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Key euro economy indicator sets alarm bells ringing
September 23, 2010--- Growth across the 16-nation eurozone economy slumped to a seven-month low in September, with a leading indicator logging its steepest fall since the early days of the global financial crisis.
Alarm bells were raised especially as Germany recorded a "particularly steep slowing," according to the purchasing managers' index (PMI), a survey of 4,500 euro area companies compiled by London-based data and research group Markit.
Its combined manufacturing and services index for September crashed to 53.8 points from 56.2 in August.
Although any score above 50 indicates a trend towards growth, and this marked a 14th successive month in positive territory, concern was evident after the weakest rise since February and the fastest drop since November 2008.
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Source: EUbusiness
Lyxor launches the first Asia ex Japan Equity Sector ETFs on the London Stock Exchange and Euronext Paris
September 23, 2010--Lyxor Asset Management (Lyxor), Société Générale's wholly-owned subsidiary and a European leader in Exchange Traded Funds (ETFs), announced today that it has listed the first ever Asia ex Japan Equity Sector ETFs on the London Stock Exchange and Euronext Paris.
This innovative range of Sector ETFs provides diversified exposure to key growth areas and market segments in the region: consumer staples, financials, infrastructure, information technology and materials.
The 5 new Lyxor ETFs are:
Lyxor ETF MSCI AC Asia ex Japan Consumer Staples TR
Lyxor ETF MSCI AC Asia ex Japan Financials TR
Lyxor ETF MSCI AC Asia ex Japan Information Technology TR
Lyxor ETF MSCI AC Asia ex Japan Infrastructure Capped TR
Lyxor ETF MSCI AC Asia ex Japan Materials TR
They are listed in GBP and USD on the London Stock Exchange and in EUR on Euronext Paris.
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Source: Telegraph.uk.com
DB Global Equity Index & ETF Research : European Weekly ETP Review: Gold price marches on, the ETF launch calendar follows
September 23, 2010--Net Cash flows
The week that ended on September 17th went down in history as the most quiet week, in terms of European cash flows, for 2010. The entire European ETP industry netted €5 million of inflows across all asset classes. No single asset class showed strong directional bias. This is a sharply different picture from last week, when the industry saw new inflows of €690 million.
Most major European equity indices finished the week close to flat. The French CAC 40 declined by 0.1%, the German DAX was down by 0.01%, the British FTSE 100 was up by 0.12% while Euro Stoxx 50 finished the week down 0.83%. Gold defied the equity markets and saw its (USD/oz) price rise by 2.25%.
Equity ETFs gathered net inflows of €19 million, fixed income registered €14 million of outflows, commodities saw €28 million of inflows and all other asset classes put together netted €29 million of outflows.
New Listings
Five new products were launched by four providers. In addition, 38 products were cross listed by five providers. Newly launched products included a hedge fund ETF by Source, two commodity ETPs (Platinum and Oil) by UBS, a high yield fixed income ETF by Blackrock and an equity Asia (ex Japan) ETF by HSBC.
Turnover
On-exchange daily average ETP turnover for this week was up by 0.6%, to €1.70 billion. Average daily equity ETF turnover was up 0.6%, reaching €1.25 billion. Fixed Income ETF turnover was up by 3.2%, reaching €215 million. Commodity turnover was down by 1.2%, to €235 million.
Assets Under Management (AUM)
European ETP assets were down 0.7%, in line with the movement in major European equity markets, finishing the week at €204.4 billion. Year to date, European ETP AUM are up by 20.2%.
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Source: DB Global Equity Index & ETF Research
EFAMA urges separate panel devoted to asset management for new EU supervisor
September 23, 2010--The director general of the European Fund and Asset Management Association (EFAMA) has called for the creation of a consultative panel for asset management matters, as part of a pan-European supervisory body recently agreed by the European Parliament.
The European Parliament yesterday voted in favour of reforms to the way the single financial market is overseen, signing off on the creation of three pan-European supervisory bodies.
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Source: IP&E
LME and LBMA announce LBMA Gold Forward Curve
September 23, 2010--The London Metal Exchange (LME) and the London Bullion Market Association (LBMA) will begin collecting data for forward gold rates from September.
The new venture will see the publication of gold rates up to ten years forward. This will bring new transparency to the London gold bullion market where currently only spot rates are distributed.
