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DB Global Equity Index and ETF Research-Europe-Weekly European ETF Market Monitor:European equity ETFs continue to attract strong interest
September 19, 2012--Equity ETFs: A market rally draws investors
Global ETF cash flow patterns for the week that finished on September 14th signal an improvement in equity market sentiment.
US domiciled ETFs received €14.2 billion of inflows, while European domiciled ETFs received inflows of €1.4 billion. Equity ETFs received the lion’s share on both sides of the Atlantic, with US domiciled ETFs receiving over 90% ($12.8 billion) of inflows, while European domiciled ETFs received comparable interest (79%, €1.1 billion).
In Europe, European developed markets (DM) diversified equity benchmarks received 75% of the week’s total equity ETF cash flows (€829.5 million). This is a continuation of a trend we have noted in our August monthly report published on September 13th and titled Quest for yield: Dividends and corporate bond credit at the forefront . During August diversified European DM equity benchmarks received inflows of €702 million. YTD, ETFs that are benchmarked to European DM diversified indices have received €1.8 billion.
Last week’s European equity cash flows were strongly tilted towards EuroStoxx50 benchmarked ETFs (€493 million), while Stoxx 600 (€194 million) and MSCI Europe (€127 million) also received healthy interest. On the outflows front, DAX benchmarked ETFs continued to experience negative pressure and registered €149 million of outflows, bringing their YTD outflows to over a billion (€1.1 billion).
The European broad equity benchmarked ETF flow gains come on the back of positive market gains over the past week. The EuroStoxx 50 is up 15.7% YTD, up 5.0% in August and up 2.2% over the week that finished on September 14th. The STOXX 600 and the MSCI Europe indices have seen similar gains.
Fixed Income ETFs
Fixed income ETFs received €260 million of net inflows over the past week, the majority of which (€303 million) went to corporate bond benchmarked ETFs. High yield continued its run and attracted €176 million while investment grade benchmarked corporate ETFs received €127 million. US domiciled fixed income ETFs also received healthy flows totalling $1.4 billion.
Commodity ETPs
European domiciled commodity ETPs received €348 million for the week, with Gold ETPs gaining the lion’s share €251 million. This brings YTD gold inflows to €3.9 billion, making by far the most popular commodity with ETP investors. The price of gold ($/oz) rose by 2.1% over the past week, while it is up 12.5% YTD.
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http://pull.db-gmresearch.com/p/501-BDC4/6197795/Weekly_European_ETF_Market_Monitor.pdf
FinTuition Releases White Paper on European ETFs, Liquidity, Securities Lending and Collateral
September 18, 2012--Roy Zimmerhansl of FinTuition and Andrew Howieson of Howieson Consulting announce the release of a ground-breaking white paper: "ETF Liquidity, Securities Finance and Collateral Management; Maximising the role of European Exchange Traded Funds".
Exchange Traded Funds (ETFs) listed in Europe have developed into a significant element of the European fund management industry. At June 30, 2012, 39 issuers listed 1,304 ETFs with assets under management (AUM) of €215 billion. The interactions between ETF investment and trading and securities finance/collateral management are complex and not always fully clear.
Market participants point to a relatively low level of liquidity in European ETFs as compared to the US ETF market and to potential linkages with the relative underdevelopment of securities finance and collateral management in relation to European ETFs.
DB-Global Equity Index and ETF Research-Weekly European ETF Market Monitor
September 17, 2012--The most recent issue of the Weekly European ETF Market Monitor is now available. The report includes key statistics on the European ETF market as well as global ETF market highlights.
For more detailed coverage please refer to our monthly report, issued in the first week following the end of each month.
The following link will be available for 90 days. For more information, please click on the link for the full PDF.
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http://pull.db-gmresearch.com/p/503-67DD/1814356/ETF_Research_-_Weekly_European_ETF_Market_Monitor.pdf
September 2012 Quarterly Review: Investors search for yield as rates drop further
September 17, 2012--Weak growth and portfolio reallocations driven by concerns about euro area sovereign risk, combined with central bank policy actions, pushed government bond yields to unprecedented lows.
And, as market participants searched for investment opportunities offering at least some yield, prices of equities and corporate bonds rose.
Cross-border lending by internationally active banks increased slightly in the first quarter, partly offsetting the sharp contraction in late 2011.
BIS economists Mathias Drehmann and Mikael Juselius show that recessions are likely to be deeper when a larger fraction of households' and firms' income is devoted to debt servicing. In addition, they show that a rapid increase in debt service costs (relative to income) raises the probability of a banking crisis.
Boris Hofmann and Bilyana Bogdanova of the BIS show that, since the early part of the last decade, policy rates in both advanced and emerging market economies have mostly been below the level implied by a simple Taylor rule.
