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EEX Launches Phelix Week Futures
March 15, 2010--– EEX Power Derivatives supplements the product range of tradable Phelix Futures on the Power Derivatives Market. From 29 March 2010, the trading participants of EEX will also be able trade financially settled futures on a weekly
basis.
The Phelix Week Futures is a financial derivatives contract which refers to the average Power Spot Market prices of future delivery periods. The Phelix Week Future with the load ranges base load and peak load can be traded for the current week and the next
four weeks.
“This expansion of our product range closes the gap between the Spot and the Derivatives Market and enables our trading participants to implement financial hedging during a usually volatile period“, Oliver Maibaum, Managing Director of EEX Power Derivatives GmbH, explains and adds: “The week futures are the logical complement to the Phelix Month, Quarter and Year Futures which can be traded at the moment.” Just like the existing Phelix Futures products, the new products can also be traded and cleared by the Eurex participants through their existing infrastructure in the framework of the cooperation between EEX and Eurex.
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Source: EEX
Deutsche Bank names pair to Oppenheim
March 15, 2010--Deutsche Bank moved quickly to strengthen the management of Sal Oppenheim after completing the takeover of the crisis-hit private bank for €1bn.
Germany’s largest bank named two of its executives, Jürgen Dobritzsch and Jürgen Fiedler, to oversee financial control and risk management on an expanded executive board at Sal Oppenheim, which ran into trouble during the financial crisis. Another former Deutsche banker, Wilhelm von Haller, had already been installed as chief executive at its new subsidiary.
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Source: FT.com
First estimate for the fourth quarter of 2009-Employment down by 0.2% in the euro area and by 0.3% in the EU27
-2.0% and -2.1% respectively compared with the fourth quarter of 2008
March 15, 2010--The number of persons employed in the euro area1 (EA16) fell by 0.2% (347 000 persons) in the fourth quarter of 2009 compared with the previous quarter, according to national accounts estimates published by Eurostat, the statistical office of the European Union. In the same period, the number of persons employed in the EU271 decreased by 0.3% (583 000 persons). In the third quarter of 2009, employment declined by 0.5% in both zones. These figures are seasonally adjusted.
Falls in employment were recorded in manufacturing (-1.1% in the euro area and -1.0% in the EU27), construction (-0.4% and -0.7% respectively) and trade, transport & communication services (-0.5% in both zones). Financial services & business activities decreased by 0.1% in the euro area, but grew by 0.1% in the EU27. Agriculture increased by 0.5% and 0.1% respectively, and other services (which mainly includes public administration, health and education) grew by 0.2% in both zones.
Compared with the same quarter of the previous year, employment fell by 2.0% in the euro area and by 2.1% in the EU27 in the fourth quarter of 2009. In the third quarter of 2009, employment decreased by 2.2% and 2.1% respectively.
Eurostat estimates that, in the fourth quarter of 2009, 221.1 million men and women were employed in the EU27, of which 144.3 million were in the euro area. These figures are seasonally adjusted.
Over the whole of 2009, employment decreased by 1.8% (2 721 000 persons) in the euro area and also by 1.8% (4 021 000 persons) in the EU27, compared with +0.9% and +0.7% respectively in 2008.
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Source: Eurostat
EU rescue fund a 'long term' possibility: Almunia
March 15, 2010--An emergency fund to rescue eurozone economies could be a "long-term" possibility, the European Union's Commissioner for Competition Joaquin Almunia said Monday.
"A European monetary fund, it's something to think about in the long term," he told a conference in Madrid.
But "we cannot allow ourselves the luxury of thinking in the long term if we don't think in the short and medium term," he said.
He also said that coordination over budgets must be improved and strengthened and that the debt crisis in Greece must be resolved to get the eurozone economy back on track.
"The ball is in the court of the whole eurozone group... I will not recommend that it is played only in the long term," said Almunia, who was formerly the EU's economic affairs commissioner.
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Source: EUbusiness
STOXX launches New Optimised Index Series to track European Market Quartiles
March 15, 2010--- STOXX Limited, a global index provider and creator
of the leading European equity indices, today announced the launch of the STOXX Europe 600 Optimised Market Quartile Indices. The new indices are part of the STOXX Optimised Index family and classify the components of the STOXX Europe 600 Index
into the four market quartiles.
