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Financial scale of FTT charge will lead to a shift of business away from funds in Europe
February 27, 2012--The Financial Transaction Tax (FTT) would put many money market funds out of business (who would pay 67% of the tax) and reduce the attractiveness of long term savings in equity, bond and balanced funds
This would reduce an important source of long-term financing for the European economy and cause retail and institutional investors to switch their savings away from UCITS and towards savings deposits and life insurance products that are not covered by the FTT
EFAMA requests the European Commission to re-examine its proposal in light of its original goal Brussels, 27 February 2012: Recent comments from the European Commission supporting the introduction of the FTT and survey results with positive public response to such proposals highlight that the public have not yet appreciated the very significant cost impact that the FTT would have on the long-term savings of EU citizens. If applied at the start of 2011, EFAMA has estimated that the annual total impact of the FTT would have reached EUR 38 billion. Investors would have paid EUR 15 billion on the sales and redemptions of UCITS shares/units, whereas EUR 23 billion would have been levied on the sales and purchases of securities by UCITS fund managers. The share of money market funds in the total FTT revenue would have reached 67 percent.
These figures have been computed in a baseline scenario using the data for the sales and redemptions of UCITS shares/units in 2011 and the average turnover ratio of UCITS portfolios calculated for a large sample of UCITS distributed in Europe (0.9 for long-term UCITS and 6.5 for money market funds).i
These estimations show that the potential impact of the FTT would be significantly bigger than assumed by the European Commission. Taking into account the impact of the FTT on the value of derivatives transactions, the FTT-take would be even higher, in particular because many UCITS seek to remove currency exposure through hedging.
view the Potential Impact of the FTT on the UCITS Industry report
Source:EFAMA
16 new Commerzbank ETCs launched on Xetra
ETC track oil and cocoa positive and inverse with a leverage factor of up to four
February 27, 2012--Sixteen new exchange-traded commodities (ETCs) issued by Commerzbank AG have been tradable on Xetra since Monday.
The 16 new exchange traded commodities provide investors with the opportunity to invest in the performance of oil and cocoa. The underlying indices for West Texas Intermediate (WTI) oil and cocoa track both positive and inverse performance, with a leverage factor of one, two, three or four.
These strategy indices calculated by Commerzbank participate in the movements of the underlying commodity futures contracts. They comprise a leverage component and an interest rate component. The leverage component is based on the daily percentage movements of the futures contract contained in the index. The interest rate component represents an investment in a risk-free money market instrument minus index fees and costs of collateralisation.
Deutsche Börse’s ETC segment product range currently comprises 251 instruments. The monthly trading volume of ETCs on Xetra averages around €900 million.
List of new ETCs
Source: Deutsche Börse
Principles of closing session, trades at closing price and trades at single price are stipulated by the ISE's Circular Letter No.388
February 27, 2012--Principles of closing session, trades at closing price and trades at single price are stipulated by the ISE's Circular Letter No.388, dated February 5, 2012.
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Source: ISE (Istanbul Stock Exchange)
Claim of short-selling ban victory in Europe
February 27, 2012--It came in with a bang and departed with more of a whimper
Imposed with fanfare in the dead of night, the first attempt by European countries at a co-ordinated ban on short selling of financial stocks turned out to be less momentous than either its proponents had hoped or its critics had feared. That is the verdict of market participants, academics and regulators.
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Source: FT.com
Spain's 2011 budget deficit exceeds 8.5%
February 27, 2012--Spain's public sector deficit reached 8.51 per cent of the country's gross domestic product last year, well beyond the 6 per cent target agreed with the European Union and even higher than the estimate made by the centre-right government after it took power in December.
“We are going to put the measures in place so that this overshoot is not repeated,” Cristóbal Montoro, budget minister, said in Madrid on Monday night after revealing “the number we will send to Brussels”.
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Source: FT,com
S&P: Greece in 'selective default'
February 27, 2012--Ratings firm Standard & Poor's on Monday declared Greece in "selective default" after banks agreed to write off more than half of their Greek debt holdings in a second EU bailout of the country.
The rating was lowered from S&P's already junk-level "CC" grade for Greece, which has been seeking to avoid an outright default on its massive debt by negotiating a "voluntary" debt exchange with creditors.
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Source: FIN24
Standard & Poor's cuts euro rescue fund outlook to negative
February 27, 2012--Standard and Poor's on Monday cut its rating outlook on the EFSF, the eurozone bailout fund, to 'negative', meaning it could be downgraded outright in the future as the eurozone debt crisis develops.
"We have concluded that credit enhancements sufficient to offset what we view as the reduced creditworthiness of the European Financial Stability Facility (EFSF) guarantors are not likely to be forthcoming," S&P said.
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Source: EUbusiness
Credit Suisse Provide Q4 Market Commentary on European ETFs
European ETFs ended a challenging 2011 with total assets of USD 259.88 bn and net new assets of USD 18.23 bn.
Positive inflows in the first seven months of the year began to reverse in August. A divide opened up between physically replicated funds, with continued positive inflows, and synthetically replicated ETFs which - coming under intense regulatory scrutiny - experienced large outflows. Relatively speaking, the European ETF market weathered the storm much better than the larger UCITS industry.
February 26, 2012--Credit Suisse ETFs Sales Strategist Ursula Marchioni reviews the ETF industry trends in her quarterly market commentary. Key findings of the quarter are:
Political uncertainty in Europe
Political uncertainty and the lack of a comprehensive solution to the euro sovereign debt crisis continued to impact European ETFs in Q4. After a flat October, outflows accelerated in November and December. In contrast, the US ETF market - facing similar underlying macroeconomic issues to Europe - did not experience the same crisis of confidence. Most likely due to its more mature and less fragmented status, the US ETF market, recorded a very different year to Europe, with inflows of USD 115.76 bn and only one negative month (May).
view the Year-end 2011 Market Commentary on European ETFs
Source: Credit Suisse
Investment Fund Assets Withstood Turbulence which Engulfed Financial Markets in 2011
February 26, 2012--The European Fund and Asset Management Association (EFAMA)published its latest Quarterly Statistical Release for the fourth quarter of 2011.
These final quarter statistics describe the trends in the European investment fund industry for the fourth quarter and overall in 2011.
Based on the report, please see the following highlights for 2011:
Asset growth and net sales in 2011:
Investment fund assets in Europe decreased by 2.8 percent to EUR 7,920 billion: overall, net assets of UCITS decreased by 6.2 percent to EUR 5,634 billion, after registering net outflows of EUR 88 billion during the year. Net assets of non-UCITS increased by 6.8 percent to EUR 2,286 billion, on the back of continued strong net inflows into special funds (EUR 101 billion).
Long-term UCITS experienced a sharp decline in demand: long-term UCITS experienced net outflows of EUR 55 billion in 2011, against net inflows of EUR 290 billion in 2010. This reversal started in August when the downgrading of the U.S. government debt and the euro crisis unraveled financial markets, leading to strong withdrawals from equity, bond and balanced funds.
Intense competition from the banking sector affected demand for money market funds: money market funds continued to record net outflows in 2011, albeit less than in 2010 (EUR 33 billion compared to EUR 122 billion).
ECB-Monetary developments in the euro area January 2012
February 26, 2012--The annual growth rate of the broad monetary aggregate M3 increased to 2.5% in January 2012, from 1.5% in December 2011.1
The three-month average of the annual growth rates of M3 in the period from
November 2011 to January 2012 stood at 2.0%, unchanged from the previous period.
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Source: ECB
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