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Spain to toughen short-selling rules
May 28, 2010--Spain’s stock market regulator is to toughen controls of equity short selling with plans to extend current reporting rules beyond financial sector stocks.
The National Stock Market Commission (CNMV) said late on Thursday that hedge funds and other short sellers would have to inform the regulator of positions of more than 0.2 per cent of total capital in all listed companies after June 10 this year.
Positions above 0.5 per cent will have to be communicated to the public via the CNMV website.
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Source: FT.com
EU calls on trading partners to remove protectionist barriers
May 28, 2010--Almost 280 trade restrictive measures have been put in place by the European Union's major trade partners during the economic crisis over the last 18 months according to a new report published today by the European Commission. Contrary to the G20 commitment, hardly any measures have been removed despite signs of economic recovery in most countries. The European Commission calls on trading partners to remove these restrictions in order to give a much needed boost to the recovery.
EU Trade Commissioner Karel De Gucht said: "There is a risk that trade restrictive measures introduced by our partners during the crisis will become part of the trade regime even when the economy picks up speed. What we need now is an exit strategy from protectionism."
The European Commission has been issuing reports on the trade restrictive measures adopted by major trade partners since the beginning of the economic crisis. This monitoring mechanism has been important to prevent an escalation of trade protectionism during the downturn.
The recent report covers the EU's thirty main trading partners over the period from October 2008 to April 2010. The protectionist measures range from classical trade barriers such as import bans or tariff increases to "buy national" and other behind-the-border policies. The report finds that many of the new barriers are rapidly becoming permanent features of the world trading system.
Background
At the Washington Summit in November 2008, the G20 committed to a self-imposed standstill in terms of new barriers to investment or to trade in goods and services, new export restrictions or WTO inconsistent measures to stimulate exports. The London and Pittsburgh G20 summits in April 2009 and September 2009, reinforced this commitment and provided an explicit mandate to the WTO to monitor and to report publicly on the evolution of the situation on a quarterly basis.
The EU is firmly committed to this pledge. Its own monitoring report complements the monitoring exercise done by the WTO.
The main conclusions of the new report are as follows:
•Despite an overall gradual improvement of the world economy, growth remains uneven, marking a clear difference between the situation of industrialised and emerging economies. There still exists a risk that increasing unemployment could fuel a second wave of protectionist policies in the course of 2010.
•Between November 2009 and April 2010, 73 further trade restrictive measures have been introduced, thus bringing the total figure of measures in force to 278. The tendency towards new protectionist measures noted in past reports remains unabated.
•Fewer than 20 measures taken in the context of the crisis have been withdrawn or have expired between November 2009 and April 2010. This figure is clearly disappointing and contrary to the commitment made by G20 leaders to "rectify" such measures. Continuing to add to the stock of protectionist measures without rectifying them puts the economic recovery at risk.
•The creation of the Customs Union of Russia, Kazakhstan and Belarus, effective from 1 January 2010, saw the consolidation of most of Russia's duty increases introduced during the economic crisis. This remains by far the most striking example of entrenching the crisis-related measures in the permanent trade environment, with long-term implications for the resumption of trade flows with Russia.
view the Sixth Report on Potentially Trade Restrictive Measures
Source: European Commission
ETFplus new listing- LYXOR ETF S&P 500 (A) on May 31, 2010
May 27, 2010--Borsa Italiana welcomes on the ETFplus market 1 new ETF issued by Multi Units Luxembourg, the new offer is composed as follow:
- 1 ETF on developed countries: LYXOR ETF S&P 500 (A).
view the public notice
Source: Borsa Italiana
Swedish Financial Supervisory Authority, Finansinspektionen: Assessment Of NASDAQ OMX Derivatives Markets As A Central Counterparty, 2009
May 27, 2010--Finansinspektionen and Riksbanken have jointly assessed Nasdaq OMX Derivatives Markets. The assessment focuses on Nasdaq OMX Derivatives Markets' clearing of derivatives transactions.
