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British Offshore Financial Centres
October 30, 2009--The final report of Michael Foot’s Review of the opportunities and challenges facing the British Crown Dependencies (Guernsey, Isle of Man, Jersey) and six Overseas Territories (Anguilla, Bermuda, British Virgin Islands, Cayman Islands, Gibraltar, Turks and Caicos Islands) was published on 29 October.
The recommendations made to these jurisdictions cover: the quality and extent of economic planning; meeting international standards on tax transparency, financial sector regulation, and tackling financial crime; ensuring that deposit protection schemes can be understood by depositors; considering whether an Ombudsman scheme is justified; and crisis prevention and resolution measures.
These recommendations provide benchmark standards against which each of the jurisdictions can assess their performance and consider what action may be necessary to ensure a sustainable future. The report suggests that the jurisdictions should periodically publish reports on how the benchmark standards are being met, or on how and when they will be met.
View Final report of the independent Review of British offshore financial centres
viw the Deloitte Report-Understanding Corporate Usage of
British Crown Dependencies and
Overseas Territories
Source: HM Treasury
Pensions Regulator investigation finds mixed standards in DC pre-retirement literature
October 29, 2009--Good practice in the provision of pre-retirement literature in DC trust-based schemes is the focus of a report published today by the Pensions Regulator.
Material from 97 trust-based DC schemes was assessed on adherence with legislative requirements, good practice in areas such as the description and prominence of the Open Market Option, and the use of clear, plain English.
The review has provided valuable insight into current practice in this area and has highlighted that levels of compliance and good practice vary widely across the DC market.
Of 97 schemes who submitted literature:
98% offered the open market option (OMO), although take up of the OMO was viewed as remaining low, at 23% of DC members retiring
57% of schemes had some scope for improvement in the standards of the retirement information sent to members
30% had alleged legislative breaches of retirement disclosure regulations
6% were referred to regulator casework teams to follow up the substantial changes required to their retirement literature or processes
Following the publication of the report, a letter will be sent to 4,500 schemes, highlighting the findings of our investigation and encouraging trustees to review the pre-retirement literature sent out to their members.
“Compliance with the legislative requirements is important as a minimum standard, says June Mulroy, Pensions Regulator executive director of operations.
But we expect to see adoption of good practice as the norm. This will help members to make the right decisions at retirement, which we recognise can make a significant difference to the income they receive.
It is encouraging to see examples of excellent practice, but we do recognise that there is room for improvement. The economic downturn has had an impact on the value of many DC members' pension savings and as such the importance of making informed decisions is higher than ever.”
The study is part of an ongoing campaign focused on increasing the support and guidance offered to members in DC schemes through improving standards in administration and governance across the DC market.
view report-A review of retirement information for DC members
Source: Pensions Regulator
Divided EU leaders urged to agree climate funding
October 29, 2009--The Swedish EU presidency urged European leaders to use Thursday's summit to agree on hard figures to help poor nations tackle climate change, amid resistance especially from eastern Europe.
But while leaders have already agreed on broad objectives for reducing greenhouse gas emissions, vowing to cut them by 20 percent by 2020, they are split on how to share the costs, both within and outside Europe.
"I want a mention of a sum... let's see what is possible, it's coming close to the decisive moment, we're not ready yet," said Swedish Prime Minister Fredrik Reinfeldt, whose country holds the rotating EU presidency.
:read more
Source: EU Business
Culture shock a test for Source
October 28, 2009--Senior managers at Source, a newly launched exchange-traded products business, are grappling with the culture shock of moving from investment banking to asset management. Source is a joint venture between Bank of America Merrill Lynch, Goldman Sachs and Morgan Stanley.
“We have switched hats,” said Ted Hood, chief executive officer of Source, a former Morgan Stanley man. “Those of us inside the box have already found we sometimes have to say to our sponsors and partners: ‘We can’t do it like that.’” The main difference between the two cultures is the need to prioritise the interests of investors above those of shareholders, he said
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Source: FT.com
DB Index Research -- Weekly ETF Reports -- Europe
October 28, 2009-Highlights
ETF Volume
Exchange based Equity ETF turnover rose by 4.1% on the previous week. Daily turnover for the previous week was E1.4bn. European fixed income ETF turnover remained at about the same level at E181m, with money market ETFs continuing to be the main focus.
In exchange based bond ETFs, iShares € Corporate Bond has the highest daily turnover of E18.25m. Among the Equity ETFs, iShares DAX (DE) has the highest daily turnover of E76.30m.
There were 31 listings in the last week. Credit Suisse AM cross listed 17 ETFs on Borsa Italiana, Lyxor cross listed 7 ETFs on Swiss Stock Exchange and BGI cross listed 7 ETFs on Deutsche Borse.
European Style ETFs, led by short and leveraged products, kept its position as the leading product area with total turnover of E406m accounting for 29.33% of total ETF turnover, followed by European Regional ETFs with total turnover of E384m with 27.69% of total turnover. The DAX ETFs remain the dominant country products with total average daily volume of E198m across the nine listed products and accounting for 14.3% of all equity ETF volume.
DJ Euro STOXX 50 ETFs accounted for 14.9% of turnover trading E207m per day with liquidity split across 26 ETFs and 42 different listings on 9 exchanges.
Market Share
The Deutsche Borse XTF platform has the largest market share with 37.1% of total turnover. The Euronext NextTrack platform has 21.2% market share. The LSE’s combined Italian Exchange and London market share is now 26.3%.
Assets under Management (AUM)
Total European Equity related AUM declined by 1.8% to E100.8bn during last week. AUM for DJ Euro STOXX 50 ETFs was E19.4bn accounting for 19.3% of total European AUM. Fixed Income ETF AUM rose by 2.8% to E33.9bn.
Overall, the largest ETF by AUM was the Equity based ETF, Lyxor ETF DJ Euro STOXX 50 with AUM of E4.9bn. 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
CESR proposes requirements for management company passport and improved investor disclosures for UCITS
October 28, 2009--CESR delivers today its advice in two key areas relating to Undertakings for Collective Investment in Transferable Securities (UCITS): the regulatory framework that should underpin the management company passport (Ref. CESR/09-963);
and the format and the content of key investor information disclosures(Ref. CESR/09-949).
CESR’s advice follows a Commission mandate received in February 2009. The publication of today's advices is accompanied by a press release.
Source: COMMITTEE OF EUROPEAN SECURITIES REGULATORS (CESR)
ETF Landscape: European DJ STOXX 600 Sector ETF Net Flows, week ending 23-Oct-09
October 28, 2009-Last week saw US$247.2 Mn net inflows to DJ STOXX 600 sector ETFs. The largest sector ETF inflows last week were in Basic Resources with US$137.6 Mn and Automobiles & Parts with US$31.9 Mn while Media experienced net outflows of US$10.5 Mn.
Year-to-date, Basic Resources has been the most popular sector with US$416.3 Mn net new assets, followed by Banks with US$388.8 Mn net inflows. Retail sector ETFs have been the least popular with US$36.3 Mn net outflows YTD.
Visit Barclays Global for more information.
Source:ETF Research and Implementation Strategy, BGI
EEX and Eurex Expand Cooperation to Power Derivatives
Phelix contracts also tradable for Eurex clients as of 25 November 2009
October 28, 2009-The European Energy Exchange (EEX) and the international derivatives exchange Eurex are expanding their cooperation. As of 25 November 2009, Eurex customers will also be able to trade and clear EEX power derivatives via their existing Eurex access. The new products in the cooperation comprise Phelix Baseload Futures and Options and Phelix Peakload Futures.
“We are offering our core product – Phelix Futures – to a global network of new participants for trading and clearing in one big step”, said Dr. Hans-Bernd Menzel, CEO of EEX AG.
Peter Reitz, Eurex Executive Board member responsible both for product and market development and for cooperations, said: “The expansion of our cooperation with the EEX will enable our participants to engage in exchange trading of power derivatives for the first time. This step underlines our strategy of expanding into new asset classes and offering our participants access to existing liquidity pools. Thanks to their high level of existing liquidity, the Phelix power derivatives are a very attractive European benchmark product for our financial participants and perfectly complement perfectly our existing offering of emission rights contracts.”
Eurex participants will be able to trade power futures and options via a simplified admission process, as with the existing cooperation in trading emission rights. The clearing link between European Commodity Clearing AG (ECC) and Eurex Clearing AG means that Eurex participants can continue to use their existing clearing relationships.
EEX and Eurex already cooperate in emissions trading. Eurex participants have been able to trade EEX emissions products since December 2007. The cooperation currently comprises EUA futures, options on EUA futures and CER futures.
Source: Eurex
Restructuring keeps boutique firms in the frame
October 28, 2009--With global merger and acquisition activity still running well below historical averages, several smaller banks and boutique advisory firms continue to count on their restructuring and asset management businesses to keep their heads above water.
