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FSA sees fall in applicants for authorisation
November 9, 2009--The number of new financial firms and individuals seeking regulatory authorisation fell in the third quarter to the lowest levels in at least three years, suggesting that the worst is not yet over for the City.
Only 247 new banks, brokers and insurance firms sought authorisation from the Financial Services Authority in the three months to September 30, while 643 firms cancelled their registration, according to data compiled by IMAS Corporate Advisors.read more
Source: FT.com
FSA chief says cultural change needed to drive reform
Reform will only come if both the regulator and the regulated are committed to genuine change, according to Financial Services Authority (FSA) chief executive Hector Sants.
November 9, 2009--Speaking today at Bloomberg, London, Hector Sants emphasised how the FSA has changed and how its radical new intensive supervisory regime is already delivering the right outcomes for firms, consumers and for financial stability, but that there needs to be genuine cultural and behavioural change within the financial industry to ensure the lessons of the crisis provide the outcomes society expects.
Hector Sants warned:
"There remains, I believe, an absence of the acceptance of collective responsibility for what has happened. I personally remain unconvinced that all senior management have taken on board the need to change and operate in a genuinely different manner."
Hector Sants demonstrated how the experience of the past two years has equipped the UK regulator to deliver a new, stronger supervisory approach. Having completed the implementation of its Supervisory Enhancement Programme (SEP), it now has 280 more supervisory and specialist staff, a new training regime and a new risk identification process. Supervisors are now judging firms on the likely consequences of their decisions and proactively challenging business models.
This radical new approach to supervision has successfully delivered results on both prudential and conduct issues; helping to protect consumers and secure financially stronger, more resilient firms. This year, the FSA has taken action and secured redress for consumers in respect of payment protection insurance for both mortgages and personal loans (MPPI and PPI), for mortgage arrears handling and pension switching. It will be increasingly proactive in testing risks inherent in products from their development and using techniques such as mystery shopping to test the true outcome for consumers.
Stronger prudential supervision is already ensuring that firms are able to better deal with financial pressures, enhancing financial stability throughout the crisis. Without the FSA’s rigorous stress tests the recent bank recapitalisations would not have been possible and the FSA was the first major regulator, globally, to introduce new rules to tackle liquidity risk.
However, Hector Sants continued:
"I believe it is important to recognise that there are limits to what regulatory rules can achieve. It would be a mistake not to recognise that some of the failures which have occurred have their roots in the issues of culture and behaviour."
The FSA has already introduced a tougher approval process for senior management and has seen a number of applicants withdraw as a result of greater challenge, but is now looking to explore an individual’s ability to create a strong ethical framework. Acknowledging that culture is driven by those at the top of an organisation, the FSA will be opening the debate on how it can assess a senior executive’s impact on an institution’s culture as part of its authorisation regime. This topic will be included in a forthcoming FSA discussion paper.
Commenting on the current debate on regulatory structure, Hector Sants stated that all organisational structures will have fault lines but given the demonstrable effectiveness of the revised FSA approach of integrated supervision of individual firms it is critical that "society must not lose the benefits of the hard learning experience the FSA has been through".
Source: Financial Services Authority (FSA)
Two New ETFs From XACT Fonder start trading on NASDAQ OMX
November 6, 2009--NASDAQ OMX Stockholm AB, part of the NASDAQ OMX Group (NASDAQ:NDAQ), today starts trading in two new exchange traded funds (ETFs), XACT Bull 2 and XACT Bear 2.
The two ETFs issued by XACT Fonder are based on the OMXS30 (OMX Stockholm 30) index which reflects the performance of the 30 most traded shares on NASDAQ OMX Stockholm. The OMXS30 index is in 2009 the third most traded domestic index in Europe with more than 400 million derivatives contracts since its start in 1986.
XACT Bull 2 and XACT Bear 2 are leveraged exchange traded funds that offer twice the return of the daily change in the underlying OMXS30 index. Hence, for XACT Bull 2, which has a positive exposure against OMXS30, a daily index increase of 1% means an increase in value of 2%. For XACT Bear 2, which has a negative exposure against OMXS30, a 1% a daily index decrease generates a 2% value return. The leverage increases the potential return but also the risk level.
Jenny Rosberg, Deputy CEO at NASDAQ OMX Nordic said, “These two new products from XACT Fonder will make a good addition to our offering of exchange traded funds and continue to attract investor interest to this exciting market. In 2009 we have seen a significant increase in ETF trading compared to the same period last year, proving that this is a market with great growth potential”.
Source: NASDAQ OMX
Thomson Reuters MiFID Market Share Reports October 2009
November 6, 2009--The spreadsheets below provide monthly reports at a summarised level by markets and index constituents in Pan European Equities. These show the market share in terms of all trades published across the different European exchanges and other reporting venues.
