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EDHEC survey shows modest but growing use of ETFs by pension funds
December 9. 2010-- European pension funds remain modest users of ETFs, but their participation is growing.
The EDHEC-Risk European ETF Survey 2010, unveiled at EDHEC-Risk's Institutional Day in Monaco, gives an insight into how ETFs are used by 192 respondents across Europe, 68% of which were institutional investors, of which 15% were pension funds (10% of the total).
A panel discussion and views from the conference fringe also suggested pension providers use ETFs differently from the core wealth and asset management client base.
The survey revealed that most respondents use ETFs to achieve buy-and-hold broad market exposure, rather than for tactical asset allocation (TAA) or diversification via style- or sector-specific vehicles.
Felix Goltz, EDHEC-Risk's head of applied research, said: "That was surprising, seeing that the big advantage is the liquidity they offer."
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Source: IP&E
ISE "Sustainability Index" will increase Turkish companies' competitive edge
December 8, 2010--Implemented together by Turkish Business Council for
Sustainable Development (TBCSD) and Istanbul Stock Exchange (ISE), ISE
Sustainability Index Project (ISESI) moves on in accordance with its time schedule. The workshop, titled "Corporate Sustainability Indicators for Turkish Business World &
Expectations of the Investors" took place in Istanbul within the scope of this project,
which aims to form a sustainability index for the companies quoted at ISE.
With the creation of the index, where the operations of companies, quoted at the ISE, will be evaluated in terms of sustainability, it is expected that the competitive edge of Turkish
companies will increase and that they will become more attractive for the investors, as they will be assessing their social and corporate management risks, in addition to financial risks.
Criteria for the index were discussed
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Source: Istanbul Stock Exchange (ISE)
Europe to recycle and dig in drive for rare earths
December 9, 2010-- Europe will look to recycle used goods and start prospecting on home turf as it joins the international scramble for rare earth minerals, European Industry Commissioner Antonio Tajani told AFP Thursday.
After a June report forecast an upcoming shortage of 14 critical mineral raw materials across the bloc, Tajani said he would issue a plan January 26 "to ensure a supply of rare earths for companies across the European Union."
Rare earth minerals are used in everything from guided missiles to flat screen televisions and cars but availability is increasingly under pressure.
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Source: EUbusiness
Rabobank and ETF Exchange launch new ETFX Exchange Traded Funds on NYSE Euronext Amsterdam
December 9, 2010--ETF Exchange and Rabobank today announce the launch of the ETFX AMX® Fund (EAMX NA), a new ETF on the Dutch mid-cap AMX index®. This follows the earlier listing of the ETFX AEX® Fund (NTH NA), in March 2010, which tracks the Dutch blue chip benchmark, the AEX Index®.
The ETFX funds track the two main indices on NYSE Euronext Amsterdam. The ETFX AEX® Fund tracks the AEX Index® of the top 25 Dutch companies on the exchange; the ETFX AMX® Fund tracks the AMX Index®, which gives exposure to 25 Dutch mid-cap companies. The advantages of these Exchange Traded Funds include low expenses, transparency and intra-day liquidity.
The launch of these two ETFs continues the unique cooperation between Rabobank and ETF Exchange and signals Rabobank International’s growing commitment to the ETF market for the Dutch investing community. Over the coming months, Rabobank will be looking to enhance its ETF product offering, especially in its core market segments of Food & Agriculture and Sustainability.
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Source: Rabobank
European Senior Fixed-Income Investor Survey Q410
Cautious Optimism for Corporates and Banks Amid Persistent Sovereign Gloom and Contagion Concerns
December 8, 2010--Highlights
Fitch Ratings’ latest quarterly survey of fixed?income investors across Europe
signalled rising optimism regarding the outlook for corporates and banks. However, similarly to Q3, investors also felt contagion concerns from sovereign debt problems were the greatest risk to credit market stability, as borne out by recent events. Conducted from early October until 5 November 2010, the survey preceded Ireland’s request for financial assistance from the EU and IMF on 19 November, which has negatively impacted market access for banks in peripheral economies.
The survey responses show that austerity measures in progress by the euro zone and UK governments are overall regarded as well balanced, although a significant
minority are concerned that cuts are too severe and may backfire, especially in the UK. The Q4 results remained broadly consistent with the last quarter, with sovereigns remaining the asset class least favoured by investors (36%), facing the greatest refinancing challenge (51%) and the area where most investors expect further deterioration in credit fundamentals (52%).
Respondents’ concern over bank refinancing subsided and there was a clear bias in anticipation of improving credit fundamentals, despite the interconnectedness between sovereign credit risk and the financial system. Banks as an asset class saw the highest expectations for increasing debt issuance.
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Source: Fitch Research
ETF Landscape: European STOXX 600 Sector ETF Net Flows week ending 03-Dec-10
December 8, 2010--For the week ending 03 December 2010, there were US$358.0 Mn net outflows from STOXX Europe 600 sector ETFs. The largest sector ETF net outflows last week were in basic resources with US$174.5 Mn and banks with US$118.3 Mn while insurance experienced net inflows of US$145.2 Mn.
Year-to-date, STOXX Europe 600 sector ETFs have seen US$118.7 Mn net inflows. Banks sector ETFs have seen the largest net inflows with US$103.9 Mn, followed by personal and household goods with US$72.2 Mn while food and beverage has experienced the largest net outflows of US$175.8 Mn YTD.
As of 03 December 2010, there is US$9.6 Bn AUM invested in the STOXX sector ETFs which is more than double the US$4.6 Bn open interest in the sector futures. The ETF AUM is greater than the open interest in the corresponding futures contract in 17 out of 19 sectors.
to request report
Source: Global ETF Research & Implementation Strategy Team, BlackRock
Strengthening sanctions for violations of EU financial services rules: the way forward
December 8, 2010-The European Commission adopted today a communication setting out possible ways to reinforce sanctioning regimes in the EU's financial services sector. Today, rules vary greatly between Member States and, arguably, often do not serve as an effective deterrent. Based on a review of national sanctioning regimes for violations of national rules transposing some of the most important EU directives relating to financial services, the Communication presents areas for improvement and suggests possible EU actions in order to achieve greater convergence and efficiency of these regimes. Interested stakeholders can send their contributions up until 19 February 2011.
Internal Market and Services Commissioner Michel Barnier said: "If a financial institution does not abide by EU rules in the area of financial services, traders and executives must realise that they won't get away with it and that the response will be tough, wherever in Europe the violation occurs. Now, too often, that is not the case. Today's Communication sets out a way forward to ensure that sanctioning powers will be stronger and more convergent across Europe so we can better protect citizens' interests."
The Communication is based on a cross-sectoral stocktaking exercise of the coherence, equivalence and actual use of sanctioning powers in the Member States carried out by the three Committees of Supervisors (Committee of European Banking Supervisors - CEBS, Committee of European Insurance and Occupational Pensions Supervisors - CEIOPS and Committee of European Securities Regulators - CESR).1 The exercise covered some of the most important Directives applicable in the financial sector including securities, banking and insurance legislation.
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Source: Europa
Markets In Financial Instruments Directive (MiFID): Frequently Asked Questions
December 8, 2010--1. What is MiFID?
MiFID is the Markets in Financial Instruments Directive – or Directive 2004/39/EC1. It replaces the Investment Services Directive (ISD) which was adopted in 1993. It was agreed unanimously by the Member States and by a strong Parliamentary majority, and is a cornerstone of the EU's regulation of financial markets. It seeks to improve the competitiveness of EU financial markets by creating a genuine single market for investment services and activities, and to ensure a high degree of harmonised protection for investors in financial instruments, such as shares, bonds, derivatives and various structured products. Greater competition across Europe in the provision of services to investors and between trading venues is intended to contribute to deeper, more integrated and liquid financial markets. It also has the potential of driving down costs for issuers, delivering better and cheaper services for investors, and contributing to economic growth and job creation in Europe.
2. Why is MiFID being reviewed only three years after entry into force?
In keeping with its intended objective, MiFID has contributed to a more competitive and integrated EU financial market. However, recent events and market developments have demonstrated weaknesses in some of the underlying principles of MiFID, as well as highlighted areas needing reinforcement or revision. Such measures are necessary in order to bolster investor confidence and achieve all of MiFID's original objectives. Ensuring a more robust framework of regulation will also serve to address the more complex market reality we are now faced with, a reality which is characterised by increasing diversity in financial instruments and methods of trading. Similar discussions are taking place elsewhere in the world.
3. Did MiFID contribute to the crisis?
The financial crisis was caused by multiple factors. The original objectives of MiFID were to improve the resilience of EU financial markets through free competition and high levels of market transparency and investor protection. To some extent these have been achieved. However, the full effects of MiFID are yet to play out. While it is true that the Directive has not entirely delivered on its objectives, it is mistaken to assign all developments, such as the growth of trading in newer trading functionalities (for example high frequency trading) and dark environments (for example all dark pools – see question 6) to MiFID. These have more to do with technological developments.
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Source: Europa
Financial services: improving European rules for a more robust framework for all financial actors and instruments
December 8, 2010--As part of its work in creating a more transparent and stable financial system, the European Commission has today launched a consultation on the review of the Markets in Financial Instruments Directive (MiFID). In force since November 2007 (see IP/07/1625), MiFID provides a comprehensive framework for investment firms offering services in relation to financial instruments, as well as rules to protect investors. It allows trading venues and investment firms to operate freely across the EU.
It has increased competition and integration in EU financial markets, and led to significant improvements in investor protection. However, rapid technological advances, the complexity and changing make-up of financial markets and the lessons of the financial crisis call for an extensive review targeted at addressing all of the areas where shortcomings have been revealed or improvements are needed. The purpose of this consultation is to gather input from all stakeholders in order to inform the legislative proposals due in the spring of 2011. The deadline for replies is 2 February 2011.
Internal Market and Services Commissioner Michel Barnier said: "The original aim of this key piece of European legislation, MiFID, was to create a robust common regulatory framework for Europe's securities markets. In many ways, it has been a success. But the world has changed. And we all know the current framework needs improvement. My objective is to ensure that the revision of MiFID will lead to a stronger regulatory framework, adapted to the new trends and players on financial markets. And a framework which leads to greater market transparency and efficiency, as well as more protection for investors."
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Source: Europa
Russell Investments Expands Global Index Business With Senior European Appointment
December 8, 2010--Russell Indexes, a leading global equity index provider, has appointed Scott Stark to the role of Director of Russell Indexes Europe. This new role continues the rapid expansion of Russell’s European index business and will focus on its global, regional and country indices as both performance benchmarks and as the basis for financial products including exchange traded funds (ETFs), structured products and index funds.
Scott has extensive European index experience covering major asset classes including equity, fixed income, currency and commodities. Scott previously worked for Markit where he was in charge of European index business development, and EuroMTS where he was CEO of their index division and responsible for the launch of a series of pan-European bond indices. These indices currently have over €1 trillion in benchmarked assets. Prior to EuroMTS, Scott was CEO of STOXX Ltd where he was key in establishing the EuroSTOXX 50 index as Europe’s leading index for financial products.
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Source: Mondovisione
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