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Fund Managers frequently pocket large portions of the Revenues of Securities lending
May 11, 2019--Securities lending is the practice of lending a stock, bond or other financial instrument in exchange for interest. Typically, the borrower pays a fee to the lender for the shares.
EU rules governing the practice of securities lending by UCITS funds, stipulate that 100% of the income from securities lending-net of direct and indirect operational costs-must be returned to the funds
Securities lending or repurchase agreements should always be aimed at increasing the return of the fund and can't be used to generate surplus income for the fund management company.
Yet in practice many asset managers pocket from a third to nearly half of the revenues generated from securities lending.
view the Efficient Portfolio Management Techniques: Attribution of profits derived from Securities Lending by UCITS Exchange-Traded Funds paper
Source: Better Finance
Ireland: Staff Concluding Statement of the 2019 Article IV Mission
May 10, 2019--A decade after the global financial crisis, the Irish economy is one of the most dynamic in Europe. Economic growth is strong, unemployment is nearing historical lows, and public finances have improved. Ireland's success story is broad-based with multinational enterprises playing an important role.
The downsized banking sector is well capitalized and liquid, but profitability is under pressure while credit to the economy has only recently begun to expand. Investment funds and other financial intermediaries continue to grow rapidly, lifting the overall size of Ireland's financial sector above its pre-crisis level.
The baseline economic outlook foresees continued robust growth and job creation with a further tightening of capacity constraints. External risks are increasing, however, as Ireland's close ties with the U.K. make it uniquely vulnerable to Brexit. Also, an escalation in global protectionism and changes in international corporate taxation could have negative spillovers. Policymakers should manage these risks by focusing on building buffers and strengthening resilience of the economy, both to alleviate demand pressures and prepare for the possibility of a major external shock.
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Source: IMF
IMF Working paper-CoMap: Mapping Contagion in the Euro Area Banking Sector
May 10, 2019--Summary:
This paper presents a novel approach to investigate and model the network of euro area banks' large exposures within the global banking system. Drawing on a unique dataset, the paper documents the degree of interconnectedness and systemic risk of the euro area banking system based on bilateral linkages.
We develop a Contagion Mapping model fully calibrated with bank-level data to study the contagion potential of an exogenous shock via credit and funding risks. We find that tipping points shifting the euro area banking system from a less vulnerable state to a highly vulnerable state are a non-linear function of the combination of network structures and bank-specific characteristics.
view the IMF Working paper-CoMap: Mapping Contagion in the Euro Area Banking Sector
Source: IMF
Solactive launches Global Technology Leaders Index
May 9, 2019--Solactive is pleased to announce the release of its Solactive Global Technology Leaders Index. It tracks the performance of both globally leading technology companies and businesses not necessarily labeled as traditional tech firms by a common sector classification system, but whose disruptive potential made them market incumbents that set significant impulses for the entire technology industry.
This, in particular, refers to, but is not limited to, global companies engaged in technology-related themes such as Cyber-Security, the Internet of Things, E-Commerce, Robotics & Automation, Artificial Intelligence, Autonomous Vehicles, and Cloud/Big Data.
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Source: Solactive AG
Flow Traders Annual General Meeting of Shareholders adopts all proposals
May 8, 2019--Flow Traders N.V. ("Flow Traders") announces that its Annual General Meeting of Shareholders ("AGM") has adopted all proposals on the agenda of the AGM held today. An overview of the most important resolutions and announcements is presented below.
Dividend
The Management Board of Flow Traders announced the distribution of a dividend for the year 2018 of €2.35 per share.
As an interim dividend of €1.35 per share was paid on 13 August 2018, the final dividend will be €1.00 per share. The final dividend will be made payable on 15 May 2019. Ex-dividend date for the final dividend has been set at 10 May 2019.
Reappointment of Dennis Dijkstra as CEO and member of the Management Board
The AGM reappointed Dennis Dijkstra as Chief Executive Officer (CEO) and member of the Management Board with effect from 8 May 2019 for a period of four years.
