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Spain put on debt watch by Moody’s
December 15, 2010--Ratings agency Moody’s warned Spain on Wednesday that its debt rating could be downgraded, pushing Spain back into the euro zone debt spotlight ahead of an EU leaders’ summit starting on Thursday.
Moody’s said it was concerned about Spain’s high debt funding needs, its heavily indebted banks and its regional finances, but said it did not expect Madrid to have to resort to an EU bailout like Greece and Ireland. Spain, which with Portugal has come under intense market pressure in recent weeks, raising concerns it could be driven into a bailout, needs to refinance around 60 billion euros of debt early next year, according to JP Morgan research.
Basic Rules of ISE Stock Indices has been changed
December 15, 2010--At the meeting of the Executive Council of our Exchange, the following resolutions have been made with regards to the Basic Rules of ISE Stock Indices:
- Circular Letter number 292 on “Basic Rules of ISE Corporate Governance Index”, Circular Letter number 299 on “Basic Rules of ISE City Indices”, Circular Letter number 315 on "Basic Rules of ISE 10 Bank Index” and Circular Letter number 316 on “Basic Rules of ISE Stock Indices” have been combined and the Circular Letters in question have been abolished.
The new text with Circular Letter number 353 regarding the “Basic Rules of ISE Stock Indices” which has been reconstituted via the combination of Circular Letters number 292, 299, 315 and 316, has been adopted.
The number of companies which are required in order to Start/End Calculating Indices has been established as 5 and 1, respectively, and accordingly, the calculation of ISE Defense Index will be discontinued effective from January 03, 2011 as ISE Defense Index only includes the ASELSAN stock.
ISE All Index will be continued to be calculated as an index that covers all the stocks traded on the ISE (except List C and Watchlist market), and accordingly, stocks which are not currently included in its scope will be included in the index effective from January 03, 2011.
Baymarkets’ EDGE Energy
December 14, 2010--Baymarkets has designed a new OTC price discovery and execution platform for making trading energy futures, swaps and options easy.
Crude Oil, Natural Gas, Electricity, Ethanol, Coal and Environmental Commodities are all covered in the range of energy products handled by the platform.
EDGE Energy is an ideal system for brokerage firms, banks’ sell-side and anyone planning to create an electronic marketplace in the energy space. Brokers can increase their deal flow by attracting traders to the broker-centric screen where they can view their own activity. Brokers can offer screen trading by granting full access rights.
The system can be used as an internal whiteboard and order management system that easily connects offices worldwide, helping brokerage firms expanding their business to multiple sites.
Dutch pension funds now hold more than €675bn in assets
December 14, 2010--The combined assets of Dutch pension funds have grown from €649bn at year-end 2009 to €675bn during the third quarter, with €300bn allocated to fixed income and €216bn invested in equity, according to financial supervisor De Nederlandsche Bank (DNB).
More than 50% of fixed income has been invested in government bonds in the euro area, while the owned non-euro bonds were mainly issued by financial institutions (€48bn) and companies (€30bn).
According to the regulator, 80% of pension funds' equity investments are outside the euro-zone, with €118bn invested in companies and €52bn in financial institutions. Equity investments in the euro-zone came to more than €45bn.
The DNB noted that Dutch pension funds have re-structured their investment policies over the last 18 months by placing a large part of their assets in funds for joint account (FJAs) against participations certificates.
Stricter financial regulation can help contain future asset bubbles and reduce macroeconomic imbalances
December 14, 2010--As part of the effort to broaden macroeconomic surveillance, this Quarterly Report on the Euro Area investigates the extent to which financial supervisory and regulatory reform can help avoid future harmful credit and asset price booms, for instance in housing markets. Stricter financial supervision can help directly reduce risks to financial stability by keeping banks' leverage in check and by establishing more stringent lending standards. Further topics in this issue highlight the effect the crisis has had on cross-border banking integration in the euro area. Furthermore, the sovereign debt crisis of 2010 is shown to complicate the ongoing process of balance sheet repair. Finally, the freezing of interbank markets in 2008 has caused non-financial corporations to switch to greater bond issuance, thereby diversifying away from their traditional bank-based funding.
