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European groups fear OTC derivatives plan
July 14, 2011--Europe’s largest industrial companies have expressed alarm at a proposal by the European Commission
that they say would impose punitive capital charges on banks providing over-the-counter derivatives to companies, stifling legitimate hedging.
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Source: FT.com
France loses out in ‘flight to quality’
July 14, 2011--Could France be losing its haven status in Europe’s sovereign debt markets? This week the difference between French and German borrowing costs rose to its highest since 1997, raising concerns over whether France could become the next victim of the current crisis of confidence in European debt markets.
The so-called spread to German Bunds hit 77 basis points on Wednesday, marking a sharp break with the past close correlation between continental Europe’s two biggest economies of 30-40 basis points.
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Source: FT.com
Euro area annual inflation stable at 2.7%
EU down to 3.1%
July 14, 2011--Euro area1 annual inflation was 2.7% in June 20112, unchanged compared to May. A year earlier the rate was 1.5%. Monthly inflation was 0.0% in June 2011.
EU3 annual inflation was 3.1% in June 2011, down from 3.2% in May. A year earlier the rate was 1.9%. Monthly inflation was -0.1% in June 2011.
These figures come from Eurostat, the statistical office of the European Union.
Inflation in the EU Member States In June 2011, the lowest annual rates were observed in Sweden (1.5%), Slovenia (1.6%) and the Czech Republic (1.9%), and the highest in Romania (8.0%), Estonia (4.9%) and Lithuania (4.8%). Compared with May 2011, annual inflation fell in fourteen Member States, remained stable in six and rose in six.
The lowest 12-month averages4 up to June 2011 were registered in Sweden (1.5%), the Czech Republic and the Netherlands (both 1.8%), and the highest in Romania (7.8%), Estonia (4.7%) and Greece (4.6%).
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Source: AME Info
BlackRock ETF Landscape: STOXX Europe 600 Sector ETF Net Flows -Week Ending 08-Jul-2011
July 13, 2011--For the week ending 08 July 2011, there were US$85.7 Mn net inflows to STOXX Europe 600 sector ETFs. The largest sector ETF net inflows last week were in basic resources with US$74.7 Mn followed by food and beverage with US$40.1 Mn net inflows while banks experienced net outflows of
US$42.7 Mn.
Year to date, STOXX Europe 600 sector ETFs have seen US$87.5 Mn net outflows. Insurance has seen the largest net outflows with US$191.5 Mn, followed by utilities with US$181.4 Mn net outflows, while banks experienced the largest net inflows with US$260.8 Mn.
As of 08 July 2011, there is US$9.9 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
Sweden: Financial Sector Stability Assessment
July 13, 2011--EXECUTIVE SUMMARY, KEY FINDINGS, AND RECOMMENDATIONS
The Swedish economy has rebounded strongly. The impact of the financial crisis on Sweden’s economy and financial sector was substantial, resulting in a sharp output contraction, currency depreciation, and major banks faced liquidity strains, which, coupled with concerns about asset quality in banks’ operations in the Baltics, have lead to sharp
decline in banks’ share prices.
The authorities’ response was forceful, introducing a wide range of extraordinary measures that helped to contain the impact of the crisis, and restore market stability and confidence. Economic indicators improved markedly in 2010, and banks’
capital position and profitability strengthened, allowing the exit from crisis-response measures to begin in April 2010.
Financial stability analysis indicates that banks are resilient to credit risk, but could face difficulties with respect to liquidity risks. The stress testing results show that banks should be able to maintain adequate capital in the face of severe credit risk shocks, owing to high profits and capital buffers, and relatively high-quality loan portfolios. Liquidity stress tests suggest vulnerabilities due to the banks heavy reliance on short-term wholesale funding. The authorities’ intention to accelerate the implementation pace of Basel III capital requirement, impose higher than minimum capital requirements on the largest and systemically important banks, and tighten liquidity regulations are welcome steps, given the nature of banks’ exposures and prevailing risks.
view the Sweden: Financial Sector Stability Assessment
Source: IMF
Italy: Selected Issues
July 13, 2011--I. STRUCTURAL REFORMS AND GROWTH: WHAT WORKS?1
Based on the economic literature and international experience, this annex identifies the policy measures and institutions in product and labor markets that boost growth and
employment. Evidence points to substantial long-term growth gains for structural reforms in Italy. Advancing structural reforms in key bottleneck areas can lift productivity, and
substantially enhance growth potential.
