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Study says longevity hedges can help funds
March 9, 2010--Pension fund trustees interested in offloading the risk that their members live longer than expected should be prepared for a lengthy and complicated process but can reap rewards for their organisations, according to scheme managers.
Off-loading longevity risks stabilises pension liabilities, frees up cash and improves a company’s share price but can be costly and hamper later efforts to get rid of an entire scheme, according to a new report from pension fund managers who have done such deals and others who have looked at them.
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Source: FT.com
Greece planning more bond issues in March: report
March 9, 2010--Greece is planning to raise around 10 billion euros (13.6 billion dollars) this month by issuing bonds as it races to meet debt requirements, Dow Jones Newswires reported on Tuesday citing officials.
"Greece would like about 10 billion euros from bond issuance in March," an anonymous official was quoted as saying. The official said the money would be "a good cushion before the big debt maturities in April and May".
Greece needs to redeem debts of around 20 billion euros by the end of May.
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Source: EUbusiness
Merkel renews push for 'sanctions' under Euro rescue fund
March 9, 2010--German Chancellor Angela Merkel insisted Tuesday that plans for a European Monetary Fund will only work if strengthened "sanctions" are incorporated to penalise wayward spenders.
Speaking in Luxembourg, after meeting Prime Minister Jean-Claude Juncker, who presides over a group of finance ministers from the 16 countries that share the euro, Merkel also pushed the European Commission to act on derivatives that are partly blamed for exacerbating the Greek debt crisis.
"There must be sanctions," she said of plans that were due to be outlined to his European Commission peers by the EU's economic and monetary affairs overlord Olli Rehn in Strasbourg, France, on Tuesday.
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Source: EUbusiness
Longevity market needs to show depth and maturity, say pension execs
March 9, 2010--Pensions executives have raised concerns about the growth of the longevity hedging market, as some individuals are concerned about whether there is enough capacity and transparency in the market to assist the majority of pension plans.
A study released by ClearPath Analytics suggesting, entitled Longevity Hedging for Pnesion Plans, has found there are still very mixed views about the potential for pension funds to hedge against ageing populations and its impact on pension liabilities.
In particular, both Ian Chisholm, general manager of the trustee services unit at Shell UK and Penny Green, CEO of Saul Trustees believe the sheer complexity and lack of transparency regarding transactions is still a key concern putting many pension trustees off the use of longevity hedging.
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Source: IP&E
CESR publishes an update on the assessment of the proposals for MiFID pre-trade transparency waivers
March 9, 2010--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.
Source: CESR
Regulating the derivatives markets-European Parliment
March 8, 2010--The over-the-counter trade in derivatives must become much more transparent and better controlled, say Members of the EP Economic Affairs Committee. They argue that the risk element in derivatives should be expressed more clearly in their price, while a clear distinction should be made between the use of derivatives by companies and their use by financial institutions.
The Economic Affairs Committee discussed on Monday evening the first draft of a resolution on policy measures aimed at ensuring safer derivatives markets. MEPs placed a strong emphasis on how to deal with credit default swaps (CDS).
"Those who have benefitted from the high opacity in this area are not going to welcome us with open arms" rapporteur Werner Langen (EPP, DE) told fellow MEPs, underlining the main objective of more transparency.
Mr Langen said a balanced approach was needed, distinguishing between financial and non-financial institutions, with only the first being more tightly regulated. He believes the derivatives activities of non-financial institutions should only be regulated more if they come with high-risk attached, thus excluding most hedging derivatives. Most MEPs at last night's debate shared this opinion, although Kay Swinburne (ECR, UK) warned that this differentiation may be much more complex than initially envisaged.
Mr Langen also stresses that in future the prices of derivative products must better reflect risk and that this risk must not be borne by taxpayers. Until now, argues the draft report, the price of these products has been undervalued due to underestimated risks.
The report goes on to argue for more independence of central clearing houses from their users and also says they should not compete with each other on risk assessment. Various MEPs were not in favour of more independent clearing houses, with Peter Skinner (S&D, UK) arguing that such independence would only further concentrate risk.
view the Draft report on Derivatives markets
Source: European Parliment
UBS to launch European Multilateral Trading Facility
March 9, 2010--UBS Investment Bank has announced its intention to launch, pending regulatory approval from the UK Financial Services Authority, a new Multilateral Trading Facility (MTF) for crossing orders in European stocks.
