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ESMA allows EU-registered CRAs to endorse credit ratings issued in the US,
March 15, 2012--ESMA today announces that it considers the regulatory frameworks for credit rating agencies (CRAs) of the United States of America, Canada, Hong Kong and Singapore to be in line with European rules.
The EU Regulation (EC) No 1060/2009 on Credit Rating Agencies1 requires ESMA to assess whether the
requirements of third-country CRA regimes are “as stringent as” the European ones. Today’s announcement
allows European financial institutions to continue using for regulatory purposes credit ratings issued
in these countries after 30 April 2012.
ESMA’s assessment of third-country CRA regimes is an important tool for enhancing internationally consistent supervision of CRAs in the interests of protecting financial markets and investors in the EU.
For the endorsement by EU CRAs of credit ratings issued in non-EU countries, the ratings must be issued by CRAs that are registered or licensed and are subject to supervision in those countries. This is already the case for the USA and Hong Kong. In Canada2 and Singapore the registration of CRAs is at an advanced stage and we understand should be completed before 30 April 2012.
In order to facilitate regulatory information exchange and as a precondition to endorsement, ESMA has also entered into co-operation agreements for the supervision of CRAs with the national competent authorities of the USA, Canada, Hong Kong and Singapore.
US and European Corporate Bond Issuance is Set to Become Prohibitively Expensive for SMEs as Liquidity Concentrates in Major Names
Although $386Bn in Investment-Grade Bonds Were Issued in the US in the First 10 Weeks of 2012, Dealer Bond Holdings are at Their Lowest in 10 years, According to New TABB Group Research
March 15, 2012--Corporate bond coupons are set to be driven higher and issuance will become prohibitively expensive for SMEs (small and medium enterprises) as US and European regulatory change forces a liquidity crisis in secondary trading and activity concentrates
in only the largest, shortest bonds issued by the most trusted names, according to new research published today by TABB Group.
Regulators on both sides of the Atlantic are challenging the traditional principal-based, market-making model for corporate bonds, forcing an end-game where bonds will trade like stocks in a transparent, equity-like, exchange framework. “Short term, the effects of such wholesale change will be negative with secondary market liquidity damaged and more fragmented than it already is,” says Will Rhode, a London-based TABB senior analyst and author of “Corporate Bond Trading: Building Networks, Realising Liquidity.”
Environment: Act now or face costly consequences, warns OECD
March 15, 2012--As countries struggle with the immediate challenges of stretched public finances and high unemployment, they must not neglect the longer term. Action needs to be taken now to prevent irreversible damage to the environment.
“Greener sources of growth can help governments today as they tackle these pressing challenges. Greening agriculture, water and energy supply and manufacturing will be critical by 2050 to meet the needs of over 9 billion people.” said OECD Secretary-General Angel Gurría.
The OECD Environmental Outlook to 2050: The Consequences of Inaction presents the latest projections of socio-economic trends over the next four decades, and their implications for four key areas of concern: climate change, biodiversity, water and the health impacts of environmental pollution. Despite the recent recession, the global economy is projected to nearly quadruple to 2050. Rising living standards will be accompanied by ever growing demands for energy, food and natural resources - and more pollution.
vew the OECD Environmental Outlook to 2050: The Consequences of Inaction report
Platinum overtakes gold for first time in six months
March 15, 2012--The price of platinum has risen above that of gold for the first time in six months on the back of divergent investor sentiment towards the two precious metals.
Investors are turning towards equities and other riskier assets amid stronger economic data from the US and Europe. That shift has pushed gold to its lowest level in two months as economic data damp hopes of a third round of “quantitative easing” in the US.
FIA Issues Order Handling Recommendations for Executing Brokers
March 14, 2012—The Futures Industry Association today issued order handling risk management recommendations for executing brokers.
The report documents both current practice and emerging technologies in order to respond to regulatory concerns about algorithmic trading. The recommendations were developed by experts from executing firms and represent the latest in a series of recommendations developed by FIA members for trading firms, brokers and exchanges.
