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EU businesses investing in R&D despite economic crisis
November 19. 2009--Corporate investment in research and development (R&D) increased by 8.1% in the EU in 2008 in spite of the economic crisis, according to new figures published this week in the 2009 EU Industrial R&D Investment Scoreboard. The figures reveal that European companies outperformed their counterparts in the US and Japan, who increased their R&D spending by 5.7% and 4.4% respectively. Corporate R&D investment worldwide increased by 6.9%.
Two EU companies feature in the top 10 in the Investment Scoreboard figures. German car manufacturer Volkswagen took third place with an R&D investment of EUR 5.93 billion, and Finnish communications company Nokia took eighth place. Overall top world performer was the Japanese company Toyota Motor with EUR 7.61 billion invested in R&D. Among the other top 10 investors worldwide are US companies Microsoft, General Motors, Pfizer, Ford and Johnson & Johnson.
The Investment Scoreboard figures also show promisingly strong R&D investments by companies in the renewable energy technology sector.
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Source: EU Business
Antitrust: Commission confirms sending of Statement of Objections to Standard & Poor's
November 19, 2009--The European Commission can confirm that on 16 November 2009 it sent a Statement of Objections (SO) to Standard & Poor's (S&P), a division of McGraw-Hill Companies, Inc. of the United States. The SO outlines the Commission’s preliminary view that S&P is abusing its dominant position by requiring, as the sole-appointed National Numbering Agency (NNA) for US securities, financial institutions and information service providers (ISPs) to pay licensing fees for the use of International Securities Identification Numbers (ISINs) in their own databases.
The Commission takes the preliminary view that this behaviour amounts to unfair pricing and constitutes an infringement of Article 82 EC Treaty.
ISINs are the global identifiers for securities and are governed by International Standardisation Organisation (ISO) standard 6166. They are indispensable for a number of operations that financial institutions carry out (for instance, reporting to authorities or clearing and settlement) and cannot be substituted by other identifiers for securities.
S&P is the sole-appointed NNA for US securities and therefore the only issuer and first-hand disseminator of US ISIN numbers. The Commission’s preliminary conclusion is that S&P is abusing this monopoly position by enforcing the payment of licence fees for the use of US ISINs by (a) banks and other financial services providers in the EEA and (b) information service providers in the EEA.
This preliminary finding is based on, inter alia, a comparison with the charging policy of other NNAs that either do not charge any fees at all or, if they do, do so only on the basis of the distribution cost as opposed to usage, according to ISO principles. According to the Commission's preliminary findings, S&P does not incur any costs for the distribution of US ISINs to financial service providers because the latter do not receive the ISINs from S&P but from information service providers such as Thomson Reuters or Bloomberg.
S&P has 8 weeks to reply to the SO, and will then have the right to be heard in an Oral Hearing. If the preliminary views expressed in the SO are confirmed, the Commission may require S&P to cease the abuse and may impose a fine.
Background
The Commission opened a formal investigation into S&P in January 2009 (see MEMO/09/6 ).
A Statement of Objections is a formal step in EC antitrust investigations in which the Commission informs the parties concerned of the objections raised against them. The parties can reply to the Statement of Objections, setting out all facts relevant to their defence against the objections raised by the Commission. They may also request an oral hearing to present its comments on the case.
The Commission may then take a decision on whether the conduct addressed in the Statement of Objections is compatible or not with the EC Treaty’s antitrust rules. Sending a Statement of Objections does not prejudge the final outcome of the procedure.
Source: European Commission
ECB amends rating requirements for asset-backed securities in Eurosystem credit operations
November 20, 2009--The Governing Council of the European Central Bank (ECB) has decided to amend the rating requirements for asset-backed securities (ABSs) to be eligible for use in Eurosystem credit operations.
The Eurosystem will require at least two ratings from an accepted external credit assessment institution for all ABSs issued as of 1 March 2010. In determining the eligibility of these ABSs, the Eurosystem will apply the “second-best” rule, meaning that not only the best, but also the second-best available rating must comply with the minimum threshold applicable to ABSs (see the press release of 20 January 2009).
As of 1 March 2011, the second-best rule and the requirement to have at least two ratings will be applied to all ABSs, regardless of their date of issue.
The Governing Council has deemed it necessary to introduce the above amendments to ensure that the Eurosystem’s requirement of high credit standards for all eligible collateral is met. In addition, the changes, which reflect recent market developments, aim to make a further contribution to restoring the proper functioning of the ABS market.
The list of external credit assessment institutions accepted by the Eurosystem is available on the ECB’s website.
Source: European Central Bank (ECB)
CESR publishes responses to consultation on trade repositories
November 20, 2009--CESR today published the responses received to its consultation on trade repositories in the European Union.
