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Green light to tighter financial oversight
September 7, 2010--EU finance ministers meeting at the Ecofin Council on 7 September backed the establishment of four European financial supervisory bodies, aimed at averting a recurrence of the financial crisis. A provisional deal had been reached with the European Parliament on 2 September.
Under the reform, a European Systemic Risk Board (ESRB), to be located in Frankfurt, will be responsible for the oversight of the financial system within the Union. In the event of a high-level or systemic risk - one that could jeopardise the entire market - it will issue warnings and recommendations for action and monitor their follow-up. For the first five years, the ESRB will be chaired by the President of the European Central Bank, but the issue is to be reviewed after three years.
Three supervisory authorities will be created, for banking, securities and insurance, with their seats in London, Paris and Frankfurt, respectively. They replace the existing supervisory committees, which have had only an advisory role. Working in tandem with a network of national supervisors, the new authorities will be tasked with, inter alia, setting common standards and contributing to a common supervisory culture. Responsibility for day-to-day supervision of individual institutions is to remain with national authorities.
The reform, which is one of the priorities of the Belgian presidency, is subject to approval by the Parliament at its forthcoming plenary session, followed by formal adoption by the Council. The new bodies should be up and running as of 1 January 2011.
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Source: Council of the European Union
HSBC launches HSBC MSCI Pacific ex Japan ETF
September 7, 2010--HSBC has launched its HSBC MSCI Pacific ex Japan exchange traded fund, or ETF, which carries a total expense ratio of 0.4%.
The HSBC MSCI Pacific ex Japan ETF will be listed initially on the London Stock Exchange. Further registrations and cross-listings in Europe are planned over the coming months, said HSBC.
The latest ETF from HSBC offers investors exposure to the performance of the MSCI Pacific ex Japan Index, which represents the equity market performance of the developed markets in the Pacific ex Japan region, namely Australia, Hong Kong, New Zealand, and Singapore.
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Source: iStockanalyst
Preparations for New IT infrastructure
Two new standardized interfaces to be launched in 2011
September 7, 2010-At today’s “Open Day 2010 – Deutsche Börse IT Conference”, Deutsche Börse Systems announced that it will be implementing two new interfaces in the trading systems of the Eurex derivatives exchange and the Xetra cash market in the upcoming year. These are:
a standardized FIX interface for entering orders to facilitate participant access to Eurex and Xetra and
a new interface for netted market data in multicast format.
The development of the two interfaces is part of Deutsche Börse Group’s IT strategy. In the medium term, the Group plans to implement the new high-performance trading infrastructure developed initially for the International Securities Exchange (ISE) in other markets of the Deutsche Börse Group. The new interfaces will enable Eurex and Xetra customers to adapt their own trading applications in good time. The new interfaces will eventually replace the current VALUES API open interfaces in the medium-term. In order to minimize costs for customers, both interfaces will be launched as part of the annual system releases during the course of 2011. Alongside this, Deutsche Börse plans to considerably simplify its existing access structure for customers and plans to offer a web-based solution in the future.
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Source: Deutsche Börse
DB Global Equity Index & ETF Research: European Weekly ETP Market Review:Do ETF trackers track? European equity ETF tracking error under the microscope
September 6, 2010-When investors purchase index products such as ETFs, they have a very set and, seemingly, simple goal in mind: they expect them to track their stated benchmark, as closely as possible. This very specific investor expectation often raises the product evaluation bar and can even create undue expectations. Therefore, analyzing and understanding the dynamics that drive this very fine tracking balance is close to many investors’ heart.
Tracking error (TE) is perhaps the most popular measure of how well an ETF is performing against its benchmark. And while less TE is generally better than more TE, it is important to consider that mistracking can come not only in the form of underperformance but also in the form of outperformance. [Relative to an ETF’s benchmark]. Thus, while it is important to measure TE, it is also critical to understand its sources.
The most evident and quantifiable source of mistracking comes from management fees but that information is typically readily available and therefore easier to evaluate. Hence, it is more important to look beneath the surface, decompose an ETFs return stream and detect other possible sources of mistracking as well as resultant risks and benefits. Such information can enable investors to make much more effective beta investment decisions as well as give them a more insightful perspective in how to evaluate an ETF product.
* Benchmark underperformance is more immediately accepted as an index product flaw, however, our study has revealed that outperformance can also disguise information which is equally important to consider. A set of ancillary investment activities, which always fall within an ETF’s investment mandate, as well as market driven events, can both benefit or potentially expose an ETF to risks. * Trackers are meant to track. Do they track? What drives ETF TE? How common of a problem is mistracking? These are only a few questions which are tackled in this report. To answer them, we have put European domiciled equity ETF TE under the microscope by looking at 59 ETFs, representing approximately 40% of the European equity ETF market as of August 20th 2010. We have chosen to look at equity ETFs as their benchmarks are typically subject to higher volatility [than fixed income ETFs] and hence studying them can reveal more information about TE and its sources. To optimize our selection sample we have picked both physically as well as synthetic replicated ETFs, funds by 12 different providers as well as ETFs tracking both developing and emerging market benchmarks. A full list of assumptions pertaining to our study can be found in the ‘Study Assumptions’ section of this report. A full list of ETFs included in the study can be found in Appendix A.
