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EESC for comprehensive financial regulation
May 6, 2010--The EESC tabled its opinion on the regulation of alternative investment funds, such as hedge funds and private funds. Although endorsing the much debated proposal of the European Commission, the EESC calls for uniform risk data provision for all such funds and emphasizes their responsibility in triggering the crisis.
"Within the European economy, the impact of hedge funds and private equity funds is more serious in social and employment terms than in the economic and financial sense," stated rapporteur Mr. Angelo Grasso (Various Interests Group, Italy). He nevertheless stressed that alternative investment funds have contributed to the increase of the leverage of and the inherent risk within the financial system, a fact lately illustrated by the downgrading of Greek sovereign debt which is pushing the Eurozone country to the brink of default.
The EESC therefore endorses efforts to regulate the industry and its recommendations to a corresponding Commission proposal was passed with a clear majority at the April session of the body.
At the April plenary, the EESC tabled a series of concrete recommendations to the Commission proposal aiming to create an appropriate and efficient regulatory and supervisory framework for the European alternative funds industry.
It believes that both the alternative investment fund managers and their products should urgently be regulated by the proposal, even if many aspects of the managers' regulation already impact the operation and features of the products.
As for hedge funds' and private equity funds' future obligations to hand over systemic risk data about their operations, the EESC recommends taking over the internationally supported principles worked out by the International Organisation of Security Commissions (IOSCO), specifying eleven kinds of data including much needed information from large leveraged funds.
In order to ensure transparency and to protect investors, the EESC insists that all alternative investment fund managers should be covered by the rules of the new directive, and therefore be required to record and submit key information. However, the data to be given and the rules to be complied by have to be scaled to the funds' sizes and the risks they run.
Financial supervisory package : Frequently asked questions
May 6, 2010--On the 10th May MEPs in the Economic and Monetary Affairs Committee will be voting on the reforms they wish to see made to financial supervision in Europe. This document provides a synthesis of why reform is generally needed and also an indication of the main proposals which will be voted upon. A short list of links to further information is also provided.
Please note that this document is intended as an aid to understand the vote in the EP's economics committee. It in no way attempts to prejudge the result of the vote nor to advance one line of thinking over another. There may also be some last minute changes made to the compromise texts between the time of publication of this document and the vote in committee.
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Source: European Parliment
Rising iTraxx reflects health fears for Europe’s banks
May 6, 2010--Fears over the health of European banks have heightened dramatically in recent days, according to indicators that measure sentiment in the financial sector.
The cost to insure European banks against default has jumped to record levels amid worries that another financial crisis may be looming.
Markit’s iTraxx senior financial index, which tracks the cost to insure the leading European banks against default, has risen by 45 basis points to 162bp since the start of the month.
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Source: FT.com
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.
view responses
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
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