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Clampdown on derivatives trading
May 24, 2011--New EU legislation designed to regulate the trade in derivatives - widely believed to have contributed to the global financial crisis - moved a step closer on Tuesday with a vote by Parliament's Economic Affairs Committee.
The draft regulation - on over-the-counter derivatives (OTCs), central clearing parties (CCPs) and trade repositories - aims to bring greater safety, transparency and stability to the OTC derivatives market, which was valued at around €425 trillion in 2009. Information on OTC derivative contracts would have to be reported to 'trade repositories' and be accessible to supervisory authorities. OTC derivative contracts would need to be cleared through central counterparties (CCPs), thus reducing counterparty credit risk, i.e. the risk that one party to the contract defaults. A key supervisory role is envisaged for the new European Securities and Markets Authority (ESMA).
The Commission's draft was approved with amendments by the Economic Affairs Committee and will now go to the full Parliament for a vote in July. The result of today's committee vote was 36 in favour, 1 against and 2 abstentions.
Supervision
The committee envisages a central role for ESMA. The new European supervisor will work closely with national supervisory authorities, have an important stake in authorising new CCPs to the market and should be allowed to carry out on-site inspections.
Narrow scope, few exemptions
MEPs rejected suggestions by some EU Member States that all derivatives should be governed by this regulation. Instead they want the rules to apply only to OTC derivatives, as the Commission proposes and was agreed by the G20 group. However, to ensure ESMA has the full picture, they want reporting obligations to apply to all derivatives.
The committee's report, drafted by Werner Langen (EPP, DE), is strict regarding exemptions to the clearing obligation. However, for pension funds there will be a special regime, provided that the national capital requirements provide a guarantee similar to cleared contracts.
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Source: European Parliament
Alan Miller, chief investment officer and founding partner of SCM Private, manages exchange traded funds and gives a robust response to Terry Smith's blog post on the risks he sees in ETFs
May 24, 2011--Alan Miller, chief investment officer and founding partner of SCM Private, manages exchange traded funds and gives a robust response to Terry Smith's blog post on the risks he sees in ETFs.
Read Terry Smith's view of exchange traded funds here.
1. “Being tradeable on the secondary market, Smith says, means there is a possibility that market participants will short ETFs themselves.”
As Mr Smith should know, and I can speak as someone who years ago took the great pleasure of shorting Mr Smith’s former employer, Collins Stewart (Other OTC: COLLF.PK - news) , for someone to short a share requires someone on the other side to buy it (so they can lend it to the person shorting it!).
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Source: Yahoo UK
ETFs Are Becoming a Shadow Banking System, Tullett’s Smith Says
MAy 24, 2011--Exchange-traded funds are developing in a similar way to the shadow banking system that almost brought down the world’s financial system in 2008, according to Terry Smith, chief executive officer of Tullett Prebon Plc. (TLPR)
ETFs often fail to track the underlying asset whose behavior they’re designed follow, are exposed to the risk of a provider going bankrupt and are vulnerable to heavy short- selling, Smith, 58, wrote today in a blog titled “ETFs - Worse than I thought.”
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Source: Bloomberg
Survey raises concerns over eurozone recovery rate
May 23, 2011--Rising concerns emerged Monday over the state of European economic recovery -- with key indicators slowing sharply, and eurozone stragglers behind Germany and France showing signs of stagnation, a widely-watched survey said.
London-based research giant Markit's composite eurozone index for manufacturing and services output, compiled via company purchasing managers' questionnaire replies, suggested eurozone growth slowed to a seven-month low in May.
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Source: EUbusiness
Italy reports decade of lowest growth in Europe
May 23, 2011-- - Italy has clocked the lowest growth rate in the European Union in the past decade with an average yearly rise in gross domestic product (GDP) of just 0.2 percent, official data out on Monday showed.
The average for the European Union between 2001 and 2010 was 1.1 percent.
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Source: EUbusiness
State Street sees increased private equity and real estate footprint from Mourant purchase
May 23, 2011--The acquisition earlier this year of Mourant International Finance Administration, the alternative fund services arm of the Jersey-headquartered legal and financial services firm, is proving a highly successful move, according to State Street senior vice-president and head of private equity and real estate services Phil McGowan (pictured).
"We are expecting strong growth in Jersey and Guernsey, and we are thinking that private equity and real estate are extremely good places to be right now,” McGowan says. “That’s why we made the acquisition and are putting our resources into the Channel Islands.
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Source: Hedge Week
Euro-priced gold jumps to record high
May 23, 2011--The price of gold jumped to a record in euros as renewed fear about the eurozone debt crisis drove investors to move money out of the single currency and into the precious metal.
On the spot market, gold bullion rose to a peak of €1,080.04 a troy ounce, surpassing the previous euro-denominated record set in December last year.
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Source: FT.com
Clearstream facilitates access to Israeli securities
Settlement link to Israel launched on 23 May 2011 * Clearstream’s global reach now includes 52 domestic markets
May 23, 2011- Clearstream, the global liquidity provider within Deutsche Börse Group, enables international investors to easily access Israeli securities through a new settlement link that was launched today.
The international central securities depository (ICSD) will offer settlement and custody services for all asset classes denominated in Israeli Shekel, i.e. equities, corporate bonds, government bonds, treasury bills and warrants.
The domestic settlement link will enable Clearstream customers to develop post-trade solutions for the Israeli market, with Clearstream as their single point of access. Citibank N.A. Tel Aviv is Clearstream’s direct agent in Israel.
Mark Gem, Member of the Executive Board and Head of Network Management at Clearstream, said: “We continue to expand our global reach by adding Israel to our settlement network. Clearstream is the place where issuers and investors meet to settle their transactions, for funding and investing respectively. The settlement link to Israel will help bringing these parties together. We will continue to facilitate market access and openness.”
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Source: Clearstream
NYSE Euronext announces new ETF -HSBC HSBC MSCI CHINA ETF
May 23, 2011--NYSE Euronext is pleased to announce that HSBC has listed 1 new ETF on NYSE Euronext's Paris
market today:
ETF name:HSBC MSCI CHINA ETF
Trading name:HSBC MSCI CHINA
ISIN: IE00B44T3H88
Symbol: CNY
Reuters RIC: CNY.PA
BBG Ticker:CNY FP
Underlying index:MSCI China
TER: 0,60%
Source: NTSE Euronext
Seven EU states fear 'diluted' Basel banking rules: source
May 20, 2011--Seven European states including Britain and Spain, where banks suffered heavily during the financial crisis, have demanded that new rules on banks' capital are not watered down when applied by Brussels.
Banks have until 2019 to reach full compliance under an eight-year transition laid out last year in Basel III international regulations aimed at shoring up banks against repeats of the 2007-2008 financial crisis.
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Source: EUbuiness
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