The LBMA Gold Forward Curve will be created from data supplied by the LBMA’s eight forward market makers, which include some of the world’s biggest banks.
Their data will be processed by the exchange’s LMEdcs system and distributed to subscribers by the LME’s network of licensed data distributors from early next year.
“This partnership with the LBMA demonstrates that both organisations and their memberships are willing and able to work closely together for the benefit of the London market in a changing financial climate,” said Joanna Stuart, the Project Lead on Precious Metals at the LME. “The LME has many capabilities and experience that it can share with the LBMA and help the latter maintain its leading position in the OTC gold forward markets.”
The LBMA Forward Curve will serve the need for transparency and information in the vibrant OTC bullion market and the LME and LBMA aim to launch further data series.
Source: London Bullion Market Association
European Central Bank: Results Of The Euro Money Market Survey 2010
September 23, 2010--Today the European Central Bank (ECB) is publishing the results of a survey entitled “Euro Money Market Survey 2010”, which highlights the main developments in the euro money market in the second quarter of 2010, in comparison with the second quarter of 2009.
The results from this year’s survey, derived from a constant panel of 105 banks (unless otherwise stated), show the following:
Aggregate turnover in the euro money market declined for a third consecutive year, albeit at a slower pace, falling this year by 3% from its level in the second quarter of 2009. The most notable declines in activity took place in the overnight index swaps (OISs) segment (-19%) and in the unsecured market (-18%).
In the unsecured market the decline was most pronounced for unsecured cash borrowing and, within this particular segment, for maturities of more than one year and for maturities ranging from one to three months.
The secured market remained the largest segment, with its aggregate turnover increasing by 8%. This increase was driven mostly by a 14% increase in activity for maturities between tomorrow next (T/N) and one month. Overnight activity (O/N) in the secured market declined instead by 8%.
The share of transactions in the secured market that was cleared by central counterparties (CCP), as a subset of the repo market, rose from 41% of total repo transactions in 2009 to 45% in 2010.
All except one of the derivatives segments covered in the survey experienced a decline in turnover in 2010. The most significant drop took place in the overnight index swaps (OISs) segment, where turnover fell by 19%. Turnover in forward rate agreements (FRAs) decreased by 10% in 2010 following a rise over the previous two years. In other interest rate swaps excluding OISs (“Other IRSs”) and cross-currency swaps (“Xccy swaps”) turnover decreased by 11% and 4% respectively. The only derivatives segment that did not suffer a decline was the foreign exchange swaps segment (“FX Swaps”), where turnover increased by 3%.
The qualitative part of the survey shows that liquidity conditions and efficiency in the unsecured market continued to deteriorate. In cross-currency swaps, liquidity conditions were perceived to have worsened significantly. The qualitative input also shows that market liquidity stabilised or even improved in most other segments of the euro money market between the second quarter of 2009 and the second quarter of 2010.
view Results of the Euro Money Market Survey 2010 report
Soure: European Central Bank (ECB)
CESR review identifies improvements in financial information throughout Europe in 2009
September 23, 2010--CESR publishes today its first annual activity report on monitoring enforcement of International Financial Reporting Standards (IFRS) in Europe (Ref. CESR/10-917). The report shows both an increase in regulators’ enforcement activities and greater consistency regarding the actions taken by enforcers.
As part of the 2009 IFRS enforcement activities, EU enforcers also identified an overall improvement in the quality of reporting under IFRS, since its adoption in Europe. Nevertheless, the report also presents those areas identified by enforcers on which listed companies are urged to focus further, in order to ensure improvements in the information provided to investors.
Recognising the global nature of financial markets and the need to maintain investor’s confidence globally, the report also outlines the steps taken by CESR in 2009 to engage with third country enforcers of financial information. This dialogue seeks to encourage further harmonisation of enforcement practices in IFRS reporting by listed companies worldwide.
view the Activity Report On IFRS enforcement 2009
Source: CESR
Parliament gives green light to new financial supervision architecture
September 22, 2010--Having fought for more than a year in favour of a radical reform of European financial supervision, the European Parliament on Wednesday gave the final seal of approval to a package of reforms which will see a fundamental shift in the way banks, stock markets and insurance companies are policed as of 2011.
