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Exotic ETFs are not seeing demand - provider
October 6, 2009--Exotic and more sophisticated exchange-traded funds have suffered from a serious lack of interest this year, according to Axel Lomholt, head of product development for iShares Europe.
“In the equity space, there is evidence to suggest that currently interest is limited in speciality funds and in the more advanced ETFs such as inverse and leverage ETFs,“ he sid. “It is a cyclical phenomenon and we have instead seen more demand for traditionally-driven ETFs and have also seen a great pick-up in the fixed income space.
Dow Jones EURO STOXX 50 Index Licensed To HSBC To Underlie Exchange-Traded Funds
October 5, 2009-STOXX Limited, the leading provider of European equity indexes, today announced that the Dow Jones EURO STOXX 50 has been licensed to HSBC to serve as the basis for an exchange-traded fund, which will be available on the London Stock Exchange tomorrow.
“Since it’s launch in 1998, the Dow Jones EURO STOXX 50 Index has become a well-accepted, rules based and transparent tool for market participants to measure and access the performance of the euro zone’s leading companies,” said Ricardo Manrique, chief executive officer, STOXX Ltd. “By licensing the Dow Jones EURO STOXX 50 Index, HSBC solidifies their new lineup of ETFs by adding the leading pan-euro index to their product platform.”
Farley Thomas, global head of wholesale at HSBC Global Asset Management said "HSBC is prioritizing the launch of ETFs tracking the most popular indexes by ETF assets under management. The Dow Jones EURO STOXX 50 Index is by far the most popular index in the European ETF industry."
Launched on February 28, 1998, the Dow Jones EURO STOXX 50 Index represents 50 supersector leaders in the 12 euro zone countries Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, the Netherlands, Portugal and Spain.
As of October 2, 2009, the index was up 16.42% for the year. The Dow Jones EURO STOXX 50 Index is weighted by float-adjusted market capitalization, and each component's weight is capped at 10% of the index's total free-float market capitalization.
The index captures approximately 60% of the free-float market capitalization of the Dow Jones EURO STOXX TMI Index. Daily historical data are available back to December 31, 1986.
r more information on the Dow Jones EURO STOXX 50 Index please visit www.stoxx.com.
HSBC unveils inaugural Eurozone equity ETF
October 5, 2009--Tomorrow the HSBC DJ Euro Stoxx 50 ETF will begin trading on the London Stock Exchange.
The HSBC DJ Euro Stoxx 50 ETF replicates the performance of the Dow Jones Euro Stoxx 50 total return index, comprising the 50 largest companies in the Eurozone region.
The fund, which is domiciled in Ireland, has a total expense ratio of 0.15%.
The index covers 12 Eurozone countries, including Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, the Netherlands, Portugal and Spain. The benchmark is weighted by float-adjusted market capitalization and each component's weight is limited to 10% of the index's total market cap.
Europe to throw 50 billion euros behind energy research
October 5, 2009--Europe will this week launch a campaign to triple funding for energy research to 8 billion euros ($11.7 billion) a year in a technology race with Japan and the United States, a draft document shows.
Solar power should get 16 billion euros over the next decade and up to 30 energy-sipping "Smart Cities" should be built with the backing of around 11 billion euros, added the report by the European Union's executive, the European Commission.
In total, at least 50 billion euros of additional funding is seen over the next 10 years to ensure a wide range of technology emerges to help the EU meet
FSA finalises far-reaching overhaul of UK liquidity regulation
October 5, 2009-The Financial Services Authority (FSA) has today published its final rules on the liquidity requirements expected of firms.
The far-reaching overhaul, designed to enhance firms’ liquidity risk management practices, is based on the lessons learned since the start of the credit crisis in 2007. The new rules will require changes to firms’ business models and will bring about substantial long-term benefits to the competitiveness of the UK financial services sector.
London’s competitive position depends on counterparties’ perception of the financial soundness of the firms that operate in the UK. Low-levels of financial soundness cannot provide sustainable long-term competitive advantage. The FSA’s new requirements are designed to protect customers, counterparties and other participants in financial services markets from the potentially serious consequences of imprudent liquidity risk management practices.
