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ICAP to take Euro interest rate swaps trading electronic
August 31, 2010--ICAP plc, the world’s premier interdealer broker, will launch an electronic market for trading Euro interest rate swaps (Euro IRS) with market maker support, bringing increased transparency and greater efficiency, as well as lower transaction costs to the world’s largest OTC derivative market.
This initiative will make a substantial contribution towards further reducing operational and systemic risks in trading OTC derivatives.
ICAP’s electronic interest rate swap platform will be live on 6 September 2010 and will take ICAP’s established voice liquidity and combine it with a proven electronic platform to create a single liquidity pool in a wide range of Euro IRS instruments out to 30 years maturity. The platform will be open to market making banks that have access to a clearing house for interest rate derivatives. Other banks will continue to have access via ICAP’s voice brokers.
Barclays Capital, Deutsche Bank and J.P. Morgan have each agreed to support the platform by providing streaming prices, alongside a number of other banks.
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Source: ICAP
LCH.Clearnet has announced that from 1st October 2010 it will introduce free equity clearing for average daily member volumes of more than 150,000 trades a day
August 31, 2010--LCH.Clearnet has announced that from 1st October 2010 it will introduce free equity clearing for average daily member volumes of more than 150,000 trades a day.
According to the firm, the move will allow both exchanges and users to benefit from economies of scale and a lowered frictional cost of post trade.
Commenting on the move, Kevin Milne, director of post trade at London Stock Exchange, said: “We are very supportive of these tariff amendments.
“In combination with our own ongoing tariff cuts, this move will further reduce the overall cost of trading for our major clients and make the service more compelling. We will continue to work collaboratively with LCH.Clearnet and others to ensure that the users of our markets receive the most competitive offerings possible.”
Wayne Eagle, director of equities at LCH.Clearnet, added: “This supports our exchange clients, rewards customer loyalty and incentivises growth. Customers get economies of scale, without having to choose between cost and the quality of clearing.”
LCH.Clearnet also plans to introduce reduced clearing fees for members with average daily volumes of more than 50,000. Members will be given a marginal cost of 1p per trade to 75,000 trades, after which the marginal cost will drop to 0.5p.
Source: GSL.tv
CESR publishes two sets of guidance concerning Credit Rating Agencies
August 30, 2010--CESR’s Guidance on the enforcement practices and activities to be conducted under Article 21.3(a) of the Regulation
CESR’s Guidance on common standards for assessment of compliance of credit rating methodologies with the requirements set out in Article 8.3
Source: CESR
NASDAQ OMX Nordic: NASDAQ OMX suspends HQ Bank AB
Augsut 30, 2010--On August 27, 2010, following the Swedish FSA's decision to revoke HQ Bank's trading and banking license, NASDAQ OMX has decided to suspend HQ Bank's equity trading membership with NASDAQ OMX Stockholm AB, NASDAQ OMX Copenhagen A/S and NASDAQ OMX Helsinki Oy as well their derivatives trading and clearing membership with NASDAQ OMX Stockholm AB.
The FSA's decision to revoke HQ Bank's licenses means that HQ Bank no longer fulfils the member criteria.
NASDAQ OMX will, in cooperation with HQ Bank, ensure an orderly wind down of their exchange-related operations in an expedient manner.
Source: NASDAQ OMX
Business Climate Indicator for the euro area remains broadly unchanged
August 30, 2010--In August, the Business Climate Indicator (BCI) for the euro area remained broadly unchanged after
the jump observed in July. The level of the indicator suggests that economic activity in industry will
continue to recover in the coming months, although it has still some way to go to reach its pre-crisis
level.
Managers in industry were more optimistic about their order books; in particular they were upbeat
about their export order books. Managers' assessment of production observed in recent months and
production and employment expectations remained unchanged. Meanwhile, managers' assessment
of their stocks of finished products worsened slightly.
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Source: Europa
Critics question long-term appeal of ‘Newcits’ funds
August 27, 2010--Even as the growth of ‘Newcits’ funds in the marketplace accelerates, concern has been growing about their limitations and potential dangers.
These fears cover issues such as the potential for investment by retail customers that do not understand the products or for whom they are unsuitable, the possibility that investors may be disappointed if returns fail to match those of offshore hedge funds, and the need for higher volumes of assets under management to meet increased set-up and servicing costs.
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Source: ETF Express
DB Global Equity Index & ETF Research: European Weekly ETP Market Review: Gold slowly re-emerges as downward pressure in the equity markets persists
August 27, 2010--Weekly European ETP Market Roundup
Net Cash flows
Major European equity market indices continued declining the week that finished on August 20th 2010. The Euro Stoxx 50 index fell by 2.3%, the CAC 40-declined by 1.4%, the DAX fell by 1.7% and the FTSE 100 closed the week down 1.5%. Continuing its long rising streak, the price of gold (USD/oz) rose by 1%.
Overall European ETF market flows moderately picked up this week, and while the rise wasn’t dramatic, it has definitely started to show further signs of investors returning to the market. European ETP inflows totaled €598 million (up from the €22 million cash inflow in previous week). ETF trading this week had a taste of the June 2010 patterns. It had a clear direction and it was impacted by declines in the equity markets.
Equity inflows were minimal, netting €174 million across the European ETF industry. Similarly, overall fixed income inflows were weak and totaled €164 million (up from €49 million cash inflow last week). However, commodity flows picked up to their highest levels since the end of June 2010 and totaled €263 million, sharply up from the €28 million of outflow in the previous week.
