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Barclays clears $1tn of OTC derivatives
May 31, 2012--Barclays has cleared more than $1tn worth of over-the-counter derivatives arranged with clients globally, the latest in a series of moves as some asset managers rush to embrace some forms of clearing as a way to relieve burdens on stressed capital.
The clearing of interest rate, credit and foreign exchange swaps via CME Group, LCH.Clearnet’s SwapClear unit, and IntercontinentalExchange’s ICE Credit Clear comes well ahead of the final version of the Dodd-Frank Act rules that will require a bulk of the swaps market to be centrally cleared.
Transparency on banks' treasury units urged
May 30, 2012--International banks must improve disclosure of often obscure treasury unit investments following the recent $2bn trading loss at JPMorgan's chief investment office, rating agencies and bank analysts have urged.
The US bank’s trading losses have thrown the spotlight on how regulatory pressure to hold higher liquidity cushions has turned treasury departments into an important but opaque revenue driver for international banks.
How will tax hit your ETF holdings? -Deborah Fuhr
May 30, 2012--At this time of year, many investors ask questions about the tax implications of using exchange traded funds (ETFs).
There is a hierarchy of three levels of tax to consider when investing in funds and ETFs.
First is within the ETF itself. The investment the fund is making in equities or fixed income and where those securities are domiciled relative to the domicile of the fund will impact on the taxes on income or capital gains within the fund.
Then there is tax relating to where the fund is domiciled. This will have an impact on the type and level of tax the fund might incur in the country in which it is domiciled.
Large trade breaks ETF model
May 30, 2012--An unexpected systemic risk in exchange-traded funds has just been brought to light in a research note from credit ratings agency Moody's, which says a recent trade by a large investor caused a breakdown in an ETF and left investors nursing losses.
The research note, which was published this week, says investors in an ETF provided by State Street saw the value of the investors' holdings drop by more than a percentage point below the value of the index the ETF was tracking, after a large investor, probably a hedge fund, redeemed a $780m block of the ETF's shares.
World Bank-State and Trends of the Carbon Market 2012
May 30, 2012--The total value of the carbon market grew by 11 percent in 2011, to $176 billion, and transaction volumes reached a new high of 10.3 billion tons of carbon dioxide equivalent (CO2e) according to a new report from the World Bank.
According to State and Trends of the Carbon Market 2012 this growth took place in the face of economic turbulence, growing long-term oversupply in the EU Emissions Trading Scheme (EU ETS) and plummeting carbon prices.
The report, released here at the Carbon Expo in Cologne, describes how even as prices declined, the value of the global carbon market increased in 2011, driven predominantly by a robust growth in financially motivated transactions. By far, the largest segment of the carbon market was that of EU Allowances (EUAs), valued at $148 billion. There was also a substantial increase in the volume of secondary Kyoto offsets (which grew by 43 percent, to 1.8 billion tons of CO2e, valued at US$23 billion) fueled by increased liquidity in the Certified Emission Reduction (CER) market and in the nascent secondary Emission Reduction Unit (ERU) market. Following the same pattern observed in previous years, the global carbon market in 2011 was primarily driven by the EU ETS.
View State and Trends of the Carbon Market 2012 report
Mirae-Markets Remain Alert to Potential Grexit
May 30, 2012--China
Leaders again reiterate their pro-growth commitment.
Hong Kong and China stock markets experienced volatility along with the global market amid the potential Grexit (Greek exit from the euro zone).
Premier Wen signaled more emphasis on maintaining growth when formulating macroeconomic policy, echoing his earlier comment on the need to increase the strength of selective easing. Wen stated that he will strengthen and improve macroeconomic policy, and launch timely and appropriate selective easing measures to expand domestic demand and stabilize trade.
India
Current account deficit to be soothing.
The long awaited petrol price hike in India positively drove sentiment and the Sensex Index edged higher last week.
On May 23, state-run oil companies increased the price of petrol by RS7.5 per litre. The move should have very limited impact on inflation because of the light weight of petrol in CPI. Fiscally, the rise could bring down full year losses incurred by oil companies on petrol.
Brazil
Third stimulus package to foster growth.
The Brazilian Government last week presented the third stimulus package to foster growth, with significant stimulus for the capital goods and auto sectors via credit provision and tax relief.
The Government has targeted a reduction in product prices to consumers, with public and private banks to increase vehicle credit by making use of an R$18bn reduction in reserve requirements.
Risk aversion remains high.
European politics continue to dominate markets. Risk aversion remains high due to concerns over Eurozone economic stability. Markets remain alert to any signs of deposit flight from the Greek banking sector, and any potential trigger for similar action in other Eurozone countries including Portugal, Ireland, Spain and Italy.
Germany continues to resist the monetization of Eurozone debt and the issuance of Euro bonds, despite increasing pressure from its neighbors.
