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EU watchdog may ban some ETF retail sales
July 22, 2011--The European Union's markets watchdog warned on Friday it may ban the sale of some exchange-traded-funds (ETFs) to small investors because they are risky and hard to understand.
The EU watchdog published a consultation paper on how to better contain risks in a sector which has seen explosive growth in the past decade and could hit the $2 trillion level by next year globally.
The European Securities and Markets Authority (ESMA) said current safeguards on selling ETFs within the EU's mutual funds framework, known as UCITS, were insufficient as the more complex types of products pose possible risks to the wider financial system to undermine financial stability.
ETFs are mutual funds that can be traded like shares and are popular because of their cheap fees.
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Source: Reuters
Amundi ETF strengthens presence in Germany, Italy, the Netherlands and Switzerland
July 22, 2011--The intensive European roll-out plan of the Amundi ETF range continues with the introductions of quality, cost-efficient and innovative products widening investors’ access to an increasing number of products in the range with recent registrations and cross-listings in Germany, Italy, the Netherlands and Switzerland.
Today, the Amundi ETF range exceeds 100 products on NYSE Euronext in Paris and 300 registrations and cross-listings on in Germany, Italy, the Netherlands, Switzerland, and the UK.
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Source: ETF Express
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.
to request report
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.
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