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ESMA launches a consultation on short selling and CDS
January 24, 2012--In November 2011 the Council and the Parliament voted on a Regulation on short selling and certain aspects of credit default swaps. This is about to be published and should be applicable from 1 November 2012. According to the Regulation ESMA has to submit its technical standards to the Commission by 31 March 2012.
ESMA publishes today for consultation the draft technical standards, inviting comments by 13 February 2012. Following the close of the consultation, ESMA will consider the feedback it received to this consultation in February/March 2012 and expects to publish a final report and submission of the draft technical standards to the European Commission by 31 March 2012 for endorsement.
view the Draft technical standards on short selling and certain aspects of credit default swaps
Source: ESMA
16 new Commerzbank ETCs launched on Xetra
ETCs track the positive and inverse performance of oil, gas and copper with leverage factors
Janaury 23, 2012--16 new exchange-traded commodities (ETCs) issued by Commerzbank AG have been tradable on Xetra since Monday.
The new exchange traded commodities enable investors to participate in the performance of oil, gas and copper. The underlying indices for oil and gas track both the positive and the inverse performance, with a leverage factor of either three or four.
The underlying index for copper tracks both the positive and the inverse performance with a leverage factor of a maximum of four.
These strategy indices are calculated by Commerzbank and 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 234 instruments. The monthly trading volume of ETCs on Xetra averages around €900 million.
view list of the new ETCs
Source: Deutsche Börse
Esma group paper gives clue to rule changes
January 23, 2012--n 2011 regulators in many countries expressed concerns that exchange traded funds were becoming too complex, and raised issues relating to investor protection and systemic risk. The European Securities and Markets Authority (Esma) is expected to announce new rules soon.
One of the catalysts for these concerns among regulators and investors has been the finger pointing and bickering between physical ETF providers (mostly asset managers) and synthetic ETF providers (mostly banks and brokers) highlighting risks to investors making use of the rival products.
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Source: FT.com
iShares expands its commodity range with four new ETFs
Products set new standards of transparency and risk management for commodity swap ETFs
January 23, 2012--iShares, the Exchange Traded Funds (ETF) platform of BlackRock, Inc. (NYSE: BLK) today expanded its commodity range with the launch of
four ETFs that set new industry standards for commodity swap-based funds, by utilising iShares unique swap-based ETF platform, designed to provide unparalleled levels of transparency and investor protection in the ETF market.
The iShares S&P GSCI Dynamic Roll Agriculture Swap, iShares S&P GSCI Dynamic Roll Energy Swap, iShares S&P GSCI Dynamic Roll Industrial Metals Swap and iShares S&P GSCI Dynamic Roll Commodity Swap ETFs listed on the London Stock Exchange today. They track the latest generation of S&P GSCI indices and offer diversified
exposure to agriculture, energy, industrial metals and the broad commodity market.
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Source: BlackRock
Trade bodies unite to raise Esma fears
January 22, 2012--Seven of Europe's most influential trade associations have joined forces to voice their concerns over the extraordinary workload being handled by Europe's regulatory agencies – and have demanded that they get more time and resources to formulate new rules.
In an open letter to the European Commission, trade bodies including the Futures and Options Association, the Association for Financial Markets in Europe and the International Swaps and Derivatives Association, said the challenges facing European watchdogs were "acute", and could "jeopardise high quality regulation."
The letter read: "The reform programme is moving into a phase of drafting detailed implementing and technical rules.
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Source: Financial News
Deutsche Börse increases market quality with new Top of the Book Order
January 20, 2012--The new Top of the Book Order is Deutsche Börse's contribution to a higher market quality. The order type narrows the order book spread and is beneficial for the entire market.
Technically it was implemented with Xetra Release 12.0 and there already is huge interest from trading participants.
This is how the Top of the Book Order works: by entering a Top of the Book Order, a trader ensures that an order is either placed on top of the order book and thereby reduces the current order book spread, or rejected.
Prior to the new release, Deutsche Börse had conducted a series of market tests and the collected data showed clearly that this order type results in narrower spreads. It improves the market efficiency for all trading participants because liquidity goes up and transaction fees go down.
