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Trading in Financial Instruments: European Parliament dark pools report adopted
November 9, 2010--The European Parliament's economics committee today adopted a report by European Conservatives and Reformists economics spokesman Kay Swinburne MEP into regulation of trading in financial instruments such as 'dark pools'.
Dr Swinburne's report accepts that, while the 2004 Markets in Financial Instruments directive (MiFID) has benefited the EU's financial markets through increased competition and provided a number of benefits to investors, it has coincided with a huge increase in the use of technology and an unprecedented increase in the speed of trading. She warns that technological advances require more sustainable legislation to reduce levels of systemic risk in the functioning of the markets, ensure fair competition and ensure market integrity.
The parliament's position will now be taken into account when the commission brings forward reviews of the MiFID and Market Abuse Directives (MAD).
After the vote Dr Swinburne said:
"Today the Parliament has clearly shown its concern for the integrity of our financial markets, and is asking the fundamental question: is the market still serving the needs of long term investors and businesses?
"At the moment, there is a worrying lack of information readily available regarding the Over-The-Counter space, on broker-operated dark pools and on high frequency trading strategies. The European Parliament is asking for much more information to be made available and collected in a usable form.
"The only way to really understand whether the market is functioning correctly is for regulators to have enough information to see what is going on in the market. When practices like quote stuffing and spoofing are alleged to be taking place alongside supposed barracuda trading strategies which seem to be forcing long term investors into trading within dark pools it suggests that some kind of market dysfunction may be taking place.
"Hopefully, the Commission and Committee of European Securities Regulators will now use my report to take a long hard look at their reviews of Market Abuse Directive and MiFID and find answers to the questions I have raised."
Source: Online News
Europe leads the world in carbon awareness but more action is needed to achieve required emissions cuts
November 9, 2010--Europe's largest companies lead the world in reporting carbon emissions and management, according to the Carbon Disclosure Project (CDP) 2010 Europe 300 Report, but Europe will still fail to meet the EU Emissions Trading System (EU ETS) emission cap by 2020 on the current trajectory set by the Europe 300 companies. If these companies achieve their current targets they could deliver an average emissions reduction of just 1.5% annually. These cuts fall short of the planned decrease in the absolute emissions under the EU Emissions Trading System (EU ETS) of 1.9% each year on average over 2013 to 2020, and up to 4.1% if the EU decides to embrace the 30% EU-wide GHG reduction target.
The analysis, conducted by CA Cheuvreux, shows while almost 80% of companies reporting to CDP have set an emissions reduction target, the majority will expire by 2012 and less than a quarter of the companies set targets beyond 2015. In order for business to increase these time horizons and realise the required higher targets, the report calls for a clear, long-term regulatory framework. Across all sectors of business almost nine out of ten companies recognise regulatory opportunities emerging from climate change policies.
The CDP 2010 Europe 300 Report, sponsored by the AXA Group, endorses the recent calls for increased collaboration and understanding between policy makers and business to address global climate change to allow greater planning and encourage sufficient investment in low-carbon technology.
Connie Hedegaard, European Commissioner for Climate Action, commented on future policy: “Ensuring Europe maintains its leadership position and reaps the full economic benefits of the low carbon revolution requires a continued strong push from the policy side. This is one reason the European Commission has put decarbonising the economy at the heart of our vision for Europe’s development up to 2020 and beyond.
“The EU’s long term goal is to cut emissions by 80% to 95% by 2050. This process will eventually impact on companies big and small across all sectors. Joining the Carbon Disclosure Project is a way for businesses to prepare themselves for this transition – and maximise their chances of profiting from it.”
view the Carbon Disclosure Project (CDP) 2010 Europe 300 Report
Source: Carbon Disclosure Project (CDP)
Chancellor announces financial services deals in Beijing
November 9, 2010--In Beijing today the Chancellor George Osborne announced the completion of financial services deals with Chinese companies.
The deals announced in Beijing are:
A Royal Bank of Scotland joint venture with Guolian Securities, allowing RBS entry into the Chinese securities market. This is the first such joint venture by a UK bank and will enable RBS to participate in underwriting Chinese stock market listings.
Aberdeen Asset Management's authorisation to offer £200m per year of asset management services to Chinese clients.
The announcements were made at the conclusion of the third annual UK-China Economic and Financial Dialogue (EFD) held in Beijing on 9 November 2010.
The EFD also agreed that the UK would be China's partner of choice on financial services cooperation, building upon the UK's major presence in the Chinese financial services sector. UK banks already account for 25% of foreign banking in China.
Further progress was also made on a bancasurrance partnership between Standard Life and the Bank of China, which is subject to the final conclusion of commercial negotiations.
In addition to the agreements on financial services, the EFD also covered trade, green investment and energy.
view Combined Policy Outcomes of the Third China-UK Economic and Financial Dialogue
Source: HM Treasury
German investors targeting 'risk-less returns', says Complementa
November 9, 2010--Risk management in Germany has improved in the wake of the financial crisis, and institutional investors are now focusing on 'risk-less returns', according to consultancy Complementa.