In keeping with the prominent role occupied by financial marked issues in recent months, this edition of the Quarterly Report on the Euro Area features analysis of a number of closely related topics in this area. The Focus Section starts with the observation that excessive credit and asset price booms in some parts of the euro area created an important source of vulnerability in the run-up to the crisis. A single monetary policy for the euro area is by itself unable to effectively address the adverse effects of excessive credit growth, which in the past has shown strong regional divergences. The financial crisis has further exposed the limits of the current regulatory and supervisory structure in dealing with the build-up of balance sheet vulnerabilities in the banking sector. In this respect, the newly created European Systemic Risk Board (ESRB) will play a pivotal role for the identification of risks and will thereby support a stronger focus on macroprudential surveillance. Furthermore, changes to banks’ loss provisioning standards, combined loan-to-value and loan–to-income rules, as well as more demanding capital adequacy rules stand out as promising regulatory instruments to prevent excessive credit build-up in the future. Within the euro area, the supervisory toolbox should be considered as part of a wider macro-financial surveillance framework.
Turning to the set of special topics in this edition, the report examines the impact of the financial crisis on the euro-area banking sector, in particular on cross-border integration of financial institutions through bank mergers and acquisitions (M&A). The results show that the process of market integration is still ongoing, although at a slower pace as a consequence of the crisis and the ensuing restructuring of the banking sector. The process of market integration is however not uniform across countries, as smaller economies are integrating internationally more quickly than larger ones, for whom M&A activity is predominantly domestic. But irrespective of country size, the crisis has led to a clear slowdown of M&A activity and a refocusing on domestic activities for almost all euro-area countries.
view the Quarterly report on the euro area
Parliament stakes out its position on MiFID reform
December 14, 2010--Ahead of the Commission's review next year of the MiFID directive, the most wide-ranging EU law regulating trading venues and practices in the financial services sector, MEPs on Tuesday approved a resolution setting out Parliament's priorities on the matter.
The Markets in Financial Instruments Directive (MiFID), comes up for review in spring 2011. The main point of Parliament's resolution today is that both standard and non-standard trading venues should be supervised in a transparent way, with all venue users having access to similar information on the price formation process.
MiFID's success in reducing transaction costs has also resulted in trades slipping out of sight due to a fragmentation of trading among the proliferation of trading venues and the use made of the directive's exemptions, says the resolution authored by Kay Swinburne (ECR, UK).
More broadly, the resolution urges the Commission to give priority to limiting the build-up of risk.
More transparency and rules
When performing activities similar to those of other standard trading venues, broker crossing networks (BCNs), or bilateral trading systems, must be obliged to conform to the same rules as those for the standard venues, says the resolution, in a bid to close up certain loopholes to the MiFID directive. It also calls for all BCNs to be obliged to submit information about their activities to supervisory authorities to enable them to enforce the MiFID rules when this is deemed necessary.
The resolution asks ESMA to study the costs and benefits of high volume, high speed trading (algorithmic trading and high frequency trading (HFT)) on markets, look into the potential abusive manipulation of markets leading to an uneven playing field, and analyse the impact of these trading methods on overall market stability.
Kingdom of the Netherlands-The Netherlands: Financial Sector Assessment, Preliminary Conclusions by the Staff of the International Monetary Fund
December 14, 2010--Introduction
1. At the request of the Netherlands authorities a Financial Sector Assessment Program (FSAP) team led by the Monetary and Capital Markets Department of the IMF has visited the Netherlands between November 29 and December 14, 2010 in order to conduct an update of the Fund’s 2004 assessment of the soundness and stability of the Netherlands financial sector.
It has been the practice that such assessments are undertaken roughly every seven years.1 The following provides some initial findings from the mission. These findings are subject to further review, and will also serve as background to the Article IV discussions to be held with the IMF’s European Department in spring 2011.
2. The Netherlands has over the past decade introduced a financial sector supervisory model that is being studied closely in many countries. Prudential oversight of all financial institutions—banks, insurance and pension funds, and securities firms—is exercised by a single authority. This reflects the increasing interconnectedness of the various elements of the financial system, with large complex financial institutions (LCFIs) spanning the sector. In the Netherlands, the decision was made to place prudential supervision in the Netherlands Central Bank (DNB), leveraging on the synergies between the macro monitoring and micro supervisory aspects, as well as on its long-standing credibility. With regard to conduct-of-business supervision, the Financial Markets Authority (AFM) has a strong focus on market behavior and consumer/investor protection.
