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S&P forecasts jump in CLO defaults
August 24, 2011--European leveraged loan defaults could surge in coming years due to the looming expiration and limited new issuance of collateralised loan obligations, which were a vital source of funding before the financial crisis, Standard & Poor’s has predicted.
CLOs – pools of loans used to finance acquisitions – helped fuel the leveraged buy-out boom before credit markets unravelled in 2007.
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Source: FT.com
Short sellers remain calm despite bans
August 23, 2011--Short sellers and securities lenders have remained calm in spite of controversial short selling bans for bank stocks introduced in Europe this month.
Securities lending data show that the amount of stock on loan – used as a proxy for tracking the scale of short positions – has dropped just 0.1 per cent on average since immediately before the 15-day prohibitions on shorting bank stocks were announced by France, Spain, Italy and Belgium.
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Source: FT.com
STOXX Limited to adopt rule changes to enhance index liquidity
August 23, 2011--STOXX Limited, the market-moving provider of innovative, tradable and global index concepts, today announced a series of rule enhancements to its indices in reaction to the increasingly fast moving and volatile markets, as well as to enhance the liquidity of the index baskets.
These measures include the introduction of a fast entry rule for STOXX’s regional blue-chip indices; the adoption of a minimum liquidity rule for its benchmark indices, among them the STOXX Europe 600 Index; and the use of more up-to-date figures in the calculation of STOXX’s regional blue-chip indices.
Under the new fast entry rule for the STOXX regional blue-chip indices, all stocks that rank in the “lower buffer” category of the selection list during the quarterly rebalance will be eligible for fast entry into the respective indices, e.g. top 40 for the EURO STOXX 50 Index. Previously, fast entries were only possible for initial public offering (IPO) companies that ranked among the ”lower buffer” category on the selection list. This improved rule will enable the respective STOXX indices to reflect the market with greater precision, and to accurately represent the performance of the biggest and most liquid stocks in the respective regions. The fast entry rule will become effective immediately.
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Source: STOXX
STOXX Changes Composition Of Benchmark Indices
Results Of The Third Regular Quarterly Review To Be Effective On September 19, 2011
August 23, 2011--STOXX Limited, the market-moving provider of innovative, tradable and global index concepts, today announced the new composition of the STOXX Benchmark and their sub- and sector indices, among them the STOXX Europe 600 Index, STOXX Americas 600 Index and STOXX Asia/Pacific 600 Index, as well as that of the STOXX Europe Football Index and STOXX Europe Private Equity 20 Index.
Effective as of the open of European markets on September 19, 2011, the following stocks will be added to and deleted from the STOXX Europe 600 Index and its respective size and sector indices:
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Source: STOXX
European investors turn to commodity ETFs
August 23, 2011--European investors have been deserting government bond exchange traded funds and heading for the hard assets held in commodity ETFs amid Europe’s ongoing sovereign debt crisis.
As a result, assets held in commodity ETFs (funds and products) have surpassed those held in fixed income ETPs for the first time, according to research by Lyxor.
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Source: FT.com
ESMA consults on future rules for alternative investment fund managers and the treatment of third country entities
August 23, 2011--ESMA publishes today a consultation paper (ESMA/2011/270) setting out its proposals for the detailed rules on supervision and third country entities underlying the Alternative Investment Fund Managers Directive (AIFMD).
These rules reflect the global nature of the alternative investment management indus-try and the need to put in place a framework for entities outside the EU. Today’s publication, which complements the draft advice published for consultation in July (ESMA/2011/209), is in response to the European Commission’s request for assistance to ESMA’s predecessor, CESR, in December 2010. ESMA has to deliver its final advice to the Commission by 16 November 2011.
‘Forex trades not regulated in Turkey, involve high risk'
August 23, 2011--Trading foreign currencies (forex) with high leverage ratios requires extensive information and experience in this fields as it involves high risk with no regulation, Capital Markets Board (SPK) President Vedat Akgiray has said.
In his remarks to the Anatolia news agency on Tuesday, Giray underlined that people trading in the forex market risk losing their entire savings, and therefore warned them to be careful when deciding to trade foreign currencies. “The forex market is attractive since it promises high rates of profit for less money. Many investors are influenced by Internet ads and allocate their resources to this sector, resulting in huge losses. Even if they make profits, forex companies have a variety of reasons for not distributing this money, as these companies are not regulated,” Akgiray noted.
