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The progress of platinum group metal exchange traded funds (ETFs)
June 30, 2010--Two physically-backed platinum and palladium exchange-traded funds, or ETFs, were launched in the first half of 2007 in Europe. Exchange-traded funds exist in a wide variety of commodities, including gold and silver, and are constructed to allow investment into specific commodities without the investor having to take physical delivery or enter the futures markets. Investors can buy shares in these funds which are equivalent to a specific weight of either platinum or palladium and the performance of these shares replicates the performance of that metals price (less any management charges).
Since the funds are physically-backed, when a share is created, an equivalent amount of metal must be deposited with the fund. This metal is allocated and this has the effect of taking this metal off the market. This can have the impact of reducing liquidity in the market and of increasing price volatility, particularly as the metal cannot be loaned out. This is in contrast to products such as Exchange Traded Notes (where the shares are not backed by allocated metal).
Since the launch of these funds, there have been clear differences in the behaviour of investors in the palladium and platinum funds. Almost 200,000 oz of platinum had been accumulated by investors by the end of 2007 and a further 100,000 oz was held at the end of 2008. However, purchases and sales of ETF shares have been highly correlated to movements in the metal price, particularly for platinum: investors have bought heavily at times of rising prices, adding to the upward pressure on the price, and sold heavily as the price fell, exacerbating the fall in the platinum price by adding liquidity to the market in the second half of 2008. Platinum holdings peaked at almost 500,000 oz in the middle of 2008 before declining to end the year close to the 300,000 oz level. As the price has recovered in 2009 it has attracted back ETF investors, taking holdings to a record level of some 680,000 oz at the end of 2009.
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Source: Platinum News
ETF Landscape: STOXX Europe 600 Sector ETF Net Flows, week ending 25-Jun-10
June 30, 2010--Last week saw US$129.6 Mn net outflows from STOXX Europe 600 sector ETFs. The largest sector ETF inflows last week were in Food & Beverage with US$26.3 Mn and Personal & Household Goods with US$21.6 Mn while Banks experienced net outflows of US$42.9 Mn.
Year-to-date, Media has seen the largest net inflows with US$285.8 Mn net new assets, followed by Industrial Goods & Services with US$48.0 Mn. Basic Resources sector ETFs have seen the largest net outflows with US$213.4 Mn YTD. In total, STOXX Europe 600 sector ETFs have seen US$642.9 Mn net outflows YTD.
The assets invested in the ETFs are greater than the open interest in the corresponding futures contract in all 19 sectors.
to request report
Source: Global ETF Research & Implementation Strategy Team, BlackRock
EU to broaden out bank stress tests: document
June 30, 2010-- The European Union is to extend the scope of its stress tests of banks' ability to withstand economic and financial shocks, according to a document seen by AFP on Wednesday.
In the face of investor concerns about the health of the European banking sector, EU leaders agreed earlier this month to publish the results of stress tests in July.
But the move failed to placate investors and financial markets concerned that the tests would only cover Europe's biggest banking groups and not smaller lenders, especially Spanish savings banks and regional German banks.
"Stress test exercise should be extended to a larger set of banking institutions and complemented, namely as regard sovereign risks," according to the document prepared by EU financial experts.
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Source: EUbusiness
ETF Securities Gold Holdings Rise to a Record $10 Billion on Haven Demand
June 30, 2010--Gold held in ETF Securities Ltd.’s European exchange-traded products rose to a record $10 billion, accounting for half of the provider’s total global assets under management.
Its ETFS Physical Gold product held $5.2 billion of metal as of June 11, and ETFS Gold Bullion Securities contained $4.8 billion, London-based ETF Securities said today in a report.
Total assets under management climbed to an all-time high $20 billion as of June 17 including commodity, currency and equity products, up 70 percent from last July, it said.
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Source: Bloomberg
CESR publishes responses received to two consultations on Credit Rating Agencies
June 30, 2010--CESR has published the responses received to two consultations on Credit Rating Agencies.
view responses
Source: CESR
Deutsche Bank’s €5.5bn pension funds aim to raise ESG allocation
June 29, 2010--Deutsche Bank says it has a long-term goal to expand on the current €100m it has solely invested in environmental, social and governance (ESG) criteria in its own €5.5bn pension funds.
“As with our asset management services, we apply sustainability criteria to our investment decisions for the pension plans of our employees as well,” the bank giant has said in its latest Sustainability Report. “Deutsche Bank pension funds have a volume of €5.5bn, of which €100m are already invested solely according to ESG criteria.
“Our long-term goal is to expand this type of investment.”
Deutsche had €3.1bn in sustainable funds/thematic funds under management for clients at the end of last year, according to the report.
view Sustainability Report
Source: Responsible Investor
DP10/3: Enhancing the auditor's contribution to prudential regulation
June 29, 2010--The FSA's Discussion paper 10/3 is entitled 'Enhancing the auditor's contribution to prudential regulation'. It was published in June 2010 and the period for responses closes on 29 September 2010.
view the Enhancing the auditor's contribution to prudential regulation DP
Source: FSA.gov.uk
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
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