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Shadow banking: balance benefits and risks, say MEPs
November 20, 2012--"Shadow" banks, such as hedge funds or trading houses, benefit the real economy by lending to risky ventures that regular banks avoid.
But if their loans turn bad, they may collapse, taking regular banks with them, because they lack a capital cushion. Better prudential oversight is needed to reduce shadow banking's systemic risks, without stifling its benefits to the economy, say MEPs in a resolution voted on Tuesday.
Shadow banking institutions account for up to 30% of the global financial system, worth over €50 trillion in 2011. In good times, they provide credit to people or entities that otherwise cannot get it and so fund the real economy. But if they make bad investments they have no protection, because they do not hold deposits and have no access to central bank liquidity.
Risks to regular banks
Shadow banks do not exist on their own. They are interconnected with regular banks, which often use them to get round capital and accounting rules. If they collapse, they can cause a domino effect across other financial institutions and borders, bringing down regular banks and ultimately harming taxpayers across the EU who are obliged to come to the rescue.
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Source: European Parliament
ESMA publishes an opinion on the interpretation of Article 50(2)(a) of the UCITS Directive
November 20, 2012--ESMA has published an opinion on the interpretation of Article 50(2)(a) of the UCITS Directive
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Source: ESMA
MEP proposes ban on fund manager performance fees
Funds charging performance fees could be threatened by European ruling on charges.
November 19, 2012--Fund managers could be banned from charging performance fees under European proposals that could be included in a future Ucits directive.
Amendments to the latest Ucits rules, which cover the majority of open-ended funds in the UK, include a proposal to limit charges to a percentage of a fund’s size, rather than any performance-related measure.
The Ucits V proposals, which were tabled by German MEP Sven Giegold,
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Source: FT Adviser
Borsa Italiana reaches 800 listed instruments on ETFplus
November 19, 2012--More than 800 Exchange Traded Products (ETPs) are now listed on ETFplus, Borsa Italiana's dedicated market for the trading of ETFs, ETCs and ETNs.
The important milestone was reached as two new ETFs were listed on the market.
In the year of the 10th anniversary of the first ETF to be listed on the Italian market, ETFplus continues to grow, confirming its status as an international centre for the trading of ETFs.
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Source: Borsa Italiana Spa
Institutional investor surveys reveal marked risk aversion
November 19, 2012-- A number of recent institutional investor surveys reveal significant risk aversion among asset owners even as asset managers are beginning to suggest that now is the time to take a little more risk.
As Dutch asset manager ING Investment Management (INGIM) presented its 2013 outlook and the results of a Europe-wide survey of 171 pension professionals in London last week, Valentijn van Nieuwenhuijzen, head of strategy, said: "Investor confidence is low, so many may miss out on the upside risks we believe are clearly visible."
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Source: IP&E
db X-trackers to offer replication choice on major benchmark indices
19 November 2012--Europe's second largest exchange traded funds (ETF)
provider, db X-trackers, is launching a new initiative that aims to provide investors with the choice of direct or indirect tracking of major equity benchmarks.
In a first for the ETF industry, buyers of db X-trackers ETFs will be able to invest in line with their replication preference for certain ETFs tracking the German, US, Japanese, British, and
Eurozone equity markets. The direct replication products will include the identifier ‘(DR)’ in their fund names. As with all db X-trackers ETFs, the new products will be fully compliant
with the UCITS regulations.
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Source: db X-trackers
New buzz around ETF managers
November 19, 2012--The European stage is set for the development of a new breed of asset manager, dedicated to using exchange-traded funds to allocate assets.
Over the past three years, the number of ETF specialist fund managers in the UK has tripled to 45, although most of them are small.
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Source: Financial News
FSB publishes Initial Integrated Set of Recommendations to Strengthen Oversight and Regulation of Shadow Banking
November 18, 2012--The Financial Stability Board (FSB) is publishing today for public consultation an initial integrated set of policy recommendations to strengthen oversight and regulation of the shadow banking system.
The "shadow banking system" can broadly be described as “credit intermediation involving entities and activities (fully or partially) outside the regular banking system” or non-bank credit intermediation in short.
The FSB has focused on five specific areas in which the FSB believes policies are needed to mitigate the potential systemic risks associated with shadow banking:
(i) to mitigate the spill-over effect between the regular banking system and the shadow banking system;
(ii) to reduce the susceptibility of money market funds (MMFs) to “runs”;
(iii) to assess and mitigate systemic risks posed by other shadow banking entities;
(iv) to assess and align the incentives associated with securitisation; and
(v) to dampen risks and pro-cyclical incentives associated with secured financing contracts such as repos, and securities lending that may exacerbate funding strains in times of “runs”.
view the Consultative Document-Strengthening Oversight and Regulation of Shadow Banking
Source: Financial Stability Board (FSB)
Deutsche and Lyxor in surprise physical move
November 18, 2012--Two of the largest players in Europe's exchange traded funds market are radically changing their business models in an effort to revive their flagging performance.
Both Deutsche Bank and Lyxor Asset Management, the second- and third-largest ETF managers in Europe, are launching “physical” ETFs that buy the constituents of an underlying index, – a departure from their existing range of “synthetic” ETFs that use derivatives to track a benchmark.
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Source: FT.com
Deutsche Boerse: Moscow Exchange and Deutsche Börse sign letter of intent planning strategic partnership
November 16, 2012--Today Deutsche Börse and Moscow Exchange signed a Letter of Intent (LoI) in the presence of Russian President Vladimir Putin and German Chancellor Angela Merkel.
The exchange organizations agreed on a strategic co-operation and an extensive exchange of information in order to facilitate the further development of the financial markets. Furthermore the co-operation intends to foster and extend the links between the financial centers Moscow and Frankfurt.
The two partners plan to cooperate on exchange infrastructure, product development, IT and rules and regulations regarding trading, clearing, settlement & custody, collateral management as well as market data and indices.
In accordance with the LoI, the two exchanges are above that to support each other in the further development of their markets in terms of volumes, liquidity and global reach of issuers, intermediaries and investors.
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Source: Deutsche Börse
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