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ETF Securities lines up potential $1bn listing
May 3, 2011--ETF Securities which launched the first gold ETF in 2003, is lining up a potential $1bn share listing, in the latest sign of euphoria in the sector.
Investment bankers said the ETF provider, which has $28bn of products under management and which specialises in the booming commodities sector, had retained Citigroup and Bank of America Merrill Lynch to discuss its strategic options. These include an initial public offering, subject to market conditions, according to three different people.
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Source: Financial Times
EU financial system still weighed down by risk
May 3, 2011-The risk burden still threatens Europe's financial stability, and the crisis aftermath will last many years, the two vice chairs of the EU's new financial risk watchdog warned the Economic and Monetary Affairs Committee on Monday. Mervyn King and Andrea Enria repeatedly called for the EP's support when pushing through difficult reforms, particularly in better times when the financial sector would lobby fiercely against regulation.
Mervyn King, the first Vice Chair of the European Systemic Risk Board (ESRB) and Governor of the Bank of England, assured MEPs that the ESRB would not "shy away from making all the warnings and recommendations it considered necessary". Andrea Enria, also an ESRB Vice Chair and head of the European Banking Authority, said that one of the ESRB's most pressing tasks would be to tackle the "shadow" banking sector, whose activities escape the rules applying to normal banks.
Political support vital
Asked whether he had the human and financial resources he needed, Mr King insisted that generating the necessary political will would prove the biggest challenge. "The right judgements will be dependent on the existence of will and determination. At times, the ESRB is going to have to take very unpopular decisions and face an immense lobby. We count on the EP to support us in those days" he said.
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Source: European Parliment
Boerse Stuttgart achieves a turnover of around EUR 7.9 billion in April
Trading in securitised derivatives at previous year's level/ higher trading volumes of euro-denominated government bonds
May 3, 2011--According to its order book statistics, Boerse Stuttgart achieved a turnover of around EUR 7.9 billion in April 2011. This meant that trading volumes were at the level of April 2010. In comparison with the eventful months at the beginning of the year, trading activities among investors were less buoyant also due to a number of public holidays.
The lion's share of trading volume was accounted for by securitised derivatives. At more than EUR 4.1 billion, turnover in April was lower than in the record-breaking month of March, but nevertheless slightly up on the figure for April 2010. Both leverage products and investment products accounted for around EUR 2 billion of turnover.
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Source: Boerse Stuttgart
Development of Financial Markets in Central Europe: the Case of the CE4 Countries -IMF Working Paper
May 3, 2011-- Summary: Financial markets in the CE4 countries are still shallow compared to other advanced EU countries. While the government bond markets are comparable in size, measured by capitalization in percent of GDP, the private bond, private credit, and equity markets lag behind.
Empirical analysis in this paper helps identify factors that explain this phenomenon. We find that the observed differences cannot be explained by macroeconomic variables only, but incorporating indicators of institutional development and external funding eliminates the gap in the case of the equity and private credit markets. However, for the private bond market a significant gap remains even after accounting for these factors.
view the IMF working paper-Development of Financial Markets in Central Europe: the Case of the CE4 Countries
Source: IMF
ECB: challenges to financial integration in 2010
May 2, 2011--After the improvement observed in 2009 in many market segments and despite continuous equity market integration in 2010, the financial environment with the worsening fiscal situation in some euro area countries posed challenges for European financial integration, the European Central Bank’s Financial Integration report published today concluded.
The main policy-relevant messages of the report can be summarised as follows:
Euro area capital markets continued to increase in size in recent years, and cross-country differences in size declined.
The worsening of the fiscal situation in some countries posed serious challenges to financial integration in 2010. The money and bond markets were particularly affected.
The sharp divergence of yields in some European government bond markets reflected an increase in the perception of sovereign risks as well as liquidity risks, in some cases exacerbated by market overreaction.
