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Eurex Clearing prepares for upcoming regulatory reforms by expanding its services to interest rate and equity swaps
New services focus on risk management and safety for OTC derivatives/ Client Asset Protection solution to be launched in Q2 2011
March 16, 2011-- Eurex Clearing, Europe’s leading clearinghouse, announced today that it plans to expand its Eurex OTC Clear service to include OTC-traded interest rate and equity derivatives. The new services will be introduced in the context of the upcoming regulatory reforms expected to require mandatory clearing for standardized OTC derivatives in the U.S. and Europe.
Currently, Eurex's OTC Clear service comprises OTC-traded Eurex look-alike futures and options on equities and interest rates as well as Eurex Credit Clear, a clearing service for OTC credit default swaps. In 2010, Eurex Clearing processed 774 million contracts in OTC-traded products.
“The further expansion of our product coverage is an important part of our strategic agenda enabling our customers to prepare for the new regulatory environment”, said Thomas Book, Eurex Executive Board member responsible for Eurex Clearing. “We will offer all clearing services in the relevant asset classes to our clearing members and buy-side clients to comply with new requirements in the most effective and capital efficient way.”
In addition to the expansion of the Eurex OTC Clear service, Eurex Clearing’s strategic agenda includes two further major initiatives focusing on risk management and safety for OTC derivatives. First, Eurex Clearing will introduce a new Client Asset Protection service for its listed and OTC markets, which will be launched beginning in Q2 2011 in close coordination with market participants. The Client Asset Protection service will offer full protection of client assets within the clearinghouse and allow for immediate portability of positions and assets in case of a clearing member default. Second, Eurex Clearing plans to introduce a new risk methodology for the clearinghouse, which will be portfolio-based rather than instrument focused as in many current CCP risk management approaches. The new portfolio-based risk methodology will allow cross-margining between Eurex’s listed derivatives and OTC interest rate swaps and equity derivatives (except CDS), offering buy-side and sell-side firms significant margin and collateral efficiencies.
“Our objective is to be the industry leader in risk management standards. The new risk management approach will further contribute to the safety of the derivatives market, while delivering capital efficiencies to our clients by providing offsets particularly between Eurex’s listed derivatives and OTC-traded derivatives,” explained Book.
Source: Eurex
FSA chairman spells out regulatory challenges beyond Basel III
March 16, 2011--Lord Turner, chairman of the Financial Services Authority (FSA), will say this evening that already agreed regulatory reforms will have a major beneficial impact but further reforms are needed to make the financial system stable. He will also say that regulators need to recognise that the financial system will continually mutate, creating new risks, and requiring a continually evolving regulatory regime.
"The pre-crisis delusion was that the financial system, subject to the then defined set of rules, had an inherent tendency towards efficient and stable risk dispersion. The temptation post-crisis is to imagine that if only we can discover and correct specific imperfections – such as bad incentives or industry structure – that a permanently more stable financial system can be achieved."
Lord Turner will argue that while popular anger often focuses on the direct costs of public rescue of banks, these are likely to be small relative to the overall harm produced by financial crises. This harm derives from volatile credit supply, first too easily and cheaply available then restricted, producing a credit crunch and recession. Such volatile credit supply could moreover, arise in a world where no large banks ever failed or needed public support.
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Source: FSA.gov.uk
Economy: UK recovery slow, but fiscal consolidation must continue
March 16, 2011-- Economic growth will be subdued this year and next in the United Kingdom, but the government must continue its difficult fiscal consolidation and structural reform programmes to return the economy to a sustainable path, according to the OECD’s latest UK Economic Survey.
Spending cuts will curb government consumption, investment and household income growth over the 2011-12 period, but will bring long-term gain. The OECD says that pushing through key reforms will address fiscal sustainability concerns and help bring about a long-term rebalancing of the UK economy.
“By taking hard, though necessary, decisions now, the UK is ensuring that it can continue to provide the British people with effective government services in the future,” OECD Secretary-General Angel Gurría said during the survey’s release in London. “To counter some of the negative impact, monetary policy should remain expansionary to support the recovery, even if headline inflation is currently above target” (read the full speech).
Fiscal consolidation should be adjusted to better support growth. Economic recovery and job creation would both benefit from smaller-than-planned cuts in public investment. Such reforms should be financed through improvements to the efficiency of Value Added Tax, including ending exemptions and bringing lowered rates up.
view the Economic Survey of the United Kingdom 2011
Source: OECD
SPDR ETFs Report Highlights Inflows Of €56 Billion Into European ETF Market
March 15, 2011--The report notes that in 2010, ETF investors concentrated their new investments in several asset classes, most notably emerging market equity, commodities, US, German and Japanese equity, as well as Euro government bonds. ETFs that provide investors with exposure to changes in the VIX - a popular proxy for US equity market risk - also attracted significant assets. Outflows were concentrated in euro zone ETFs, reflecting investor unease about the sovereign debt crisis.
With regards to the 2011 outlook, other points in the report include:
Continued growth of ETF assets expected in 2011 as the search for diversification continues
Greater globalisation of European portfolios and demand for high dividend ETFs is also expected
the trend for investors to have more global portfolios will increase, with an increasing proportion of assets being invested in non-correlated asset classes such as emerging market equity and bonds
With government bond interest rates near historic lows and cash rates at virtually zero, investors have been starved of income in portfolios.
