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Crédit Agricole and Société Générale name asset management arm Amundi
October 23, 2009--Crédit Agricole and Société Générale have named their combined asset management arm Amundi.
The companies say the name Amundi blends the initials of "asset management" with an allusion to the world.
The Latin origin of Amundi also harks back to the group's European roots.
Subject to the approval of the European competition authority, Amundi will come into being on 1 January 2010.
Source: Global Fund News
RBS to cut back reliance on APS
October 23, 2009-Royal Bank of Scotland is planning to significantly pare back its involvement in the government’s asset protection scheme, in a sign that the economic climate is improving.
The bank, which is 70 per cent owned by the state, had originally planned to ring fence about £325bn of potentially toxic assets under the insurance scheme. However, its latest plans will see this reduced below £300bn and possibly down as far as £265bn, according to people familiar with the matter.
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Source: FT.com
Private investors start to take profits
October 23, 2009-Private investors have called time on the stock market rally and started to take profits, according to the trading records of 1.6m UK shareholders.
In August and September individual investors sold a net £199m of equities, according to Capita Registrars, which registers shareholdings in more than 2,000 UK and Irish companies. Before August, there had been nine consecutive months of net equity buying.
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Source: FT.com
State pension faces population explosion
October 23, 2009-The population crisis facing the state pension has been highlighted by a new report showing the number of over-85s will more than double within the next 25 years.
The Office for National Statistics says there will be 3.3m people over 85 living in the UK by 2033, compared to 1.3m last year.
The severity of the population ageing will put more pressure on the UK's already creaking state pension system and radical action will be needed to tackle the problem.
Rising life expectancy is placing a heavy burden on those of working age, with more pensioners claiming benefits for longer.
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Source: Thismoney.com
Deutsche Börse adapts model for professional use of indices
Business model aligned with international practice /
Basic information remains free of charge
October 23, 2009-Deutsche Börse announced today the transition of its model for professional
and commercial use of its indices. The previous licenses for the indices are to
be replaced by use-based access to the main index parameters as of 1 January
2010. However, the licensing applicable to index trademarks for marketing and identification purposes remains unchanged.
In converting the model, Deutsche Börse is adapting to what has already become international practice. The conversion will make certain detail data required for professional and commercial use of the indices available exclusively to contracting parties of Deutsche Börse.
The high transparency of the DAX® index, however, will be maintained. The guidelines on the indices remain available free of charge; the 30 constituents will continue to be published. In addition, complete historical detail information with a maximum time lag of three months will be made available. To further increase transparency, Deutsche Börse will also provide a wide range of index-relevant key indicators, such as the performance of index constituents or the Sharpe Ratio, free of charge as part of the conversion.
To ease the changeover for market participants, a transition period lasting until 31 March 2010 will also be introduced. In addition, registered trading participants will continue to receive detail data for the sole purpose of trading DAX products on the Deutsche Börse trading platforms free of charge.
Source: Deutsche Börse
DB Index Research -- Weekly ETF Reports - Europe
October 22, 2009-Highlights
ETF Volume
Exchange based Equity ETF turnover rose by 5.3% on the previous week. Daily turnover for the previous week was E1.3bn. European fixed income ETF turnover declined by 6.6% to E179.9m, with money market ETFs continuing to be the main focus.
In exchange based bond ETFs, iShares € Corporate Bond has the highest daily turnover of E17.92m. Among the Equity ETFs, iShares DAX (DE) has the highest daily turnover of E69.68m.
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Source: Aram Flores and Shan Lan -DB Index Research
FSA publishes further analysis on systemically important banks and the cumulative impact of capital and liquidity reform
The Financial Services Authority (FSA) has today issued a discussion paper (DP) focusing on policy measures to address the problem of systemically important ‘too-big-to-fail’ banks. The paper also examines the trade-offs involved in increasing capital and liquidity requirements, and stresses the need to assess the cumulative impact of multiple reforms.
October 22, 2009-The paper identifies the dangers posed by those firms that are seen as too-big or too-interconnected-to-fail, or too-big-to-rescue. It describes the full range of policy options - including the creation of ‘narrow banks’ – in order to provide the basis for an informed debate, but also outlines the position which the FSA is currently proposing in international fora, namely that:
There is a strong case for applying some form of capital (and perhaps liquidity) surcharge internationally for systemically important banks; surcharges could be proportional to continuous and increasing measures of systemic importance, avoiding the dangers created by specific thresholds of systemic importance.
A capital surcharge could be combined with an approach to global banking groups which places greater emphasis on the standalone sustainability of national subsidiaries, with overt understanding that home country authorities will not be responsible for the rescue of entire groups. The more that groups are organised on this basis, the less the required surcharge at group level might need to be.
Action should be taken to reduce inter-connectedness in wholesale trading markets, with much over-the-counter (OTC) derivative trading moved to central counterparties (CCPs), and with effective collateral and margin call arrangements for bilateral trades which reduce the dangers of strongly pro-cyclical margin call effects.
Reform to trading book capital should significantly increase capital requirements and differentiate more strongly between basic market making functions which support customer service and riskier trading activities, with a bias for conservatism in relation to the latter.
Systemically important banks should be required to produce recovery and resolution plans (‘living wills’) which set out how operations would be resolved in an orderly fashion.