View 2009 Market Share Report (Jan - Oct) XLS
View 2008 Market Share Reports XLS
From March 2009 the Monthly Equity Market Share reports are being sourced from our recently launched Equity Market Share Reporter. Both the Volume and Turnover data are now calculated based on each individual trade reported by all European Exchanges, MTFs, and OTC trade reporting venues rather than the accumulated volume figures for each stock as published by the Exchanges. Trades reported after trade-date are now reflected in these statistics. We are also able to separately identify the trading volumes of the Independent Dark Pools.
The report most recently published spreadsheet for January to July 2009 reflects separate values for all trades published through MiFID trade publication services with the venue name and " - OTC". This reflects feedback to the data published last month requesting that these trades be split out from the totals per venue for trade executed on those venues or reported under the rules of those venues.
This classification of OTC trades differs from that previously used where only trades on the exchanges' MiFID trade reporting services were categorised as OTC. However in our recent review and categorisation of trades into our seven standard trade classifications it was clear that for a number of exchanges including the LSE and NASDAQ OMX, that trades published through their MiFID reporting services in stocks traded on their exchange, trades were included in their main feed with trade flags to identify them as such. As a consequence the totals for OTC trades in the January to July 2009 is higher than previously identified.
The Equity Market Share Reporter in addition provides:
data broken down into more granular trade types such as Transparent Order Book, Dark Order Book, On-Exchange Reported & Off-Exchange (OTC), and
analysis of the trading liquidity of any stock for which trades have been published by any of the comprehensive list of Exchanges, MTFs, Dark Pools & OTC reporting venues covered, and
easy downloading of the data into Excel.
For further information about the Monthly Market Share reports or to request to be added to our distribution list for notification of when new reports are posted please email: mifid@reuters.com.
Source: Thomson Reuters
FSA sets out new prudential regime for personal investment firms
November 6, 2009--The Financial Services Authority (FSA) has today set out its new prudential regime for personal investment firms (PIFs) to ensure that they are better capitalised to withstand any future financial shocks.
Under the new rules, all PIFs will have to hold capital resources worth at least three months of their annual fixed expenditure in realisable assets such as cash. The minimum capital resources threshold for any firm will be set at £20,000.
Requiring PIFs to hold more capital resources will enable firms to provide redress for consumers and limit the compensation due from the Financial Services Compensation Scheme (FSCS) in the event that they are wound up.
Following feedback from the industry, the transition to the new regime has been extended by a year to 31 December 2013, allowing firms more time to comply with the requirements. Firms will also be able to take into account any changes arising from the Retail Distribution Review.
Paul Sharma, FSA director of prudential policy, said:
One of the lessons learned from the current crisis is that firms need to hold enough capital resources in order to weather future financial storms. Having a clear, consistent regime for all personal investment firms will provide better protection for consumers and the industry from the fall-out when firms fail.
"We have listened to the industry and are phasing in the new regime to allow time for them to adapt to the changes. However, we expect firms to start considering now what resources they will need to have in place."
As a follow-up to the consultation, the FSA is considering how expenditure-based capital resources requirements can be applied consistently to all PIFs, particularly those with commission-based business models. The FSA will also consult in 2010 on an appropriate prudential regime for pension and third party administrators.
Source: FSA.gov.uk
Deutsche Bank has appointed Nick Shellard as UK head of exchange-traded fund sales.
November 6, 2009--Deutsche Bank has appointed Nick Shellard as UK head of exchange-traded fund sales.
Shellard, who has over a decade of experience in ETFs, joins from Barclays Global Investors, where he was previously head of iShares ETF sales for the UK and Switzerland.
Tim Hart, co-head of equity sales for Europe, says: “The UK is a strategically important growth market for ETFs.
read more
Source: ETF Express
Eurozone retail sales slide further
November 5, 2009-- Retail sales in the 16 nations using the euro fell again in September, continuing a downward trend as consumers remained cautious, according to official EU data released on Thursday.
The volume of retail sales in the eurozone fell 0.7 percent over the month in the eurozone and 3.6 percent compared to sales in September 2008, the European Union's Eurostat data agency said.
Across the 27-nation bloc as a whole, retail trade also weakened, contracting by 0.4 percent in September and by 2.5 percent over one year.
read more
Source: EU Business
UK investors believe economic recovery will be short lived
November 5, 2009--UK investors believe any economic recovery will be short lived, with the majority of investors positioning their portfolios in preparation for a W shaped recession, according to a survey by iShares.
The survey, which collated over 200 responses for each question, asked ETF investors to consider answers relating to some of their key investment challenges.
