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ESMA Seeks Preliminary Views On The Potential Shape Of Future Regulationof Exchange-Traded Funds And Structured UCITS
July 22, 2011--ESMA publishes today a discussion paper (ESMA/2011/220) setting out policy orientations on guidelines for UCITS Exchange-Traded Funds (ETFs) and structured UCITS. The Authority has reviewed the current regulatory regime applicable to such funds and considers that the existing requirements are not sufficient to take account of the specific features and risks associated with these types of fund. In the discussion paper,
ESMA examines the possible measures that could be introduced to mitigate the risk that particu-larly complex products, which may be difficult to understand and evaluate, are made available to retail investors. In this document, ESMA also raises the potential systemic risk caused by these types of fund and their impact on financial stability. ESMA will use the feedback received to this paper to develop draft guidelines for such funds.
A lexicon of debt crisis terms
July 21, 2011--Here are definitions of some of the key financial terms and concepts used by the officials and bankers discussing ways to end the eurozone debt crisis:
BOND: A promise by a debtor, such as a country, to pay back a loan with interest. The sovereign bonds of Greece and other eurozone countries are in peril in the current debt crisis.
BUYBACK: An arrangement for Greece to use money from a European rescue fund to buy back some of its own debt at a lower price on so-called secondary bond markets. A way effectively to lower the amount of the debt and interest Greece owes and give it more time to pay its way out.
CREDIT DEFAULT SWAPS: Financial instruments which insure investors against a debt default by a country or company. So called "CDS" are also traded in their own right. The terms of the underlying insurance contract may be triggered if investors in Greece are forced to bear part of the costs of a rescue, and this leads to a formal default rating.
CREDIT EVENT: A deterioration in a country's creditworthiness which prompts investors to use a CDS to curb their losses.
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Source: EUbusiness
Big European banks to attend eurozone summit: report
July 21, 2011--The bosses of major European banks will attend a eurozone summit in Brussels Thursday that aims to come up with a rescue plan for Greece, the German newspaper Bild reported.
Josef Ackermann, the chief executive of the biggest German bank, Deutsche Bank, is one of those slated to join heads of state and government for the event, the mass circulation daily said.
Bank executives are expected to support some sort of participation by private creditors in a second rescue plan for Athens once political proposals have been worked out.
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Source: EUbusiness
Euro area investment fund statistics-May 2011
July 21, 2011--In May 2011, the amount outstanding of shares/units issued by euro area investment funds other than money market funds was EUR 44 billion higher than in April 2011. This increase was due almost equally to increases in share/unit prices and to net issues of shares/units.
The amount outstanding of shares/units issued by euro area investment funds other than money market funds increased to EUR 5,839 billion in May 2011, from EUR 5,795 billion in April
2011. Over the same period, the amount outstanding of shares/units issued by euro area money market funds increased to EUR 1,091 billion from EUR 1,071 billion.
Transactions1 in shares/units issued by euro area investment funds other than money market funds amounted to EUR 22 billion in May 2011, while transactions in shares/units issued by money market funds amounted to EUR 8 billion.
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Source: ECB
Unscheduled free float adjustment in SDAX
Adjustment for Elexis AG as of 26 July 2011
June 21, 2011--Deutsche Börse has announced an unscheduled adjustment to the free float of Elexis AG in SDAX. Due to the takeover by SMS GmbH, the free float of Elexis AG has changed by more than 10 percentage points. According to the index guidelines, the company’s free float will thus be reduced from the current 84.9 percent to 15.54 percent.
The adjustment will become effective on Tuesday, 26 July 2011.
The next regular review of the Deutsche Börse blue-chip indices will be on 5 September 2011.
Deutsche Börse
BlackRock ETF Landscape: STOXX Europe 600 Sector ETF Net Flows -Week Ending 15-Jul-2011
June 20, 2011-For the week ending 15 July 2011, there were US$89.9 Mn net outflows from STOXX Europe 600 sector ETFs. The largest sector ETF net outflows last week were in industrial goods and services with US$45.8 Mn followed by banks with US$30.0 Mn net outflows while healthcare experienced net inflows of US$45.0 Mn.
