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Regulator's 2009 recovery plan report shows how schemes are coping in the downturn
November 17, 2009--On November 11, 2009 The Pensions Regulator published the latest edition of its annual analysis of recovery plans from defined benefit and hybrid pension schemes.
This analysis updates previous publications in 2007 and 2008, providing an overview of scheme recovery plans with valuation effective dates from 22 September 2005 to 21 September 2008. This represents the first near complete triennial cycle of the regulator's scheme funding regime – with schemes divided into three 'tranches' based on the effective date of the scheme valuation
Pensions Regulator chair, David Norgrove said: “The three tranches of scheme valuations have been conducted in very different economic circumstances and this analysis explores some of the effects that the downturn, and other factors such as longevity improvements, have had on scheme funding.
“We urge trustees to continue to take a prudent approach to assessing schemes' technical provisions, to maintain an honest and open dialogue with employers, and to remain aware of the changing economic situation as they focus on the long term interests of scheme members. The regulator will continue to focus on this shared goal.”
Some of the key findings are:
We have not seen a material increase in schemes triggering our scrutiny on technical provisions (funding targets) over the last two tranches. This reflects in part technical factors affecting the trigger calculation.
We have seen an increase in both recovery plan lengths and back-end loading. This resonates with the regulator's statement on the employer covenant in June, emphasising the flexibility in our funding framework where employers face short-term cash constraints.
Mortality assumptions have demonstrated greater prudence in response to evidence of increasing longevity and our regulatory guidance.
Schemes have moved towards the use of baseline mortality assumptions which reflect more up-to-date mortality experience in combination with adjustments which allow for future mortality improvements and an underpin. There has been an increase in the mean effective single discount rate adopted in the third tranche, reflecting increasing reliance on future investment returns.
We will continue to monitor developments in this area, and in particular it should be noted that the data predates market activity in late 2008 and early 2009.
The proportion of tranche 3 recovery plans that triggered was 60 per cent, compared with 70 per cent and 52 per cent in tranches 1 and 2 respectively. The weighted average recovery plan length was 8.3 years for tranche 3 schemes, up from 6.1 years for schemes in tranche 2.
From tranche 2 to tranche 3, the proportion of recovery plans that triggered solely on technical provisions was lower.
There has been an overall reduction in the number of clearance applications in the financial year 2008-09 from 2007-08.
View the Scheme funding:An analysis of recovery plans
Bankers push for action on Saudi groups
November 24, 2009--The British Bankers’ Association is urging the UK government to raise international banks’ concerns about their possible exposure to two prominent Saudi companies that have defaulted on billions of dollars of debt with the kingdom’s authorities.
.The call, in a letter to Lord Davies, the UK’s minister of trade, investment and business, highlights increasing concerns among international bankers about their ability to recoup debts owed to them by Saad Group and Ahmad Hamad Algosaibi and Brothers (AHAB).
Barroso refuses to rule out Brussels tax
November 24, 2009--The European Union's top executive on Tuesday refused to rule out a bloc-wide tax on its half-billion population, in remarks sure to raise eurosceptic hackles.
Jose Manuel Barroso, the president of the European Commission, said he would look at raising direct EU taxation -- a debate that has sparked anger especially in fiercely sovereign Britain.
Speaking during a regular question-time session in the European Parliament, Barroso was asked if he agreed with the bloc's incoming president, current Belgian premier Herman Van Rompuy, who is on record for proposing direct taxation.
UK's New Power Market N2EX to Launch on January 11, 2010
Aims to Build Liquidity, Efficiency and Transparency in UK Power Trading
November 24, 2009--N2EX, the UK power market set
up by NASDAQ OMX Commodities and Nord Pool Spot, has decided on a
launch date of January 11, 2010 for its market in cooperation with The
Transitional Market Council (TMC). The N2EX market design has been
tailored to the requirements of the UK power market with the goal of
creating UK's premier energy exchange.
