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New EDHEC-Risk Research Sees No Evidence of Causal Link between Credit Default Swap (CDS) and Sovereign Debt Prices
In newly-released research by Dominic O'Kane, Affiliated Professor of Finance at EDHEC Business School, EDHEC-Risk Institute has performed a theoretical and empirical analysis of the relationship between the price of eurozone sovereign-linked credit default swaps (CDS) and the same sovereign bond markets during the eurozone debt crisis of 2009-2011.
March 13, 2012--The working paper, entitled "The Link between Eurozone Sovereign Debt and CDS Prices," tests the claim that speculative use of CDS by market participants had caused or accelerated the rapid decline in 2010-11 of bond prices in eurozone periphery countries,
a claim that led to the decision by the European Parliament and member states on October 18, 2011, to make the ban on so-called "naked" CDS permanent.
The EDHEC-Risk research shows that CDS spreads do not drive the sovereign bond spread in all circumstances, and that in various countries and at various times, the opposite effect is present. The results are in line with those of a recent report from the French regulatory authority, the AMF, entitled “Price Formation on the CDS Market: Lessons of the Sovereign Debt Crisis (2010- ),” even though the latter study is less comprehensive than EDHEC-Risk’s working paper. EDHEC-Risk is keen to stress that certain conclusions in the AMF report should be analysed with care. A causal link between rising CDS spreads and their decision-making character has not been established or proven in the report, which moreover does not include a formal test on the subject.
view EDHEC-Risk Working Paper Link between Eurozone Sovereign Debt and CDS Prices report
Source: EDHEC
Disputed financial transactions tax crosses first EU hurdle
March 13, 2012--EU finance ministers gave a downbeat reaction Tuesday to plans for a cross-border tax on the finance industry, but agreed to discuss further a proposal stiffly resisted by Britain.
Four decades after US economist James Tobin came up with the idea, the French-led financial transactions tax (FTT) drive is aimed at raising revenues from financial firms after banks especially benefited heavily from taxpayer bailouts when the US mortgage meltdown triggered the 2008 global financial crisis.
The City of London is home to 80 percent of Europe's finance industry, and Britain expressed its view during the talks that the initiative as drawn up by the European Commission last year had "raised more questions than answers" to-date.
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Source: EUbusiness
Chinese diplomat sees airlines turning to Boeing over EU tax
March 12, 2012--A senior Chinese diplomat said it "makes sense" for Chinese airlines to shun aircraft made in Europe, owing to an EU tax on aircraft emissions, the Wall Street Journal reported on Monday.
The newspaper reported that the new Chinese ambassador to the European Union in Brussels Wu Hailong told reporters that a decision by the European Union to make non-European airlines subject to the tax "contributed to the current dilemma."
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Source: EUbusiness
March 2012 Quarterly Review discusses global market repercussions of euro area sovereign debt crisis
March 12, 2012--The BIS Quarterly Review for March 2012, released today, discusses global impact of European bank deleveraging. The March issue also provides highlights from the latest BIS data on international banking and financial activity.
In addition, it features three articles (more detailed abstracts follow):
1.The impact of Federal Reserve asset purchase programmes: another twist
2.FX volume during the financial crisis and now
3.Bank stock returns, leverage and the business cycle
\European bank funding and deleveraging
Following special policy measures introduced by central banks around the beginning of December, European banks' funding conditions improved. Previously, many banks had been unable to raise funds in the unsecured senior bond market, and the cost of unsecured money market funding had risen to levels previously exceeded only during the 2008 crisis. Dollar funding had become especially expensive. Two three-year lending operations (LTRO) by the ECB and a wider set of collateral than was previously eligible relieved much of the stress. Furthermore, the cost of swapping euros into dollars fell in December, as central banks reduced the costs of their international swap lines. Short-term borrowing costs then declined and unsecured bond issuance revived.
view the BIS Quarterly Review, March 2012
Source: BIS
FESE European Equity Market Report-Year 2011 Updated With February 2012 figures
March 12, 2012--FESE has published the 'European Equity Market Report' which gathers data from all the market segments operated by FESE members (including Regulated Markets and Multilateral Trading Facilities) as well as from the major MTFs operated by investment firms in the European market. The FESE Statistics Methodology used in the Report has been agreed by all the trading venues involved, both RM and MTFs.
view report
Source: FESE
EEX Natural Gas Trading reaches New Volume Record
More than 1.5 TWh traded in the GASPOOL Spot Market Area for the first time-Incentive model and Market Message Service support trading
March 12, 2012--In February 2012, the European Energy Exchange (EEX)
achieved a new monthly record of 1,506,857 MWh in natural gas trading on the Spot Market of the GASPOOL market area.
This corresponds to an increase of 66 percent as against the previous record month (December 2011) during which 908,949 MWh were traded. In total 4,024,451 MWh with delivery into the GASPOOL, NCG and TTF market areas were traded on the EEX Natural Gas Spot Market in February which
constitutes an increase of 136 percent as against the same period in the previous year (GASPOOL and NCG: 1,704,603 MWh).
“We are pleased that exchange trading in natural gas is further gaining in speed and that we can record additional volumes on the exchange, in addition to increasing trading in control energy”, explains Oliver Maibaum, EEX Managing Director Exchange.
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Source: EEX
2012 Financial Reports' announcement deadlines for IMKB companies, ETFs and ISE Brokerage Houses
March 12, 2012--2012 Financial Reports' announcement deadlines for IMKB companies, ETFs and ISE Brokerage Houses-Istanbul Stock Exchange.
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Source: Istanbul Stock Exchange
Lyxor adds smart strategies to commodity ETFs
March 9, 2012--Lyxor Exchange Traded Funds has launched a new range of 'Smart' Commodity ETFs on the London Stock Exchange.
The new Optimix TR and Momentum TR indices use rule-based, enhanced beta strategies which aim to optimise roll yields across contracts and seasons, or to generate absolute returns from a universe of 24 commodities.
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Source: Canadian ETF Watch
London Stock Exchange Surges After Agreeing to Buy Stake in LCH.Clearnet
March 9, 2012--London Stock Exchange Group Plc (LSE) rallied the most in more than eight months after agreeing to buy a majority stake in LCH.Clearnet Group Ltd. for 463 million euros ($613 million) to expand its post-trade services.
Shares in the owner of Europe’s oldest independent bourse climbed 8.9 percent to 977.50 pence at 12:08 p.m. in London trading, the biggest increase since June 30, valuing the exchange at 2.65 billion pounds ($4.2 billion).
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Source: Bloomberg
IMKB Launches The Financial Education Platform Conscious Investor" On March 12
March 9, 2012--İMKB will launch the financial education information platform "Conscious Investor" on Monday, March 12, at www.bilincliyatirimci.org.
Conscious Investor Platform, created as part of the investor campaign, is primarily aimed at providing information on the capital markets and the stock exchange for those interested in learning about or investing in the capital markets.
www.bilincliyatirimci.org is designed as an interactive portal, and will inform Turkish investors with the help of training modules and fun videos. In addition to the training modules, investors will have access to “Dictionary of Stock Exchange Terms” which includes general concepts about the market; “E-Library”, providing numerous documents, and “News” offering updated information about İMKB and the portal. “Investor Forum” and “Questionnaire” sections will also be available for investors to note their views and suggestions. İMKB plans to continually improve the portal with new training modules as required by the investors. Interactive e-trainings offered in the portal are free-of-charge. The Conscious Investor Platform is available in Turkish only.
Users can follow the Conscious Investor portal on Facebook and Youtube as well.
Source: Istanbul Stock Exchange
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