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FEAS Newsletter December 2009
December 23, 2009--FEAS Newsletter for December 2009 is now available.
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ETF Landscape: European DJ STOXX 600 Sector ETF Net Flows, week ending 18-Dec-09
December 23, 2009--Highlights
Last week saw US$25.0 Mn net outflows to DJ STOXX 600 sector ETFs. The largest sector ETF inflows last week were in Banks with US$44.1 Mn and Health Care with US$19.0 Mn while Oil & Gas experienced net outflows of US$42.8 Mn.
Year-to-date, Telecommunications has been the most popular sector with US$465.5 Mn net new assets, followed by Basic Resources with US$393.3 Mn net inflows, while Personal & Household Goods sector ETFs have been the least popular with US$11.8 Mn net outflows YTD.
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Moody’s downgrades Greece’s credit rating
December 22, 2009--Moody’s Investors Service on Tuesday downgraded Greece’s credit rating, despite efforts by the new Socialist government to slash public spending and pull the country out of an economic crisis.
The government responded with a promise to redouble its cost-cutting efforts, while Greek investors responded with relief that the latest downgrade was not more severe. Moody’s became the third rating agency to downgrade Greek government bonds -- changing them from an A1 category to A2.
New Exchange Traded Funds (ETFs) on SIX Swiss Exchange
December 22, 2009--Three new products have been listed in the Exchange Traded Funds segment of
SIX Swiss Exchange, taking the total to 275 ETFs. The new funds are:
UBS Index Solutions – Gold ETF hedged (CHF). The trading currency is CH
UBS-ETF MSCI Canada I. The trading currency is CAD.
UBS-ETF MSCI EMU I. The trading currency is EUR.
UBS Investment Bank will perform the market making for these products.
CESR issues advice on mergers, master-feeder structures and cross-border notification of UCITS and KID methodologies
December 22, 2009--CESR delivers today two pieces of work related to the future UCITS IV Directive: a technical advice on mergers of UCITS, master-feeder UCITS structures and cross-border notification and two methodologies for Key Investor Document for UCITS.
For CESR’s technical advice to the European Commission on level 2 measures relating to mergers of UCITS, master-feeder UCITS structures and cross-border notification of UCITS (Ref. CESR/09-1186), click here.
For the annex to CESR’s technical advice on the level 2 measures related to the format and content of Key Information Document disclosures for UCITS: methodology for the calculation of the synthetic risk and reward indicator (Ref. CESR/09-1026), click here.
For the annex to CESR’s technical advice on the level 2 measures related to the format and content of Key Information Document disclosures for UCITS: methodology for the calculation of the ongoing charges figure (Ref. CESR/09-1028), please click here.
Forex market to be reeled in with new regulations
December 22, 2009--Capital Markets Board (SPK) President Vedat Akgiray has stated that the foreign exchange market (forex) in Turkey currently has a daily trading volume of $3 billion and that regulations to control this largely unregulated market would be completed by mid-January.
Akgiray, speaking at the PriceWaterhouseCoopers Business School’s “Roadmaps for Business in the Post-crisis Period” event on Tuesday, noted that the forex market is “completely unregulated” and that thousands of people lose money on a daily basis. He added that the task of regulating this market was given to the SPK and that new regulations are expected to be put into place by Jan. 15. read more
Eurex to Launch Dividend Futures on Single Stocks
December 22, 2009--The international derivatives exchange Eurex announced today that it will offer futures contracts based on particular dividends of individual shares from 11 January 2010. Eurex will launch Dividend futures on the constituents of the Dow Jones EURO STOXX 50. Following the successful introduction of the index dividend futures on the Dow Jones EURO STOXX 50 in June 2008, Eurex further expands its offering. Thus, for the first time in Europe the pure dividend component of the underlying stocks of a benchmark equity index are available for exchange trading and clearing as a stand-alone product.
Peter Reitz, member of the Eurex Executive Board, said: “The listing of our new single stock dividend futures reflects the demand by investors for exchange-traded and centrally cleared products. With these new instruments investors can participate in the performance linked to the dividend element of a share and equity derivates trader can hedge against a substantial component of their risk. The growing interest in dividend products has already been demonstrated by the very positive response to our listed index dividend futures.”
