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ECX Monthly Report June 2010
July 1, 2010--2010 ECX volumes passed the 3 billion tonne mark in June. 585,296 contracts were traded during the month, at an average of 26,604 per day.
The gradual migration of EUA and CER futures business from OTC cleared to screen-based continued over the first half of 2010. Over 65% of EUA futures were executed on the screen during this time, compared to 41.5% during the first half of last year.
ECX Daily Futures remained very actively traded in June, with over a million tonnes traded on average every day: the percentage of the total carbon spot market during the month reached 45%.
Deutsche Börse algo news feed now available in three data centers in London
July 1, 2010--The algo news feed AlphaFlash of Deutsche Börse – Market Data & Analytics will be available in three London data centers starting 15 July 2010. This raises the total number of data centers which provide direct access to this data feed to seven worldwide. AlphaFlash, a joint product of Deutsche Börse and the financial news agencies Need to Know News and Market News International, both entities of Deutsche Börse, delivers more than 150 machine readable macroeconomic indicators directly into trading algorithms.
By adding three new centers in London, a key market for algo traders, Deutsche Börse is responding to customer demand for an expansion of the proximity hosting infrastructure in Europe.
"The new offering of different data centers on location provides algo traders direct and ultra-fast access to AlphaFlash data in order to trade on London markets. We are making it as easy as possible for firms to use our algo news feed”, said Georg Gross, Head of Front Office Data & Analytics at Deutsche Börse.
AlphaFlash clients in London can choose among three providers. Telehouse London Metro, which is already being used by Deutsche Börse for its low latency market data feeds, allows clients to add AlphaFlash via existing connections. City Lifeline, an independent London provider, offers access to Deutsche Börse's existing network as well as proximity to London data sources and metro-area market centers. The Equinix data center LD4 International Business ExchangeTM in West London was chosen because of existing demand from clients who are already using Equinix services.
In addition co-location and proximity hosting options for AlphaFlash are available in Chicago, New Jersey, Washington and Frankfurt. Further data centers, particularly in Asia, are being planned.
For more information about AlphaFlash, please visit: www.deutsche-boerse.com/alphaflash.
Investors seek clarity on euro rescue fund
July 1, 2010--Two months after European leaders unveiled a “shock and awe” €750bn rescue package to restore confidence in the eurozone, quite how their plan will work remains far from certain.
Nervous investors are demanding clarity, warning that the crisis for the single currency area could worsen.
At the heart of the plan to underpin the finances of indebted eurozone nations is the European Financial Stability Facility, a special purpose vehicle with €440bn of loans at its disposal for troubled countries.
Publication of the Finance Bill 2010
July 1, 2010--The Government is today publishing the 2010 Finance Bill. The Bill will enact the key tax measures at the heart of the Emergency Budget package, to cut the unprecedented deficit, deliver fairness and promote enterprise.
In addition to this Finance Bill, which will quickly enact the Government’s priorities, there will be a further bill in the autumn. This will introduce minor, technical measures announced by the previous Government and will be published in draft later this month, to allow thorough pre-legislative scrutiny.
The Exchequer Secretary David Gauke MP said:
“The Government’s inheritance was one of debt and unsustainable spending. We are taking the decisive action needed to pay for the past and plan for the future. That is why today we are legislating the key measures at the heart of our comprehensive five-year plan to put the British economy back on track.
"We have made the tough choices needed to get our borrowing down, but we will do it in a way that is fair, protects the vulnerable and supports businesses across Britain.”
NYSE Euronext and Markit to enhance post-MiFID market transparency
July 1, 2010--NYSE Technologies, the commercial technology unit of NYSE Euronext and Markit, the financial information services company, have announced the launch of a joint initiative designed to consolidate data and enhance transparency in the European over the counter (OTC) equity markets.
As part of this initiative, NYSE Technologies will integrate data from Markit BOAT, within its own range of market data products. This will give joint users access to trade reports on an average of roughly EUR 30 billion of OTC trades in equities every day which is equivalent to approximately 80% of the daily volumes traded on all European equity markets through April 2010.
The initiative is open to other publication venues in Europe in order to give market participants access to the most comprehensive dataset on the European OTC equity markets from a single source.
"By working with Markit, we will offer our diverse client base and vendor community a consolidated OTC trade data product that provides enhanced levels of transparency, broad market coverage and simplifies data distribution," said Mark Schaedel, Senior Vice President, Global Data Products, NYSE Technologies. "We are very excited to be working toward a seamless, market-wide OTC data solution with Markit that improves the quality of market data across Europe's cash equity markets."
