Currency ETCs are intended for investors wishing to diversify their portfolio through the addition of a new asset class which has a low correlation with equities and bonds, or for those investors wanting to take advantage of tactical or strategic macro opportunities using the foreign exchange market. The table below shows that the returns of most major market currencies versus the US Dollar outperformed equities, bonds and real estate with lower volatility. For example, the MSFX Long AUD Index outperformed UK equities by 13.4, 55.4 and 37.2 percentage points over one, three and five years respectively with approximately 5% per annum of the total return over the five year period due to local Australian interest rates which have been incorporated into the MSFX Currency Index.

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Euro-Parliament nod for free emissions permits

November 4, 2009-The European Parliament's environment committee on Wednesday approved a list of 164 industrial sectors that will win free carbon emissions permits for the next five years if no global deal on climate change is negotiated next month.

Members of the powerful committee voted 39 for and 19 against, with one abstention, the parliament said.

A European Union action plan adopted in December 2008 to fight global warming places serious constraints on industry, which must reduce harmful carbon dioxide emissions by 21 percent from 2005 levels by 2020.

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ETF Landscape: European DJ STOXX 600 Sector ETF Net Flows, week ending 30-Oct-09

November 4, 2009--Highlights
Last week saw US$35.3 Mn net outflows to DJ STOXX 600 sector ETFs. The largest sector ETF inflows last week were in Retail with US$17.2 Mn and Food & Beverage with US$12.5 Mn while Banks experienced net outflows of US$37.2 Mn.

Year-to-date, Basic Resources has been the most popular sector with US$411.2 Mn net new assets, followed by Banks with US$351.6 Mn net inflows. Financial Services sector ETFs have been the least popular with US$28.3 Mn net outflows YTD.

Visit Barclays Global for more information.

UK official holdings of International Reserves

November 4, 2009--Part I: UK Government Foreign Currency Assets and Liabilities
October 2009 1. UK Government’s net reserves rose by $555 million in October 2009, bringing the end-October total to $32,580 million (£19,772 million1) compared with $32,025 million (£20,048 million2) at end-September 2009.

Part II: Bank of England Foreign Currency Assets and Liabilities – October 2009.
1. Bank of England’s net holdings of foreign currency and gold fell by $3 million in October 2009 bringing the end-October total to -$1 million (£606,8701) compared with $1 million (£626,0172) at end-September 2009.

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Michael Foot publishes final report-independent review of British offshore financial centre

November 4, 2009-Michael Foot has today published his independent review of British offshore financial centres.
Michael Foot was asked by the Chancellor of the Exchequer to conduct a review of the long-term opportunities and challenges facing the British Crown Dependencies (CDs) and Overseas Territories (OTs) as financial centres.

The report covers a number of important areas that impact on the future sustainability of these jurisdictions and sets out a series of robust and sensible standards that Crown Dependencies and Overseas Territories will be expected to meet.

The report clearly states that British offshore financial centres must ensure they meet international standards on tax information exchange, financial regulation, anti-money laundering and countering the financing of terrorism, as well as ensuring, they put their public that finances on a firmer footing by diversifying their tax bases.

Financial Secretary to the Treasury, Stephen Timms said:
“I welcome Michael Foot’s report which comes amidst a real step change in the international determination to tackle tax and regulatory havens under the UK’s leadership of the G20.

This report sends a strong signal to overseas financial centres that they must ensure that they have the correct regulation and supervision in place, while also ensuring their tax bases are more diverse and sustainable to withstand economic shocks – this is essential to their long term stability”

Minister for the Overseas Territories, Chris Bryant said:
"I welcome Michael Foot's balanced and intelligent report. I have argued for some time that the Overseas Territories need to have robust governance of financial institutions, transparency in financial systems, proper regulation of off-shore financial services and a broader tax base.

The Overseas Territories have made substantial progress, especially in relation to financial transparency. I shall be working closely with the governments and governors to ensure that these recommendations are taken forward. There is still work to be done, but the Overseas Territories play a unique - and uniquely British - role, which I want to protect. "

Lord Bach, Ministry of Justice Minister for the Crown Dependencies:
“I welcome the publication of this considered and helpful review. As it recognises, the Crown Dependencies have much to be proud of in terms of meeting high international standards.

This is, however, a fast changing and increasingly complex financial environment. The report is clear that there is no room for complacency and we are confident that the Crown Dependencies will continue to lead the way in terms of meeting new standards as they evolve”

SocGen continues gradual recovery

November 4, 2009--Société Générale on Wednesday lowered its profit outlook in the light of the toughening regulatory environment, as it reported net profits for the three months to the end of September of €426m, continuing its gradual recovery from loss-making territory early this year.

Didier Valet, finance director of France’s number three bank, said: “As we await a definitive regulatory outcome [on global capital requirements], a return on equity of around 15 per cent looks more achievable than previous targets.”

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EEX trading results for Natural Gas and CO2 Emission Allowances

November 4, 2009--In October, the total Spot Market volume for Natural Gas (GPL and NCG market areas) was 564,861 MWh (October 2008: 118,890 MWh). This volume includes 9,624 MWh traded in the Natural Gas auction launched on 15 July 2009. The Spot Market price for the day-ahead delivery of Natural Gas ranged between EUR 6.50 per MWh and EUR 14.90 per MWh.