Eurex is introducing these products to enable investors to hedge or trade the dividends that are announced and paid by the individual index constituents in each year. The separate exchange listing of this dividend element will improve possibilities for risk management and increases transparency on one of the fundamental elements determining a shares value.
Introduced in June 2008 the Dow Jones EURO STOXX 50 Index Dividend Futures currently trades around 10,000 contracts daily, year-to-date almost 2.5 million contracts were traded. Open interest stands at over 480,000 contracts (representing circa €5 billion of notional dividend value). BNP Paribas Arbitrage and Société Générale currently act as market makers in these futures; over 50 members in total are currently active and trading.
Eurex will initially introduce dividend futures on 25 of the constituent components of the Dow Jones EURO STOXX 50. Hence, investors can manage their exposure to the 2010 dividend period. Eurex will offer annual contracts in each name from December 2010 out to December 2014 that will settle to the value of the dividends paid in the annual period to that date. With the introduction of the dividend futures, Eurex aims to work closely with the current market participants and to attract new entrants to the asset class.
EU backs German 'bad bank,' despite 'doubts' over plan
December 22, 2009--European regulators on Tuesday backed the creation of a German "bad bank" for paper assets running to more than 121 billion dollars, despite "doubts" the plan would pass state aid tests.
The European Commission "temporarily approved" German Landesbank WestLB taking over "a portfolio of toxic and non-strategic assets with a nominal value of 85.1 billion euros," said a statement from Brussels enforcers.
However, European Union Competition Commissioner Neelie Kroes also said she was "surprised" that three billion euros of German state funding were required to get the holding business, expected to lose money, up and running.
ETF Exchange (ETFX) announces the launch of the world’s first third generation ETF platform today
Confirmed participants on the platform: BofA Merrill Lynch, Citi, and Rabobank International.
Issuing 3rd generation ETFs pioneered by ETF Securities.
December 22, 2009--ETF Securities Ltd (ETFS), the global pioneers in Exchange Traded Commodities (ETCs) and independent provider of Exchange Traded Funds (ETFs), is pleased to announce the launch of the ETF Exchange (Europe) (ETFX), the world’s first third generation ETF platform.
ETF Securities is initially working with BofA Merrill Lynch, Citi, and Rabobank International who are participants on the platform, acting as distribution partners, authorised participants and swap providers, with scope to add additional participants in the future.
The vision for 3rd generation ETFs was pioneered by ETF Securities. The idea was inspired by investor demands for increased levels of transparency, liquidity and counterparty risk management. ETF Securities identified that the current ETF issuance model by single financial institutions could be strengthened by diversifying index replication across a consortium of the strongest financial players and concentrating liquidity within a single platform issued by an independent ETF issuer.
ETFX offers a total of 21 equity ETFs comprising Europe’s first ETF platform concentrating on resource-equity ETFs and double leveraged (2x) and double short (-2x) ETFs. These ETFs are listed across 5 European exchanges (the London Stock Exchange, Deutsche Borse, NYSE-Euronext Amsterdam, the Borsa Italiana and the Irish Stock Exchange) and traded in up to 3 currencies (USD, EUR and GBP). They are part of the ETF Exchange initiative driven by client demand for increased liquidity, innovative products and reduced credit risks and counter-party exposure. The ETFs are all swap-backed ETFs using multiple counterparties, allowing more efficient tracking, with collateral being held in excess of UCITS1. This issuance model is arguably amongst the most efficient and risk averse available today.
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The ETFX equity ETF platform has seen strong trading growth since the introduction of thematic ETFs in the fourth quarter of 2008, and 2x short and 2x leveraged equity ETFs at the end of the second quarter 2009. Basic resource themed ETFs have seen particularly strong returns, led by a 126% YTD increase in the ETFX Russell Global Coal Mining Fund (COAL) and a 100% YTD rise in the ETFX Dow Jones STOXX 600 Basic Resources Fund (BRES)2. ETFX ETFs now have over $320 million AUM, up over 65% in the past three months.
CESR publishes an update on the assessment of the proposals for MiFID pre-trade transparency waivers
December 21, 2009--The MiFID compliance of these functionalities has been assessed at CESR level on the basis of the new joint process that CESR launched in February 2009.
The table(Ref. CESR/09-324) includes information on a new assessments made at CESR level regarding an application for a waiver to be granted on the basis of the MiFID Implementing Regulation that CESR considered not to be compliant with MiFID.
