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Council adopts rules on derivatives
July 4, 2012--The Council today1 adopted a regulation aimed at increasing transparency in derivatives
and reducing risk in the over-the-counter2 (OTC) derivatives market (PE-COS 8/12).
Adoption of the regulation follows an agreement reached with the European Parliament; accordingly, the Council accepted all amendments voted by the Parliament at first reading
on 3 July.
The regulation requires:
the clearing of standardised3 OTC derivative contracts through central counterparties (CCPs)4 in order to reduce counterparty risk (i.e. the risk of default by one party to the contract). This is aimed at preventing the default of one market participant causing the collapse of other market players, thereby putting the entire financial system at risk. To be authorised, a CCP will have to hold a minimum amount of financial resources.
Specifically, the regulation requires a CCP to have a mutualised default fund to which members of the CCP have to contribute
NYSE Euronext Monthly ETF Activity Report -June 2012
July 4, 2012--Listings-June 2012 saw two new ETF listings from Lyxor on NYSE Euronext Paris:
Trading Name: LYXOR ERC
ISIN:LU0776635921
Symbol: ERC
Underlying index: Euro iStoxx 50 Equal Risk
TER:0.25
Trading Name: LYXOR WLDR
ISIN:LU0776636812
Symbol: WLDR
Underlying index: MSCI World Risk Weighted
TER:0.45
At the end of the month NYSE Euronext European markets had 686 listings of 591 ETFs from 16 issuers.
Trading activity
The average daily value traded on-book last month was €257.7 million, down 39.9% vs. June 2011. The total value traded on-book amounted to €5.4 billion, down 7.5% month-on-month;
An average of 7,167 on-book trades (single-counted) was executed daily last month, a decrease of 24.0% vs June 2011, and down 4.4% month-on-month;
A total of €733.4 million was exchanged in block trades in June, down 12.9% from the €842.1 million in the previous month. Overall, block trade volume represented 13.5% of total regulated market ETF trading activity on NYSE Euronext.
Assets Under Management (AUM)
At the end of June 2012, the combined AUM of all ETFs listed on the NYSE Euronext European markets totalled €130.8 billion.
Market Quality
Last month, NYSE Euronext welcomed UBS as a new Liquidity Provider; UBS now officially provides liquidity on one iShares ETF.
Our high-capacity, low-latency technology, combined with the flow from client orders, competitive market makers and our 23 first-class Liquidity Providers, contributed to a median spread for all listed ETFs of 31.15 bps.
Eurex expands European index derivatives segment
Introduction of futures and options on the EURO STOXX 50 ex Financials Index next Monday, 9 July
July 4, 2012--The international derivatives market Eurex Exchange is expanding its offering to include futures and options on the EURO STOXX(R) 50 ex Financials Index.
This index has been calculated since October 2011 by the global index provider STOXX Ltd. The new contracts will be tradable as of next Monday, 9 July 2012.
“Our new index derivatives give market participants additional investment and hedging opportunities for their investment strategies. At the same time the new index products complement our highly liquid future in the European blue chip index EURO STOXX 50,” said Mehtap Dinc, Head of Product Development at Eurex.
ETFs to target emerging market assets
July 4, 2012--Passive investing has gained traction in many investment markets as models become ever more sophisticated and flexible.
This month, Citywire Global talked to Frankfurt-based Thorsten Winkler, co-founder of Advanced Asset Management who has become a specialist in the deceptively active pursuit of managing funds of ETFs.
German Economy Fares Well But Reform Agenda Still Unfinished
Germany's relatively strong performance sets conditions for domestic demand-led growth
Downside risks cloud near-term outlook
Accelerating structural, financial reforms would raise growth potential, also benefit euro area
July 3, 2012--Despite looming risks, Germany continues to perform relatively well, the IMF said in its annual report on the state of the economy.
The IMF called for policies to steer the recovery while guarding against downside risks, and noted that speeding up structural and financial reforms—along with rebalancing sources of growth—should help raise both Germany’s growth potential and generate positive outward spillovers.