Another trend we expect to continue in 2011 is increased investment in ETFs that focus on high dividend-paying stocks. Investors have become more interested in ‘getting paid while they wait' than counting on capital appreciation. Dividend ETFs offer the potential for capturing much of the upside of traditional equities as well as higher yields.
Source: SS MAG.com
ETF Stat February 2011 -Borsa Italiana
March 15, 2011--The ETF Statistics of the ETF Plus Market for the month of February are now available.
view report
Source: Borsa Italiana
Three new Amundi ETFs launched on Xetra
XTF segment now contains 801 funds
March 15, 2011-- Two new listed equity index funds and a bond index fund issued by Amundi have been tradable in Deutsche Börse’s XTF segment since Tuesday. This brings the number of exchange traded funds listed in Deutsche Börse’s XTF segment to over 800.
ETF name: Amundi ETF AAA Govt Bond EuroMTS
Asset class: bond index ETF
ISIN: FR0010930636
Total expense ratio: 0.14 percent
Distribution policy: non-distributing
Benchmark: EuroMTS AAA Government Index
ETF name: Amundi ETF MSCI Europe Energy
Asset class: equity index ETF
ISIN: FR0010930644
Total expense ratio: 0.25 percent
Distribution policy: non-distributing
Benchmark: MSCI Europe Energy Index
ETF name: Amundi-ETF MSCI Emerging Markets I
Asset class: equity index ETF
ISIN: FR0010959676
Total expense ratio: 0.45 percent
Distribution policy: non-distributing
Benchmark: MSCI Emerging Markets Index
The bond fund ETF, Amundi ETF AAA Govt Bond EuroMTS, allows investors to participate in the performance of the EuroMTS AAA Government Index. The underlying index tracks the value of euro-denominated government bonds that are issued in the euro zone and have at least an AAA rating. All the bonds must have an outstanding volume of at least €2 billion and a minimum residual maturity of one year. With the Amundi ETF MSCI Europe Energy, investors can participate in the performance of all European equities in the energy sector.
The Amundi ETF MSCI Emerging Markets further offers investors an investment opportunity in the performance of 2,600 companies from 21 emerging markets. The index represents 85 percent of market capitalisation.
The product offering in Xetra’s XTF segment currently comprises 801 exchange-traded index funds, making it the largest offering of all European stock exchanges. With this offering and an average monthly trading volume of around €13 billion, Deutsche Börse’s XTF segment is the leading trading venue for ETFs in Europe.
Source: Deutsche Börse
CME Clearing Europe Announces Launch Of European Clearing Services - Initial Products Are Energy, Rapeseed Oil And Freight
March 15, 2011--CME Clearing Europe, a wholly-owned London-based subsidiary of CME Group, today announced that it will begin clearing more than 150 over the counter (OTC) energy and commodity derivative products beginning Friday, 6 May.
"The start of clearing at CME Clearing Europe is timely in light of the need for enhanced risk management in commodity markets and the imminent legislative change mandating the clearing of OTC derivatives," said Andrew Lamb, Chief Executive Officer of CME Clearing Europe. "While the initial focus of our product expansion will be on commodity products – energy, metals and agricultural – we aim to introduce clearing for OTC financial derivatives, beginning with interest rate swaps, in parallel with the deepening of the commodity clearing. Our goal is to offer a full multi-asset OTC clearing service, building on CME Group's clearing experience as well as its established and growing European presence."
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Source: CME Group
Nikkei crashes as nuclear problems escalate
March 15, 2011--Japanese equities plunged in their third-biggest drop on record on Tuesday as foreign investors embarked on panic selling amid an escalating nuclear crisis that has erased a sixth of their value this week.
Tokyo markets were already reeling as investors tried to assess the impact that Tokyo Electric was having in controlling the series of explosions at its Fukushima plant following a devastating earthquake and tsunami last Friday. But news of an explosion releasing radiation into the air on Tuesday sent shares into a tail spin.
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Source: FT.com
Eurozone keeps close eye on inflation threat to growth
March 14, 2011-- Eurozone governments agreed Monday to keep a very close eye on rising inflation amid fears it threatens growth in the 17-nation single currency area.
The head of eurozone finance ministers, Luxembourg Prime Minister Jean-Claude Juncker, blamed the inflationary pressure primarily on a "considerable" rise in commodity prices.
After ministers met in Brussels, he said it was important to prevent a wider rise in prices and salaries "which could spark generalised inflationary tensions in the medium term."
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Source: EUbusiness
Latin America the focus for latest HSBC ETF offerings
HSBC has launched further exchange-traded funds with the announcement of two Latin American equity propositions
March 14, 2011--The HSBC MSCI EM Latin America ETF aims to replicate the performance of the MSCI EM Latin America Net Total Return Index.
The HSBC MSCI Mexico Capped ETF was launched on 4 March with the aim of replicating the performance of the MSCI Mexico Capped Net Total Return Index.
Both ETFs will use physical replication to track their respective indices - as is the case with all HSBC ETFs launched to date - investing in securities in the same proportions as the relevant index. As one distinction between the two the Latin America product may not take exposure to all securities in the index and will instead use a technique known as ‘optimisation’ to replicate performance.
They are both listed on the London Stock Exchange in sterling and US dollar trading currencies.
Source: International Advisor
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