The STOXX Europe 600 Optimised Market Quartile Indices have been licensed to Source to underlie exchange-traded funds (ETF) which will be available in the next
couple of weeks.
“With the launch of the STOXX Europe 600 Optimised Market Quartile Indices we are taking an innovative approach to creating index products which offer market participants a way to measure the performance of European companies in relation to economic cycles,” said Hartmut Graf, chief executive officer, STOXX Ltd. “The new indices are an addition to our existing Optimised Index family, which applies superior concepts to improve liquidity and diversification in the indices.”
Ted Hood, CEO of Source, commented “Source is pleased to continue our collaboration with STOXX and expand the range of optimised European indices. The combination of increased liquidity with the ability to implement market cycle driven investing should prove highly popular.”
The STOXX Europe 600 Optimised Market Quartile Indices are based on forward-looking expectations of how certain types of companies respond to changes in the economic cycle.
The STOXX Europe 600 Optimised Consumer Discretionary Index covers those companies who are most sensitive to economic cycles, for example automotive companies, hotels and restaurants. The STOXX Europe 600 Optimised Consumer Staples Index represents companies which are less sensitive to economic cycles, such as manufacturers and distributors of food and beverages, tobacco companies or producers of non-durable household goods. The STOXX Europe 600 Optimised Defensive Index represents companies who tend to not be affected by economic cycles, while the STOXX Europe 600 Optimised Cyclicals Index is comprised of companies in the index universe which tend to follow economic cycles. All of the components of the STOXX Europe 600 Optimised Supersector Indices fall into one of the four Market Quartiles.
The classification of the individual companies into the four categories is based on various criteria: the company’s subsector classification according to the Industry Classification Benchmark (ICB), fundamental factors, broader market views and input from market participants.
The STOXX Europe 600 Optimised Market Quartile Indices follow the same methodology as the STOXX Optimised Indices. The most defining features of this index family is, that they take into account the ability to borrow a stock in the stock lending market, a key component in facilitating active trading in the underlying index constituents and related products. To incorporate this unique aspect, STOXX uses data provided by Data Explorers, the unique provider of global, independent data, analytics and insight into short selling and securities lending.
The STOXX Europe 600 Optimised Market Quartile Indices are available in price and net return versions, and are reviewed quarterly in March, June, September and December. The indices are weighted by float-adjusted market capitalization and calculated in euro.
Further information on the STOXX Europe 600 Optimised Market Quartile Indices is available at www.stoxx.com.
Source: STOXX
PLUS stock exchange launches Fixed Income trade reporting
March 15, 2010--The PLUS stock exchange is pleased to announce the launch of
trade reporting for Fixed Income securities on the PLUS market.
The launch responds to growing demand from private investors, providing them with a cost effective way to access fixed income securities such as UK Gilts and corporate bonds.
The new service extends PLUS’s existing offer of trade reporting for equities, increasing the variety of products retail investors can access through the exchange. PLUS is focused on serving the particular needs of the retail investor community and aims to further support retail trade flow in the UK.
Commenting on the launch, Ian-Patrick Lauder, Head of Trading Services at PLUS, said: “PLUS is committed to responding to customer needs and our service meets growing interest from private investors to access the fixed income securities market, which has traditionally been the preserve of institutional investors due to the high minimum investments involved.” This development enhances access to the UK retail brokerage community that PLUS gives to market-makers.
Rachel Maguire, Business Development Director at PLUS, added: “PLUS’s trading volume doubled in the second half of 2009 and this increase was largely due to individual clients trading shares. In 2010, we aim to further increase this retail flow by the addition of Fixed Income trade reporting to our product portfolio.”
Stacey Parsons from Winterflood Securities said of the launch: “Winterflood Securities
welcomes PLUS markets entry into Retail Fixed Income trade reporting together with the competitive rates they bring. Everything that promotes dealing in the Fixed Income Market to
retail investors and helps to make the Market accessible is excellent news.”
