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BlackRock to consider expanding fixed income ETF range
August 9, 2010--BlackRock is considering how to expand its range of fixed income exchange traded funds after seeing assets held in iShares European-domiciled fixed income ETFs more than doubling over the past two years and surpassing the $25bn mark.
“When iShares started to create fixed income ETFs in Europe in 2003, we really had no idea that the business would grow to this size,” said Alex Claringbull, senior portfolio manager at BlackRock: “At that time, ETFs were generally viewed as equity related instruments and indeed many people thought that the “E” stood for equity. However, the vast majority of assets in continental Europe are held in fixed income and we thought that investors would be attracted by the liquidity, diversification and transparency that could be offered via fixed income ETFs.”
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Source: FT.com
European ETF activity highlights for July 2010: NYSE Euronext
August 9, 2010--At the end of July, NYSE Euronext had 535 listings of 487 ETFs from 17 issuers. These ETFs cover more than 300 indices exposed to an extended range of assets and strategies (Equity, Fixed Income, Commodities, Short, Leverage, etc…).
The number of ETFs increased by 8.46% YTD compared to the end of 2009. So far this year, 46 new ETFs have been listed, while 8 ETFs have been the subject of mergers by absorption.
Both the daily average number of trades and daily average turnover figures again showed solid YOY growth in July 2010. On average, there were 8 011 trades on a daily basis, representing an increase of 18.2% versus July 2009. Daily average turnover increased from €305 million in July 2009 to €330.2 million in July 2010, or 8%.
At the end of July, the combined Assets Under Management of all ETFs listed on the NYSE Euronext European markets totaled €118.6 billion, an increase of 31.5% from the €90.2 billion at the end of July 2009.
The combination of the flow of 20 first-class Liquidity Providers, competitive market makers, client orders and our high capacity, low latency technology contributed to a median spread of 30.56 bps of all listed ETFs, down from 35.58 bps in July 2009.
At the end of July 2010, NYSE Euronext’s Liquidity Providers program featured 20 Liquidity Providers that had a total of 985 liquidity provision agreements, providing firm bid/ask quotes with minimum size and maximum spread requirements for the entire trading session on all ETFs.
Five new option contracts on ETFs are now available via NYSE Liffe. The respective underlying ETFs, and their trading symbols, are:
Lyxor ETF Stoxx Europe 600 Banks – BNK;
Lyxor ETF Stoxx Europe 600 Oil & Gas – OIL;
Lyxor ETF Stoxx Europe 600 Basic Resources – BRE;
Lyxor ETF Stoxx Europe 600 Telecommunications – TEL;
Lyxor ETF China Enterprise (HSCEI) – ASI.
For more info visit www.euronext.com/etf.
Source: NYSE Euronext
Thomson Reuters MiFID Monthly Market Share Reports For July 2010
August 6, 2010--The Thomson Reuters MiFID Monthly Market Share Reports For July 2010 are now available.
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view Main Trading Venues for all European Equities report
Source: Thomson Reuters
Decisions taken by the Governing Council of the ECB (in addition to decisions setting interest rates)
August 6, 2010--August 2010
Operational issues
Review of the Eurosystem risk control measures
On 28 July 2010 the ECB announced amendments, as adopted by the Governing Council, to the risk control measures for assets eligible for use as collateral in Eurosystem credit operations. These amendments stem from the biennial review of the Eurosystem risk control measures. The press release also details the new haircut schedule, which will enter into force on 1 January 2011, in line with the Governing Council’s decision of 8 April 2010 to introduce graduated valuation haircuts for lower-rated assets.
Payment systems and market infrastructure
Legal framework for the TARGET2 Simulator
On 29 July 2010 the Governing Council adopted Decision ECB/2010/9 on access to and use of certain TARGET2 data. This Decision governs the access to and use by the TARGET2 overseers and the TARGET2 operators of certain data in the context of the TARGET2 Simulator, a device which will allow quantitative analyses and numerical simulations with transaction-level data for the purposes of ensuring the efficient functioning of TARGET2 and its oversight.
