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Eurosystem staff macroeconomic projections for the euro area
June 10, 2010--On the basis of the information available up to 27 May 2010, Eurosystem staff have prepared projections
for macroeconomic developments in the euro area. Benefiting from the prospect of an economic recovery
worldwide, average annual real GDP growth is projected to be between 0.7% and 1.3% in 2010 and
between 0.2% and 2.2% in 2011. Inflation is projected to remain moderate over the projection horizon,
being dampened by the slack prevailing in the euro area. The average rate of overall HICP inflation is
expected to be between 1.4% and 1.6% in 2010 and between 1.0% and 2.2% in 2011.
TECHNICAL ASSUMPTIONS ABOUT INTEREST RATES, EXCHANGE RATES, COMMODITY PRICES AND FISCAL POLICIES
The technical assumptions about interest rates and both energy and non-energy commodity prices are based on market expectations, with a cut-off date of 20 May 2009.1 The assumption about short-term interest rates is of a purely technical nature. Short-term rates are measured by the three-month EURIBOR, with market expectations derived from futures rates. The methodology gives an overall average level of short-term interest rates of 0.8% for 2010 and 1.1% for 2011. The market expectations for euro area tenyear nominal government bond yields imply an average level of 3.9% in 2010, increasing to 4.2% in 2011. The baseline projection takes into account the recent improvements in financing conditions and assumes that, over the projection horizon, bank lending rate spreads vis-à-vis the above-mentioned interest rates will narrow somewhat. Similarly, credit supply conditions are assumed to ease gradually over the horizon. As regards commodities, on the basis of the path implied by futures markets in the twoweek period ending on the cut-off date, oil prices per barrel are assumed to average USD 79.5 in 2010 and USD 83.7 in 2011. The prices of non-energy commodities in US dollars are assumed to rise by 17.9% in 2010, followed by a more modest increase of 1.2% in 2011.
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Source: ECB
Change in the CAC 40 index components
June 11, 2010--Following ACCOR’s announcement to spin-off its Hotels and Prepaid Services activities into two entities, ACCOR and EDENRED(*), and in compliance with CAC 40 index management rules:
- Effective at markets opening on Friday 2 July 2010, both ACCOR and EDENRED will be included in the CAC 40 index. The number of shares and free float factor of EDENRED will be equal to those of ACCOR in the CAC40 at markets closing on 1 July 2010. The divisor will not change.
- Effective at markets opening on Monday 5 July 2010, EDENRED will be removed from the CAC 40 index. This removal will be based on the last known price used to calculate the CAC 40 index at market closing on 2 July 2010. The new divisor will be announced on 2 July after the close of markets and will be effective on 5 July 2010.
(*) The spin-off is subject to the approval at the ACCOR Extraordinary Shareholders Meeting of 29 June 2010.
Source: NYSE Euronext
New iShares equity index ETF launched on Xetra
June 10, 2010--Since Thursday, a new exchange-traded equity index fund from the issuer iShares
(BlackRock Inc.) has been tradable in Deutsche Börse’s XTF segment.
ETF name: iShares EURO STOXX 50 (Acc)
Asset class: equity index ETF
ISIN: DE000A0RD800
Total expense ratio: 0.35 percent p.a.
Distribution policy: non-distributing
Benchmark: EURO STOXX 50
Trading currency: euro
The iShares EURO STOXX 50 (Acc) allows investors to track the performance of the EURO STOXX 50 performance index. In the case of a performance index, income is reinvested in the index and not distributed to investors. The EURO STOXX 50 index tracks the performance of the 50 largest companies from 12 euro area countries.
The product offering in Deutsche Börse’s XTF segment currently contains a
total of 671 exchange-listed ETFs, making it the largest offering of all European stock exchanges. This selection, together with an average monthly trading volume of around 13 billion euros, makes Xetra Europe’s leading trading venue for ETFs.
