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UK banks welcome liquidity swap ruling
February 29, 2012--UK banks can use complicated asset trades with insurers to help achieve tough liquidity rules, the UK Financial Services Authority announced, cheering industry groups which had feared the transactions would be banned.
The FSA has been consulting on so-called “liquidity swaps” since July and delayed several deals, including a £1bn seven-year deal between Phoenix and a high street bank and a multiyear trade that Lloyds Banking Group tried to do with its Scottish Widows life assurance arm. On Wednesday, it formally blessed the idea. “We see a role for these transactions on a sensible scale, provided the risks are properly identified and managed by both parties,” Paul Sharma, FSA policy director, wrote in new guidance.
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Source: FT.com
Financial transaction tax: a better design is possible
February 29, 2012--The proposed financial transaction tax should be better designed to capture more traders and to make evading it unprofitable, say proposals presented in the Economic and Monetary Affairs Committee on Wednesday. The proposals also say the tax should go ahead even if only some Member States opt for it.
Parliament has been calling for a financial transaction tax (FTT), for close to two years and the Commission tabled a legislative proposal for one late in 2011.
Tabling her amendments to the Commission proposal, Anni Podimata (S&D, EL), the MEP steering the legislation through the European Parliament, said "I want a more watertight framework to capture more trades and to minimise the interest for tax evasion".
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Source: European Paliament
Credit rating agency reform plans need more bite, say committee MEPs
February 29, 2012--The EU's credit rating agency reform plans need to be beefed up, in order to replace "unsolicited" sovereign debt ratings of EU Member States with ratings by an independent body,
reduce reliance on agency ratings, and eliminate conflicts of interest that could influence them, said rapporteur Leonardo Domenici (S&D, IT), in the Economic and Monetary Affairs Committee's first debate on the plans on Wednesday.
"I believe that we should add something to the Commission proposal. It is a complex piece of work to explore some aspects and hold on to the details to avoid unexpected and unwanted effects", said Parliament's rapporteur on the reform plans Leonardo Domenici (S&D, IT).
He also stressed that "we have to come up with new answers to the sovereign debt problem".
Prohibiting "unsolicited" sovereign debt ratings
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Source: European Parliament
The Kay Review of UK Equity Markets and Long-Term Decision Making
February 29, 2012--Interim Report:
On 29 February 2012 Professor John Kay published the Interim Report of his independent review to examine investment in UK equity markets and its impact on the long-term performance and governance of UK quoted companies. The Interim Report summarises the responses to the review's call for evidence and presents a broad discussion of the issues raised.
The comments and proposals discussed in the report signal areas of interest for the final report but do not represent its provisional conclusions. Professor Kay is not making any recommendations at this stage. He will present his final report, including recommendations for action, to the Secretary of State for Business in the summer.
view the Interim report
Source: BIS
ESMA publishes the responses received to the consultations on certain aspects of the MiFID requirements for suitability and compliance
February 29, 2012--The responses to the consultation paper on certain aspects of the MiFID requirements for suitability are available here.
The responses to the consultation paper on certain aspects of the MiFID requirements for the compliance function are available here.
Source: ESMA
Clearstream and BNP Paribas Securities Services launch innovative collateral management cooperation
February 29, 2012--Clearstream introduces Liquidity Hub Connect, a new service for agent banks-Unique model:client assets remain with BNP Paribas Securities Services while Clearstream manages global collateral allocation, optimization and exposure coverage-Existing quad-party collateral management venture is being strengthened and integrated in the Global Liquidity Hub-Cooperation will reduce operational risk and bring down collateral fragmentation costs for clients
Clearstream: Clearstream and BNP Paribas Securities Services (BNP Paribas) have signed a letter of intent to intensify their cooperation on collateral management: BNP Paribas customers will be able to consolidate their collateral holdings, via Clearstream's Global Liquidity Hub, to cover their global exposures from a single optimised collateral pool.
Customers gain a double benefit: they will retain their asset portfolios within BNP Paribas’ proven and established custody network while Clearstream’s collateral management engine allocates, optimises and substitutes collateral on a fully automated basis across the books of BNP Paribas.
This partnership offers clients the advantage of Clearstream’s world-leading collateral management service coupled with BNP Paribas’ highly-regarded agent bank service. Pooling collateral across the globe in one central hub while allowing collateral to remain in its custody location-i.e. agent banks or CSDs – brings cost savings and security to the client. Collateral consolidation enables the financial industry, and in particular sell-side firms, to reduce operational risks, operational costs and opportunity cost resulting from collateral fragmentation. Additionally, mutual clients of BNP Paribas and Clearstream will benefit from pooling and optimising collateral positions held in custody across the two organiqations against the rapidly expanding range of exposures covered by Clearstream’s Global Liquidity Hub.
