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FSA statement re: Walker Review
November 26, 2009--The Financial Services Authority (FSA) welcomes the publication of Sir David Walker’s final review of corporate governance in UK banks and other financial institutions.
Many of the recommendations complement work the FSA is already carrying out, such as the increased focus on the quality of governance and risk management at FSA-regulated firms. The FSA has already strengthened its approach to the approval of individuals who manage and influence firms at a senior level and will publish a further consultation paper on governance and approved persons early next year.
The FSA introduced a remuneration code in August 2009. It comes into effect on 1 January 2010. Sir David Walker has expressed strong support for, and his recommendations are broadly consistent with, the FSA’s existing remuneration code. The FSA reiterates its commitment to reviewing its remuneration code next year in order to take any international developments into account. This review will also consider whether, and how, to implement Sir David’s wider recommendations on remuneration.
In relation to shareholder engagement, on conclusion of the Financial Reporting Council’s consultation on the ‘Stewardship Code’ the FSA will consult upon a rule introducing a ‘comply or explain’ disclosure requirement for relevant investment management firms.
The FSA continues to participate actively in international fora to ensure that the UK continues to lead the way in setting high standards for governance and remuneration.
Source: FSA
Government to implement Walker reforms on pay and governance
November 26, 2009--The Government will move quickly to implement the reforms of bank pay and governance proposed today by Sir David Walker.
Sir David’s review was commissioned by the Government earlier this year to explore failures of corporate governance and management of banks. His final report suggests a series of reforms to strengthen the role of shareholders, improve the quality of bank boards, and to increase transparency of pay and bonus policies.
Chancellor of the Exchequer Alistair Darling said:
“One of the fundamental causes of the financial crisis was bad management of some our major banks. Too many people around board tables did not ask the right questions; some chief executives did not fully understand the risks being taken by their traders; pay and bonuses encouraged reckless risk taking instead of responsible behaviour. Banks failed because some of the top people running banks failed to do their jobs.
“Tougher regulation, including stronger capital and liquidity requirements, reform of the mortgage market, greater competition, consumer protection, and living wills will help to make our system safer for the future. But the culture of the banks themselves must change.
“Sir David’s proposals are the blueprint for how banks must be run in the future. His interim report recommended changes to control bonuses that have already become part of a global standard agreed by the G20. The Government strongly supports his recommendations and will take steps to implement them as soon as possible.”
Sir David’s report recommends action to be taken by the Government, the Financial Services Authority, the Financial Reporting Council, bank owners, and the banks themselves. For its part, the Government accepts all the recommendations and will begin immediate work to implement them.
Specifically, the Government’s Financial Services Bill will allow the Treasury to issue regulations forcing banks to disclose in bands the number of staff earning more than £1million per annum. We will issue draft regulations for consultation in the New Year and bring them into force as soon as practicable after enactment of the Bill. This will force disclosure for the 2010 performance year.
In addition, the Financial Services Secretary Paul Myners will shortly meet with major institutional investors to discuss steps they can take to implement Walker’s recommendations as owners of UK banks.
A review of corporate governance
in UK banks and other financial
industry entities-Final recommendations-Walker Report
Source: HM Treasury Department
16 New Xmtch ETFs Launched on Xetra
Seven ETFs tradable in euros and US dollars, respectively, and two products tradable in pounds sterling, all now listed in Deutsche Börse’s XTF segment
November 25, 2009--Eight new Xmtch bond index funds and eight equity index funds from the ETF offering of Credit Suisse are tradable on Xetra®. Of the 16 new products, seven are tradable in euros, seven in US dollars, and two ETFs in pounds sterling.
Six of the new Xmtch ETFs allow investors to participate in the performance of the Markit iBoxx EUR Sovereigns or Markit iBoxx USD Treasuries index series. These indices track government bonds with maturities of between one and three, three and seven, and seven and ten years, and which are issued by euro zone governments or the US government. The ETFs based on the Markit iBoxx USD Tips Inflation-Linked and Markit iBoxx Euro Sovereigns Inflation-Linked indices replicate the performance of government inflation-linked bonds in the USA and the euro zone with an outstanding nominal amount of at least two billion US dollars or euros.
The seven new Xmtch ETFs based on the MSCI Small and Large Cap index series offer investors the opportunity of participating in the performance of small and large caps from the UK, Japan, the USA and the euro zone.
The Xmtch ETF (Lux) based on the MSCI Emerging Market index also gives investors the possibility to participate in the performance of companies from 25 emerging markets.
The product offering in Deutsche Börse’s XTF segment currently comprises 541 exchange-listed index funds, making it the largest offering of all European stock exchanges. With this offering and an average monthly trading volume of around €11 billion, Xetra is the leading trading venue for ETFs in Europe.
The table attached to this message contains the 16 bond and equity ETFs admitted to trading in the XTF segment on 25 November along with their ISIN, trading currency and management fee.
