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ICT research: Commission-backed project to help identify systemic financial market risks
October 18, 2010--The European Commission is investing in a research project to develop new systemic risk indicators for “early warning systems” that could alert governments and bankers to impending financial crises in the earliest stages and take early action to stop them from spreading. Researchers from universities in Italy, Spain, Switzerland and the UK, experts at Yahoo! and the European Central Bank will investigate how financial institutions are exposed to systemic risk as a result of complex, highly inter-connected digital information and transaction systems. Based on a new multi-disciplinary research approach, the project will analyse the complex system of global, ICT-based financial transactions, along with internet search queries, to monitor the build-up of risk in the financial system and the economy as a whole.
Commission Vice-President for the Digital Agenda Neelie Kroes said "This new research aims to allow better monitoring of financial markets by focussing on systemic risks arising from the highly inter-connected digital information and transaction systems in the financial markets."
Today's financial institutions are mutually interconnected in a complex web of computer-based transaction systems. In such a strongly interconnected system, if a financial institution fails, there can be a risk that a "domino effect" could lead to problems for other institutions, even financially healthy ones. One reason why the severity of the recent financial crisis was not adequately predicted was because existing tools and data did not allow experts to sufficiently consider the extent to which the sector relies on these complex interactions and mutual exposures.
The aim of the "Forecasting Financial Crises" project is to improve policy makers' understanding of how banking systems, stock markets and the flow of credit are mutually interconnected. The conceptual and software instruments developed during the research could help develop early-warning systems that would permit actions to be taken if needed to stabilise financial markets. The research will focus not only on financial transaction data, but also on internet search data such as the frequency of certain key words related to finance in search engines. The aim is to develop new risk indicators that could be used by policy bodies like the European Central Bank, the European Systemic Risk Board, or the Basel Committee on Banking Supervision to help to prevent future financial crises.
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Source: Europa
A Strong Britain in an Age of Uncertainty
October 18, 2010--The Government has today published its National Security Strategy: “A Strong Britain in an Age of Uncertainty”, which outlines our reappraisal of Britain’s role in the world, the risks to our security and their implication for the UK.
National security is the first duty of Government and we have given it the highest priority. This Strategy describes how – in an age of uncertainty – we need the structures in place to allow us to react quickly and effectively to new and evolving threats to our security. That is why the Prime Minister established National Security Council on the first day of the new Coalition Government.
The National Security Strategy and the Strategic Defence and Security Review, to be published tomorrow, mark a step-change in the UK’s ability to protect its security and advance its interests in the world.
The Strategy is informed by a full assessment of the risks to our security and identifies 15 priority risk types, the most pressing of which are:
Acts of terrorism affecting the UK or its interests
Hostile attacks upon UK Cyber Space
A major accident or natural hazard (e.g. influenza pandemic)
An international military crisis between states, drawing in the UK and allies.
view National Security Strategy: “A Strong Britain in an Age of Uncertainty”,
Source: Cabinet Office
Commission to relaunch controversial tax plan
October 18, 2010--The European Commission on Tuesday will relaunch the controversial idea of a European-wide tax to help fund the EU budget, as cash-strapped states are reluctant to contribute more.
The commission will unveil a package of proposals that could transform the way the European Union collects funds following the global recession and a surge in public deficits that forced European governments to tighten their belts
The proposals will set the stage for tough negotiations over the 27-nation bloc's budget for 2014-2020, with battle lines drawn over farm spending, which accounts for 40 percent of expenditures and rebates for states such as Britain.
European Union Budget Commissioner Janusz Lewandoswky has signalled that a European-wide tax is a possible option to increase EU revenue and reduce national government contributions, which fund 75 percent of the budget.