New Short-Term European Paper (STEP) market convention
On 5 August 2010 the Governing Council, having taken note of the new STEP market convention and the assumption of sole responsibility for the STEP labelling process by the STEP Market Secretariat, approved the discontinuation of the Eurosystem’s involvement in this activity with immediate effect. More information on the STEP market is available on the ECB’s website.
Financial stability and supervision The Eurosystem’s response to the European Commission’s public consultation on short selling
On 5 August 2010 the Governing Council approved the Eurosystem’s response to the European Commission’s public consultation on short selling and authorised its publication on the ECB’s website.
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Source: European Central Bank
UN climate talks 'going backwards': EU
August 6, 2010-- United Nations climate talks in Bonn are "going backwards," with the United States and other major emitters sliding ever further from taking on their "fair share" of cuts, the EU said on Friday.
"These negotiations have if anything gone backwards," said the EU's climate action commissioner Connie Hedegaard at the close of a week-long negotiating session in Bonn, Germany.
"This imbalance is not helpful and could seriously endanger the prospects of securing the successful outcome the world needs from the Cancun climate conference next December.
"At this pace the world will simply collectively miss the train," she warned.
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Source: EUbusiness
Average daily value traded in cash equities up ten per cent in July -London Stock Exchange
August 6, 2010--In July, 17.5 million equity trades were carried out across the London Stock Exchange Group’s electronic order books, with a combined value of £136.1 billion (€162.9 billion). The average daily value traded across the Group’s cash equity markets was £6.2 billion (€7.4 billion), a ten per cent increase on July 2009.
On the Italian equity order book, an increase in trading activity continued with the average daily number of trades growing 11 per cent year on year and the average daily value traded up 17 per cent. In London, the total value traded on the order book increased four per cent year on year, reaching £95.2 billion (€113.9 billion).
UK Cash Equities
During July, the average daily value traded on the UK equity order book was £3.7 billion (€4.4 billion), an increase seven per cent year on year, while the average daily number of trades was also up eight per cent at 537,477.
Italian Cash Equities
The average daily number of trades in Italian equities was 210,515 in July, an 11 per cent increase on the same month last year. The average daily value traded during the month was up 17 per cent at €2.3 billion (£1.9 billion).
International Cash Equities
The total value traded in international equities increased ten per cent on July 2009 to £11.8 billion (€14.2 billion), while the total number of trades was 1,088,326, an eight per cent year on year increase.
ETFs and ETCs
The average daily number of trades in ETFs and ETCs was up 32 per cent year on year, reaching 14,473, while the average daily value traded was up 38 per cent to £391 million (€467 million).
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Source: London Stock Exchange
Dutch pension schemes call for 'special position' in EU derivatives legislation
August 6, 2010--The three main lobbying organisations for pension funds in the Netherlands have asked the European Commission for a "special position" with respect to proposed EU legislation on derivatives and market infrastructure.
In a joint letter to the Commission, TVB, OPF and UvB said they were worried the proposals for a mandatory central clearing system, as well as a standard collateral per transaction, would seriously harm the interests of pensioners.
They argued that pensioners would ultimately be the ones to pay for a safety device to protect financial markets from high-risk investors through increased risk and additional costs.
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Source: IP&E
Global Equity Index & ETF Research : Weekly ETP Market Review: All remain quiet on the European ETF Front
August 5, 2010--Weekly European ETP Market Roundup
Net Cash flows
* Most major European equity indices had a generally positive week. The Euro Stoxx 50 index rose by 0.85%, the DAX fell slightly, by 0.30%, and the FTSE 100 rose by 2.5%. The price of gold/oz (USD) registered a small fall, -0.64%, while the Euro continued to rise against the US dollar, finishing the week 1.57% up.
Cash flows in the European ETP market continued to remain relatively muted. Total European ETP cash flows were negative, registering €59 million of net outflows for the week that ended July 30th. While this week was slightly more active [in terms of cash flow activity] than last week, under the surface turnover remains very subdued due to the summer holiday calendar.
