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ETF warning sounded after UBS rogue trading loss
Exchange traded funds (ETFs) have quickly become a trillion-dollar plus trading instrument - but there are warnings that they are now are being mis-sold to the retail market
September 16, 2011--Small investors have been mis-sold "exchange traded funds" at the heart of UBS's £1.3bn rogue trading loss and face potentially huge losses, according to leading City financier Terry Smith.
Smith, chief executive of money brokers Tullett Prebon, compared ETFs to the toxic instruments that played a catastrophic role in the credit crunch, and said the City had failed to learn any lessons.
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Source: The Guardian
ETF Securities Sued by Former Executive in U.K. Over Bonus
September 16, 2011--ETF Securities Ltd., the world’s largest provider of exchange-traded commodity funds, was sued in London by a former employee who says he is owed a stake in the company tied to a 2006 bonus award.
Stefan Garcia, now an executive at another ETF firm, said the bonus gave him options to buy 1,000 shares of the company at 49.99 pounds ($78.74) with no time limit, according to U.K. court documents filed in July.
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Source: Bloomberg
EU interim forecast: Recovery stalls amid financial market crisis
September 15, 2011--Economic growth in the EU is slowing down. After growing strongly in the first quarter of 2011, GDP expanded less in the second quarter. GDP growth is now expected to remain subdued in the second half of the year, coming close to standstill at year-end. The soft patch predicted in the spring forecast is now likely to deepen but will not result in a double dip. On account of the stronger-than-expected performance in the first quarter, annual growth is still projected at 1.6% in the euro area and 1.7% in the EU.
However, growth forecasts for the second half of the year have been revised down considerably, by ½ percentage point for the euro area as well as the EU compared to the Commission's spring forecast. Moreover, the current outlook is uncertain, and the balance of risks to this forecast is to the downside.
EU Economic and Monetary Affairs Commissioner Olli Rehn said: "The outlook for the European economy has deteriorated. Recoveries from financial crises are often slow and bumpy. Moreover, the EU economy is affected by a more difficult external environment, while domestic demand remains subdued. The sovereign debt crisis has worsened, and the financial market turmoil is set to dampen the real economy. To get the recovery back on track, it is crucial to safeguard financial stability and put budgets on a path that is sustainable beyond doubt. This requires steadfast continuation of the strategy of differentiated, growth-friendly fiscal consolidation and the implementation of the decisions to support financial stability. At the same time, structural reforms remain more important than ever to build tomorrow's growth potential."
Growth forecasts revised down
The interim forecast contains updated projections for GDP growth and inflation for the seven largest EU Member States, the euro area and the EU for 2011. The next forecast covering all EU Member States and looking further ahead will be released in November. GDP growth for 2011 as a whole is set to remain unchanged from the Commission's spring 2011 forecast for the euro area (1.6%) and to be slightly lower for the EU (1.7%). This is largely owed to stronger-than-expected growth in the first quarter. However, the quarterly growth profile for the second half of the year has been revised down considerably. Growth projections for the EU are now at 0.2% in both the third and the fourth quarter, 0.2% in the third and 0.1% in the fourth quarter for the euro area, respectively. For both areas the quarterly growth rates were revised down by about ¼ percentage point, respectively. The downward revisions concern all the Member States under review, suggesting both a common factor and the high level of interconnection of our economies. Nonetheless, growth is expected to remain uneven across Member States.
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Source: Europa
New RBS ETF launched on Xetra
ETF tracks RBS CTA Index
September 15, 2011--Another ETF issued by The Royal Bank of Scotland has been tradable on Xetra® since Thursday.
ETF name: RBS Market Access CTA Index Fund
Asset class: Multi-asset index ETF
ISIN: LU0653608454
Total expense ratio: 0.75 percent
Distribution policy: non-distributing
Benchmark: RBS CTA Index
The RBS Market Access CTA Index Fund enables investors to invest in the performance of the RBS CTA Index. The RBS CTA Index is composed of the two sub-indices RBS Systematic CTA Index and RBS Discretionary CTA index, each with a 50% weighting and representing a diversified portfolio of hedge funds. The hedge fund strategies are based on the commodity trading advisor approach. The fund manager may use futures and/or options on equities, bonds, currencies and commodities to implement the systematic and discretionary CTA strategies.