The euro area equity markets were less strongly affected by the recent developments. Most available indicators suggest that the equity market integration actually strengthened in 2010.
view the report-Financial Integration in Europe May 2011
Source: ECB
The Autorité des marchés financiers calls for the greatest vigilance regarding non-financial products1
May 2, 2011--After the stock market crises of the dot-com bubble in 2000 and subprime mortgages in 2007, retail
investors have become more wary of financial investments and are increasingly tempted to place their
savings in other types of investments, notably due to the current low level of interest rates.
Over the last few years, the AMF has noted growth in offers from market players proposing investments,
sometimes with highly attractive yields, in sectors as varied as works of art, solar panels, stamps, letters
and manuscripts or other niche sectors.
The AMF would like to remind investors that these sectors are not all subject to any specific regulations
other than the Consumer Code and the Civil Code.
Whenever an adviser or intermediary offers an investment in a product other than financial products, ask them or the AMF whether the product in question has an information document approved by the AMF, which is mandatory in certain cases.1 If there is no such information document, the product they are offering is not regulated by the AMF. In such cases, your adviser or intermediary is not bound by the following rules:
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Source: AMF
Average daily volume of 10.5 million contracts at Eurex Group in April
Eurex Exchange: stable volume year-to-date in 2011/Eurex Repo: continues to grow in all markets year-on-year
May 2, 2011--: In April 2011, the international derivatives exchanges of Eurex Group recorded an average daily volume of 10.5 million contracts (April 2010: 12.7 million). Of those, 7.6 million were Eurex Exchange contracts (April 2010: 9.4 million), and 2.9 million contracts (April 2010: 3.3 million) were traded at the U.S.-based International Securities Exchange (ISE).
The decline of Eurex Exchange volume y-o-y is due to the lower volatility compared with April 2010 and the adjustment of contract specification of equity derivatives. In total, 145.1 million contracts were traded at Eurex Exchange and 58.3 million at ISE.
Eurex Exchange traded 49.9 million equity index derivatives contracts (April 2010: 58.1 million). The single largest contract was the future on the EURO STOXX 50® Index with 20.8 million contracts. The option on this blue chip index totaled 20.2 million contracts. Futures on the DAX index recorded 2.3 million contracts while the DAX options reached another 4.3 million contracts. The Eurex KOSPI Product recorded approximately 167,000 contracts, an ADV of almost 8,800 contracts. On 13 April, a new daily order book volume peak was recorded with 17,688 Eurex KOSPI contracts.
The equity derivatives (equity options and single stock futures) segment at Eurex Exchange recorded 54.3 million contracts (April 2010: 80.2 million). Thereof, equity options totaled 19.6 million contracts and single stock futures equaled 34.7 million contracts. The decrease of equity derivatives volume y-o-y is mainly due to the change of contract specifications. In Q1 2011, Eurex Exchange increased the contract size of most equity options and single stock futures to match international standards, with the effect of lower turnover in these products. The adjusted figure of monthly volume in the equity derivatives segment is 73.4 million contracts.
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Source: Eurex
Flash estimate - April 2011 Euro area inflation estimated at 2.8%
April 29, 2011--Euro area1 annual inflation2 is expected to be 2.8% in April 2011 according to a flash estimate issued by Eurostat, the statistical office of the European Union. It was 2.7% in March3.
Computation of flash estimates
Euro area inflation is measured by the Monetary Union Index of Consumer Prices (MUICP).
To compute the MUICP flash estimates, Eurostat uses early price information relating to the reference month from Member States for which data are available4 as well as early information about energy prices.
The flash estimation procedure for the MUICP combines historical information with partial information on price developments in the most recent months to give a total index for the euro area. No detailed breakdown is available. Experience has shown the procedure to be reliable (19 times exactly anticipating the inflation rate and 5 times differing by 0.1 over the last two years).
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Source: Eurostat
Ukrainian Exchange launches options trading
April 28, 2011--Ukrainian Exchange has launched trading in options contracts on April 26 2011, representing a futures-style quarterly option on UX Index Futures, i.e. the Ukrainian stock index.
