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Industry calls for consolidated ETF tape in Europe
April 23, 2012--With about two thirds of European ETF trading still conducted over-the-counter, providers are calling for comprehensive reporting of ETF trading to reduce fragmentation and cost and improve transparency and liquidity.
According to figures from BlackRock, European average daily volumes of ETFs at the end of 2011 were $2.96bn. Reported OTC trades represented around 16% of this at $462m. It is widely believed by market participants that OTC trading of ETFs in Europe constitutes two thirds of total ETF liquidity.
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Source: Financial News
Nine new Lyxor ETFs launched on Xetra
April 23, 2012--Nine new ETFs issued by Lyxor International Asset Management have been tradable in Deutsche Börse's XTF segment since Monday.
The nine new Lyxor ETFs based on the S&P 500 Select Sector Capped 20% Indices enable investors for the first time to participate in the performance of American companies from the following sectors: consumer discretionary, consumer staples, energy, financials, health care, industrials, materials, technology and utilities.
The S&P 500 Select Sector Capped 20% index series only includes companies from the S&P 500. The weight of each stock is based on its float-adjusted market capitalisation and limited to 20% of the index.
The product offering in Deutsche Börse’s XTF segment currently comprises a total of 965 exchange-listed index funds, making it the largest offering of all European stock exchanges.
view new Lyxor equity index ETFs
Source: Xetra
IMF Working paper-Bank credit, asset prices and financial stability: Evidence from French banks
April 23, 2012--Summary: This paper analyses the effect of asset prices on credit growth in France and tries to disentangle credit demand and supply factors, both for the whole 1993-2010 period and during periods of financial instability.
Using bank-level panel data at a quarterly frequency, stock price growth is shown to have a significant effect on lending growth over the whole period, but without credit supply factors being singled out. By contrast, housing price growth has a significant effect during periods of financial instability only, even after controlling for credit demand effects. These results show that credit demand factors do play a large role but also provide evidence of tighter credit constraints on households in financial instability periods.
view the IMF Working paper-Bank credit, asset prices and financial stability: Evidence from French banks
Source: IMF
Government is on track to cut cost of delivering infrastructure
April 23, 2012--The Government has today published the first annual report of the three year Infrastructure Cost Review programme launched in March 2011 and led by Infrastructure UK.
The Cost Review set out plans to reduce the cost of delivering infrastructure in the UK by £2 to £3 billion a year by 2015. Today’s report confirms that the programme is on track to deliver these savings, with the first annual report having already identified projected savings of up to £1.5 billion through changed behaviours and practice, consistent with the Cost Review principles.
view the Infrastructure Cost Review: Main Report
Source: HM Treasury
Spanish economy 'back in recession'
April 23, 2012--Spain's economy has contracted 0.4% in the first quarter of the year and the country is now in a technical recession, latest figures show.
The drop, published in a Bank of Spain report, follows a 0.3% quarterly decline in the fourth quarter.
A technical recession is commonly defined as two consecutive quarters of economic contraction.
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Source: herald.ie
Eurozone economic activity contracts
April 23, 2012--Eurozone economic activity has contracted unexpectedly sharply this month, pushing the region deeper into recession and dashing hopes that action to combat its debt crisis would soon pave the way for a gradual recovery.
Purchasing managers' indices for the 17-country bloc fell for a third consecutive month to the lowest level for five months, pointing to an intensification of the economic contraction which started in the final three months of last year, when the eurozone debt crisis was at its most intense. Economists had expected a modest improvement.
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Source: IBN Live
Behind the exchange-traded label
April 22, 2012--Investors in products bearing the exchange-traded label almost invariably assume they have invested in funds regulated under European Ucits rules.
In fact, the position is far from clear-cut. Whereas exchange-traded funds are listed funds with regulated exposures, exchange-traded notes and exchange-traded commodities lack either of these characteristics.
The most common ETN and ETC exposures are wrapped into a debt security, whose value is linked to the performance of designated investments
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Source: Financial News
MiFID threatens liquidity -and traders
April 20, 2012--As the sweeping reforms contained in the so-called MiFID II proposals creep closer to being incorporated into European regulations, bond specialists are preparing for a fundamental shift in fixed-income markets.
The reforms, which are designed to make European bonds trade more like equities, might batter liquidity levels - and slash the number of bond traders employed by banks - but could create new opportunities for exchanges and agency brokers.
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Source: Reuters
Research says lack of data consolidation is pushing buy side flow into dark pools
April 20, 2012--New research from TradeTech Pulse suggests that the lack of data consolidation and established data standards across Europe is increasingly pushing asset managers to direct flow into dark pools, as they are finding it so hard to navigate across the fragmented nature of the markets in Europe.
The research also reveals that between 30%-40% of asset managers’ trading flow is now being executed in an OTC environment, however not all asset managers trade in dark pools. And contrary to the popular assumption, avoiding high frequency traders is not the major reason that an asset manager will direct flow into a dark pool. The majority of the respondents believe they will be trading high volumes in a greater variety of dark pools in a few years’ time.
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Source: FTSE Global Markets
ESMA advises Commission on short-selling regulation
April 20, 2012--ESMA has published today its final advice on possible delegated acts concerning the Short-Selling Regulation.
ESMA's advice specifies the definition of when a natural or legal person is considered to own a financial instrument for the purposes of the definition of short sale (Article 2(2) of theRegulation).
Section II of the advice relates to the net position in shares or sovereign debt covering the concept of holding a position, the case when a person has a net short position and the method of calculation of such a position including when different entities in a group have long or short positions or for fund management activities related to separate funds (Article 3(7)).
Section III sets out the advice on the cases in which a credit default swap (CDS) transaction is considered to be hedging against a default risk or the risk of a decline of the value of the sovereign debt and the method of calculation of an uncovered position in a CDS (Article 4(2)).
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