Consultation on Trade Repositories in the European Union
Closing date : 06 Nov. 2009 Consultation on Trade Repositories in the European Union
29 Sep. 2009 - The financial crisis, especially the default of Lehman Brothers, underlined the importance of a robust and adequately functioning post-trading infrastructure, highlighted the need for more transparency on exposures generated by the over-the counter (OTC) market, in particular for derivatives, notably credit default swaps (CDS), and demonstrated the need to safeguard the OTC market from abusive behavior. The CESR/ESCB Recommendations for Securities Settlement Systems and Central Counterparties in the European Union, upon request of the ECOFIN, have been reviewed in order to encompass the OTC derivatives dimension. On 31 July 2009 the European Commission announced a major step towards financial stability for the European CDS market in (defined as the market in CDS that reference European entities and indices), related to European entities and indices will be cleared through central counterparties as of that date. The fact that various providers of clearing services have now expanded (or are in the process of doing so) their scope of services to central clearing of CDS is an important reason to consider what further improvements can be made in order to enhance risk mitigation and to improve the transparency and efficiency of the post-trading process as a whole. On 3 July 2009 the European Commission published a Communication on ensuring efficient, safe and sound derivatives markets. In the Communication the Commission referred to the forthcoming report of CESR on trade repositories, on the basis of which the Commission will take appropriate actions. It also raised several other issues that it considers to be important in the context of derivatives markets.
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Source: CESR
NASDAQ OMX Launches New Fixed Income Index - OMRX All Index Added To Expanded OMRX Index Family
November 20, 2009--NASDAQ OMX Stockholm announces that it has launched a new fixed income index named OMRX All Index, which will act as a benchmark for the Swedish bond and money markets. The index includes treasury bills, nominal treasury bonds as well as nominal bonds from major mortgage institutions. The OMRX All Index will be added to NASDAQ OMX' new expanded OMRX fixed income index family.
Effective November 19, NASDAQ OMX existing index series (ALLA, OTHER, STAT and SSV) will be incorporated into the OMRX index family and rulebook. The new name standard is introduced to simplify and facilitate the comparability of NASDAQ OMX fixed income indexes. Significant indexes included in the OMRX series are OMRX Bond All Index and OMRX Mortgage Bond All, which together with the new OMRX All Index will form a sub-index family suitable for investors looking to utilize broad mortgage issuer diversification.
Magdalena Hartman, Vice President NASDAQ OMX Global Index Group said, “The launch of OMRX All Index together with the new OMRX Bond All Index and OMRX Mortgage Bond All Index is a direct response to customer demand for broader benchmark indexes that covers multiple mortgage issuers. Moreover, by harmonizing the name standard and rulebook for our fixed income index family we make them more accessible and visible to our customers.”
Jonas Pripp, Head of fixed income at Swedbank Robur commented, “It is very positive that NASDAQ OMX now takes the step to expand its OMRX index family. These types of indexes are in demand among our large institutional clients and we also intend to change benchmark to the new indexes for our fixed income funds. The new indexes reflect actual market conditions for Swedish covered mortgage bonds, which implies an increased diversification, leading to better products for our customers. For us, a reliable and dynamic supplier is just as important as transparency, diversification and index replicability.”
Source: NASDAQ OMX
WSE Introduces the RESPECT Index
November 20, 2009--On 19 November 2009, the Warsaw Stock Exchange announced the Respect Rating – a ranking of socially responsible WSE-listed companies – and started publishing the Respect Index.
“It is an important day from the perspective of the development of the Warsaw Stock Exchange during the past couple of years. Today, we initiate the project of promoting responsible management in WSE-listed companies and measuring it through a special-purpose index. The activities of a modern enterprise take into account relations with shareholders, business partners, stake holders as well as the community.” – said Mr Ludwik Sobolewski, WSE President & CEO, during a seminar that inaugurated the Respect Rating and Index.
“Securities exchanges have a very important role to play – that of leaders in establishing responsible business standards. Today’s launch of the Respect Index marks the beginning of a great adventure and a great challenge for us.” – Ms Eliza Durka, WSE Marketing Communications Office Director, said.
The Respect Index measures the performance of companies that were classified as socially responsible in the survey. It is an income index, taking into account corporate actions such as dividends and rights issues. Sixteen companies that received the highest rating in the survey were included in the composition of the Index:
APATOR SA
BANK PBH
Barlinek SA
Ciech SA
Citi Handlowy
ELEKTROBUDOWA SA
Grupa LOTOS SA
GRUPA ZYWIEC SA
ING Bank Slaski SA
KGHM Polska Miedz
Mondi Swiecie SA
PGNiG SA
PKN ORLEN SA
Telekomunikacja Polska SA
Zaklady Azotowe w Tarnowie – Moscicach SA
Zaklady Magnezytowe „ROPCZYCE” SA
For more information, please visit www.wse.com.pl
Source: Warsaw Stock Exchange (WSE)
NASDAQ OMX Stockholm And Valueguard Launch New Housing Price Index
November 19, 2009--NASDAQ OMX Stockholm AB, part of the NASDAQ OMX Group (NASDAQ:NDAQ), together with Valueguard today introduced a new suite of housing price index, “NASDAQ OMX Valueguard-KTH Flats” (HOX), based on the price development for privately held flats in Sweden's three largest cities.