The new power market is being developed in close cooperation with the
Futures and Options Association (FOA) and UK market participants. It
will launch its day-ahead auction market on January 11, and trading and
clearing for the prompt market will begin the following day. The
platform will be live in mid-December and it is expected that
participants will use the platform for clearing ahead of the market
launch date as part of their testing.
N2EX will later establish a cash-settled derivatives power market, with a full range of clearing services and cross-commodity netting opportunities. The derivatives market will be based on the physical reference price.
"We are proud to deliver the N2EX market solution to the UK power market. The agreed launch date will secure market readiness," commented Geir Reigstad, vice president, NASDAQ OMX Commodities.
"Our aim is to establish a physical reference price based on the physical power market and to build market liquidity, efficiency and transparency," said Hans Randen, acting CEO of Nord Pool Spot.
"Together we have established state-of-the-art solutions adapted to our specific requirements. The market trials have shown that N2EX has every opportunity to be a very useful instrument for the UK power market," said Paul Beynon, chairman of the Power Trading Forum of FOA.
Dynamic price and volume information will also strengthen the transparency for UK consumers, allowing them to understand the price mechanisms in the wholesale market. This will lead to increased competition, to the benefit of end users.
Nord Pool Spot has a long-term experience in operating power markets
dating back to 1993. NASDAQ OMX Commodities provides significant
experience with its knowledge of clearing the Nordic power market in
addition to being a supplier of exchange technology to more than 70
financial marketplaces in over 50 countries.
Macro prudential tools vital to future financial stability
November 23, 2009--Lord Turner, chairman of the Financial Services Authority (FSA), today said that reforms to the regulation and supervision of individual financial firms need to be combined with new macro prudential tools to guard against the risks of future financial instability.
Speaking at the CBI annual conference, Lord Turner recalled that when he was Director General, the CBI had argued successfully for low and stable inflation and liberalised markets but that the combination had not ensured financial stability. This was because of two mistaken assumptions: first, that low and stable inflation was sufficient to deliver financial stability; and second, that efficient and rational markets will allow only useful financial innovation to flourish.
He said that:
"Low and stable inflation is essential but does not by itself guard against the dangers of volatile credit supply which cannot be analysed well or addressed effectively either by a central bank focused solely on an inflation target, nor by a regulator seeking to ensure individual firm stability through a firm-by-firm approach."
Lord Turner, therefore, stressed the need to develop new macro prudential tools such as through-the-cycle changes in capital or liquidity requirements and welcomed the Bank of England’s recent discussion paper which had set out a range of possible approaches. He said that implementing these tools will require close working relationships between functions currently located in both the Bank of England and the FSA.
In his closing remarks Lord Turner also welcomed the CBI’s engagement in the issue of how well the banking system is equipped to serve all the needs of a vibrant economy.
He said:
"A debate about the economic value and the effectiveness of the financial system should not focus solely or even primarily on a new found willingness to challenge potentially negative aspects of the pre-crisis financial system. Instead, it should focus on the positive functions that banks and other financial institutions must perform in a successful economy – the not only socially useful but vital functions of linking savers to productive investment, allocating capital to efficient use, and providing savings, credit and payment products to individuals, companies and institutions."
Seven New UBS ETFs Launched on Xetra
ETFs on MSCI country/regional indices listed in XTF segment
November 23, 2009--Seven new exchange-traded index funds from the issuer UBS ETF SICAV are tradable in Deutsche Börse’s XTF segment. All seven are based on the MSCI index family. These share indices are globally accessible for investing and are segmented by size, type and sector. They are weighted by free-float market capitalization and track the performance of international equity markets based on total return with net dividends reinvested.
ETF name: UBS-ETF MSCI USA I
Asset class: Equity index ETF
ISIN: LU0446735259
Management fee: 0.18 percent
Distribution policy: distributing
Benchmark: MSCI USA
The MSCI USA Index currently includes more than 600 large and medium-sized US companies selected on the basis of free-float market capitalization.