It found that 61 per cent believe the recovery will take the shape of a W as opposed to a U or a V, and 78 per cent think the emerging markets will come out on top at the end of the recession versus the west.
read more
Source: ETF Express
Deutsche Börse AG, Q3/2009: Solid Result Despite Continued Weak Market Activity
Stable business performance compared to Q2/2009/ Costs in first nine months at 2008 level despite higher expenses for growth initiatives/ Earnings per share €0.85 (Q2/2009: €0.89)/ Cost target for 2010 shall not exceed 2009 cost guidance of €1,280 million
November 5, 2009-- Deutsche Börse Group in the third quarter 2009 once again generated a solid result. Market activity has stabilized at second quarter 2009 levels despite seasonally weaker activity in July and August. Clearstream’s post-trading activities also showed stable performance. Assets under custody rose quarter-on-quarter in both the international and the domestic business. Overall, it was not possible to achieve the level of revenue seen in record year 2008. Nevertheless, Deutsche Börse Group considers this development to be further proof of the stability of its broad based business model, even in weaker market phases.
Sales revenue for Deutsche Börse Group decreased slightly against the second quarter of 2009 to €500.9 million (Q2/2009: €515.6 million, –3%). The decline is largely due to price changes in trading of US options and in the settlement of German securities as well as effects caused by the weaker US dollar. In comparison to the extraordinarily strong third quarter 2008, sales revenue decreased by 19 percent (Q3/2008: €616.1 million). Net interest income from the Group’s banking business fell in the third quarter, particularly due to a continued decline in short-term interest rates to €21.9 million (Q2/2009: €25.9 million, –15%; Q3/2008: €55.7 million, –61%).
Total costs in the third quarter of €306.7 million were down slightly quarter-on-quarter (Q2/2009: €322.5 million, –5%), as well as year-on-year (Q3/2008: €311.2 million, –1%) due to the ongoing efficiency measures. The cost forecast of around €1,280 million for financial year 2009 remains unchanged. Overall, Deutsche Börse thus generated EBITA of €243.7 million in the third quarter (Q3/2008: €385.0 million, –37%). Net income for the period amounted to €158.3 million (Q3/2008: €257.3 million, –38%). Basic earnings per share stood at €0.85 based on the average 185.9 million outstanding shares in Q3/2009. This corresponds to a decline of 4 percent over the second quarter 2009 (Q2/2009: €0.89). In the prior-year quarter this figure amounted to €1.35 based on 190.5 million shares.
Sales revenue for the nine months to September 2009 amounted to €1,556.3 million (Q1-3/2008: €1,846.1 million, –16%). Despite an increase in organic growth investments, costs at €926.8 million remained stable compared to the previous year (Q1-3/2008: €924.3 million). This shows that the Group’s efficiency measures prove effective. EBITA amounted to €804.1 million (Q1-3/2008: €1,185.9 million, –32%). With a tax rate for the Group of 27.0 percent (Q1-3/2008: 28.9 percent), net income for the period amounted to €529.1 million (Q1-3/2008: €810.9 million, –35%). Basic earnings per share amounted to €2.85 (Q1-3/2008: €4.23, –33%).
For 2010, the Executive Board of Deutsche Börse AG plans to further increase the expenses for organic growth initiatives and at the same time aims at not exceeding 2008 costs and the 2009 cost guidance of around €1,280 million also in 2010.
Reto Francioni, CEO of Deutsche Börse AG, said, “Third quarter business activity stabilized at second quarter levels despite negative seasonal effects. As a result of our strict cost management, we achieved stable costs in the first nine months compared to 2008 despite higher expenses for organic growth initiatives. Overall, we once again generated a solid result in an environment which continued to be influenced by market participants’ reluctance to trade. Our ambition is to continue Deutsche Börse’s long standing track record for profitable growth. Against this background, the Executive Board plans to further increase the expenses for organic growth initiatives. At the same time, total costs for 2010 shall not exceed the level of around €1,280 million in 2010.”
Segment reporting
The reluctance of participants on the equity markets observed since the beginning of the year also continued in Q3/2009. However, Xetra trading volumes stabilized at the level of the first six months of 2009. The number of transactions on the electronic trading platform Xetra thus fell only slightly quarter on quarter to 41.7 million (Q2/2009: 43.2 million transactions, –3%). Single counted order book volume remained stable at €266.2 billion (Q2/2009: €265.0 billion). As trading volumes were significantly below the record levels of 2008, third quarter sales revenue decreased to €63.1 million (Q3/2008: €99.9 million, –37%). As a result, EBITA also fell to €23.3 million (Q3/2008: €56.7 million, –59%).