ESMA consults on market maker and primary dealer exemption for short selling
September 17, 2012--The European Securities and Markets Authority (ESMA) has published a Consultation Paper on Exemption for market making activities and primary market operations under the Short Selling Regulation, which contains draft Guidelines on market making and the application of exemptions for market making activities and primary market operations under the Regulation.
The Guidelines are intended to support the creation of a level-playing field, consistency of market practices and convergence of supervisory practices amongst national securities market regulators across the EEA.
ESMA has previously alerted the market and securities markets regulators, on 30 August 2012, to the opening on 1 September of the notification period for the use of the exemption and indicated that today’s consultation paper should be used as the interim benchmark for the notification and application of the exemption.
ESMA proposes remuneration guidelines for firms providing investment services
September 17, 2012--The European Securities and Markets Authority (ESMA) has published today a consultation paper on proposed Guidelines on remuneration policies and practices under the Markets in Financial Instruments Directive (MiFID).
Steven Maijoor, ESMA Chair, said:
“During the last decade we have seen a number of mis-selling scandals affect the retail investor across Europe, ranging from pensions to mortgages to investment products. A key factor identified as a driver for the promotion, recommendation and selling of unsuitable products is the presence of financial incentive schemes for sales staff that do not take account of the clients’ best interests.
“Today’s proposed remuneration guidelines for MiFID investment firms are key to ensuring that the pay and incentive structures for sales staff and their superiors do not create false incentives when selling financial products to retail investors. The consistent application of ESMA’s remuneration guidelines will help strengthen investor protection and achieving the same level of protection for Europe’s retail investors no matter where they invest.”
The key elements of the guidelines include:
General obligations
Firms should ensure that remuneration is not paid in a manner that aims at circumventing the MiFID requirements and/or the ESMA guidelines.
Firms should design and monitor their remuneration policies and practices to take account of the conduct of business and conflicts of interest risks that may arise.
Firms should set up adequate controls on the implementation of their remuneration policies and practices to ensure that they deliver the intended outcomes.
view the consultation paper-Guidelines on remuneration policies and practices (MiFID)
ETF Stat August 2012--Borsa Italiana
September 17, 2012--The ETF Statistics of the ETF Plus Market for the month of August 2012 are now available.
view report
BofA Merrill Lynch Implements FTEN's RiskXposure to Enhance Its European Cash Equities Clearing Business
September 17, 2012--FTEN, Inc., a NASDAQ OMX company, today announced that BofA Merrill Lynch has chosen FTEN's RiskXposure (RX) platform to enhance its European Cash Equities clearing business.
RX now provides BofA Merrill Lynch with a comprehensive post trade risk management infrastructure, as a complement to BofA Merrill Lynch's existing systems, that integrates client positions and executed trade data from central counterparty clearing houses (CCP) and exchanges. RX aggregates the data to provide real time market and credit risk exposure on a per-market, per-CCP and per-client basis.
Ted Myerson, Global Head of Access Services at NASDAQ OMX, said; "RX brings general clearing members risk management capabilities closer to the point of trade, empowering them with deeper insight and tighter control over their end client's activity to safely and effectively manage their businesses."
He added, "FTEN is in a unique position to help general clearing members like BofA Merrill Lynch proactively utilize our risk management expertise and proven technology for the clearing community."
Another new ETF Provider: Source
The market entry of a new issuer is laying the foundation for further growth in the ETF segment of SIX Swiss Exchange
September 17, 2012--With Source, SIX Swiss Exchange is welcoming another new issuer in its segment for Exchange Traded Funds. The British ETF provider has launched 14 new products and thereby provides an even greater range.
Currently, SIX Swiss Exchange offers investors a choice of 880 ETFs.
Ted Hood, CEO of Source, explains: "Source is delighted to announce the listing of our first ETFs in Switzerland. These include major equity benchmarks such as the S&P 500, MSCI EM and MSCI USA, the nine S&P US Select Sectors and some of Source's market leading volatility products, developed in conjunction with Nomura and J.P. Morgan." Flow Traders B.V., J.P. Morgan Securities Ltd., Nomura International plc und Virtu Financial Ireland Ltd. act as the market makers for the 14 new ETFs of Source.
Virtu Financial Acquires Dutch ETF Market Maker
September 14, 2012--Virtu Financial ("Virtu") has today acquired the European ETF Market Maker assets of Nyenburgh Holding B.V. ("Nyenburgh" or the "Company"). Terms of the transaction were not disclosed.
Barclays Bank PLC, acting through its investment bank (“Barclays”), acted as sole financial adviser to Nyenburgh in connection with the transaction.
Nyenburgh is recognized as a leading ETF market maker across Europe. The Company has years of established relationships with ETF sponsors and primary European exchanges. With the acquisition of Nyenburgh’s ETF market making business, Virtu continues its expansion into formalized, regulated market making business across the US, Europe and Asia
