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EU finance regulation shake-up welcomed
September 3, 2010--European governments gave their approval on Friday to an overhaul of the way banks and markets in the region are supervised, which was agreed in principle on Thursday night. However, they warned that new pan-European Union watchdogs would need to exercise their powers cautiously.
In Germany, Leo Dautzenberg, a member of Chancellor Angela Merkel’s ruling Christian Democratic Union, and one of its finance policy experts in parliament, hailed Thursday night’s agreement on the EU financial supervision package as “closing an important gap in financial market regulation”.
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Source: FT.com
Swiss franc benefits from haven status as doubts spread
September 3, 2010--The Swiss franc hit a record high against the euro and approached parity against the dollar for the first time in nine months this week as worries about the global economic recovery drove haven demand.
The Swiss franc has risen more than 15 per cent against the euro to date this year, with those gains accentuating after the Swiss National Bank in June halted its policy of intervening to stem gains in its currency, saying that the risk of deflation in the Swiss economy had all but disappeared.
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Source: FT.com
Euro recovery takes divergent paths
September 3, 2010--Continental Europe's main economies took increasingly divergent paths towards recovery in August, with Germany and France indicating growth but Spain's services sector tipping into contraction.
According to the purchasing managers' index (PMI), a survey of 4,500 euro area companies compiled by London-based data and research group Markit, the services sector reported improvement, albeit uneven, but fears over southern Mediterranean performance deepened.
A combined manufacturing and services index for the 16-nation eurozone fell to a slightly upwardly-revised 56.2 points from 56.7 points in July, when it had accelerated for the first time in three months. Any score above 50 indicates a trend towards growth.
The services-only index rose slightly to 55.9 in August, with Ireland -- on tenterhooks over the health of its banking sector -- also reporting growth alongside Italy.
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Source: EUbusiness
Swedish krona hits high against euro
August 2, 2010--The Swedish krona rose to a two-year high against the euro on Thursday after the Riksbank, Sweden’s central bank, raised interest rates and delivered an upbeat assessment of the country’s economy.
The Riksbank raised rates by 25 basis points to 0.75 per cent, saying it needed to tighten monetary policy gradually towards “more normal levels”. It added that the economy was expected to show strong growth, with inflationary pressures increasing.
The central bank downplayed the risks to the Swedish economy posed by fears over a slowdown in the US and the eurozone, and the increased risk aversion in financial markets.
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Source: AME Info
CESR Updates The List Of Measures Recently Taken By Members Regarding Short-Selling
September 2, 2010--ESR published on 22 September 2008 a statement that facilitates an overview of actions taken by CESR Members in relation to short-selling. The statement paper includes either the statements or links to the statements published by CESR Members explaining the measures taken. This paper is not a comparison of the measures taken.
CESR updates the list of measures recently taken by Members regarding short-selling. The documents will be updated on a continuous basis; the latest update has been provided by the Greek CMC.
Further information can be found in the statement published today.
view Measures adopted by CESR Members on short selling-Updated
Source: CESR
New issuer to list exchange traded fund (ETF) on SIX Swiss Exchange
September 2, 2010--SIX Swiss Exchange is pleased to welcome a new issuer to its Exchange Traded Funds segment: HSBC ETF PLC.
With the HSBC FTSE 100 ETF, a new product has been listed in this segment, which now comprises a total of 475 ETFs (91 of which are also listed in an additional trading currency).
The market maker for this new issue is HSBC Bank plc.
Source: SIX Swiss Exchange
EU reaches deal on cross-border financial supervisors
September 2, 2010--Europe took a big step closer on Thursday to its goal of creating cross-border financial supervisors, reaching a "crucial milestone" in efforts to reform a sector blamed for the global recession.
EU states, the European Commission and European lawmakers reached a deal in principle to establish three agencies that will oversee banks, insurers and the markets, European Internal Market Commissioner Michel Barnier said.
The agreement also creates a European Systemic Risk Board which would look out for threats to the region's economy following months of negotiations.
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Source: EUbusiness
EP adds bite to EU financial watchdog rules
September 2, 2010--EU authorities are to get tough new powers to settle disputes among national financial supervisors and to ban risky financial products and activities, in a revamp of EU financial supervision plans agreed on Thursday. 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 deal struck late on Thursday by the European Parliament and Council negotiators means that the new EU supervisory authorities (ESAs) and the European Systemic Risk Board (ESRB) should be up and running by January 2011.
