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Commission seeks views on possible EU framework to deal with future bank failures
January 6, 2011--Following the publication of a Communication on 20 October 2010 on a European crisis management framework for the financial sector (see IP/10/1353), the European Commission has today launched a consultation on technical details underpinning that framework. Today's consultation should be read in conjunction with that Communication. The Commission intends to come forward with a legislative proposal for a comprehensive framework for dealing with failing banks before the Summer of 2011. The deadline for contributions to this consultation is 3 March 2011.
The possible options set out in this consultation would constitute a significant step for the EU in delivering the commitment made at the G20 summit in June 2010, by ensuring that authorities across the EU have the powers and tools to restructure or resolve (the process to allow for the managed failure of the financial institution) all types of financial institution in crisis, without taxpayers ultimately bearing the burden. They are also consistent with the principles for ensuring that resolution is a viable option for systemically important financial institutions that are being developed by the Financial Stability Board. This Consultation focuses on measures for banks and investment firms. The Commission will report by the end of 2011 on appropriate measures for other kinds of financial institution, including insurers and Central Counterparties.
Currently, there are very few rules at EU level which determine which actions can and should be taken by authorities when banks fail and, for reasons of financial stability, cannot be wound up under ordinary insolvency rules. This consultation seeks input on the technical details underpinning the policy issues identified in the Communication of 20 October 2010. These include
Common and effective tools and powers to deal with failing banks at an early stage, and to minimise costs for taxpayers, for example:
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Source: Europa
Trading In 2010 At The London Metal Exchange Surges To New Records
Total trading up 7.4 per cent to 120.3 million lots traded in 2010
Total value traded surges to US$11.6 trillion
Steel progresses strongly; more than 12 million tonnes traded
January 6, 2011--The London Metal Exchange registered new records for volume and value of trading in 2010, consolidating its position as the world’s leading metals exchange.
Total trading in 2010 rose 7.4 per cent on 2009 to reach 120.3 million lots (111.9 million in 2009). This was equivalent to 2.83 billion tonnes of material. In a year when prices also rose strongly, the notional value of all contracts traded surged to US$11.6 trillion from US$7.4 trillion in 2009.
Martin Abbott, LME Chief Executive, said, “Despite, or perhaps because of, the volatile global economy, 2010 was again a very strong year for the LME. The early stage recovery, particularly in Asia and Latin America, generated resumed interest in commodity raw materials resulting in new record highs for a number of our metals.”
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Source: London Metal Exchange
European pension funds seek exposure to investment-grade global bonds
January 6, 2011--A number of pension funds are looking to invest as much as CHF50m (€40m) in the global bond market, using IPE Quest.
In mandate QN1152, a Swiss investment consultancy is looking for investment options on behalf of schemes in mainland Europe and the UK.
The CHF50m would be divided between two to four mutual funds, with exposure to euros, sterling, the US dollar and Swiss francs welcome.
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Source: IP&E
UK official holdings of international reserves, December 2010
January 6, 2011--This monthly press notice shows details of movements in December 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 December 2010:
No intervention operations were undertaken.
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Source: HM Treasury
South Korea lenders look to rescue savings banks
January 6, 2011--Top South Korean lenders are planning to buy some of the country’s debt-strapped savings banks, as the government seeks to avert a shock to the broader financial system.
The country’s regulators, concerned that the problems at savings banks reeling from non-performing property loans could spread to the country’s major lenders, have encouraged the move.
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SOurce: FT.com
Economic Sentiment maintains its upward trend
January 6, 2011--In December, the Economic Sentiment Indicator (ESI) improved further in both the EU and the euro area. The indicator increased significantly, climbing by 1.0 point to 106.1 in the EU and by 1.1 points to 106.2 in the euro area. These results were driven in particular by strong positive readings in France and Germany.
A majority of Member States reported an improvement in sentiment. Among the seven largest Member States only Spain registered a decrease (-0.9). France registered the most significant increase (+2.5), followed by the Netherlands (+2.4), Germany (+1.5) and Poland (+1.3), while improvements were less pronounced in Italy (+0.8) and the UK (+0.7). In Germany, France, the UK, the Netherlands and Poland the ESI is above its long-term average.
