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UK economic recovery comes to surprise halt
January 25, 2011--Britain’s economy contracted by half a percent in the last three months of 2010, official data showed Tuesday, shocking markets which had expected a continued recovery and causing the pound to slump against other currencies.
Severe winter weather in December had a strong impact, particularly on the construction sector, the Office for National Statistics said. If not for snow which snarled transport and kept people away from shops just before Christmas, it estimated that GDP would have been flat for the period. “
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Source: Todays Zaman
iShares launches 100th ETF on LSE with European first
UK’s Leading ETF provider launches iShares MSCI Poland ETF
January 25, 2011--iShares, the Exchange Traded Funds (ETF) platform of BlackRock,
Inc. (NYSE: BLK) today marked the launch of its 100th ETF product listing on the London Stock Exchange (LSE) with the first physical based ETF in Europe providing direct exposure to the
Polish market.
The iShares MSCI Poland ETF aims to track the MSCI Poland Index, providing investors with good liquidity while offering targeted emerging market exposure in Eastern Europe. The ETF will
invest predominately in financials but also in the utility, materials, energy, telecoms, and industrial sectors.
The fund is offered in an accumulating form, where dividends are automatically reinvested into the ETF to remove the administrative burden of processing regular cash flows and dividends paid by the fund. It is the twelfth single country exposure iShares has launched recently, including the listing of MSCI USA, MSCI Canada and MSCI South Africa in 2010 on the LSE.
Axel Lomholt, head of product development for iShares in Europe said
“The Polish economy is one of the largest in the EU and also one of the fastest growing in Central
Europe. The iShares MSCI Poland ETF will invest predominately in the financials and energy sector, helping to meet investor demand for emerging markets. “We are delighted to start 2011 with several significant milestones including the first London listed
ETF giving exposure to Poland, 100 ETFs listed on the LSE – more than any other provider - and over US$100 billion in European assets under management. iShares is committed to expanding
its range of ETFs to meet clients’ needs for innovative products, offering targeted exposure to a wide range of asset classes combined with transparency, diversification and liquidity. We look forward to broadening our presence and product set throughout Europe over the coming year.”
Source: Blackrock
New ETF issuer PIMCO Source on Xetra
January 24, 2011--Two ETFs issued by PIMCO Source can be traded in Deutsche Börse’s XTF segment for the first time. Both funds are tradable for the first time worldwide, and only on Xetra.
“We welcome new issuer PIMCO Source to Xetra and are delighted that PIMCO and Source have chosen a primary listing on Europe’s leading platform for exchange-traded index funds.
Traders across Europe benefit from a highly liquid offering via our Xetra network. Today we are expanding our range with two innovative products, including, for the first time, an actively managed bond ETF,” said Rainer Riess, Managing Director of Xetra Market Development at Deutsche Börse.
Ted Hood, CEO of Source commented on the launch “The new PIMCO Source ETFs have been developed to respond to the challenges posed by current market conditions and to capture fixed income opportunities as they arise. For Government bond investors, the PIMCO European Advantage Government Bond Index Source ETF, which seeks to provide the performance of PIMCO’s innovative GDP-weighted European Advantage Government Bond Index, avoids the bias to highly indebted countries that market cap indices deliver.”
Tammie Arnold, Managing Director at PIMCO, commented “We believe these two new fixed income ETFs meet a growing demand among European investors for well-engineered fixed income ETFs, with actively managed strategies for risk management and higher return potential and passive strategies with optimized replication of both traditional and innovative benchmarks. The PIMCO EUR Enhanced Short Maturity Source ETF is designed for investors who hold cash balances and are looking to achieve enhanced cash returns while remaining focused on capital preservation and liquidity.”
Both of these bond ETFs are newly listed in the XTF segment:
ETF name: PIMCO European Advantage Government Bond Index Source ETF
Asset class: bond index ETF
ISIN: IE00B5VJLZ27
Total expense ratio: 0.30 percent
Distribution policy: distributing
Benchmark: PIMCO European Advantage Government Bond Index
ETF name: PIMCO Euro Enhanced Short Maturity Source ETF
Asset class: actively managed bond ETF
ISIN: IE00B5ZR2157
Total expense ratio: 0.35 percent
Distribution policy: distributing
Benchmark: EONIA
The PIMCO European Advantage Government Bond Index Source ETF seeks to provide the performance of the PIMCO European Advantage Government Bond Index. The index is comprised of investment-grade, euro-denominated government bond securities in the Eurozone. Weighting within the index is based on gross domestic product, therefore avoiding overweighting in highly indebted countries.
