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ESMA publishes its 2012 regulatory work programme
May 7, 2012--ESMA's annual regulatory programme aims to provide information on the planned technical standards, technical advice and guidelines & recommendations to be issued by ESMA in 2012.
This information is provided in accordance with article 3 of the procedure for developing and adopting draft technical standards and guidelines and recommendations.
The regulatory programme takes into account, amongst others, ESMA’s objectives and tasks, the procedure for adopting technical standards, providing technical advice and issuing guidelines as well as the scope and nature of specific powers conferred in European Union legislative acts to ESMA.
The regulatory work programme is based on the ESMA 2012 Work Programme approved by the Board of Supervisors in November 2011 and published on 4 January 2012 on the ESMA website, but provides a more detailed outline of the individual work streams.
view the ESMA 2012 Regulatory Work Programme
Source: ESMA
ESMA launches a call for evidence on transaction reporting
May 7, 2012--This call for evidence seeks to collect interested parties' views on what elements ESMA should consider in its work on guidelines on harmonised transaction reporting, as well as opinions on what areas of the OTC derivatives guidelines need to be updated.
On the basis of responses received to this call for evidence, ESMA will define its further work on guidelines on harmonised transaction reporting and launch a full public consultation.
view the ESMA-Call for evidence
Transaction reporting
Source: ESMA
Switzerland: Selected Issues Paper
May 7, 2012--UNPRECEDENTED CURRENCY APPRECIATION AND POLICY RESPONSE
A. Introduction
1. Last year saw an unprecedented appreciation of the Swiss franc and a series of policy actions by the SNB to stem it.
This annex gives a detailed account of the SNB’s policy response, which has put a halt to the appreciation, and sheds lights on its impact and
implications.
2. The Swiss franc has appreciated significantly since 2008, with a sharp acceleration last summer. The appreciation began as nominal interest rates in other advanced countries declined and the positive differentials with Swiss rates shrank, which reduced the appeal of the Swiss franc as a funding currency for carry trades. As the euro area sovereign crisis developed, safe haven flows added further upward pressure on the currency. The SNB intervened in foreign exchange markets in 2009 and 2010 to slow down the appreciation. By July 2011, the appreciation reached 50 percent vis-à-vis the euro, 47 percent vis-à-vis the dollar, and 33 percent in real effective terms. The Swiss franc became one of the most appreciated currencies among advanced economies.
view IMF paper-Switzerland: Selected Issues Paper
Source: IMF
Source offers optimised exposure to Brent Crude
May 7, 2012--Source is pleased to announce the launch of the Source Brent Crude Enhanced T-ETC (Ticker: BOIL), pursuant to its Treasury bill secured ETC programme.
This exchange traded certificate offers optimised exposure to Brent crude oil via the S&P GSCITM Brent Crude Enhanced Total Return Index. It complements Source’s existing Crude Oil Enhanced T-ETC (Ticker: SEWTI), which provides optimised exposure to West Texas Intermediate (WTI) crude oil.
Historically, WTI light sweet crude was the major global benchmark for the oil market. However, Brent crude is increasingly recognised as a distinct and important benchmark, particularly since 2011, when it consistently traded at a premium to WTI. “Political situations, oil inventories and infrastructure issues on the two sides of the Atlantic can be starkly different,” commented Source CEO Ted Hood. “Investors increasingly want exposure to a specific oil contract - Brent or WTI - rather than generic crude oil exposure.”
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Source: Source
Renegotiating EU fiscal pact 'not possible': Germany
May 7, 2012--The German government on Monday ruled out reworking the European Union's fiscal pact despite calls to do so by French president-elect Francois Hollande.
"It is not possible to renegotiate the fiscal pact," government spokesman Steffen Seibert told a regular news conference.
He noted that 25 of the 27 EU member states had already signed the accord imposing strict budgetary discipline in March after major wrangling.
Hollande has called for a shift in strategy toward more growth-oriented measures including more public spending.
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Source: EUbusiness
New rules will help grow ETF market
May 6, 2012--Expansion of the European exchange traded funds market due to regulatory changes is "inevitable," according to Joe Linhares, head of iShares Emea for BlackRock.
Mr Linhares said a road map for how ETFs would reach retail investors was now becoming clearer as a result of the combination of reforms proposed in the UK and Europe with the retail distribution review (RDR) and Mifid II directive respectively.
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Source: FT,.com
London Stock Exchange-Monthly Market Report - April 2012
APril 4, 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 April a total of 31.1 million trades were carried out across the Group's electronic equity order books, an increase of 42 per cent on April 2011.