Source: Deutsche Börse
European ETF activity highlights for May 2010: NYSE Euronext
June 10, 2010-* At the end of May, NYSE Euronext had 529 listings of 481 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…).
In May 2010, the number of ETFs increased by 21.5% compared to end of May 2009.
YTD, the number of ETFs increased by 26.9%, with 32 new ETF listings so far this
year.
Both the daily average number of trades and daily average turnover figures were tremendous in May 2010, beating several records. On average, there were 14 090 trades on a daily basis, representing an increase of more than 87% versus May 2009, the highest level ever. Daily average turnover increased from €328 million in May 2009 to €671 million in May 2010, or 105%, the second highest value ever and very close to the record set in August 2008.
At the end of May, the combined Assets Under Management of all ETFs listed on the NYSE Euronext European markets totaled €116.4 billion, an increase of 38.7% from the €83.9 billion at the end of May 2009.
The combination of the flow of 19 first-class Liquidity Providers, competitive market makers, client orders and our high capacity, low latency technology contributed to a median spread of 37.14 bps of all listed ETFs despite the exceptional volatility in May 2010, down from 50.96 bps in May 2009.
At the end of May 2010, NYSE Euronext’s Liquidity Providers program featured 19 Liquidity Providers that have a total of 937 liquidity provision agreements, providing firm bid/ask quotes with minimum size and maximum spread requirements for the entire trading session on all ETFs.
Visit www.euronext.com/etf for more info
Source: NYSE Euronext European ETF team
New ETFs on NYSE Euronext
June 10, 2010--NYSE Euronext is pleased to announce that Lyxor AM has listed one new ETF on NYSE Euronext’s Paris market today.
ETF name:Lyxor ETF SP 500
ETF ISIN:LU0496786574
ETF Symbol:SP5
ETF Bloomberg Ticker:SP5 FP
Source: NYSE Euronext
Global Securities Regulators Adopt New Principles and Increase Focus on Systemic Risk
June 10, 2010--The International Organization of Securities Commissions (IOSCO) has published its revised Objectives and Principles of Securities Regulation (Principles) to incorporate eight new principles, based on the lessons learned from the recent financial crisis and subsequent changes in the regulatory environment, which are designed to strengthen the global regulatory system against future crises.
The eight new principles cover specific policy areas such as hedge funds, credit rating agencies and auditor independence and oversight, in addition to broader areas including monitoring, mitigating and managing systemic risk; regularly reviewing the perimeter of regulation; and requiring that conflicts of interest and misalignment of incentives are avoided, eliminated, disclosed or otherwise managed.
The Principles, which are an agreed set of high-level global standards outline the basis of an appropriate, effective and robust securities regulatory system, therefore their proper implementation by securities regulators is critical to the creation and maintenance of a sound global regulatory system. The Principles also play an important role in promoting a sound global financial regulatory system through their use by the International Monetary Fund (IMF) and World Bank assessors in the performance of the securities sector element of country Financial Sector Assessment Programs.
Systemic Risk Principle
This new Principle recognises the need for Regulators to be conscious of systemic risk and the role they play in relation to it. The financial crisis has highlighted that financial markets which IOSCO members regulate, or may be exempt from regulation, can be the mechanism by which risk is transferred within the financial system. Under the new principle the Regulator should have, or contribute to, regulatory processes to monitor, mitigate and appropriately manage such risks. Regulators should have particular regard to investor protection, market integrity, transparency and the proper conduct of business within markets as contributing factors to reducing systemic risk.
