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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
D Boerse to charge for 'stupid algos'
February 28, 2012--Deutsche Boerse is to issue punitive charges to traders if they send too many orders into the exchange that do not result in deals being done in a bid to clamp down on what it calls "stupid algos".
Like other exchanges, the German operator has seen a surge in the number of orders streaming into its trading system amid the spread of high-frequency trading.
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Source: FT.com
FTSE Launches New Carbon Strategy Indices For Australia, Europe And Japan
February 28, 2012--FTSE Group ("FTSE"), the award winning global index provider, together with partners CDP and ENDS Carbon today announces the launch of four new indices within the FTSE CDP Carbon Strategy Index Series.
The extended index series combines FTSE’s expertise in ESG (Environmental, Social, and Governance) analytics and pioneering approach to index construction and weighting methodologies. The indices are designed to help investors reduce the long-term investment risks associated with climate change and related regulation in these markets.
The new indices in the series include the FTSE CDP Carbon Strategy Australia 200 Index, FTSE CDP Carbon Strategy Australia 300 Index, FTSE CDP Carbon Strategy Europe Index and FTSE CDP Carbon Strategy Japan Index. These indices join two existing UK indices: the FTSE CDP Carbon Strategy All-Share Index and the FTSE CDP Carbon Strategy 350 Index.
It is widely accepted that climate change will increasingly impact the profitability of companies and portfolios over the coming decades. Today’s launch is a timely response to the concerns of a large number of pension funds and asset managers who are seeking to incorporate carbon risks into their investment strategy.
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Source: FTSE
Vienna Stock Exchange launches short & leverage indices
February 28, 2012--Today, the Vienna Stock Exchange launched new Short and Leverage Indices and enlarged its existing index portfolio.
Leverage Indices are based on an existing index (reference index) and achieve a leverage effect by applying a leverage factor to the development of the reference index. This leverage function means that the index participates in both positive and negative movements in the daily performance of the reference index. When the leverage is negative, it is referred to as a short index.
The newly introduced indices are based on the following indices of the Vienna Stock Exchange:
ATX (Austrian Traded Index),
CECE EUR (index for the region of Central and Eastern Europe), and
RDX EUR (Russian Depositary Index). For more information on the indices of the Vienna Stock Exchange, please visit www.indices.cc.
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