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HBSC launches ETF replicating MSCI Brazil index
July 13, 2010--HSBC has announced a series of emerging markets exchange-traded funds (ETFs), beginning with the HSBC MSCI Brazil ETF based on the MSCI Brazil Index.
The Ucits III-compliant ETF will have a total expense ratio (TER) of 0.6%. It will be domiciled in Ireland and initially listed on the London Stock Exchange with further registrations and cross-listings in Europe planned.
The MSCI Brazil index is made up of Brazil's largest listed companies.
HSBC's head of ETFs Farley Thomas said HSBC would develop a range of ETFs covering the major emerging markets.
Thomson Reuters All European Equities Market Activity by Trade Type (June 2009 to June 2010)
July 13, 2010--The Thomson Reuters All European Equities Market Activity by Trade Type (June 2009 to June 2010)report is now available.
View the Main Trading Venues for all European Equities (June 2010)Report
Too many 'active' funds are passive, study finds
July 13, 2010-- Institutional investors are paying for active management, but getting de facto benchmark huggers, according to a recent study.
The report – conducted by Germany's Union Investment and the WHU Otto Beisheim School of Management – covered the 52 master funds and 431 sub funds that Union had under administration for institutional clients between 2003 and 2008.
Participants in the study aimed to analyse the -0.29% annual underperformance reported by the master funds over the five-year period. On the sub-fund level, the annual underperformance was -0.31%.
The study found an average tracking error of 1.3% for the master funds and more than 2% for the sub funds.
Lutz Johanning, head of empirical capital market research at the WHU, said investors were essentially "getting structures sticking very closely to the benchmark" while paying for "so-called 'active' mandates".
He added: "This is a call for investors to set higher tracking errors for their active managers."
Tradegate Exchange to Connect dwpbank
1,600 institutions can gain access to second largest exchange for private investors
July 13, 2010-- Tradegate Exchange and Deutsche WertpapierService Bank (dwpbank) have agreed on the technical connection of dwpbank to the exchange platform Tradegate. From the end of Q3 2010, dwpbank will provide its approximately 1,600 clients with market access to this Berlin-based trading venue geared to private investors.
“The connection to Tradegate Exchange means we are expanding market access for our client institutions and are enabling technical order routing to the second largest stock exchange for private investors in Germany via our WP2 settlement system,” said Karl-Martin im Brahm, member of dwpbank’s executive board and responsible for sales and distribution. The market-leading transaction bank is a process and system service provider in securities settlement for two thirds of all banks in Germany, the majority of which are savings banks, Volksbanks and Raiffeisenbanks.
This agreement is a continuation of Tradegate Exchange’s growth strategy, considerably increasing its number of trading participants. “We are delighted about this additional business potential. Tradegate is an exchange with key competitive advantages and an increasing number of private investors can benefit from it,” said Thorsten Commichau, Managing Director of Tradegate Exchange GmbH.
Tradegate Exchange’s special range of offers includes commission-free trading, long trading hours until 10 p.m., intelligent order types and free real-time prices. Orders are generally executed immediately and in full on Tradegate Exchange.
Previously an off-exchange trading platform, Tradegate has been operating as a regulated stock exchange since the beginning of 2010. It completed its first two quarters as a public-law stock exchange very successfully. The number of transactions increased year-on-year by 32 percent. A total of around 1.5 million trades were executed in the four instrument groups equities, bonds, ETFs and investment funds in the first six months of this year. This equates to a market share of 31 percent for Tradegate Exchange in the first six months of 2010, and enables the exchange to safeguard its position as Germany’s second largest trading venue for equity trades of private investors.
Swedish subsidiary of Boerse Stuttgart sets new trading record
Turnover exceeds EUR 551 million on Nordic Derivates Exchange (NDX) in first six months of 2010
July 13, 2010--The Nordic Derivates Exchange (NDX), which belongs to Boerse Stuttgart’s subsidiary Nordic Growth Market (NGM), has set a new record for turnover in the first half of 2010. With a trading volume of over SEK 5.2 billion (Swedish kronor) (equivalent to approximately EUR 552 million), turnover on the NDX was up more than 245 percent on the same period in 2009.
The strongest month was June, with a record trading volume of SEK 1.4 billion (equivalent to approximately EUR 147 million). This compares with around EUR 28 million in June of the previous year. June 2010 also saw the number of orders increase to a new record level. 37,000 orders were executed, a rise of 171 percent on the same month in 2009.
