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Common Rules for a Financial Transaction Tax – Frequently Asked Questions
September 28, 2011--1. General background
Why has the Commission proposed a new tax on the financial sector?
For two main reasons:
1.the financial sector would make a fair contribution to the cost of the crisis after benefiting from very significant financial support from governments since the beginning of the current crisis
2.a coordinated framework at EU level would help to create a stronger internal market for financial services by avoiding competitive distortions and discouraging risky trading activities. It would also be a strong signal to promote the introduction of such a tax at global level
Why is a financial transaction tax necessary at EU level?
It is appropriate to set up a harmonised tax at EU level to create a solid internal market for financial services. The financial transaction tax would prevent evasion, avoid double taxation and minimise distortions of competition within the EU's Single Market. The objective of the proposal could not be sufficiently achieved by the Member States acting by themselves.
Is there support for the introduction of a financial transaction tax?
Yes. According to the latest Eurobarometer, 65% of European citizens are in favour of a financial transaction tax.
Do financial services currently enjoy preferential treatment compared with other sectors?
Yes. Financial services are, in the majority of cases, exempt from paying VAT (due to difficulties in measuring the taxable base). This leads to the under-taxation of financial services.
In addition, the financial sector benefits from very high profit margins and the implicit protection from governments in the current economic crisis.
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Source: Europa
Bonds of medium-sized companies established in the German market
September 28, 2011--Boerse Stuttgart presents new survey/ One in four medium-sized enterprises preparing to issue a bond/ Guest speaker Michael Glos says financing mix makes sense for medium-sized enterprises
In September 2010, Dürr AG was one of the pioneers that issued corporate bonds via Boerse Stuttgart’s Bondm trading segment. Today, just a year later, almost one in four medium-sized companies is planning to issue a bond. This was the conclusion of a recent survey on financing of medium companies in Germany produced by consultants Seidenschwarz & Comp. GmbH together with Prof Dr Burkhard Pedell of Stuttgart University and presented at a media conference. Among the guest speakers at the ‘1 Jahr Bondm’ (one year of Bondm) event were former German Economics Minister Michael Glos and Peter Hofelich, SME Commissioner for the Federal State Government of Baden-Wuerttemberg.
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Source: Boerse Stuttgart
Weekly ETP turnover down 9.4%, says Lyxor
September 28, 2011--Reported weekly on-exchange ETP turnover fell by 9.4% on the previous week at EUR13.6bn, according got the latest weekly ETP market update from Lyxor.
Underlying equity market activity (measured by the STOXX Europe 600 Index turnover) fell by 0.28% on the previous week at EUR129bn, while exported on exchange ETP trading was 10.48% of equivalent equity market activity.
Lyxor was ranked number two with 24.0% market share on a 20 day basis with iShares just ahead at number one with market share of 24.04%. Lyxor was also number tow on a five day basis with 24.11% market share, iShares market share on a 5 day basis was 26.28%.
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Source: ETF Express
20 new Commerzbank ETCs and ETNs launched on Xetra
September 28, 2011--Since Wednesday eight exchange traded commodities (ETCs) and twelve exchange traded notes (ETNs) from the new issuer Commerzbank AG have been tradable on Xetra for the first time.
“Deutsche Börse welcomes Commerzbank AG as a new ETC and ETN provider on Xetra. We are delighted to offer investors right across Europe additional trading and investment opportunities with our expanded product offering,” said Rainer Riess, Managing Director of Xetra Market Development at Deutsche Börse.
ETNs are tradable debt securities based on the performance of underlying reference indices. Unlike exchange traded commodities (ETCs), which have been tradable with Deutsche Börse since 2006, ETNs are based on indices outside the commodities sector.
The eight new exchange traded commodities provide investors with the opportunity to invest in the performance of gold and silver. The underlying indices track positive and inverse performance respectively, with a leverage factor of either one or two.
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Source: Deutsche Börse
UK nears solution to clearing spat with ECB
September 28, 2011--Britain should win its battle with the European Central Bank over clearing houses if changes to a draft European Union derivatives law get final approval, EU diplomats said on Thursday.
Earlier this month, Britain sued the ECB in the European Court of Justice over the central bank's new rule requiring clearing houses like London-based LCH.Clearnet to set up shop in the euro zone because it handles large amounts of euro-denominated securities.
Ambassadors to the 27 EU states gave overwhelming approval on Wednesday evening to a new provision in a draft EU law on derivatives clearing that is being finalised, diplomats involved in the negotiations said.
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Source: Reuters
Spain, Italy Extend Bans on Short Selling of Bank Stocks
September 29, 2011--Italian and Spanish financial market regulators extended temporary bans on short selling of financial shares that were introduced last month in a bid to stem market volatility.
The European Securities and Markets Authority announced the extension by the two countries in an e-mailed statement. The Spanish ban will remain “until the market conditions allow it” to be lifted, the country’s financial regulator said in its statement. Italy’s restriction, and another enacted by France in August, will both last until Nov. 11.
