fact that with the bolstered liquidity that the new financing provides, we will be even better positioned to execute on our strategy and capture significant growth opportunities within the luxury market,” he said.

TechCrunch : Jack Dorsey says his ‘secure’ new Bitchat app has not been tested f

Jack Dorsey says his ‘secure’ new Bitchat app has not been tested for security

On Sunday, Block CEO and Twitter co-founder Jack Dorsey launched an open source chat app called Bitchat, promising to deliver “secure” and “private” messaging without a centralized infrastructure.

The app relies on Bluetooth and end-to-end encryption, unlike traditional messaging apps that rely on the internet. By being decentralized, Bitchat has potential for being a secure app in high-risk environments where the internet is monitored or inaccessible. According to Dorsey’s white paper detailing the app’s protocols and privacy mechanisms, Bitchat’s system design “prioritizes” security.


But the claims that the app is secure, however, are already facing scrutiny by security researchers, given that the app and its code have not been reviewed or tested for security issues at all — by Dorsey’s own admission.

Since launching, Dorsey has added a warning to Bitchat’s GitHub page: “This software has not received external security review and may contain vulnerabilities and does not necessarily meet its stated security goals. Do not use it for production use, and do not rely on its security whatsoever until it has been reviewed.”

This warning now also appears on Bitchat’s main GitHub project page, but was not there at the time the app debuted.

As of Wednesday, Dorsey added: “Work in progress,” next to the warning on GitHub.

This latest disclaimer came after security researcher Alex Rodocea found that it’s possible to impersonate someone else and trick a person’s contacts into thinking they are talking to the legitimate contact, as the researcher explained in a blog post.

Rodocea wrote that Bitchat has a “broken identity authentication/verification” system that allows an attacker to intercept someone’s “identity key” and “peer id pair” — essentially a digital handshake that is supposed to establish a trusted connection between two people using the app. Bitchat calls these “Favorite” contacts and marks them with a star icon. The goal of this feature is to allow two Bitchat users to interact, knowing that they are talking to the same person they talked to before.

Dorsey did not respond to TechCrunch’s request for comment sent to his Block email address.


On Monday, Radocea filed a ticket on the GitHub project to ask how to report the security flaw he discovered in the Bitchat Favorites system. Soon after, Dorsey marked it as “completed,” without comment. (Dorsey re-opened the ticket on Wednesday, saying security issues can be reported by posting on GitHub directly.)

Another person reported concerns with Dorsey’s claims that Bitchat has “forward secrecy,” a cryptographic technique that ensures that even if an attacker steals or compromises an encryption key, that attacker still cannot decrypt previously-sent messages.

Someone also pointed out a potential buffer overflow bug, which is a common type of security vulnerability where a hacker can force a device’s memory to spill out to other locations, opening the door for a data compromise.

Radocea warned that Bitchat users should not trust the app yet.

“Security is a great feature to have for going viral. But a basic sanity check, like, do the identity keys actually do any cryptography, would be a very obvious thing to test when building something like this,” Radocea told TechCrunch. “There are people out there that would take the messaging around security literally and could rely on it for their safety, so the project in its current state could endanger them.”

Referring to his and other people’s findings, Radocea criticized Dorsey’s warning that Bitchat has not been tested for security.

“I’d argue it has received external security review, and it’s not looking good,” he said.

FT : Hedge funds to blame for coffee price surge, says Lavazza boss

Hedge funds to blame for coffee price surge, says Lavazza boss
Italian company chair blames speculators for ‘80 per cent’ of price rise that created ‘unbelievable’ volatility

Hedge funds and other financial speculators were to blame for “80 per cent” of the surge in coffee prices that created “unbelievable” volatility and uncertainty in the market, the head of the Lavazza coffee company said.

Giuseppe Lavazza, chair of Lavazza Group, which owns the eponymous brand, hit out at the “big investment funds” that had driven prices to levels that were “totally unsustainable for the industry, totally unsustainable even for the consumer”.

London robusta futures, the global benchmark, soared to a record high of more than $5,700 per tonne in January. Prices have eased since on hopes of improved harvests to about $3,500 per tonne this week. But the benchmark is still well above the historical average of $1,700.

