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Bank and broker trading networks under attack
April 7, 2011--Europe’s exchanges have launched a scathing attack on the operations of banks and brokers, warning that the proliferation of off-exchange trading means the region is “in danger of turning into a network of private markets”.
The criticism is in a letter to Michel Barnier, European Union internal market commissioner, from the Federation of European Securities Exchanges which represents 46 bourses.
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Source: FT.com
ECB hikes interest rates
April 7, 2011--The European Central Bank raised its main interest rate on Thursday for the first time since July 2008 just as Portugal became the latest victim of the eurozone's deficit and debt crisis.
The increase in the ECB's benchmark refinancing or "refi" rate to 1.25% also marked the first change in either direction since it was cut to a record low of 1.0% in May 2009.
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Source: FIN24
Exchanges And Data Vendors To Restore Post-Trade Transparency In The European Equity Market
European exchanges represented by FESE, the Federation of European Securities Exchanges, have
together with the London Stock Exchange, Bloomberg and Thomson Reuters agreed to adopt common
standards that will restore post trade transparency in the European equity markets.
April 7, 2011--Building on the trade reporting standards initiated by an industry working group under the auspices of
the Committee of European Securities Regulators (now European Securities and Markets Authority) for
Over‐The‐Counter reporting, European exchanges and data vendors today announce the start of the
implementation of trade reporting standards for orderbook trading on Regulated Markets and
Multilateral Trading Facilities.
These trade reporting standards are complementary to the efforts being undertaken by the data vendors to ensure consistent output across multiple data consolidators. Furthermore they are supportive of the wide range of collaborative initiatives, including those being led by the Association for Financial Markets in Europe.
The key benefits of the initiative are:
The standards will enable trade data resulting from executions on Regulated Markets and MTFs
to be easily consolidated with OTC trade reports.
The execution venues committed to these standards have a combined market share of over 90%
of all European equity orderbook trading.
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Source: FESE
Diversified Broad Commodity ETPs See Record Inflows in Q1 2011
April 7, 2011--According to ETF Securities’ forthcoming Global Commodity ETP Quarterly report for Q1 2011, diversified broad commodity exchange-traded-products (ETPs) were the most popular choice of commodity ETPs for investors in the first quarter of 2011. Hedging against rising inflation, gaining exposure to strong emerging market growth and diversifying portfolios are some of the key factors driving this demand. Diversified broad commodity ETPs saw global assets rise by $5.2bn in Q1 2011; the largest quarterly inflows on record and representing 51% of AUM growth in commodity ETP assets during the period.
It is estimated that rising food and energy prices have been responsible for up to half of the total increase in headline inflation rates in the world’s two largest economies: the US and China. With the inventories of most agricultural commodities near historically low levels and weather events hitting supply in key producing countries, agriculture prices have been on a strong uptrend since last year. More recently, political and social upheaval in North Africa and the Middle East has driven oil prices higher. Investors appear to be using commodity ETPs as a way to hedge against further price increases.
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Source: ETF Securities
EDHEC Risk Institute-Europe launches with London opening
April 7, 2011-EDHEC-Risk Institute, the premier European centre for financial research and its application to the industry, hosted an exclusive reception last night at its newly-opened London premises to mark the launch of EDHEC Risk Institute–Europe.
The event, attended by chief executive officers and senior representatives of financial institutions, was opened by Olivier Oger, Dean of EDHEC Business School and Professor Noël Amenc, Director of EDHEC-Risk Institute and underlined the relevance of research conducted by EDHEC-Risk Institute for financial institutions and end-investors. With the support of the financial Industry, EDHEC Risk Institute–Europe aims to continue to be the leading academic institution fostering innovation and high professional standards in the investment industry. The opening of the London office follows the launch of EDHEC Risk Institute–Asia in Singapore in January of this year.
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www.edhec-risk.com for more information.
Source: EDHEC Risk Institute–Europe
Covered bonds protected by Britain’s regulator
April 6, 2011--UK banks’ covered bonds would be protected even if the bank that sold them went under, policymakers have confirmed as part of a review that underlined the growing importance of this once-niche market to banks’ financing plans.
The consultation, which was launched jointly on Wednesday by the UK Financial Services Authority and the UK Treasury, comes as European banks’ issuance of the bonds is running at a record pace and other countries, including the US and Australia, are considering whether to create their own domestic markets
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Source: FT.com
BlackRock ETF Landscape: European STOXX 600 Sector ETF Net Flows for Week Ending 01-Apr-2011
April 6, 2011--For the week ending 01 April 2011, there were US$237.2 Mn net outflows from STOXX Europe 600 sector ETFs. The largest sector ETF net outflows last week were in insurance with US$111.5 Mn followed by banks with US$77.1 Mn net outflows while basic resources experienced net inflows of US$152.6 Mn.
Year to date, STOXX Europe 600 sector ETFs have seen US$418.1 Mn net inflows. Banks has seen the largest net inflows with US$438.0 Mn, followed by oil and gas with US$430.5 Mn net inflows while industrial goods and services experienced the largest net outflows with US$163.8 Mn.
As of 01 April 2011, there is US$10.8 Bn AUM invested in the STOXX sector ETFs which is double the US$5.4 Bn open interest in the sector futures. The ETF AUM is greater than the open interest in the corresponding futures contract in 16 out of 19 sectors.
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Source: Global ETF Research & Implementation Strategy Team, BlackRock
UK publishes review of the covered bond market
April 5, 2011--The Government and the FSA published today a joint review of the UK’s covered bond regulation.
Responses to the joint review should be submitted by Friday July 1 2011.
Covered bonds are an important source of funding for banks and building societies that can complement unsecured funding and securitisation.
The review proposes a number of measures that seek to build upon the UK’s existing covered bond regime. These measures aim to ensure that the UK covered bond market is better aligned with markets in other countries, enabling UK issuers of covered bonds to compete on a more level playing field.
The review also provides an update on the UK's engagement with international partners on broader policies concerning covered bonds. In particular, the UK believes that in the exercise of any future ‘bail-in’ powers, secured creditors’ rights to collateral should not be over-ridden.
Mark Hoban, Financial Secretary to the Treasury, said:
“Making sure banks and building societies lend to families and businesses is vital for sustaining the recovery. Today’s review demonstrates the Government’s commitment to supporting the UK’s growing covered bond market. The review will bring out the strengths of the UK’s covered bond regime and help lenders raise the funds they need to lend.”
view Review of the UK's regulatory framework for covered bonds
Source: HM Treasury
UK official holdings of international reserves, March 2011
April 5, 2011--This monthly press notice shows details of movements in March in the UK’s official holdings of international reserves, which consist of gold, foreign currency assets and International Monetary Fund assets. These reserves are maintained primarily so that the UK Government’s reserves could be used to intervene to support Sterling, or the Bank of England’s reserves could be used to support the Bank’s monetary policy objectives.
If such interventions were to occur, then they would be shown and explained in this release. The Background note at the end of this release explains more about the reserves, and about these statistics.
In summary this month’s release shows that, in March 2011: Intervention operations were undertaken by the Bank as instructed by the Government.
Movements in reserves and levels of reserves were as follows:
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Source: HM Treasury
Eurozone economic activity survey gives mixed signals
April 5, 2011-- A closely-watched survey indicating the pace of growth across the eurozone logged a 43-month high for the services sector in March, upwardly-revised EU data showed on Tuesday.
The composite eurozone index for manufacturing and services output compiled by the London-based Markit research firm fell 0.6 points from February to 57.6 points in March, a slight improvement from a previous estimate of 57.5 points.
Any reading above 50 indicates activity is expanding.
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Source: EUbusiness
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