Nasdaq OMX DM fulfils 13 of the 14 recommendations. One recommendation is assessed as broadly observed.
Assessment of NASDAQ OMX Derivatives Markets as a central counterparty, 2009
Source: Finansinspektionen
Investors pile $200m into ETF Securities' Currency platform as European debt crisis continues
May 27, 2010--ETF Securities' Currency ETC platform sees AUM increase by 530% YTD, bringing AUM to $200 million
ETFS Short AUD Long USD (SAD) receives $65m of inflows over the past month as SAD rises 14% in May
Short EUR and short GBP also popular trades in May as investors look to profit from European debt crisis
84% of investors currently short G10 currencies vs. USD, with USD strengthening 16% since the inception of Currency ETC platform in November 2009
Average monthly trading volume surges over 900% YTD as investors increase use of Currency ETCs as currency volatility rises 31% in the past month
ETF Securities (ETFS), which launched the world's largest and Europe's first platform of Exchange Traded Currencies (Currency ETCs), has seen assets in the Currency ETC platform increase by 530% this year. Total AUM reached $200m having only been launched on 12 November 2009. We believe this growth in the Currency ETCs further exemplifies investors' acceptance of ETF Securities' collateralised ETC structure as a safe, easy and efficient way to invest in the FX market. ETFS Short AUD Long USD (SAD) is currently the largest Currency ETC with $67 million in AUM, having taken $65m of inflows in the past month. SAD is up 14% thus far in May as the market has begun to consider whether there will be a pause in Australia's rate hike cycle along with the potential effects on the local economy of the new mining profits tax.
ETFS Short EUR Long USD (SEUR) with $39 million AUM, and ETFS Short GBP Long USD (SGBP) with $16 million AUM, have also been popular, having captured around $20m of AUM in the past week as concerns over the European debt crisis have continued. SEUR is up 22.6% since the start of December 2009 and up 8.8% in May while SGBP is up 15.0% since the start of December 2009 and up 6.7% in May.
As the average one-month G10 currency volatility increased 31% (as of 25th May 2010), trading volumes in Currency ETCs have surged over 900% this year. ETCs have been designed to be liquid and simple instruments. As a result, Commodity ETCs (structured in a similar way to Currency ETCs) have seen their volumes increase from around $500m per week to around $2 billion per week in the past 2 years. Last week, Currency ETCs traded around $70m.
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Source: ETF Securities
European Senior Fixed Income-Investor Survey Q210
Sovereign Refinancing Challenges Escalate
May 26, 2010--Highlights
The results of Fitch Ratings’ latest survey of fixed income investors across Europe clearly capture the rising worries about the euro zone. Conducted during April 2010, the survey preceded the EU/ECB/IMF support package announced on 10 May, which
resulted in the faltering of the 14th month long credit rally.
Intensifying investor concerns regarding developed?market sovereigns are expressed throughout the survey results. Respondents believed this bedrock asset class would
have by far the biggest difficulty refinancing debt, against a backdrop of an expected weakening in credit fundamentals due to rising budget deficits and debt. Survey participants signalled that governments will face higher funding costs amid a
rising concern over future defaults and losses.
This pessimism contrasts sharply with the more generally enthusiastic outlook for most other asset classes. Credit profiles are anticipated to strengthen further, and confidence has grown over whether the loss?taking is over. Investors perceive that commercial lending conditions will loosen further, except in the small? and medium?sized enterprise (SME) segment.
However, in a sign of the contagion risk of sovereign concerns, survey participants indicated that the broad spread?tightening observed since mid?2009 is reversing for most asset classes.
The corporate sector is expected to continue to hoard cash and repay debt, and capex is viewed as a low priority. There is greater conviction that companies will engage in merger and acquisition activity, although investors expect deals to be financed by a mix of debt and equity, protecting credit profiles.
Expectations have fallen for credit strength in financial institutions, driven partly by concerns relating to the impact of new regulation. At the same time,respondents became more bullish on the prospects of a loosening in the lending standards of commercial banks.
