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Europe may be losing control of debt contagion: analysts
May 5, 2010--Europe is at risk of losing control of the Greek debt debacle and may now be powerless to halt an onslaught elsewhere that could threaten the very existence of the eurozone, analysts warn.
Investors fear a 110-billion-euro EU-IMF rescue package may be inadequate and -- worse -- may prove insufficient to shield Spain and Portugal from the market pressures assailing Greece.
Stock markets are tumbling around the world while the euro, the lynchpin in the grand European experiment, has fallen from 1.45 dollars at the start of the year to 1.29, calling into question the very survival of the single currency.
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Source: EUbusiness
Put Trading on European Stock ETF Surges to Record
May 5, 2010-- Trading of bearish options on an exchange-traded fund tracking European stocks surged to a record yesterday after a single transaction betting on a 12 percent drop by July.
Almost 36,000 puts to sell the SPDR Euro Stoxx 50 Fund changed hands in U.S. trading, compared with the four-week daily average of 10 contracts. All of the trades were done through a put-spread strategy, less than 30 minutes before European stock exchanges closed, that involved buying about 18,000 July $34 puts and selling the same number of July $30 puts. The ETF lost 2.5 percent to $33.94, the lowest in 10 months.
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Source: Business Week
Source announces launch of new MSCI Emerging Markets ETF to create improved tracking
May 4, 2010--Source has launched the MSCI Emerging Markets ETF, tracking the MSCI Emerging Markets Total Return (net) index.
The ETF will provide consistent tracking of its underlying benchmark through Source’s multi-counterparty derivative approach.
The new product will achieve the performance of the index by entering into total return swaps, thereby providing better returns than are currently being delivered in these products in Europe.
Bloomberg Ticker: MXFS LN
In addition, it is listed on the London Stock Exchange and trades in USD, thereby minimising foreign exchange related tracking error.
Source: Source
Barclays calls halt at private equity unit
May 4, 2010--Barclays has ordered a halt to new investments at its in-house private equity arm Barclays Ventures, one of the biggest investors in buy-outs of small-cap UK companies worth between £5m ($7.6m) and £50m.
The decision to end new investments by Barclays Ventures comes as banks across the world are reconsidering their private equity businesses amid growing regulatory pressure and increasing capital requirements on such activities.
The winding-down of Barclays Ventures, which has backed more than 120 companies in the past decade, adds to the list of private equity victims from the financial crisis, which already includes Candover, Alchemy Partners, and European Capital.
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Source: FT.com
Credit Suisse Underlines European ETF Expansion
May 4, 2010--We are pleased to announce that Credit Suisse has today aligned its ETF product range with Credit Suisse’s brand strategy, renaming its family of funds ‘Credit Suisse ETFs’ as it moves ahead with its plan to become one of the leading ETF providers in Europe in the coming years.
Dan Draper, Managing Director and Global Head of ETFs, commented, “Our ETF platform has grown significantly in a short time, reflecting the strength of Credit Suisse’s offering and its European network.”
He continued, “Credit Suisse offers clients the trust and experience of an asset manager, combined with the market leading trading and structuring expertise of an investment bank. Our new product name fits in with our one bank strategy, reflecting the strong franchise behind our ETF product suite. We are excited about developing new products and further expanding our European presence in the months to come.”
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Source: Credit Suisse AG
CESR publishes responses to the Call for evidence on micro-structural issues of the European equity markets
May 4, 2010--CESR Publishes Responses To The Call For Evidence On Micro-Structural Issues Of The European Equity Markets.
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Source: CESR
German pension funds need more credit research
May 4, 2010--The €1.4bn German Versorgungswerk for chartered accountants WPV plans to continue to decrease its exposure bank-related fixed income investments, but will have to seek external advice to do so.
We have already reduced the quote of banking debt but we want to further decrease our exposure,” said WPV managing director Hans-Wilhelm Korfmacher.
