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STATE STREET RENAMES EXCHANGE TRADED FUNDS: ETFs Adopt SPDR® Family Brand
June 29, 2010--State Street Global Advisors (SSgA), the investment management business of State Street Corporation (NYSE: STT), today announced that its French-domiciled exchange traded funds (ETFs) have been renamed to align with its global SPDR® family of exchange-traded products.
SSgA's ETFs, previously named streetTRACKS®, are now registered and listed under the SPDR brand. The funds are currently registered in France, Germany, Luxembourg, the UK and the Netherlands, and SSgA intends to seek registration in other selected jurisdictions.
"We're pleased to begin the process of bringing the streetTRACKS family of ETFs under the SPDR name to further unify State Street's global ETF brand," said Vin Bhattacharjee, head of SSgA's EMEA Intermediary Business in London. "The SPDR brand has a strong heritage as the ETF industry's pioneer and has also come to represent precision, innovation and quality offerings that provide benefits to investors. This effort is a first step as we look forward to expanding our SPDR ETF footprint in Europe. We anticipate seeking regulatory approval to cross-list these funds on stock exchanges in key European markets."
The new name covers all 13 of SSgA's French-domiciled ETFs, including European regional and industry sector funds. The ETFs currently trade on the NYSE Euronext.
In addition to renaming the funds, SSgA revamped other aspects of the ETFs, including lower total expense ratios and enhanced liquidity provisions. It also created a dedicated ETF support team in London and launched a new website, www.spdrseurope.com.
State Street is one of the largest providers of ETFs in the world with $204 billion in ETF assets under management worldwide¹. At the 2010 Global ETF Awards, SPDR ETFs were recognized as the "Most Recognized ETF Brand".
ETFs have experienced tremendous growth over the past decade and now account for close to half of all listed securities being traded with strong appeal amongst both retail and institutional investors.
Source: State Street Global Advisors
FSA publishes review of with-profits sector
June 29, 2010--The Financial Services Authority (FSA) has today published the findings of its comprehensive review into the operation of with-profits funds.
The review focused on whether firms are treating their with-profits policyholders fairly, looking specifically at how senior management in firms have implemented FSA rules. The review showed the performance of firms is mixed. Some firms are performing satisfactorily; however, a significant number of firms are not adequately demonstrating the practices the FSA expects from a well-run with-profits business.
The two main areas of concern are:
* ineffective governance of with-profit funds, especially in how independent challenge is provided by firms' with-profits committees, which means that policyholders' interests may not be properly protected; and
* significant weaknesses in the quality of consumer literature - the FSA is not satisfied that all firms are doing enough to ensure that policyholders receive sufficiently comprehensive, timely and clear information to help them understand their policies.
The FSA is addressing these concerns. Firms have been told to take action quickly to improve their operations; for example, several firms have been directed to make immediate changes to their governance arrangements to better protect policyholders' interests. The FSA will be monitoring firms' responses closely, and will consider disciplinary action if firms do not address the concerns. Two firms have been referred to the FSA's enforcement division for further investigation.
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Source: FSA.gov.uk
UK green bonds proposal targets pension funds
June 29, 2010--Green bonds targeted at institutional investors are a key part of new proposals to fund climate change projects in the UK.
The idea comes in plans to form a Green Investment Bank released by a government commission today. The bonds would be similar to existing green bonds issued by the World Bank and the European Investment Bank.
The Green Investment Bank Commission, headed by former Merrill Lynch Europe head Bob Wigley, envisages UK pension funds and insurance companies potentially allocating up to 5% of their total bond investment to the new bonds.
The Commission estimates that £550bn of investment could be required for the UK to meet its climate change and renewable energy targets by 2020.
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Source: Responsible Investor
First-Ever Report on UK ETF Market Charts Dynamic Evolution, Growth Prospects for Exchange Traded Funds
June 28, 2010--Use of exchange traded funds (ETFs) in the UK will likely get a push from Independent Financial Advisors who increasingly turn to the vehicle in response to the Financial Services Authority’s new regulations promoting investor trust and confidence, according to a new report on the UK ETF market released today by BlackRock’s Global ETF Research and Implementation Strategy group – the first such report ever produced on ETFs in the UK.
BlackRock’s global ETF research team is regarded as the industry’s pre-eminent source of data, analysis and perspective on the ETF marketplace worldwide. Led by Deborah Fuhr, managing director, the team advises institutional clients and intermediaries globally on ETF implementation, and also produces the “ETF Landscape Reports,” a comprehensive series of monthly, quarterly and annual ETF market commentaries.
