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Newsflash - Dividend derivatives open interest exceeds 1 million contracts
July 20, 2010-- The international derivatives exchange Eurex has for the first time exceeded the 1 million mark in open interest on its dividend product suite. Dividend futures and options contracts outstanding as at 19 July stood at 1,010,417 which represent a nominal value in excess of 6.2 billion euro of the dividend payments of European blue-chip companies.
Dividend based derivatives are a relatively new asset class and Eurex was the first exchange globally to launch equity index dividends in summer 2008. Open interest of the dividend index derivatives stands above 636,000 contracts. Dividend contracts on single stocks were introduced in January 2010, they have already amassed 374,000 contracts in open interest in the first half year of trading.
Source: Eurex
First Trade in EUA Futures for the Third European Emissions Trading Period
Positive Development on the Derivatives Market for EUA Futures
July 20, 2010-- On Friday, 16 July 2010, the first trade in EUA Futures for the Third European Trading Period was concluded on the market for emission rights operated by European Energy Exchange AG (EEX) and Eurex.
The volume traded comprised 25,000 EUA for delivery in the year 2013 and the trades were concluded between RWE and CEZ. Since 30 June of this year it has been possible for the EEX and Eurex trading participants to trade EUA futures for delivery in the years 2013 and 2014 in addition to the existing contracts.
Positive Development on the Derivatives Market for EUA Futures
In June, the volume on the EEX Derivatives Market for CO2 emission allowances increased considerably as against the previous months. In total, 17,453,000 EUA were traded in June (June 2009 1.696.000 EUA) with derivatives trading on the secondary market accounting for 14,603,000 EUA. This positive trend has continued in July.
The measures taken by EEX and Eurex to strengthen emissions trading contribute to this positive development in trading turnover. For example, EEX has recently extended the trading hours for emission futures on the exchange and has lowered the transactions fees on the Derivatives Market for Emissions until the end of December.
EEX and Eurex offer their participants a platform for trading in EUA Futures, CER Futures and options on EUA Futures. Within the framework of this cooperation, which was launched in December 2007, Eurex participants can trade the CO2 derivatives products listed on EEX through their existing infrastructure and a simplified admission process.
Source: Eurex
Derivatives reform to punish property industry
July 20, 2010--The European Union’s proposed reform of over-the-counter derivatives markets is intended to reduce the systemic risk caused by speculative use of derivatives, typically by hedge funds and other financial institutions. It was assumed those using derivatives for bona fide hedging and prudent risk management purposes would be excluded from the margin requirements that the new regulations would demand. However, it is now becoming clear that the European property industry risks being one of the biggest victims of regulatory overreach.
Regulators on both sides of the Atlantic want to see the majority of derivatives cleared by central counterparties. This would reduce systemic risk by requiring that a derivative counterparty maintains a cash reserve, or “margin”, equal to the potential liability under the contract in the event of a default, an eminently sensible precaution in relation to speculative trading of derivatives.
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Source: FT.com
The European Commission could pull the plug on shareholder engagement unless owners step up
EC Green Paper is sceptical about shareholder oversight to prevent another financial crisis
July 20, 2010--You could be forgiven, on the basis of recent developments, for thinking that we are about to enter a new era of shareholder engagement. The UK’s decision to press ahead with the introduction of a Stewardship Code for institutional investors, to mirror the Corporate Governance Code for public companies, does seem to enshrine the shareholder-oversight approach to governance.
Meanwhile the Financial Services Authority is currently consulting on how to require asset managers to disclose the nature of their commitment, or otherwise, to the Stewardship Code, which will give the initiative a little regulatory bite. Finally, it seems, the need for shareholders to act like owners is given some official backing. However, it doesn’t look like everyone agrees that this is the right approach to take to reform in the wake of the financial crisis. One document in particular is causing a few waves in the governance community – the European Commission’s Green Paper on corporate governance in financial institutions.
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Source: Responsible Investor
CESR launches four consultations on the Key Investor Information Document
July 20, 2010--Guidelines on the selection and presentation of performance scenarios in the Key Investor Information document for structured UCITS
Guidelines for the transition from the Simplified Prospectus to the Key Investor Information document
A guide to clear language and layout for the Key Investor Information document
Template for the Key Investor Information document
Source: CESR
CESR updates the list of measures recently taken by Members regarding short-selling.
July 19, 2010--CESR published on 22 September 2008 a statement that facilitates an overview of actions taken by CESR Members in relation to short-selling. The statement paper includes either the statements or links to the statements published by CESR Members explaining the measures taken. This paper is not a comparison of the measures taken.
CESR updates the list of measures recently taken by Members regarding short-selling. The documents will be updated on a continuous basis; the latest update has been provided by the Polish KNF.
Further information can be found in the statement published today.
Source: CESR
CESR launches two consultations on OTC derivatives, and announces a public hearing on 11 August
July 19, 2010--Two consultation papers are published today:
Standardisation and exchange trading of OTC derivatives
Transaction Reporting on OTC Derivatives and Extension of the Scope of Transaction Reporting Obligations
An open hearing on the consultation on Standardisation will take place on 11 August.
All responses should be submitted online, in the section consultations, by 16 August 2010.
Source: CESR
Overvalued lira a disadvantage for Turkey’s foreign trade
July 19, 2010--The European Commission has warned that an overvalued Turkish lira may hamper the country’s competitive power in foreign markets, the Anatolia news agency reported on Monday.
The commission on Monday released a report detailing its assessment of the economic performance of EU candidate countries in the second quarter. The report warns Turkey over currency-related risks, particularly in its foreign trade. Recalling that the TL has gained 8 percent in value against the euro since the beginning of the year, the report said this could weaken Turkey’s competitive power in international markets. The commission’s assessment comes on the heels of recent warnings from the domestic market that Turkish exporters are no longer able to cope with an ever-appreciating lira as profit margins are too narrow to compete with rivals in international markets.
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Source: Todays Zaman
Europe gets a breather before bank stress tests
July 19. 2010--- The markets have given Europe some respite in its struggle against debt but the EU faces a moment of truth this week with tests that will show whether banks can survive a new economic cataclysm.
European Union governments hope the results of "stress tests" on the banking industry, which will be released on Friday, will reassure investors worried about the banks' exposure to the continent's sovereign debt crisis.
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Source: EUbusiness
EC's take on derivatives could hurt retirement benefits, says EFRP
July 19, 2010--The European Commission's proposals on derivatives could increase costs and risk for pension funds and lead to lower retirement benefits for plan members, the European Federation for Retirement Provision (EFRP) has warned.
The federation, whose 26 member associations represent more than €3.5trn of assets, acknowledged the Commission's consultation was an "important step" toward enhancing transparency and controlling systemic risk.
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Source: IP&E
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