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DB Index Research -- Weekly ETF reports -- Europe
January 21, 2010--Highlights
ETF Volume
Exchange based Equity ETF turnover declined by 2.8% on the previous week. Daily turnover for the previous week was E1.1bn. European fixed income ETF turnover rose by 5.8% to E207.5m.
n exchange based bond ETFs, db x-trackers II EONIA TR Index ETF has the highest daily turnover of E18.30m. Among the Equity ETFs, iShares DAX (DE) has the highest daily turnover of E52.71m.
There were 23 new listings last week. CASAM issued thirteen new ETFs on NYSE Euronext Paris followed by Credit Suisse AM which issued seven new ETFs on Swiss Stock Exchange. UBS issued two new ETFs on Swiss Stock Exchange and ETFlab launched one new ETF on Deutsche Borse. All the new listings were primary listings.
European Regional ETFs remained at the top position as leading product area with total turnover of E342m with 31.93% of total ETF turnover followed by Country ETFs with total turnover of E248m accounting for 23.15% of total ETF turnover. The DAX ETFs remain the dominant country products with total average daily volume of E123m across the fourteen listed products and accounting for 11.4% of all equity ETF volume.
DJ Euro STOXX 50 ETFs accounted for 15.4% of turnover trading E165m per day with liquidity split across 17 ETFs and 44 different listings on 9 exchanges.
Market Share
The Deutsche Borse XTF platform has the largest market share with 37.7% of total turnover. The Euronext NextTrack platform has 18.3% market share. The LSE’s combined Italian Exchange and London market share is now 28.0%.
Assets under Management (AUM)
Total European Equity related AUM declined by 1.6% to E115.7bn during last week. AUM for DJ Euro STOXX 50 ETFs was E22.9bn accounting for 20.0% of total European AUM. Fixed Income ETF AUM remained at about the same level at E36.4bn.
Overall, the largest ETF by AUM was Lyxor ETF DJ Euro STOXX 50, an Equity based ETF, with AUM of E5.2bn. The largest Fixed Income ETF by AUM was the iShares € Corporate Bond with AUM of E3.3bn.
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Source: Aram Flores and Shan Lan -DB Index Research
FSA Chairman calls for close engagement between accounting standard setters and prudential regulators of banks
January 21, 2010--FSA chairman, Lord Turner, today called for close engagement between global accounting standard setters and those responsible for prudential regulation of the banking sector to address issues arising from the unique systemic nature of banks.
Financial Services Authority (FSA) chairman, Lord Turner, today called for close engagement between global accounting standard setters and those responsible for prudential regulation of the banking sector to address issues arising from the unique systemic nature of banks.
Speaking today at a conference hosted by the Institute of Chartered Accountants of England and Wales (ICAEW) in London, Adair Turner, said: “No other sector of the economy is remotely comparable to banking in its capacity to be a driver of economic volatility rather than a victim of it.” As a result, he argued that banks must be viewed differently from any other sector of the economy, including the rest of the financial sector, and that accounting standards relevant to banks need to reflect these differences.
He highlighted two aspects of existing bank accounting practice which contribute to the problem of procyclicality and are, therefore, intrinsically tied to macro-prudential and macroeconomic concerns:
First, the accounting treatment of loan losses within the banking book. This bases loan loss provisions on evidence of already current credit impairment and does not allow for reasonable judgements on future potential losses. And second, the ‘fair value’ valuation approach (predominantly ‘mark-to-market’) in the trading book, which recognises unrealised gains or losses and which, especially when applied to illiquid securities, can drive harmful volatility in both upswings and downswings.
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Source: FSA
GAM unit hoping to list physically-backed base metals ETFs by year end -source
The exchange traded funds will be listed on the Swiss exchange
January 21, 2010--GAM Holding (GAMH.VX) unit Swiss and Global Asset Management (S&G) plans to list some of the first physically-backed base metals exchange traded funds by the end of the year, a source close to the asset manager said.
The ETFs, to be listed on the Swiss exchange, will buy physical quantities of copper, zinc, aluminium and nickel to gain exposure to spot market prices rather than futures contracts, where prices can diverge sharply from spot prices, the source said.
As a result of this divergence, asset managers say, commodities ETF investors can find their returns vary widely from those of the underlying commodity.
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Source: MineWeb
Government moves to support UK Islamic finance industry
January 21, 2010--The Treasury has introduced measures in Parliament to support Islamic finance and the issuance of corporate sukuk within the UK.
The Financial Services and Markets Act 2000 Order 2010, will help to provide a level playing field for corporate sukuk within the UK. The Order provides clarity on the regulatory treatment of corporate sukuk, reducing the legal costs for these types of investments and removing unnecessary obstacles to their issuance.
Sukuk are a broad class of financial instruments designed to replicate the economic function of bonds, but with a structure which complies with Islamic principles. Although there is an obvious appeal to the Muslim community, sukuk can be issued and bought by everyone.
Exchequer Secretary to the Treasury Sarah McCarthy-Fry MP said:
“The Government’s objectives on Islamic finance are to enhance the UK’s competitiveness in financial services by maintaining the UK’s position as a Western leader for international Islamic finance; and to ensure that everybody, irrespective of their religious beliefs, has access to competitively priced financial products.”
“This measure is another important step in the development of the Islamic finance sector in the UK and will help to provide a level playing field for Islamic financial products in this country. It is good news for the UK economy and for our Islamic finance industry.”
view the Impact Assessment of the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2010
Source: HM Treasury
January 2010: Flash Consumer Confidence Indicator
January 21, 2010--In January 2010, the DG ECFIN flash estimate of the consumer confidence indicator signals an improvement for the EU aggregate (up to -13.3 from -14.3 in December) and a broadly unchanged level for the euro-area aggregate (-15.8 compared with -16.1 in December).