The first “ETF Landscape” report for the UK market demonstrates BlackRock’s commitment to industry-leading, authoritative coverage of the global ETF market -- and recognizes the UK market’s dramatic growth and evolution as more and more investors and intermediaries utilize ETFs. The UK report will be published quarterly by the Global ETF Research and Implementation Strategy group.
ETFs are index based open-ended funds that can be bought and sold as quickly and easily as ordinary shares on a stock exchange. They have become popular and widely used investment vehicles to achieve many investment strategies, including gaining diversified exposure to a market, core/satellite investing, and buy and hold investing.
Assets under management in UK-listed exchange traded funds (ETFs) have doubled since 2008, with increasingly risk-conscious investors turning to the vehicle to meet their desire for greater transparency of investment price, holdings, and risk-return features. According to the BlackRock report, as of 3/31/10, 239 unique ETFs with assets of US$49.8 billion and exposure to equity, index and commodity indices were listed on the London Stock Exchange (LSE) – one of the first exchanges to list ETFs in Europe more than 10 years ago.
In the UK, as globally, all types of institutional and retail investors including Independent Financial Advisors (IFAs) are embracing ETFs as an asset allocation tool. According to BlackRock, IFAs are likely to increase their use of ETFs because they are particularly well aligned with the intent of the FSA’s Retail Distribution Review proposals, which among other goals are intended to improve clarity of investment advice for consumers.
BlackRock’s Global ETF Research and Implementation Strategy group is available to provide data, commentary and insight for all aspects of your reporting on the fast growing ETF market, both in the UK and abroad.
Deborah Fuhr can be reached at phone: +4420 7668 4276; mobile +44 777 5823 111; email: deborah.fuhr@blackrock.com.
Source: BlackRock
Deutsche Börse Improves Xetra Efficiency
June 28, 2010--Deutsche Börse launched a new version of Xetra on Monday with Release 11.0, further improving the efficiency of the pan-European trading system.
“Deutsche Börse has improved the market quality of Xetra yet again with Release 11.0. The functionality and speed of our trading system and the provision of liquidity will be improved,” said Rainer Riess, Managing Director of Xetra Market Development at Deutsche Börse.
One of the most important technical improvements is the expansion of the Enhanced Transaction Solution interface. Order information is now sent to participants in real time via this interface.
The new execution restriction “book or cancel” (BOC) facilitates targeted provision of liquidity on Xetra. BOC orders can only be in the order book to provide liquidity, and so are only stored in the order book when no immediate execution is possible.
The processing time of non-persistent orders has also been shortened. Orders of this type from trading participants with the most efficient connections can be processed in less than one millisecond on average, making them 50 percent faster than before. Non-persistent orders are not saved in exchange systems if trading is interrupted and are thus designed not to be executed after such interruptions.
Source: Deutsche Börse
Source launches the first European ETF on the S&P 500 VIX Futures Index
June 28, 2010--Source today announced the launch of its new S&P 500 VIX Futures ETF. The fund is the first volatility-linked ETF in Europe to track the S&P 500 VIX Short-Term Futures Total Return index (the “Index”) and has a 0.60% per annum management fee.
Recent spikes in market volatility around the Greek crisis have accentuated risk aversion and highlighted the need to manage exposure to implied volatility. This new addition to Source’s product range offers convenient, liquid exposure via VIX futures. Source and Nomura have worked together to originate this ground breaking product. Nomura, the global investment bank, is a pioneer in creating, distributing and trading volatility products.
The CBOE Volatility Index, known as the “VIX”, is the most widely used measure of implied volatility and is seen as a barometer for market uncertainty. However, the VIX is not easily investable. The S&P 500 VIX Futures Source ETF tracks the Index, an investable index that reflects the return from rolling short-term VIX futures contracts. Although the performance of the Index differs from the VIX, it has historically shown high correlation with the VIX and high negative correlation with the S&P 500 index.1
Until now, European investors have been limited to trading individual VIX futures contracts or gaining exposure via structured notes. The new S&P 500 VIX Futures Source ETF is a UCITS III compliant fund, is listed on the London Stock Exchange and trades in USD.
Commenting on the launch, Ted Hood, CEO of Source said: “The past few years have taught us that sudden, large movements in the markets can never be discounted. We are delighted to be offering this tactical tool to European investors that can be used to take an outright view on implied volatility or for hedging against worst-case market scenarios.”