As well as strong growth and a greater volume of trading, the first six months of 2010 showed signs of improved market penetration. In the knock-out segment, for example, which comprises turbo warrants and mini futures, the NDX’s share of all stock exchange trading in Sweden stood at over 88 percent in May.
“We are delighted by this positive trend. It demonstrates that we are on the right track and confirms our strategy of opening up the Swedish market further to new certificates and new forms of investment. We are convinced that the level of acceptance among investors and their willingness to invest are on the increase,” observed NDX Business Manager, Tommy Fransson.
FESE Response to Public Consultation on Derivatives and Market Infrastructures
July 12, 2010--I. Introduction
The Federation of European Securities Exchanges (FESE) represents 45 exchanges in equities, bonds,
derivatives and commodities through 20 full members from 29 countries, as well as 7 Corresponding
Members from European emerging markets.
Our response below is structured according to the different sections included in the consultation paper
and the questions suggested in each of them. We have also included a brief section with some general
remarks.
II. GENERAL REMARKS
FESE welcomes the opportunity to contribute to this public consultation on ‘derivatives and market infrastructures’ which, as explained in its introduction, results from the problems identified in the OTC derivatives markets and follows the mandate of the G20 leaders’ statement agreed on 25th September 2009. In addition to our responses to the different questions outlined below, we would like to note the following:
This consultation covers CCP clearing of OTC derivatives, one part of the mandate of the G20 mandate. Other upcoming legislative proposals of the European Commission should cover the rest of the G20 mandate, including trading of OTC derivatives on organised venues. We consider that trying to meet this mandate through separate legislative proposals may produce unintended consequences and eventually put at risk the implementation of the G20 agreement by end?2012 at the latest.
Barbara Georg new manager for IPO candidates and listed companies
July 12, 2010-- With immediate effect, Barbara Georg (41) is to take responsibility for companies planning IPOs or already listed, as well as the further development of the stock exchange segments. She also remains responsible for securities listing on the cash market, a position she has held since 2006.
The turbulence on the capital markets is making equity financing via the stock exchange increasingly important – not only for smal and mid-sized companies, but also for companies from China, Russia and India. By combining these two departments, Deutsche Börse now offers the entire listing process from a single source and makes it easier still for IPO candidates and applicants.
“In Barbara Georg, we have a very experienced manager to assume these key functions in the primary market with expertise in all areas of listing,” said Frank Gerstenschläger, Deutsche Börse Executive Board member responsible for the cash market. Georg has held various managerial positions at Deutsche Börse since 1999. Prior to that, Georg, a trained lawyer, worked for Deutsche Bank, where she was responsible for stock exchange admission for bond issuances.
Deutsche Börse’s high liquidity, strong analyst network for the sectors environmental technology, pharmaceuticals and health care, automotive and technology/software distinguish it as a listing venue from other stock exchanges in Europe. This tends to result in better valuations and lower capital costs as academic studies regularly show.
NASDAQ OMX Introduces Nordic Last Sale for Professional Investors
New Market Data Product Responds to Professional Users' Demand for More Transparency, Unbundled Pricing, and a New, Lower Price
July 12, 2010--The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ), the world's largest exchange company, today announced the introduction of a new product -- NASDAQ OMX Nordic Last Sale for Professional Users.
NASDAQ OMX Nordic Last Sale for Professional Users carries real-time trade data for all executions on the NASDAQ OMX book as well as over-the-counter (OTC) trades reported to the NASDAQ OMX Trade Reporting Facility in Stockholm.
Prior to this development, NASDAQ OMX Last Sale in the Nordics had so far only been priced for non-professional users. The non-professional product will continue unchanged.
NASDAQ OMX Nordic Last Sale for Professional Users, available as of September 1, will help foster post-trade transparency. Additionally, it will improve the quality of post-trade OTC data, due to an innovative price validation mechanism. NASDAQ OMX's unique price validation is expected to catch several inaccurate prints per day, allowing any errors to be corrected before erroneous trades become part of the consolidated tape. This new service will address some of the shortcomings resulting from the implementation of the Markets in Financial Instruments Directive (MiFID) recently recognized by European Union (EU) institutions.
