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European Parliament: MEPs Crack Down On Sovereign Debt Speculation And Naked Short Selling
March 7, 2011--A ban on certain trades in sovereign bonds, and requirement that traders settle their uncovered positions by the end of each trading day, were two key outcomes of Monday's Economic Affairs Committee vote on a draft EU regulation on short selling and credit default swaps. MEPs also inserted a requirement that short sale transactions be reported less often, but beefed up the rules to ensure that fines are dissuasive
"Short selling", whereby speculators bet on a fall rather than a rise in the price of a security to make a profit, and "credit default swaps", essentially to insure against a state defaulting on its debt obligations, were both heavily implicated in Europe's recent sovereign debt crises. This regulation, being steered through Parliament by Pascal Canfin (Greens/EFA, FR), takes one more step towards curbing speculation and improving transparency in the financial services sector.
Insuring against risk
The committee position would prohibit anyone from being involved in credit default swap (CDS) transactions if they do not already own sovereign debt linked to that CDS ("naked" CDS trading), or securities whose price depends heavily on the performance of the country, such as shares in a major company based there. This position therefore innovates, not only by banning CDS naked trading, but also by introducing a correlation that would allow investment firms some room for manoeuvre.
One day to settle "naked" short sales
Although the committee position does not entirely ban "naked" short selling, it sets a very tight deadline for converting a naked short sale into a short sale. By the end of the trading day, any naked short sales undertaken must have been converted, states the position. A seller failing to make the conversion on time would incur fines which, the amended text states, "must be sufficiently high to prohibit any profits being made".
The position adopted in committee retains the Commission's tough "locate and reserve rule", whereby a seller must not only identify from where it plans to borrow the shares in question, but must also have a guarantee that it will indeed be able to borrow them when the time comes.
Reporting more but less often
The committee position imposes further reporting requirements on investment firms, particularly in exceptional circumstances. It also allows national supervisory authorities to require lenders to notify them in exceptional situations. In emergencies, national authorities will be also required to provide more information within 24 hours to the European Securities and Markets Authority (ESMA), when requested.
On the other hand, the committee position only requires investment firms to report on their short sale transactions at the end of the trading day, rather than reporting each short sale as it happens, as proposed by the Commission. Investors would also be required to publically disclose less information than would have been required by the Commission's original proposal.
Next steps
MEPs primarily involved with steering the regulation through Parliament will now sit down with Member States to thrash out a deal which can be then be tabled for a plenary vote in the coming months.
The regulation is expected to be in force by 2012.
Source: European Parliament
Poland deficit to reach 3% in 2013, says PM
March 4, 2011--- Poland will rein in its public deficit to 3.0 percent of the gross domestic product (GDP) in 2013, Poland's Prime Minister Donald Tusk said Friday in Warsaw.
"It shouldn't be difficult to bring the public deficit to 3.0 percent by 2013 without too many painful measures," Tusk said quoted by TVP Polish television.
"It seems it would be difficult to bring the deficit down to 3.0 percent in 2012. But a level in the range of 3.5 percent, 3.7 percent to 3.8 percent should be acceptable to the (European) Commission," he said.
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Source: EUbusiness
DB Global Equity Index and ETF Research : Commodities gain as the Equity ETF market registers its first negative cash flow week for 2011
Investment Outlook: Investors continue to turn to commodities
March 4, 2011--quity markets had a rough week around Europe last week, with all major indices experiencing large drops. Germany’s DAX dropped 3.3%, France’s CAC fell 2.1%, the UK’s FTSE 100 dropped 1.3% and the broad European Euro Stoxx 50 dropped 2.7%. This negative equity market climate contributed to the European ETP industry experiencing negative equity flows. It also largely contributed to a 1.4% decline in ETP assets. The rise in commodity prices notably crude oil and gold failed to offset this decline and European ETP assets lost €3.4 billion to end the week at €236.3 billion.
Cash inflows were muted for the week that finished on 25th Feb, registering inflows of €253 million as compared to €938 million in the week ended 18th Feb 2011.