Mohamed Yangui, Managing Director, Head of Product Development and Structuring Group at Nomura added, “As one of Source’s strategic partners, we are confident that this new generation of UCITS compliant volatility instruments will establish itself amongst European investors as one of the preferred solutions due to its liquidity, transparency and the potential for exposure mitigation.”
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Source: Source ETF
FSA confirms list of Retail Distribution Review adviser qualifications
June 28, 2010--The Financial Services Authority (FSA) has today published the final list of qualifications retail investment advisers will need to pass before 1 January 2013. This provides the certainty advisers need to prepare for the implementation of Retail Distribution Review (RDR) requirements.
Qualifications and ongoing study form part of the FSA’s plan to enhance the reputation of the retail investment market by instilling greater professionalism and ethics. Increasing customers’ trust and confidence in the sector is vital for its future.
The FSA is consulting on whether advisers will also be required to hold a Statement of Professional Standing confirming that they are qualified to give advice, have kept their knowledge up-to-date and subscribe to a code of ethics. The statements will be issued by FSA-accredited professional bodies.
To be accredited, the bodies will have to promote professional excellence, and prove their ability to apply a consistently high standard of checks on advisers. Setting the same requirements for all bodies will help deliver a uniformity of standards across the industry.
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Source: FSA
FSA supervisory chief to quit EU reviews options for revised Market Abuse Directive view the Consultation on the review of the market abuse directive Financial Stability Report-Bank of England
In terms of resilience, the Report says that UK banks have raised their capital and liquidity buffers substantially, which has helped them weather recent tensions. But, in common with their peers, they face a number of challenges in the period ahead. UK banks need to maintain resilience in a difficult environment, while refinancing substantial sums of funding; they have a collective interest in providing sufficient lending to support economic recovery; and they will need over time to build larger buffers of capital and liquidity to meet more demanding future regulatory requirements. The new Basel regulatory regime will be agreed in the autumn. An extended transition to this new regime would enable banks to build resilience through greater retention of earnings, while sustaining lending. The new regime should include a buffer of capital which banks can use to absorb stresses, as well as a hard minimum. That buffer might need to vary over the cycle.
view the Visual Summary of the Financial Stability Report view full report-Financial Stability Report, Issue 27
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June 28, 2010--The Financial Services Authority has lost the second of its two managing directors as it prepares to split itself in two to comply with the new government’s plan to shake up financial regulation.
Jon Pain, head of supervision, plans to announce on Tuesday that he will leave early next year when the FSA divides up his division into two teams, one focusing on prudential regulation and the other concentrating on supervising the way banks and brokers treat customers and conduct business.
Source: FT.com
June 28, 2010--The Commission services have launched a public consultation on the review of the Market Abuse Directive. Its objective is to consult financial market participants, governments, competent authorities and other stakeholders on the modifications to the Market Abuse Directive that the Commission is considering for its forthcoming legislative proposal.
The consultation sets out options in the following areas: rules intended to extend the scope of the Directive; rules intended to enhance the effectiveness and coordination of the enforcement and sanctioning powers of the competent authorities, as well as the role of the European Securities Markets Authority; and rules intended to enhance the level of harmonisation and coordination among regulators in the EU, with the objective of creating a single rulebook. The issues set out in the consultation document will also be debated at a public hearing taking place in Brussels on 2 July. The hearing will bring together senior policy makers, regulators, industry experts and academics.
Source: EUbusiness
June 25, 2010-The Bank of England is today publishing its bi-annual Financial Stability Report. The Report is part of the delivery of the Bank’s strategy for its financial stability work, as set out in the Bank’s Annual Report 2010. The Report concentrates on the Bank’s assessment of conjunctural risks to financial stability. It was largely prepared ahead of the announcement by the Chancellor of the Exchequer of the Government’s plans to change the UK’s system of financial regulation.
In relation to current conditions, the Report notes that since December markets have focused increasingly on strains placed on sovereign balance sheets. In April, concerns over Greek sovereign risk spilled over to other European countries and developed rapidly into a generalised retreat from risk-taking. Inadequate transparency about sovereign exposures led to counterparty concerns and renewed strains in bank funding markets. In response, the IMF and European authorities put in place a substantial package of support. While these measures helped to stabilise conditions, market pressures have not yet abated. EU leaders also recently announced plans to publish the results of stress tests conducted on the largest European banks; this will be another important step.
Source: Bank of England
