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Eurex statement on current market activity
August 15, 2011--The current extremely volatile market environment has led to enormous increases in contract and quote volume on Eurex Exchange in the last two weeks. New records were set in some benchmark products, such as futures and options on the EURO STOXX 50 and DAX.
The total average daily trading volume (ADV) in August is at an annual high of almost 12 million contracts, compared to the yearly ADV of 8.4 million contracts. The growth in the trading and clearing volume was accompanied by an even greater rise in system transactions and quotes handled by the system. At the beginning of last week, the number of quotes even reached a new peak of 1.2 billion on a single day.
Despite the massive rise in volumes, Eurex Group’s IT systems constantly fulfilled its role as designed and provided well-functioning markets thus ensuring market integrity. The on-going and constant enhancement of and investment into Eurex Group’s IT infrastructure were the reasons that the system availability and data throughput at Eurex Exchange and Eurex Clearing remained stable – trading and clearing worked without any frictions or interruptions. The additional transaction load had no effect on the latency or response times of the Eurex systems.
Eurex not only offers high performance and stable trading opportunities for its participants; its numerous risk management services also ensure that participants can optimally manage their individual risks – even in very volatile market situations. Risk management in real time using the Enhanced Risk Solution interface and the numerous pre- and post-trade functionalities ensure that participants can identify risks at an early stage and quickly avoid excessive exposure.
The safety mechanisms that have been implemented also guarantee market integrity and orderly trading. These include volatility interruption, which allows a short-term interruption of trading in affected products in the event of high volatility, thus enabling market participants to react appropriately to excessive price volatility.
Source: Eurex
Swiss franc falls on intervention concerns
August 15, 2011--The Swiss franc dropped sharply on Monday on speculation that the Swiss National Bank was preparing to peg its currency to the euro in order to deter haven inflows to the country.
The currency fell 2.6 per cent to SFr1.1376 against the euro, dropped 2.2 per cent to SFr0.7950 against the dollar and was 2.4 per cent weaker at SFr1.2961 against the pound.
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Source: FT.com
Euro: the road towards one-for-all economic governance
August 15, 2011--French President Nicolas Sarkozy and German Chancellor Angela Merkel meet Tuesday to discuss strengthening eurozone economic governance as its debt crisis threatens to hit major countries.
Sceptical markets have pushed up borrowing costs for Italy and Spain -- forcing the European Central Bank to intervene -- and the prospect of rising bailout costs has even led to concerns about France's credit rating.
Here are the ideas in play:
Eurozone Council
France and others want EU president Herman Van Rompuy to wield new powers in an institutionalised Eurozone Council. Seen as a wily operator who can coax concessions from the most reluctant prime ministers, he would become the euro's voice in financial and economic matters.
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Source: EUbusiness
ETF Stat July 2011 -Borsa Italiana
August 12, 2011--The ETF Statistics of the ETF Plus Market for the month of July 2011 are now available.
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Source: Borsa Italiana
EDHEC-Risk Institute Denounces Short Selling Bans
August 12, 2011--EDHEC-Risk Institute condemns the August 11 decisions by the financial market authorities in
Belgium, France, Italy and Spain to impose or extend short-selling bans in the wake of renewed
market volatility.
These hasty decisions are not only devoid of theoretical basis, but also fly in the face of empirical
evidence. Academic studies, including work by EDHEC-Risk Institute researchers, have documented
the positive contribution of short-sellers to market efficiency and shown that constraining short sales
significantly reduces market quality – by reducing liquidity and increasing volatility – and can have
unintended spillover effects.
In a series of research articles, EDHEC Business School Professor Ekkehart Boehmer and his coauthors have studied short selling activities, looking at the type of information possessed by shortsellers1, at the impact between short selling activities and abnormal returns2, and at the link between short-selling and the price discovery process3. They established that short sellers are important contributors to efficient stock prices, that short interest contains valuable information for the market, that information is impounded faster and more efficiently into prices when short sellers are more active and that short sellers change their trading around extreme return events in a way that aids price discovery.
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Source: EDHEC-Risk Institute
France reports zero second-quarter GDP growth
August 12, 2011--France's statistics office said economic output, as measured by gross domestic product, was zero in the April-June period versus a first quarter that, at 0.9 percent, was the best in almost five years.
The main cause was a drop in household consumption, which was down 0.7 percent from the first quarter.
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Source: Fox Business News
UK contingency plans may fall short
August 12, 2011--George Osborne on Thursday hinted at “contingency plans” designed to shield the British banking sector from a disaster in the eurozone – scenarios that Sir Mervyn King, governor of the Bank of England, has said fall under the headings of “the unimaginable and the unmentionable”. How effective might such plans be?
The FT sketches out the divergent outcomes for the UK economy and its banking sector – and gauges their ability to withstand the worst effects.
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Source: FT.com
European short-selling ban comes under attack
August 12, 2011--Fuming traders and marketmakers have scrambled to cover short positions and rejig their trading platforms after a late-night announcement that four European countries were banning short selling of financial stocks.
Compliance officers, traders and lawyers worked through Thursday night to implement the 15-day prohibition aimed at preventing investors from attempting to profit from share price falls.
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Source: FT.com
Fear of SNB intervention weighs on franc
August 12, 2011--The Swiss franc endured a volatile week as the fall-out from the decision by rating agency Standard & Poor’s to downgrade US sovereign debt shook financial markets.
Haven demand for the Swissie accelerated early in the week, taking the currency up to record highs against the euro and the dollar.
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Source: FT.com
Short-selling restricted in four eurozone states
August 12, 2011-- The speculative practice of short-selling will be restricted from Friday in Belgium, France, Italy and Spain to combat "false rumours" that have destabilised the markets, European regulators said.
The European Securities and Markets Authority (ESMA) said in a statement that the four countries "will shortly announce new bans on short-selling or on short positions."
This was "to restrict the benefits that can be achieved from spreading false rumours or to achieve a regulatory level playing field, given the close inter-linkage between some EU markets."
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Source: EUbusiness
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