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Source: Flow Traders N.V.
European Commission-Spring 2019 Economic Forecast: Growth continues at a more moderate pace
May 7, 2019--The European economy is forecast to continue expanding for the seventh year in a row in 2019, with real GDP expected to grow in all EU Member States. As global uncertainties continue to weigh, domestic dynamics are set to support the European economy. Growth is expected to gather pace again next year
.The recent slowdown in global growth and world trade, together with high uncertainty about trade policies, is weighing on prospects for Gross Domestic Product (GDP) growth in 2019 and 2020. The continued weakness of the manufacturing sector also plays a role, especially in those countries encountering specific problems in the automobile industry.
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Source: European Commission
With 1,500 ETFs, SIX Ranks among Top 3 ETF Venues in Europe
May 7, 2019--2nd May marked an ETF-record for SIX. SIX has experienced remarkable growth in ETF listings since it first launched the segment in 2000.
The Swiss stock exchange's extensive range of ETFs, offered by a unique mix of large and smaller providers from both Switzerland and abroad, covers a wide spectrum of investment needs.
The Swiss stock exchange, operated by SIX, continues to cement itself as a leading global ETF (Exchange Traded Fund) destination, with 1'500 ETFs now listed on the exchange, a new milestone representing a massive increase in its product offering since 2015, when there were 1'000 ETFs listed.
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Source: SIX Swiss Exchange
New iShares ETFs on Xetra: Companies from different regions focus on sustainability
May 6, 2019--Since Tuesday five new Exchange Traded Funds from iShares are tradable via Xetra and Börse Frankfurt.
With the equity ETFs, investors can participate in the performance of various MSCI indices on a regional or global level, which are grouped according to sustainability criteria.
The benchmark indices exclude companies related to weapons, tobacco cultivation or generating revenues from coal or oil. Companies that violate the UN Global Compact principles or do not have an ESG ranking are also excluded from the indices. The weighting of the companies in the individual indices is based on their ESG ratings and CO2 emissions.
The five investment regions are the USA, Japan, Europe, the EU countries and the global MSCI World index.
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Source: Deutsche Börse Market Group
Announcement of a change to the management board of Solactive AG
May 6, 2019--Christian Grabbe has decided to pursue a new career opportunity outside Solactive and will therefore not be seeking re-appointment as a board member of Solactive AG.
After ensuring a smooth transition, he will leave the company with immediate effect.
In his approximately five years as Chief Operating Officer and member of the Management Board, Christian Grabbe has played a key role in organizing the company from a small index vendor located in Frankfurt to a global provider with overseas offices in North America and Asia, offering 24 hours service for its global customers. With Christian Grabbe's support, the company grew from 20 employees to more than 200 today. He has accompanied the Solactive growth story with the introduction of the required operational processes and measures, and he has been a key factor in setting up the operations in Hong Kong, Toronto and Dresden. On the basis of these achievements, Christian has decided to end his management role.
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Source: Solactive
Monday Morning Memo: Spotlight on the Concentration at the Promoter Level in the European ETF Industry
May 5, 2019--Investors, market observers, and regulators always raise questions about the competitiveness of the European exchange-traded fund industry since the assets under management seem to be concentrated among a few ETF promoters. Generally speaking, I would agree with the statement that one needs to be concerned if a few players are dominating a market, but not with regard to the European ETF industry.
The graph below depicts the fact that the European ETF industry is highly concentrated at the promoter level since the 10-top promoters in Europe held 93.22% of the overall assets under management (€725.2 bn) in the European ETF industry, while the other 41 promoters that have at least one ETF registered for sales in Europe only hold 6.78%. Even worse, iShares-the largest ETF promoter in Europe-accounts €335.2 bn, or 46.22%, of the overall assets under management. This is nearly as much in assets as the other nine of the 10-top promoters combined (€340.8 bn). In any other industry, such a high concentration should be concerning for regulators and clients, as this may lead to a monopoly or an oligopoly, which might bring prices up and/or the quality down.
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Source: Refinitiv
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