G20 countries should rely on open markets to reboot global growth
May 30, 2012--G20 governments should prevent further deterioration in their collective trade and investment policy stance and focus on promoting open markets to re-boot growth in the world economy, according to the OECD, WTO and UNCTAD.
In their seventh report to the G20, the organisations say that the accumulation of new restrictions, combined with governments’ failure to remove existing ones, are clearly adding to downside risks facing the global economy.
“G20 leaders have pledged to avoid protectionism and roll back measures taken during the crisis,” said OECD Secretary-General Angel Gurría. “We know that closing markets stifles growth and makes it harder to tackle unemployment. Countries must resist the temptation to implement inward-looking trade and investment policies.”
Between October 2011 and early-May 2012, thirteen G20 members implemented policy measures related to investment, national security or international trade agreements, according to the report. Most had the effect of opening up markets and increasing transparency for investors.
view the REPORTS ON G20 TRADE AND INVESTMENT MEASURES1 (MID-OCTOBER 2011 TO MID-MAY 2012)
FTSE Establishes New ESG Service Unit with Two Senior Appointments
May 30, 2012--FTSE Group ("FTSE"), the award winning global index provider announces the establishment of an Environmental Social Governance (ESG) Service Unit with two senior appointments; Kevin Bourne and Gordon Morrison.
Kevin Bourne will assume the role of Managing Director of the newly structured ESG Service Unit. This Unit will comprise the existing Responsible Investment team headed by David Harris, who also acts as Vice-Chairman of the UK Sustainable Investment and Finance association (UKSIF), as well as a new ESG Analytics team to be headed by Gordon Morrison.
Previously Kevin and Gordon were the founders of LCE Risk, an innovative ESG Quant and Research firm which pioneered the development of quantitative tools to measure and model the global economic transition to a low carbon economy. Prior to LCE Risk, both Kevin & Gordon held senior equities roles at HSBC. Kevin was the Global Head of Electronic Trading and Gordon was the Global Head of Client Analytics. Whilst at HSBC Kevin instigated and led the HSBC Climate Change Index initiative.
DCGX Academy-BULL FIGHT: Spanish Banks raise concerns-Yuan 5M Low, INR Breaks 56
May 30, 2012--HIGHLIGHTS
INDIAN INR
INR today again fell past the psychological level of Rs 56 against the US USD in early trade on heavy demand for the dollar from importers amid concerns over euro-zone worries. Strong month-end demand from importers, particularly oil refiners, and the euro's weakness against the dollar dragged the INR down INR opened at Rs 56 and continued its downward journey to trade at Rs 56.16, down 49 paise against its yesterday's close of Rs 55.67.
Meanwhile, the BSE benchmark Sensex fell by 113.55 points, or 0.69 % to 16,325.03 in early trade today.
FOREIGN EXCHANGE
Euro Touches 2-Year Low on Spanish Banks Concern. Aussie Drops .
Roach Says Euro Leaders Will Keep Greece in Currency.
CAD Heads for Monthly Loss on Prospects for Europe
USD Scarce as Top-Quality Assets Fall 42% After Stimulus
Greece Exit From Euro Seen Exposing Flaws of Deposit Guarantees
Oil Slump Helping Bonds Beat Emerging Markets:
Pound Approaches 3 1/2-Year High Versus Euro on Spanish Concern.
AUD falls after Retail Sales Decline
Asian Currencies Weaken as Escalating Europe Crisis Damps Demand , Yuan Drops to Five-Month
Euro Touches 2-Year Low on Spanish Banks Concern; Aussie Drops :The euro fell to an almost two-year low after Spain's borrowing costs climbed, fueling concern Europe's debt crisis is spreading. The European currency was poised for the biggest monthly decline since September after Bank of Spain Governor iguel Angel Fernandez Ordonez resigned a month early amid criticism over the May 9th nationalization of Bankia group, Spain's third- biggest bank.
The threat of Greece exiting the euro is exposing flaws in how banks and governments protect European depositors' cash in the event of a run. National deposit-insurance programs, strengthened by the EU in 2009 to guarantee at least 100,000 euros ($125,000), leave savers at risk of losses if a country leaves the euro and its currency is re-denominated.
ISO Standard Provides Global Solution For Legal Entity Identification For Financial Services
ISO has just published a new standard for the financial services industry which provides a global solution for the accurate and unambiguous identification of entities engaged in financial transactions.
May 30, 2012--ISO 17442:2012, Financial services -Legal Entity Identifier (LEI), is aimed at meeting the data collection and analysis needs of both national and global regulators in their responses to problems arising from the world financial crisis.
The development of ISO 17442 has been positively received by the financial services sector and by regulators. These include the Financial Stability Board (FSB) which was established to coordinate at the international level the work of national financial authorities and international standard setting bodies, and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies in the interest of financial stability.