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CFA Institute Centre Study Reveals Market Fragmentation Has Had No Material Impact on Price Formation
Investors voice concern over transparency, trade reporting obligations, and dark pools
December 7, 2009 − A study released today by the CFA Institute Centre for Financial Market Integrity, the policy arm of CFA Institute, has found no empirical evidence to suggest market fragmentation has had any material impact on the quality of the price formation process for equities traded under the Markets in Financial Instruments Directive (MiFID) regime.
The study was undertaken to establish whether the proliferation of new trading platforms under MiFID has affected transparency, costs and price formation to the detriment of investors. The study will be used to support the CFA Institute Centre’s call for a consolidated system (or ‘tape’) for quote and trade data for European Equity Markets.
To complement the empirical analysis contained within the study, independent views of 962 investor users1, drawn from a CFA Institute member survey, were incorporated to build a qualitative and quantitative picture on the impact of market fragmentation. The results highlight that market fragmentation has created mixed views amongst investor users, with their primary concern being the difficulty in obtaining a complete and clear picture of market prices.
The study identifies the following:
CFA Institute Centre finds no empirical evidence that fragmentation has been detrimental to the quality of the price-formation process
70 percent of survey respondents concluded that dark pools are problematic for price discovery
view the Market Microstructure-The Impact of Fragmentation
under the Markets in Financial Instruments Directive report
Source: Institute Centre for Financial Market Integrity (CFA)
Dow Jones STOXX 600 Factoids - December 4, 2009
December 7, 2009--As of December 4, 2009
Dow Jones STOXX 600
Dow Jones STOXX 600, up 6.43 points this week, or 2.65%, to 249.03.
Snaps a two week losing streak.
Today, it is up 2.70 points, or 1.10%.
Up three of the past four trading days.
Highest closing value since Wednesday, November 18, 2009.
Off 38.59% from its record closing high of 405.50, hit on Monday, March 06, 2000.
Rose 31.18% from 52 weeks ago.
Off 0.92% from its 2009 closing high of 251.34, hit on Monday, November 16, 2009.
Up 57.64% from its 2009 closing low of 157.97, hit on Monday, March 09, 2009.
Month-to-date it is up 4.12%.
Year-to-date it is up 26.48%.
Source: Dow Jones
Ucits hedge funds tipped to be top
December 7, 2009--Almost half of the money flowing into the new generation of Ucits hedge funds is coming from investors outside the European Union, according to the developers of a new platform for the funds.
Merchant Capital is launching a Dublin-based umbrella structure to help smaller hedge fund managers create regulated, onshore, Ucits-compliant versions of their funds.
The first fund on the platform will be a European equity long/short fund run by Tressis, a Spanish group, due to launch this week.
read more
Source: FT.com
Post-retirement investment options need improvement
December 7, 2009---The increasing number of Defined Contribution (DC) scheme members approaching retirement age without sufficient savings will drive innovation for post retirement solutions according to a new paper from Watson Wyatt. In the paper the firm suggests that the DC post-retirement hedging and de-risking market is currently under-developed and opportunities exist for greater product development.
Gary Smith, senior consultant at Watson Wyatt, said: “The current practice of formulaic switching from growth assets to protection assets as DC members approach retirement age is too simplistic and will prevent many members from participating in strategies that can enhance the purchasing power of their portfolios. Fiduciaries of DC schemes will also need to increasingly engage older members on this subject.”
In the paper, entitled Managing risk around retirement, Watson Wyatt outlines a number of market-based and regulatory developments that could improve pre- and at-retirement investment and points to three specific examples for doing so:
Introducing flexibility around retirement date
Deferring the date of annuity purchases and adopting a draw down strategy Expanding annuity-type products
Gary Smith said: “Delaying retirement dates is becoming increasingly popular, but members should be careful to use this time to increase contributions while de-risking given their ability to take investment risk will be diminishing.”
The paper includes the recommendation that the adoption of an income drawdown strategy should be considered by members because it provides greater control over their assets, while still allowing them to benefit from purchasing an annuity later. This would also potentially allow them to retain an exposure to growth assets for a longer period, according to the firm.
view Managing risk
around retirement-Improving DC design report
Source: Watson Wyatt
New Source Equity Index ETF Tradable on Xetra
December 4, 2009-- As of today, an additional exchange-traded index fund issued by Source is tradable on Xetra.
ETF name: Dow Jones EURO STOXX 50
Source ETF – unit class B
Asset class: equity index ETF
ISIN: IE00B5B5TG76
Management fee: 0.15 percent
Distribution policy: distributing
Benchmark: Dow Jones EURO STOXX 50
The Dow Jones EURO STOXX 50 Index comprises 50 euro zone stocks, selected on the basis of their market capitalization, trading volume and industry. The returns generated by the fund are distributed to investors semi-annually.
Source already had an ETF based on the Dow Jones EURO STOXX 50 Total Return Index listed on Xetra in April. This product enables investors to participate in earnings via share price performance, with the earnings reinvested in the index. With the ETF included in Xetra trading today, investors now have the opportunity to invest in a Source ETF based on the Dow Jones EURO STOXX 50 Index, with either automatic dividend reinvestment or distribution.
The product offering in Deutsche Börse’s XTF segment currently contains a total of 543 exchange-listed index funds, making it the largest offering of all European stock exchanges. This selection, together with an average monthly trading volume of around 11 billion euros, makes Xetra Europe’s leading trading venue for ETFs.
