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Eurex to Launch Dividend Futures on Single Stocks
December 22, 2009--The international derivatives exchange Eurex announced today that it will offer futures contracts based on particular dividends of individual shares from 11 January 2010. Eurex will launch Dividend futures on the constituents of the Dow Jones EURO STOXX 50. Following the successful introduction of the index dividend futures on the Dow Jones EURO STOXX 50 in June 2008, Eurex further expands its offering. Thus, for the first time in Europe the pure dividend component of the underlying stocks of a benchmark equity index are available for exchange trading and clearing as a stand-alone product.
Peter Reitz, member of the Eurex Executive Board, said: “The listing of our new single stock dividend futures reflects the demand by investors for exchange-traded and centrally cleared products. With these new instruments investors can participate in the performance linked to the dividend element of a share and equity derivates trader can hedge against a substantial component of their risk. The growing interest in dividend products has already been demonstrated by the very positive response to our listed index dividend futures.”
Eurex is introducing these products to enable investors to hedge or trade the dividends that are announced and paid by the individual index constituents in each year. The separate exchange listing of this dividend element will improve possibilities for risk management and increases transparency on one of the fundamental elements determining a shares value.
Introduced in June 2008 the Dow Jones EURO STOXX 50 Index Dividend Futures currently trades around 10,000 contracts daily, year-to-date almost 2.5 million contracts were traded. Open interest stands at over 480,000 contracts (representing circa €5 billion of notional dividend value). BNP Paribas Arbitrage and Société Générale currently act as market makers in these futures; over 50 members in total are currently active and trading.
Eurex will initially introduce dividend futures on 25 of the constituent components of the Dow Jones EURO STOXX 50. Hence, investors can manage their exposure to the 2010 dividend period. Eurex will offer annual contracts in each name from December 2010 out to December 2014 that will settle to the value of the dividends paid in the annual period to that date. With the introduction of the dividend futures, Eurex aims to work closely with the current market participants and to attract new entrants to the asset class.
Source: Eurex
EU backs German 'bad bank,' despite 'doubts' over plan
December 22, 2009--European regulators on Tuesday backed the creation of a German "bad bank" for paper assets running to more than 121 billion dollars, despite "doubts" the plan would pass state aid tests.
The European Commission "temporarily approved" German Landesbank WestLB taking over "a portfolio of toxic and non-strategic assets with a nominal value of 85.1 billion euros," said a statement from Brussels enforcers.
However, European Union Competition Commissioner Neelie Kroes also said she was "surprised" that three billion euros of German state funding were required to get the holding business, expected to lose money, up and running.
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Spurce: EU Business
ETF Exchange (ETFX) announces the launch of the world’s first third generation ETF platform today
Confirmed participants on the platform: BofA Merrill Lynch, Citi, and Rabobank International.
Issuing 3rd generation ETFs pioneered by ETF Securities.
December 22, 2009--ETF Securities Ltd (ETFS), the global pioneers in Exchange Traded Commodities (ETCs) and independent provider of Exchange Traded Funds (ETFs), is pleased to announce the launch of the ETF Exchange (Europe) (ETFX), the world’s first third generation ETF platform.
ETF Securities is initially working with BofA Merrill Lynch, Citi, and Rabobank International who are participants on the platform, acting as distribution partners, authorised participants and swap providers, with scope to add additional participants in the future.
The vision for 3rd generation ETFs was pioneered by ETF Securities. The idea was inspired by investor demands for increased levels of transparency, liquidity and counterparty risk management. ETF Securities identified that the current ETF issuance model by single financial institutions could be strengthened by diversifying index replication across a consortium of the strongest financial players and concentrating liquidity within a single platform issued by an independent ETF issuer.
ETFX offers a total of 21 equity ETFs comprising Europe’s first ETF platform concentrating on resource-equity ETFs and double leveraged (2x) and double short (-2x) ETFs. These ETFs are listed across 5 European exchanges (the London Stock Exchange, Deutsche Borse, NYSE-Euronext Amsterdam, the Borsa Italiana and the Irish Stock Exchange) and traded in up to 3 currencies (USD, EUR and GBP). They are part of the ETF Exchange initiative driven by client demand for increased liquidity, innovative products and reduced credit risks and counter-party exposure. The ETFs are all swap-backed ETFs using multiple counterparties, allowing more efficient tracking, with collateral being held in excess of UCITS1. This issuance model is arguably amongst the most efficient and risk averse available today.
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The ETFX equity ETF platform has seen strong trading growth since the introduction of thematic ETFs in the fourth quarter of 2008, and 2x short and 2x leveraged equity ETFs at the end of the second quarter 2009. Basic resource themed ETFs have seen particularly strong returns, led by a 126% YTD increase in the ETFX Russell Global Coal Mining Fund (COAL) and a 100% YTD rise in the ETFX Dow Jones STOXX 600 Basic Resources Fund (BRES)2. ETFX ETFs now have over $320 million AUM, up over 65% in the past three months.
Source: ETF Securities
CESR publishes an update on the assessment of the proposals for MiFID pre-trade transparency waivers
December 21, 2009--The MiFID compliance of these functionalities has been assessed at CESR level on the basis of the new joint process that CESR launched in February 2009.
The table(Ref. CESR/09-324) includes information on a new assessments made at CESR level regarding an application for a waiver to be granted on the basis of the MiFID Implementing Regulation that CESR considered not to be compliant with MiFID.
