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Agencies Seek Comment on Swap Margin and Capital Requirements
April 12, 2011--Five federal agencies are seeking comment on a proposed rule to establish margin and capital requirements for swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The rule is proposed by the Federal Reserve Board, the Farm Credit Administration, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, and the Office of the Comptroller of the Currency. The proposed rule would require swap entities regulated by the five agencies to collect minimum amounts of initial margin and variation margin from counterparties to non-cleared swaps and non-cleared, security-based swaps
The amount of margin that would be required under the proposed rule would vary based on the relative risk of the counterparty and of the swap or security-based swap. A swap entity would not be required to collect margin from a commercial end user as long as its margin exposure is below an appropriate credit exposure limit established by the swap entity. A swap entity would also not be required to collect margin from low-risk financial end users as long as its margin exposure does not exceed a specific threshold. The proposed margin requirements would apply to new, non-cleared swaps or security-based swaps entered into after the proposed rule's effective date. The proposal also seeks comment on several alternative approaches to establishing margin requirements.
Provisions in the Dodd-Frank Act also require the agencies to establish capital requirements for regulated swap entities. The proposed rule would implement these provisions by requiring swap entities to comply with the existing capital standards that apply to those entities as part of their prudential regulation, as those capital standards already address non-cleared swaps and non-cleared, security-based swaps.
Staff of the agencies consulted with staff of the Commodity Futures Trading Commission and the U.S. Securities and Exchange Commission in developing the proposed rule.
The agencies request comments on the proposed rule by June 24, 2011.
view the MARGIN AND CAPITAL REQUIREMENTS FOR COVERED SWAP ENTITIES
Source:Board of Governors of the Federal Reserve System
iShares enters exchange traded commodity market
April 12, 2011--iShares has branched out into exchange traded commodities (ETCs) after listing four physically backed products on the London Stock Exchange.
The iShares Physical Gold ETC, iShares Physical Silver ETC, iShares Physical Platinum ETC and iShares Physical Palladium ETC aim to track the spot prices of the underlying metals.
ETCs are debt securities, rather than funds or ETFs, backed by metals held in separate accounts in secure vaults. They give investors exposure to the prices of precious metals without them having to take physical ownership.
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Source: Money Observer
Deutsche Börse offers currently fastest connectivity for trading community in London
April 12, 2011-Deutsche Börse today announced a significant improvement of its IT network between the financial center London and Deutsche Börse Group's trading platforms in Frankfurt/Main.
The Group deployed new enhanced 10 Gigabit data links between Frankfurt and London delivering the currently lowest possible latency of 4.33 milliseconds. Technical partner for this ultra-fast connectivity is Colt Technology Services. These links connect the London based new Deutsche Börse low latency access point at Telehouse with the matching engines of Eurex and Xetra in Frankfurt.
“We are very pleased to offer our UK based customer unprecedented fast connection between the financial centres,” said Michael Girg, Head of Networks Support at Deutsche Börse. “With new shortest geographical paths, Colt has set a new benchmark that supports us in our continuous striving for delivering fastest access to our trading platforms.”
"The connectivity we deployed for Deutsche Börse onto our ultra-low latency market leading London-Frankfurt route is another proof of Colt’s commitment to continuously enhance its information delivery platform to help our finance customers deliver higher trading performance" said Bernhard Pussel, Director Wholesale Germany at Colt Technology Services GmbH.”
In February, Deutsche Börse had announced an agreement with Telehouse, whereby Deutsche Börse said that it plans to use Telehouse’s data center as a low latency access point in London.
Source: Deutsche Börse
NYSE Euronext European ETF activity highlights for March 2011
April 12, 2011--Listings
March saw 13 new ETF listings including 9 from Amundi and 4 from Credit Suisse on Euronext Paris.
At the end of March, NYSE Euronext had 637 listings of 541 ETFs from 17 issuers. So far this year, there was a total of 75 new listings on the NYSE Euronext European market including 68 new primary listings and 7 cross listings.
These ETFs cover more than 360 indices exposed to an extended range of assets and strategies (Equity, Fixed Income, Commodities, Short, Leverage, etc.).
Trading activity
In March 2011, both the average daily number of trades and the Average Daily Turnover (ADT) figures showed continued growth:
On average, there were 11 224 trades on a daily basis, representing an increase of 59.8% versus March 2010.
ADT of €509.9 million, representing an increase of 75.2% from the €291 million in March 2010.
Market Quality
The combination of the flow of 22 first-class Liquidity Providers, competitive market makers, client orders and our high capacity, low latency technology contributed to a median spread of 28.97 bps of all listed ETFs.
Visit www.euronext.com/etf for more info.
Source: NYSE Euronext
Eurex to further expand its equity options offering by covering Irish equities
Eleven new Irish equity options with settlement via CREST to be introduced in late April 2011
April 12, 2011--The international derivatives exchange Eurex announced today that it will launch new equity options based on 11 of the most liquid Irish stocks on 26 April 2011. The companies are Bank of Ireland, C&C Group, CRH, DCC, Dragon Oil, Elan Corp, Irish Life & Permanent Group, Kerry Group, Kingspan Group, Ryanair Holdings and Smurfit Kappa Group.
With this launch, Europe’s largest derivatives exchange will offer for the first time Irish equity options with home market settlement. The new equity options will be physically settled in the CREST system of Euroclear UK & Ireland.