Source: Deutsche Börse
NASDAQ OMX Welcomes 34 New Derivatives Members in 2009
December 4, 2009-ASDAQ OMX
is pleased to report that in 2009 it has welcomed 34 new
members for trading and clearing in Nordic derivatives. This represents
an annual member increase with more than 60 percent compared to last
year.
A membership at NASDAQ OMX Stockholm AB allows access to all
Nordic equities and fixed income derivatives products through one
single trading platform.
Hans-Ole Jochumsen, President of NASDAQ OMX Nordic, said, "We see this large member inflow as a testimony to the strength and attractiveness of our Nordic derivatives market, the home of flagship products like OMXS30, one of Europe's most traded indexes. Since announcing our separation with EDX London many banks and brokers have opted for NASDAQ OMX as their primary market for Nordic derivatives, and we look forward to providing them with a liquid market and broad product range."
NASDAQ OMX is today the fourth largest derivatives exchange in Europe, offering trading in a wide variety of Nordic single stock-, index- and fixed income derivatives products. Among its products are OMXS30, the third most traded domestic index in Europe with more than 400 million traded derivative contracts since its start back in 1986. Since September 2009 NASDAQ OMX also offers trading in Norwegian single stock and index derivatives.
New derivatives members at NASDAQ OMX Stockholm AB include Barclays, Credit Suisse, Goldman Sachs, JP Morgan, Merrill Lynch, Morgan Stanley, Newedge, and UBS.
Jerome Kemp, Global co-head of Futures & Options and OTC Clearing at J.P. Morgan commented, "We are looking forward to participating with our clients in the opportunities that the NASDAQ OMX market presents, both now and in the future, as they continue to expand their exciting range of products."
Amaury de Villemandy, CEO Newedge Europe & Middle East, said, "NASDAQ OMX has a long history in Nordic derivatives and is the home to many proven products. Newedge is looking forward to offering these directly to our client base."
For a complete list of NASDAQ OMX equities and derivatives members
please visit:
http://nordic.nasdaqomxtrader.com/membershipservices/membershiplist
Source: NASDAQ OMX
HSBC ETF range added to Ascentric
December 4, 2009--HSBC’s nascent exchange-traded fund (ETF) range has been launched on independent wrap platform Ascentric.
HSBC entered the ETF market in August 2009 with the HSBC FTSE 100 ETF, followed in October by the HSBC Dow Jones EURO STOXX 50 ETF.
HSBC entered the ETF market in August 2009 with the HSBC FTSE 100 ETF, followed in October by the HSBC Dow Jones EURO STOXX 50 ETF.
read more
Source: Hedge Fund Review
EU financiers launch infrastructure fund
December 4, 2009--Major European public financial institutions launched a pan-European equity fund on Friday to boost key EU policies in areas such as climate change, energy security and transport networks.
The "Marguerite Fund" -- a pan-European equity fund -- was launched with initial capital of 600 million euros (900 million dollars) by the European Investment banks and five national public investors.
These include France's Caisse des Depots and Germany's KfW Bankengruppe.
Marguerite, the first joint initiative of Europe's leading public financial institutions, is one of the biggest fund raising exercises in 2009 in Europe, with a target total of 1.5 billion euros by the end of 2011.
The fund "will provide equity or quasi equity to companies which own or operate infrastructure in the sectors of transport and energy," the sponsors said in a join statement.
read more
Source: EU Business
Standard & Poor’s launches S&P 500 Gold Hedged Index
December 4, 2009--With the returns of gold rivaling that of the US equity market, Standard & Poor’s has launched the S&P 500 Gold Hedged Index.
The index seeks to simulate the returns of an investment strategy which is long the total return of the S&P 500 stock market index and long gold futures contracts, allowing investors to participate in the returns of the US equity market while hedging against a decline in the value of the US dollar versus gold.
Standard & Poor’s has licensed UBS to create and launch investment products based upon the index.
read more
Source: ETF Express
NASDAQ OMX Starts Trading In Two New ETFs From XACT Fonder
December 4, 2009--NASDAQ OMX Stockholm AB, part of the NASDAQ OMX Group (NASDAQ:NDAQ), today starts trading in two new exchange traded funds (ETFs), XACT Europe Bull 2 and XACT Europe Bear 2.
The two ETFs issued by XACT Fonder are based on the Dow Jones EURO STOXX 50 Index, which reflects the performance of the 50 largest shares in Europe.
XACT Europe Bull 2 and XACT Europe Bear 2 are leveraged exchange traded funds that offer twice the return of the daily change in the underlying EURO STOXX 50 Index. Hence, for XACT Europe Bull 2, which has a positive exposure against EURO STOXX 50, a daily index increase of 1% means an increase in value of 2%. For XACT Europe Bear 2, which has a negative exposure against EURO STOXX 50, a 1% a daily index decrease generates a 2% value return. The leverage increases the potential return but also the risk level.
Jenny Rosberg, Deputy CEO at NASDAQ OMX Nordic said, "These two new ETFs from XACT Fonder will make a great addition to Nordic investors looking for exposure in European blue chip shares. In 2009 we have seen an increased interest in both listing and trading of ETF products, proving that this is a market with great growth potential."
Source: NASDAQ OMX
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