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Source: Bloomberg Busines Week
DB Global Equity Index & ETF Research :European ETF Market Weekly Review:Market downturn shaves off €12 bil. from European ETP assets
September 28, 2011--Investment Outlook: Across the board cash outflows
In the week that ended on September 23rd, European domiciled ETPs registered net cash outflows of €683 million. Most of the European equity benchmarks ended significantly lower than the previous week's close: CAC, DAX, Euro Stoxx 50 & the FTSE 100 lost 7.3%, 6.8%, 6.2% and 5.6% respectively. Gold, a traditional safe heaven over the past year, also lost 9.0%.
Fixed Income ETFs registered cash outflows of €342 million over the last week. Money market ETFs alone, witnessed an exit of close to €600 million over the last week. Sovereign ETFs collected €192 million in cash inflows taking their YTD flows, close to €500 million.
Equity ETFs registered outflows of €298 million in the past week taking their YTD flows tally to €15.3 billion. Within equities, ETFs tracking emerging market (EM) benchmarks registered cash outflows of €430 million in the past week. Developed non-European ETFs (mostly Japan) attracted inflows totaling €244 million. ETFs offering exposure to large cap products and euro zone benchmarks witnessed cash out flows of €256 million and €116 million respectively. Inflows into ETFs offering inverse and leveraged exposure (€236 million) and outflows from broader equity segments over the last week, signals a persistent negative investor sentiment.
Cash flow activity within commodity ETPs was low in the past week, with flat flows totaling (€1 million) across all the commodity segments combined. Gold products witnessed modest inflows of €75 million over the past week taking its YTD cash flows to €2.7 billion.
Assets Under Management (AUM): Equity and commodity led decline
Total European ETP assets decreased by a massive 5.5% and ended the previous week at €218.5 billion. Equities lost close to €9 billion to end the week with €127.4 billion in assets. Overall commodity assets ended the week with €44.7 billion with a weekly loss of €3.4 billion. Gold ETPs lost close to €1.6 billion in assets mostly due to decrease in the [US$/oz] price of gold [9%]. Silver ETPs also lost close to €800 million due to declines [22.3%] in spot silver prices[US$/oz].Fixed income ETF assets declined by close to €300 million to end the week at €44.3 billion.
Exchange Total Weekly Turnover: Modest increase in Turnover levels
Weekly on-exchange ETP total turnover increased by a modest 2.1% to end the week at €15.8 billion. Equity turnover gained 3.7% from its previous levels and ended the week at €11.9 billion. Fixed Income turnover decreased by over €250 million from its previous levels and ended at €1.2 billion in weekly totals. Commodity turnover gained €115 million to reach €2.7 billion.
New ETP Product Launch Calendar: 3 New launches, 3 cross listings
Blackrock launched 3 equity thematic products which focus on companies engaged in agribusiness, oil& gas and gold respectively. All these ETFs, along with their cross listings were listed on the London Stock Exchange. Please refer to figure 10 for details.
To request a copy of the report
Source: Christos Costandinides, European Head of ETF Research & Strategy, Deutsche Bank
Assessment of the impact upon the markets of the Decision of 11th August 2011 prohibiting net short
September 28, 2011--In close coordination with the European regulators concerned1 and under the aegis of ESMA, the AMF has
been assessing both market conditions and the impact of the measures restricting net short positions on
ten French securities of the financial sector as decided in August 2011.
In the context of this assessment, regulators which had adopted comparable measures until 30 September, decided to extend their respective ban, while the AMF considered that the conditions for lifting the restriction were not met.
As a consequence, the AMF’s Decision of 11th August remains in force until
11th November. In the meantime, the AMF will continue to closely monitor, in coordination with the European regulators concerned, the markets and their developments. It may decide to lift the ban if market conditions allow it.
Source: AMF
SocGen's Newedge futures unit for sale
September 27, 2011--Societe Generale has put up for sale its stake in Newedge, a futures and clearing brokerage it co-owns with Credit Agricole, a source familiar with the situation said on Tuesday, as the No. 2 French bank looks to shrink its balance sheet and sell risky assets.
"Newedge is definitely for sale," the source said, adding that the bank could also sell its custody and securities unit SGSS but no firm decision had been reached on that.
"Both of these are fairly difficult to sell," the source said, adding: "I wouldn't hold my breath" on a successful sale.
Societe Generale, whose shares soared 17 percent on Tuesday as part of a broader rally in European banking stocks, declined comment.
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Source: Reuters
ETF industry braces itself for transparency push
September 27, 2011--Top heavyweights from the $1.3 trillion exchange-traded fund (ETF) industry are bracing themselves for a shift in how their fast-growing but relatively opaque products are marketed, distributed and regulated.
During a three-hour hearing in Paris on Monday, executives from ETF providers like BlackRock , Societe Generale unit Lyxor and Natixis unit Ossiam picked apart the European Securities and Markets Authority's (ESMA) recent proposals to make ETFs more transparent and ultimately less risky for investors.
But despite some pushback on details such as how ETFs should be labeled, what information should be disclosed and how their risk levels might be controlled, some executives acknowledged the broad push toward more transparency was inevitable.
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Source: Reuters
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