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ESMA defines standards for derivatives and CCPs
September 27, 2012--The European Securities and Markets Authority (ESMA) has today published its technical standards on the Regulation on OTC derivatives, central counterparties and trade repositories (EMIR), which set out the specific details of how EMIR’s requirements are to be implemented.
The EMIR framework aims to improve the functioning of OTC derivatives markets in the European Union (EU), by reducing risks via the use of central clearing and risk mitigation techniques, increasing transparency via trade repositories, and ensuring sound and resilient central counterparties (CCPs).
Steven Maijoor, ESMA Chair, said:
“The publication of ESMA’s standards on EMIR sees the EU taking its final steps towards meeting the G20 commitment on bringing OTC derivatives trading under supervision, and provides clarity to the market on the shape of the new regime. The new regulatory framework reduces the risks arising from OTC derivatives trading by improving transparency in the sector and ensuring resilient central counterparties.
Xetra Bonds to offer continuous trading for bonds
Liquid, transparent and broader bonds offering
September 27, 2012--With effect from 1 October, bond trading on Xetra will be expanded to include over 2,000 international government and corporate bonds and 60 German government bonds.
Trading participants will benefit from a transparent and liquid bond market and gain access to a broad investor network via Xetra.
For the first time, the open Xetra order book will have a depth of 5, showing the five best bid- and ask-limits and the market data dissemination offers trading participants complete transparency in pre and post trading. Xetra Bonds thereby meets the highest transparency requirements. Designated sponsors and specialists provide additional liquidity in trading and quote bid and ask prices on a continuous basis. The first designated sponsors are Optiver V.O.F. Netherlands, Florint B.V. and Close Brothers Seydler Bank AG, which also acts as specialist. Further specialists in bond trading are Steubing AG and ICF Kursmakler AG.
Global Equity Index and ETF Research-Weekly European ETF Market Monitor:Conditions continue to improve in the equity market
Better conditions in the equity market
September 26, 2012--ETF trading patterns continue to point to an improved climate in the European equity market for the week ended on September 21st 2012.
The European ETF market registered total inflows of €924 million, the vast majority of which was received by equity benchmarked ETFs (€952 million). ETCs also had a good week, with commodity benchmarked ETCs receiving €300 million. Together, ETPs received a total of €1.2 billion of inflows, making this week the 6th (out of 38) best for this year.
This week’s strong ETF cash flows come on the back of continuously rising equity prices, both in the US and Europe, since 2012 lows in early June. Indeed, cash flow patterns for developed market (DM) equity benchmarked ETFs have reflected price movements closely. DM equity benchmarked ETF cash flows have also seen a rise, with an emphasis in the past two weeks.
DM equity benchmarks are important for the ETF industry and for Europe specifically. Equity ETFs make up 67% of the European ETF industry and DM benchmarked equity ETFs make up 68% of Europe’s equity ETF segment.
Year to date, European domiciled DM equity benchmarked ETFs have received total inflows of €1.8 billion, close to 30% of these (€508 million) have materialized in the most recent week ended on September 21st.
Who’s benefiting?
The top benchmark index benefactor of broad DM equity ETF flows is the MSCI World index, gathering €1.2 billion YTD, closely followed by MSCI Europe that gathered €1.1 billion. The US S&P 500 comes in third place with YTD inflows of €804 million, while Europe’s STOXX 600 experienced inflows of €564 million. All four indices saw positive ETF flows over the past week.
Germany’s DAX remains by far Europe’s largest DM ETF equity benchmark, despite ETF outflows topping €1.2 billion YTD. Switzerland’s SMI, France’s CAC 40 and the MSCI USA follow with ETF outflows of €417 million, €337 million and €324 million respectively. DAX and MSCI USA also experienced outflows in the most recent week that finished on September 21st.
The ratio of (top 10 DM ETF benchmark) winners to losers indicates an improvement in market sentiment, moving up to 2.9x for the week that ended September 21st, from 1.6x YTD. The ratio indicates that inflows for the top 10 inflow benchmarks outstrip outflows for the respective top ten outflow benchmarks.
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Banking union: Economic Affairs Committee starts work on supervision proposals
September 26, 2012--The banking supervision legislation debated in detail in the Economic and Monetary Affairs Committee on Wednesday was rather less warmly received than many other Commission proposals have been.