"While MiFID has been beneficial in increasing exchange competition and reducing transaction fees for market participants, it has also caused market fragmentation -- thus creating challenges to post-trade transparency," said NASDAQ OMX Executive Vice President Hans-Ole Jochumsen. "NASDAQ OMX Nordic Last Sale for Professional Users enhances post-trade transparency and facilitates vendors' creation of a consolidated tape by providing complete and accurate execution data."
"NASDAQ OMX Nordic Last Sale for Professional Users was introduced in response to customer demand," said Randall Hopkins, Senior Vice President, NASDAQ OMX Global Data Products. "Now market professionals can more effectively identify liquidity and evaluate execution quality, enabling them to make better informed investment decisions. By giving firms a lower price-point for Last Sale data, as compared to Level 1, firms are given more choices, better ways to match their needs precisely to the product type, and in many cases, to lower their market data costs."
NASDAQ OMX Nordic Last Sale for Professional Users is available for a subscription fee of €15/ per month. For more information about NASDAQ OMX Nordic Last Sale for Professional Users, visit
http://nordic.nasdaqomxtrader.com/marketdata/dataproducts/NordicLastSale/
Two new ComStage ETFs launched on Xetra
July 12, 2010-- Two new listed equity index ETFs issued by ComStage have been tradable in Deutsche Börse’s XTF segment since Monday.
ETF name: ComStage ETF HSI
Asset class: equity index ETF
ISIN: LU0488316729
Total expense ratio: 0.55 percent
Distribution policy: distributing
Benchmark: Hang Seng Index (price index)
ETF name: ComStage ETF HSCEI
Asset class: equity index ETF
ISIN: LU0488316992
Total expense ratio: 0.55 percent
Distribution policy: distributing
Benchmark: Hang Seng China Enterprises Index (price index)
The ComStage HSI and HSCEI ETFs track the performance of companies traded on the Hong Kong Stock Exchange. The Hang Seng Index (HSI) represents the development of the largest and most liquid blue chips listed on the Hong Kong Stock Exchange. Mainland-Chinese companies whose H-shares are listed in Hong Kong can be included in the HSI if they meet certain criteria. The Hang Seng China Enterprises Index (HSCEI) comprises the most important mainland-Chinese shares traded on the Hong Kong Stock Exchange (H-shares). It only comprises the H-shares with the highest market capitalization which are also included in the Hang Seng Composite Index (HSCI). Both of these are price indices.
The product offering in Deutsche Börse’s XTF segment currently contains a total of 680 exchange-listed index funds, making it the largest offering of all European stock exchanges. This selection, together with an average monthly trading volume of around €14 billion, makes Xetra Europe’s leading trading venue for ETFs.
Deutsche Bank ETF Research - Quarterly Update: Retreating to Safety
July 12, 2010--Despite strong Q2’10 inflows, falling equity markets take their toll by shaving over 10% off AUM and bringing 2010 YTD ETP market growth to -0.85%
Euro sovereign concerns and worries about the strength of the recovery in the US kept investors scratching their heads about the likely trajectory of equity markets. This situation put the quarterly growth of the global ETP market in negative territory (-0.85% YTD), despite strong cash flows ($44.1 billion) in both the US ($31.6 billion) and Europe (€9.8 billion) and Asia (estimated at $8 billion). The global ETP market shrunk by 4.1% in Q2’10 and experienced its first decline in the past five quarters. This quarter’s decline wiped out the 3.5% increase registered in Q1’10 AUM, bringing the YTD growth below zero at -0.85%.
ETP market growth forecast: European growth rates steam ahead, while falling equity markets shadow expected global growth rates 0f 15%
While we still expect positive growth for the global ETP market for the remainder of 2010, recent economic events lead us to also consider the possibility of growth between 15 and 20% slowing, should equity market declines continue. Global ETP market growth above 15% is still within reach, however, it is less likely as it necessitates both a very strong equity market rally (upwards of 20%) as well as cash flow patterns at or above historical highs ($80-90 billion for the remaining two quarters) for the rest of the year.
The European market continued to defy falling equity markets and strong cash flow patterns contributed to growth of 13.4% 2010 YTD. Growth in this region is expected to comfortably outstrip that of the other two major regions and could reach 25-30% before year end. The US and Asian markets are more likely to grow at rates which could be at half those of Europe, both the US and Asia Pacific regions registered close to flat growth 2010 YTD.
