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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.
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Source: BIS
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)
Source: ESMA
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.
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Source: Borsa Italiana
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."
Source: NASDAQ OMX
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.
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Source: SIX Swiss Exchange
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
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Source: Dutch Daily News
Social Stock Exchange to launch in London
September 14, 2012--A London-based Social Stock Exchange (SSE) aims for launch in the second quarter of 2013. It plans to partner with a Recognised Investment Exchange to create an investment exchange authorised and regulated by the Financial Services Authority (FSA) for trading in securities of social enterprises and other social purpose businesses.
The SSE team are building the trading platform, the pipeline of companies who wish to list, the market-maker and broker communities, and the community of impact investors and have offices in central London, UK.
The goal is to build a securities exchange that lists social businesses from around the world and attracts capital from individuals, private clients, family offices, foundations and institutional investors who are seeking both a financial and demonstrable social return. The target is to become the premier trading venue for social businesses wishing to raise risk capital and for social impact investors who wish to find global businesses that reflect their values.
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Source: African Capital Markets
Ucits sales hit massive slump in Q2
September 14, 2012--The sales of Ucits funds suffered a huge drop between the first and second quarters of 2012 as investors grew cautious due to the economic uncertainty in Europe, according to EFAMA.
According to industry body, which collates 97% of total Ucits and non-Ucits assets on a monthly basis, inflows into Ucits funds fell from €91 billion in the previous quarter to only €7 billion in Q2.
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Source: CityWire
August 2012 Euro area annual inflation up to 2.6% EU up to 2.7%
September 14, 2012--Euro area1 annual inflation was 2.6% in August 2012, up from 2.4% in July2. A year earlier the rate was 2.5%. Monthly inflation was 0.4% in August 2012.
EU3 annual inflation was 2.7% in August 2012, up from 2.5% in July. A year earlier the rate was 3.0%. Monthly inflation was 0.4% in August 2012.
These figures come from Eurostat, the statistical office of the European Union.
Inflation in the EU Member States
In August 2012, the lowest annual rates were observed in Sweden (0.9%), Greece (1.2%) and Latvia (1.9%), and the highest in Hungary (6.0%), Cyprus (4.5%) and Estonia (4.2%). Compared with July 2012, annual inflation rose in twenty Member States, remained stable in two and fell in four.
The lowest 12-month averages4 up to August 2012 were registered in Sweden (1.0%), Ireland and Greece (both 1.8%), and the highest in Hungary (5.1%), Estonia (4.5%) and Slovakia (4.1%).
Euro area
The main components with the highest annual rates in August 2012 were transport (4.8%), alcohol & tobacco (4.5%) and housing (4.1%), while the lowest annual rates were observed for communications (-3.1%), recreation & culture (0.8%) and education (1.0%). Concerning the detailed sub-indices, fuels for transport (+0.38 percentage points), heating oil (+0.10), gas and electricity (+0.09 each) had the largest upward impacts on the headline rate, while telecommunications (-0.18), garments (-0.08) and rents (-0.07) had the biggest downward impacts.
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Source: Eurostat
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