New Exchange Traded Funds (ETFs) on SIX Swiss Exchange
December 21, 2009--Three new products have been listed in the Exchange Traded Funds segment of SIX Swiss Exchange, taking the total to 275 ETFs. The new funds are:
UBS Index Solutions – Gold ETF hedged (CHF). The trading currency is CHF.
UBS-ETF MSCI Canada I. The trading currency is CAD.
UBS-ETF MSCI EMU I. The trading currency is EUR.
UBS Investment Bank will perform the market making for these products.
Source: SIX Swiss Exchange
Turquoise will bolster the LSE's position
December 21, 2009-One down, six to go. With the London Stock Exchange set to absorb Turquoise, the share trading platform, the UK bourse can worry a little less about competitors snapping at its heels.
The nine banks that created Turquoise in 2006 as a way of forcing the LSE to lower its fees are now part of a joint venture with the exchange that will compete with the remaining six “multilateral trading facilities” left in Europe
They are Chi-X Europe, BATS Europe, Nasdaq OMX Europe, NYSE Arca Europe, Hungary-based Quote MTF and Equiduct, controlled by Citadel Securities of Chicago.
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Source: FT.com
EU predicts fewer, larger eurozone banks
December 21, 2009--The financial crisis has had limited impact on an existing process of consolidation among banks within the 16 countries that use the euro currency, the European Commission said on Monday.
"The findings show that banks in the euro area have become fewer, larger and more international. And this trend is likely to persist," it said in a report that looked into the question of banks that were "too big to fail."
Three out of every 10 banks across the eurozone have already disappeared since the single currency became a reality a decade ago.
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Source: EU Business
Turkey takes another small step towards EU
December 21, 2009--European Union nations on Monday allowed Turkey to take another small step towards joining the bloc, opening a new policy area for accession discussions, a diplomatic source said.
Meeting in Brussels, officials from the 27 EU member states agreed to open another of the 35 policy 'chapters' which all EU candidate countries must successfully negotiate prior to membership, in this case the chapter on environment.
That brings to 12 the number of chapters opened since Turkey began its formal membership talks back in October 2005.
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Source: EU Business
Irish Funds Industry Welcomes New Law to Enhance the Efficiency of Fund Re-Domiciliation to Ireland
December 21, 2009--The Irish Funds Industry Association (IFIA) has today announced that it welcomes the new legislation passed by Seanad Éireann - the upper house of the Irish parliament – on Friday, 18th December 2009. The Companies (Miscellaneous Provisions) Act 2009 will enable investment funds to re-domicile to Ireland simply and efficiently.
The new legislation provides a clear framework designed to address and minimise the challenges currently experienced when re-domiciling a fund. The legislation has been drafted to specifically allow a fund structured as a corporate entity in another domicile to re-register in Ireland with its original corporate identity retained, ensuring continuity of activity and continuation of arrangements.
In addition, the legislation simplifies the considerations involved when re-domiciling. These include the ability to re-domicile a fund at a single meeting of shareholders in the jurisdiction from which the fund is seeking to move; and a single filing of registration documentation with the Companies Registration Office in Ireland to include a statutory declaration from a director of the company. The simplified process should thus reduce the burden and cost of re-domiciling by eliminating unnecessary shareholder meetings, notary declarations, certificates and reports.
Responding to the immediate need for a simple and efficient legislative process and to shorten the time frame for the enactment of primary legislation, the legislative provisions were included in the Companies (Miscellaneous Provisions) Bill 2009 as amendments to the Bill.
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Source: Irish Funds Industry
Financial Stability Review December 2009
December 18, 2009--The extraordinary remedial actions taken by central banks and governments since late last year have been successful in restoring confidence in, and improving the resilience of, financial systems around the world. Financial system support measures have been addressing the funding challenges of key financial institutions and have bolstered their capital positions. These measures, together with sizeable macroeconomic policy stimuli, set in motion a mutually reinforcing process between financial system conditions and real economic performance, fostering improving business cycle prospects, as well as a fading of systemic risk.
An important reason for lowered systemic risk was an abatement of tail risk, thanks primarily to the downside protection by governments of financial institutions’ balance sheets. A recovery of risk appetite, underpinned by lowered systemic risk, contributed to the remarkable turnaround in financial markets since March 2009 and supported the trading income of large and complex banking groups (LCBGs). Many of these institutions also benefited from a considerable boost to net interest income on account of very steep yield curves. These better financial conditions strengthened the profitability of many LCBGs to such an extent that they were able to absorb considerable write-downs on securities and loans while still, on average, reporting material improvements in profitability over three consecutive quarters. Some were even able to return the capital they had received from governments, thus exiting from financial support.
Despite the recovery in financial markets and improved financial performance of euro area LCBGs, there are several grounds for caution in assessing the outlook for financial stability in the euro area. In particular, the main risks identified outside the euro area financial system include the possibility of:
vulnerabilities being revealed in non-financial corporations’ balance sheets, because of high leverage, low profitability and tight financing conditions;
greater-than-expected household sector credit losses if unemployment rises by more than expected;
the surge of government indebtedness raising concerns about the sustainability of the public finances, as well as the crowding out of private investment; and
an adverse feedback between the financial sector and public finances as a result of financial system support measures, fiscal stimuli and weak economic activity.
view the full report-Financial Stability Review December 2009
read summary of the Financial Stability Review December 2009
Source: European Central Bank (ECB)
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