Source: Plus Stock Exchange
London Stock Exchange promotes best practice in investor relations
New guide will help companies communicate effectively with investors
- Series of events planned
March 15, 2010--The London Stock Exchange is this week sending copies of a new edition of its guide to investor relations to the companies on its markets. “Investor Relations - A Practical Guide” provides practical assistance to companies, whether quoted or considering a stock market flotation, on best practice in investor relations, examining the key principles firms should consider when developing their investor relations strategy.
The Guide collates a wealth of expertise from a series of corporate advisers, quoted companies and investors, and details the latest developments affecting investor relations, including the Companies Act 2006 provisions for electronic shareholder communication and AIM Rule 26, covering website disclosure for AIM companies.
The Guide provides insight into:
• the key stakeholders involved; • which people, internally and externally, comprise a company’s investor relations team and their responsibilities; and • the tools and activities available to companies to effectively communicate their story to shareholders, potential investors, analysts and the media
Tracey Pierce, Head of Equity Primary Markets, London Stock Exchange Group, said:
“We are committed to providing the companies on our markets with the tools they need to communicate effectively with investors, and I feel sure that this guide, alongside our other initiatives, will help companies in building constructive long-term relationships with their investors and other stakeholders. Implementing a successful investor relations strategy is central to enhancing liquidity, gaining access to capital and can help create enhanced profile and a vibrant shareholder community around a company’s stock.”
Tim Ward, CEO of the Quoted Companies Alliance, said:
“The most effective quoted companies see shareholder engagement as a long-term, on-going dialogue rather than an activity they undertake occasionally. A thorough ongoing IR programme takes many forms, including meetings with investors and journalists, meaningful annual reports and effective websites. The QCA is delighted to support this essential guide. The information contained in this guide will support companies’ understanding of these processes and the wider dynamics of shareholder engagement, helping the investment community to be more knowledgeable and confident about their current and prospective investments.”
Richard Davies, Chairman of the Investor Relations Society, said:
“Properly used, the investor relations team will be the eyes and ears of the company in the market and will deliver valuable insight into market sentiment. This guide will act as a valuable tool for companies seeking to establish an effective dialogue with their shareholders and other financial market participants, and we hope that best practice investor relations will be embraced by all management teams.”
The Guide will be officially launched at the Exchange’s offices in Paternoster Square in April. The Exchange will also be arranging a series of roundtable meetings for companies around the UK to promote the importance of investor relations.
view the Investor Relations - A Practical Guide
Source: London Stock Exchange
European Reform Barometer Spring 2010
Benchmarking our way out of the crisis
March15, 2010--Foreward--This report confirms the strong commitment of the European business community to cultivate a true benchmarking culture within the European Union and at the global level.
The EU’s pledge to exit from the crisis and support greater prosperity, job creation and economic stability on our continent will only be credible if it is ready to tackle structural impediments to growth at both EU and national level. This is where Europe’s untapped potential lies and is a necessary condition to restore fiscal sustainability and uphold Europe’s social model. It will require strong resolve for policy-makers to implement the necessary reforms and promote their benefits to society.
Benchmarking is a powerful device to pin down structural weaknesses at the national level, identify
priority areas for reform and foster policy learning across countries. It must be used both to communicate the gains of reforms and to exert pressure on governments tempted to shift the burden of adjustments into the future.
Previous attempts to coordinate structural reforms in the European context have failed mainly due to weak political ownership and accountability. This was the core reason for the disappointing results of the Lisbon Strategy launched in 2000 and expiring in 2010. This failure has dealt a blow to the credibility of the EU and its capacity to successfully coordinate national policies.
A new EU growth strategy is being put in place to get Europe back on track to prosperity and job creation. Europe cannot afford to fall short of expectations once again.
EU leaders have, with this new EU growth strategy, the chance to plant the seeds for a more effective system of governance to tackle the immense challenges ahead. Benchmarking and greater tenacity of EU institutions to name good performers and shame countries falling short of their commitments will need to be a key pillar of such a governance structure.
