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International regulators publish systemic risk data requirements for hedge funds

Febraury 25, 2010--The International Organization of Securities Commissions' (IOSCO) Technical Committee has published details of an agreed template for the global collection of hedge fund information which it believes will assist in assessing possible systemic risks arising from the sector. The template was developed by the Task Force on Unregulated Entities (Task Force) following requests from the Financial Stability Board (FSB) as well as from IOSCO members.

The purpose of the template is to enable the collection and exchange of consistent and comparable data amongst regulators and other competent authorities for the purpose of facilitating international supervisory cooperation in identifying possible systemic risks in this sector. IOSCO believes that participants are best monitored through their trading activities, the markets they operate in, funding and counterparty information, amongst others.

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view the Hedge Funds Oversight report

Source: IOSCO

Eurozone lending drop reveals recovery risk: analysts

Febraury 25, 2010-- A steep fall in eurozone lending even though the amount of money available rose slightly in January highlights a serious risk to Europe's fragile finances and recovery, analysts say.

Loans to the private sector shrank by 0.6 percent in January, the European Central Bank reported Thursday, while money supply as measured by the bank's M3 indicator increased by 0.1 percent.

The rate of contraction in loans was much sharper than December's drop of 0.1 percent, and came as a survey of eurozone business and consumer sentiment showed the bloc shifting into reverse after a 10-month rebound in confidence.

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Source: EU Business

Monetary Developments in the Euro Area: January 2010

February 25, 2010-The annual rate of change of M3 increased to 0.1% in January 2010, from -0.3% in December 2009.1 The three-month average of the annual rates of change of M3 over the period November 2009 - January 2010 stood at -0.1%, unchanged from the previous period.

Regarding the main components of M3, the annual rate of growth of M1 decreased to 11.5% in January 2010, from 12.3% in December. The annual rate of change of short-term deposits other than overnight deposits increased to -8.0% in January, from -9.1% in the previous month. The annual rate of change of marketable instruments increased to -10.8% in January, from -11.0% in December.

Turning to the main counterparts of M3 on the asset side of the consolidated balance sheet of the MFI sector, the annual growth rate of total credit granted to euro area residents decreased to 1.6% in January 2010, from 2.4% in the previous month. The annual rate of growth of credit extended to general government decreased to 9.1% in January, from 11.2% in December, while the annual growth of credit extended to the private sector decreased to 0.1% in January, from 0.7% in the previous month. Among the components of the latter, the annual rate of change of loans to the private sector decreased to -0.6% in January, from -0.1% in the previous month (adjusted for loan sales and securitisation2 the annual growth rate of loans to the private sector decreased to -0.3%, from 0.2% in the previous month). The annual rate of change of loans to non-financial corporations decreased to -2.7% in January, from -2.2% in December. The annual growth rate of loans to households increased to 1.6% in January, from 1.3% in the previous month.

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Source: European Central Bank (ECB)

Investors worry about European national debt: Fitch survey

February 25, 2010--European and US investors are worried about European government debt levels but cautiously optimistic on international corporate debt, a survey by Fitch credit ratings agency showed on Thursday.

Monica Insoll, managing director in Fitch's credit market research group, said in a statement that the survey had found that "investors have a negative view on sovereign debt fundamentals and funding needs in 2010."

But she added: "Responses from senior credit investors across Europe paint a picture of continued improvement in fundamental credit conditions in relation to corporate asset classes."

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Source: EU Business

2010 eurozone growth to lag well behind Asian rivals

February 25, 2010--Economic growth across Europe will be uncertain, fragile and dwarfed by emerging Asian rivals throughout 2010, according to new Brussels forecasts released on Thursday.

As nervous euro countries anxiously study developments in debt-saddled Greece, the European Commission acknowledged that "uncertainty" surrounding even these projections "remains rife, as recent developments in financial markets illustrate well."

Brussels predicts just 0.7 percent expansion for both the eurozone and the full 27-nation European Union, the world's biggest open trading bloc, in disappointing forecasts unchanged from November.

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Source: EU Business

EU interim forecast: Fragile recovery in progress

The European Commission expects GDP in the EU to recover gradually, while still facing strong headwinds.
February 25, 2010--The Commission published its latest interim economic forecasts on 25 February 2010. The underlying message of this update of GDP and inflation variables is that the EU economy is recovering, but still facing headwinds. The updated projections include France, Germany, Italy, the Netherlands, Poland, Spain and the United Kingdom, accounting for 80% of EU GDP.

The Commission has revised slightly upward the growth projections for the first half of 2010. However, the projected growth rate for the whole of 2010 remains mainly unchanged at 0.7% in both the EU and euro area.

This update is based on a global recovery in the second part of 2009 that proved stronger than expected. This is due especially to an uptake in Asia. World GDP excluding the EU did not shrink in 2009 and is expected to grow by some 4¼% in 2010. However, what impact the world uptake will have on EU growth remains to be seen.

The EU is benefitting from improved sentiment indicators, but industrial production and retail sales figures amongst others have been less promising, and investments remain weak. Equally, financial markets have recovered in 2009 but uncertainties remain. Adding a probable weak labour market outlook dampening demand, and many of the growth sources being of temporary nature, the robustness of the EU recovery is yet to be tested.

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view the Interim Forecast February 2010

Source: European Commission

ETF Securities to launch ten euro-based currency ETCs on Xetra

February 25, 2010--ETF Securities (ETFS), the global pioneer in Exchange Traded Commodities (Commodity ETCs) and 3rd generation Exchange Traded Funds (ETFs) is planning to expand the world’s largest and Europe’s first Exchange Traded Currency (Currency ETCs) platform with the launch of 10 new Euro-based Currency ETCs on the Deutsche Börse (Xetra) in the coming weeks.

The upcoming listing of 10 new Euro-based Currency ETCs on the Deutsche Borse adds to ETF Securities’ commitment to the German market. ETF Securities is already an established player in Germany with over 114 Commodity ETCs and 11 ETFs listed on Xetra, totaling approximately $1.5 billion of local investment and close to $200 million weekly trading volume on Xetra.

The 10 new Currency ETCs will track Morgan Stanley Foreign Exchange Indices (MSFXSM Indices) and are designed to replicate a fully collateralised long or short investment in EUR versus CHF, GBP, JPY, NOK, or SEK and also provide exposure to local interest rates.

The 10 new Currency ETCs will complement the existing platform of 18 Currency ETCs listed on the London Stock Exchange (LSE) on the 12th November 2009 providing long or short passive exposure to G10 currencies versus the US Dollar and include AUD, CAD, CHF, EUR, GBP, JPY, NOK, NZK and SEK. Since the launch of the Currency ETC platform, assets have grown to approximately $50 million and weekly trading volumes have risen strongly, up over 200% since start of 2010.

Currency ETCs which are Long USD and short G10 currencies have seen the most interest from investors, making up 81% of assets. ETFS Short EUR Long USD (LSE: SEUR) has been the most popular trade in 2010, capturing 50% of new assets, while the Australian dollar held the most net long positions.

All Currency ETCs are fully collateralised in order to mitigate counter-party risk and listed in the ETC segment of the Deutsche Börse or the LSE.

The 10 new securities to be listed on the Deutsche Börse are: