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ETF Securities' Currency ETCs Spark Strong Interest From Trading Community Just One Week After LSE Listing
World's largest and Europe's first Exchange Traded Currency platform
Just one week after listing on the LSE, Currency ETCs are now supported by seven liquidity providers
Four major Multilateral Trading Facilities show strong interest
Currency ETCs provide 18 long or short exposures to G-10 currencies with long USD Currency ETCs outperforming last week
Currency ETCs include exposure to local interest rates and fully collateralised to minimise counterparty risks
November 25, 2009--ETF Securities (ETFS) is pleased to announce that its newly launched Exchange Traded Currencies (Currency ETCs) are now supported by seven liquidity providers on the London Stock Exchange (LSE).
In addition, two Multilateral Trading Facilities (MTFs) have started quoting the Currency ETCs with another two MTF's planning to quote the new ETCs within the next few weeks.
The first 18 Currency ETCs were listed on the LSE on the 12th November and track MSFX Currency IndicesSM. Since listing, the Currency ETCs have rapidly generated interest with seven liquidity providers signing up to provide investors access to these new securities. Specialist market-making firms Flow Traders, Nyenburgh, Bluefin Europe and IMC will provide "on screen" liquidity and two way prices while Morgan Stanley, Merrill Lynch and Fortis have signed up as Authorised Participants.
Liquidity providers are responsible for dealing in the ETCs and play an important role in providing liquidity in the marketplace through the posting of firm bid and ask prices with a minimum size for each ETC during Exchange trading hours, while also facilitating the creation/redemption process. This ensures that there will always be a deep two-way market, that investors should always be able to buy or sell their holdings on equal terms and that the ETC tracks the underlying index.
MTFs have also shown strong interest in Europe's first 18 Currency ETCs. The ETCs started trading on PLUS Markets on Tuesday 17th November and then NASDAQ OMX Europe on Monday 23rd November. Other major MTFs including Chi-X Europe and Turquoise have also shown interest to quote the Currency ETCs on their platforms in the coming weeks.
Similar to Exchange Traded Funds (ETFs), ETCs are liquid, accessible and simple. ETCs can be created and redeemed on a continuous basis by market makers, matching the tremendous liquidity of the underlying foreign exchange markets but traded on a regulated exchange in the same way as an equity. The average daily turnover of the global FX market is about $3.2 trillion which compares to the average daily turnover of $450 billion for global equities, $48 billion for the New York Stock Exchange and $6 billion for the London Stock Exchange. Thus currencies are much more liquid than equities.
The 18 initial Currency ETCs provide long or short passive exposure to G10 currencies versus the US Dollar and include AUD, CAD, CHF, EUR, GBP, JPY, NOK, NZK and SEK. The ETCs also provide exposure to local interest rates in addition to FX movements. For example the implied interest rate incorporated into the MSFX Long Australian Dollar IndexSM averaged approximately 5% p.a. over the past five years.
ETF Securities launched the Currency ETC platform due to investor demand for secure, transparent and liquid exchange traded products. Currency ETCs are fully backed* by eligible collateral to the value of at least 100% of the total value of all Currency ETCs outstanding which is held in a segregated custody account with BNY Mellon. The collateral is adjusted daily to ensure credit risk is minimised. Currency ETCs are backed by the same eligible collateral criteria as ETF Securities' existing Commodity ETCs. With ETF Securities' Commodity ETC assets having nearly tripled in 2009 to $17 billion and volumes having doubled to over $1 billion per week, it is clear that investors have widely accepted the ETC structure as a secure vehicle of choice for exposure to commodities. As a result, the ETC product structure has been replicated to include currencies.
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Source: ETF Securities
On 24 November 2009, the Luxembourg Stock Exchange admitted to trading a sovereign bond issue from the state of Qatar, for a total amount issued of USD 7 billion.
November 24, 2009--The Luxembourg Stock Exchange admitted to trading a sovereign bond issue from the state of Qatar, for a total amount issued of USD 7 billion.