The report presents an evaluation of EU’s performance and individual country positions on key structural indicators in 2009, and their relative evolution since 2008. It then presents reform priorities as indentified by BUSINESSEUROPE members to exit the crisis and address the main growth bottlenecks at the Member State level. The report concludes with recommendations regarding ways of improving governance instruments for the new EU growth strategy.
view report
Source: Business Europe
The Race for Assets in the European Commodity Exchange-Traded Products market-Deutsche Bank Report
March 12, 2010--Highlights
As of March 5 2010, commodity exchange-traded products (C-ETPs) hosted €23.1 billion, split roughly 50/50 between exchange-traded commodities (ETCs) and exchange-traded funds (ETFs) tracking commodity indices. Historically, ETFs (mostly targeting precious metals and general commodity index returns) held the lion's share, but that is about to change, with ETCs (that target primarily single commodity returns) about to overtake them. This is a shift that signals a change in investor risk appetite in the year ahead. We believe that this is due to (a) decreasing demand for gold, and, (b) increased interest in specific commodity return profiles.
The big winners (in terms of attracting assets) in 2010 will be industrial metals and indices tracking the broad market, while Swiss domiciled ETFs tracking gold will continue to grow. In terms of trading, Energy will remain a highly popular sub-sector, especially in light of a number of energy leveraged products being launched.
Continued AUM growth expected, in the region of 60%-80%, albeit slower than 2009 (145%), but higher turnover likely
2009 was an exceptional year and together with 2008, saw investment that proliferated commodities as an asset class in the ETP space. With the sector reaching a critical mass, marginal growth will be harder to achieve.
Overall we expect the C-ETP sector to continue experiencing inflows. The growth of the C-ETP sector will likely slow in 2010 from the 145% observed in 2009, but will remain healthy. We estimate growth between 60%-90% in the European C-ETP space for 2010.
Precious Metals flows likely to slow as these have now reached a fairly significant size of the industry. In addition, with the decrease of volatility in the equity markets, some gold flows are likely to be directed back to equity. The first two months of 2010 saw net outflows from UK based gold C-ETPs and net inflows for Swiss based gold C-ETPs.
Despite slowing flows, the gold C-ETPs remain the biggest single commodity sub-segment, (57%), with Overall commodity indices well below in second place (13%) and Broad Agricultural Indices in 3rd place (5%). Given the current size of the precious metals sub-segment, it is likely that it will maintain its dominance in 2010.
Very busy C-ETP launch calendar in the first two months of 2010
In anticipation and building on steady growth over the past couple of years, product launches in the first two months of 2010 were very strong, totaling 45 YTD 2010, compared with 66 for the entire 2009. Five existing providers came to market with new C-ETP products.
Swiss managers launched 26 ETFs (primarily targeting long gold returns denominated in a number of currencies besides CHF) employing physical replication. EU providers launched ETC and ETN products targeting a wide range of non precious metals commodity benchmarks.
Non precious metal commodities continue to attract investment but at a rate slower than 2009, gold inflows are regionally split
2009 saw net inflows in all six commodity sectors (Agriculture, Broad Indices, Energy, Industrial Metals, Livestock and Precious Metals), totalling €9.7 billion (average €800 million per month).
Overall C-ETPs in 2010 YTD saw €631 million of net inflows for the first two months of 2010, with outflows of €32 million in Agriculture and €67 million in Energy, primarily driven from Brent Oil (€31 million) and WTI (€21million).
2010 YTD average monthly net inflows stand at €316 million, 25% lower the respective number for 2009, €425 million.
Given the busy product launch calendar we expect inflows to pick up over the second and third quarter of 2010. As more long and short products become available on a number of the dominant C-ETP sectors (short precious metals, Oil, Agriculture), these products will increasingly find a home with institutional investors and active value traders looking for value as the year progresses.
Energy remains the most traded C-ETP sector, at 2.7 times that of overall C-ETPs
Overall C-ETP average monthly AUM-normalized turnover (Turnover/AUM) in 2010 is at levels comparable to 2009, with agriculture and industrial metals showing slightly higher levels than their respective prior year.
The highest AUM-normalized monthly turnover continues to be observed in the Energy (0.45) sector, remaining 2.7 times that of the overall C-ETP equivalent number (0.17)
Turnover for non-precious metals C-ETPs will likely increase as more products become available and they continue gaining popularity with institutional investors and active traders. These are likely to become investment tools for traders hoping to benefit from changing economic trends.