“Coffee, over the last four years, where coffee prices rose so much, 80 per cent is speculation, especially hedge funds,” Lavazza told a gathering of journalists on the sidelines of the Wimbledon tennis tournament.

Factors such as bad harvests had contributed but the “hedge funds really made a difference”.

“Coffee is a big market, but the futures market is a small one. So with [a small amount of] money, you can create a big, big tsunami,” said Lavazza, the fourth generation of his family to lead the company. “This is not a big risk, but if they win the race, they can gain a lot of money.”

He continued: “The volatility and uncertainty that put into the market, it’s really unbelievable . . . for roasters, for traders and even for producers.”

Coffee consumption had fallen 3.5 per cent over the past two years due to the high prices, he said.

Hedge funds and other speculators have long been blamed for huge moves in commodity prices, with so-called commodity trading advisers — funds that typically latch on to strong upward or downward price trends — viewed as particularly culpable.

Fund managers say they provide liquidity to markets and are only active in areas that already exist.


Yet Lavazza said liquidity issues and soaring margins calls — the additional capital traders are required to put up to maintain futures market positions — had tipped some in the industry over the edge. 

Netherlands-based Mercon Coffee Group, one of the world’s largest coffee traders, filed for bankruptcy in late 2023 at the start of the current rally.

Lavazza had been forced to dramatically increase its working capital, with the Turin-based company spending €1.6bn to buy coffee last year, up from €600mn in 2018.  

The Italian executive, who has complained that the £4 cost of an espresso in London was too high, said consumer coffee prices had “hopefully” now peaked.

However prices could rise again due to new deforestation regulations proposed by the EU and US President Donald Trump’s tariffs plans. 

Lavazza said Trump’s levy on EU goods was “fine” but warned that tariffs between the US and coffee-producing countries such as Brazil and Vietnam would be more challenging and push up prices for American consumers.

But this was “manageable” compared with the proposed EU law to ban imports of a group of seven commodities, including coffee, from being sold on the bloc’s market if they were grown on deforested land. 

The proposed regulation that is due to come into force at the end of the year has been criticised by 18 member states including Italy, as well as chocolate companies such as Cadbury owner Mondelez.

“It’s very tough, because it really puts some very strong limits for European roasters to import good coffee,” Lavazza said. The legislators pushing it “don’t have any idea how our business works”, he added.

FT : Top financial watchdog recommends limits on hedge fund leverage

Top financial watchdog recommends limits on hedge fund leverage
FSB proposes that non-banks provide more disclosure on borrowing amid rising concern the sector could trigger new crisis

Hedge funds and other non-bank groups could face limits on the amount of leverage they can use and may have to provide more disclosure to regulators about their borrowing, under plans put forward by the world’s financial stability watchdog.

The Financial Stability Board (FSB) said on Wednesday that its recommended measures — which follow a consultation announced late last year — were designed to tackle the build-up of leverage in non-banks, which “can be an important amplifier of stress. If not properly managed, it can create risks to financial stability.”

The plans highlight the belief among central bankers and regulators that hedge funds and other non-bank actors such as private credit funds, which often make heavy use of leverage but enjoy lighter regulation than banks, pose one of the biggest threats to the global financial system.

Regulators have warned about the so-called Treasury basis trade, a highly leveraged bet in which hedge funds short US government bond futures while borrowing money to take a cash position, hoping the two prices will converge. The unwinding of this trade was blamed for a sharp sell-off in bond markets in March 2020, while hedge funds were also widely seen as exacerbating Treasury market turbulence in April this year.

On Wednesday, the Bank of England said it would consult on ways to address vulnerabilities in UK repo markets, with hedge fund borrowing reaching a record high of £77bn. A “small number of hedge funds” accounted for 90 per cent of net gilt borrowing, the BoE said.

The measures recommended by the FSB, which was set up by the G20 group of countries after the 2008 crisis to co-ordinate global financial regulation, include requiring non-banks to disclose more data on leverage, making more transactions centrally cleared, imposing tougher rules on borrowing via refinancing markets and even setting outright limits on leverage levels for some funds.

