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New EuroCCP White Paper Offers Proposals to Reduce Risks of Interoperability
January 13, 2010--In a white paper published today, EuroCCP presents a series of recommendations to address regulatory concerns about potential systemic risk problems that may result when multiple equities central counterparties (CCPs) in Europe interoperate.
Regulators have put on hold interoperability arrangements in Europe pending a full review of the systemic risks attached to multi-CCP interoperability. The paper released today provides EuroCCP’s perspective and outlines possible approaches to mitigating these risks.
“We share the regulators’ concerns. Arrangements between multiple, competing CCPs, where each CCP becomes a counterparty to the other interoperating CCPs, requires a new framework for managing the liquidity and credit risks such arrangements may create,” said Diana Chan, CEO of EuroCCP. “EuroCCP wishes to work with others in the industry to craft an approach that manages these risks properly, in both normal and extreme market conditions. Proposals have to be scalable and allow competition to flourish in Europe’s equity markets.”
The paper, Recommendations for Reducing Risks Among Interoperating CCPs, discusses several options and offers four primary recommendations:
CCPs should augment their existing default funds to cover potential close-out losses in the event of an interoperating CCP’s default.
An Interoperability Convention, to provide transparency of arrangements between interoperating CCPs, should replace confidential bilateral agreements.
Commercial barriers to interoperability should be removed. Each market participant should be able to choose which CCP they use.
Longer term, further consideration should be given to inter-CCP netting, whereby a netting agent would be established to determine each CCP’s net securities and cash position against the other CCPs.
“EuroCCP aims to make interoperability safer and easier. Collective action among CCPs and engagement with market participants and regulators is essential to delivering the benefits of interoperability,” Chan said.
The paper is part of EuroCCP’s drive to build a stronger European equities market through promoting competition, reducing frictional costs and strengthening risk standards.
view Recommendations for Reducing Risks Among Interoperating CCPs
Source: Euro CCP
New Exchange Traded Funds (ETFs) on SIX Swiss Exchange
January 13, 2010--Seven new products have been listed in the Exchanged Traded Funds segment
of SIX Swiss Exchange, taking the total to 312 ETFs. The new funds are:
Xmtch (IE) on MSCI Pacific ex Japan
Xmtch (IE) on MSCI Canada
Xmtch (IE) on MSCI UK
Xmtch (IE) on MSCI USA
Xmtch (IE) on MSCI Japan
Xmtch (IE) on MSCI Europe
Xmtch (IE) on MSCI EMU
Credit Suisse will perform the market making for these funds.
Source: SIX Swiss Exchange
FESE European Equity Market Report
January 13, 2010--The European Equity Market Report updated with December 2009 figures is now available.
view the report
Source: FESE
The game is not over for the services directive!
January 13, 2010--On 28 December 2009, the Services Directive entered into force after three years of transposition into the various national legal orders. This is just the first important step towards realisation of the single market for services in Europe. 2010 will be a decisive year to judge through the mutual evaluation process whether theory in laws turns into tangible benefits for services providers and consumers so much needed in the current economic downturn.
The Commission will play a key role in ensuring a robust and high-quality transposition and even enforcement. Equally important is to inform and raise awareness among citizens and particularly SMEs about those expected benefits. In this regard, the Commission has made available extensive information material.
Pension funds tap growing prospects for emerging markets
January 13, 2010--Two European pension funds are pursuing the predicted surge of interest in emerging markets equity investments and have launched searches for suitable EM managers, using IPE-Quest.
Details of QN1073 reveal a Swiss pension fund may invest CHF400m-600m (€271m-€407m) in passive long-only emerging marketing equities, benchmarked to the MSCI EM Total Return local index.
read more
Source: IP&E
ETF Landscape: European DJ STOXX 600 Sector ETF Net Flows, week ending 08-Jan-10
January 13, 2010--Last week saw US$1.0 Mn net outflows from DJ STOXX 600 sector ETFs. The largest sector ETF inflows last week were in Basic Resources with US$131.9 Mn and Oil & Gas with US$29.3 Mn while Food & Beverage experienced net outflows of US$104.1 Mn.
Year-to-date, Basic Resources has been the most popular sector with US$131.9 Mn net new assets, followed by Oil & Gas with US$29.3 Mn net inflows. Food & Beverage ETFs have been the least popular with US$104.1 Mn net outflows YTD.