They had a combined value of £154.3 billion (€187.7 billion), down 4 per cent on April 2011 (£161.1 billion).
During the month, the average daily value traded on the UK order book was £4.5 billion (€5.5 billion), up 3 per cent year on year; the average daily number of trades increased 35 per cent to 788,162.
The LSE’s share of trading in the total UK order book for April was 64.1 per cent.Exchange Traded Products
Total value traded in Exchange Traded Products across the Group’s order books in April was down 19 per cent year on year to £7.5 billion (€9.2 billion). The total number of trades was down 6 per cent at 303,683.
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Source: London Stock Exchange
IMKB starts calculating IPO Index on May 7
May 4, 2012--IMKB will start calculating an Initial Public Offering (IPO) Index consisting of the stocks of the companies that go public and start trading on İMKB National Market and Second National Market, and those of real estate investment trusts and venture capital investment trusts that start trading on İMKB Collective Products Market.
The IPO Index will be calculated as price and yield separately. The companies that go public will be included in the IPO Index on the first day that they start trading, and will remain as Index constituents for a period of two years.
The base value of İMKB IPO Index will be equal to 59,043.16, the closing value of İMKB Stock Market’s main indicator İMKB 100 Index as of April 26, 2010. The Index will start to be calculated on real time basis with 46 constituent companies on May 7, 2012. The first and second session closing values for the Index for the period between April 27, 2010-May 4, 2012 has been calculated and will start to be announced on İMKB web site (www.imkb.gov.tr) on May 7, 2012.
Source: Istanbul Stock Exchange
DB - Equity Research- Equity Research -European ETF Market Monthly Monitor : Pressure on equity markets continues in April
May 4, 2012--DAX dominates European ETF flows in April
The European equity market experienced overall negative pressure in April, with most of the region's major equity indices losing ground. The Euro Stoxx 50 lost 6.9%, the DAX lost 2.7% and the FTSE 100 lost 0.5%. A number of question marks hovered above the market. With elections looming in France and Greece as well as concerns about Spain's spending discipline, investors continue to deliberate on market direction.
The European ETF industry experienced outflows of close to €4 billion over April, bringing YTD industry flows down to €1.8 billion. April was the most negative month in terms of flows this year, however, the vast majority of outflows were associated with ETFs tracking one benchmark, the German DAX. Outside the DAX, cash flow activity was negative and non-DAX related outflows totaled €709 million. Spring has historically been a very active period for DAX flows with a lot of the activity linked to the German dividend season.
This month’s outflows compare unfavorably to those of the equivalent month last year that saw inflows of €2.4 billion. At the time, DAX had experienced outflows of €494 million.
The picture was similar in the US where the S&P500 closed down 0.7% and US domiciled equity ETFs experienced outflows of close to $1 billion. US domiciled fixed income ETFs registered inflows of $5.2 billion. US equity flows in April were sharply down from those observed in March ($7.4 billion inflows) while fixed income flows were comparable to those observed in March ($4.8 billion inflows).
European ETF assets reached €221 million in April, registering a growth of 6.3% since the beginning of the year. The global ETF market assets reached $1.5 trillion, registering growth of 12.9% over the same period.
ETF month in perspective
This month’s defining ETF investment trends
April saw continued mild pressure on equity markets, with both developed as well as emerging market benchmarked equity ETFs experiencing outflows. Fixed income, with the exception of money markets, continued to see inflows.
The month’s biggest ETF investment trends in April, at asset class level, were:
IN
Corporate bonds – April: €255 million, YTD: €2.6 billion inflows
Sovereign bonds – April: €292 million, YTD: €995 million outflows
Gold: April – €197 million, YTD: €958 million inflows
OUT
Germany/DAX – April: €3.3 billion, YTD: €3.6 billion outflows
Money markets – April: €573 million, YTD: €1.4 billion outflows
Europe broad indices – April: €571million, YTD: €1.4 billion outflows
Overall equity emerging markets – April: €210 million, YTD: €2.1 billion inflows
DAX: Another not-silent Spring
Equity ETFs benchmarked to the German DAX index experienced outflows of €3.3 billion over April, which was by far the month’s biggest cash flow trend. This brought the year’s DAX outflows to €3.6 billion. April to June have historically been very active months in terms of DAX related flows.
2011 was by far the highest year in terms of DAX ETF flows, amassing a total of €12.1 billion of inflows. While in prior years a significant part of the DAX flow activity was linked to seasonal patterns, much of the activity in 2011 was associated to the comparative strength of the German economy among its European peers.