ETCs attracted most of the cash inflows [€396 million] of this week’s slim pickings. Within commodities, gold led the segment’s flows and collected €114 million followed by crude oil which received €95 million of net cash flows in the past week. Broad commodity benchmarks gathered €89 million in the past week and retained the top spot in year to date commodity ETP flow figures with over €635 million.
ETFs tracking developed markets outside of Europe received the bulk of equity cash flows with €294 million inflows in the previous week. European developed market ETFs witnessed cash outflows of €356 million. Emerging market ETFs also saw net outflows of €90 million for the previous week. European sector ETFs which had been consistently attracting healthy inflows week on week since the start of the year reversed direction and ended the week with €129 million in net cash outflows.
Fixed Income ETFs had a flat week with €34 million in net cash flows. Money market ETFs registered outflows of €201 million and corporates welcomed €109 million inflows in the previous week.
Assets Under Management (AUM): Decline in equity markets eroded assets
Total European ETP assets decreased by 1.4% and ended the previous week at €236.3 billion. Equity ETFs led the decline by shaving off €4 billion in the previous week. Fixed Income ETF assets were flat and ended the previous week at €41.6 billion.
Commodities emerged as the only major asset class to register modest weekly gains and ended the week at €39.1 billion in assets. Commodity ETPs added €0.7 billion in assets thanks to rising energy and precious metals prices which include crude oil, gasoline, gold and silver.
On-Exchange Total Weekly Turnover: Rise in equity and commodity trading activity pushes turnover to year highs
Weekly total on-exchange ETP total turnover registered a sharp increase of 29% to end the week at €12.9 billion. This represents gains of close to €2.9 billion from the week that ended 18th Feb 2011 when weekly total turnover figures were close to €10 billion. Equities contributed nearly 75% to this increase by adding close to €2.2 billion to total ETP turnover.
European single country and broad equity benchmarks added more than €1 billion in turnover in the past week. Weekly ETF turnover in short and leveraged equity ETFs went up by €0.7 billion signaling increased directional positions on equity benchmarks.
Fixed Income ETF turnover declined by 19% and ended the week at €0.8 billion.
New ETP Product Launch Calendar: 4 new cross-listings on Borsa Italiana.
Product launches took a pause in the previous week with no new product launches.
Credit Suisse extended the reach of their newly launched equity and fixed income ETFs by cross-listing those on Borsa Italiana. These included 2 equity ETFs on MSCI World and alternative energy and 2 fixed income ETFs tracking US & European money market rates.
To request a copy of the report
Source: Deutsche Bank Global Equity Index & ETF Research
EPEX Spot / EEX Power Derivatives:Power Trading Results in February 2011
March 3, 2011--In February 2011, a total volume of 116.8 TWh was
traded on the Power Spot and Derivatives Market operated by EPEX Spot SE and EEX Power Derivatives (same month of the previous year: 112.3 TWh).
In February 2011, power trading on the day-ahead auctions on EPEX Spot accounted for a total of 24,195,345 MWh (February 2010: 21,034,205 MWh) and can be broken down as follows:
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Source: EEX
IMKB shows notable rebound as risk appetite increases
March 3, 2011---The Istanbul Stock Exchange benchmark index (IMKB-100) rose significantly during Thursday’s trading session as investors’ risk appetite went up.
As investors were talking about the ?stanbul bourse entering into a “bear market,” which refers to falling stock indices, the ?MKB recovered from three days of consecutive drops and gained by 2.70 percent, or 1,565 points by the time Today’s Zaman went to print, as Swiss Credit Suisse Group AG raised its recommendation on the equity market to “overweight” and a Turkish Statistics Institute (TurkStat) report showed that monthly inflation in February came below a 41-year low level on Thursday, leading to an increase in investors’ risk appetite.
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Source: Todays Zaman
Changes in SDAX and TecDAX
Deutsche Börse reviews index composition
March 3, 2011--: On Thursday, Deutsche Börse has decided on the new composition of its equity indices SDAX and TecDAX. Hamborner REIT is included in SDAX and replaces Pfleiderer. Manz Automation leaves TecDAX and is replaced by Süss MicroTec. Gigaset replaces Conergy in TecDAX. This decision is based on the assignment of Gigaset to the technology segment.