"Data consolidation within the European equity markets can be made possible if all publication venues work together to harmonise their datasets. It is in that spirit that we are launching this initiative with NYSE Euronext," said Niall Cameron, Executive Vice President, Markit. "This is a wide-ranging and ambitious project that we hope will attract a number of other publication venues across Europe."
The new service will include deployed data feeds, hosted and managed solutions, web services and historical products. NYSE Technologies will also integrate data from Markit BOAT and other data providers into packaged solutions which provide customers with a single view of activity across all major European cash equity markets.
NYSE Euronext customers, including investors connecting directly and data vendors, can access OTC feeds from Markit, NYSE Euronext or both post trade products in a consolidated format via NYSE Technologies' Secure Financial Transaction InfrastructureTM (SFTI) network. The feeds will also be available in NYSE Euronext's data centres and via an NYSE Technologies web services platform to be launched later this year. Both parties remain committed to working with CESR, the European Commission and their respective data contributors and consumers to ensure that these offers support all future MiFID requirements.
DTCC To Establish European-Based Trade Reporting Repository - Effort To Ensure Regulators Unfettered Access To Global CDS Data
July 1, 2010--The Depository Trust & Clearing Corporation (DTCC) announced today plans to establish a new subsidiary called DTCC Derivatives Repository Ltd., which will maintain global credit default swap data identical to that maintained in its New York based Trade Information Warehouse.
This move is intended to help ensure that regulators globally have secure and unfettered access to global data on credit default swaps (CDS) by establishing identical CDS data sets on two different continents.
“DTCC has always envisaged a ‘global solution’ for repository services supporting each OTC asset class,” said Stewart Macbeth, Managing Director and General Manager, Trade Information Warehouse. “It is very common for counterparties to be located on different continents and to trade on underlying securities issued across borders. This means that repositories for any asset class need to maintain global information to be useful. It also means that steps need to be taken to ensure that the data is always available to regulators globally regardless of events and circumstances taking place in one location or another.”
DTCC Derivatives Repository Ltd will be headquartered in London under a regulatory application filed with the Financial Services Authority (FSA) in the UK.
This new subsidiary will jointly house the global equity derivatives repository being built by DTCC as the result of winning the International Swaps and Derivatives Association (ISDA®) global bid for this service. The location of this European subsidiary was made based on the ISDA mandate to have the global equity derivatives repository in London.
This European-based repository will support a wide variety of critical functions, including operational, customer, technical, and most importantly, CDS trade reporting needed to ensure greater public transparency and to support the information needs of regulators and supervisory authorities.
DTCC’s current customer base in the credit derivatives market includes all major derivatives dealers and more than 1,700 buy-side firms and other market participants located in more than 50 countries and supporting reference entities in 90 countries. The total gross notional value of the approximately 2.3 million CDS contracts held by DTCC is $25.1 trillion.
UKSIF calls for transparency on ESG investments
July 1, 2010--Pension funds should disclose how their responsible investment schemes are being implemented, according to UKSIF.
In a report published to coincide with the 10-year anniversary of environmental, social and corporate governance (ESG) regulation in the UK, the organisation also predicted web-based disclosure for responsible investments by pension funds would become commonplace.
Penny Shepherd, chief executive at UKSIF, said: "We are fast approaching a tipping point when responsible investment will become the norm for major investors worldwide.
She added that this could only be achieved with the help of governments and asset owners.
FTSE Group Announces Executive Appointments
July 1, 2010--FTSE Group (“FTSE”), the award winning global index provider, today announced the appointments of several global senior executives to support its continuing growth and bring further industry experience into the company.
"FTSE continues to grow at a rapid pace, servicing institutional investors and financial intermediaries worldwide" said Mark Makepeace, Chief Executive Officer. "The new appointments deepen the company’s relationships within the industry, increase its management strength and expand its capacity for growth
The new appointments are:
Guy Warren, Chief Operating Officer: Guy will be responsible for continuing to strengthen FTSE’s IT infrastructure and operational delivery, enabling the company to provide a ‘best of breed’ service of excellence to its clients.
Guy has a strong background in IT and Financial Services which spans 28 years, including software product development, IT services and out-sourcing. Guy joins FTSE from Misys where he was the Executive Vice President & General Manager of the Banking division. Prior to this role, Guy was the Chief Executive Officer of Logica UK, the largest subsidiary of Logica PLC.
Jonathan Horton, Chief Marketing Officer: Jonathan will oversee marketing, sales and business development, building up a wider range of data and content services. Jonathan has over 25 years of marketing and consulting experience and has led high profile strategic, operational and marketing assignments across a wide range of industry sectors at Chief Executive Officer and Chief Operating Officer levels. He first worked with FTSE as a consultant in 1995 and re-joined the business in January 2009, initially as global head of marketing and recently as acting Chief Operating Officer.