Ralph Schlosstein, chief executive of Evercore, said on Wednesday that the bank’s results reflected the “early stages of the recovery of the M&A markets”, although Lazard, one of Evercore’s competitors, said it would take four years for dealmaking activity to reach the highs of the prior period.
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Source: FT.com
October 2009 edition of the EU10 Regular Economic Report
October 28, 2009 —The EU’s newest member states in Eastern and Central Europe have begun the recovery one year after the breakout of the global financial crisis as the credit crunch has eased, but most countries undergo large contractions this year, and the recovery is likely to be feeble and uncertain, the World Bank said today as it launched its new EU10 Regular Economic Report.
Although the rebound of the global economy has started, the report cautions that the recovery in EU10* countries could be weak and growth is likely to be lower than in pre-crisis years. EU10 countries are projected to contract by around 4.2 percent in 2009, and to grow by around 1 percent in 2010 and 3.6 percent in 2011, down from 3.9 percent in 2008 and around 6 percent in 2007. Medium-term growth prospects look weak as the recovery is not yet private-demand driven and potential growth is lower than before the crisis.
According to the report, the EU10 countries fall into three groups with regards to their recent growth performance:
• Poland is in the first group as the only EU country whose economy has expanded throughout the last three quarters.
• Bulgaria, Romania and other Central Europe countries make the second group with year-on-year contraction of 5 to 10 percent of GDP.
• Third group comprises The Baltic countries, where the output contraction started in 2008, with declines of 15 to 20 percent of GDP.
“The scale of the contraction is linked to a number of factors, including the degree of trade openness, the export composition, the exchange rate regime and the magnitude of macroeconomic imbalances.” said Kaspar Richter, Senior Economist in the World Bank’s Europe and Central Asia Region and lead author of the report at the launch in Warsaw and Thomas Laursen, World Bank Country Manager for Poland and the Baltic Countries added “Poland’s performance during the crisis has been remarkable due to different factors. Poland entered the crisis with stronger macroeconomic balances than other countries in the region, it has a floating exchange rate regime and its economy is more diverse and not as open as others’ in the region. Also, the response of Polish authorities to the crisis was fast and adequate.”
Given these prospects, financially weaker governments in the region will need to protect poor people while strengthening institutions and infrastructure to attract investors. At the same time, they need to adjust their policy agenda to support exit strategies and prevent future crisis.
Unemployment rose in the EU10 countries from 6.1 percent in August 2008 to 8.1 percent in July 2009, or from about 2.9 million to 3.8 million people. At the same time, one million workers who had emigrated from the region to crisis-hit countries such as the UK, Ireland, and Spain after 2004 have returned home, adding to the pressure on job markets in Eastern and Central Europe. The economic crisis is affecting foremost workers with basic education level and limited work experience, most of whom are young. Unemployment rates for workers aged 15 to 24 increased more than twice as compared to the overall increase. As a result, almost one third of the economically active population below 24 years of age is unemployed in the Baltic countries, and around
“Employment has remained remarkably high in many EU10 countries, similar to key countries of the euro area, and opposite to the trends seen in the US. However, while employment tends to hold up better during downturns, it could take much longer to increase up during upturns.” said Richter “Governments’ active efforts to alleviate the impact of economic slowdown on the labor markets have to be combined with measures supporting employability and guiding people towards new jobs, empowering workers to take advantage of new opportunities when the economy recovers.”
According to the EU10 Regular Economic Report the main challenge for the EU10 countries now is to adjust the policy agenda; the economic policy should balance the support of recovery with exit strategies to contain risks of negative public debt dynamics and inflation. Structural policies, along the lines of the Lisbon agenda, are crucial to mitigate the loss in potential output growth due to weaker capital flows. Social policies are crucial to mitigate the loss in living standards for the poor.
“The recovery from the economic crisis depends foremost on restoring financial market confidence. To help close some external financing gaps created by the crisis and ease the burden of adjustment, the IMF, EC and World Bank have provided substantial support. As international investors take a closer look at the vulnerabilities of emerging economies, there is a large premium on strong domestic policies.” – said Richter, “Governments face the difficult challenge of reconciling three objectives: to protect priority programs for economic and social development so that growth prospects are enhanced and social cost of the economic crisis mitigated; to exit from anti-crisis policies and ensure fiscal consolidation once the recovery is under way to make room for a private sector led recovery; and to improve policies, regulations and coordination to prevent such crises in future.”
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* The EU10 countries include: Bulgaria,
the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia.
view report
Source: World Bank