It provided a range of options for national regulators to choose from to “help guide authorities in selecting, designing, and calibrating policy measures”, it added.

Hedge funds criticised parts of the FSB’s proposals.

“The report’s recommendations on blunt entity-level caps and minimum haircut requirements are not appropriate tools to reduce risk in the financial system, and could have unintended, negative consequences for economic growth and financial stability,” said Bryan Corbett, head of the Managed Fund Association, which represents the biggest hedge funds, including Millennium Management, Citadel and Apollo Global Management.

However, Corbett welcomed the FSB’s “focus on enhancing central clearing and counterparty risk management as targeted tools to address risky forms of leverage, and agree that current leverage measurement approaches are inflexible and flawed”.

The Alternative Investment Management Association, which represents hundreds of hedge funds, private credit funds and private equity groups, said it supported the idea of “more harmonised risk reporting to financing counterparties while preserving confidentiality”, which it said would “reduce the need for blunt regulatory tools”.

The non-bank sector — which includes hedge funds, private equity, insurers and pension funds — has grown to almost half of global financial assets over the past decade, with “business models and strategies continuously evolving and often using leverage”, the FSB said. 

It said the measures would allow national authorities to “identify financial stability risks created by non-bank financial intermediation leverage and have appropriate policy measures in place to address the risks that they identify”.

The FSB also announced the creation of a new task force to identify and address areas where it lacks sufficient data on the build-up of leverage outside of banks. 

The task force will be led by Andrew Bailey, who this month took on a three-year mandate as FSB chair alongside his role as Bank of England governor. It will start by conducting a test case on “leveraged trading strategies in sovereign bond markets”. 

The FSB said it had “identified several data challenges that have hindered the effective assessment of non-bank sector vulnerabilities by authorities”. It plans to publish a report on sovereign bond leveraged trading strategies by the middle of next year.

As well as bond market turmoil in the early stages of the coronavirus pandemic and earlier this year, regulators’ concerns intensified following the collapse of family office Archegos Capital Management four years ago, which left investment banks with $10bn of losses, and the UK gilt market crisis three years ago, which was triggered by derivative-linked strategies in pension funds.

The FSB said there was a positive side to non-bank leverage, which “can enhance efficiency and support liquidity in financial markets”.

But it added: “This is only feasible when leveraged entities maintain sufficient headroom to increase risk and leverage, including having sufficient liquidity.”

FT : UK set to hold minority stake in Sizewell C nuclear project

UK set to hold minority stake in Sizewell C nuclear project
Ministers are closing in on a final deal to secure private investment into the multibillion pound development

The UK government is set to hold a minority stake in the Sizewell C nuclear power project as ministers close in on a final deal to secure private investment into the multibillion pound development.

The government’s stake is expected to be diluted to around 47.5 per cent, with Canadian investor Brookfield Asset Management, British energy supplier Centrica and French energy giant EDF holding the remainder, according to people with knowledge of the ongoing negotiations.

Brookfield is likely to take a 25 per cent stake, with Centrica buying 15 per cent, the people said.

EDF, which is leading the development of the site, said on Tuesday it would reduce its holdings to 12.5 per cent. The announcement came as part of French President Emmanuel Macron’s state visit to the UK this week.

The Suffolk project is part of a push by the UK government to use nuclear power to ease Britain’s transition away from fossil fuels such as gas in electricity generation.

UK energy secretary Ed Miliband said last month that Sizewell would be the beginning of a “golden age” for nuclear in Britain. He also said the project would be “majority public funded”. The government has committed £14.2bn.

The final cost of Sizewell could be close to £40bn, according to industry estimates that the government and Sizewell have not accepted. The British government currently owns about 84 per cent of the project.

Electricity consumers will be charged a fee on their bills to help fund Sizewell’s construction, reducing the risk for investors.

Brookfield and Centrica declined to comment. The Department for Energy Security and Net Zero said the government would remain a “significant” shareholder. EDF declined to comment.

EDF yesterday said its total investment would be a maximum of £1.1bn. The company has already invested around £600mn. Bpifrance, the country’s export credit agency, is also providing a £5bn debt guarantee.