The eight new principles added to the current 30 are:
Principle 6: The Regulator should have or contribute to a process to monitor, mitigate and manage systemic risk, appropriate to its mandate;
Principle 7: The Regulator should have or contribute to a process to review the perimeter of regulation regularly;
Principle 8: The Regulator should seek to ensure that conflicts of interest and misalignment of incentives are avoided, eliminated, disclosed or otherwise managed;
Principle 19: Auditors should be subject to adequate levels of oversight.;
Principle 20: Auditors should be independent of the issuing entity that they audit;
Principle 22: Credit rating agencies should be subject to adequate levels of oversight. The regulatory system should ensure that credit rating agencies whose ratings are used for regulatory purposes are subject to registration and ongoing supervision;
Principle 23: Other entities that offer investors analytical or evaluative services should be subject to oversight and regulation appropriate to the impact their activities have on the market or the degree to which the regulatory system relies on them; and
Principle 28: Regulation should ensure that hedge funds and/or hedge funds managers/advisers are subject to appropriate oversight.
view the revised Objectives and Principles of Securities Regulation
Source: IOSCO
Bankers fear effect of Basel rules
June 10, 2010--Economic growth in the eurozone, the US and Japan will be cut by three percentage points between now and 2015 if current proposals to force banks to hold more capital and liquid assets go forward unchanged, the world’s leading banking industry group warned on Thursday.
As a result, 9.7m fewer jobs would be created in those areas over the period, according to an impact assessment issued by the Institute of International Finance at a meeting in Vienna.
The group is pushing hard for the Basel Committee on Banking Supervision to rewrite or at least delay implementation of the proposals, known as Basel III, which are slated to be voted on later this year.
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Source: FT.com
EU will go beyond trillion-dollar bailout limit: Van Rompuy
June 10, 2010--- A near trillion-dollar bailout fund for debt-burdened euro nations will be increased if required, the European Union's appointed president said in an interview published on Thursday.
Herman Van Rompuy, who is in Berlin to meet German Chancellor Angela Merkel seven days from an EU summit dominated by disputes over how to install new cross-border economic governance, told Belgian business magazine Trends-Tendances that the 750-billion-euro EU-IMF fund of loan guarantees could be extended.
"Is it enough? Today, there is not even the hint of anyone asking to put this rescue plan into action," he told the magazine.
However, "if the plan proves insufficient, my answer is simple: in this case, we will do more."
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Source: EUbusiness
FSA publishes annual report for the year 2009/10
June 10, 2010--The Financial Services Authority (FSA) has published its Annual Report, outlining its performance against the priorities set out in its 2009/10 Business Plan and the FSA's statutory objectives.
In his foreword, FSA chairman, Adair Turner, commented that over the last three years, the FSA has transformed its approach to regulation and supervision and as a result, has had to go through a process of intense internal change.
Key elements of this transformation process are:
A radically changed approach to prudential supervision and in particular to the supervision of high impact firms, including stress testing, accounting reviews, challenges to business models, detailed liquidity assessments and reviews of remuneration policy.
Dramatically increased involvement in international and European fora to help drive global agreement on the complete revision of the prudential regulatory regime, with recommendations for such major change set out in the Turner Review and associated discussion and consultation papers.
view the report
Source: FSA.gov.uk
ETF Landscape: European STOXX 600 Sector ETF Net Flows, week ending 04-Jun-10
June 9, 2010--This is a weekly publication analysing Net Flows in aggregate in the seven families of ETFs tracking the 19 STOXX 600 sectors.
Last week saw US$191.8 Mn net inflows to STOXX 600 sector ETFs. The largest sector ETF inflows last week were in Banks with US$309.9 Mn and Industrial Goods & Services with US$20.1 Mn while Health Care experienced net outflows of US$50.4 Mn.
Year-to-date, Media has had the largest net inflows with US$288.4 Mn net new assets, followed by Industrial Goods & Services with US$85.4 Mn YTD. Basic Resources sector ETFs have had the largest net outflows with US$235.3 Mn YTD. In total, STOXX 600 sector ETFs have seen US$327.2 Mn net outflows YTD.
The assets invested in the ETFs are greater than the open interest in the corresponding futures contract in 17 out of 19 sectors.
to request report
Source: Global ETF Research & Implementation Strategy Team, BlackRock
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