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Source: EU Business
LSEG makes co-location directly available to vendors and service providers
October 18, 2010--London Stock Exchange Group [“LSEG”] announced today that non-trading market participants, including vendors and service providers, can take their own cabinets within the Exchange’s Hosting facility. The move, undertaken after detailed consultation with market participants, represents a significant strategic step in the evolution of the Exchange Hosting service, paving the way for the creation of a unique community of both trading firms and solution providers in the Exchange’s data centre.
Antoine Shagoury, Chief Information Officer, London Stock Exchange Group, said:
“This is another significant step forward in our efforts to enhance the Exchange Hosting service. Our ever expanding community of trading customers will directly benefit from this vendor diversification and the innovative, value added services and products these new non–trading participants will bring to our co-location environment.”
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Source: London Stock Exchange Group
Deutsche Börse: Four new Lyxor ETFs launched on Xetra
October 15, 2010--: Four new exchange-listed index funds issued by Lyxor are tradable in Deutsche Börse’s XTF segment.
ETF name: Lyxor ETF STOXX Europe 600 Automobiles & Parts Daily Short
Asset class: equity index ETF
ISIN: FR0010916759
Total expense ratio: 0.45 percent
Distribution policy: non-distributing
Benchmark: STOXX Europe 600 Automobiles & Parts Daily Short Index
ETF name: Lyxor ETF STOXX Europe 600 Banks Daily Short
Asset class: equity index ETF
ISIN: FR0010916767
Total expense ratio: 0.45 percent
Distribution policy: non-distributing
Benchmark: STOXX Europe 600 Banks Daily Short Index
ETF name: Lyxor ETF STOXX Europe 600 Basic Resources Daily Short
Asset class: equity index ETF
ISIN: FR0010916783
Total expense ratio: 0.45 percent
Distribution policy: non-distributing
Benchmark: STOXX Europe 600 Basic Resources Daily Short Index
ETF name: Lyxor ETF STOXX Europe 600 Oil & Gas Daily Short
Asset class: equity index ETF
ISIN: FR0010916809
Total expense ratio: 0.45 percent
Distribution policy: non-distributing
Benchmark: STOXX Europe 600 Oil & GasDaily Short Index
The new Lyxor ETFs track the inverse performance of the largest European companies by market capitalization from the following sectors of the STOXX Europe 600 index family: Automobiles & Parts, Banks, Basic Resources and Oil & Gas.
Source: Deutsche Börse
Effective October 18, 2010 FORTS Launches Option Contract On Brent Oil
October 15, 2010--Starting from October 18, 2010 FORTS, futures and options market of RTS, will start trading on options contracts on Brent oil. Code of the contract in the trading system is (BR). The underlying asset of the contract is a futures contract on Brent oil.
The contracts will be settled on a monthly basis.
They will be convenient both for experienced investors who wish to use options for creating high-performance strategies on the utilities derivative market and for major Russian oil producers and consumers for hedging against risks related to price fluctuations on the global oil markets.
Evgeny Serdyukov, Director of the Futures & Options Market at OJSC RTS comments: "Oil producers and consumers will gain an opportunity to hedge market risks by this new RTS’s financial instrument. Participants of the financial market will be able to create nonlinear strategies and form portfolio consisting of several options and futures contracts on oil that would return guaranteed interest within the determined period or within some price limits and would not depend on oil price changes. Banks will afford to establish structured products based on this option with the link between their yield and oil price and with the guaranteed return of capital."
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Source: RTS
IOSCO forms Task Force on OTC Derivatives Regulation
October 14, 2010--The Technical Committee of the International Organization of Securities Commissions (IOSCO) has formed a Task Force on OTC Derivatives Regulation (Task Force) in order to coordinate securities and futures regulators’ efforts to work together in the development of supervisory and oversight structures related to over-the-counter (OTC) derivatives markets.
IOSCO’s experience in developing objectives and principles for securities regulation, including its development of Recommendations for Central Counterparties in conjunction with the Committee on Payment and Settlement Systems (CPSS), provides the Task Force with a strong basis upon which to develop mechanisms to encourage consistency among IOSCO members for derivatives regulation. As OTC derivatives also fall within the remit of other regulators and central banks, coordination and cooperation with other standard setting bodies and relevant authorities will be an important dimension of the Task Force’s work.