Christopher Woods, Governance & Policy: Chris is responsible for FTSE’s work with leading academics worldwide and he chairs FTSE’s Index Governance Board that reviews all index rules and policies and determines the appropriate treatment of complex corporate events. Chris is also responsible for managing FTSE’s external index user advisory committees which approve all rule changes and policy matters.
With over 25 years of financial services experience, Chris has a strong background in investment management. Prior to taking on this role, he was the Chief Investment Officer at Man Global Strategies at Man Group plc. Chris was previously a Senior Managing Director at State Street Global Advisors and for four years was Chief Information Officer of SSgA UK Ltd.
Reza Ghassemieh, Managing Director, Fundamental Research and Analytics: Reza joins FTSE with the mandate to build a new team to construct a comprehensive analytical research framework. This will help to enhance FTSE’s global support of active investment management processes. This new set of tools will also be extended to attribution and risk models as well as portfolio optimisation. The development of FTSE’s research capabilities is a natural extension of the company’s current data services and analytics.
Reza has over 20 years of experience in quantitative research and analytics and joins FTSE from Nomura, the global investment bank, where he was the Managing Director and Head of Quantitative Research. Prior to his career at Nomura, Reza was a quantitative analyst at James Capel & Co.
John White, Managing Director, Content Services: John has joined to build a new team within FTSE that will take on responsibility for data governance, covering everything from content acquisition to outbound distribution of data and data services. He and his newly developed team will leverage current FTSE expertise and industry best practice in the management of FTSE’s content.
John has over 25 years experience in the investment data field. Prior to joining FTSE, John was the Global Head, Market and Vended Data Services at State Street Global Advisors, the world’s 2nd largest investment management organisation. Prior to joining SSgA, John was manager of Columbia Management Company's Data Management Group. Before this role, he managed the Data Integrity Group at Wellington Management Company. John also spent over 11 years on the investment data vendor side in various roles, from directing real time and end of day pricing integrity to product management before working in investment management.
The progress of platinum group metal exchange traded funds (ETFs)
June 30, 2010--Two physically-backed platinum and palladium exchange-traded funds, or ETFs, were launched in the first half of 2007 in Europe. Exchange-traded funds exist in a wide variety of commodities, including gold and silver, and are constructed to allow investment into specific commodities without the investor having to take physical delivery or enter the futures markets. Investors can buy shares in these funds which are equivalent to a specific weight of either platinum or palladium and the performance of these shares replicates the performance of that metals price (less any management charges).
Since the funds are physically-backed, when a share is created, an equivalent amount of metal must be deposited with the fund. This metal is allocated and this has the effect of taking this metal off the market. This can have the impact of reducing liquidity in the market and of increasing price volatility, particularly as the metal cannot be loaned out. This is in contrast to products such as Exchange Traded Notes (where the shares are not backed by allocated metal).
Since the launch of these funds, there have been clear differences in the behaviour of investors in the palladium and platinum funds. Almost 200,000 oz of platinum had been accumulated by investors by the end of 2007 and a further 100,000 oz was held at the end of 2008. However, purchases and sales of ETF shares have been highly correlated to movements in the metal price, particularly for platinum: investors have bought heavily at times of rising prices, adding to the upward pressure on the price, and sold heavily as the price fell, exacerbating the fall in the platinum price by adding liquidity to the market in the second half of 2008. Platinum holdings peaked at almost 500,000 oz in the middle of 2008 before declining to end the year close to the 300,000 oz level. As the price has recovered in 2009 it has attracted back ETF investors, taking holdings to a record level of some 680,000 oz at the end of 2009.
ETF Landscape: STOXX Europe 600 Sector ETF Net Flows, week ending 25-Jun-10
June 30, 2010--Last week saw US$129.6 Mn net outflows from STOXX Europe 600 sector ETFs. The largest sector ETF inflows last week were in Food & Beverage with US$26.3 Mn and Personal & Household Goods with US$21.6 Mn while Banks experienced net outflows of US$42.9 Mn.
Year-to-date, Media has seen the largest net inflows with US$285.8 Mn net new assets, followed by Industrial Goods & Services with US$48.0 Mn. Basic Resources sector ETFs have seen the largest net outflows with US$213.4 Mn YTD. In total, STOXX Europe 600 sector ETFs have seen US$642.9 Mn net outflows YTD.
The assets invested in the ETFs are greater than the open interest in the corresponding futures contract in all 19 sectors.
