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FESE Response To CESR Proposal For A Pan-European Short Selling Disclosure Regime
October 9, 2009--The Federation of European Securities Exchanges (FESE) represents the Market Operators of 42 securities
exchanges active in equities, bonds, and derivatives in the European Union (EU) and Iceland, Norway and
Switzerland.
We welcome the work that CESR has carried out since September 2008 with regard to the measures adopted by its
Members on short selling practices. Several EU securities regulators have adopted measures introducing stringent
disclosure / reporting requirements by firms to supervisory authorities.
We understand the rationale behind the
measures taken by the authorities as extreme market conditions triggered extreme measures to seek restoring
confidence in the markets. However, notwithstanding the laudable intentions, the restrictions imposed by several
authorities in the EU have been both discriminatory and ineffective:
1) The restrictions on short-selling have been discriminatory because of their scope of instruments and venues.
Firstly, in some jurisdictions the short-selling restrictions applied to certain cash equities only and did not cover other instruments that fulfil a similar function in the market (e.g. futures and options that allow investors to profit when the stock or the index declines).
Secondly, the restrictions applied only to cash equities admitted to trading on a Regulated Market (RM) and not to privately-issued stocks.
Thirdly, in some regimes, the restrictions did not cover trading happening outside of RMs - therefore, the banned stocks could be traded on private markets without limitations. The discriminatory nature of these measures was mainly due to the absence of an appropriate legislative framework that covers instruments traded in multiple execution venues under the supervision of different authorities across Europe. As a result, this situation provided unfair advantages to private OTC markets vis-à-vis RMs (and MTFs) whilst shifting the presumed risk to other venues and instruments not caught by the ban.
2) The restrictions on short-selling have not been effective in reducing share price volatility or limiting share price falls, but rather caused a decline in market efficiency for the affected stocks.
FESE European Equity Market Report – September 2009 Figures
October 9, 2009--The ‘European Equity Market Report’ which gathers data from all the market segments operated by FESE members (including Regulated Markets and Multilateral Trading Facilities) as well as from the major MTFs operated by investment firms in the European market.
For the first time since the start of MiFID, this Report allows for an accurate comparison of trading statistics across trading venues
European Equity Market Report - Year 2009 (updated with September figures)
Equity income funds set for comeback
October 9, 2009--Equity income funds, which have suffered in the past year as UK companies cut dividends, could be set for a comeback.
Once a favoured pick of private investors and financial advisers, the funds have suffered a rapid fall from grace.
In August, they were the least popular of all the UK’s managed funds, according to figures from the Investment Management Association. But as recently as September 2008 they were the best-selling funds overall.
LSE Falls To All-Time Low FTSE 100 Market Share - BATS Europe Sets 2nd Straight Record With 9.69%
October 9, 2009--LSE recorded its second consecutive all-time market share low in the FTSE 100 with 57.96% today as BATS Europe set its second record in a row – 9.69%.
BATS Europe was actually well above 10% (10.61%) prior to the LSE’s closing auction. With our September UK pricing special behind us, it is good to see market share increasing across the board – our 4.38% market share today for all of Europe was also a record.
ETF Landscape: Industry Review, September 2009
October 9, 2009--At the end of August, global ETF assets hit an all time high of US$891Bn, 3.9% above the previous all time high of US$858Bn set in July 2009.
There were 1,773 ETFs with 3,137 listings from 95 providers on 41 exchanges around the world.
Visit Barclays Global for more information.
Regulators criticise 'unworkable' EU plans for hedge fund reform
October 9, 2009--Eddy Wymeersch, chairman of the Committee of European Securities Regulators (CESR), said the proposed legislation on alternative investment funds was unworkable and needed a rethink.
"I hope they will come forward with something more balanced," he said. "It really doesn't work. They have pooled everything together, the scope is absolutely too wide, everything is caught."