With the PIMCO Euro Enhanced Short Maturity Source ETF, investors can invest for the first time in an actively managed, diversified portfolio of fixed-income securities with a maturity of up to a year. The investment objective is to exceed the performance of the money market. The securities are euro zone government bonds denominated in euros and issued or guaranteed by governments, their regional authorities, bodies or institutions. They may also include corporate bonds, mortgage-backed securities and other asset-backed securities.
The product offering in Deutsche Börse’s XTF segment currently contains a total of 763 exchange-listed index funds, making it the largest offering of all European stock exchanges. This selection, together with an average monthly trading volume of 13 billion euros, makes Xetra Europe’s leading trading venue for ETFs.
Source: Deutsche Börse
EDHEC-Risk Institute calls for greater attention to non-financial risks in the European fund management industry
January 24, 2011--A new study conducted by EDHEC-Risk Institute as part of the “Risk and Regulation in the European Fund Management Industry” research chair in partnership with CACEIS, entitled “The European Fund Management Industry Needs a Better Grasp of Non-Financial Risks,” looks at how non-financial risks and failures have impacted the regulatory agenda in Europe and traces the management of liquidity, counterparty, compliance, misinformation, and other non-financial risks in the fund industry.
By identifying the distribution of risks and responsibilities in the industry, the authors, Noël Amenc, Director, EDHEC-Risk Institute, and Samuel Sender, Applied Research Manager, EDHEC-Risk Institute, examine how convergence between country regulations could be achieved. They also assess how fund unit-holders can best be protected with appropriate regulations, improved risk management practices, and greater transparency.
The study includes a series of observations and recommendations:
The fund management industry as a whole has paid insufficient attention to non-financial risks and has failed to measure the operational consequences of financial innovation.
The UCITS directive itself fails to make adequate allowances for the operational consequences of financial innovation. Although investment funds have diversified internationally, made growing use of derivatives and other sophisticated strategies, and evolved in other ways, and although EU regulations and recommendations have recognised or even favoured these changes, they have failed to do studies on their impact and have failed to modify regulation accordingly.
The determination to harmonise the depositary liability regime that has not yet been fully transposed into regulation should not mask the need to manage non-financial risks throughout the fund management industry.
Strengthening of capital requirements and improvement of information should be linked to the evaluation of non-financial risks.
Improved governance and greater involvement of unit-holders would make it possible for fund management firms to improve the ways they take non-financial risks into account.
Better regulation should lead to improved methods of managing such non-financial risks as counterparty risk, liquidity risk, or sub-custody risk.
Homogenisation of country regulations and of supervisory cultures is necessary to prevent regulatory arbitrage.
UCITS not exposed to non-financial risks should be distinguished from more modern UCITS that have potentially greater exposure to these risks.
view report-EDHEC-Risk Publication European Fund Management Industry Non-Financial Risks
Source: EDHEC
FSA chief seeks new consumer safeguards
January 24, 2011--The head of the Financial Services Authority has called for a “radical rethink” of consumer protection in the UK, including the possible imposition of fee caps and bans on some retail financial products.
The regulator has historically adopted a “light touch” approach for the regulation of financial products, emphasising full disclosure, but the financial crisis and a series of mis-selling scandals have forced politicians and regulators to reconsider.
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Source: FT.com
First EFSF bond issue on Tuesday
January 24, 2011-- The first EU bond auction to raise funds for Ireland will be launched Tuesday, the German Finance Agency said Monday, and is expected to attract up to five billion euros ($6.8 billion dollars).
The five-year issue "will be closed Tuesday before 16:00 (1500 GMT)," when the agency has organised a press conference in Frankfurt with Klaus Regling, head of the European Financial Stability Facility (EFSF), a spokesman told AFP.