ESA firefighting powers
The agreement gives the ESAs a strong role within the current setup of colleges of national supervisors. This will enable them to guide national supervisors to ensure tighter supervision of cross-border financial institutions. In the event of disagreements between national supervisors, ESAs will also 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 also be able to intervene as mediators at their own discretion, rather than at the request of one of the national supervisors.
The ESAs will also be able to monitor how national supervisors implement their obligations under EU law. If these obligations are implemented incorrectly, the ESAs may raise the alarm, issue instructions to the national supervisor concerned and, if these go unheeded, directly instruct the financial institution to remedy any breach of EU law.
A clean financial market: the role of the ESAs
ESAs will have the power to investigate specific types of financial institution, financial product, such as a "toxic" product, or financial activity such as naked short selling, to assess what risks they pose to a financial market. When specific financial legislation regulates these areas of activity, or in emergency situations, ESAs may temporarily prohibit or restrict harmful financial activities or products, and may also ask the Commission to introduce legislative acts to prohibit such activities or products permanently.
Powers that may grow
MEPs secured the inclusion of a strong review clause requiring the Commission to report back every three years on whether it is desirable to integrate the separate supervision of banking, securities, pensions, and insurance, on the benefits of having all the ESAs headquartered in one city, and on whether the ESAs should be entrusted with further supervisory powers, notably over financial institutions with pan-European reach.
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Source; European Parliment
ECB staff macroeconomic projections for the euro area
September 2, 2010-On the basis of the information available up to 20 August 2010, ECB staff have prepared projections for macroeconomic developments in the euro area.1
Average annual real GDP growth is projected to be between 1.4% and 1.8% in 2010 and between 0.5% and 2.3% in 2011. Inflation is projected to be broadly stable in a range between 1.5% and 1.7% in 2010 and between 1.2% and 2.2% in 2011
Technical assumptions about interest rates, exchange rates, commodity prices and fiscal policies
The technical assumptions about interest rates and both energy and non-energy commodity prices are based on market expectations, with a cut-off date of 13 August 2010.2 The assumption about short-term interest rates is of a purely technical nature. Short-term rates are measured by the three-month EURIBOR, with market expectations derived from futures rates. The methodology gives an overall average level of short-term interest rates of 0.8% for 2010 and 1.1% for 2011. The technical assumptions for euro area ten-year nominal government bond yields are also derived from market expectations and imply an average level of 3.6% in 2010 and 3.8% in 2011.3 The baseline projection takes into account further improvements in financing conditions and assumes accordingly that, over the projection horizon, bank lending rate spreads vis-à-vis the above-mentioned interest rates will stabilise or narrow somewhat. Similarly, credit supply conditions are assumed to ease over the projection horizon. As regards commodities, on the basis of the path implied by futures markets in the two-week period ending on the cut-off date, oil prices per barrel are assumed to average USD 78.8 in 2010 and USD 84.0 in 2011. The prices of non-energy commodities in US dollars are assumed to rebound strongly, by 39.1% in 2010 and a further 11.0% in 2011.
Bilateral exchange rates are assumed to remain unchanged over the projection horizon at the average levels prevailing in the two-week period ending on the cut-off date. This implies a EUR/USD exchange rate of 1.31 over the whole projection horizon and an effective exchange rate of the euro that, on average, depreciates by 6.5% in 2010 and a further 1.4% in 2011.
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Source: European Central Bank (ECB)
ETF Landscape: STOXX Europe 600 Sector ETF Net Flows, week ending 27-Aug-10
September 1, 2010--Last week saw US$3.6 Mn net outflows from STOXX Europe 600 sector ETFs. The largest sector ETF outflows last week were in Industrial Goods & Services with US$66.5 Mn and Telecommunications with US$58.4 Mn while Banks experienced net inflows of
US$176.6 Mn.
Year-to-date, STOXX Europe 600 sector ETFs have seen US$227.4 Mn net outflows. Food & Beverage sector ETFs have seen the largest net outflows with US$163.4 Mn, followed by Basic Resources with US$158.5 Mn while Media has experienced the largest net inflows with US$205.8 Mn YTD.
The US$8.2 Bn AUM invested in the ETFs is greater than the US$3.7 Bn open interest in the sector futures. The ETF AUM is greater than the open interest in each of the corresponding futures contract in all 19 sectors.
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Source: Global ETF Research & Implementation Strategy Team, BlackRock
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