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ESMA publishes the responses to the call for evidence on transaction reporting
June 7, 2012--ESMA has published the responses to the call for evidence on transaction reporting.
view responses
Source: ESMA
UK and overseas financial services regulators need the power to stop carbon trading mis selling, says CISI
The City of London is at risk of serious reputational damage owing to the FSA's lack of power in regulating carbon trading, says the Chartered Institute for Securities & Investment (CISI).
In the June edition of its member magazine Securities & Investment Review, the CISI says the carbon trading industry is opening a window on potential problems in the wholesale markets in the form of lack of proper management of carbon trading back offices, and of cyber-crime.
Bulletin boards and internet chat rooms offer carbon trading and other ‘green’ investments that promise balm to worthy consciences, keen to help prevent global warming and save humanity, while offering annualised returns of up to 500%.
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Source: Chartered Institute for Securities & Investment (CISI)
London Stock Exchange-May 2012
June 7, 2012--London Stock Exchange Group (LSE.L) sits at the heart of the world's financial community, offering international business unrivalled access to Europe's capital markets.
In May a total of 34.1 million trades were carried out across the Group’s electronic equity order books, an increase of 10 per cent on April 2012. They had a combined value of £170.2 billion (€211.7 billion), up 10 per cent on last month (£154.3 billion).[1]
The average daily number of trades across the Group’s electronic equity order books was 1.5 million, a 7 per cent decrease on last month. The average daily value traded was £7.7 billion, down 6 per cent on last month.
UK Equities Order Book
During the month, the average daily value traded on the UK order book was £4.3 billion (€5.3 billion), down 6 per cent month-on-month; the average daily number of trades decreased 4 per cent to 759,666.
The LSE’s share of trading in the total UK order book for May was 63.6 per cent.
Derivatives On the Group’s derivatives platforms, the average daily number of contracts traded was 377,667, up 17 per cent compared with April.
Exchange Traded Products
The average daily value traded in Exchange Traded Products across the Group’s order books in May was up 9 per cent month-on-month to £432 million (€538 million). The average daily number of trades was up 1 per cent at 16,083.
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Source: London Stock Exchange
ETFs set to keep on trucking in Europe by Deborah Fuhr
June 6, 2012--More financial advisers and institutional investors in the US are using exchange traded funds (ETFs) in a greater variety of ways, paving the road ahead for the younger European market.
A new study in the US found the use of ETFs has evolved into a segment of advisers and asset managers who provide dedicated ETF advice on portfolio construction and implementation guidance, in outsourced managed accounts or defined contribution model portfolios.
This segment has grown significantly since 2008 when the Guide to ETF Investment Managers listed 25 managers and $5.8 billion (£4.6 billion) in total assets under management. Today, it is tracking more than 200 ETF strategies from more than 100 managers who represent $46 billion in assets, marking an 800% increase in assets.
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Source: City Wire
EDHEC-Risk Research Reveals Benefits of Diversifying Equity Portfolios with Volatility Derivatives
June 6, 2012--Following the collapse of worldwide equity markets in 2008, and the subsequent rally in long positions in equity volatility, interest has grown in the possible use of equity volatility derivatives as diversifiers for traditional and alternative portfolios.
In a new publication entitled “The Benefits of Volatility Derivatives in Equity Portfolio Management,” produced with the support of Eurex Exchange, EDHEC-Risk researchers show how volatility derivatives can be used to optimise access to the equity risk premium in a controlled volatility risk environment, and to engineer equity portfolios with attractive downside-risk properties.
The key findings of the research are as follows:
A long volatility position shows a strongly negative correlation with respect to the underlying equity portfolio and adding a long volatility exposure to an equity portfolio results in a substantial improvement of the risk-adjusted performance of the portfolio.
The benefits of the long volatility exposure are found to be the strongest in market downturns, where they are needed the most.
The benefits of adding volatility exposure to equity portfolios are also found to be robust with respect to the introduction of trading costs associated with rolling over volatility derivatives contracts.
view the EDHEC-Risk Publication Benefits of Volatility Derivatives in Equity Portfolio Management paper
Source: EDHEC-Risk
Close links between business and government pose risks in Europe
25 country report highlights political donations, lobbying
June 6, 2012--Anti-corruption group Transparency International today warned in a new report that the close relationship between business and government has enabled corruption and undermined economic stability in Europe.
The report highlights the gaps in governance that contributed to the financial and political scandals that dogged nearly every European country in the last year. Transparency International called on lawmakers to make lobbying and campaign finance more transparent.
