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Longevity association to kick-start hedging activity
February 1, 2010--A group of eight banks, insurers and reinsurers has launched the Life and Longevity Markets Association (LLMA) to help promote the hedging and trading of longevity risk.
The association’s first tasks will be to develop consistent standards and documentation, to create indices and create standardised valuation models to effectively price derivatives when longevity assumptions change.
Pension funds, holders of longevity risk, and reinsurers holding mortality risk, are natural counterparties.
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Source: IP&E
Be aware of ETF ownership rights, says ICGN
February 1, 2010--Investors need to be aware that they cannot exercise their ownership rights with certain types of exchange-traded funds (ETFs), according to the International Corporate...
“Investors have a right to vote with their shares,” said Carl Rosén, executive director at the ICGN. “With ETFs gaining a lot of market share in Europe, it is important to highlight the fact that investors invested in ETFs which use derivatives to mimic an index are not able to exercise their voting rights.”
ETFs that own their underlying assets and do not use derivatives normally have corporate governance and voting policies in place, allowing investors to exercise their rights, said Rosén. He believes a lot of institutional investors lack the understanding of how ETFs are structured, which is why he is calling for more transparency on the issue.
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Source: IP&E
London Stock Exchange's new retail bond market goes live
Broad support for new platform
February 1, 2010--The London Stock Exchange today launched its new electronic Order book for Retail Bonds. Introduced in response to strong private investor demand for greater access to fixed income, it offers continuous two-way pricing for trading in UK gilts and retail-size corporate bonds on-exchange for the first time.
Initially, 49 gilts and ten corporate bonds are available for trading including securities issued by Tesco, BT, National Grid, GlaxoSmithKline, Morgan Stanley, GE Capital, Enterprise Inns and a bond issued specifically for this new service by Royal Bank of Scotland. Investors can see prices on-screen, and trade in increments as low as £1 for gilts and £1,000 for corporate bonds, in a process similar to share dealing.
The new market is supported by dedicated market makers. Evolution Securities has committed to a leading role and will make markets across all of the gilts and corporate securities on the service. In addition, Shore Capital Stockbrokers will make markets in corporate bonds and ABN Amro is committed to quoting in the new RBS bond.
The new initiative is modelled on Borsa Italiana’s highly successful MOT market which, with €230 billion worth of trading in 2009, is Europe’s largest retail fixed income market.
To mark the start of trading on the electronic Order book for Retail Bonds, the Exchange today welcomed key politicians and market participants to speak at its Paternoster Square headquarters.
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Source: London Stock Exchange Group
CESR updates the list of measures recently taken by Members regarding short-selling.
February 1, 2010--CESR published on 22 September 2008 a statement that facilitates an overview of actions taken by CESR Members in relation to short-selling. The statement paper includes either the statements or links to the statements published by CESR Members explaining the measures taken. This paper is not a comparison of the measures taken.
CESR updates the list of measures recently taken by Members regarding short-selling. The documents will be updated on a continuous basis; the latest update has been provided by the French supervisor AFM, who prolonged their measures for an infinitive period, and the German supervisor BaFin, whose ban on naked short selling expired on Jan 31.
Updated Measures adopted by CESR Members on short selling
Source: CESR
Boerse Stuttgart sees strong growth in ETF trading
February 1, 2010--In April 2009, Boerse Stuttgart had a trading volume of some EUR 10.2 billion according to its order book statistics, a decline of 6 percent in comparison with March 2009 and of almost 15 percent compared with April 2008.
Trading in investment fund units accounted for more than EUR 312 million and was up by almost 75 percent in comparison with the same month in the previous year.
Most of this, around EUR 268 million, can be attributed to passively managed funds, known as ETFs. Trading volumes here had therefore more than doubled compared with April 2008. Among the securitised derivatives, reverse convertible bonds showed particularly large rates of increase, growing to EUR 126.6 million and were up by almost 100 percent in comparison with the same month in the previous year. In comparison with March 2009, the Stuttgart stock exchange recorded a growth of more than 52 percent in these products.
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Source: Boerse Stuttgart
Component Changes Made To Dow Jones EURO STOXX 50 Index
February 1, 2010--STOXX Limited, the leading provider of European equity indices, today announced component changes in the Dow Jones EURO STOXX 50 Index due to the application of the fast exit rule. In the index, Volkswagen AG (Germany, Automobiles & Parts, VOW.XE) will be replaced by Unibail-Rodamco S.A. (France, Real Estate, UL.FR).
Volkswagen AG is being removed because it has ranked below 75 on the Dow Jones EURO STOXX 50 Index’s monthly selection lists for the last two consecutive months. Therefore, the company qualifies for the fast exit rule. Unibail-Rodamco S.A. has been the highest ranking non-component on the monthly selection list and will therefore be added to the index.