European Equity ETPs gathered €404 million of inflows, compared to the €60 million of outflows observed last week. Fixed income experienced €208 million of outflows this week. Commodity cash flows turned into outflows this week, totaling €236 million, compared to €60 million of inflows last week.
Equity flows remain subdued, and even though they moved into positive territory this week, there was no clear sense of strong direction reflected in the trades observed. On the upside, this equity flow calm has managed to put a stop to outflows associated with major European indices.
The big flows into gold have also taken a break. Pursuant to last week’s €72 million of outflows, this week brought €243 million of additional gold outflows. While these flows do neither represent any major change in the fortune of gold ETPs nor do they denote a gold outflows trend, it is certainly a continuation of a slowing gold flows trajectory. It is also a sharp contrast to the peak observed in May and June of this year. Outflows from gold and a very quiet week in non-precious metals ETPs has contributed to the week finishing with negative commodity flows.
New Listings
Deutsche Bank listed four new precious metals ETCs this week. The ETCs track the price of gold (1), silver (1) and palladium (2). Two of these newly listed ETCs offer Euro hedged returns.
The same provider also cross listed on Borsa Italiana five additional ETFs tracking the Mexican, Canadian, and US equity markets in addition to two ETFs tracking European real estate indices.
Turnover
Consistent with the general July calm trading environment, average daily on-exchange ETP turnover declined 2.2%, maintaining its downward slope of the previous weeks. Average daily turnover registered at €1.76, down from €1.80 last week. Equity turnover declined at almost twice the rate of total ETP market daily average turnover, decreasing by 3.9%.
AUM
European ETP AUM finished the week almost flat at €195.8 billion, with a slight drop of -0.4% as compared to last week. Slight outflows were netted by mildly upward trending equity markets. The equity segment of the market finished the week exactly flat, with the commodity segment experiencing the biggest relative fall of 2.1% followed by fixed income that experienced a fall of 0.3%. European ETP AUM growth for 2010 YTD remains robust, registering at 15.1%.
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Source: Deutsche Bank Global Equity Index & ETF Research
db x-trackers launches currency ETFs in London
August 5, 2010--db x-trackers, Deutsche Bank’s exchange-traded fund (ETF) platform, has launched two ETFs linked to the DB Currency Returns Index (DBCR). The new funds will be listed on the London Stock Exchange and offer exposure to currency as an asset class in either USD or GBP-hedged share class formats.
The DBCR Index equally weights the three most established currency trading strategies – carry, momentum and valuation. Utilising a rules-based process, the strategies take long and short positions in the G10 currencies with regular rebalancing of the components.
“We have taken a major step today towards giving UK investors the tools they need to harness the potential of the currency markets,” said Manooj Mistry, head of db x-trackers ETFs UK. “The db x-trackers Currency Returns ETF is ideal for investors who are increasingly recognising the benefits of allocating assets to investment classes that show low or negative performance correlation with equity and bond markets, as well as investors looking for an additional way to achieve alpha in a low growth environment.”
Deutsche Bank broke new ground when it launched the DBCR Index in 2007. In-house research shows that long-term systematic returns, or ‘beta’, exist in the currency markets. The DBCR Index was created as a way to monetise those returns and was the world’s first investable benchmark for currency markets.
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Source: db x-trackers
Russia grain export ban sparks price fears
August 5, 2010--The prices of everyday staples such as bread, flour and beer are set to rise sharply after Russia imposed a ban on grain exports, triggering panic in commodities markets and sending wheat prices to their highest since the 2007-08 global food crisis.
Vladimir Putin, Russian prime minister, announced the ban on all the country’s grain exports, effective within 10 days, after a severe drought devastated crops and wildfires spread across the country.
The move, which caught traders and food producers by surprise, pushed the price of wheat to its highest in two years and evoked memories of the last time the then Soviet Union suffered a catastrophic crop failure in 1972. And Moscow introduced export restrictions during the 2007-08 global food crisis, triggering a wave of panic buying from North Africa and Middle East importers
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Source: FT.com
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