“Using the new Irish equity options, our customers will be able to better hedge their exposure to the Irish equity market. Simultaneously, we are offering new trading opportunities as we will completely cover the index constituents of the EURO STOXX 50® Index as well as extending our coverage of the STOXX 600® index components”, said Peter Reitz, member of the Eurex Executive Board. “We will provide our customers with extended cross-margining opportunities as we offer trading of derivatives on all the major European blue-chip stocks on one platform.”
The new options will be denominated in euro. Eurex and Eurex Clearing have been officially recognized by statutory instruments as financial intermediaries in Ireland and will thus be exempted from Irish stamp duty taxation. Additionally, the customer business of all Eurex Clearing members will also automatically be exempted.
The new suite of options will have maturities of up to two years. To support order book trading, a market-making scheme will be offered to ensure order book liquidity. During the first five months of trading, supporting market makers can qualify for a 50 percent revenue sharing program that will last for two years. Trading hours will be from 9:00 am until 17:28 pm CET.
Source: Eurex
FSB publishes note on ETFs
March 12, 2011--The Financial Stability Board (FSB) published on 12 April a note entitled Potential financial stability risks arising from recent trends in exchange-traded funds (ETFs). The FSB is publishing this note as part of its role on monitoring market developments relevant to financial stability and advising on their implications for regulatory policy.
The note highlights recent developments in the ETF market, which has experienced strong growth and rapid innovation. Although most of the ETF market remains plain-vanilla, there has been an increase in product variety and, in some cases, complexity. The note aims at improving understanding of the possible emerging issues for financial stability, and encouraging the financial industry, early in the product cycle, to adapt risk management practices, disclosure and transparency to the pace of innovation in this market.
The FSB welcomes feedback from the public on this note by 16 May 2011.
view the Potential financial stability issues arising from recent trends in Exchange-Traded Funds (ETFs) note
Source: The Financial Stability Board (FSB)
Source launches new EURO STOXX® Optimised Banks ETF
April 12, 2011--In response to significant investor demand, Source today announces the launch of its new EURO STOXX Optimised Banks ETF. The new ETF will complement Source’s 18 existing European optimised sector ETFs, which have already gathered over €1.6 BN in assets and set new standards in liquidity, with over €120 BN in turnover since their launch in June 2009.
The performance dynamics and macro environment surrounding the European banks sector have driven significant price performance and trading activity over the past year. Source has seen this activity reflected in the turnover of its existing STOXX Europe 600 Source Bank ETF, which has traded on average over €2 BN per month since May 2010. However, the relative performance of Eurozone banks, especially Spain, versus other European banks has highlighted a need in the market for a liquid, tradable ETF on the Eurozone banks sector.
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Source: Source ETFs
European Fund Administration appointed by Skandinaviska Enskilda Banken AB for the administration of its new ETF range
April 12, 2011-European Fund Administration S.A. (EFA) is proud to provide Skandinaviska Enskilda Banken AB (SEB) with its fund accounting and transfer agency services for its first ETF products.
The Swedish bank recently entered the ETF business with three products - SpotR, SpotR Bull and SpotR Bear. The investment objectives of the 3 sub-funds are to provide the investors with a return linked to the OMXS30 index, the Swedish market index.
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Source: EFA
HSBC lists four emerging market ETFs
April 12, 2011--HSBC has launched four European ETFs offering exposure to the Indonesian, Korean, Malaysian and Taiwanese equity markets.
The HSBC MSCI Korea ETF lists on the London Stock Exchange today, and follows the launch of the HSBC MSCI Indonesia, HSBC MSCI Malaysia and HSBC MSCI Taiwan ETFs, all of which went live on 30 March. All carry a highly competitive Total Expense Ratio (TER) of just 0.60%. Further registrations and cross-listings across Europe are planned.
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Source: ETF Express
Deutsche Börse's Xetra division and STOXX today announced the introduction of an information portal for sustainable securities, as well as the launch of the STOXX Global ESG Leaders indices.
Largest German information offer for sustainable securities on a central platform / High transparency through use of standardised indicators / New indices facilitate measurement of a company’s sustainable activities
April 11, 2011-Deutsche Börse's Xetra division and STOXX today announced the introduction of an information portal for sustainable securities, as well as the launch of the STOXX Global ESG Leaders indices.
The information portal for sustainable securities is aimed at private and institutional investors. The portal helps investors to make their individual investment decisions according to standard sustainability criteria. The information portal enables investors to develop their own strategies for sustainable investments in a transparent way and to assess the sustainability of existing investments. The portal also enables companies to filter their activities in line with the ESG criteria: environmental, social and governance considerations.
The information portal covers all investment classes, from equities to ETFs, investment funds and certificates. The STOXX Global ESG Leaders index family offers indicators for 1800 European public limited companies, transparently and neutrally, using the well-known ESG criteria. These key sustainability data were provided by Sustainalytics, a leading global provider of ESG research and analysis, with nearly 20 years of experience in the responsible investment (RI) and socially responsible investment (SRI) markets. Investors can use the portal to select and weight these equities according to their personal investment preferences and sustainability criteria.
“The information portal for sustainable securities is a further important step in our efforts to provide transparency on the capital markets, especially in the sustainable investment segment which is seeing increasing demand from private and institutional investors,” said Rainer Riess, Managing Director at Deutsche Börse AG and responsible for the Xetra business unit.
Source: Deutsche Börse
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