The volumes on the Derivatives Market for Natural Gas (GPL and NCG market areas) amounted to 1,573,370 MWh (October 2008: 2,763,100 MWh). On 30 October 2009, the open interest was 4,473,651 MWh. On 30 October 2009 Natural Gas prices for delivery in 2010 were fixed at EUR 16.31 per MWh (GPL) and EUR 16.49 per MWh (NCG), respectively.

A total of 494,002 EU Allowances (EUA) was traded on the EEX Spot Market for CO2 Emission Allowances in October. During the month, the Carbix (Carbon Index) ranged between EUR 12.97 per EUA and EUR 14.80 per EUA.

The volume on the EEX Derivatives Market for CO2 Emission Allowances was 2,516,000 EUA (October 2008: 16,666,000 EUA). The 2009 future contract was fixed at EUR 14.56 per EUA on 30 October 2009, and the 2010 future contract at EUR 14.92 per EUA.

On the CO2 Derivatives Market for Certified Emission Reductions a volume of 35,000 CER was traded (October 2008: 175,000 CER). On 30 October 2009, the 2009 future contract was traded at EUR 13.62 per CER and the 2010 future contract at EUR 13.41 per CER.

IOSCO consults on principles to mitigate private equity conflicts of interest

November 3, 2009--The International Organization of Securities Commissions’ (IOSCO) Technical Committee has published a Consultation Report on Private Equity Conflicts of Interest. The Report proposes a number of Principles for the effective mitigation of the potential conflicts of interest encountered in private equity firms, and the risks these conflicts pose to fund investors or the efficient functioning of the market.

The report examines the material conflict of interest risks encountered at each stage of the life cycle of a typical private equity fund, managed by a multi-fund, multi-strategy firm, and sets out the potential and common methods for mitigating these potential conflicts of interest alongside each risk. Mitigation typically takes the form of appropriate alignment of interest through incentive structures, disclosure and legal agreements. This issue was originally identified as an emerging risk from the private equity industry in a report published by IOSCO in June 2008.

View Private Equity Conflicts of Interest -Consultation Report

BME to create a Trade Repository for OTC financial products

Greater control and transparency, in line with the proposal by the European Commission
November 3, 2009--Bolsas y Mercados Españoles (BME) is going to create a Trade Repository for a wide range of Over the Counter (OTC) financial instruments, in line with the European Commission’s Communication of October 20th with the aim of achieving greater operational control and transparency in the trading of these products. The project is expected to be completed by the second quarter of 2010.

Visit this link for more information: (http://ec.europa.eu/news/economy/091022_en.htm),

According to the European Commission the appropriate management of systemic risk requires supervisory authorities to have a thorough vision of OTC derivatives markets and this can only be attained if all trades are reported to a Trade Repository, which in turn makes the information available to the supervisory authorities. In this scenario, it is very important that the Trade Repositories are managed in an independent, professional and efficient manner in such a way that they fulfill their main function without the limitations that arise from conflicts of interests of those who still prefer to keep the markets opaque. It is against this backdrop that BME starts the Trade Repository, confident of its capacity to respond satisfactorily to the demands brought about by the current situation.

The new service will initially be provided in Spain although it has a clear international orientation. The system can in the future be shared with other markets or implemented by BME in other countries. The Trade Repository will encompass a broad scope of financial instruments, among them bilateral securities lending, Bank Loans or Credit Claims as well as OTC derivatives whose underlying assets are Fixed Income, Equities, Currencies, Commodities or others.

By launching this project BME takes one step forward in its strategy of expanding its business line in the context of past and future developments affecting the markets and their regulation and supervision.

EEX: Record Volume on the Spot Market for Natural Gas in October - Volume for the month exceeds 500,000 MWh for the first time ever

November 3, 2009--03The trade volume on the Natural Gas Spot Market of European Energy Exchange AG (EEX) has reached a new record level in October. At a volume for the month of 564,861 MWh (GPL and NCG market areas) the highest volume for any month since the launch of trading has been achieved (October 2008: 118,890 MWh). The highest volume for a day (93,888 MWh) was achieved on 29 October.

The Gaspool market area accounted for 20,386 MWh and the NetConnect Germany market area accounted for 544,475 MWh of the total volume on the Spot Market. In October a total of 697 trades was concluded, which corresponds to more than a doubling of the number of trades as against the previous month (September 2009: 310 trades).

Currently, 75 trading participants are admitted to natural gas trading on EEX. EEX sees the fact that more and more companies which are already trading other products of the exchange are applying for admission to natural gas trading as a positive signal. At the moment, 65 trading participants are licensed to trade on the Spot Market and 57 trading participants are licensed to trade on the Derivatives Market.

The European Energy Exchange AG (EEX) is the leading energy exchange in Continental Europe and operates market platforms for trading in power, natural gas, CO2 emission allowances and coal. To this end, EEX relies on an open business model which generates higher flexibility, increased market coverage and bundles liquidity through targeted spin-offs and partnerships. Through this systematic expansion of cooperations, EEX makes a decisive contribution to the integration of the European energymarkets. EEX Group also includes European Commodity Clearing AG (ECC), a leading clearing house which operates throughout Europe and whose range of services comprises clearing and settlement of energy exchange transactions concluded on EEX and its partner exchanges as well as OTC transactions.

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