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Financial services: Council agrees a general approach on strengthened capital requirements and remuneration policies in the banking sector
November 10, 2009--The Council agreed on a general approach , pending the European Parliament's opinion in first reading, on a draft directive aimed at:
–strengthening disclosure and capital requirements for the trading book and re-securitisation instruments in the banking sector; and
– preventing remuneration policies that generate unacceptable levels of risk.
It requested the presidency to pursue negotiations with the Parliament on the basis of its general approach, with a view to adopting the directive in first reading.
It is widely recognised that weaknesses in the regulatory framework on capital requirements for the banking sector and in the risk management of financial institutions contributed to the crisis in global financial markets.
As regards the capital requirements framework, the draft directive, in line with the approach envisaged by the Basel Committee on Banking Supervision , sets higher and reinforced capital requirements for certain assets that banks hold in the trading book and for re-securitisation instruments. Such investments entail higher risks on account of their complexity and their sensitivity to losses.
The draft directive also enhances disclosure requirements, in line with internationally agreed standards, in several areas such as securitisation exposures in the trading book and sponsorship of off-balance-sheet vehicles.
As concerns risk management, the draft directive introduces a requirement that the remuneration policies of financial institutions be subject to supervisory oversight. There is no such requirement under the current supervisory framework, and as a result, supervisory authorities have generally not focused on the implications of remuneration policies for the risk management of financial institutions.
With regard to the supervision of remuneration policies, the draft directive:
–imposes a binding obligation on credit institutions and investment firms to have remuneration policies and practices that are consistent with and promote sound and effective risk management;
–brings remuneration policies within the scope of supervisory review, so that supervisors may require firms to take measures to rectify any problems that they may identify;
–ensures that supervisors may also impose penalties, including fines, against firms that fail to comply with the obligation.
Source: COUNCIL OF THE EUROPEAN UNION
FSA to simplify system for calculating regulatory fees
The Financial Services Authority (FSA) has today announced proposals to simplify the structure of the fees it levies on regulated firms and to enhance fairness and transparency.
November 10, 2009--Following a review of its approach for determining the annual fees that firms pay, the FSA is consulting on a number of measures to ensure that fees continue to be set in a fair way, and to make the basis for calculating fees easier for firms to understand, including:
Setting a standard 'minimum fee' that all firms will have to pay to cover the basic cost of being regulated;
Ensuring that 'variable' fees over and above this basic minimum amount increase in direct relation to a firm’s size – with the result that fees for the largest firms reflect the greater regulatory engagement they receive.
By the end of November, the FSA will publish a Fees Calculator which will enable firms to assess what these proposals mean for them.
Mark Norris, the FSA’s chief operating officer, said:
"We are committed to delivering fair and transparent fees to all authorised firms. This is particularly important given that we are funded entirely by the firms we regulate, so we need to ensure firms can clearly see how we calculate their contribution to the running costs of the FSA."
The FSA is inviting responses to the proposals in its consultation paper by 11 January 2010. In February 2010, depending on the outcome of this consultation, the FSA plans to consult on fee levels for 2010/11 using this new fee model.
Source: FSA
European ETF Activity highlights: NYSE Euronext
November 10, 2009-- At the end of October, NYSE Euronext had 439 ETFs with 487 listings from 13 issuers. NYSE Euronext ETFs cover more than 290 indices including an extended range of assets and strategies (Equity, Fixed Income, Commodities, Short, Leverage, etc…).
* The number of ETFs increased by approximately 26% YTD compared to end of 2008. At the end of October, NYSE Euronext European markets had registered 97 ETF listings and 6 delistings in 2009.
* Daily average turnover in October 2009 increased by 3.53% to €352 Million, and the daily average number of trades increased from 7 446 to 8 582, or 15.3%, compared to September 2009.
* The median spread of all listed ETFs was 32.27 bps in October.
view report
Source: NYSE Euronext
EU Business Group: Euro Exchange Rate At "Pain Threshold"
November 9, 2009--The euro's exchange rate has reached a "pain threshold" for industry, the head of the European Union's largest business lobby said Monday.
The euro on Monday traded just below $1.50. When the currency rises, euro-zone exports become relatively more expensive in foreign markets, hampering a sector considered crucial to the region's economic recovery.
"This is not good news for growth in Europe," BusinessEurope's President Juergen Thumann said in a statement following a meeting with key EU economic officials, including European Central Bank President Jean-Claude Trichet and European Commissioner for Economic and Monetary Affairs Joaquin Almunia.
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Source: Dow Jones Newswires
Growth and Independence through Equity Financing
Study highlights the importance of equity financing for innovation and growth in German SMEs in the wake of the financial crisis
November 9, 2009--The importance of equity financing has become a bigger issue both for companies and the public in general as a result of the financial crisis. Structural changes in corporate financing are a result of changes in the credit markets and the increasing harmonization between the transparency requirements of lenders and equity providers.
A joint study conducted by the Technical University in Munich, Ernst & Young and Deutsche Börse examined the reasons for this trend towards an excess of equity, and analyzed the importance of IPOs for business performance and the economy.
“The majority of companies use IPOs to finance growth strategies and strengthen their equity base,” said Frank Gerstenschläger, member of the Executive Board of Deutsche Börse. “The study clearly shows that an IPO boosts companies' domestic and foreign sales, encourages broader diversification and higher spending on research and development.”
According to Ulrich Lenz from Ernst & Young, the study shows that for many companies, there will be no return to traditional-style bank and debt financing, “Only with a broad financing approach and a clear focus on equity can companies secure their future independence and embark on new routes towards profitable growth,” said Ulrich Lenz.
Christoph Kaserer, professor at Munich’s Technical University said that the study also reveals a series of obstacles which still have to be surmounted en route to deeper equity markets and a strong equity culture. According to him, other countries – particularly Anglo-Saxon ones – have already overcome these obstacles. “Germany has to find a way to develop a more active equity market for both the supply side (investors) and the demand side (companies).”
The study, entitled “Corporate Growth and Entrepreneurial Independence through Equity Financing – Structural Changes and New Approaches for the German Mittelstand in the Current Financial Crisis” will be presented at the 13th German Equity Forum Fall in Frankfurt from 9-11 November 2009. A panel discussion will follow the presentation.
The German Equity Forum is organized by Deutsche Börse and KfW Bankengruppe. It is the largest international information and networking platform for companies seeking equity capital.
German Equity Forum Fall 2009 Opens in Frankfurt
November 9, 2009--Deutsche Börse and KfW Bankengruppe have opened the 13th German Equity Forum in Frankfurt am Main. The capital market conference runs from 9 – 11 November, and is the largest information and networking platform in Europe for companies seeking equity capital.
“Equity has never been more important,” said Reto Francioni, CEO of Deutsche Börse at the opening of the Fall Forum 2009. “The issue of equity supplied via the stock exchange is moving slowly but surely into the spotlight. The large number of participants this year alone shows the great interest in the primary market.”
Ulrich Schröder, Chairman of the Board of Managing Directors of KfW Bankengruppe had this to say at the opening of the forum, “Innovations are particularly important if we are to overcome this financial and economic crisis as quickly as possible. They are the key driving force behind economic growth. Companies have to find support in this respect and thus need a functioning market.”
The Equity Forum offers panel discussions, presentations and workshops on corporate financing and capital market regulation. International companies from China, India, Belarus and the Ukraine will introduce themselves in country forums. Some 200 listed companies will be presenting their current financial figures at investor and analyst conferences. The event also includes presentations by the top 25 non-listed high-growth companies from the Alternative Energies, Life Science, Consumer & E-Commerce, High Technology and Software & Internet sectors to a broad group of investors. The forum is expected to attract 5,000 attendees.
Leading global market organizer Deutsche Börse and development bank KfW have been organizing the German Equity Forum, held twice a year, since 1996. The fall event focuses on listed companies and those in later-stage financing, while the primary focus of the spring forum is on early-stage and growth companies.
Source: Deutsche Börse
Electronic equity trading up eight per cent month on month - Record Levels of Trading in ETFs and ETCs, and on EDX London
November 6, 2009-19.7 million equity trades were carried out across London Stock Exchange Group’s electronic order books during October, an increase of eight per cent on the previous month. The total equity value traded across the Group during the month was £173.4 billion (€189.4 billion).
Significant volatility during October 2008, which led to record volumes across the Group’s equity markets last year, affected year on year comparisons. Nevertheless, trading in ETFs, ETCs, fixed income and derivatives products showed strong growth in October. ETF and ETC trading set new records, with the average daily number of ETF and ETC trades up 84 per cent on last year. The average daily value traded on the MTS cash markets increased 76 per cent year on year, while EDX London also performed strongly, seeing its second busiest month ever for number of contracts traded.
