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European Commission - Financial Transaction Tax: Making The Financial Sector Pay Its Fair Share
September 28, 2011--Today the Commission has presented a proposal for a financial transaction tax in the 27 Member States of the European Union.
The tax would be levied on all transactions on financial instruments between financial institutions when at least one party to the transaction is located in the EU. The exchange of shares and bonds would be taxed at a rate of 0.1% and derivative contracts, at a rate of 0.01%. This could approximately raise €57 billion every year. The Commission has proposed that the tax should come into effect from 1st January 2014.
The Commission has decided to propose a new tax on financial transactions for two reasons.
First, to ensure that the financial sector makes a fair contribution at a time of fiscal consolidation in the Member States. The financial sector played a role in the origins of the economic crisis. Governments and European citizens at large have borne the cost of massive taxpayer-funded bailouts to support the financial sector. Furthermore, the sector is currently under-taxed by comparison to other sectors. The proposal would generate significant additional tax revenue from the financial sector to contribute to public finances.
Second, a coordinated framework at EU level would help to strengthen the EU single market. Today, 10 Member States have a form of a financial transaction tax in place. The proposal would introduce new minimum tax rates and harmonise different existing taxes on financial transactions in the EU.. This will help to reduce competitive distortions in the single market, discourage risky trading activities and complement regulatory measures aimed at avoiding future crises. The financial transaction tax at EU level would strengthen the EU's position to promote common rules for the introduction of such a tax at global level, notably through the G20.
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Source: European Commission
EU financial transaction tax: what's covered, what's not
September 28, 2011-- A controversial European Union bid to impose a tax on financial transactions is intended to make the finance sector pay something back after massive public sector bailouts in recent years.
Draft European Commission legislation endeavours to prevent companies from relocating outside the single market, as critics claim, or consumers from picking up the tab further down the line, as campaigners fear.
"For instance, for a purchase of shares to the value of 10,000 euros, the bank could charge 10 euros, which is not excessive," the commission says.
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Source: EUbusiness
Brussels to release financial tax plan despite US objections
September 28, 2011--Europe looks set to shrug off US objections and go it alone with a financial transactions tax, an EU source said Tuesday, with Brussels due to imminently release proposals likely to raise a storm even within the bloc's ranks.
The European Commission approved in principle the tax proposal on Tuesday, and the head of the EU executive Jose Manuel Barroso may outline the plan on Wednesday in a "state of the union" address to the European parliament in Strasbourg.
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Source: EUbusiness
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.
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Source: Christos Costandinides, European Head of ETF Research & Strategy, Deutsche Bank
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