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Euro area economic and financial developments by institutional sector-4th Quarter 2011
April 30, 2012--In the fourth quarter of 2011, the annual growth rate1 of households' gross disposable income
decreased to 1.8%, down from 2.4% in the previous quarter (see Table 2). The annual growth rate of households' consumption expenditure was 1.6% in the fourth quarter compared with 2.9% in the
previous quarter.
The annual growth rate of households’ gross saving increased significantly to 3.6% in the fourth quarter compared with -0.9% in the previous quarter.
The annual growth rate of households’ financing decreased to 1.6% (2011Q3: 2.0%) and that of financial investment decreased to 1.9% (2011Q3: 2.1%). The annual growth rate of households’ net worth2 decreased to -0.6% in the fourth quarter, compared with an increase of 0.7% in the previous quarter.
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Source: ECB
Deutsche Boerse completes Eurex takeover
Acquisition of SIX Swiss Exchange's 50-percent share closed
April 30, 2012--Deutsche Börse Group today completed its full acquisition of Eurex Zürich AG.
Representatives of SIX Swiss Exchange/SIX Group AG and Deutsche Börse AG jointly finalized the transaction in Zurich and signed the corresponding closing documents. Deutsche Börse is to pay 295 million euros and transfer approx. 5.3 million Deutsche Börse AG shares to the SIX Group. This gives the SIX Group a stake of around 2.7 percent in Deutsche Börse AG. In return, Deutsche Börse has acquired the SIX Group’s share in the Eurex Group, the derivatives market provider that was previously under joint operation. The transaction was agreed on 7 June 2011.
Retroactive as of 1 January 2012, Deutsche Börse Group will receive all Eurex Group profits as sole shareholder of Eurex Zürich AG. Deutsche Börse Group previously received 85 percent of Eurex Group’s profits. Deutsche Börse Group is fully acquiring all subsidiaries and shareholdings of Eurex Group, including International Securities Exchange Holdings (ISE), Inc., as well as the stakes in Direct Edge Holdings, LLC and the European Energy Exchange AG. Moreover, it is acquiring all Eurex software and trademark rights. Eurex’s Swiss markets will continue to be operated by Eurex Zürich AG.
Source: Deutsche Börse
FSB Publishes Interim Report on Securities Lending and Repos
April 27, 2012--The Financial Stability Board (FSB) published today a report entitled Securities Lending and Repos: Market Overview and Financial Stability Issues. The report describes the segments, operations and practices of these securities financing markets, which may constitute an important element of the shadow banking system.
The FSB is examining the regulation of securities financing markets from a financial stability perspective as part of its wider work on shadow banking, on which the FSB will issue recommendations by the end of 2012.
The report released today is an Interim Report of the FSB Workstream on Securities Lending and Repos and is preliminary to its work to develop policy recommendations in this area. The Workstream has reviewed current market practices through discussions with market participants, and classified the markets into four main, inter-linked segments:
a securities lending segment which comprises lending of securities by institutional investors to banks and broker-dealers against the collateral of cash or securities;
a leveraged investment fund financing and securities borrowing segment which comprises financing of leveraged investment funds’ long positions by banks and broker-dealers using both reverse repo and margin lending secured against assets held with the prime broker, as well as securities lending to hedge funds by prime brokers to cover short positions;
an inter-dealer repo segment which comprises primarily government bond repo transactions amongst banks and broker-dealers that are typically cleared by central counterparties (CCPs); and
Hedge funds bet against eurozone
April 27, 2012--Hedge fund managers make for unlikely supporters of François Hollande, the French socialist presidential candidate.
But it is Mr Hollande’s potential victory in the coming second round of the French elections, and with it a sharp deterioration in sentiment surrounding France’s creditworthiness in the bond market, that many hedge funds are now anticipating.
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Source: FT.com
Second Meeting of the Financial Stability Board Regional Consultative Group for Europe
April 27, 2012--In November 2010, the Financial Stability Board (FSB) announced arrangements to expand and formalise outreach beyond its membership.