Its opposition to the current proposals is a major boost to the trade bodies and other critics of the directive, including London Mayor Boris Johnson, who have been campaigning vociferously against the legislation.
They argue the EU's measures are a knee-jerk response to the credit crisis that would destabilise the financial sector in the UK where 80pc of the hedge funds and 60pc of private equity firms are based.
EDHEC warns that the proposed revision to IAS 19 would lead pension funds to shed risky assets
October 9, 2009--n a new position paper produced as a response to the proposed revision to IAS 19 by the International Accounting Standards Board (IASB), EDHEC has shown that the immediate recognition of the volatility of pension surpluses and deficits in the profit and loss accounts of the sponsor may lead pension funds to shed risky assets.
According to EDHEC, the IASB proposal gives pension funds no incentives to manage risk properly; instead, by suggesting that pension assets and liabilities can be considered held for trading, pension funds are given incentives to shed these liabilities.
The author of the report, Samuel Sender, Applied Research Manager with EDHEC-Risk, puts forward the following arguments in this position paper:
EDHEC firmly warns the IASB against the temptation to suppress the corridor approach, whereby actuarial gains and losses which fall within a corridor need not be recognised, as this would lead to a significant reduction in holdings of risky assets in pension funds.
EDHEC supports smoothing market yields as a way to filter out market noise.
EDHEC also supports the amortisation of pension surpluses and deficits, in a manner consistent with the general treatment of long-term assets and liabilities.
Finally, EDHEC recommends that pension funds use the projected benefit obligation to compute pension cost but that they report the accrued benefit as the pension liability in their balance sheet, a measure that would then be consistent with the prudential measure of pension liabilities.
This study was produced by EDHEC-Risk as part of the AXA Investment Managers ‘Regulation and Institutional Investment’ research chair.
The position paper “IAS 19 – Penalising changes ahead” can be downloaded by clicking on the following link:“IAS 19 – Penalising changes ahead”
Boerse Stuttgart introduces new ETF segment for retail investors
Binding monitored rules and regulations / Commerzbank and Deutsche Bank act as market makers / Lammersdorf hails most attractive ETF platform for retail investors / Lower prices for small orders spur growth
October 8, 2009--Boerse Stuttgart, Germany’s leading exchange for retail investors, announced at a press conference today that its new ETF segment would be launched on 13 October. Thanks to the ETF Bestx segment, the trading conditions available to Boerse Stuttgart’s retail investors will be even better, and there will be a clearly defined system of rules and regulations, subject to supervision under public law, for future ETF trading at the Stuttgart stock exchange. This regulatory framework, inter alia, sets binding spreads for specific minimum quote volumes of over 300 products. Investors trading in the new ETF segment stand to benefit from the best tradable prices on the market.
One of the main ways of achieving this, alongside the presence of the stock exchange’s trading experts, is the involvement of additional market makers. From launch day onwards, Commerzbank and Deutsche Bank will continuously provide binding buy and sell quotes for the ETFs listed in the segment. “Unlike our competitors, who are predominantly concerned with institutional customers, Boerse Stuttgart is clearly focused on retail investors with its new ETF segment. We are delighted that Commerzbank and Deutsche Bank as leading market makers are supporting our efforts to create an investor-friendly and growth-oriented ETF Bestx segment. We intend to make further major improvements in price quality, transparency and security in the area of ETF trading with a view to becoming Europe’s most attractive platform for retail investors trading in ETFs as well,” said Christoph Lammersdorf, CEO of Boerse Stuttgart Holding GmbH.