STOXX Launches Country Subindices For France, Italy And Spain
September 6, 2010--STOXX Limited, a global index provider and creator of the leading European equity indices, today announced the launch of the EURO STOXX 50 Subindex France, EURO STOXX 50 Subindex Italy and EURO STOXX 50 Subindex Spain. The new country indices are subsets of the flagship EURO STOXX 50 Index, representing all French, Italian and Spanish companies from the EURO STOXX 50 Index, respectively.
“The EURO STOXX 50 Index is Europe’s most favored equity index, and valued worldwide for its rules based methodology, transparency and liquidity,” said Hartmut Graf, chief executive officer, STOXX Ltd. “The new EURO STOXX 50 Country Subindices are derived from the EURO STOXX 50 Index, thus offering market participants the same benefits on a single country basis.”
The EURO STOXX 50 Country Subindices follow the same methodology as the EURO STOXX 50 Index. They are weighted by float-adjusted market capitalization, calculated in EUR and US dollar, and are available in price, gross and net return versions. Daily history is available back to December 31, 2000. The indices are reviewed annually with the EURO STOXX 50 Index.
The EURO STOXX 50 Index was launched on February 28, 1998. It represents 50 supersector leaders in the 12 euro zone countries Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, the Netherlands, Portugal and Spain. The index captures approximately 60% of the free-float market capitalization of the EURO STOXX TMI Index.
For more information on the EURO STOXX 50 Country Subindices please visit www.stoxx.com.
Source: STOXX
NYSE Euronext lists 2 new COMSTAGE ETFs based on the PSI 20 and PSI 20 Leverage on Euronext Lisbon
September 6, 2010--NYSE Euronext is pleased to announce that COMSTAGE ETF has listed 2 new ETFs based on the PSI 20 and PSI 20 Leverage on Euronext Lisbon today:
Listing date:06/09/2010
ETF name: ComStage ETF PSI 20
ETF ISIN:LU0444605215
ETF Symbol: PPP
TER: 0,50%
Listing date: 06/09/2010
ETF name:ComStage ETF PSI 20 Leverage
ETF ISIN:LU0444605306
ETF Symbol:PP2
TER:0,50%
Currently, these products are the only listed ETFs based on PSI 20 index range.
NYSE Euronext now has 535 listings of 487 ETFs based on more than 300 indices. So far this year, 48 ETFs have been listed on NYSE Euronext’s European markets.
Souyrce: NYSE Euronext
ECB publishes book on the payment system and the role of the Eurosystem in this field
September 6, 2010--The European Central Bank (ECB) has today published a book entitled “The payment system – payments, securities and derivatives, and the role of the Eurosystem”. It provides comprehensive insight into the handling of financial transactions and the functioning of the related financial market infrastructure – a core component of the financial system. It also explains the role and policies of the Eurosystem – which comprises the ECB and the 16 national central banks of the euro area – in this field.
The book is in three parts. The first provides insight into the market infrastructure of modern economies with a view to examining key concepts which have general validity and are thus applicable around the world. Emphasis is placed on the principles governing the functioning of the relevant systems and processes and the presentation of the underlying economic, business, legal, institutional, organisational and policy issues. The second concentrates on issues concerning the market infrastructure for the handling of euro-denominated payments, securities and derivatives, as well as the most important EU legislation. The third explains the operational, oversight and catalyst roles of the Eurosystem and the policies established by the Governing Council of the ECB in this field. It also considers the legal basis for the Eurosystem’s involvement and describes the transparent and cooperative approach adopted by the Eurosystem with a view to pursuing its public policy objectives while acting within a modern market economy environment.
view the Payments,
securities and derivatives, and the role
of the Eurosystem
Source: ECB
Thomson Reuters MiFID Monthly Market Share Reports For August 2010
September 6, 2010--Trading is fragmenting between exchanges and competing venues. But by how much and which venues? Find out in the summarised monthly reports.
view All European Equities Market Activities by Trade Type-August 2009 to August 2010
view the Main Trading Venues For all European Equities
Monthly summarised data on a per market and index basis
view Monthly summarised data on a per market and index basis-by region & country
Source: Thomson Reuters
EPEX Spot/EEX Power Derivatives: Power Trading Results In August
Septemeber 6, 2010--In the framework of their cooperation, the European
Energy Exchange AG (EEX) and the French Powernext SA integrated their Power Spot
and Derivatives Markets in 2009.
In August 2010, a total volume of 86.0 TWh was traded on the joint subsidiaries EPEX
Spot SE and EEX Power Derivatives (same month of the previous year: 81.2 TWh).
Power trading on the day-ahead auctions on EPEX Spot accounted for a total of
20,570,802 MWh and can be broken down as follows:
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Source: European Energy Exchange AG (EEX)
EEX trading results for Natural Gas and CO2 Emission Rights in
September 6, 2010--In August, the trading volume on the EEX Spot Market for Natural Gas amounted to 1,472,150 MWh (GASPOOL and NCG market areas) compared to 115,704 MWh in August 2009.
The volume included 772,790 MWh traded in the Within-Day Gas product which was launched on 1 March 2010. The Spot Market price for the day-ahead delivery of Natural Gas ranged between EUR 14.40 per MWh and EUR 19.25 per MWh.
The volumes on the Derivatives Market for Natural Gas (GASPOOL and NCG market areas) amounted to 1,176,450 MWh (August 2009: 473,850 MWh). On 31 August 2010, the open interest was 19,980,593 MWh. On 31 August 2010 Natural Gas prices for delivery in 2011 were fixed at EUR 20.67 per MWh (GASPOOL) and EUR 20.70 per MWh (NCG), respectively.
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Source: EEX
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