Eurex trading activity in Q3/2009 declined against the previous year (–22%), as well as against the previous quarter (–10%), with 636.8 million contracts traded. The quarter-on-quarter decline is largely due to significantly lower volumes in European equity derivatives (–47%). These volumes declined as expected after the end of the German dividend season. The decline was partially compensated, however, by a rise of volumes in index and interest rate derivatives (+3%). Due to the higher profitability of both these product groups, sales revenue declined only slightly to €191.5 million quarter-on-quarter (Q2/2009: €201.0 million, –5%). The fall in sales revenue is also due to a weaker US dollar in relation to the International Securities Exchange (ISE) contribution and a price change in trading of US options. Overall, a decline of 26 percent in sales revenues was recorded compared to the strong third quarter 2008 (Q3/2008: €257.5 million). The segment’s EBITA fell to €92.6 million (Q3/2008: €153.0 million, –39%).
The post-trading segment Clearstream once again contributed in the third quarter 2009 to Deutsche Börse Group achieving a solid overall result. The average value of securities held in custody stood at €10.5 trillion, which corresponds to a rise over the previous quarter (Q2/2009: €10.2 trillion, +3%) and a decline compared to last year’s strong third quarter (Q3/2008: €10.8 trillion, –3%). Of the third-quarter custody volumes, €5.5 trillion was attributable to international securities, a 3-percent increase, and €5.0 trillion to German securities, a 9-percent decrease compared to the third quarter of 2008. The primary reason for the decrease in German securities was lower equity indices compared to the prior-year period. The number of settlement transactions in Q3 stood at 25.5 million, a stable development quarter-on-quarter (Q2/2009: 25.4 million) and a slight decline year-on-year (Q3/2008: 26.7 million, –4%). Of this number, 5.5 million settlement transactions were attributable to international securities traded off-exchange in the third quarter – a rise of 10 percent over Q3 of the previous year. Average monthly outstanding volumes in the Global Securities Financing (GSF) business of €483.7 billion represented stable quarter-on-quarter development (Q2/2009: €484.8 billion) and a 23-percent year-on-year increase (Q3/2008: €394.1 billion). Despite stable business performance compared to the second quarter 2009, sales revenue of €176.6 million in the Clearstream segment declined slightly (Q2/2009: €181.1 million, –2%). This decline is largely due to a price change for settlement of German securities with effect from 1 July 2009. Sales revenue declined by 7 percent over last year (Q3/2008: €189.2 million) because of the more favorable market environment in 2008. Average customer cash deposits of €5.7 billion for the third quarter decreased from the previous quarter (Q2/2009: €7.9 billion, –28%), as some major clients reduced their deposits. Due to this decline and new lows in short-term interest rates, net interest income of €21.9 million was generated in the third quarter (Q2/2009: €25.9 million, –15%). As a result, third-quarter EBITA in the Clearstream segment amounted to €78.1 million (Q3/2008: €118.9 million, –34%).
In the Market Data & Analytics segment, third-quarter 2009 sales revenue of €45.4 million was comparable to that of the previous quarter and previous year (Q3/2008: €46.1 million, Q2/2009: €46.6 million). Decreases in the number of data package subscribers were largely offset by new products as well as the consolidation of the US financial news agency Market News International Inc. (MNI), which was acquired in the first quarter 2009. EBITA in this segment of €24.6 million stood below that of the same period in 2008 (Q3/2008: €30.5 million, –19%). The drop in operating income is largely due to a particularly low cost level in Q3/2008.
Third quarter 2009 external sales revenue in the Information Technology segment of €24.3 million charted a positive development (Q3/2008: €23.4 million, +4%). EBITA in this segment declined year on year to €30.3 million (Q3/2008: €31.9 million, –5%), which was largely because of higher costs in this segment as part of the investments in growth initiatives.
view Interim Report 3/2009 - Deutsche Börse Group
view Table Figures Q3/2009
Source: Deutsche Börse
BM&FBOVESPA Will Launch Tomorrow Office Of Representation In London
November 5, 2009-The Brazilian Securities, Commodities and Futures Exchange – BM&FBOVESPA is setting up a representative office in London. The objective of the office is to promote the Brazilian equities and derivatives markets in Europe, Africa, and the Middle East. Besides the new office in the British capital, the Exchange also has representative offices in New York and Shanghai.
In order to commemorate the new office, BM&FBOVESPA will host a luncheon, tomorrow, November 6, at 12 p.m., at the Mansion House, the official residence of the Lord Mayor of the City of London. Among the Brazilian and British dignitaries attending the event will be BM&FBOVESPA’s CEO, Edemir Pinto; the president of Brazil’s Central Bank, Henrique Meirelles; and the president of the Brazilian Development Bank - BNDES, Luciano Coutinho. During the event, Brazilian economist, Eduardo Loyo, will present a lecture on “Investment opportunities in Brazil”. The event will also celebrate the launching of the new BNDES subsidiary in London.
Source: BM&FBOVESPA