Regling will announce the results of a bond auction estimated at between three and five billion euros, with the proceeds used to help finance the 85-billion-euro rescue package agreed last year for heavily-indebted Ireland.
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Source: EUbusiness
France says e-bonds putting cart before the horse
Jabuary 24, 2011-- Fiscal and economic consolidation of eurozone members is needed before considering bonds backed jointly by the entire single currency area, French Finance Minister Christine Lagarde said Monday.
Allowing eurozone members to issue bonds jointly backed by 17-nation monetary union, variously referred to as e-bonds or eurobonds, is one of the ideas that have been floated to help ease the debt crisis some countries face.
"If you do that, you put once again the cart before the horse," Lagarde said in an interview on the financial news channel CNBC.
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Source: EUbusiness
Breaking Down the UK Equity Market: Executable Liquidity, Dark Trading, High Frequency and Swaps
January 24, 2011--Executive Summary
The purpose of this study is to shed light on the composition of the UK equity market and thus demonstrate how much of the daily traded turnover is made up of meaningful, executable liquidity versus what is just ‘noise’ created by the re-reporting of already conducted trades.
We also show the levels of activity in the electronic dark market as well as amongst different market participants from hedge funds to asset managers to high frequency market makers. In addition we estimate how much UK equity trading is conducted using Contracts-for-Difference (CFDs), primarily to bypass stamp duty.
With turnover of €3,898 billion in 2010, the UK market is the largest market in Europe and represents approximately 21% of all European turnover. However only 65% of turnover represents meaningful and executable liquidity since 35% of reported turnover is made up of reprints of already-conducted trades. Although views of the market are most commonly discussed in terms of total turnover, it is the executable liquidity that is most relevant and points to the true size of the market. As such it should form the basis for sizing a market opportunity or considering regulatory change.
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Source: TABB Group
New db x-trackers ETF launched on Xetra
New ETF tracks S&P 500 Index with currency hedging for first time
January 21, 2011--An additional db x-trackers index fund from Deutsche Bank’s ETF offering has been tradable on Xetra since Thursday.
ETF name: db x-trackers S&P 500 (EUR) ETF
Asset class: equity index ETF
ISIN: LU0490619193
Total expense ratio: 0.30 percent
Distribution policy: non-distributing
Benchmark: S&P 500 Total Return Net-Index
Currency hedging: yes
The db x-trackers S&P 500 (EUR) ETF enables investors, for the first time, to invest in the performance of the S&P 500 Total Return Net Index while being hedged against exchange rate fluctuations between the euro and the US dollar. The S&P 500 Total Return Net Index is weighted according to free float market capitalisation and tracks the performance of the 500 largest US stock corporations. The index calculation takes all dividends and distributions into account after any tax deductions.
The product offering in Deutsche Börse’s XTF segment currently contains a total of 764 exchange-listed index funds, making it the largest offering of all European stock exchanges. This selection, together with an average monthly trading volume of around 13 billion euros, makes Xetra Europe’s leading trading venue for ETFs.
Source: Deutsche Börse
Emissions Trading: Q & As following the suspension of transactions in national ETS registries for at least one week from 19:00 CET on Wednesday 19 January 2011
January 21, 2011--Why has the Commission shut down the European carbon market?
The Commission has not shut down the European carbon market. The Commission has temporarily removed the possibility for account holders in national EU ETS registries to initiate certain transactions, notably external and internal transfers of allowances and Kyoto Protocol units.1
This implies that delivery of allowances cannot be executed. Since the European carbon market consists mainly of futures, where delivery does not take place immediately, this suspension of certain transactions will have a minimal effect on the overall market. It affects only the spot market, which accounted for less than a fifth of overall market activity in 2010.
Why did the Commission decide to suspend transactions in national EU ETS registries?
The Commission decided to suspend transactions in national registries following a series of cyber attacks. Three attacks have taken place since the beginning of the year and other registries are known to be vulnerable to similar attacks.
EU ETS legislation allows the Commission to suspend access to national registries if there is a security breach that threatens the integrity of the overall registries system.
In actual fact, the Commission has not suspended access completely; the normal cycle of allowance allocation, submission of verified emissions and surrender of allowances and Kyoto Protocol units for compliance purposes can continue.
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Source: Europa
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