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Source: IOSCO
Eurozone falls back into trade deficit
October 15, 2010--The 16-nation eurozone fell back into a global trade deficit in August following a surplus in July, the European Union statistics agency said Friday.
The trade deficit plunged to 4.3 billion euros (6.1 billion dollars) in August following a surplus of 6.2 billion euros the previous month, Eurostat said.
Exports rose by 1.0 percent in August after a drop of 0.6 percent in July. Imports grew by 1.8 percent in August.
The global trade deficit of the wider, 27-nation European Union, which includes Britain and industrial power Poland, widened to 17.3 billion euros in August after a shortfall of 6.2 billion euros in July.
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Source: EUbusiness
NYSE Euronext European ETF activity highlights for September 2010
October 14, 2010--At the end of September, NYSE Euronext had 551 listings of 481 ETFs from 16 issuers. These ETFs cover more than 300 indices exposed to an extended range of assets and strategies (Equity, Fixed Income, Commodities, Short, Leverage, etc…).
The number of ETFs increased by 18% YTD compared to the end of 2009. As of the end of September, 81 new ETFs had been listed in 2010, while 8 ETFs had been the subject of mergers by absorption and 19 ETFs had been delisted.
Both the daily average number of trades and daily average turnover figures again showed solid YOY growth in September 2010. On average, there were 8378 trades on a daily basis, representing an increase of 19.46% versus September 2009. Daily average turnover increased from €292.1 million in September 2009 to €305.6 million in September 2010, or 4.64%.
At the end of September, the combined Assets Under Management of all ETFs listed on the NYSE Euronext European markets totaled €113.7 billion, an increase of 30.84% from the €86.9 billion at the end of September 2009.
The combination of the flow of 22 first-class Liquidity Providers, competitive market makers, client orders and our high capacity, low latency technology contributed to a median spread of 26.90 bps of all listed ETFs, down from 32.53 bps in September 2009.
At the end of September 2010, NYSE Euronext’s Liquidity Providers program featured 22 Liquidity Providers that had a total of 1026 liquidity provision agreements, providing firm bid/ask quotes with minimum size and maximum spread requirements for the entire trading session on all ETFs.
Visit http://www.euronext.com for more info.
Source: NYSE Euronext
Turkey: Achieving Results for the Future: Sustainable and Equitable Growth
October 14, 2010-Overview
Turkey has eliminated extreme poverty and is well on its way to reaching the Millennium Development Goals (MDGs). Turkey works with the International Bank for Reconstruction and Development ( IBRD) towards achieving fast, sustained and equitable growth. This partnership has delivered on a number of fronts including macroeconomic stabilization; the development of a clean, sustainable, and reliable energy sector; and improved health outcomes.
Challenge
Today, Turkey is the world’s sixteenth largest economy, with 74 million inhabitants and per capita annual income above US$9,000. Since 2001, Turkey has stabilized domestically and built its international profile, pursuing a foreign policy that stresses harmony in relations with its neighbors. Accession to the European Union (EU), initiated in 2005, remains a firm long-term aim.
Approach
IBRD’s support for Turkey’s development program will focus on three areas: stabilizing the economy to ensure robust growth and poverty reduction; delivering a clean and reliable energy sector; and helping Turkey achieve better results in the health sector.
Results
Through a long and close relationship with IBRD, Turkey has been able to achieve notable results across a range of sectors, namely:
Solid fiscal and debt management, consistent monetary and exchange rate policy, and overhauled banking regulation and supervision have driven growth, improved social outcomes, and cut poverty: read more
view Full Brief-Achieving Results for Turkey’s Future: Sustainable and Equitable Growth
Source: World Bank
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