The Exchange said presently options with settlement on 15 June 2011 and 15 September 2011 are being traded.
The options are American style contracts, i.e. early exercise is possible.
According to the Exchange, the 17 strike prices with intervals of 100 points have been introduced in the trading system. The initial strike price range is from 1900 to 3500 points.
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Source: BBR
DB- Equity Research-Europe-Equity cash flows continue to propell the ETF market forward
April 28, 2011--Investment Outlook: Q2 2011 continues to bring in healthy cash inflows into the European ETP markets
For the third week in a row, cash inflows into the European ETP markets stayed above the €1 billion mark. Last week witnessed a total of €1.2 billion inflows with equities and commodities sharing the bulk among them. Equities received €952 million cash flows with European developed country ETFs collecting €849 million week on week.DAX ETFs received almost the entire flows in this segment pushing their YTD inflows to €5 billion. Regional equity ETFs focused on Eurozone lost €225 million in outflows in the past week. Most of these outflows were from ETFs tracking the Euro Stoxx 50 Index.YTD flows out of Euro Stoxx 50 ETFs now stand at €2.7 billion.
Commodities received €320 million inflows in the past week taking their overall YTD flows to €2.5 billion. Broad commodity ETFs, platinum and gold were the primary beneficiaries collecting inflows of €246 million, €55 million and €45 million respectively.
Fixed Income ETFs witnessed the exit of €110 million with money market ETFs alone accounting for the majority of outflows. The recovery in equity markets and asset price increase in commodities seems to have triggered an exit from the fixed income ETFs into the relatively risky albeit higher return generating asset classes. The first few weeks of Q2 2011 have seen a cumulative cash outflow of €405 million from fixed income ETFs.
Assets Under Management (AUM): Equity & Commodity led increase
Total European ETP assets increased by 1.3% and ended the previous week at €242.9 billion. Equities gained €2.2 billion in assets aided by healthy cash inflows and rising markets. Most of the European equity benchmarks ended higher than the previous week’s close: DAX, CAC, Euro Stoxx 50 & the FTSE 100 gained 1.63%, 1.19%, 0.59% and 0.37% respectively. This was the most pronounced in the case of European developed country ETFs (which include DAX ETFs) where AUM increased by €1.3 billion week on week.
Overall Commodity AUM increased by close to €1 billion in the past week. Rising prices of precious metals notably gold and silver added close to €0.5 billion in assets, compensating for the rather modest weekly cash flows into the segment. Fixed Income AUM remained flat in the last week with €42 billion in overall assets.
On-Exchange Total Weekly Turnover: Modest weekly increase but lower than 2010 levels
Weekly on exchange ETP total turnover increased by 3.5% to end the week at € 9.5 billion. Equity turnover gained moderately by 6.2% to end the week at €7 billion. Commodity turnover declined by more than 10% (€167 million) and had a weekly total figure of €1.4 billion. Fixed Income turnover gained a modest 7.4% to reach €945 million.
New ETP Product Launch Calendar: 5 new launches, 18 listings.
UBS launched the EUR, CHF and GBP versions of their existing ETF on DJ-UBS Commodity Index .These were offered in both A and I share classes and were listed on the Swiss Stock Exchange.
Deutsche Bank introduced an ETF tracking the MSCI BRIC Net Total Return index. This ETF provides exposure to the large and midcap companies in Brazil, Russia, India and China. A leveraged short ETF tracking the FTSE 100 Super Short Strategy Index was also launched. The Index is linked to two times the daily inverse performance of the FTSE 100 Index These ETFs were listed on the London Stock exchange.
Overall there were 13 equity and 5 commodity ETFs that were cross-listed in the European exchanges over the last week. Please see Figure 10 for more details.
To request a copy of the report
Source: Christos Costandinides, ETF Strategist of Deutsche Bank Global Equity Index & ETF Research
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