Year to date, STOXX Europe 600 sector ETFs have seen US$177.3 Mn net outflows. Utilities has seen the largest net outflows with US$209.3 Mn, followed by insurance with US$180.6 Mn net outflows, while banks experienced the largest net inflows with US$230.8 Mn.
As of 15 July 2011, there is US$9.5 Bn AUM invested in the STOXX sector ETFs which is greater than the US$5.9 Bn open interest in the sector futures. The ETF AUM is greater than the open interest in the corresponding futures contract in 17 out of 19 sectors.
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Source: Global ETF Research & Implementation Strategy Team, BlackRock
Retrospective Adjustments to Financial Statements Following Rejection
July 20, 2011--The Committee of European Securities Regulators (CESR), the predecessor of ESMA, issued in April 2007 a Statement1 to European companies having their securities traded on a regulated market and preparing consolidated financial statements under IFRS as adopted by the EU and more specifically to the users of
the information published by these companies.
CESR published together with its Statement (CESR/07-121b) a position prepared by CESR, BUSINESSEUROPE
and FEE on the retrospective adjustment following the publication of a rejection note of the IFRS Interpretations Committee2. Issues reach the Interpretations Committee generally because there are various possible understandings of IFRS requirements or there is a conflict of views. At the time of issuing the statement, it was argued by some that many such conflicts are transitional issues and would disappear over time as all stakeholders become more familiar with the interpretation and application of IFRS.
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Source: ESMA
ESMA consults on systems and controls for highly automated trading
July 20, 2011--ESMA publishes a consultation paper (ESMA/2011/224) today setting out its proposals for detailed guidelines for trading platforms, investment firms and competent authorities to address challenges of a highly automated trading environment, of which high frequency trading (HFT) is an important part.
The guidelines seek to clarify the obligations of trading platforms and investment firms under the existing EU legislative framework. ESMA believes that the proposed guidelines contribute to the efficiency, orderly functioning
and resilience of trading in a highly automated environment.
Secondary trading in financial instruments carries a number of risks, such as operational, credit and market risks as well as risks of abusive behaviour that can threaten the regulatory objectives of investor protection, fair and orderly trading, efficient price formation, financial stability and prevention of behaviour undermining market integrity. These risks are inherent to trading and also exist when trading is done on a person-to-person basis or over the telephone. However, in a highly automated trading environment, the organisational arrangements required by trading platforms and investment firms should be tailored to the scale, sophistication and speed of the trading activity that is now taking place and should keep up with the challenges posed to regulatory objectives.
European Commission Wants Stronger And More Responsible Banks In Europe
July 20, 2011--Banks have been at the centre of the financial crisis the global economy is facing since 2008. 1 Lessons have been drawn from this and mistakes of the past should not repeat themselves.
This is why the European Commission has brought forward today proposals to change the behaviour of the 8000 banks that operate in Europe The overarching goal of this proposal is to strengthen the resilience of the EU banking sector while ensuring that banks continue to finance economic activity and growth. The Commission's proposals have three concrete goals.
1.The proposal will require banks to hold more and better capital to resist future shocks by themselves. Institutions entered the last crisis with capital that was insufficient both in quantity and in quality, leading to unprecedented support from national authorities. With its proposal, the Commission translates in Europe international standards on bank capital agreed at the G20 level (most commonly known as the Basel III agreement). Europe will be leading on this matter, applying these rules to more than 8000 banks, amounting for 53% of global assets.
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Source: Europa
Scripts for eurozone crisis: from doomsday to tighter union
July 20, 2011--- The eurozone debt crisis has raised a doomsday scenario for the single currency -- a debt default in Greece that triggers a devastating domino effect, sinking the euro and the wider economy.
Ahead of a pivotal eurozone debt summit on Thursday, here are potential outcomes of the biggest crisis faced by the 17-nation single currency area since its birth in 1999:
CRISIS CONTAMINATES ITALY AND SPAIN
Instead of a blockbuster deal to resolve the debt crisis, the summit produces just another bandaid measure that fails to calm the markets. The lack of investor confidence pushes borrowing costs for Italy and Spain to record highs, making it too expensive for Rome and Madrid to raise fresh funds. The eurozone's third and fourth biggest economies are forced to go cap in hand to their European partners and the IMF for loans to pay off their debts. Belgium, mired in a political crisis, follows suit.
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Source: EUbusiness
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