16 new Xmtch ETFs on Xetra
Source: Deutsche Börse
NYSE Euronext launches the first real Iberian index
November 25, 2009--NYSE Euronext (NYX) today announced the launch of the NYSE Euronext® Iberian Index. The NYSE Euronext® Iberian Index consists of 30 Stocks, the 20 most liquid stocks listed on Bolsa de Madrid and the 10 most liquid stocks listed on Euronext Lisbon.
“With the launch of the NYSE Euronext® Iberian Index we offer investors, for the first time, the possibility of tracking the performance of the Iberian Peninsula,” says Miguel Geraldes, Head of Markets, Cash and Listing, NYSE Euronext, Lisbon.
“We are pleased to expand our product offering to include a new benchmark for Iberian Peninsula listed securities.” says George Patterson, Head of Global Index Design, Global Index Group, NYSE Euronext, ”The launch of the new benchmark also marks the first index to use the NYSE Euronext brand.”
The NYSE Euronext® Iberian Index is designed to be an underlying for Exchange Traded Products (ETPs) by providing investors with an opportunity to track the performance of Iberian Peninsula listed securities.
The stocks in the NYSE Euronext® Iberian Index are weighted according to their free float market capitalization with a maximum of 10% per stock. The index is rebalanced bi-annually on the third Friday of March and September.
In addition to the price return index, the net and gross total return index series are available. The new indices will be calculated and disseminated every 15 seconds, throughout the trading day. The base value of the NYSE Euronext® Iberian Index is set at 1000.00 on December 31, 2001.
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Source: NYSE Euronext
TOPIX Futures to trade on NYSE Liffe from summer 2010
November 24, 2009-- Tokyo Stock Exchange, Inc (“TSE”) and NYSE Liffe today announce that TOPIX Futures will be listed on the NYSE Liffe market from summer 2010. The TOPIX index futures contract is the benchmark Japanese stock price index already traded on the TSE.
The Tokyo Stock Exchange’s TOPIX Futures are already actively traded by investors worldwide, who use the instrument as a way to invest in Japan’s largest stocks. Listing the contracts on NYSE Liffe will increase the number of customers who can trade the contract, and enable trading in the TOPIX Future while the Tokyo market is closed.
The contract specifications for TOPIX Futures traded on NYSE Liffe will be fundamentally the same as those traded on TSE. Trading hours will be set from 6AM to 9PM GMT (and from 7AM to 9PM BST). Consequently, trading in TOPIX Futures will now be possible for up to 19.5 hours per day, compared to 7 hours at present.
Both exchanges are currently working together to establish a position transfer scheme where all TOPIX open positions in NYSE Liffe at the end of each day will be automatically transferred to TSE. This will allow investors to enjoy the convenience of simpler position management. Both exchanges are now discussing about the details of this working scheme so that it can be applicable to other products in addition to TOPIX Futures. A full scale outline will be announced as soon as plans are finalized.
Atsushi Saito, CEO at Tokyo Stock Exchange group, Inc. said: “Listing TOPIX futures contract on NYSE Liffe will enable foreign investors more easily to trade futures contract based on Japanese representative index. With a background that TOPIX index is used by world investors as a benchmark of Japanese stock market, TOPIX futures market now has a good liquidity and is expanding year by year. This development will greatly contribute to make Japanese market more attractive and allow investors to trade Japanese assets more conveniently.”
Garry Jones, Group Executive Vice President and Head of Global Derivatives at NYSE Euronext, said: We are very pleased to announce this development, which reflects our strong relationship with TSE, and we look forward to working together further in the future. Half of volume in the TOPIX future already comes from foreign investors and together with TSE, we hope to boost business further by offering the contract to even more potential customers, for a greater period of the day.”
Source: NYSE Euronext
ETF Landscape: European DJ STOXX 600 Sector ETF Net Flows. For the week ending 20 November 2009
November 25, 2009--Highlights
Last week saw US$149.7 Mn net inflows to DJ STOXX 600 sector ETFs. The largest sector ETF inflows last week were in Utilities with US$67.2 Mn and Basic Resources with US$60.1 Mn while Construction & Materials experienced net outflows of US$29.8 Mn.
Year-to-date, Basic Resources has been the most popular sector with US$541.8 Mn net new assets, followed by Utilities with US$320.0 Mn net inflows. Travel & Leisure sector ETFs have been the least popular with US$22.6 Mn net outflows YTD.
Visit Barclays Global for more information.
Source: ETF Research and Implementation Strategy, BGI
Companies set to defy EU accounting rule delay
November 25, 2009--Some of Europe’s biggest multinational companies are preparing to defy moves by Brussels to delay the introduction of new global accountancy rules within the European Union.
Other big companies might prepare accounts as if the new rules were in place in parallel with official financial statements, say accounting firms.
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Source: FT.com
Leaders link in calls for ‘usury’ curbs
November 25, 2009-An alliance of London-based religious leaders and civic groups on Wednesday called for cross-party political support for a more responsible, open and fair financial system, including new laws on what they termed “usury”.
Boris Johnson, the mayor of London, joined representatives of the three main political parties and the financial services industry at the meeting organised by the charity London Citizens to respond to calls for commitments in five main areas.
