:00:16. > :00:19.Report. Hello and welcome to World Business Report. US regulators
:00:19. > :00:26.accuse Royal Bank of Canada of a fraudulent trading scheme running
:00:26. > :00:36.to hundreds of millions of dollars. RBC calls the allegations baseless.
:00:36. > :00:39.
:00:39. > :00:44.Hello from Singapore. So is a treasure largest food company is
:00:44. > :00:47.expanding. Clearing the way for future profits. The London Stock
:00:47. > :00:57.Exchange looks to close a lucrative deal bringing in vital income in
:00:57. > :00:59.
:01:00. > :01:03.unpredictable markets. One of Canada's most powerful financial
:01:03. > :01:07.institutions, the Royal Bank of Canada is being sued by American
:01:07. > :01:10.regulators. The Commodity Futures Trading Commission accused the
:01:10. > :01:12.Toronto based lender of orchestrating a sham trading scheme
:01:12. > :01:22.worth hundreds of millions of dollars to take advantage of
:01:22. > :01:28.
:01:28. > :01:33.Canadian tax benefits. According to US regulators, a small group of
:01:33. > :01:39.senior bank officials bought and sold millions of dollars of shares.
:01:39. > :01:44.This took place between 2007 and 2010. The effect was to create a
:01:44. > :01:53.lot of trading without increasing the investment. The goal was to try
:01:53. > :01:59.and take advantage of tax credits. The US authorities say they are
:01:59. > :02:05.trying to distort the market. And violating rules of competitive
:02:05. > :02:12.pricing and rules about negotiating transactions. A spokesperson for
:02:12. > :02:19.the Royal Bank of Canada has dismissed the allegation saying the
:02:19. > :02:29.lawsuit is merit to less -- married to last. The suit is being brought
:02:29. > :02:32.by the agency. The shareholders of the London Stock Exchange meet
:02:32. > :02:40.later to decide whether to approve a $600 million takeover, giving the
:02:40. > :02:44.LSE control of clearing company - LCH Clearnet. Clearing sounds
:02:44. > :02:46.pretty dull, back office stuff. But it's a profitable and increasingly
:02:46. > :02:51.important part of securing financial transactions in today's
:02:51. > :03:01.unpredictable markets. Our Europe business correspondent Nigel
:03:01. > :03:02.
:03:02. > :03:09.Cassidy has more. With turnover down and Since slipping out of its
:03:09. > :03:17.has long been at risk of falling behind in the global exchange.
:03:17. > :03:24.Not so long ago, the future of the London Stock Exchange was about
:03:24. > :03:28.mergers. Now, several deals have fallen through, trading is slack
:03:28. > :03:34.and the London Stock Exchange is looking at the invisible world of
:03:34. > :03:39.clearing which could provide a more profitable direction. It's slowly
:03:39. > :03:42.eroding market could be improved by taking control of a central
:03:42. > :03:49.clearing house which protects buyers and sellers from default in
:03:49. > :03:55.the 'Twilight' zone between the buy and sell button and the transaction
:03:55. > :04:00.complete. It is profitable and increasingly demanded by regulators.
:04:00. > :04:06.The takeover is a calculated gamble. The New York Stock Exchange decided
:04:06. > :04:09.to move much of its clearing business and move it in house.
:04:09. > :04:15.Nonetheless, these commentators said the move should pay a dividend
:04:15. > :04:19.because the demand for clearance services is rising. Trade between
:04:19. > :04:26.banks have been set up by naturally - trades between to individual
:04:26. > :04:33.banks. With regulations, trade will move towards a centrally plead
:04:33. > :04:39.model. That will naturally increase the amount of work clearing houses
:04:39. > :04:43.will have to do. The LSE is closing in on LCH Clearnet. Last night, it
:04:43. > :04:49.said it had won backing from necessary majority of backers and
:04:49. > :04:52.could complete the takeover by the end of the year. The Philippines
:04:52. > :05:02.flight carrier that has been making losses the year is getting a
:05:02. > :05:07.
