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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
BBH selected by PIMCO to service new Irish-domiciled ETFs
April 5, 2011--Brown Brothers Harriman (BBH) announced today that it has been selected by PIMCO, a leading global investment management firm, to provide custody, accounting, administration, and transfer agency services to support the launch of a series of PIMCO Source Fixed Income ETFs, including the first actively managed Fixed Income ETF for Europe.
The initial two PIMCO Source Fixed Income ETFs, PIMCO Euro EUR Enhanced Short Maturity Source ETF and PIMCO European Advantage Government Bond Index Source ETF, are Irish domiciled UCITS which were recently listed on the Xetra trading platform of the Deutsche Börse Exchange. The new products are the result of a close collaboration between PIMCO and Source, a specialist provider of exchange traded products, to create and distribute a new range of fixed income ETFs for European investors.
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Source: issmag.com
Deutsche Boerse introduces DAX Risk Control Indices
April 4, 2011--Deutsche Boerse has launched the DAX Risk Control Indices, which measure a hypothetical portfolio that adjusts the risk of the underlying DAX Index. This portfolio includes an investment in the DAX Index and the money market rate, as measured by the Euro Overnight Index Average (EONIA). The asset allocations of the new indices are shifted daily to maintain the desired risk levels
"The DAX Risk Control Indices allow market participants to track the performance of a leading blue-chip index with a fixed risk level measured by market volatility. The major benefits of this index are the possibility for participation in the underlying market under normal market conditions, along with a significant protection against tail risk in highly volatile situations; and the flexibility to meet various risk appetites,” said Hartmut Graf, chief executive officer, STOXX Ltd. STOXX Ltd. is the marketing agent for the indices of Deutsche Boerse AG and SIX Group AG, including the DAX and SMI indices.
The DAX Risk Control Index replicates a portfolio that controls for risk by shifting between the risk-free money market rate (EONIA) and the risky asset (DAX Index). The index is calculated in four variants that aim to maintain a target volatility level of five percent, 10, 15 and 20 percent, respectively. If the risk level of a DAX Risk Control Index falls below these targeted risk parameters, then the allocation is automatically adjusted towards the underlying DAX Index. If the risk profile rises above the targeted levels, then the allocation moves towards the risk-free component (EONIA). A maximum exposure of 150% also is introduced to avoid extremely leveraged positions.
The DAX Risk Control Indices are available in total and excess return versions. The excess return index measures the return of the DAX Risk Control (TR) Index less the EONIA return. The index is calculated in euro. Daily history is available back to 18 May 1999.
Source: Deutsche Boerse
Istanbul’s gold exchange begins trade in diamonds
April 4, 2011--Trading in rough and polished diamonds will be open to the exchange’s existing members – a mixture of banks, foreign exchange dealers and big jewellery companies.
Dealers based in Istanbul’s Grand Bazaar – the centre of the country’s jewellery industry for the past 500 years – will also be invited to join the market.
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Source: FT.com
Boerse Stuttgart's turnover exceeds EUR 11.3 billion in March
Trading volume in leverage products increases by 20 percent/ record month for ETFs and ETCs / Heavy demand for 'Bunds'
April 4, 2011--According to its order book statistics, Boerse Stuttgart's turnover in March 2011 amounted to more than EUR 11.3 billion. This meant that trading volumes were nearly 10 percent higher than in February 2011 and almost 40 percent up on the figure for March 2010.
The biggest part of the trading volume was accounted for by securitised derivatives. In March turnover in this asset class stood at almost EUR 6 billion, 14 percent higher than in the previous month and up by more than 50 percent year-on-year. Leverage products accounted for more than EUR 3 billion of turnover, while investment products made up almost EUR 2.9 billion of the total turnover. The trading activity in leverage products grew strongly in the past month. In March volumes were up by more than 22 percent in comparison with February.
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Source: Boerse Stuttgart
Statement of Management Board of Deutsche Börse AG on NASDAQ OMX Group Inc. and IntercontinentalExchange announcement
April 1, 2011--The Management Board of Deutsche Börse AG has noted the announcement by NASDAQ OMX Group and IntercontinentalExchange of its intention to make an unsolicited offer for all of the outstanding shares of NYSE Euronext for 42.50 US-$ in cash and stock per share.
The Management of Deutsche Börse AG continues to strongly believe that the envisaged merger of Deutsche Börse AG and NYSE Euronext is the best possible combination for both shareholder groups and the stakeholders of the companies.
Source: Deutsche Börse
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