The assets invested in the ETFs are greater than the open interest in the corresponding futures contract in all 19 sectors.
Visit Blackrock for more information. Stock market most profitable investment read more
New Exchange Traded Funds (ETFs) on SIX Swiss Exchange
UBS AG will perform the market making for these funds. NYSE Euronext European ETF Activity - December 2009 * The median spread of all listed ETF s was 34.36 bps in December 2009, down from 71.03 bps in December 2008. for more info Optimized Return and Security-ETFlab offers exchange-traded bond funds for Jumbo bonds
A maximum of up to 30 so-called Jumbo bonds qualifies for the underlying index. They must have an outstanding volume of at least Euro 1.0 billion and a residual maturity between 1.5 and 10.5 years. In order to guarantee high liquidity, only papers that have been in the market for maximally four years since their issue will be considered.
Due to experiences made during the financial crises there are further security requirements. The maximum number of bonds by which an issuer is represented in the index may not exceed four, and the maximum weight of an issuer has been restricted to 15 percent. Any issuer must have a rating of at least BBB, whereby the weight of the bonds with this rating must not account for more than a total of 50 percent in the index. There are quarterly reviews as to whether the papers contained in the index meet these criteria. “This is to avoid risk concentration and to ensure that trade goes on smoothly even in difficult periods”, Andreas Fehrenbach explains.
The new exchange traded fund follows the approach of full replication, i.e. the respective papers are bought into the fund directly. In the past, the duration period was constantly between 3.5 and 4 years. Trade on the German stock exchange will start on January 12, 2010. If you are looking for a particuliar article and can not find it, please feel free to contact us
Source: ETF Research and Implementation Strategy Team, Blackrock
January 12, 2010--Investors who directed their money toward the stock exchange in 2009 ended the year with an average 84.56 percent net profit, despite a shaky economy during the global financial crisis.
Data from the Turkish Statistics Institute (TurkStat) released yesterday revealed that the greatest income gained from financial instruments was obtained from the stock market, with a whopping 84.56 percent inflation-adjusted profit, with gold bullion, usually deemed one of the safest investments, trailing behind with a still abnormally high profit rate of 26.03 percent in 2009.
Source: Todays Zaman
January 12, 2010--Two new products have been listed in the Exchanged Traded Funds segment of
SIX Swiss Exchange, taking the total to 305 ETFs. The new funds are:
UBS Index Solutions - Gold (USD) ETF A
UBS Index Solutions - Gold (USD) ETF I
Source: SIX Swiss Exchange
January 12, 2010--European ETF activity highlights:
* At the end of December, NYSE Euronext had 449 ETF s with 497 listings from 15 issuers. NYSE Euronext ETF s cover more than 290 indices including an extended range of assets and strategies (Equity, Fixed Income, Commodities, Short, Leverage, etc…).
* In 2009, the number of ETF s increased by more than 29% compared to end of 2008. At the end of December, NYSE Euronext European markets had registered 107 ETF listings and 6 delistings for the year 2009.
* Daily average turnover in December 2009 remained stable at just over €263 Million, while the daily average number of trades continued the strong 2009 upward trend, increasing from 5 378 to 6 074, or 12.94%, compared to December 2008.
Source: NYSE Euronext
ETFlab iBoxx € Liquid Germany Covered Diversified-(ISIN: DE 000 ETF L35 9)
January 12, 2010--With the ETFlab iBoxx € Liquid Germany Covered Diversified, ETFlab Investment GmbH, the Munich specialist for exchange traded funds, provides access to the segment of the biggest and most liquid German covered bonds, also known as Jumbo Pfandbriefe. “The ETF allows investors to achieve more return than with a Government bond, without having to accept disadvantages as regards the security of the papers”, Andreas Fehrenbach, the managing director of ETFlab, points out. This is granted by the high requirements of the German Pfandbrief Act.
At the moment, 15 issuers with at least an AA rating are providing broad diversification of the fund. The return of the ETF is currently about 0.20% above the SWAP interest rate with an identical residual maturity. A nice result, which can be traced back, among others, to ETFlab’s consistent and lean fees policy. With an annual All-in-Fee of only 0.09 %, the ETFlab iBoxx € Liquid Germany Covered Diversified counts among the most favourable ETFs worldwide.
Source: ETFlab