According to the IMF’s assessment of Europe’s largest economy, economic activity is relatively robust, wages are rising, the unemployment rate (5.3 percent) is at post-reunification lows, and inflation expectations are well anchored. Furthermore, the fiscal deficit is narrowing (from 4.3 percent in 2010 to 1 percent in 2011) while corporate and household balance sheets are healthy. In addition, banks have ample liquidity and maintain adequate levels of regulatory capital, and lending rates are lower than elsewhere in Europe. This implies that the conditions are now in place for a domestic demand-led recovery.
view the IMF Country report-Germany 2012 Article IV Consultation
IMF Working paper-Paths to Eurobonds
July 3, 2012--Summary: This paper discusses proposals for common euro area sovereign securities. Such instruments can potentially serve two functions: in the short-term, stabilize financial markets and banks and, in the medium-term, help improve the euro area economic governance framework through enhanced fiscal discipline and risk-sharing.
Many questions remain on whether financial instruments can ever accomplish such goals without bold institutional and political decisions, and, whether, in the absence of such decisions, they can create new distortions. The proposals discussed are also not necessarily competing substitutes; rather, they can be complements to be sequenced along alternative paths that possibly culminate in a fully-fledged Eurobond. The specific path chosen by policymakers should allow for learning and secure the necessary evolution of institutional infrastructures and political safeguards.
view the IMF Working paper-Paths to Eurobonds
UK Official holdings of international reserves June 2012
July 3, 2012--This monthly press notice shows details of movements in June in the UK's official holdings of international reserves, which consist of gold, foreign currency assets and International Monetary Fund assets.
These reserves are maintained primarily so that the UK Government’s reserves could be used to intervene to support Sterling, or the Bank of England’s reserves could be used to support the Bank’s monetary policy objectives. If such interventions were to occur, then they would be shown and explained in this release. The Background note at the end of this release explains more about the reserves, and about these statistics.
In summary this month’s release shows that, in June 2012: No intervention operations were undertaken.
Movements in reserves and levels of reserves were as follows:
view the UK Official holdings of international reserves-June 2012
HM Treasury-Government announces new sanctions for directors of failed banks
July 3, 2012--The Government has published proposals that could prevent the directors of failed banks from holding similar positions at financial institutions in the future, the Financial Secretary to the Treasury, Mark Hoban, announced this afternoon.
The recommendations follow the findings of a report by the Financial Services Authority (FSA) into the failure of the Royal Bank of Scotland, published in December 2011, which highlighted how the errors made by senior management contributed to the bank having to be saved by the taxpayer. The Government is also consulting on the possibility of introducing criminal sanctions for serious misconduct in the management of a bank.
view the Consultation paper: sanctions for the directors of failed banks
Thomson Reuters Position Paper-The Practical Aspects Of Delivering A European Consolidated Tape
July 2, 2012--The Market in Financial Instruments Directive (MiFID) significantly opened up competition in trading of European equities, bringing several benefits for investors.
Yet, it also caused fragmentation, challenging both regulators and market participants in their ability to obtain a consolidated view of the market. A number of data collectors and aggregators, including Thomson Reuters, have emerged to address this unintended consequence of MiFID.
view the THE PRACTICAL ASPECTS IN DELIVERING A EUROPEAN CONSOLIDATED TAPE-position paper
89 billion euros turnover on Xetra in June
July 2, 2012--Order book turnover on Xetra and the Xetra Frankfurt specialist trading stood at €93.8 billion in June-a decrease by 15 percent year-on-year (June 2011: €109.9 billion).
Of the €93.8 billion, €89.2 billion were attributable to Xetra – a decrease by 15 percent y-o-y (June 2011: €105.3 billion). €4.6 billion were attributable to the Xetra Frankfurt specialist trading, unchanged y-o-y (June 2011: €4.6 billion). Order book turnover on Tradegate Exchange* totalled approximately €2.0 billion in June.
In equities, turnover reached €78.4 billion on Deutsche Börse’s cash markets (Xetra: €77.0 billion, Xetra Frankfurt specialist trading: €1.4 billion). Turnover in bonds was €2.0 billion, and in structured products on Scoach €1.9 billion. Order book turnover in mutual funds and exchange-traded funds (ETFs) amounted to €11.5 billion.