Measures could focus on pursuing further product market liberalization, reducing the labor tax burden- matched by expenditure cuts, promoting decentralized wage bargaining, and addressing labor market dualism. Labor and product market reforms are complementary.
A. Diagnosis
1. In the last decade, Italy has suffered from low economic growth, weak productivity, and declining competitiveness. Total factor productivity (TFP) has been sharply declining over the last decade, which has resulted in persistently rising unit labor costs, stagnating incomes, a widening competitiveness gap, and anemic growth.
view the Italy: Selected Issues report
Source: IMF
Derivatives Rules to Help Swaps Market Grow $40.7 Trillion, Citigroup Says
July 13, 2011--The market for interest-rate and credit-default swaps will grow more than 10 percent to $435 trillion by 2013 as oversight of over-the-counter derivatives improves price transparency and cuts trading risk, according to Citigroup Inc. (C)
Banks, hedge funds and other investors are bracing for sweeping changes to the private derivatives market, including increased capital requirements and most trades being processed by clearinghouses, which require margin payments. The Dodd-Frank Act, passed in the U.S. last year, and rules being created now by the European Parliament will regulate swaps for the first time in their 30-year history.
Source: Bloomberg
EDHEC-Risk Institute Warns the European Commission of the Inadvisability of Imposing a Tobin Tax
July 13, 2011--In an open letter dated July 12, 2011 addressed to the European Internal Market and Services Commissioner, Michel Barnier, EDHEC-Risk Institute has warned of the inadvisability of imposing a “Tobin tax” on financial transactions in order to fund the future European budget.
On the basis of a position paper* by Raman Uppal, Professor of Finance at EDHEC Business School, EDHEC-Risk Institute’s recommendations are structured around the theoretical evidence on transaction taxes, the empirical evidence on transaction taxes, and implementation challenges:
The findings of theoretical models are mixed about the effectiveness of the Tobin tax to reduce volatility and improve welfare. The Tobin tax will obviously lead to a reduction in the trading of securities on which the tax is imposed. But, a reduction in the trading of financial securities also means that it is now more difficult to smooth consumption over time and across states of nature. The Tobin tax reduces speculative activity in financial markets; but, this tax also drives away investors who provide liquidity, stabilise prices, and help in the price discovery process. Thus, introducing a Tobin tax has both advantages and disadvantages, and the net effect on volatility is likely to be small.
view EDHEC-Risk Institute Letter to European Internal Market and Services Commissioner, July 12, 2011 Börse Berlin-Stable Development In The First Six Months Of 2011 read more ESMA seeks views on future rules for alternative investment fund managers If you are looking for a particuliar article and can not find it, please feel free to contact us
July 13, 2011--In the first half year of 2011 Börse Berlin gained a plus in turnover of 29 per cent in its broker aided specialist trade compared to the same period in 2010. Equiduct stabilizes its turnover at 8.2 bn Euro in the second quarter 2011.
Despite an increasingly difficult market, Börse Berlin is content with the result of the first half year of 2011. Due to a successful first quarter in broker aided trading, turnover increased by 29 per cent to 4.9 bn Euro compared to the first six months of 2010. Number of trades declined slightly by 2.5 per cent and reached a total of 120.826.
Source: Börse Berlin
July 13, 2011--ESMA publishes today a consultation paper (ESMA/2011/209) setting out its proposals for the detailed rules underlying the Alternative Investment Fund Managers Directive (AIFMD). This is in response to the request for assistance which the European Commission sent to ESMA’s predecessor, CESR, in December 2010. ESMA has to deliver its final advice to the Commission by 16 November 2011.