The product offering in Deutsche Börse’s XTF segment currently comprises a total of 869 exchange-listed index funds, while average monthly trading volume stands at €14 billion.
Source: Deutsche Börse
Investors Bet on Stronger Swiss Franc
September 15, 2011--Just one week after the Swiss National Bank shocked markets by capping the Swiss franc's rise against the euro, some investors already are beginning to position themselves for a potential breach of that ceiling.
Some financial market indicators suggest investors, including Wall Street banks and hedge funds, are buying options that would benefit them if the Swiss central bank is unable to keep the franc from rising above its set level of 1.20 francs per euro.
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Source: Wall Street Journal
Major central banks to provide dollars to banks: ECB
September 15, 2011--Top central banks promised Thursday to lend dollars to banks who find themselves short of the US currency in the ongoing eurozone debt crisis, a move that boosted the euro and stock markets.
The move sent stocks soaring and gave a boost to the euro, just hours after the EU warned that the eurozone debt crisis was bringing growth to a standstill although the region will likely escape outright recession.
"The governing council of the European Central Bank (ECB) has decided, in coordination with the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank, to conduct three US dollar liquidity-providing operations with a maturity of approximately three months covering the end of the year," the ECB said in a statement.
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Source: EUbusiness
Eurozone growth slows, outlook darkens but no recession
September 15, 2011-- The EU's economic outlook has "deteriorated" with the eurozone debt crisis contributing to slowing growth in the second half of the year, but no recession is in sight, the EU said on Thursday.
The economy in the single currency area is still expected to expand by 1.6 percent in 2011 despite the slowdown, thanks to stronger-than-expected growth in the first half of the year, the European Commission said.
The disappointing figures come as European Union finance ministers gather in Poland on Friday and Saturday for crunch talks aimed at resolving divisions over a new rescue package for Greece.
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Source: EUbusiness
EU's Almunia: monopoly concerns over D.Boerse-NYSE deal
September 15, 2011--Europe's competition chief said he fears the proposed merger of Deutsche Boerse (DB1Gn.DE) and NYSE Euronext (NYX.N) will create a monopoly in Europe's derivatives market.
"In this particular case, we are concerned that a very large player may monopolise the derivatives markets in Europe," Joaquin Almunia said in a speech at a financial conference in Wroclaw, Poland.
"Therefore, any outcome that would eliminate the possibility of new entry and user flexibility would be unacceptable to us," he added.
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Source: Reuters
Greek euro exit would have 'dramatic' consequences, says EU
September 14, 2011-- A Greek default or exit from the eurozone would have "dramatic" consequences for Greece as well as for Europe and the rest of the world, the EU's economy chief said on Wednesday.
"A default or exit of Greece from the eurozone would carry dramatic social, economic and political costs, not only for Greece, but also for euro area member states, other EU states, as well as global partners," EU Economic Affairs Commissioner Olli Rehn told the European Parliament.
Rehn's warning follows growing expectations in Europe, despite official denials, that Greece is heading towards a bankruptcy which would force it to default on part of its massive debt mountain.
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Source: EUbusiness
Spanish banks' borrowing from ECB up sharply in August
September 14, 2011--The amount borrowed by Spanish banks from the European Central Bank shot up by 34 percent in August from the amount in July to 69.92 billion euros ($95.0 billion), the Bank of Spain said on Wednesday, in a new sign of sliding market confidence in their financial health.
The debts of Spanish banks at the ECB also reached the highest level since September 2010, but remains below the figure of August, 2010 at 109.79 billion euros.
In July 2010, Spain borrowed a 130.2 billion euros from the ECB when the country came under intense pressure on the markets in the fallout from the Greek debt crisis.
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Source: EUbusiness
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