UK Cash Equities
The average daily value traded on the UK order book was £4.2 billion (€4.6 billion), seven per cent higher than the previous month but a decrease of 44 per cent year on year. The total value traded was £92.9 billion (€101.5 billion).
There was a six per cent month on month increase in the average daily number of trades in UK equities, with 566,377 trades per day, a decrease of 39 per cent year on year. The total number of UK equity trades during the month was 12.5 million.
Italian Cash Equities
On the Italian equity order book, the average daily number of trades in Italian equities was 270,340, up 14 per cent on the previous month, though down 11 per cent on last October. The average daily value traded remained flat year on year at €3.2 billion (£2.9 billion).
The total number of trades was 5.9 million and the total value traded was €69.4 billion (£63.6 billion).
International Cash Equities
The average daily value traded in international stocks on the Group’s equity order books was up 11 per cent year on year, totalling £770 million (€841 million), 18 per cent ahead of the average for the previous month. The average daily number of trades was 57,561, an increase of eight per cent on the previous month and up five per cent on last October.
ETFs and ETCs
It was a record month for trading in ETFs and ETCs across the Group; the number of trades reached 381,581, a 76 per cent increase on the same month last year, while the total value traded was up 34 per cent year on year to £9.9 billion (€10.8 billion). The average daily number of trades rose 84 per cent year on year to 17,345, while the average daily value traded was up by 40 per cent to £448 million (€490 million).
Derivatives
The average daily number of contracts traded on the Group’s derivatives markets, EDX London and IDEM, was up 17 per cent on last year at 467,292. The average daily notional value traded was £4.5 billion (€4.9 billion), 20 per cent lower than the same month last year.
EDX London enjoyed another strong performance during October, recording its second busiest month ever, with 7.0 million contracts traded across its Russian and Scandinavian products, including a record 4.8 million Russian stock options, 700,000
contracts more than the previous record, set last month. Trading in the FTSE Russia IOB Index grew for the fourth consecutive month, with a record 15,806 contracts traded, over three times as many as the previous record of 4,261, set in March 2007.
Fixed income
Trading on the MTS Cash markets remained strong, with the average daily value traded up by 76 per cent year on year at €10.7 billion (£9.8 billion), while on the MTS Repo market the average term adjusted daily value traded increased by 81 per cent year on year to €177.9 billion (£162.9 billion).
On MOT, Borsa Italiana’s retail fixed income market, the average daily value traded was €868 million (£795 million), a seven per cent month on month increase, while the average daily number of trades was 13,105, a six per cent month on month increase.
Source: London Stock Exchange Group
Standard & Poor's Announces Changes In The S&P/TSX Venture Composite Index
November 9, 2009--Standard & Poor's will make the following changes in the S&P/TSX Venture Composite Index after the close of trading on Monday, November 9, 2009:
The shares of Cadan Resources Corporation (TSXVN:CNF) will trade on a consolidated basis following a 1-for-5 consolidation.
The new CUSIP number will be 12721D 20 3 and the new ticker symbol will be CXD.
Company additions to and deletions from an S&P equity index do not in any way reflect an opinion on the investment merits of the company.
Source: Standard & Poors
Spain buys EUR 25m carbon emission rights from Poland
November 9, 2009-Spanish Prime Minister Jose Luis Zapatero Monday signed an agreement for the purchase of carbon dioxide emission rights from Poland worth 25 million euros.
"This agreement is beneficial to Spain and to Poland and also for limiting the influence of (greenhouse gas) emissions on climate change," Zapatero said at a joint press conference with Polish Prime Minister Donald Tusk in Poland's Baltic Sea resort of Sopot.
The Polish leader said the agreement would "provide ample resources for investment" to "effectively reduce CO2 emissions in Poland."
"This means that Spanish money will work in Poland to improve environmental protection," Tusk added.
read more
Source: EU Business
UK commercial property values surge
November 9, 2009--A rapid recovery in UK commercial property values from the deepest slump on record to near bubble-like conditions could see the sector turn positive this year, a leading property consultancy has forecast.
Real estate values are set to overturn most of the losses suffered in the first half, according to research by Colliers CRE, as booming investor demand has taken prices back to near peak levels in some sectors.read more
Source: FT.com