Three European supervisory authorities (ESAs) will be established to replace the current supervisory committees. Their powers will stretch much further than the advisory nature of the current system and their potential to gain further competences will be considerable thanks to a strong review clause. A European Systemic Risk Board (ESRB) will also be established with the task of monitoring and warning about the general build-up of risk in the EU economy.
This new system should be able to provide better protection from events such as the Fortis bank crisis weekend, Germany's unilateral naked short-selling ban and the losses faced by life insurance policyholders in the UK, Ireland and Germany with the collapse of Equitable Life. It should at the same time strengthen the EU single market for financial services and provide much better investor protection.
Cosmetic or root and branch reform
A number of Member States, particularly those with large financial centres, favoured the limited reform approach. This led to a significant reduction in the scope of the Commission proposals, themselves considered by the EP as not going far enough. Parliament's rapporteurs from the beginning argued that the system needed serious reform so that risk would be better understood, primarily through much improved communication between national supervisors.
The final deal sees the transformation of advisory committees into watchdogs with a bite. The ESAs are set to get tough new powers to settle disputes among national financial supervisors and to impose temporary bans on risky financial products and activities. If national supervisors fail to act, then the authorities may also impose decisions directly on financial institutions, such as banks, so as to remedy breaches of EU law. The daily work of the ESAs will see them drive coordination within the current system of colleges of national supervisors set up to watch over cross-border financial institutions.
ESA firefighting powers
In the event of disagreements between national supervisors, ESAs will be able to impose legally-binding mediation and, if no agreement can be reached within the relevant college of supervisors, to impose supervisory decisions on the financial institution concerned ESAs will be able to intervene as mediators at their own discretion, rather than only at the request of one of the national supervisors.
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Source: European Parliament
budget: MEPs want more flexibility and policy debate
September 22, 2010--Parliament wants more flexibility within the EU budget to meet current and future needs. In a resolution passed on Wednesday, it urges the Council to enter into policy negotiations on its budget proposal for 2007-2013. The current (March 2010) proposal is deemed too rigid to provide sufficient funding to meet new challenges, including those arising out of the Lisbon Treaty.
The Multiannual Financial Framework (MFF) sets annual ceilings for commitments and payments by category of expenditure. It had to be revised to bring it into line with the Lisbon Treaty, but a draft interim report by Reimer Böge (EPP, DE), approved today, criticises the Council proposal as "purely technical", and "insufficient for Parliament to give its consent."
"The Council proposal does not add the resources necessary to deliver initiatives that were not foreseen when the current MFF was adopted in 2006. The most obvious ones are the new priorities included in the Lisbon Treaty, like the external action service, climate change, energy, civil protection, sports and space. But even before the addition of these new priorities, the annual budgets could only be agreed by exhausting the existing margins", said Mr Böge, adding that "for the coming years, the remaining margins under the ceilings of the framework are estimated to be negligible."
To meet current and future needs, Parliament would like to see wider margins and reserves built into the framework. This means more flexibility to make changes within and between budget headings.
Parliament also calls on the Council and the Commission to consider rejigging the budget by establishing "positive" and "negative" priorities, bearing in mind the EU's added value. Commission and Council should finally come up with the long-awaited mid-term review (due in 2009), of all the aspects of EU spending and resources, so that a real policy debate can be held on future priorities.
The Böge report was approved with 445 votes in favour, 39 against and 18 abstentions.
Part 2 of Adopted text
Source: European Parliament
ETF Landscape: European STOXX 600 Sector ETF Net Flows, week ending week ending 17-Sep-10
September 22, 2010--Last week saw US$118.4 Mn net outflows from STOXX Europe 600 sector ETFs. The largest sector ETF net outflows last week were in Food & Beverage with US$74.6 Mn and Insurance with US$43.7 Mn while Banks experienced net inflows of US$54.4 Mn.
Year-to-date, STOXX Europe 600 sector ETFs have seen US$34.1 Mn net inflows. Banks sector ETFs have seen the largest net inflows with US$228.5 Mn, followed by Media with US$203.2 Mn while Food & Beverage has experienced the largest net outflows of US$148.3 Mn YTD.
The US$9.0 Bn AUM invested in the ETFs is greater than the US$3.3 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
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