The changes in the Dow Jones EURO STOXX 50 Index will be effective as of the open of trading on Monday, February 8, 2010.
Further information on the Dow Jones EURO STOXX 50 Index can be found on the STOXX web site at www.stoxx.com.
Source: STOXX
Eurozone manufacturing hits two-year high
February 1, 2010--Manufacturing in the eurozone hit a two-year high in January, with Germany and France leading the way for post-recession Europe as Spain and Greece fell further behind, a survey showed Monday.
The 16-nation euro currency bloc's purchasing managers' index (PMI) for the manufacturing sector, published by data and research group Markit, rose to 52.4 points in January from 51.6 points in December.
This was the highest level for two years and continued the upward progression from a record low seen last February.
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Source: EU Business
18 percent rise in turnover on Deutsche Börse’s cash markets in January
14.5 million trades executed on Xetra/ Total volume of 118.7 billion euros traded on all stock exchanges in Germany
February 01, 2010--In January, 106.2 billion euros were traded on Xetra® and on the floor at Börse Frankfurt – an increase of 18 percent year-on-year (January 2009: 90.1 billion euros). Of the 106.2 billion euros, 98.9 billion euros were traded on Xetra, an increase of 17 percent year-on-year (January 2009: 84.2 billion euros). 7.4 billion euros were traded on the floor, an increase of 26 percent (January 2009: 5.8 billion euros).
Turnover in German equities amounted to 89.9 billion euros, while foreign equities turnover stood at 12.8 billion euros. Xetra and the floor at Börse Frankfurt accounted for 97 percent of the transaction volume in German equities on all stock exchanges in Germany. 91 percent of foreign equities traded on stock exchanges in Germany were traded on Xetra and on the floor in Frankfurt.
In January, 14.5 million transactions were executed on Xetra, a slight decrease against the same period last year (January 2009: 14.6 million).
According to the Xetra liquidity measure (XLM), Siemens AG was the most liquid DAX® blue chip in January with 6.5 basis points (bp) for an order volume of 100,000 euros. HeidelbergCement AG was the most liquid MDAX® stock with 15.6 bp. The most liquid ETF was the db-x-trackers II EONIA T.R. 1C with 0.4 bp. The most liquid foreign stock was Total S.A. with 14.1 bp. XLM measures liquidity in electronic securities trading on the basis of the implicit transaction costs. It is expressed in basis points (1 bp = 0.01 percent); a low XLM denotes high liquidity in a security.
Deutsche Bank AG was the DAX stock with the highest turnover on Xetra in January at 6.6 billion euros. HeidelbergCement AG was the top MDAX stock at 1.2 billion euros, while KUKA AG led the SDAX® stocks at 29.4 million euros and Aixtron AG headed the TecDAX® at 715.0 million euros. At 1.5 billion euros, the iShares DAX was the exchange-traded fund with the highest turnover.
On all stock exchanges in Germany 118.7 billion euros were traded in January according to orderbook turnover statistics – an increase of 13 percent compared year-on-year (January 2009: 105.5 billion euros). This total includes 109.3 billion euros in equities, warrants and exchange-traded funds, as well as 9.4 billion euros in fixed-income securities.
Source: Deutsche Börse
Flash estimate - January 2010 Euro area inflation estimated at 1.0%
January 29, 2010--Euro area1 annual inflation2 is expected to be 1.0% in January 2010 according to a flash estimate issued by Eurostat, the statistical office of the European Union. It was 0.9% in December 2009..
Computation of flash estimates Euro area inflation is measured by the Monetary Union Index of Consumer Prices (MUICP). To compute the MUICP flash estimates, Eurostat uses early price information relating to the reference month from Member States for which data are available4 as well as early information about energy prices.
The flash estimation procedure for the MUICP combines historical information with partial information on price developments in the most recent months to give a total index for the euro area. No detailed breakdown is available. Experience has shown the procedure to be reliable (18 times exactly anticipating the inflation rate and 6 times differing by 0.1 over the last two years). Further information can be found in Eurostat News Release 113/2001 of 5 November 2001.
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Source: Eurostat
EU clears Deutsche deal for Sal. Oppenheim
January 29, 2010--European regulators on Friday cleared a 1.0-billion-euro (1.39 billion dollars) deal for Germany's biggest lender Deutsche Bank to buy Sal. Oppenheim, a Luxembourg-based private banking group.
The takeover marks the end of Sal. Oppenheim's independence since it was founded in 1789.
"The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the banking group Sal. Oppenheim by Deutsche Bank," a statement said.
A European Commission investigation found that "the horizontal overlaps between the activities of Deutsche Bank and Sal. Oppenheim, such as the distribution of mutual funds and the provision of private banking services, are limited" and therefore no impediment to approval.
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Source: EU Business
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