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A world first: Structured products in the trading currency gold
October 10, 2011--Scoach Switzerland is the first exchange in the world to offer trading in gold structured products.
As of 10 October 2011, Scoach Switzerland will support trading in structured products with gold as the trading currency. The Swiss central depository, SIX Securities Services, is responsible for the processing.
The initial spark for innovation in the sector originates from EFG Financial Products, one of the most innovative issuers of exchange-traded structured products on Scoach Switzerland.
Many investors who are directly invested in gold do not physically hold the gold, but rather keep it in a precious metals account, which is nothing more than a foreign currency account denominated in gold. Gold in this case, with the international currency code XAU, is treated like any other foreign currency. Just as the Swiss franc is the unit of measure for the currency CHF, the currency XAU is expressed in fine ounces of gold, or fractions thereof. Balances in the currency XAU can be exchanged for physical gold at any time at the bank where the account is maintained.
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Source: Scoach Switzerland Ltd
Energy markets: Commission welcomes adoption of new rules on wholesale electricity and gas trading
October 10, 2011--The EU has adopted today new stringent rules on wholesale energy trading. The main objective is to prevent use of insider information and other forms of market abuse which distort wholesale energy prices and normally mean that businesses and consumers pay more for their energy than they need. The new law will enter into force by the end of this year. For the first time energy trading will be screened at EU level to uncover abuses. National authorities in Member States will put in place penalties to help stop and prevent market manipulation.
EU Energy Commissioner Günther Oettinger said: "Today is an important milestone in the development of the internal market. The new trading rules will contribute to fair energy prices. Moreover, by improving market transparency and integrity, we also build confidence of all market participants in the good functioning of the internal market. This will foster competition and ensure that consumers will always get the best deal."
Background
There are several hundreds of companies involved in wholesale electricity and gas trade in Europe and up to 10 000 transactions take place every day.
In energy, more than in other sectors, market prices are highly sensitive to the availability of production and transmission capacities. This is due to the fact that electricity cannot be stored on an industrial scale. For this reason prices can be influenced easily by creating a false impression about the availability of capacities or indeed by reducing actual production. Europe's wholesale energy markets are also increasingly cross-border in nature. Price setting occurs through the interaction of supply and demand across national boundaries. Besides, transactions are frequently concluded outside the country to which the trades relate. All of this creates ways of market abuse transcending national borders. As until now regulators in Member States have not had access to all the data on cross-border transactions, it has been difficult to understand what has been going on in these markets and effectively detect abuse.
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Source: Europa
10 days to save Europe's banks
October 8, 2011--As Europe races to rescue its banks, the EU executive on Friday gave governments 10 days to agree on coordinated plans to recapitalise lenders hit by the eurozone debt crisis.
The deadline comes as the governments of France and Belgium negotiate a break-up for Dexia, the first bank felled by the crisis, and French and German leaders meet on Sunday to overcome divisions over how to organise new bailouts.
European Union leaders meet in Brussels on October 17-18, when they must agree on plans to deal with a credit crisis triggered by Greek default fears, while working together to avoid unleashing a state-aid free-for-all.
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Source: EUbusiness
IMF advises broader powers for Russian central bank
October 7, 2011--The International Monetary Fund has recommended the Russian authorities broaden the central bank's supervisory powers as banks hold considerable volumes of non-performing loans, IMF European Department Director Antonio Borges said on Friday.
The central bank has recently revealed a significant hole in the assets of Bank of Moscow, Russia's fifth-largest bank and the capital's investment vehicle under previous mayor Yury Luzhkov. Borges said the discovery was detrimental to the trust on which the banking sector should be firmly based.
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Source: RIA Novosti
Fitch cuts Italy, Spain ratings over euro crisis
October 7, 2011-- Fitch cut its credit ratings on Italy and Spain Friday, citing the increasing pressure on them as the eurozone debt crisis makes efforts to stabilise their public finances even more difficult.
The eurozone debt crisis has seen Greece, Ireland and Portugal all bailed out by the EU and International Monetary Fund to avert a potentially disastrous default which could threat not just the European but the global economy.
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Source: EUbusiness
Spain, Italy Credit Ratings Are Cut by Fitch as Europe Debt Crisis Worsens
October 7, 2011--Spain and Italy, the euro region’s fourth- and third-largest economies, were downgraded by Fitch Ratings on concern they will struggle to improve their finances as Europe’s debt crisis intensifies.
Spain had its foreign and local currency long-term issuer default ratings cut to AA- from AA+, while Italy had the same set of ratings lowered to A+ from AA-, Fitch said in statements today. The outlook for both countries is negative. Fitch also maintained Portugal’s rating at BBB-, saying it would complete a review of that ranking in the fourth quarter.
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Source: Bloomberg
Sterling slides on QE move.
October 6, 2011--Sterling fell to its lowest point since July 2010 after the Bank of England announced a second round of quantitative easing.
The Bank’s monetary policy committee said it was raising its asset purchases by another £75bn to £275bn. The MPC left the main overnight rate at 0.5 per cent.
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Source: FT.com
Clearinghouse LCH Plans to Take Gold as Collateral .
October 6, 2011--LCH.Clearnet Group Ltd. plans to begin accepting gold bullion as collateral by the end of the month amid growing demand from banks eager to depart from their traditional reliance on cash and government bonds to cover margin requirements.
The move follows similar steps from a number of exchanges and banks to increase the use of gold as an acceptable deposit, reinforcing the precious metal's allure as an alternative currency.
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Source: Wall Street Journal
Flow Traders Set Up First Specialised ETF Sales Trading Desk in Asia
October 6, 2011--Meeting the increased demand from institutional investors in Asia for access to Exchange Traded Funds (ETFs), Flow Traders Asia has set up a Sales Trading desk focused solely on ETFs. The specialised sales trading team will provide professional investors (e.g. long-only investors, hedge funds, private banks, sovereign wealth funds) with highly competitive 2-way OTC bid-ask prices and liquidity for over 95% of all ETFs listed in Asia, Europe and US*. Counterparties will also benefit from Flow Traders’ experienced execution strategies for trading ETFs and unbiased product knowledge.
Martijn Schuijt, MD of Flow Traders Asia Commented: “The set-up of the specialised ETF sales trading desk in Singapore is a natural development of our already successful market making business, and it shows our dedication to the growth of the ETF business in Asia. Now Asian investors can tap into the liquidity pool already taken advantage of by the largest European investors.”
Source: Flow Traders
DBoerse-NYSE defend merger as EU sends concerns
October 6, 2011--Deutsche Boerse and NYSE Euronext defended their proposed merger Wednesday, as they received the EU Competition Commission's letter of concerns about the deal.
The Frankfurt and New York exchange operators said they had received the official "Statement of Objections", calling it "a normal step" that set out the EU commission's "provisional position" that "does not prejudge the final outcome of the case."
"We continue to strongly believe that our combination provides substantial capital and cost savings to users; advances the goal of a unified, liquid EU capital market for raising money and managing risk; and does not materially alter the competitive landscape," the two said in a statement.
The proposed merger has sparked controversy in the US because it would hand over the 221-year-old New York Stock Exchange to foreign owners and create a powerful force in 24-hour global trading of shares and derivatives.
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Source: AFP
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