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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
“Transparency in Energy Markets“ now including data on solar energy
July 19, 2010--– From today data on the generation of electricity from solar energy will also be published on the joint transparency platform
(www.transparency.eex.com) of European Energy Exchange AG (EEX) and the four German transmission system operators (TSOs), 50Hertz Transmission GmbH, Amprion GmbH, EnBW Transportnetze AG and transpower stromübertragungs gmbh, launched last autumn.
The information published daily comprises the following data for all four German balance areas:
1. Forecasts regarding the expected volume generated from solar energy (http://www.transparency.eex.com/de/daten_uebertragungsnetzbetreiber/stromerzeugung/erwartete-produktion-solar) and
2. Information on the volumes actually generated from solar energy (http://www.transparency.eex.com/de/daten_uebertragungsnetzbetreiber/stromerzeugung/tatsaechliche-produktionsolar)
Reports on solar energy round off the fundamental data regarding energy generated from wind and other energy carriers (e.g. lignite, natural gas, run-of-river, hard coal, uranium, oil), which are already provided, and complete the representation of the situation in order to safeguard the comprehensibility of market pricing on a comprehensive basis.
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Source: European Energy Exchange AG (EEX)
Europe faces years of weak growth: IMF head
July 16, 2010--Europe's economy risks several years of weak growth which threaten to drive up unemployment and weaken spending power, the head of the International Monetary Fund warned on Friday.
Despite recovering growth in Asia, Africa and the United States, "the risk for Europe is several years of weak growth," IMF Secretary General Dominique Strauss-Kahn said on the television news channel France 24.
"That means little spending power, problems in welfare systems for pensions and health and a rise in unemployment."
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Source: EUbusiness
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