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Source: FT.com
London Stock Exchange Group plc Announcement Of Interim Results For The Six Months Ended 30 September 2009
November 25, 2009--Financial Headlines:
Revenue of £310.9 million (H1 FY2009: 342.5 million), down four per cent sequentially on H2 last year and nine per cent on the corresponding period last year reflecting continuing competitive and difficult markets in cash equity trading
Underlying operating expenses1 of £180.2 million (H1 FY2009: £165.6m); down eight per cent against same period last year and down four per cent on H2 last year in constant currency and excluding £20.4 million of non-recurring costs following acquisition of MillenniumIT
Operating profit1 of £134.8 million (H1 FY2009: £181.0 million), partly reflecting inclusion of £20.4 million (of a total £31 million) non-recurring MillenniumIT related costs
Profit before tax of £79.4 million (H1 FY2009: £127.0 million)
Basic EPS of 18.5 pence (H1 FY2009: 30.3 pence) and adjusted basic EPS of 29.0 pence (H1 FY2009: 39.3 pence); the £20.4 million non-recurring MillenniumIT related costs equate to 5.5 pence of EPS dilution in both cases
Interim dividend of 8.4 pence per share, unchanged from last year's interim payment
Strong net cash flow from operating activities of £106.8 million; net cash generated after return to shareholders of £37.6 million - gross drawn debt of £608 million, with £950 million of committed borrowing facilities through to 2012 or beyond 1before impairment, amortisation of purchased intangibles and exceptional items
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Source: London Stock Exchange
ETF Securities' Currency ETCs Spark Strong Interest From Trading Community Just One Week After LSE Listing
World's largest and Europe's first Exchange Traded Currency platform
Just one week after listing on the LSE, Currency ETCs are now supported by seven liquidity providers
Four major Multilateral Trading Facilities show strong interest
Currency ETCs provide 18 long or short exposures to G-10 currencies with long USD Currency ETCs outperforming last week
Currency ETCs include exposure to local interest rates and fully collateralised to minimise counterparty risks
November 25, 2009--ETF Securities (ETFS) is pleased to announce that its newly launched Exchange Traded Currencies (Currency ETCs) are now supported by seven liquidity providers on the London Stock Exchange (LSE).
In addition, two Multilateral Trading Facilities (MTFs) have started quoting the Currency ETCs with another two MTF's planning to quote the new ETCs within the next few weeks.
The first 18 Currency ETCs were listed on the LSE on the 12th November and track MSFX Currency IndicesSM. Since listing, the Currency ETCs have rapidly generated interest with seven liquidity providers signing up to provide investors access to these new securities. Specialist market-making firms Flow Traders, Nyenburgh, Bluefin Europe and IMC will provide "on screen" liquidity and two way prices while Morgan Stanley, Merrill Lynch and Fortis have signed up as Authorised Participants.
Liquidity providers are responsible for dealing in the ETCs and play an important role in providing liquidity in the marketplace through the posting of firm bid and ask prices with a minimum size for each ETC during Exchange trading hours, while also facilitating the creation/redemption process. This ensures that there will always be a deep two-way market, that investors should always be able to buy or sell their holdings on equal terms and that the ETC tracks the underlying index.
MTFs have also shown strong interest in Europe's first 18 Currency ETCs. The ETCs started trading on PLUS Markets on Tuesday 17th November and then NASDAQ OMX Europe on Monday 23rd November. Other major MTFs including Chi-X Europe and Turquoise have also shown interest to quote the Currency ETCs on their platforms in the coming weeks.
Similar to Exchange Traded Funds (ETFs), ETCs are liquid, accessible and simple. ETCs can be created and redeemed on a continuous basis by market makers, matching the tremendous liquidity of the underlying foreign exchange markets but traded on a regulated exchange in the same way as an equity. The average daily turnover of the global FX market is about $3.2 trillion which compares to the average daily turnover of $450 billion for global equities, $48 billion for the New York Stock Exchange and $6 billion for the London Stock Exchange. Thus currencies are much more liquid than equities.
The 18 initial Currency ETCs provide long or short passive exposure to G10 currencies versus the US Dollar and include AUD, CAD, CHF, EUR, GBP, JPY, NOK, NZK and SEK. The ETCs also provide exposure to local interest rates in addition to FX movements. For example the implied interest rate incorporated into the MSFX Long Australian Dollar IndexSM averaged approximately 5% p.a. over the past five years.
ETF Securities launched the Currency ETC platform due to investor demand for secure, transparent and liquid exchange traded products. Currency ETCs are fully backed* by eligible collateral to the value of at least 100% of the total value of all Currency ETCs outstanding which is held in a segregated custody account with BNY Mellon. The collateral is adjusted daily to ensure credit risk is minimised. Currency ETCs are backed by the same eligible collateral criteria as ETF Securities' existing Commodity ETCs. With ETF Securities' Commodity ETC assets having nearly tripled in 2009 to $17 billion and volumes having doubled to over $1 billion per week, it is clear that investors have widely accepted the ETC structure as a secure vehicle of choice for exposure to commodities. As a result, the ETC product structure has been replicated to include currencies.
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Source: ETF Securities