These changes will take effect on 21 March 2011.
SDAX
Inclusion: Hamborner REIT AG (DE0006013006)
Exclusion: Pfleiderer AG (DE0006764749)
TecDAX
Inclusion: Süss MicroTec AG (DE0007226706), Gigaset AG (DE0005156004)
Exclusion: Manz Automation (DE000A0JQ5U3), Conergy AG (DE0006040025)
The next equity index review is scheduled for 6 June 2011.
Source: Deutsche Börse
Hedge funds head for Malta to escape regulation
March 3, 2011--Some of London’s biggest hedge fund managers are shifting their operations to Malta in response to both the rising costs of business and the growing regulatory burden in the UK.
The Mediterranean island is emerging alongside traditional rivals to London, such as Swiss towns Geneva and Zug, as another European location for hedge fund managers keen to maintain flexible operating arrangements – and avoid heavy tax bills.
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Source: FT.com
EU moves towards 'single energy market' with new regulator
March 3, 2011--The European Union inaugurated its new energy regulators' office in Slovenia on Thursday, as new legislation for liberalising the EU's internal energy market came into force
"Today marks a historic milestone in Europe's single energy market," European Commissioner for Energy Gunther Oettinger said at the inauguration ceremony in Ljubljana of the bloc's Agency for the Cooperation of Energy Regulators (ACER).
He also welcomed into force the European Union's so-called third energy package, passed by the European Parliament in 2009.
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Source: EUbusiness
London Stock Exchange Group Monthly Market Report - February 2011
March 3, 2011--London Stock Exchange Group (LSE.L) sits at the heart of the world’s financial community, offering international business unrivalled access to Europe’s capital markets. In February a total of 25.4 million trades were carried out across the Group’s electronic equity order books with a combined value of £191.3 billion (€226.1 billion), up eight per cent on February 2010 (£177.8 billion).
UK Equities Order Book
During the month, the average daily number of trades increased five per cent year on year to 635,187; the average daily value traded on the UK order book was £5.0 billion (€5.9 billion), down two per cent.
The LSE’s share of total UK order book trading for February was 65.2 per cent.
Italian Equities Order book
On the Italian order book, the average daily number of trades was 306,219, up eight per cent on the same month last year; the average daily value traded on the order book increased 15 per cent year on year to €3.7 billion (£3.1 billion).
Borsa Italiana’s share of total Italian order book trading for February was 83.3 per cent.
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Source: London Stock Exchange Group
ETF Securities Lists Two New Infrastructure ETFs
First ETF in the world to track Dow Jones Brookfield Emerging Markets Infrastructure Index
First ETF in Europe to track Dow Jones Brookfield Global Infrastructure Index
Both funds aim to provide pure-play infrastructure exposure across a broad range of sectors, enabling investors to benefit from the expected long-term global growth in this space.
March 2, 2011--ETF Securities (ETFS) has today listed the ETFX Dow Jones Brookfield Global Infrastructure Fund and ETFX Dow Jones Brookfield Emerging Markets Infrastructure Fund on the London Stock Exchange (LSE).
Both funds, which are part of ETF Securities' equity ETF platform ETF Exchange (ETFX), are designed to track specialist infrastructure indices created by Dow Jones Indexes and Brookfield Asset Management, a global asset manager focused on property, power and infrastructure assets.
Constituents in the Dow Jones Brookfield Global Infrastructure Index and the Dow Jones Brookfield Emerging Markets Infrastructure Index are required to derive a significant amount of cash flow from infrastructure lines of business and aim to provide exposure to all sectors of the infrastructure market, from oil & gas storage and transportation to toll roads and ports. The indices are believed to offer broader exposure to pure-play infrastructure than many other listed infrastructure products currently available to investors in Europe.
The ETFX Dow Jones Brookfield Global Infrastructure Fund currently provides exposure to 90 securities across 20 countries with a focus on developed markets. The ETFX Dow Jones Brookfield Emerging Markets Infrastructure Fund focuses on developing economies and currently provides exposure to 71 securities across 16 countries.
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Source: ETF Securities
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