UBS MTF will be a non-displayed orderbook, featuring a Central Counterparty (CCP) model. As a 100% dark liquidity pool, there will be no pre-trade signalling risk or display of any kind. Executions completed in UBS MTF will be reported post-trade in real time to Markit BOAT. The MTF will launch offering mid-point matching based on the price of the primary market. Its CCP model will benefit clients by assisting them in mitigating counterparty risk and contributing to reduced settlement costs.
UBS MTF will be open to external members, implementing an objective membership access and order prioritization policy.
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Source: Automatedtrader.com
FTSE MIB Quarterly Index Review – March 2010
March 9, 2010--The FTSE Italia Joint Executive Group has approved the following changes to the FTSE MIB Index which will become effective after the close of business on Friday, 19 March 2010 (i.e. on Monday, 22 March 2010).
Inclusion
Company: Azimut Holding SpA
ISIN:IT0003261697
Exclusion:
Company:Arnoldo Mondadori Editore SpA
ISIN:IT0001469383
Source: FTSE
Four Currency Hedged ETCs of DB ETC Index plc Launched on Xetra
March 8, 2010--Four new Exchange Traded Commodities (ETCs) issued by the new issuer DB ETC Index plc have been tradable on Xetra since Monday. DB ETC Index plc, the Deutsche Bank ETC platform, is the fourth issuer in the ETC segment of Deutsche Börse.
The products offer investors a first opportunity to invest in Exchange Traded Commodities hedged against currency risk. All four db ETCs are backed by physical gold.
ETC Name: db ETC Brent Crude Oil Euro Hedged ETC Securities
Asset class: Commodities
ISIN: DE000A1AQGX1
Management fee: 0.45 percent
Benchmark: DBLCI-OY Brent Crude Oil EUR Index
ETC Name: db ETC Monthly Short Brent Crude Oil Euro Hedged ETC Securities
Asset class: Commodities
ISIN:DE000A1AQGW3
Management fee: 0.45 percent
Benchmark: DBLCI Monthly Short Brent Crude Oil EUR Index
ETC Name: db ETC Monthly Short Gold Euro Hedged ETC Securities
Asset class: Commodities
ISIN: DE000A1AQGZ6
Management fee: 0.45 percent
Benchmark: DBLCI Monthly Short Gold EUR Index
ETC Name: db ETC Industrial Metals Euro Hedged ETC Securities
Asset class: Commodities
ISIN: DE000A1AQGY9
Management fee: 0.45 percent
Benchmark: DBLCI-OY Industrial Metals EUR Index
Two of these four new Exchange Traded Commodities offer investors the opportunity to take exposure to the long or inverse performance of Brent crude oil futures contract. The db ETC Monthly Short Gold Euro Hedged ETC provides inverse exposure to gold, In addition, db ETC Industrial Metals Euro Hedged ETC offers the opportunity to take exposure to futures contracts of aluminum, copper and zinc.
The Xetra ETC segment product range currently comprises 155 products. The monthly trading volume of ETCs averages around €400 million.
Source: Deutsche Börse
More than One Billion Euros Invested in Xetra-Gold
Xetra-Gold is Germany’s ETC with highest turnover
March 8, 2010--Deutsche Börse holds gold in custody in its vaults with a total value of over one billion euros. The gold, which backs the bearer bond Xetra-Gold, currently amounts to 38.5 tons. Each unit of the security is backed by exactly one gram of physical gold. With the price of gold at €26.75 per gram (Xetra closing price), the total value of the physically deposited gold is thus over one billion euro.
Xetra-Gold has the highest turnover of the approximately 150 Exchange Traded Commodities (ETC) tradable on the Frankfurt Stock Exchange. The average monthly order book turnover on Xetra in 2009 was €127.8 million, totaling over €1.5 billion at the end of the year. This order book turnover is more than three times that of the second most successful product in the ETC segment. Launched in December 2007 Xetra-Gold’s market share of commodities trading on Xetra was over 32 percent in 2009.
With just one product, Deutsche Börse Commodities GmbH is the second largest issuer of ETCs/commodity certificates traded on stock exchanges in Germany. While Xetra-Gold was initially purchased by predominantly private investors, there is now increasing interest among institutional investors too. The product meets the provisions of the European UCITS directive.
Xetra-Gold provides investors with one of the most favorable opportunities of acquiring and trading physical gold. The bid/ask spread is only 0.1 percent. The end investor only has to pay a custodian fee, just as for any other security. No other ongoing management fees are charged for Xetra-Gold.
Source: Deutsche Börse
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