To this end, six regional consultative groups1 were established to bring together financial authorities from FSB member and non-member countries to exchange views on vulnerabilities affecting financial systems and on initiatives to promote financial stability.
Today, the Financial Stability Board hosted the second meeting of the FSB Regional Consultative Group for Europe in Basel. Members discussed the FSB’s evolving policy framework for the shadow banking system, extension of the G-SIFI policy framework to the domestic systemically important banks and non-banking entities, and the process of deleveraging in the European financial sector. Discussions on shadow banking included the areas of banks’ interaction with shadow banking entities, money market funds, other shadow banking entities, retention requirements and transparency in securitisation, and securities lending and repos (repurchase agreements). The discussions on the extension of the G-SIFI framework included the policy development work underway at the Basel Committee on Banking Supervision and the International Association of Insurance Supervisors, as well as the implications of the initiative for the member countries. The group also discussed the nature and impact of deleveraging in the European financial sector.
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Source: FSB
Spain in 'crisis of enormous magnitude' as unemployment rate nears 25%
April 27, 2012--The hole in Spain's economy is getting deeper.
The government reported Friday that unemployment rose to 24.4 per cent in the first quarter-compared with 22.9 per cent in the fourth quarter- and that more than half of Spaniards under 25 are now without jobs.
The bleak employment report came one day after ratings agency Standard & Poor’s downgraded the country’s debt.
The Spanish economy is in recession for the second time in three years as the damage from a housing bust persists. Foreclosures are rising, Spain’s banks are in worse financial shape and the government’s deficit is hitting worrisome levels.
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Source: The Star
Deutsche Boerse introduces DAX ex Financials Index
April 26, 2012--Deutsche Börse has launched the DAX ex Financials Index, which measures all stocks in the German blue-chip DAX index except for banks and financial services companies.
The DAX ex Financials Index is geared toward institutional investors who want to access the performance of leading German companies without exposure to the financials industry. This index responds to client demand for a flexible yet transparent, rules-based solution for their benchmarking and passive investment needs.
The DAX measures the performance of the 30 largest and best performing companies on the German equities market and represents around 80% of the listed market capitalization in Germany. The DAX ex Financials Index currently comprises 25 of the 30 DAX components, as it excludes stocks that are members of the Banks, Financial Services, Insurance and Real Estate sectors according to the Deutsche Börse classification scheme.
Source: Deutsche Börse
Selectors believe Alt Ucits are a 'disaste' waiting to happen'
April 26, 2012--Fund selectors are split on the viability of Alternative Ucits funds with a majority voicing concern over their risks, according to a poll conducted at the latest Citywire event in Luxembourg.
When asked to give their views on Alternative Ucits, 44% of the selectors questioned said the asset class is ‘a disaster waiting to happen’ whilst 24% said it is ‘a good replacement for hedge funds’.
Of those remaining, 19% of respondents said that Alternative Ucits were ‘a passing trend’ whilst 13% said they were ‘the only solution for the current environment’.
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Source: CityWire
Standard & Poor's cuts rating on Spain's debt 2 notches on debt concerns; outlook negative
April 26, 2012--Standard & Poor's lowered Spain's long-term credit rating by two notches on Thursday, saying the country's budget problems are likely to get worse because of the weak economy.
S&P reduced Spain’s long-term sovereign credit rating to “BBB+” from “A.” The agency also lowered Spain’s short-term rating and assigned a negative outlook, which suggests the possibility of another downgrade in the near future.
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Source: Washington Post
Economic sentiment flat in the EU and down in the euro area
April 26, 2012--The Economic Sentiment Indicator (ESI) remained stable in April in the EU at 93.2. In the euro area it decreased significantly by 1.7 points (to 92.8), thereby offsetting the gains recorded over the first quarter of 2012. The decline in the euro area was mainly driven by weakening confidence in the industry and services sectors.
Confidence improved only in the retail sector. The more positive reading of the ESI in the EU reflects a strong improvement in the UK. In both regions, the ESI remains well below its long term average.
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Source: European Commission
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