But he added there was an insufficient amount of credit research available for German pension funds, meaning smaller funds would need to turn to outside advice.
This was a potential business opportunity for asset managers, Korfmacher said, since smaller funds are not in a position to conduct the necessary research in-house.
WPV, which covers 15 German provinces, is seeking to outsource some of its research in this area, since this is one of the few things the Versogungswerk does not want to do on its own at the moment.
WPV currently has a fixed income allocation of 70% and Korfmacher is confident it will be able to reach its target returns despite the low interest rate environment.
“With moderate inflation, which is the most likely scenario, it should not be a problem to reach the discount rate," he said.
"Reaching an inflation adjusted return will be a challenge, but the diversification of assets - for example, via real estate investments - will provide a certain protection,” he explained.
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Source: IP&E
EON opens access to German gas market, avoids EU fine
May 4, 2010--German energy giant E.ON has ended a potentially costly competition probe by offering to "effectively open up access to the German gas market," the EU's anti-trust watchdog announced Tuesday.
The move by E.ON addresses EU concerns that the company "may have unfairly shut out competitors in a possible abuse of its dominant market position," the European Commission said in a statement.
"With today's commitments we have achieved a far-reaching solution which will give competitors access to the transport capacities they need to enter the market," said EU Competition Commissioner Joaquin Almunia.
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Source: EUbusiness
EU opens way for tougher rules for ratings agencies
May 4, 2010--The EU Commission on Tuesday opened the way for tougher rules on credit ratings agencies, saying changes planned for December may not be enough after European debt downgrades rocked the markets.
"I think we will need to go further, especially given the impact of these agencies on all financial or economic systems," EU Finance Commissioner Michel Barnier told a European parliamentary committee.
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Source: EU Business
Financial markets: Commission calls on Hungary to implement Markets in Financial Instruments Directive (MiFID)
May 5, 2010--The European Commission has today acted to ensure safer and more competitive financial markets by asking Hungary to comply with its obligation to implement the Markets in Financial Instruments Directive (MiFID). The aim of this Directive is to regulate investment firms and trading venues by ensuring a high degree of competition and investor protection. If the Directive is not properly implemented, investors in Hungary will not enjoy the same level of protection as elsewhere in the EU. Meanwhile, Hungarian investment firms wishing to provide cross-border services are put at a disadvantage as Hungarian law does not require them to comply with European standards. The Commission's request to Hungary takes the form of a reasoned opinion. If the national authorities do not reply satisfactorily within two months, the Commission may refer the matter to the Court of Justice.
What are the aims of the EU rules in question?
The Markets in Financial Instruments Directive 2004/39/EC (MiFID) and its implementing Directive 2006/73/EC are to significantly reduce barriers to cross-border trading of shares and cross-border provision of investment services. This would mean that there would be more competition between investment firms, regulated markets and other trading platforms. It would force markets to become more efficient, lower costs for issuers and investors of accessing capital markets and give investors a far greater choice of equities, bonds etc. to invest in – allowing them to maximise their returns. This would enable more investments in Hungary, which will in turn create more wealth and jobs.
MiFID rules also aim at ensuring a high level of protection for investors in Hungary. For example, there are strict limits on the inducements which banks or financial advisers can receive in respect of the services which they provide to their clients. When executing client orders, firms have to take all reasonable steps to deliver the best possible result. For retail clients, the emphasis is on ensuring that they get the best price for the instrument and the costs associated with the execution.
How is Hungary not respecting this rule and how are EU citizens and businesses suffering as a result?
Hungary has incorrectly transposed a number of provisions of MiFID and its implementing Directive 2006/73/EC, including provisions linked to definitions, market transparency, the passporting of investment firm authorisations and investor protection. As a result, Hungarian companies do not have the possibility to provide their services in other Member States – leaving less room for growth and jobs in Hungary's financial sector. Furthermore, investors are not able to enjoy the same level of competitiveness and protection in financial markets as elsewhere in the EU.
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Source: European Commission
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