The level of flows was moderately low this week, and together with the 2.5% decline in average daily turnover, it indicates subdued trading activity. Two themes, albeit mild, left their mark on the week that finished August 20th: (1) uptick of gold inflows, with €255 million of net inflows (vs. €20 million in previous week), (2) Continued overall positive emerging market flows, totaling €160 million. Despite the flow improvement in the past three of weeks, flows remain weak and it will be interesting to see if September will in fact take the market out of its current uneasy quietness. Such a change would officially close the holiday season, or if cautiousness continues it might well prove to be based more on fundamentals.
New Listings
There were two new product launches and one cross-listing last week. Deutsche Bank’s db x-trackers launched two new precious metals ETCs, one tracking the price of platinum and the other tracking the price of palladium Both ETCs are physically backed, their returns are euro hedged and are listed on Deutsche Boerse.
Credit Suisse asset management cross listed an MSCI EMU Mid Cap ETF on Deutsche Borse. This ETF has a primary listing on the Swiss stock exchange.
Turnover
On-exchange total daily average turnover decrease by 2.5% to €1.68 billion, for the week that ended August 20th 2010. Equity turnover registered the largest decline, down by 3.2% to €1.23 billion. Fixed Income turnover remained flat at €203 million and commodity turnover fell by 1.2% to €248 million.
Assets Under Management (AUM)
Total European ETP AUM rose by 0.2% to €198.5 billion, largely driven by commodity prices and inflows. Year to date AUM: are up 18.6%.
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Source: DB Global Equity Index & ETF Research
EU bank regulators overhaul stress tests
Augsut 26, 2010--European bank regulators have overhauled their guidelines on industry stress testing for the first time since 2006, after last month’s tests on 91 European institutions were criticised for not being tough enough.
The European Union’s committee of European banking supervisors, an umbrella body for all the EU’s national regulators, on Thursday published a detailed blueprint of how European lenders should identify and manage risk following a three-month public consultation.
In contrast to July’s one-off examinations of leading European banks, the new guidelines are designed to be applied by regulators day by day.
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Source: FT.com
S&P Expands Range of Risk Control Indices
August 25, 2010--With market volatility remaining, Standard & Poor’s, the world’s leading index provider, today announced that it is extending its range of risk control indices with the launch of two risk control index series. The S&P 500 Dividend Aristocrats Daily Risk Control Index Series and the S&P Nordic LargeCap Daily Risk Control Index Series seek to provide investors greater stability and control over the risk level of the underlying index by establishing a specific volatility target.
The S&P 500 Dividend Aristocrats Daily Risk Control Index Series seeks to provide investors a way to gain exposure to large cap, blue chip companies within the S&P 500 that have followed a policy of increasing dividends every year for at least 25 consecutive years, whilst limiting the level of risk. This is the first such strategy index dedicated to providing exposure to true blue chip companies with managed dividend policies. Risk control levels of 8%, 10%, 12% and 15% are offered.
The S&P Nordic LargeCap Daily Risk Control Index Series seeks to provide large cap investable exposure to the Nordic equity markets, including Denmark, Finland, Norway and Sweden, whilst controlling risk. It utilises the S&P Global Broad Market Index (BMI) and has target volatilities of 10%, 15% and 18%.
Steve Goldin, Vice President of Strategy Indices at S&P Indices, said: “As investor risk appetite returns to the market, the concept of equity investing with associated risk control has grown in appeal. Whilst demand for risk control indices around emerging markets and themes, such as clean energy and infrastructure, remains high, we are seeing an increased interest for risk control on strategy indices and developed equity markets, including Europe, the Nordics and the U.S. The launch of these new indices reaffirms Standard & Poor’s position as the leading independent index provider to offer new levels of innovation for investors looking to control risk.”
S&P’s risk control methodology is a fully flexible risk control solution, which can be applied to any S&P Index. For further information on the S&P 500 Dividend Aristocrats Daily Risk Control Indices and S&P Nordic LargeCap Daily Risk Control Indices, including methodology, please visit www.standardandpoors.com/indices.
Source: Standard & Poor's
Another year of growth and development for the London Stock Exchange markets for Islamic finance
August 27, 2010--In the Islamic Finance Review 2009/10, we explored the key factors contributing
to London’s position as the gateway for Islamic finance in Europe, namely the
depth and breadth of its capital markets, the extensive pool of expertise
offered by one of the largest concentrations of specialist legal and advisory expertise in the world and the sustained commitment from the UK
Government to developing Islamic finance with a series of tax and regulatory changes specifically aimed at facilitating the growth of Shariah-compliant financial products.
We also highlighted the diverse range of products and
offered across the London Stock Exchange’s markets – from the
trading of equity shares on the Alternative Investment Market (AIM), which
offers growing companies all the benefits of being quoted on a world-class
public market within a regulatory environment that has been designed to
meet their specific needs, to the listing of sukuk on the Main Market, an EU
Regulated Market under MiFID, or the Professional Securities Market, which
is Exchange-regulated and offers the benefits of more flexible regulatory
requirements. In addition to this, a vibrant and growing ETF market means
that the London Stock Exchange is able to provide Islamic institutions and
investors with a broad choice of Shariah-compliant financial instruments
within a range of market structures.
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ource: London Stock Exchange
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