:05:07. > :05:13.helping hand from a beverage company. Tell us more. The company
:05:13. > :05:21.is firming up a deal to acquire an almost 50% stake in the parent firm
:05:21. > :05:26.of the flight career. Media reports are saying there $0.5 billion
:05:26. > :05:30.investment will give the management control. Negotiations have on going
:05:30. > :05:36.for the past three months and there are reports it could be sealed as
:05:36. > :05:42.early as today. Philippine Airlines has been suffering from Labour
:05:42. > :05:51.problems, competition and Highfield prices the years. In the last
:05:51. > :05:55.quarter of 2011 it recorded a loss of 33.5 million US dollars. It may
:05:55. > :05:58.help in the re fleeting and modernisation of the Air flight in
:05:59. > :06:05.preparation for the projected influx of interest in the coming
:06:05. > :06:09.years which would be beneficial for the country's tourism. They have
:06:09. > :06:12.diversified expanding into intensive sectors such as
:06:12. > :06:22.infrastructure, power, mining and telecommunications over the last
:06:22. > :06:26.few years. Faster profit growth after dominating the local and
:06:26. > :06:29.regional food and beverage sector. The outgoing president of the World
:06:29. > :06:33.Bank - Robert Zoellick - has been defending the lender from critics
:06:33. > :06:36.who say it is out of touch with the developing world. Traditionally run
:06:36. > :06:39.by an American, the Bank's leadership is being challenged this
:06:39. > :06:43.time by candidates from Africa and Latin America. Speaking to the
:06:43. > :06:51.BBC's Juliana Liu at the Boao forum in China, Mr Zoellick says the
:06:51. > :06:56.developing world is well represented within the bank. What
:06:56. > :07:01.we tried to do at the bank is to bring in more people from
:07:01. > :07:05.developing world all throughout. To have a successful system, you need
:07:05. > :07:10.people from Europe, Asia, and America, these regional banks are
:07:10. > :07:15.intended to be headed by people from the individual regions. I
:07:15. > :07:18.believe it is a good thing for the system to allow but it is also
:07:18. > :07:25.important for Europeans and Americans to have a place in it as
:07:25. > :07:32.well. You will never see the head of a US -- of the IMF from the US
:07:32. > :07:39.or the UN. Is that a glass ceiling? I do not know if I would use glass
:07:39. > :07:44.ceiling. It reflects the old power system. Within the US government,
:07:44. > :07:48.to be engaged in institutions over 25 years is, in some of those
:07:48. > :07:53.institutions could have US leadership because it keeps US
:07:53. > :07:58.engaged. They have a quarter of the world's economy. It may not be the
:07:58. > :08:05.bank. Countries have expressed an interest in creating a bank like
:08:05. > :08:10.the World Bank? The Brit bank will have different purposes. For India
:08:11. > :08:17.it is infrastructure, for China it may be the interest in trying to
:08:17. > :08:21.internationalise, Brazil sees it as an interaction with the other two
:08:21. > :08:27.partners. Russia is trying to determine its role. My feeling is
:08:27. > :08:32.that if it is created, there will be issues to work through. The head,
:08:32. > :08:36.the capital base, the staffing. But the World Bank should work with it
:08:36. > :08:40.as a partner just as we do other institutions because where we are
:08:40. > :08:44.unique is in addition to the financing, a lot of or work is
:08:44. > :08:48.knowledge. In other business news - shares of cosmetics firm Avon
:08:48. > :08:53.Products closed up more than 17% on Monday after rival Coty disclosed
:08:53. > :08:56.it had made a $10 billion takeover bid. Coty - the maker of Calvin
:08:56. > :09:04.Klein fragrances and perfumes from Beyonce and Lady Gaga - says went
:09:04. > :09:07.public with its bid after private approaches were rejected. Door to
:09:07. > :09:15.door cosmetics seller Avon has been struggling with falling profits and
:09:15. > :09:23.a bribery investigation. But it says the offer is too low. The
:09:23. > :09:27.market had been fairly mixed. When Japan are not following the trend.