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Source: Fitch Ratings
New Credit Suisse Equity Index ETF Launched on Xetra
May 26, 2010--An additional exchange-listed equity index fund issued by CS ETF (IE) plc has been tradable in US dollars in Deutsche Börse’s XTF segment since Wednesday.
ETF name: CS ETF (IE) on S&P 500
Asset class: equity index ETF
ISIN: IE00B5BMR087
Total expense ratio: 0.28 percent p.a.
Distribution policy: non-distributing
Benchmark: S&P 500 Index
Trading currency: US dollar
The CS ETF (IE) on S&P 500 allows investors to track the performance of the S&P 500 Index, which is weighted according to free float market capitalization and in turn tracks the performance of the 500 largest US stock corporations.
Source: Deutsche Börse
ETF Landscape: European STOXX 600 Sector ETF Net Flows, week ending 21-May-10
May 26, 2010--Last week saw US$216.8 Mn net outflows from STOXX 600 sector ETFs. The largest sector ETF inflows last week were in Health Care with US$43.5 Mn and Automobiles & Parts with US$42.8 Mn while Basic Resources experienced net outflows of US$158.4 Mn.
Year-to-date, Media has had the largest net inflows with US$270.0 Mn net new assets, followed by Oil & Gas with US$60.9 Mn YTD. Banks sector ETFs have had the largest net outflows with US$234.2 Mn YTD. In total, STOXX 600 sector ETFs have seen US$544.7 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
Commission sets out vision for bank resolution funds
May 26, 2010--The European Commission is today proposing that the European Union establishes an EU network of bank resolution funds to ensure that future bank failures are not at the cost of the taxpayer or destabilise the financial system. Following discussion at the forthcoming European Council, the European Commission will present these ideas at the G-20 Summit in Toronto on 26-27 June 2010. Such funds would form part of a broader framework aimed at preventing a future financial crisis and strengthening the financial system. The Commission believes that a way to achieve this is by introducing requirement for Member States to establish funds according to common rules into which banks are required to pay a levy. The funds would not be used for bailing out or rescuing banks, but only to ensure that a bank's failure is managed in an orderly way and does not destabilise the financial system. .
Internal Market and Services Commissioner Michel Barnier said: "It is not acceptable that taxpayers should continue to bear the heavy cost of rescuing the banking sector. They should not be in the front line. I believe in the 'polluter pays' principle. We need to build a system which ensures that the financial sector will pay the cost of banking crises in the future. That is why I believe that banks should be asked to contribute to a fund designed to manage bank failure, protect financial stability and limit contagion – but which is not a bail-out fund. Europe must take a lead in developing common approaches and providing a model for cooperation which could be applied globally."
Why bank resolution funds are needed
As a result of the financial crisis, national governments have had to use massive amounts of taxpayers' money to support their financial sector, maintain financial stability and protect depositors. Efforts are now needed to ensure that such situations never happen again. The Commission is already putting in place preventive measures which should reduce the probability of bank failure, but work is also needed to ensure that should bank failures arise in the future, robust mechanisms backed by private money are in place to deal with them.
In October 2009, the Commission made clear that it supports the establishment of a new crisis management framework at the EU level. This new framework will include a harmonised set of powers and rules allowing regulators to prevent bank failures and to take measures to facilitate the orderly resolution of insolvent banks whilst minimising costs to taxpayers(IP/09/1549). The Commission is now suggesting resolution funds as a complement to this new framework. Naturally, their size and scope would depend on the efficiency of improved supervision and regulation.
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Source: European Commission
CESR publishes a report to the European Commission on the technical details of the pan-european short selling disclosure regime
May 26, 2010--This report on the technical details of a pan-European short selling disclosure regime complements the Report on a Model for a Pan-European Short Selling Disclosure Regime (the Model) (CESR/10- 088, the ‘Report’).
The two reports should be read in conjunction with each other and, collectively, contain CESR’s proposal to the European Institutions for such a regime.
view the report on the technical details of a pan-European short selling disclosure regime
The publication today is accompanied by a letter to the European Commission
Source: CESR
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