The Economic Sentiment Indicator continues to recover
The Economic Sentiment Indicator (ESI) rose once again in December to 92.0 (+4.1 points) in the EU and to 91.3 (+2.5) in the euro area. It has improved in both areas for nine consecutive months since its trough in March 2009, though it still remains below its long-term average.
view tables
Source: European Commission Economic and Financial Affairs
FSA outlines concerns about firms' handling of clients' money and assets
January 21, 2010--The Financial Services Authority (FSA) has sent a letter and report to the chief executive officers (CEOs) of major insurance brokers and investment firms which are able to hold money or assets on behalf of clients. The letter draws attention to the FSA’s concerns over the handling of clients’ money and assets
It follows a letter sent to firms in March 2009, which explained the obligations a firm has to protect clients’ money and assets and set out the FSA’s intention to conduct further firm visits during 2009.
Subsequently the FSA visited a range of firms and found a number of failings. As a result, the FSA took the decision to write to chief executives with an accompanying report containing details of visit findings, and highlighting some of the weaknesses discovered.
These included:
poor management oversight and control;
lack of establishment of trust status for segregated accounts;
unclear arrangements for the segregation and diversification of clients’ money; and
incomplete or inaccurate records, accounts and reconciliations.
The FSA has already taken measures against a number of the firms that it visited, including referring two firms to enforcement, freezing a firm’s assets and commissioning skilled persons reports.
Sally Dewar, managing director of risk, said:
"The client asset rules are a key protection for consumers. It is simply unacceptable that firms are not ensuring that consumers get the appropriate protection. We have pointed out our concerns to firms and will be following up these concerns with further visits this year."
The report also includes examples of how firms should meet FSA expectations in relation to compliance with its requirements. Over the course of the year, the FSA will be increasing its visits to firms to assess how well these are being met.
view Client Money & Asset report
Source: FSA.org
World Bank Turkey Country Director Ulrich Zachau has spoken highly of the Turkish economy’s outlook for 2010, noting that it is undergoing a process of recovery.
January 20, 2010--World Bank Turkey Country Director Ulrich Zachau has spoken highly of the Turkish economy’s outlook for 2010, noting that it is undergoing a process of recovery.
The recovery started last year, Zachau said and went on: “Even though the official numbers haven’t been disclosed yet, the growth rate in the fourth quarter of 2009 seems to be on the positive side compared to the same period a year ago. The fundamentals of the Turkish economy are still sturdy.”
Speaking to the Anatolia news agency on Wednesday, the World Bank official shared his remarks regarding the Turkish economy’s performance in 2009 and its possible course this year. Zachau reiterated the World Bank’s official expectation of around a 3 to 4 percent growth rate in 2010 for Turkey, especially fueled by a reinvigoration in domestic consumption.
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Source: Todays Zaman
Index Linked Notes, New Investment Product On The Spanish Stock Exchange
Three issues by Barclays Bank to start trading
January 20, 2010--
The Spanish Stock Exchange today begins trading the first 3 issues of INDEX LINKED NOTES by Barclays Bank, namely: Bono Europa 3, Bono Europa 5 and Bono Memoria. The first two are linked to the Euro Stoxx 50 underlying asset and the third is linked to a basket made up of the S&P 500 and the Euro Stoxx 50 indices.
The INDEX LINKED NOTES, a new investment product launched on the Spanish Stock Exchange, are a type of structured bonds that can deliver a return if certain conditions set depending on the trends followed by the underlying indices are met.
The INDEX LINKED NOTES are traded on the SMART-Warrants platform in accordance with the regulations of the Warrants, Certificates and Other Products trading segment.
RENTA 4 Sociedad de Valores will act as the specialist intermediary.
Source: Bolsa de Madrid
Another ETF Securities Gold ETC Launched on Xetra
January 20, 2010--A further ETC (exchange traded commodity) issued by ETFS Metal Securities Limited has been tradable on Xetra® since Wednesday.
ETC name: ETFS Physical Swiss Gold Securities
Asset class: Commodities
ISIN: DE000A1DCTL3
Management fee: 0.39 percent
Benchmark: Gold PM Fixing
The new ETC from ETFS Metal Securities Limited gives investors a further opportunity to participate in the performance of gold. The ETFS Physical Swiss Gold Securities ETC is an exchange-traded bond backed by gold physically deposited in Switzerland. The holders of this security are entitled to payment of its value in cash or in gold.
Deutsche Börse’s ETC segment product range currently comprises 142 products. The monthly trading volume of ETCs on Xetra averages around 400 million euros.
Source: Deutsche Börse
ETF Landscape: European DJ STOXX 600 Sector ETF Net Flows week ending 15-Jan-10
January 20, 2010-Highlights
Last week saw US$117.2 Mn net outflows from DJ STOXX 600 sector ETFs. The largest sector ETF inflows last week were in Technology with US$30.2 Mn and Industrial Goods & Services with US$21.9 Mn while Automobiles & Parts experienced net outflows of US$59.9 Mn.
Year-to-date, Basic Resources has been the most popular sector with US$83.7 Mn net new assets, followed by Technology with US$26.7 Mn net inflows. Food & Beverage ETFs have been the least popular with US$98.7 Mn net outflows YTD
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Source: ETF Research and Implementation Strategy Team, Blackrock
