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European Repo Market White Paper emphasises importance of repo and urges reform of market infrastructure
July 13, 2010--ICMA’s European Repo Council (ERC) has today published a White Paper on the European repo market, including the role of short-selling, the problem of settlement failures and the need for reform of the market infrastructure. It emphasises the importance of the repo market for the efficiency and stability of the financial system.
The White Paper was commissioned by ICMA’s ERC in response to current regulatory considerations which will impact the repo market. There is concern that regulatory initiatives should not constrain the capacity of the repo market in Europe at a time when increasing demands are being made on it, both by the regulators themselves in terms of proposals for enhanced collateral management to reduce risk and by governments in terms of increased debt issuance.
Proposals relating to the restriction of short-selling would have unintended consequences for the securities market, which will increase costs and risks for issuers and investors.
Borsa Italiana ETF Stat May 2010 Report
July 13, 2010--The ETF Statistics of May 2010 are now available.
NYSE Euronext to List Non-U.K. Companies in London
July 13, 2010--NYSE Euronext plans to introduce a platform in London to list non-U.K. companies in a bid to compete with the London Stock Exchange Group Plc, according to a statement on the company’s Paris-based website.
Trading in shares and depositary receipts of companies opting for this venue can be in U.S. dollars, euros or pounds, according to a Euronext document. The market was mentioned in March at a NYSE Euronext investor day conference in New York.
“Why not? It’s a me-too strategy and at low marginal cost there’s the chance to attract listings and some trading volume,” said Bruce Weber, a professor at the London Business School who specializes in exchanges and electronic trading. “It’s an opportunity for NYSE though they certainly have competition. London has been a center for international equities trading since the 80’s.”
Coalition Government launches consultation document on Bank Levy
July 13, 2010--Financial Secretary to the Treasury, Mark Hoban MP, today launched a consultation document on the Bank Levy. The document sets out issues around technical aspects of the design and implementation of the Bank Levy. This consultation exercise will help to ensure that the Levy is designed in a way that best meets its objectives, including ensuring the compliance costs faced by firms are minimised.
It is proposed that draft legislation will be published in the autumn to allow for further comments from stakeholders. Final draft legislation for inclusion in the 2011 Finance Bill will be published towards the end of 2010, ahead of implementation of the Levy. The structure of the Levy is intended to encourage the banks to move away from riskier funding models, reducing systemic risk. Once fully in place, the Levy is expected to generate around £2.5 billion per annum.
Copies of the consultation document and consultation stage impact assessment have been deposited in the Vote Office and the libraries of both Houses. Mark Hoban said:
"Excessive risk taking in the banking sector was a significant contributory factor in the recent financial crisis. Alongside the wider financial regulatory reform aimed at increasing the resilience of the financial sector, the Levy is intended to ensure that the banking sector makes a fair contribution that reflects the risks it poses to the financial system and the wider economy, and to encourage banks to move away from riskier funding – problems with risky funding led to serious liquidity problems that played a key role in the financial crisis."
view the Bank Levy: a consultation paper
Bank teams rush to set up new funds
July 13, 2010--The hedge fund industry is seeing a rush of start-ups amid a series of high-profile spin-outs from the in-house trading teams at investment banks.
In spite of one of the worst second-quarter performances for the industry on record, the new funds also are attracting strong backing from investors.
In spite of one of the worst second-quarter performances for the industry on record, the new funds also are attracting strong backing from investors.
CESR Publishes 8th Extract from EECS’s
July 13, 2010--CESR has published Eight Extract From EECS’s Database Of Enforcement Decisions (Ref: CESR/10-834)
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CESR: EFRAG’s draft comment letter on the IASB’s Exposure Draft Fair Value Option for Financial Liabilities
July 13, 2010--The Committee of European Securities Regulators (CESR) has considered, through its standing committee on corporate reporting (CESR-Fin), EFRAG’s draft comment letter on the IASB’s Exposure Draft (ED) Fair Value Option for Financial Liabilities.
The ED is part of the IASB’s revision of IAS 39 – Financial Instruments: Recognition and Measurement, of which IFRS 9 – Financial Instruments: Classification and Measurement as published in November 2009 was the first part.
CESR supports the IASB’s tentative decision to maintain the current IAS 39 requirements regarding financial liabilities except for specific amendments on the cost exception for equity derivatives and the treatment of credit risk for liabilities designated under the fair value option.
CESR welcomes the IASB’s initiative to maintain the bifurcation of embedded derivatives on the liabilities side but is at the same time concerned that this might create inconsistencies with the assets side where bifurcation is prohibited. CESR therefore would like the IASB to consider further assessment in due course whether bifurcation of a hybrid contract with a financial asset host would provide users with more decision-useful information.
EU vows transparency in bank stress tests
July 13, 2010-- EU finance ministers scrambled on Tuesday to ease market concerns over the health of European banks, vowing that results of tests on their ability to survive a new economic crisis would be transparent.
European officials hope results of tests on 91 banks accounting for 65 percent of the European banking system will reassure investors worried that some lenders may have hidden the extent of their exposure to bad debt.
Belgian Finance Minister Didier Reynders, whose country holds the rotating EU presidency, said his counterparts had agreed at a meeting in Brussels to coordinate the July 23 release of the test results.
EU moves forward on cross-border financial watchdogs
July 13, 2010-- European efforts to create cross-border watchdogs for the financial industry moved forward Tuesday after British fears over the powers to be entrusted to the new agencies were eased.
European finance ministers meeting in Brussels handed Belgium, which holds the EU's rotating presidency, a new mandate to negotiate with the European parliament in the hope of getting a vote in September.
The creation of the EU-wide agencies is a key plank in European efforts to prevent a repetition of the 2008-2009 financial crisis, which was blamed on the excessive risk taking of banks and investment funds.
Nearly all EU states now on deficit watch
July 13, 2010--The European Union placed Bulgaria, Cyprus, Denmark, Finland under its excessive deficit watch on Tuesday, leaving only three of 27 EU states off the list of those breaking EU fiscal rules.
The decision by EU finance ministers meeting in Brussels leaves only Luxembourg, Sweden and Estonia off of a list of countries facing an excessive deficit procedure for budget shortfalls exceeding three percent of output.
Bulgaria and Cyprus exceeded the public deficit limit in 2009 while Denmark and Finland are expected to breach the limit, the council of finance ministers said in a statement.