This bond issue was composed of 3 tranches with respective maturities at 2015 (4.00% coupon), 2020 (5.25% coupon) and 2040 (6.40% coupon). Qatar intends to use the net proceeds from the issue for general funding purposes, including contingency funding for state-owned entities, infrastructure investments in Qatar, growth of its hydrocarbon sector and for potential investments in the international oil and gas industry.
Source: Online News
Mexican IPC Index ETF "iShare NAFTARC" Listed On Spain's LATIBEX Exchange
November 24, 2009--BGI IShares listed it’s Mexican ETF (TRAC) NAFTRAC on the Spanish LATIBEX exchange on November 19th, 2009.
The NAFTRAC tracks the top 35 traded Mexican stocks according to the BMV IPC index. The TRAC was listed on April 16th, 2002 and was the first such instrument to be listed in Mexico and Latin America, and has become one of the most traded instruments in Mexico’s Stock Exchange.
Barclays Global Investors (BGI) Mexico, is underwriting and listing the TRAC on LATIBEX in Madrid, Spain
Source: Mondovisione
Keeping pensions safe - improving scheme governance and administration
November 24, 2009--The regulator today launches a campaign aimed at encouraging good governance and administration and better management of pension scheme risks. A statement published alongside results of the 2009 pension scheme governance survey outlines the regulator's key focus areas.
The regulator makes clear that trustees responsible for running pension schemes need to be sure that:
they have the right skills, and they get the right people to help them run their pension scheme;
they have the right processes in place to manage scheme risks.
Pensions Regulator chief executive Tony Hobman said:
“Good governance underpins secure pensions.
“Scheme members entrust their pension savings into the hands of others to a total estimate of more than £1 trillion in assets, often for decades of their working lives.
read more
Source: Pensions Regulator
Regulator's 2009 recovery plan report shows how schemes are coping in the downturn
November 17, 2009--On November 11, 2009 The Pensions Regulator published the latest edition of its annual analysis of recovery plans from defined benefit and hybrid pension schemes.
This analysis updates previous publications in 2007 and 2008, providing an overview of scheme recovery plans with valuation effective dates from 22 September 2005 to 21 September 2008. This represents the first near complete triennial cycle of the regulator's scheme funding regime – with schemes divided into three 'tranches' based on the effective date of the scheme valuation
Pensions Regulator chair, David Norgrove said: “The three tranches of scheme valuations have been conducted in very different economic circumstances and this analysis explores some of the effects that the downturn, and other factors such as longevity improvements, have had on scheme funding.
“We urge trustees to continue to take a prudent approach to assessing schemes' technical provisions, to maintain an honest and open dialogue with employers, and to remain aware of the changing economic situation as they focus on the long term interests of scheme members. The regulator will continue to focus on this shared goal.”
Some of the key findings are:
We have not seen a material increase in schemes triggering our scrutiny on technical provisions (funding targets) over the last two tranches. This reflects in part technical factors affecting the trigger calculation.
We have seen an increase in both recovery plan lengths and back-end loading. This resonates with the regulator's statement on the employer covenant in June, emphasising the flexibility in our funding framework where employers face short-term cash constraints.
Mortality assumptions have demonstrated greater prudence in response to evidence of increasing longevity and our regulatory guidance.
Schemes have moved towards the use of baseline mortality assumptions which reflect more up-to-date mortality experience in combination with adjustments which allow for future mortality improvements and an underpin. There has been an increase in the mean effective single discount rate adopted in the third tranche, reflecting increasing reliance on future investment returns.
We will continue to monitor developments in this area, and in particular it should be noted that the data predates market activity in late 2008 and early 2009.
The proportion of tranche 3 recovery plans that triggered was 60 per cent, compared with 70 per cent and 52 per cent in tranches 1 and 2 respectively. The weighted average recovery plan length was 8.3 years for tranche 3 schemes, up from 6.1 years for schemes in tranche 2.
From tranche 2 to tranche 3, the proportion of recovery plans that triggered solely on technical provisions was lower.
There has been an overall reduction in the number of clearance applications in the financial year 2008-09 from 2007-08.