The report Money, Politics, Power: Corruption Risks in Europe highlights a deficit of transparency in the way decisions are made and political groups funded. 19 of the 25 countries surveyed have yet to regulate lobbying, and only ten ban undisclosed political donations outright.
“Across Europe, many of the institutions that define a democracy and enable a country to stop corruption are weaker than often assumed. This report raises troubling issues at a time when transparent leadership is needed as Europe tries to resolve its economic crisis,” said Cobus de Swardt, Managing Director of Transparency International.
Three quarters of Europeans view corruption as a growing problem in their country, according to European Union surveys. The last year saw high profile corruption trials in France and Italy. Political corruption scandals involved MP expenses (UK), pension fraud (Norway), patronage (Czech Republic, Romania) and conflicts of interest (Bulgaria, Finland, Slovenia).
view the report Money, Politics, Power: Corruption Risks in Europe
Source: Transparency Interantional
Moody's downgrades Austrian banks; ratings carry stable or negative outlooks
Actions conclude rating reviews initiated or extended on 15 February 2012
June 6, 2012--Moody's Investors Service has today taken various rating actions on Austrian banks, including downgrades of the debt and deposit ratings of the three largest Austrian banking groups.
The senior debt and deposit ratings of Raiffeisen Bank International (RBI) and UniCredit Bank Austria (UBA) were downgraded by one notch, whilst those of Erste Group Bank AG (Erste) were downgraded by two notches. The new ratings are as follows:
RBI, deposit ratings A2, standalone bank financial strength rating (BFSR) D+ / baseline credit assessment (BCA) ba1,
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Source: Moody's
New crisis management measures to avoid future bank bail-outs
June 6, 2012--The financial crisis highlighted that public authorities are ill-equipped to deal with ailing banks operating in today's global markets. In order to maintain essential financial services for citizens and businesses, governments have had to inject public money into banks and issue guarantees on an unprecedented scale: between October 2008 and October 2011, the European Commission approved €4.5 trillion (equivalent to 37% of EU GDP) of state aid measures to financial institutions1.
This averted massive banking failure and economic disruption, but has burdened taxpayers with deteriorating public finances and failed to settle the question of how to deal with large cross-border banks in trouble.
The proposals adopted today by the European Commission for EU-wide rules for bank recovery and resolution will change this. They ensure that in the future authorities will have the means to intervene decisively both before problems occur and early on in the process if they do. Furthermore, if the financial situation of a bank deteriorates beyond repair, the proposal ensures that a bank's critical functions can be rescued while the costs of restructuring and resolving failing banks fall upon the bank's owners and creditors and not on taxpayers.
view the EU framework for bank recovery and resolution (June 2012)
Source: European Commission
Moody's takes multiple actions on German banks' ratings; most outlooks now stable
Actions follow rating reviews announced on 15 February 2012
June 6, 2012--Moody's Investors Service has today taken various rating actions on seven German banks and their subsidiaries, as well as one German subsidiary of a foreign group.
As a result, the long-term debt and deposit ratings for six groups and one German subsidiary of a foreign group have declined by one notch, while the ratings for one group were confirmed. Moody's also downgraded the long-term debt and deposit ratings for several subsidiaries of these groups, by up to three notches. At the same time, the short-term ratings for three groups as well as one German subsidiary of a foreign group have been downgraded by one notch, triggered by the long-term rating downgrades.
Further to these actions, Moody's has assigned stable outlooks to the ratings of most German banks. The ratings of two groups and of one German subsidiary of a foreign bank carry negative outlooks, reflecting bank-specific vulnerabilities to a possible further deterioration of the environment.
The ongoing rating review for Deutsche Bank AG and its subsidiaries will be concluded together with the reviews for other global firms with large capital markets operations.
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Source: Moody's
The Europe 2020 Competitiveness Report: Building a More Competitive Europe
June 5, 2012--The World Economic Forum's Europe 2020 Competitiveness Report focuses on measuring Europe's performance in becoming smart, inclusive and environmentally sustainable.
It is the first in a series to measure Europe’s performance against its own Europe 2020 strategy and closely follows the Europe 2020 seven flagship initiatives: enterprise environment, digital agenda, innovative Europe, education and training, labour market and employment, social inclusion and environmental sustainability.
Through the methodological framework of the Europe 2020 Competitiveness Index, the report measures the extent to which the 27 EU Member States and six accession and candidate countries have in place the institutions, policies and services to make Europe a smart, inclusive and environmentally sustainable society. The report indicates that Europe as a whole trails world leaders in terms of building a knowledge-driven economy, although there are significant differences among countries
view the The Europe 2020 Competitiveness Report: Building a More Competitive Europe
Source: World Economic Forum (WEF)
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