Deutsche Börse considers participants who use the Top of the Book Order as liquidity providers and grants them credit instead of charging a transaction fee.
Client feedback has been excellent, the first contracts with Top of the Book Liquidity Providers have been signed and there is high demand for this innovative order type.
Source: WFE
EU faces struggle to bridge divide with Britain
Regulation chief to meet UK finance minister in London
Two set to discuss reforms after recent EU summit split
Smooth relations important in drive for financial reform
January 20, 2012--Michel Barnier, the official in charge of regulating finance in the European Union, meets George Osborne on Monday in what are likely to be tough talks over rules the British finance minister believes will hurt the City of London.
Relations between Brussels, where the European Commission sets the direction of regulation for banking and finance, and London, which fears losing its autonomy in supervising its powerful financial centre, have reached a low ebb.
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Source: Reuters
ALFI annual review-In 2011, Luxembourg funds industry has continued to maintain jobs amid crisis
Stability and reputation of Grand Duchy helps employee numbers to rise and net sales to remain positive
January 19, 2012--ALFI continues to raise concerns over regulations which adversely impact the funds industry and its end users.
The Luxembourg funds industry continued to expand over the last 12 months despite the eurozone crisis and declines in major stock indices.
The number of funds in Luxembourg rose by 4.84%1 to 3,833 and net sales amounted to €16.998bn. While total AUM decreased over the period by €101.453bn, mainly as a result of market depreciation, total assets under management were still a steady €2,059.419bn, second globally only to the US.
The increase in net sales and funds enabled the Luxembourg fund industry to continue to maintain and even create employment in 2011. The Luxembourg financial centre, of which the fund industry is a key part, is a motor of the Luxembourg economy, with over 43,000 employees working directly for Luxembourg financial sector companies and many more working for non-financial companies that provide goods and services to the financial centre.
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Source: ALFI
European Buy-Side Traders Call For Standards Supporting The Quality Of Liquidity Across Lit Venues, TABB Says
Electronic Trading In Europe To Reach 45% Of Average Daily Value Traded By Traditional Asset Managers In 2012, Up From 38% In 2010
January 19, 2012--Although change and uncertainty will continue to hold sway across the lit and dark equities venues in Europe for the foreseeable future, according to new research published today by TABB Group, one certainty stands tall – transparent, actionable metrics supporting the quality of liquidity are lacking.
P>While MiFID II and the implementation of a post-trade consolidated tape are coming, buy-side traders tell TABB they don’t have the time to wait to learn how these changes will impact their markets. In 2012, electronic trading across Europe will rise to 45% of average daily value traded by traditional asset managers, up from 38% in 2010 and up from 25% in 2008.
What the buy-side trader needs, explains Laurie Berke, a TABB principal and author of “European Market Quality: A Metric in Need of a Standard,” is a framework to define and measure the relative quality of liquidity in any given market and determine how that quality metric can drive optimal decision-making.
Over 50% of the buy-side traders interviewed expect MiFID II regulations, when they do arrive, to make it harder for them to source liquidity. Presently, 51% use transaction cost analysis (TCA) to develop a view on dark venues – but they have no means of directly comparing quality of liquidity across lit markets where the majority of price discovery occurs.
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Source: TABB Group
........Fundsmith's Terry Smith fires fresh warnings on ETFs
ETFs appeal to hedge funds and high frequency traders
Popular (Berlin: PP4.BE - news) as shorting instruments
Mis-sold as index tracking funds
January 18, 2012--Exchange traded funds (ETFs) are being widely missold as a low cost form of index tracker when in fact they are highly complex vehicles best suited to hedge funds and proprietary trading desks, a leading investor said.
Speaking to journalists on Wednesday, Terry Smith, head of fund management company Fundsmith warned the unwary investor buying into an ETF could be exposed to highly complex opaque products more suited to high frequency traders and hedge funds.
"If you read the description of the product they use the words synthetic, derivative, swap and counterparty. If you can't figure out what the problem might be here you need to study the history of the last four years more carefully," said Smith, who is also Chief Executive of interdealer broker Tullett Prebon (Munich: A0LET0 - news) .
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Source: Reuters
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