In a survey of nearly 50 institutional investors, with combined assets under management of more than €40bn, Complementa found that the crisis had shifted respondents' focus toward capital preservation and maximising the target return without increasing risk.
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Source: IP&E
EU president strikes down idea of European tax
November 9, 2010--- The president of the European Union struck a major blow Tuesday to the concept of a Europe-wide tax, proposed last month by the European Commission but opposed by heavyweights France and Germany.
"I do not think that redesigning the way the EU gets its revenue is a top priority," Herman Van Rompuy said in a speech in Berlin.
"I am personally open to new ideas, but since most alternative sources of income would risk hitting member states unequally, this would weaken the fairness of the current system, its built-in solidarity.
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Source: EUbsiness
FESE members deliver on their commitments to facilitate Equity Market Data Consolidation
November 8, 2010--In July 2010, FESE members committed1 to a number of key steps in order to further contribute to an industry?led efficient consolidation of equity market data. The purpose of this report is to give a
progress update and further details on the on?going work of FESE members to market participants and policy makers.
Context of FESE’s actions:
Regulated Markets (RMs) fully support the industry?led consolidation of equity market data. RMs’ data
is of excellent quality, widely available, easily consolidatable with other data, and provided to users at a
reasonable cost. According to a recent research study entitled “The cost of access to real time pre & post trade order book data in Europe,”2 the expenditure on the cost of data from exchanges accounts for 8% to 15% of total data consolidation costs. The study also shows that the cost of data charged by the largest exchanges in Europe (75 EUR a month) is about the same as the cost charged in the US (70
EUR), a market often cited as a reference point. Thus, exchanges’ user fees are not only commensurate
with the value and the quality of RMs’ data, but they also represent only a minor portion of the overall
cost of consolidation in both absolute and relative terms.
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Source: FESE
Background note on the alternative investment fund managers directive
November 8, 2010--Over a year in the making, the Alternative Investment Fund Managers (AIFM) directive - widely known as the "hedge funds" directive - is reaching the final stages of approval. This note answers some basic questions about what is to be regulated and why. It also explains some more technical issues to do with the "passport" system for marketing funds across the EU. Finally, it also compares the EU institutions' starting positions, and shows the final outcomes, on the most controversial issues.
What are alternative investment funds?
Put simply, "alternative investment funds" (AIF) covers a wide range of funds, none of which are covered by the Directive on Undertakings for Collective Investment in Transferable Securities (UCITS) [1] . It is estimated that in 2009 AIF managers were responsible for over €1,000 billion in assets.
The best-known AIFs are hedge funds and private equity funds, but others include real estate funds, commodity funds, industrial funds and infrastructure funds.
Most AIFs are not schemes sold directly to small investors. Instead, investors in these funds tend to be institutions such as pension funds, or very wealthy individuals or families. However, their impact on the real economy and the man in the street may still be very tangible as is shown by the example of pension funds.
[1] A collective investment scheme is a way of investing money with others to participate in a wider range of investments than is feasible for most individual investors, and to share the costs and benefits of doing so.
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Source: European Parliament
EU Project Crawls the Web for Hidden Financial Expertise
Boerse Stuttgart is member of consortium for the EU project FIRST
November 8, 2010--The new research project FIRST, co-funded by the European Union, aims to extract relevant financial information from the vast amounts of unstructured data present in the World Wide Web – in real-time that is. Its goal is to use methods of artificial intelligence to support financial decision making. FIRST will, in a nutshell, harness the knowledge of the internet to support financial decision makers.
The FIRST project started in October 2010 and will be conducted over the course of three years. Co?funded by the European Union’s “Information and Communication Technologies” Theme of the Seventh Framework Programme, the project has an overall budget of 4.574 million Euros. The FIRST consortium consists of 8 European partners from Germany, Italy, Slovenia, and Spain. Boerse Stuttgart is a member of the consortium.
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Source: Boerse Stuttgart
ETF investors could distort metal prices, FSA warned
November 8, 2010--Plans to allow investors to easily own industrial metals like copper and aluminium are being scrutinised by the UK regulator, the Financial Services Authority.
The FSA has received a complaint about yet-to-be launched exchange traded funds (ETFs) that would own industrial metals, the regulator confirmed.
Investors already have access to physical metals like gold through ETFs, but the new product would give them access to non-precious metals.
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Source: citywire.co.uk
ECB forced to act as crisis fears rise
November 8, 2010--The European Central Bank has been forced to intervene in government bond markets for the first time in almost a month, as financial markets fret that the escalating eurozone crisis is moving into a new and more dangerous phase.
The ECB said it spent €711m ($991m) buying government debt last week, reactivating an emergency programme that had lain dormant in the previous three weeks.
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Source: FT.com
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