Q2’10 flows continue strong but asset allocation indicates clear shift in risk appetite
While market uncertainty and elevated volatility levels had a profound effect on how ETP flows were allocated among asset classes in the second quarter of the year, on both sides of the Atlantic, the ETP sector continued to see strong inflows totaling $44.1 billion. This level is significantly above the $18.1 billion observed in Q1’10. The majority of the flows (71.7%) came into the US market, while the remaining (28.3%) came to the European market. The proportion of the flow allocation, relative to AUM, points that the European market received (relative to its size) higher inflows (US: $779 billion (72%), Europe: $236 billion (21.8%), despite the falling Euro/US$ exchange rate.
Equity flows, while positive, continued to decline over Q2’10. The month of May registered net outflows of $250 million in the US market, while in Europe, the exit from equities was more pronounced in June with €3.2 billion of outflows. Fixed income registered strong inflows in both territories (US: $ 10.7 billion, Europe: €3.1 billion), with large allocations to sovereign benchmarks, despite sovereign solvency concerns in Europe.
The biggest flow-related story was gold. Q2’10 global gold ETP inflows easily surpassed the cumulative gold inflows of the past five consecutive quarters put together and reached $11.6 billion (US: $8.3 billion, Europe: €2.8 billion). Taking into account AUM at the beginning of Q2’10, gold ETPs in Europe were more popular than in the US as they experienced a quarter-over-quarter increase of 43%, to €20.4 billion from €14.3 billion. The real increase is higher, as the price of gold is quoted in US$ and the Euro depreciated over 10% against the US$ over Q2’10. In the US, for the same period, the gold ETP segment rose by 23% to $58.0 billion from $44.4 billion.
European off-exchange ETP trading gathers pace
While to many an oxymoron, it is nevertheless a reality. The combined ETP turnover that takes place off-exchange (within ancillary exchange OTC platforms) in the three of the major European exchanges (Deutsche Borse, SIX Swiss Exchange, London Stock Exchange) is three times higher than the level of on-exchange turnover. The significance of this is that popular data provision services (such as Bloomberg and Reuters) do not account for off-exchange turnover thus giving the impression that turnover volumes are lower than what they actually are.
The level of off-exchange activity differs among the three exchanges that openly report off-exchange trades, with the biggest of the three, Deutsche Borse leading with 80% of trading occurring off-exchange. This is followed by the London Stock exchange, registering close to 60% of its ETP turnover activity off-exchange. The SIX Swiss exchange registers roughly 25% of its ETP trades off the exchange. Combining all three exchanges, 60% of ETP turnover activity has occurred off-exchange historically, with May month end levels closer to 75%.
Global ETP product launch calendar: Europe leads Q2’10 new product launches
The second quarter of the year registered 173 new product launches, the majority of which were ETFs (130), with the remainder being ETCs (41) and ETVs (2). Most of the new products were launched in Europe (110), with the US (47) and Asia (16) in second and third places respectively. This brings the total new ETP products launched to date in 2010 at 405, following the 232 ETPs launched in Q1’10.
ETPs targeting equity benchmarks led the pack (103), with fixed income (24) following and commodities third (23). Currency ETPs had a particularly strong quarter with 22 products being launched in Europe on a number of pair currencies. Just over three quarters of the products launched target long benchmark indices (135), with the remainder targeting short (18) and leveraged (20) benchmark indices
ETP research universe revision
Our core coverage universe is exchange-traded funds and our aim is to produce research that can facilitate informed decision making across asset classes. As legislation stands today, both in the US and Europe, the vast majority of ETFs may only track equity and fixed income benchmarks. When making investment decisions and in the interest of constructing efficient portfolios, investment managers look for uncorrelated return sources. Therefore, recognizing both the need to make decisions utilizing information across asset classes, and at the same time, the secure/funded nature of ETFs, we are continuing to include in our coverage universe exchange-traded funds (ETFs), Exchange-Traded Commodities (ETCs, Europe) and Exchange-Traded Vehicles (ETVs, US), however, we will be reporting ETNs separately going forward.
ETNs in our reported universe are close to $10.0 billion as of the end of Q2’10 (Figure 52). The impact of their exclusion from our reported universe will be therefore immaterial (less than 1%) in terms of AUM. The impact is more noticeable in terms of product count, we currently include 273 ETN products in our reported universe. Excluding them will reduce the total ETP product count by 10.3% to 2,379 products, down from 2,652.