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Source: European Commission
China to buy EUR6.0 bn of Spanish debt: report
January 6, 2011--- Chinese Vice Premier Li Keqiang has said Beijing is willing to buy about EUR6.0 billion worth of Spanish public debt, Spanish newspaper El Pais reported on Thursday, citing government sources.
Li told Spanish Prime Minister Jose Luis Rodriguez Zapatero during a meeting in Madrid on Wednesday that China "was willing to buy as much Spanish debt as its Greek and Portuguese debt holdings combined, that is some six billion euros ($7.9 billion)," it said.
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Source: EUBbusiness
ETF Landscape: European STOXX 600 Sector ETF Net Flows for Week Ending 31-Dec-10
January 5, 2011--For the week ending 31 December 2010, there were US$54.0 Mn net inflows to STOXX Europe 600 sector ETFs. The largest sector ETF net inflows last week were in healthcare with US$36.9 Mn followed by industrial goods and services with US$24.5 Mn net inflows while chemicals experienced net outflows of US$21.7 Mn.
In 2010, STOXX Europe 600 sector ETFs saw US$120.0 Mn net outflows. Basic resources saw the largest net outflows with US$223.3 Mn, followed by food and beverage with US$179.2 Mn net outflows while personal and household goods experienced the largest net inflows with US$122.7 Mn.
As of 31 December 2010, there is US$9.5 Bn AUM invested in the STOXX sector ETFs which is more than double the US$3.8 Bn open interest in the sector futures. The ETF AUM is greater than the open interest in the corresponding futures contract in all 19 sectors.
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Source: Global ETF Research & Implementation Strategy Team, BlackRock
Deutsche Börse eyes joint clearing with rivals
January 5, 2011--Deutsche Börse, operator of one of Europe’s largest clearing houses, has talked to rival clearers about consolidation in cash equities clearing as a revamp of the region’s securities post-trade business appears imminent.
Clearing, viewed as the mundane processing of trades on stock and derivatives exchanges, has moved centre stage following the financial crisis as regulators insist on a greater use of clearing houses in the opaque derivatives markets.
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Source: FT.com
Boerse Stuttgart's turnover for 2010 tops EUR 94 billion
January 5, 2010--Boerse Stuttgart's order book statistics for 2010 showed a turnover of more than EUR 94 billion. This meant that the total trading volume was 3.9 percent down on last year's figures. The Stuttgart Stock Exchange recorded growth mainly in the trading of equities, securitised derivatives and investment funds.
"With a total trading volume of more than EUR 50 billion for securitised derivatives we were able to consolidate our position as Europe's market leader for this asset class," said Christoph Lammersdorf, CEO of Boerse Stuttgart Holding GmbH. The strong 37 percent growth in the trading of bonus certificates, 22 percent growth in the trading of discount certificates and 67 percent growth in the trading of reverse convertibles deserve a particular mention.
Stuttgart is Germany's market leader for trading in corporate bonds. With a trading volume of EUR 15 billion, these account for significantly more than half of all bonds traded at the Stuttgart Stock Exchange. In 2010 trading in equities was also up by almost 30 percent, so that the total annual turnover grew to more than EUR 10 billion.
Trading in investment funds showed particularly strong rates of growth last year. In this segment Boerse Stuttgart's turnover for 2010 amounted to more than EUR 6.7 billion. This meant that trading volumes were up by almost 57 percent in a year-on-year comparison, the growth mainly being accounted for by exchange-traded funds (ETFs). In 2010 this segment saw a huge 63 percent boost in turnover to more than EUR 5.7 billion.
In December 2010 monthly turnover at the Stuttgart Stock Exchange amounted to around EUR 7.7 billion and, due to the Christmas and New Year period, it was lower than in November, the month with the heaviest trading when turnover amounted to almost EUR 9.3 billion.
Source: Boerse Stuttgart
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