MEPs nonetheless stressed the urgent need for it and pledged to strive to meet their tight deadline, whilst at the same time addressing the major hurdles in the way of strong EU bank supervision.
Exactly two weeks after the Commission unveiled its legislative proposals for tighter Eurozone banking supervision, the committee's opening discussion on them pointed to what are likely to be MEPs' key concerns: strong accountability of the supervisor, a clear division of tasks between EU and national levels, including non-Eurozone countries, and differing supervision arrangements for different banks.
Practical approach
MEPs broadly recognised the urgent need to reach a deal. "We must accept that we are not working in a vacuum but in a crisis. For this reason we will have to work with what we have on the table", said Marianne Thyssen (EPP,BE), one of the rapporteurs.
Financial trading rules: Economic Affairs Committee MEPs outline reform plan
September 26, 2012--Investors would have to be offered financial products that are tailored to their needs, and so they should be less likely to be misled, under new uniform trading rules unanimously approved by the Economic and Monetary Affairs Committee on Wednesday.
These rules, in proposed updates to the EU directive and regulation on markets in financial instruments, would apply to almost all such instruments and almost all market players.
“With this dossier the European Parliament takes a very important step towards transparent and efficient financial markets in the European Union. The main goals of the reform of the financial markets regulation are reducing systemic risk, guaranteeing financial market stability and an adequate investor protection. We now look to the Council to join us in negotiations with the Commission, so that we can bring these proposals to a successful conclusion”, said lead MEP Markus Ferber (EPP, DE). He added that he hoped that Parliament could put the amendments proposed by the committee to a plenary vote in October.
The updated market in financial instruments directive and regulation (MIFID/MIFIR) would lay down uniform trading rules for firms selling investment products, investment service providers and regulated marke
Monetary developments in the euro area-August 2012
September 26, 2012--The annual growth rate of the broad monetary aggregate M3 decreased to 2.9% in August 2012, from 3.6% in July 2012.1
The three-month average of the annual growth rates of M3 in the period from June 2012 to August 2012 stood at 3.2%, unchanged from the previous period.
September 26, 2012--EU proposals to regulate high frequency trading under MiFID may well end up raising transaction costs for end-investors and pushing trading into the dark rather than making markets more transparent, argues Remco Lenterman.
Remco Lenterman is chairman of the FIA European Principal Traders Association.
"The negotiations on the revision of the EU’s law for securities markets, the Markets in Financial Instruments Directive (MiFID), are entering a crucial phase. Some proposals may well end up raising transaction costs for end-investors and pushing trading into the dark rather than making markets more transparent.
European Parliament moves to fight market speculation
September 26, 2012--The European Parliament on Wednesday agreed plans to improve financial market transparency and end speculation, notably deal-making blamed for volatile food prices.
The assembly's economic affairs committee unanimously agreed -- by 45 votes in favour -- new rules based on a proposal last year by the European Commission to update European Union regulation on markets in financial instruments, known as MIFID.
Under the agreement, market players and trading operators would be required to lay down clear rules and procedures for fair and orderly trading, objective criteria for executing orders efficiently, and transparent criteria for determining which financial instruments may be traded via their systems.
S&P lowers eurozone growth forecasts
September 26, 2012--The international ratings agency Standard and Poor's slashed its 2012-2013 eurozone growth forecasts on Tuesday, and now expects a slightly stronger economic contraction this year.
S&P said that business activity would likely decline by 0.8 percent across the 17-nation bloc rather than by 0.7 percent, its previous forecast issued in July.
For 2013, the ratings agency expects the eurozone economy to record no growth, revising the earlier outlook for a slight expansion of 0.3 percent.
"Recent economic indicators continue to paint a bleak picture for Europe," a statement quoted Jean-Michel Six, S&P chief economist for Europe as saying.
ESMA publishes a Q&A on KIID for UCITS
September 25, 2012--The purpose of this document is to promote common supervisory approaches and practices in the application of the UCITS Directive and its implementing measures.
It does this by providing responses to questions posed by the general public and competent authorities in relation to the practical application of the UCITS framework.
view the Q&A Key Investor Information Document (KIID) for UCITS document
