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European Parliament-Global finance and its institutions need a facelift
October 25, 2011--In the run-up to the November G20 summit in Cannes, Parliament on Tuesday adopted its contribution to reviewing global economic governance by a large majority. The resolution calls for an overhaul of the IMF, primarily to make it a more political body, a halt to political meddling with exchange rates, and global rules to separate speculative banking activities from traditional retail ones. The G20 is also called upon to agree on the elements for a global financial transaction tax.
The resolution, drafted by Gunnar Hokmark (EPP, SV) also calls for stronger global financial regulation and supervision to close loopholes, and highlights the need to address existing imbalances between world economies so as to avoid further turbulence, something the G20 has so far struggled hard to do.
A political IMF
The resolution calls on the IMF to fulfil its growing role by becoming more legitimate, transparent and accountable. To this end, the resolution proposes that its managing director be elected through an "open and merit based" process and also calls for a fairer distribution of voting rights. Finally the text calls for a widening of the IMF's mandate, primarily to monitor single economies of systemic importance and not only cross-country surveillance.
More broadly, the resolution calls for better democratic accountability to be developed for the IMF, World Bank and the "G" formations, particularly the G20 and for all these financial institutions to coordinate their work better.
A financial sector of service to the economy
Among the various elements proposed for making the global financial sector safer and better controlled, the resolution advocates two crucial items. Firstly, it calls for the G20 to conclude discussions "without further ado" on the basic components of a global financial transaction tax. This call was backed by a large majority (594 in favour, 62 against, 3 abstentions).
Bankers fear political moves will kill off CDS
October 25, 2011--It has been blamed by politicians for causing the eurozone debt crisis and attacked as the favoured asset of “evil speculators”.
Now, politicians are seeking to take their revenge: not just with the recent introduction of bans on some trading of credit default swaps but also in their attempts to ensure that any haircut on Greek government bonds does not trigger a credit event.
The Independent Commission on Banking: six weeks on1
October 24, 2011-Six weeks on from the publication of its final report, Angela Knight reminds policy makers that the ICB is a body that recommends, not a body that decides.
The BBA Chief Executive reviews ICB recommendations in a blog posted on the BBA website today. Her comments focus on the retail ring-fence and an increase in loss-absorbing capital and emphasise the real cost of these proposals to the economy, to banks and to customers.
Eurex completes migration to new data centre
Matching engine successfully migrated
October 24, 2011--The international derivatives exchange Eurex has completed the re-location of its active matching engines into a new single data centre.
With this step, Eurex achieved a further milestone of its technology roadmap. The active Eurex trading and clearing infrastructure is now located in the International Business Exchange (IBX) data centre of the international IT company Equinix Inc., a global provider of data centre services. Eurex and Equinix have already been offering the co-location solution Proximity Services since 2006.
As part of the migration, Eurex upgraded and replaced all of the matching engines with the latest high-performance hardware. As consequence, all Eurex members benefit from an increased throughput of the Eurex system.
Since Deutsche Börse had already moved the Xetra cash market in July 2011 the migration of the Eurex system enables Deutsche Börse Group to offer its clients co-location services for derivatives and cash markets from a single location. Clients also benefit from the fact that as one of the largest global providers of data centre services, Equinix bundles a large number of exchange-related service providers, including data vendors, under one roof. Moreover, through the linkage of many telecommunication providers, Eurex participants can choose the access to the Equinix data centre that is the most cost-effective for them.
Bank of England's Paul Tucker calls for reform of clearing houses
October 24, 2011--Laeders must agree on effective regimes to wind down the world's clearing houses in the event of collapse, or risk "mayhem" on financial markets, a Bank of England policymaker has warned.
Paul Tucker, a deputy governor of the Bank, said the issue needed attention because clearing houses had become centres of systemic risk in their own right, with potentially huge consequences in the event of failure.
Speaking at a European Commission conference in Belgium, he said: "There is a big gap in the regimes for central counterparties (CCPs).
"What happens if they go bust? I can tell you the simple answer: mayhem. As bad as, conceivably worse than, the failure of large and complex banks."