With the introduction of ETF Bestx, Boerse Stuttgart has set itself the target of guaranteeing best prices and highest execution reliability during regular trading sessions from 9.00 to 20.00 hours CET. This is also clear from the explicit costs: from October, Boerse Stuttgart will become even cheaper for smaller orders. Transaction fees will be equivalent to 0.119 percent of the order volume with a cap of EUR 12.18 (plus 19 percent sales tax). “Our ETF trading system already offers very attractive prices. In the case of ETFs based on the DAX or on the DJ Euro Stoxx 50, we offer most of our prices without a spread. We want to ensure that investors can continue to trade a full range of products on a par with institutional investors with an unfailing emphasis on fairness, high quality and top conditions.” said Michael Görgens, Head of Investment Fund and ETF Trading at Boerse Stuttgart. So far, 2009 has seen strong growth in the ETF segment at Boerse Stuttgart, and its ETF trading initiative has already boosted turnover to EUR 2.56 billion (from 2 January to 30 September 2009), an increase of 111 percent on the same period in 2008.
Boerse Stuttgart’s launch of the new ETF Bestx segment widens the range of standards it has established – tried and tested over its ten years as the leading market player in exchange trading with certificates – to include ETF trading. The Stuttgart stock exchange has every confidence in its superior market model, which, for example, integrates trading experts into electronic ETF trading. Their role is to ensure the quality of price determination even in volatile markets, to avoid partial executions, facilitate active stop-order management and actively support trading up to 20.00 hours CET.
OMXS30 Index is the Third Most Traded Domestic European Index in 2009
October 8, 2009--NASDAQ OMX Group,
Inc. (Nasdaq:NDAQ) announced today that the OMX Stockholm 30 Index
(Nasdaq OMX Stockholm:OMXS30) has broken a benchmark target of 400
million derivative contracts since its start back in 1986. In 2009
OMXS30 has been the third most traded domestic index in Europe, with
several hundreds of thousands new contracts traded every day.
Magdalena Hartman, Vice President at NASDAQ OMX Global Index Group,
said, "We are very proud to have reached 400 million contracts, a
milestone in the industry that only a handful of European indexes have
achieved. Amid continuous change in the global marketplace, the OMXS30
Index has for over two decades consistently been a reliable investment
indicator for the Nordic financial markets."
As of December 19 this year, OMXS30 futures and options will only be
available for trading at NASDAQ OMX Stockholm as a result of the
termination of the agreement with EDX London who today offers trading
in OMXS30 derivatives.
DB Index Research -- Weekly ETF Reports -- Europe
October 7, 2009--Highlights
ETF Volume
Exchange based Equity ETF turnover rose by 6.5% on the previous week. Daily turnover for the previous week was E1.2bn. European fixed income ETF turnover rose by 2.2% to E185.4m, with money market ETFs continuing to be the main focus.
In exchange based bond ETFs, iShares € Corporate Bond has the highest daily turnover of E18.81m. Among the Equity ETFs, iShares DAX (DE) has the highest daily turnover of E66.03m.
There were 31 new listings in the last week. CASAM listed 10 new ETFs on the NYSE Euronext Paris. BGI listed 9 new ETFs and 9 crosslisted ETFs on the London Stock Exchange. BGI also listed 3 ETFs on Borsa Italiana.
European Style ETFs, led by short and leveraged products, kept its position as the leading product area with total turnover of E378m accounting for 30.77% of total ETF turnover, followed by European Regional ETFs with total turnover of E332m with 27.06% of total turnover. The DAX ETFs remain the dominant country products with total average daily volume of E157m across the nine listed products and accounting for 12.8% of all equity ETF volume.
DJ Euro STOXX 50 ETFs accounted for 13.5% of turnover trading E166m per day with liquidity split across 25 ETFs and 41 different listings on 9 exchanges.
Market Share
The Deutsche Borse XTF platform has the largest market share with 34.9% of total turnover. The Euronext NextTrack platform has 22.1% market share. The LSE’s combined Italian Exchange and London market share is now 26.9%.
Assets under Management (AUM)
Total European Equity related AUM declined by 2.3% to E96.5bn during last week. AUM for DJ Euro STOXX 50 ETFs was E18.8bn accounting for 19.5% of total European AUM. Fixed Income ETF AUM rose by 1.3% to E33.3bn.
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