If supervision examination of these plans reveals serious obstacles to resolution, then steps will need to be taken to reduce or remove them – this could require restructuring certain parts of the group. Restructuring could include clear separation between retail deposit taking business and businesses involved in proprietary trading activities, with the latter able to fail even if the former were supported in crisis conditions.
The DP also stresses the need to assess the possible cumulative impact of multiple reforms to capital and liquidity regimes now being considered by international standard-setting bodies. It describes the case for significant increases in capital and liquidity requirements to reduce financial instability risks, while recognising the potential implications for lending volumes and the cost of credit intermediation. It considers methodologies which can help inform judgements on the trade-offs involved.
View Discussion Paper
Source: FSA.org
CESR starts consulting on inducements - good and poor practices
October 22, 2009--CESR issued today a consultation paper on inducements for which the Markets in Financial Instruments Directive (MiFID) sets out requirements for the receipt or provision by an investment firm of a fee, commission or non-monetary benefit.
The purpose of this consultation is to highlight some of the observed industry practices on the MiFID inducements rules and to provide investment firms with an understanding of how CESR views such practices. Throughout the consultation paper CESR has indicated what types of firm behaviour European securities regulators encourage and discourage.
This is expected to provide firms with a benchmark against industry compliance with the MiFID inducements rules, with the additional comfort of knowing whether European securities regulators encourage or discourage particular instances of firm behaviour.
The consultation is open until December 22.
View paper-Inducements: Good and poor practices
Source: COMMITTEE OF EUROPEAN SECURITIES REGULATORS (CESR)
UK's Financial Services Authority Publishes Further Analysis On Systemically Important Banks And The Cumulative Impact Of Capital And Liquidity Reform
UK banks are taking decisive steps to restore confidence and to rebuild trust in their industry, a new BBA publication shows today.
October 22, 2009--Next Steps for Banking sets out how banks are working to meet the public expectation of change by overhauling their practices in conjunction with the Government, regulators and customers.
The publication aims to be an authoritative account of the actions the banks are taking to reform the industry and will be available as a downloadable part-work, with new chapters added every two weeks. The first two chapters, issued today, are Why Banking Matters and Banking Reform - the Next Steps.
Launching the publication, Angela Knight said:
"The banks are undertaking a vast amount of work to reform the financial system, much of it unobserved and unrecorded. This series sets out to detail the work that is being done at an unprecedented pace to reform the industry, and to inform the debate as to the kind of change we need going forward.
"It must be remembered that reform comes at a cost: we need an open and constructive discussion about how we can reconcile the need to restore stability with the need both to keep down the cost of funds and to ensure their continued availability. We believe the key to making the right changes is to base them on the banks who have managed well through the downturn.
"The debate on the future of the financial system is taking place right now across the world, among governments, regulators and central banks. Next Steps is our contribution to that debate."
first two chapters of Next Steps for Banking
Source: British Banking Association
Clearstream and Banque centrale du Luxembourg Collaborate on Collateral Management
October 22, 2009-Clearstream, the International Central Securities depository within Deutsche Boerse Group, and the Banque centrale du Luxembourg (BCL) are launching a new service allowing all Luxembourg based banks to optimise further their use of collateral to cover any operation with the Eurosystem via BCL.
Clearstream will act as a triparty agent for the banks looking to cover any operation with BCL. Through their securities account with Clearstream, the banks will manage one central, multi purpose collateral pool allowing them to not only cover their monterary policy operations but also to perform other operations necessitating collateral among which intraday credit operations in TARGET2, the real time gross settlement system for the euro.
Luxembourg based banks will benefit from the flexibility of Clearstream’s fully automated CmaX (collateral management eXchange) system. This includes automatic allocation of collateral, eligibility checks, substitutions of collateral, mark to market valuation, margin calls, re-use of collateral and reporting facilities.
Operationally, Banque Centrale de Luxembourg will communicate electronically to Clearstream the amount to be collateralized and Clearstream will ensure that eligible assets are pledged as collateral. Assets eligible at the European Central Bank and for which Clearstream already has “assessed links” (1) represent some 40,000 securities, 90% of the total number of eligible assets.
The financial crisis and the subsequent freeze on money markets have shed light on the importance of accessing central banks liquidity as well as on the crucial role of securities financing mechanisms and infrastructures which provide much of the liquidity to the world’s capital market. Since the beginning of the financial crisis, collateral managed by the Eurosystem has gone up from € 800 billion to € 1500 billion.
Clearstream pioneered the development of collateral management services, including triparty repo, in Europe by launching the world’s first such multi-currency service back in 1993. It now offers a wide range of collateral management services together with a suite of securities lending products under the name of Global Securities Financing (GSF) services. In the past weeks, GSF services have broken the €500 billion mark for monthly average outstandings (from € 400 billion a year ago), illustrating the growing importance of secured financing and the continued flight of collateral towards central liquidity pools at a time of market uncertainty.
(1) Background on assessed links. assessed links are contractual and technical arrangements for the transfer of securities involving between securities settlement systems which may be used in the collateralisation of the credit operations of the Eurosystem after an assessment has been carried out against the Eurosystem’s standards to ensure that the conditions set by the Governing Council have been met.
Source: Clearstream: