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Trading firms sign up for cash equities protocol
September 4, 2010--Some of the largest banking firms in Europe have signed up to a protocol that covers banks and investment firms bilaterally trading cash equities if one firm fails.
The Association for Financial Markets in Europe, a trade lobby group, on Monday said it had agreed a legal framework that allows a signatory to strike a cash balance for open trades with a signatory that defaults.
Bank of America Merrill Lynch, Barclays, Deutsche Bank, Goldman Sachs, JPMorgan Securities, Morgan Stanley, Nomura and UBS have all signed up to the protocol.
iShares launches the first currency hedged equity ETFs in Europe
Products launched as investor demand for currency hedged equity exposure grows
October 4, 2010--iShares, the Exchange Traded Funds (ETF) platform of BlackRock, Inc. (NYSE: BLK) today announces a new development in its European product set with the
launch of Europe’s first currency hedged equity ETFs. The new products enable investors to invest internationally and hedge currency exposure in one trade, without having to monitor and
maintain a currency hedge.
The five new physically-backed funds, which complement the iShares existing range of equity ETFs, have been launched on the London Stock Exchange (LSE) as a result of significant client
demand for currency hedged equity exposure. The launch takes the total number of iShares ETFs listed on the London Stock Exchange (LSE) to 94, the highest number of any provider in
the market.
The funds track some of iShares most popular and traded global indices offered by MSCI and Standard and Poor’s:
1. iShares MSCI Japan Monthly EUR Hedged
2. IShares MSCI World Monthly EUR Hedged
3. iShares MSCI World Monthly GBP Hedged
4. iShares S&P500 Monthly GBP Hedged
5. iShares S&P500 Monthly EUR Hedged
In line with market best practice, the indices incorporate a monthly currency hedge, with currency exposure hedged using one month forward FX contracts. The hedge is not adjusted during the month for price movements of securities, corporate actions or index changes, and reduces, rather than eliminates, currency exposure.
State Street Global Markets’ currency management team has been appointed to manage the currency hedge.
Axel Lomholt, head of product development, iShares EMEA, said: “These latest products – the first of their kind in Europe - provide investors with the opportunity to hedge against unintended and often undesirable currency risk, a consideration which is particularly important during periods of volatile currency fluctuations.
“All five funds act as the perfect complement to our existing range of equity products, and are in line with our strategy of offering investors the most compelling and diverse range of products with which to invest.
“We are particularly pleased to be able to offer these ETFs in a physically-backed structure
which remains our preferred means with which to develop product.”
Two New db x-trackers II Bond Index ETFs Launched on Xetra
October 4, 2010-- Since Monday, two additional db x-trackers II bond index funds from Deutsche Bank’s ETF offering have been tradable on Xetra.
ETF name: db x-trackers II iBoxx EUR Sovereigns Eurozone AAA TRI ETF
Asset class: bond index ETF
ISIN: LU0484969463
Total expense ratio: 0.15 percent
Distribution policy: non-distributing
Benchmark: iBoxx EUR Sovereigns Eurozone AAA Index
ETF name: db x-trackers II iBoxx EUR Sovereigns Eurozone Yield Plus Index ETF
Asset class: bond index ETF
ISIN: LU0524480265
Total expense ratio: 0.15 percent
Distribution policy: non-distributing
Benchmark: Markit iBoxx EUR Sovereigns Eurozone Yield Plus Index
These two new ETFs are an additional way for investors to participate in the performance of euro-area government bonds. The iBoxx EUR Sovereigns Eurozone AAA Index tracks the performance of euro-denominated government bonds that are issued by euro-area governments and have an average rating of AAA. The Markit iBoxx EUR Sovereigns Eurozone Yield Plus Index comprises euro-denominated government bonds that are issued by the five euro-area member states with the highest bond yields.
The product offering in Deutsche Börse’s XTF segment currently contains a total of 719 exchange-listed index funds, making it the largest offering of all European stock exchanges
FSA chief addresses the role that culture and ethics play in shaping behaviour and judgements
October 4, 2010--The chief executive of the Financial Services Authority (FSA), Hector Sants, provided the keynote address at a Mansion House conference on values and trust today. Exploring the role for regulators in facilitating the right culture within firms Sants said that it is crucial to address the role that culture and ethics play in shaping behaviours and judgements.
Sants said that until this issue is addressed, “we will not be able to prevent another crisis of this magnitude from occurring again, and will never fully restore the trust of society in the financial system.”
As there is no set of economic rules or supervisory architecture that can ensure failures are eradicated, until behaviours and judgements are addressed, regulators and firms will not achieve the goal of restoring trust.
Addressing how regulators and firms can work together, he said:
Insurance-linked securities-Eine dynamische Nische des Kapitalmarkts
October 4, 2010--Eine aktuelle Studie von Deutsche Bank Research nimmt den Markt für verbriefte Versicherungsrisiken
genauer unter die Lupe. Dieses relativ junge Marktsegment ist in den vergangenen
Jahren stark gewachsen. Die Deutsche Bank schätzt, dass sich das Marktvolumen
weltweit in den letzten 5 Jahren verdoppelt hat. „Aktuell liegt das ausstehende Volumen verbriefter
Versicherungsrisiken bei etwa 50 Mrd. USD – wovon ca. 30 Mrd. auf Lebens- sowie 20 Mrd. auf Sach- und Haftpflichtrisiken fallen“, erläutert Christian Weistroffer, Autor der
Studie. Entsprechend dem zugrundeliegenden Versicherungsgeschäft ist der Markt für verbriefte Versicherungsrisiken klar geteilt in einen Lebens- und einen Nicht-Lebens-Bereich.
Insurance-linked securities (ILS) bieten für Versicherungsunternehmen und Investoren eine
Reihe von Chancen: Mit Hilfe von ILS kann die Risikotragfähigkeit der Kapitalmärkte besser
zur Abdeckung von Versicherungsrisiken genutzt werden, wodurch sich die potenziellen Versicherungskapazitäten
erweitern. Anders gesagt eröffnen sich durch die Verbriefung von
Versicherungsrisiken für Versicherer und Rückversicherer neue Möglichkeiten der Finanzierung
und Absicherung jenseits klassischer Rückversicherungslösungen. Für Investoren bieten
sich attraktive Anlagemöglichkeiten. Sie können direkt in Versicherungsrisiken investieren,
welche weitgehend unkorreliert zu anderen Finanzmarktrisiken sind. „Insgesamt kann
eine engere Verzahnung von Kapital- und Versicherungsmärkten zu einer effizienteren Bewertung
der Risiken führen und – die richtigen Rahmenbedingungen vorausgesetzt – helfen, die Verteilung von Risiken im Finanzmarkt zu optimieren“, zeigt sich der Chefvolkswirt der
Deutschen Bank, Dr. Thomas Mayer überzeugt.
Trotz hoher Wachstumsraten ist der Markt für ILS nach wie vor ein Nischenanlagesegment. Im Vergleich zum Markt für verbriefte Kreditrisiken – mit mehreren hundert Milliarden USD jährlichem Verbriefungsvolumen – fällt der Markt für verbriefte Versicherungsrisiken aus Anlegersicht kaum ins Gewicht. Dementsprechend beteiligt sich bisher auch nur eine Handvoll von spezialisierten Investoren. Traten vor 10 Jahren vornehmlich die Rückversicherer als Käufer auf, sind es heutzutage vor allem Anleger außerhalb der Versicherungsindustrie, wie spezialisierte Fonds, Hedge Fonds und andere Vermögensverwalter. Retailinvestoren partizipieren bisher kaum.
Die internationale Finanzmarktkrise hat auch am Markt für ILS ihre Spuren hinterlassen. Während der Krise kam die Emissionstätigkeit teilweise zum Erliegen, hat sich jedoch – zumindest im Bereich der Nicht-Lebens-Risiken – wieder vollständig erholt. In einzelnen Fällen offenbarten sich Schwächen der eingesetzten Instrumente, welche sich insbesondere auf die Werthaltigkeit von Sicherheiten und Garantien durch Dritte erstreckten. Vor allem der Markt für Verbriefungen im Bereich Leben litt unter den Auswirkungen der Finanzmarktkrise auf Monolineversicherer. Die Erfahrungen der Krise haben dazu geführt, dass Strukturen überdacht wurden und zukünftig robuster gestaltet werden.
Mittelfristig wird sich das Marktwachstum fortsetzen. Dafür sprechen – neben den Vorteilen, welche sich aus ILS für Versicherer und Investoren ergeben – eine Reihe weiterer Faktoren: So werden bisher lediglich etwa 10-15% der gesamten Rückversicherungskapazität durch die Finanzmärkte bereitgestellt; Einkommen und versicherbares Vermögen steigen-insbesondere in den Emerging Markets – und damit auch die Nachfrage nach Versicherungsschutz. Im Bereich Nicht-Leben ergibt sich ein erhöhter Versicherungsbedarf aus gestiegenen Naturkatastrophenrisiken. Im Lebens-Bereich trägt die Steigerung der durchschnittlichen Lebenserwartung in Verbindung mit einer Verlagerung des Langlebigkeitsrisikos vom öffentlichen auf den privaten Sektor zu einem steigenden Absicherungsbedarf bei.
Herausforderungen bestehen nach wie vor im Ausgleich der Interessen von Investoren und Sponsoren. Bisher werden neue Emissionen meist ad hoc gestaltet und je nach Marktlage an die spezifischen Interessen der Sponsoren angepasst. Dies erfordert auf Seiten der Investoren ein hohes Maß an Flexibilität und Bewertungs-Knowhow und verhindert eine Verbreiterung
der Investorenbasis.
Iceland: Selected Issues Paper-IMF
October 4, 2010--I. EXECUTIVE SUMMARY
1. Iceland faces a significant debt sustainability challenge. The 2008 financial crisis saw Iceland’s public debt soar from under 30 to over 100 percent of GDP, and while
underlying external debt came down sharply (as heavily indebted banks collapsed into bankruptcy), it remains elevated at close to 300 percent of GDP. Standard debt dynamics
identities link the evolution of debt to the level of interest rates and the exchange rate and the
pace of economic growth. Given these macro parameters, the primary fiscal position drives public debt dynamics, while the primary current account surplus drives external debt
dynamics.
A key complication is that the macro parameters depend on the pace of policy
adjustment. The Selected Issues Papers in this volume examine this nexus in more depth.
2. The first chapter looks more closely at external debt sustainability. A closer look at sectoral balance sheets helps illuminate the nature of interest and exchange rate risks. For the corporate sector much of the external debt is FDI related, and many corporations have natural hedges through assets or fx income, suggesting that even long-lived shocks to the exchange rate may not greatly damage external debt sustainability.
view the Iceland: Selected Issues Paper
MiFID: Spirit and Reality of a European Financial Markets Directive
RESEARCH REPORT PUBLISHED JOINTLY BY THE CHAIR OF E-FINANCE OF GOETHE UNIVERSITY FRANKFURT AND CELENT
October 4, 2010--The goal of this report is to describe the objectives and spirit of MiFID and compare it to the status quo and evolution of the European equity trading landscape, with a specific focus on the role of the different categories of trading venues. It serves to assist the current industry and regulatory discussion and provides proposals for possible future regulatory adaptations and enhancements.
The key idea of the Markets in Financial Instruments Directive MiFID was to establish a comprehensive regulatory regime governing trading in financial instruments irrespective of the trading methods used to conclude those transactions in order to promote market efficiency, market integrity, fairness, and competition among various forms of trading mechanisms and venues. Now three years after the implementation of MiFID, the reality of European markets reveals that the competition between Regulated Markets and the newly emerged MTFs works in favor of investors and has led to the desired effects in terms of technology and trading model innovations, service competition, significant fee reductions, and improved market quality in terms of reduced spreads and deeper order books.
Despite a rise of the number of trading venues available to investors, from regulated markets to MTFs and dark pools, transactions carried out on an OTC basis still represent a significant and stable part of the overall trading volume executed in the European cash equity market. However, MiFID characterizes OTC transactions in Recital 53 as transactions that cumulatively fulfill the requirements of being ad hoc and irregular, carried out with wholesale counterparties, above standard market size, and conducted outside systems used for systematic internalization. The analysis of individual OTC transactions in this study reveals that currently the majority of OTC transactions are not larger but smaller than standard market size. Peter Gomber, who holds the Chair of e-Finance at the Goethe University of Frankfurt and is coauthor of this report, says that: “If—as most market participants state—the minimization of market impact is the central motivation for OTC trading, one should expect that most OTC trades would face market impact if concluded on the reference market. However, our analysis reveals that most OTC trades are rather small and would not face market impact. The structural differences between OTC trading and primary market trades are overestimated in the public discussion.” In 2009, five out of ten OTC trades in high liquid shares and six out of 10 trades for a sample of less liquids ones were below the MiFID standard market size. The share of OTC trades that would face no market impact increased from 68% in 2008 to 80% in 2010 for high liquid shares and from 58% in 2008 to 66% in 2010 for a sample of less liquids ones.
Ireland's low tax days are numbered: Commissioner
Octobe 1, 2010--The budget crisis in Ireland could spell the end of its status as a low tax country, the European Union's economic affairs chief said Friday.
European Economic Affairs Commissioner Olli Rehn sidestepped a question during an EU finance ministers meeting about reports that European authorities are pressing Ireland to raise its corporate tax.
"I do not want to take any precise stand on an issue which is a matter for the Irish government and the Irish parliament to decide," Rehn told a news conference. "But I would not rule out any option at this stage."
EU to start talks with US to review IMF quotas
October 1, 2010-- The European Union agreed Friday to start talks with the United States to address calls for the 27-nation bloc to reduce its representation at the International Monetary Fund.
Finance ministers struck "agreement... to try and start discussions with the US and other partners to see if it is possible to start on quota revision," said Belgian Finance Minister Didier Reynders, chairing talks in Brussels.
ETFs and ETPs Update September 2010 -London Stock Exchange
October 1, 2010--Promotion on Admission Fees
The London Stock Exchange Group is pleased to announce a new initiative to promote the admission of ETFs, ETCs and ETNs on the London Stock Exchange's Main Market and ETFplus on Borsa Italiana, which will be available to new and existing issuers until 31 March 2012. Issuers will receive a 15% discount on the admission fee when a security is admitted to trading on the second exchange within the Group.
Full details are available here.
Annual ETF Seminar
The London Stock Exchange is holding its annual ETF Seminar on 8th October 2010. This seminar will be chaired by Anthony Hilton of the Evening Standard and includes a panel session with leading institutional investors. A full agenda will be published in the coming weeks. Further information can be found here. This seminar is free to attend. To register, email academy_uk@londonstockexchange.com or call the UK Academy team on +44 207 797 1739 .