View the Scheme funding:An analysis of recovery plans
Source: Pensions Regulator
Bankers push for action on Saudi groups
November 24, 2009--The British Bankers’ Association is urging the UK government to raise international banks’ concerns about their possible exposure to two prominent Saudi companies that have defaulted on billions of dollars of debt with the kingdom’s authorities.
.The call, in a letter to Lord Davies, the UK’s minister of trade, investment and business, highlights increasing concerns among international bankers about their ability to recoup debts owed to them by Saad Group and Ahmad Hamad Algosaibi and Brothers (AHAB).
read more
Source: FT.com
Barroso refuses to rule out Brussels tax
November 24, 2009--The European Union's top executive on Tuesday refused to rule out a bloc-wide tax on its half-billion population, in remarks sure to raise eurosceptic hackles.
Jose Manuel Barroso, the president of the European Commission, said he would look at raising direct EU taxation -- a debate that has sparked anger especially in fiercely sovereign Britain.
Speaking during a regular question-time session in the European Parliament, Barroso was asked if he agreed with the bloc's incoming president, current Belgian premier Herman Van Rompuy, who is on record for proposing direct taxation.
read more
Source: EU Business
UK's New Power Market N2EX to Launch on January 11, 2010
Aims to Build Liquidity, Efficiency and Transparency in UK Power Trading
November 24, 2009--N2EX, the UK power market set
up by NASDAQ OMX Commodities and Nord Pool Spot, has decided on a
launch date of January 11, 2010 for its market in cooperation with The
Transitional Market Council (TMC). The N2EX market design has been
tailored to the requirements of the UK power market with the goal of
creating UK's premier energy exchange.
The new power market is being developed in close cooperation with the
Futures and Options Association (FOA) and UK market participants. It
will launch its day-ahead auction market on January 11, and trading and
clearing for the prompt market will begin the following day. The
platform will be live in mid-December and it is expected that
participants will use the platform for clearing ahead of the market
launch date as part of their testing.
N2EX will later establish a cash-settled derivatives power market, with a full range of clearing services and cross-commodity netting opportunities. The derivatives market will be based on the physical reference price.
"We are proud to deliver the N2EX market solution to the UK power market. The agreed launch date will secure market readiness," commented Geir Reigstad, vice president, NASDAQ OMX Commodities.
"Our aim is to establish a physical reference price based on the physical power market and to build market liquidity, efficiency and transparency," said Hans Randen, acting CEO of Nord Pool Spot.
"Together we have established state-of-the-art solutions adapted to our specific requirements. The market trials have shown that N2EX has every opportunity to be a very useful instrument for the UK power market," said Paul Beynon, chairman of the Power Trading Forum of FOA.
Dynamic price and volume information will also strengthen the transparency for UK consumers, allowing them to understand the price mechanisms in the wholesale market. This will lead to increased competition, to the benefit of end users.
Nord Pool Spot has a long-term experience in operating power markets
dating back to 1993. NASDAQ OMX Commodities provides significant
experience with its knowledge of clearing the Nordic power market in
addition to being a supplier of exchange technology to more than 70
financial marketplaces in over 50 countries.
Source: NASDAQ OMX
Macro prudential tools vital to future financial stability
November 23, 2009--Lord Turner, chairman of the Financial Services Authority (FSA), today said that reforms to the regulation and supervision of individual financial firms need to be combined with new macro prudential tools to guard against the risks of future financial instability.
Speaking at the CBI annual conference, Lord Turner recalled that when he was Director General, the CBI had argued successfully for low and stable inflation and liberalised markets but that the combination had not ensured financial stability. This was because of two mistaken assumptions: first, that low and stable inflation was sufficient to deliver financial stability; and second, that efficient and rational markets will allow only useful financial innovation to flourish.
He said that:
"Low and stable inflation is essential but does not by itself guard against the dangers of volatile credit supply which cannot be analysed well or addressed effectively either by a central bank focused solely on an inflation target, nor by a regulator seeking to ensure individual firm stability through a firm-by-firm approach."
Lord Turner, therefore, stressed the need to develop new macro prudential tools such as through-the-cycle changes in capital or liquidity requirements and welcomed the Bank of England’s recent discussion paper which had set out a range of possible approaches. He said that implementing these tools will require close working relationships between functions currently located in both the Bank of England and the FSA.
In his closing remarks Lord Turner also welcomed the CBI’s engagement in the issue of how well the banking system is equipped to serve all the needs of a vibrant economy.
He said:
"A debate about the economic value and the effectiveness of the financial system should not focus solely or even primarily on a new found willingness to challenge potentially negative aspects of the pre-crisis financial system. Instead, it should focus on the positive functions that banks and other financial institutions must perform in a successful economy – the not only socially useful but vital functions of linking savers to productive investment, allocating capital to efficient use, and providing savings, credit and payment products to individuals, companies and institutions."
Source: FSA.gov.uk
Seven New UBS ETFs Launched on Xetra
ETFs on MSCI country/regional indices listed in XTF segment
November 23, 2009--Seven new exchange-traded index funds from the issuer UBS ETF SICAV are tradable in Deutsche Börse’s XTF segment. All seven are based on the MSCI index family. These share indices are globally accessible for investing and are segmented by size, type and sector. They are weighted by free-float market capitalization and track the performance of international equity markets based on total return with net dividends reinvested.
ETF name: UBS-ETF MSCI USA I
Asset class: Equity index ETF
ISIN: LU0446735259
Management fee: 0.18 percent
Distribution policy: distributing
Benchmark: MSCI USA
The MSCI USA Index currently includes more than 600 large and medium-sized US companies selected on the basis of free-float market capitalization.
ETF name: UBS-ETF MSCI Canada
Asset class: Equity index ETF
ISIN: LU0446734872
Management fee: 0.45 percent
Distribution policy: distributing
Benchmark: MSCI Canada
The MSCI Canada Index tracks the performance of Canadian companies which, combined, represent 85 percent of market capitalization in Canada.
ETF name: UBS-ETF MSCI Europe
Asset class: Equity index ETF
ISIN: LU0446734104
Management fee: 0.30 percent
Distribution policy: distributing
Benchmark: MSCI Europe
ETF name: UBS-ETF MSCI Europe I
Asset class: Equity index ETF
ISIN: LU0446734286
Management fee: 0.18 percent
Distribution policy: distributing
Benchmark: MSCI Europe
The MSCI Europe Index currently includes companies from 16 industrialized nations: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. The companies are selected on the basis of free-float market capitalization. The UBS-ETF MSCI Europe I is aimed primarily at institutional investors.
ETF name: UBS-ETF MSCI World I
Asset class: Equity index ETF
ISIN: LU0446735416
Management fee: 0.25 percent
Distribution policy: distributing
Benchmark: MSCI World
The MSCI World Index currently includes more than 1,900 international stocks from 23 industrialized nations. The stocks are selected on the basis of market capitalization. US stocks account for approximately 50 percent of the MSCI World Index, European stocks (including UK) for 34 percent, and Japanese stocks account for 10 percent of the index. The remaining stocks are mainly from Canada and Australia. The UBS-ETF MSCI World I is aimed primarily at institutional investors wanting to track the performance of global equity markets.
ETF name: UBS-ETF MSCI Pacific ex Japan
Asset class: Equity index ETF
ISIN: LU0446734526
Management fee: 0.40 percent
Distribution policy: distributing
Benchmark: MSCI Pacific ex Japan
The MSCI Pacific ex Japan tracks the performance of the four developed equity markets in the Asia-Pacific region: Australia, Hong Kong, New Zealand and Singapore.
ETF name: UBS-ETF MSCI EMU Values
Asset class: Equity index ETF
ISIN: LU0446734369
Management fee: 0.35 percent
Distribution policy: distributing
Benchmark: MSCI EMU Values
The MSCI EMU Values Style Index tracks the performance of companies with high earnings from the following industrialized nations: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal and Spain.
The product offering in Deutsche Börse’s XTF segment currently contains a total of 525 exchange-listed index funds, making it the largest offering of all European stock exchanges. This selection, together with an average monthly trading volume of around 10 billion euros, makes Xetra Europe’s leading trading venue for ETFs.
Source: Deutsche Börse
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