Corporate bonds continue to do well, but at a slower pace
Last month we highlighted the inflows into corporate bond benchmarked ETFs as one of the year’s biggest ETF trends. Both investment grade (€2.0 billion, 76%) as well as high yield (€600 million, 24%) saw total YTD inflows of €2.6 billion. April saw this trend continuing albeit at a slower pace than March, as the focus shifted from investment grade to high yield.
Corporate benchmarked ETFs saw inflows of €255 million in April, as compared with €743 million of inflows in March. High yield was the biggest recipient of new corporate flows in April, attracting 71% of the month’s corporate bond benchmarked flows (€181 million). Investment grade benchmarked corporate fixed income ETFs saw flows of €65 million in April.
YTD global investment grade fixed income ETFs attracted 1.1 billion of inflows, European investment grade fixed income was the second highest corporate bond benchmarked ETF recipient category with total inflows of €616 million. European high yield fixed income was the third largest recipient of corporate bond inflows, totaling €317 million YTD.
April also saw a slight pick-up in sovereign benchmarked fixed income inflows totaling €292 million. This brought the years outflows down to just under €1.0 billion. The biggest recipient of sovereign inflows was the iShares FTSE GILTS UK 0-5 fund, taking in a total of €264.5 million.
The rise of smaller ETF providers
The top 3 European providers all crossed in the red, with regards to 2012 YTD cash flows. iShares, db-x trackers and Lyxor saw their YTD flows registering total outflows of €314, €951 and €354 million respectively.
As of the end of April, this year’s top cash flow earners were Source (market share: 2.3%, nu. 9, inflows: €1.1 billion), UBS (market share: 4.3%, nu. 6, inflows: €783 million) and ETFlab (market share: 1.9%, nu. 11, inflows: €608 million). Other smaller European providers also in positive territory include StateStreet (nu. 15, €527 million) and Amundi (nu. 7, €227 million).
ETF comparatives: Mutual Funds, cash equity turnover
European ETF turnover, as a percentage of the region’s cash equities turnover, declined to 7.0% (from 7.2% in March) as of the end of April 2012. The equivalent number for the US market stands at 25.0% for the same period, up by 0.4% from the end of March 2012.
European ETFs comprised 2.8% of the continent’s mutual fund industry as of February 2012. European domiciled ETFs registered inflows of €1.3 billion over February 2012, while UCITS mutual funds registered inflows totaling €17.9 billion. Mutual fund industry data as per the European Fund Management Association (EFAMA).
US ETFs comprised 8.6% of the mutual fund industry as of the end of March 2012, unchanged from the end of February 2012. US domiciled ETFs registered inflows of $12.4 billion in March 2012, while US mutual funds registered inflows of $28.6 billion over the same period. Mutual fund industry data as per the Investment Company Institute (ICI).
request report
Source: Christos Costandinides, European Head of ETF Research & Strategy, Deutsche Bank
EDHEC-Risk study highlights the need to reform retirement systems and corporate pension funds
MAy 3, 2012--A new EDHEC-Risk Institute study entitled "Shifting Towards Hybrid Pension Systems: A European Perspective," made possible with the support of AXA Investment Managers, highlights the need to reform retirement systems and pension funds, as well as the need to adopt professional management structures and to considerably improve the product offering of defined-contribution (DC) funds.
Among the key prescriptions of the study:
In DC plans, primarily in the US and the UK, employees bear all the financial risk and no guarantees are offered by the sponsor or by prudential regulation. However, the lack of guarantees and transparency could lead to a problem of trust – it is thus important that some guarantees are offered in DC funds and that their costs are clearly explained in order to avoid creating a biased risk/return illusion. These changes would help to avoid future disappointment amongst employees, who would reduce their participation in such retirement systems and potentially question their perception of their overall remuneration.
• Participants are first and foremost exposed to inflation risk and longevity risk, and DC funds need to adopt an asset-liability management strategy in the manner that defined-benefit (DB) funds do. Today, DC funds are under-diversified and they need to stop solely investing in equities and government bonds, thus observing the first principle of modern portfolio theory. Such a diversification of asset classes should allow them to invest in illiquid assets in order to benefit from their risk premium over the long term. The long-term choice also means that it is necessary to adopt professional risk management practices, because when the investment horizon, liabilities and eventual guarantees are taken into account, such (dynamic) risk management strategies need to be put in place.
view the EDHEC-Risk Publication Shifting Towards Hybrid Pension Systems: A European Perspective
Source: EDHEC
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