C-ETP fee structure transparency is becoming an issue
We estimate that the average cost of investing in a C-ETP ranges between 0.67% and 1.22%, a range that is higher from the average prospectus stated total expense ratio, which on average ranges between 0.51% and 0.67%. The difference is attributable to a number of other costs which result from enhancements to the C-ETP structures (for example collateral provision cost) as well as replication related fees such as swap spreads and index licensing fees. The cost of leveraged C-ETPs is on average 40 bps over their respective long cousins. These costs will likely drop as the market becomes more competitive and additional providers enhance their product ranges.
ETN issuer counterparty risk: an incentive for the use of these instruments by short term investors?
ETN holders have direct counterparty risk to the issuer as ETNs rank pari-passu with the issuer’s other general senior unsecured debt. However, the ETNs’ pricing does not incorporate a credit spread for the investor taking on issuer counterparty risk. The ETN issuers will typically redeem these notes at the ETN’s target benchmark valuation but if redemptions are suspended and the secondary market is the only source of liquidity credit spreads will likely apply. The experience in the US suggests that these instruments have mostly been popular with short term holders, usually intraday, where counterparty risk is not a major issue. Therefore these are more likely to be trader’s instruments.
Return measurement: Excess or total return?
C-ETP investments are funded investments as the investor pays up-front 100% cash to obtain exposure; therefore total return (asset/future return +funding return) is the relevant return to use. Several providers in the market deduct the cost of providing collateral, which in the current market is close to the cost of funding, from total return, essentially transforming the C-ETP’s return into an ‘excess’ return. Collateralization makes structures safer and it is very desirable, and since direct spot exposure is largely unattainable for most commodities (with the exception of precious metals), a C-ETP structuring mechanism is necessary. A fine balance needs to be struck between collateral charges (payable by investors) and funding returns (receivable by investors). The economic fundamentals of the collateral’s underlying market play a big role in assessing this dynamic balance as they are likely to vary over time. These considerations are particularly important in a low interest rate environment, such as the current.
Source: Deutsche Bank Index Research-Europe
Equity ETF Review 2009-ETF Securities
March 12, 2010--Global equity markets rallied strongly in 2009, with resource-related equities
leading the charge. The rally took place following severe market declines in 2H
2008 and 1Q 2009 caused by the worst financial crisis in 50 years. All of the long
equity ETFs on the ETFX platform performed strongly, with the ETFX Global Coal
Mining Fund (COAL) leading the pack with a 138% return.
The best performers on the ETFX ETF platform were resource-related ETFs,
benefitting from cyclical recovery in the developed world and continued robust
demand from key emerging market economies – particularly China. After COAL,
the best performing thematic ETFX ETFs in 2009 were ETFX Dow Jones STOXX
600 Basic Resources Fund (BRES), up 114%; ETFX DAXglobal Steel Fund
(STEE), up 79%; and ETFX S-Net ITG Global Agri Business Fund, up 53%.
Leveraged equity ETFs also did well, with ETFX FTSE® 100 Leveraged (2x) Fund
up 55%.>
As we move into 2010 the key question is whether the strong performance of risk assets can continue. Long-term structural factors remain strongly favourable for the resource sector as rising per capita incomes in large population emerging markets continues to drive demand for energy, metals, agriculture and related products. The shorter-term cyclical outlook is less clear as extraordinary government fiscal and monetary stimulus programs are pared back and the consequences of rising debt levels in developed economies raises concerns about sovereign risks, potential growth set-backs and inflation.
The ETFX ETF platform provides investors with the flexibility to make positive returns whether markets rise or fall. In the first two months of 2010, as high uncertainty has been the dominant theme, short ETFs have performed strongly, with the ETFX FTSE® 100 Super Short Strategy (2x) Fund (SEU2) surging 9%, followed by a 6% rise in the ETFX DAX® 2x Short Fund (DES2). In this report we outline the key factors driving the returns of the ETFs on the ETFX platform and assess of how these factors may affect performance in 2010.
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Source: ETF Securities
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