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Source: Clearstream
European Fund Market Review 2012
February 29, 2012--"It was a game of two halves" is a footballing cliché in the UK, but was particularly apt for the European funds industry in 2011. The stock market falls that began in July not only ended the healthy sales activity that had started the year, but triggered a tidal wave of redemptions that rolled through the industry.
While these outflows ebbed slightly in the final quarter of the year, there were few
who did not feel the cold chill of investors withdrawing from mutual funds by the year-end.
As in previous years, underpinning this report are a series of charts and tables that give a detailed view of the industry and how its constituent parts-the companies, products and markets — vary so dramatically, even as the overarching regulatory framework makes 'the international' nature of the European funds business one of its most distinguishing features. But first some comments on both recent activity and historical trends.
Net sales of long-term funds (i.e. excluding money market funds) in 2010 (€305.8bn) exceeded not just those of 2009 (€257.7bn), but also the level achieved in pre-crisis 2006 (€265.9bn). Expectations were therefore high when the first half of 2011 saw inflows of €96.1bn, but this was followed by outflows of €155.9bn, so that the year as a whole ended in the red (-€59.8bn) for only the second time in a decade (2008 total was -€391.4bn).
With more than 80% of money market fund assets either in predominantly institutional cross-border products or in France, drawing out wider conclusions from European activity in this asset class is not straightforward. What is clear, though, is that interest in these funds has not boosted net sales for the industry, with money market funds suffering outflows of €10.7bn in 2011. Having said this, in a market such as Switzerland redemptions from these funds accompanying inflows into long-term products have continued for the third year in a row and suggest that investors here have been, at least slowly, increasing their appetite for risk.
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Source: Lipper
STOXX Changes Composition of Benchmark Indices
Results of the First Regular Quarterly Review to be Effective on March 19, 2012
February 28, 2012--STOXX Limited, the market-moving provider of innovative, tradable and
global index concepts, today announced the new composition of the STOXX Benchmark and their suband
sector indices, among them the STOXX Europe 600 Index, STOXX Americas 600 Index and STOXX Asia/Pacific 600 Index.
Effective as of the open of European markets on March 19, 2012,
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Source: STOXX
Irish Stock Exchange is Europe's first Exchange tolist Global Depositary Notes
February 28, 2012-On February 24, 2012 The Irish Stock Exchange (ISE) admitted the first ever Global Depositary Note (GDN) to a
European exchange market. The GDN is in the form of a 70 million US$ denominated GDN issued by Citibank N.A., New York, (Citibank) and relates to an offering by Petroleos Mexicanos
Certificados Bursatiles (Pemex) of 7 billion 7.65% Mexican Peso debt due in 2021.
Pemex is the Mexican state-owned petroleum company, which is also one of the largest companies in Latin
America. The GDN security has been admitted to the ISE’s Global Exchange Market (GEM).
Under the GEM Rules of the ISE, GDN issuers are required to provide investors in these securities with access to relevant and timely information to make appropriate investment decisions. To gain admission to GEM, the GDN issuer must make certain information available in their admission documents which are published on the ISE website. On an on-going basis, the GDN issuer must undertake to disclose to the market relevant and timely regulatory information in relation to the underlying issuer and underlying securities through the ISE’s announcement service.
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Source: Irish Stock Exchange (ISE)
ETF Securities expands Brent crude range against a background of rising geopolitical tensions
Four new products listed on the London Stock Exchange
February 28, 2012--On Friday, ETF Securities listed four new exchange-traded commodity products on the London Stock Exchange, in recognition of Brent Crude's growing importance as the new global benchmark for oil.
The new products provide investors with long, leveraged, short and forward exposures to Brent Crude and complement the issuer’s existing range of 1-month, 1-year, 2-year and 3-year exposures.
Brent crude is increasingly seen as the global benchmark for crude oil, particularly as West Texas Intermediate has been beset with local logistical issues that have seen it move to a significant discount to Brent.
During its annual investment conference held earlier this year, ETF Securities asked delegates in London, Frankfurt, Milan and Zurich to consider how various scenarios might impact their asset allocation decisions. Three quarters of respondents to the poll said they expected tensions in the Middle East to escalate and two thirds believed this would occur within the first half of the year. Perhaps unsurprisingly, the vast majority of respondents said this would have an impact on their asset allocation decisions.
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Source: ETF Securities
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