Specifically, the rules include:
An updated quantitative regime coupled with a narrow definition of liquid assets; Over-arching principles of self-sufficiency and adequacy of liquid resources; Enhanced systems and controls requirements;
Granular and more frequent reporting requirements; and,
A new regime for foreign branches that operate in the UK.
Paul Sharma, FSA director of prudential policy, said:
"The FSA is the first major regulator to introduce tighter liquidity requirements for firms. We must learn the lessons of the financial crisis and we believe that implementing tougher liquidity rules is essential to ensure we are in a better position to face future crises.
"In the current crisis some firms weathered the storm better than others. These firms tended to be those that had policies that were similar to those that we are introducing today - including holding assets that were truly liquid, such as government bonds. Phasing the period in which firms will build up their liquidity buffers should mitigate the knock-on effects to bank lending."
The FSA will not tighten quantitative standards before economic recovery is assured. It plans to phase in the quantitative aspects of the regime in several stages, over an adjustment period of several years. This is to take into account the fact that all firms at present are experiencing a market-wide stress.
The precise amount of liquidity that each firm will need to hold will be refined over time to ensure that the combined impact of higher capital and liquidity standards is proportionate.
The qualitative aspects of the regime will be put into place by December 2009.
The FSA strongly supports the liquidity workstreams that are underway internationally although recognises that it may be some time before there is international agreement on specific proposals, Therefore, the structure of the new regime is sufficiently flexible to allow the FSA to amend it through time to reflect any new international standards.
Deal of the Week: Commission-free sharebuying
October 2, 2009--Interactive Investor (II), the online stockbroker, is offering commission-free share purchases through its Portfolio Builder regular investment service until June 30 2010. Investors can buy any UK share, including Aim companies and exchange traded funds (ETFs), for no dealing fee.
Users select one of four dates in a month for their purchase, and can invest as little as £20, with no maximum. There is no requirement to invest every month, and scheduled purchases can be cancelled up until the day before.
Warning over pension deficits
October 2, 2009--Rising equity markets are not sufficient reason for companies with large pension fund deficits to relax, according to a leading pensions adviser.
In spite of a revival in markets that has boosted the battered value of equities used to finance pension commitments, Mercer has warned that falling spreads on corporate bonds could increase deficits further.
Mercer, which advises companies on retirement schemes and other benefits in 40 countries, said the positive impact of rising equities has been more than outweighed by the effect of falling credit spreads on corporate bonds from record highs to more normal levels.
Bankers warn on regulation's threat to growth
October 2, 2009-A deluge of financial regulations threatens to harm economic growth, one of the world’s top bankers said on Friday, in what appeared to be the start of a concerted fightback by the industry against feared regulatory overkill.
Josef Ackermann, chairman of the Institute of International Finance, the global bankers’ association, and head of Deutsche Bank, said governments were not paying enough attention to the aggregate impact of the reforms being proposed.
BNP Paribas To Close In 'Grey List' Territories
October 2, 2009--French bank BNP Paribas has announced that it will close its activities in jurisdictions that have failed to comply with the OECD standard on transparency and information exchange.
Speaking to French radio station Europe 1, Chief Executive, Baudouin Prot said that the bank’s subsidiaries in jurisdictions featured on the OECD’s ‘grey list’ would be closed, without giving a timescale. Prot did however hint that the proposal would not be implemented immediately and that there was flexibility on the matter, noting that the list’s composition evolved regularly.
According to Prot, BNP Paribas has "half a dozen" subsidiaries in low tax jurisdictions, but only two, in the Bahamas and Panama, are located in OECD 'grey listed' territories.
db x-trackers achieves distributing fund status for 63 ETFs
October 2, 2009--db x-trackers, Deutsche Bank’s exchange-traded funds platform, has been granted distributing fund status by HM Revenue & Customs for the accounting period 1 January 2008 to 31 December 2008.
The status has been granted to equity, commodity, foreign exchange and shariah-compliant ETFs available from db x-trackers during 2008 and includes 63 ETFs listed on the LSE.
Distribution funds status means that any gains made on the disposal of the ETFs would be regarded as a capital gain for UK individuals or a chargeable gain for UK corporates if the shares are certified as distributing funds throughout the investor’s entire period of ownership. The current rate of capital gains tax is 18 per cent for UK individuals.