ETF name: UBS-ETF MSCI Canada
Asset class: Equity index ETF
ISIN: LU0446734872
Management fee: 0.45 percent
Distribution policy: distributing
Benchmark: MSCI Canada
The MSCI Canada Index tracks the performance of Canadian companies which, combined, represent 85 percent of market capitalization in Canada.
ETF name: UBS-ETF MSCI Europe
Asset class: Equity index ETF
ISIN: LU0446734104
Management fee: 0.30 percent
Distribution policy: distributing
Benchmark: MSCI Europe
ETF name: UBS-ETF MSCI Europe I
Asset class: Equity index ETF
ISIN: LU0446734286
Management fee: 0.18 percent
Distribution policy: distributing
Benchmark: MSCI Europe
The MSCI Europe Index currently includes companies from 16 industrialized nations: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. The companies are selected on the basis of free-float market capitalization. The UBS-ETF MSCI Europe I is aimed primarily at institutional investors.
ETF name: UBS-ETF MSCI World I
Asset class: Equity index ETF
ISIN: LU0446735416
Management fee: 0.25 percent
Distribution policy: distributing
Benchmark: MSCI World
The MSCI World Index currently includes more than 1,900 international stocks from 23 industrialized nations. The stocks are selected on the basis of market capitalization. US stocks account for approximately 50 percent of the MSCI World Index, European stocks (including UK) for 34 percent, and Japanese stocks account for 10 percent of the index. The remaining stocks are mainly from Canada and Australia. The UBS-ETF MSCI World I is aimed primarily at institutional investors wanting to track the performance of global equity markets.
ETF name: UBS-ETF MSCI Pacific ex Japan
Asset class: Equity index ETF
ISIN: LU0446734526
Management fee: 0.40 percent
Distribution policy: distributing
Benchmark: MSCI Pacific ex Japan
The MSCI Pacific ex Japan tracks the performance of the four developed equity markets in the Asia-Pacific region: Australia, Hong Kong, New Zealand and Singapore.
ETF name: UBS-ETF MSCI EMU Values
Asset class: Equity index ETF
ISIN: LU0446734369
Management fee: 0.35 percent
Distribution policy: distributing
Benchmark: MSCI EMU Values
The MSCI EMU Values Style Index tracks the performance of companies with high earnings from the following industrialized nations: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal and Spain.
The product offering in Deutsche Börse’s XTF segment currently contains a total of 525 exchange-listed index funds, making it the largest offering of all European stock exchanges. This selection, together with an average monthly trading volume of around 10 billion euros, makes Xetra Europe’s leading trading venue for ETFs.
Commission approves proposed Euro TLX SIM joint venture between UniCredit and Banca IMI
November 23, 2009--The European Commission has cleared under the EU Merger Regulation the proposed joint venture between the Italian financial institutions Unicredit S.p.A. and Banca IMI S.p.A, a company of the Intesa San Paolo Group. The planned transaction would transform the existing joint venture TLX S.p.A. into a new full function joint venture Euro TLX Societa Intermediazione Mobiliare S.p.A (Euro TLX SIM).
After examining the operation, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.
UniCredit is an international financial institution offering a wide range of banking and financial services in several European countries. Banca IMI is an investment company belonging to the banking group Intesa San Paolo. TLX is currently jointly controlled by UniCredit and Banca IMI and manages two electronic platforms for trading in financial instruments, principally for the account of its parent companies.
Upon completion of the planned transaction, TLX would change its name to Euro TLX SIM and would start operating a single electronic platform for trading in financial instruments named Euro TLX offering services to third parties on a commercial basis.
The Commission’s examination of the proposed transaction found that there were no horizontal overlaps between the parties' activities. The Commission's investigation found that the operation would not raise any vertical concerns either, in particular due to the "best execution" requirements to which UniCredit and Banca IMI would be subject under the European Directive on markets in financial instruments (so-called "MiFID" Directive, 2004/39/EC). It also showed that the entity resulting from the transaction would compete with other established players , thereby enhancing competition and enlarging the choice of providers.
More information on the case will be available at:
http://ec.europa.eu/competition/mergers/cases/index/m109.html#m_5495
Chi-X leaves upstart label behind
November 23, 2009--In the cut-throat world of share trading, being nice to your competitors does not come naturally.
So it is a surprise when Hirander Misra, chief operating officer of Chi-X Europe, compliments Xavier Rolet, chief executive of the London Stock Exchange, on how he has done since replacing Dame Clara Furse in May.
Moody's cautions India on problem loans
November 23, 2009--Deteriorating credit conditions in India’s banking system over the coming months have raised concerns about a hefty increase in problem loans and weakening bank profitability, ratings agency Moody’s warned on Monday.
India’s largely state-owned banking system has emerged mostly unscathed from the global financial crisis and has won wide applause from regulators and policymakers for its conservative approach. The broader economy has also proved resilient, buoyed by domestic demand. India is one of the fastest-growing large economies in the world and is forecast to grow 6.5 per cent this year.
Employment in Europe Report 2009
November 23, 2009--The current crisis is taking its toll on EU labour markets, reversing most of the employment growth achieved since 2000, according to the 2009 Employment in Europe Report published on 23 November 2009
Men, young people, the low-skilled and workers on temporary contracts have borne the brunt of the employment contraction. Employment in the EU has shrunk by over 4 million jobs since the start of the crisis, although the effect has been somewhat mitigated thanks to the use of shorter working hours and other schemes. But these short term measures, however important, are not in themselves sufficient to ensure a successful exit from the crisis. Employment policies must focus on preparing for the transition to a low-carbon economy.
With this challenge in mind, the 21st annual edition of the Employment in Europe report takes a deeper look at two key issues for future EU labour market policy: movements to, from and between jobs and the implications of climate change for the job market.
EU labour markets are more dynamic than often believed, but long-term unemployment remains a serious threat
European labour markets have shown considerable dynamism in recent years, as every year, around 22% of European workers change jobs. Such dynamism is not just limited to countries usually seen as 'flexible', such as the UK or Denmark, but concerns all EU countries, although the figures range from 14% of workers in Greece and 16% in Sweden to over 25% in the UK, Finland, Spain and Denmark. This appears to be part of a more sustained rise, since the late 1990s, in transitions from inactivity and unemployment towards employment in the EU, suggesting a fundamental structural improvement in our labour markets.
However, not all workers have benefited equally from this positive trend. Although the number of long-term unemployed has declined since the 1990s, this problem remains a serious challenge. In recent years, close to 45% of all unemployment spells lasted longer than a year in the EU, compared with only about 10% in the US. Tackling this issue has become even more urgent since the start of the crisis. Policies aimed at supporting workers' transitions toward employment in line with the principles of flexicurity are key to lowering long-term unemployment and preserving employability.
Low-carbon policies will significantly change EU employment structures
The EU's moves towards a competitive low-carbon economy will become important driving forces from a labour market perspective. Although the total net job creation effects may not be very large – as creation of new 'green' jobs and greening of existing jobs will partly be offset by loss of some existing jobs – the underlying structural changes will involve re-allocation of workers across economic sectors and skill types.
Climate change and related policy measures will therefore have an important impact on the future demand for skills. The new competencies required by the low-carbon economy will, at least initially, favour high-skilled workers. However, with market deployment of new technologies, lower-skilled workers should also be able to fill the new jobs – provided they receive adequate training. Hence, policy focus on skills - to ease transitions towards new jobs and to limit emergence of skills gaps and shortages – together with adequate social dialogue are the main ingredients needed to facilitate the shift to low-carbon economy.
The Employment in Europe report forms the analytical basis for the Joint Employment Report (JER), for which the Commission will present its proposal on 9 December. The JER is the employment analysis and reporting part of the EU's Jobs & Growth Strategy. .
View Employment in Europe 2009
view Communication - Key messages from the Employment in Europe 2009 Report"