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Source: Todays Zaman
EEX and Eurex to launch New Incentive Model for CO2 Spot and Derivatives Market
August 23, 2011--On 1 September 2011, the European Energy Exchange (EEX) and the Eurex Exchange will introduce a new incentive model for the emissions market which aims at strengthening the EEX CO2 market in the competition with other trading platforms.
The model targets the secondary market trading and is designed to increase the attractiveness of EEX prices (tight spreads) and hence liquidity of the markets.
The future incentive model provides for two volume thresholds: If the monthly volume achieved by a trading participant exceeds a level of 2 million tonnes of CO2 or a level of 4 million tonnes of CO2, the company concerned qualifies for a bonus of EUR 10,000 or EUR 20,000 respectively. This bonus will be paid to at maximum three trading participants that have traded the respective highest volumes above the thresholds specified in each month. All the products that are available for secondary trading in emission allowances, i.e. the Spot Market for EU Emission Allowances (EUA) and the Derivatives Market for EUA and Certified Emission Reductions (CER), will be considered.
All trading participants that are licensed for the Spot and Derivatives Market for Emission Allowances will automatically be considered for this model. The market makers for whom EEX and the Eurex Exchange offer a separate incentive scheme are not included in this model.
EEX and the Eurex Exchange offer their participants a platform for trading in EUA futures, CER futures and options on EUA futures. In the framework of this cooperation, which was launched in December 2007, Eurex participants can trade the CO2 derivatives products listed on EEX through their existing infrastructure and a simplified admission process.
Source: Eurex
British Bankers’ Association Warns Of The Real Cost Of Regulatory Change
August 22, 2011--A chorus of concerned bankers and business people is now warning about the consequences to economic growth of further uncosted regulatory change, the British Bankers’ Association warns.
As the Bank of England warns of the volatility of market sentiment – characterised by the Bank’s head of financial stability as a yo-yoing appetite for risk – policy makers need to be acutely aware of the dangers of further increasing the cost of banking at a time when businesses should be building for recovery, said BBA chief executive Angela Knight:
“Policy makers, regulators, banks and other businesses agree that our three priorities should be restoring financial stability, securing economic recovery and ensuring regulatory reform is fit for purpose. But there is growing concern that regulatory reform is outpacing the other priorities, with real effects on economic recovery.
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Source: BBA
Eurex Clearing launches the first major element of its new Client Asset Protection Services
New “Individual Clearing Model” offers individual client segregation to ensure maximum protection and portability of client assets/ Upcoming European regulatory requirements of EMIR on segregation of clients’ and intermediaries’ assets already addressed/ Important contribution to increase market safety and integrity
August 22, 2011--Eurex Clearing, Europe’s leading clearinghouse, announced the launch of its “Individual Clearing Model”, the first major element of a new suite of industry leading client segregation services. The new service is the first segregation solution offered by a clearing house enabling full legal and operational segregation of all assets (positions and margin collateral) for its non-clearing members (clients with trading admission) at the clearing house level.
The new model allows for collateral and positions to be transferred immediately in the event of a clearing member default, thus clients are protected and enabled to continue their trading activities.
The Individual Clearing Model responds to the increasing demand of buy-side firms for central counterparty (CCP) services. Through the new service, Eurex Clearing makes an important contribution to market safety and integrity and already offers a service which fulfils the planned regulatory requirements as specified in the published draft versions of the European Markets Infrastructure Regulation (EMIR). Eurex Clearing is the first CCP globally to offer full legal and operational segregation across all cleared markets.
The new service will be offered in addition to the existing Eurex Clearing model. Eurex Clearing will also launch a so-called Omnibus Model, offering segregation of client assets in an omnibus account with higher operational efficiency and flexibility for the clearing member. The three different levels of protection enable clearing members to offer tailor-made access to Eurex Clearing and provide choice for clients.
“Maximum legal protection and immediate portability of client assets are at the heart of the value proposition for CCP clearing”, said Thomas Book, Eurex Executive Board member responsible for clearing. “In close collaboration with our participants, we have developed a unique offering of flexible alternatives for how client positions and assets can be held at Eurex Clearing, depending on clients’ individual protection needs.”
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Source: Eurex
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