Europe pinpoints $150-billion hole in bank coffers
October 22, 2011--Europe identified Saturday a $150-billion hole in banks' cash buffers after warning lenders they faced massive hits on Greek debt under a new eurozone rescue plan.
Amid dire warnings that Europe's debt crisis threatens global recession, plans to recapitalise came after ministers put the squeeze on banks to accept write-downs of "at least 50 percent" to allow a new bailout for Athens to go ahead.
But a drive for the eurozone's wider rescue fund to tap into unlimited European Central Bank funds hit the rocks, as German Chancellor Angela Merkel and French President Nicolas Sarkozy flew in for crunch talks before back-to-back EU summits Sunday and Wednesday.
Unification Of Securities Tickets On MICEX And RTS
October 21, 2011--On November 21, 2011 as a further step towards integration of cash equities markets of MICEX and RTS tickers of securities admitted to trading on both exchanges will be unified.
For this purpose 35 securities admitted to trading on MICEX Stock Exchange and RTS Stock Exchange will be assigned single tickers:
for 25 securities tickers assigned by MICEX will be replaced by the relevant tickers on RTS
for 8 securities tickers assigned by RTS will be changed for the relevant tickers on MICEX;
for 2 securities tickers used on MICEX and RTS will be discarded, and these securities will be assigned new tickers.
EU eyes 50-60 percent Greek haircut for sustainable: Troika
October 21, 2011--Private investors would have to forgive 60 percent of what Greece owes them to make its debt sustainable by 2020 and for a euro zone loan package to stay at the 109 billion euros ($151 billion) agreed in July, a report by international lenders said.
The confidential report, discussed by euro zone finance ministers on Friday, will form the basis for talks with private investors on what losses they should accept on their Greek portfolios in the second emergency financing plan for Greece.
New rules for more efficient, resilient and transparent financial markets in Europe
October 20, 2011--In recent years, financial markets have changed enormously. New trading venues and products have come onto the scene and technological developments such as high frequency trading have altered the landscape. Drawing lessons from the 2008 financial crisis, the G20 agreed at the 2009 Pittsburgh summit on the need to improve the transparency and oversight of less regulated markets – including derivatives markets - and to address the issue of excessive price volatility in commodity derivatives markets.
In response to this, the European Commission has today tabled proposals to revise the Markets in Financial Instruments Directive (MiFID). These proposals consist of a Directive and a Regulation and aim to make financial markets more efficient, resilient and transparent, and to strengthen the protection of investors. The new framework will also increase the supervisory powers of regulators and provide clear operating rules for all trading activities. Similar discussions are taking place in the United States and other major global financial centres.
Commissioner for Internal Market and Services Michel Barnier said: "Financial markets are there to serve the real economy – not the other way around. Markets have been transformed over the years and our legislation needs to keep pace. The crisis serves as a grim reminder of how complex and opaque some financial activities and products have become. This has to change. Today's proposals will help lead to better, safer and more open financial markets."
Background
In force since November 2007, the original Markets in Financial Instruments Directive (MiFID) governs the provision of investment services in financial instruments (such as brokerage, advice, dealing, portfolio management, underwriting, etc.) by banks and investment firms and the operation of traditional stock exchanges and alternative trading venues ( so-called multilateral trading facilities. While MiFID created competition between these services and brought more choice and lower prices for investors, shortcomings were exposed in the wake of the financial crisis.
iShares unveils ETP guide for advisers
iShares has launched a due diligence campaign to support advisers and investors when choosing exchange-traded products.
October 20, 2011--The provider has unveiled a Europe-wide framework for investors assessing the structure, tax, performance, trading and valuation, total cost of ownership and securities lending
It has also proposed a classification system with three distinct types of ETPs, exchange-traded funds, exchange-traded notes and commodities and exchange-traded instruments.
David Gardner, head of sales for iShares Europe, Middle East and Asia, said: “As with any investment product, investors need to be sure the ETPs they buy are appropriate and give them exactly the exposure they want.