The HOX index will increase the transparency of the housing market by providing timely and trustworthy information of the monthly price movements. This is the first step in building a standardized market for financial products with housing prices as the base. In the longer run, households will be able to invest in products that give a return equal to the price changes in the housing markets.
The calculation of the index is done by Valueguard Index Sweden, based on a methodology developed together with the KTH Royal Institute of Technology. The index base value is 100 and the base date is January 2005, and distribution starts today.
“The housing market in Sweden is about the same size as the market capitalization of the entire NASDAQ OMX Stockholm”, says Erik Thedéen, President NASDAQ OMX Stockholm. “For most households, the house is the largest asset and we believe that many house-owners could benefit from being able to manage their exposure to this market and to save in financial products with the return linked to house prices”.
Håkan Toll, CEO of Valueguard, says: ”We are pleased to launch this suite of indices together with NASDAQ OMX. We believe that this is the first step for the introduction of financial products based on these indices that can be used by both professional and retail investors to manage their exposure to this market.”
Source: NASDAQ OMX
Structured Product Market Will Expand 20% In 2010
November 19, 2009--OPAL, the UK’s largest provider of structured product administration to investment companies, banks, building societies and other third parties, predicts that, despite the high profile issues in 2009, the market will continue to grow by 20 percent in 2010.
OPAL also predicts that there will be a move to create a new classification for ‘no risk’ / guaranteed products such that they do not become tainted by some of the more esoteric structures, more commonly associated with structured products.
Tony Collins, managing director, OPAL, comments: “2009 has been a turbulent year, but despite this, many companies see the benefits that a specific type of structured product can offer. I personally welcome the closer review by the FSA as this will help to create stability in the market and, more importantly, give companies the confidence to launch what are really compelling products. Returns of above 5 per cent, capital protection and protection under the FSCS give the market a healthy future.”
Source: Business UK
CESR has published the DIRECTIVE 2009/65/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
November 18, 2009--CESR has published the DIRECTIVE 2009/65/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL-on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS)(recast)
view Directive 2009/65/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
Source: CESR
DB Index Research -- Weekly ETF Reports -- Europe
November 18, 2009-Highlights
ETF Volume
Exchange based Equity ETF turnover remained at about the same level on the previous week. Daily turnover for the previous week was E1.5bn. European fixed income ETF turnover remained at about the same level at E183m, with money market ETFs continuing to be the main focus.
In exchange based bond ETFs, db x-trackers II EONIA TR Index ETF has the highest daily turnover of E18.11m. Among the Equity ETFs, iShares DAX (DE) has the highest daily turnover of E75.98m.
There were 44 listings in the last week. ETF Securities Ltd listed 22 new ETCs and cross-listed 18 ETCs on the London Stock Exchange, AXA IM/BNP Paribas cross-listed 2 ETFs on Borsa Italiana and UBS listed 1 new and cross-listed 1 existing ETF on Swiss Stock Exchange.
European Style ETFs, led by short and leveraged products, kept its position as the leading product area with total turnover of E458m accounting for 31.31% of total ETF turnover, followed by European Regional ETFs with total turnover of E385m with 26.34% of total turnover. The DAX ETFs remain the dominant country products with total average daily volume of E205m across the nine listed products and accounting for 14.0% of all equity ETF volume.
DJ Euro STOXX 50 ETFs accounted for 13.5% of turnover trading E198m per day with liquidity split across 26 ETFs and 46 different listings on 9 exchanges.
Market Share
The Deutsche Borse XTF platform has the largest market share with 37.6% of total turnover. The Euronext NextTrack platform has 21.6% market share. The LSE’s combined Italian Exchange and London market share is now 25.7%.
Assets under Management (AUM)
Total European Equity related AUM rose by 2.8% to E104.6bn during last week. AUM for DJ Euro STOXX 50 ETFs was E20.2bn accounting for 19.3% of total European AUM. Fixed Income ETF AUM remained at about the same level at E33.8bn.
Overall, the largest ETF by AUM was the Equity based ETF, Lyxor ETF DJ Euro STOXX 50 with AUM of E5.2bn. The largest Fixed Income ETF by AUM was the iShares € Corporate Bond with AUM of E3.2bn.
To request a copy of the report click here
Source: Aram Flores and Shan Lan -DB Index Research
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