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Eurex Plans to Expand European Index Derivatives Segment
Segment to include futures and options on EURO STOXX and STOXX Europe 600 indices as from 28 July
June 29, 2010--The international derivatives exchange Eurex plans to extend its offering of futures and options on European size indices provided by STOXX Ltd. Four futures and four options based on the EURO STOXX® and the three corresponding sub-indices EURO STOXX Large, Mid and Small will be tradable as from 28 July. The new derivatives will enhance the existing offering of four futures and four options based on the STOXX Europe 600 Index and the three sub-indices STOXX Europe Large 200, STOXX Europe Mid 200 and STOXX Europe Small 200.
“By extending our offering to include new euro-denominated index derivatives, we will create additional investment and hedging opportunities for clients who want to gain exposure without currency risks on the basis of compact underlyings,” said Michael Peters, member of the Eurex Executive Board. “The new EURO STOXX index products will also complement our highly liquid future on the European blue-chip index EURO STOXX 50.”
As is the case with existing Eurex index products, the new futures will be settled in cash. The expiration dates will also be in March, June, September and December. An incentive program for market makers will be in place for several months to support sufficient liquidity from the outset. The new futures will be tradable between 8 a.m. and 10 p.m., and the options between 9 a.m. and 5.30 p.m. CET.
Eurex has been offering derivatives on the four STOXX Europe 600 indices since 2005. In 2009, approximately 730,000 contracts based on these index derivatives were traded; open interest currently is at approximately 30,000 contracts. The STOXX Europe 600 Index contains 600 companies from 18 European countries. The 600 index constituents are split into three groups of 200 according to their market capitalization – representing the three sub-indices STOXX Europe Large 200, Mid 200 and Small 200.
As of 28 July, the contract size of the STOXX Europe 600 derivatives already listed will be adjusted to be consistent with the new products. Alongside the four listed futures and options, each bearing a contract value of EUR 200 per index point, additional futures and options with a value of EUR 50 per index point will be launched.
Source: Eurex
European firms in China expect conditions to worsen: survey
June 29, 2010--European firms in China expect to face even tougher regulatory policies in the next two years, a survey released Tuesday showed, as fears mount that Beijing is trying to shut out overseas companies
While most of the more than 500 European companies surveyed said they were optimistic about the growth outlook for China, they were worried the country's communist leaders would become more discriminatory against foreign firms.
Companies polled by the European Chamber of Commerce in China warned their commitment to the world's third-largest economy was not "unconditional", suggesting they would consider leaving if conditions deteriorated.
"If things turn sour, China is not necessarily a must for them," Jacques de Boisseson, president of the European business group in Beijing, told a news conference.
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Source: EUbusiness
CESR Published A Comment Letter On EFRAG’s Draft Response On The IASB’s ED Financial Instruments: Amortised Cost And Impairment (Ref: CESR/10-713)
June 29, 2010--The Committee of European Securities Regulators (CESR) has considered, through its standing committee on corporate reporting (CESR-Fin), EFRAG?s draft comment letter on the IASB?s Exposure Draft (ED) Financial Instruments: Amortised Cost and Impairment.
CESR supports the IASB?s objective of developing an internationally acceptable alternative for the current incurred loss regime for impairment. The ED is an important part of the replacement of IAS 39 – Financial Instruments: Recognition and Measurement, of which IFRS 9 – Financial Instruments: Classification and Measurement as published in November 2009 was the first part. We believe that those documents represent a clear improvement to the present requirements of IAS 39 – Financial Instruments: Recognition and Measurement.
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Source: CESR
Economic Sentiment Indicator remains unchanged
June 29, 2010--In June, the Economic Sentiment Indicator (ESI) remained broadly unchanged at 100.1 (down by 0.1 points) in the EU and at 98.7 (up by 0.3 points) in the euro area. Among the largest Member States, the UK (-3 points) reported the biggest drop in sentiment (especially in industry), followed by France (-2.3) and the Netherlands (-2.0).
In contrast, Spain (+2.3) reported the most significant increase - although this was from one of the lowest levels in the euro area. Improvements were less pronounced in Italy (+1.4). Sentiment in Germany (+0.4) and in Poland (-0.5) remained broadly unchanged.
The Directorate General for Economic and Financial Affairs (DG ECFIN) conducts regular harmonised surveys for different sectors of the economies in the European Union (EU) and in the applicant countries. They are addressed to representatives of the industry (manufacturing), the services, retail trade and construction sectors, as well as to consumers. These surveys allow comparisons among different countries’ business cycles and have become an indispensable tool for monitoring the evolution of the EU and the euro area economies, as well as monitoring developments in the applicant countries.
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Source: European Commission
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.
view review
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
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