Scoach Frankfurt Launches Trading with Secured Certificates from Switzerland
Collateral Secured Instruments (COSI) minimize issuer default risk/ COSI in Germany only tradable on Scoach
December 14 2010-- Collateral secured certificates from Switzerland are now also tradable on Scoach, the Frankfurt exchange for structured products. The collateral deposited for these collateral secured instruments (COSI) minimizes counterparty risk for structured products. COSI enables investors to protect themselves against the possibility of issuer insolvency.
The issuer EFG Financial Products is offering COSI for the first time in Germany, exclusively on the Scoach trading platform. A total of 17 COSIs are currently tradable on Scoach in Frankfurt; the volume invested thus far amounts to €61.5 million.
For COSI, the issuer deposits collateral in the form of securities or cash at Swiss custodian SIX SIS. All depository rules of the SIX Swiss Exchange apply. The issuer has to align the value of the collateral to the certificate’s performance during its term. In the event of issuer insolvency, the collateral is sold to the benefit of the investor.
Government launches consultation on Simple Financial Products
December 14, 2010--The Financial Secretary to the Treasury, Mark Hoban MP, today announced the publication of a consultation document on Simple Financial Products. The consultation sets out proposals for financial products that will help promote personal responsibility, enable consumers to compare products and understand product features more clearly. The proposals will also help to encourage competition between providers.
Today’s consultation proposes:
industry and consumer-led development of a new category of simple financial products, with standardised features; that the first simple products to be developed should be deposit savings and life and income protection insurance products;
that simple products should not be subject to price-caps, and provision should be voluntary.
view the Simple financial products: a consultation
Christian Index licensed to Deutsche Bank
Faith based index for the European region will underlie exchange-traded fund
December 13, 2010--STOXX Limited, a global index provider and creator of the leading European equity indices, today announced that the STOXX Europe Christian Index has been licensed to Deutsche Bank AG to serve as the underlying for an exchange-traded fund (ETF). The db x-trackers STOXX Europe Christian Index ETF is available on Xetra.
“The STOXX Europe Christian Index has been launched to meet market participants’ demand for a benchmark which measures the performance of European companies who act responsibly on an ethical, environmental, social and economical level and therefore according to the values of the Christian religion,” said Hartmut Graf, chief executive officer, STOXX Ltd. “By licensing the STOXX Europe Christian Index, Deutsche Bank offers the first ETF based on this index.”
“By licensing the STOXX Europe Christian Index for the latest addition to our ETF portfolio, we are adding a product which offers exposure to index components selected according to social and moral doctrines,” said Thorsten Michalik, global head of db x-trackers ETFs. “We know that for many investors, ethical aspects are closely linked to capital investment.”
Launched on April 26, 2010 in collaboration with Christian Brothers Investment Services, Inc., trading in Europe as CBIS Global, the STOXX Europe Christian Index is the first Christian equity index for the European region. It is meant to enable investors to participate in the performance of companies which are compliant with Christian moral and social doctrines.
To ensure the quality of the index and the integrity of the underlying index methodology, an independent committee has been established to define, build and implement the screening criteria. It is made up from experts of the Christian community, as well as members of the academic and investment community. To be included in the index, stocks must pass a set of screens for compliance with Christian values and principles. Excluded from the index are companies which do not meet predetermined tolerance levels for certain areas of activity, such as for example pornography, strategic and non-strategic weapons, birth control and gambling.
The index universe for the STOXX Europe Christian Index is defined as all stocks in the STOXX Europe 600 Index. The index is weighted by free-float adjusted market capitalization, and each component's weight is capped at 20% of the index's total free-float market capitalization. It is reviewed semi-annually in June and December. Daily history is available back to December 31, 2004. The STOXX Europe Christian Index is available in price and net return versions, and is calculated in Euro and U.S. Dollar (USD).
Further information on the STOXX Europe Christian Index is available at www.stoxx.com.