"The executing broker has an important role to play in monitoring and controlling market access," said FIA President John Damgard. "The recommendations are designed to clearly differentiate the role of the execution-only broker and set an industry standard for handling orders generated by automated execution tools."
view report-Order Handling Risk Management Recommendations for Executing Brokers
SGX links global liquidity pools to Asian economies, enables access to international markets
March 14, 2012--Singapore Exchange (SGX) today brings Asian markets closer to global investors with the launch of hubs in Chicago and London.
The hubs are the first by an Asian exchange and will provide customers with convenient and cost-effective local connections to SGX markets.
SGX expects to begin operating the hubs once pre-trade risk controls at the exchange level in the derivatives market are made available to participants in April. The pre-trade risk controls are in line with the Futures Industry Association’s recommendation for exchange-hosted risk controls.
By connecting to SGX’s hubs, global investors can access the world’s biggest offshore market for Asian equity futures. These include the China A50 futures, the only offshore futures for China’s domestic A-share market.
Mirae BRICS Weekly-Weakness afflicts markets after strong start to the year
March 14, 2012--China
The government's GDP growth target lowered for the first time in 8 years.
The GDP growth target of 7.5% set by the National People's Congress has disappointed the market as it is the first time in 8 years that the Chinese government has set the target below 8%.
However, a lower target also provides more room for economic transformation. Expansionary fiscal policy is being seen, with budget deficit at around 2.4% of GDP after adjustment to widely accepted fiscal accounting methodology.
India
Markets fall as election dashes reform hopes.
The Indian market ended lower last week. The five state poll results was not what the market was looking for – the regional Samajwadi Party (SP) has won a majority in the Uttar Pradesh (UP) election, while the BJP, the primary opposition party, won in three out of four other states. The market reacted negatively to the result as the Congress’s support on reforms is now a question.
Brazil
Central bank cuts surprises market with 75-basis point rate cut.
The BCB cut the Selic rate by 75 bps during its March’s Copom Meeting to 9.75%. This decision was not expected by the market, which anticipated another 50-basis point cut.
Russia
Rising oil prices and easing political risk benefit Russia.
Emerging markets outperformed developed markets as China eased monetary policy and a spike in the oil price sent Russia higher. With the exception of Thailand and Egypt, Russia was the best performing emerging market.
IOSCO consults on exchange traded funds regulation
March 14, 2012--The Technical Committee of the International Organization of Securities Commissions (IOSCO) has published a consultation report, Principles for the Regulation of Exchange Traded Funds, which examines the key regulatory issues regarding ETFs.
It also proposes 15 principles against which both the industry and regulators can assess the quality of regulation and industry practices relating to ETFs regarding investor protection, sound functioning of markets and financial stability.
Interest in ETFs has increased worldwide as evidenced by the significant amount of money invested in these types of products. This dynamic growth has drawn the attention of regulators who are concerned about the potential impact of ETFs on investors and the marketplace.
To address these concerns, the Consultation Report proposes 15 principles that reflect a level of common approach and are a practical guide for regulators and industry practitioners. The proposed principles address ETFs that are organised as Collective Investment Schemes (CIS) and are not meant to encompass other Exchange-Traded Products (ETPs) that are not organised as CISs.
view the Principles for the Regulation of Exchange Traded Funds
Consultation Report
Greg Smith-Why I Am Leaving Goldman Sachs
March 14, 2012--TODAY is my last day at Goldman Sachs. After almost 12 years at the firm --first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.
To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.
It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.
G20 GDP for the fourth quarter of 2011-G20 GDP growth slows to +0.7% in the fourth quarter of 2011
March 14, 2012--Quarterly GDP growth in the G20 slowed to +0.7% in the fourth quarter of 2011, compared with +0.9% in the third quarter, according to provisional results. In 2011 as a whole, G20 GDP rose by 2.8%, a marked deceleration compared with the +5.0% growth recorded in 2010.
The G20 GDP aggregate masks diverging patterns among the world’s largest economies. In the United States, GDP growth increased to +0.7% in the fourth quarter of 2011, compared with +0.5% in the third quarter. In India and Indonesia growth increased strongly, but slowed in China to +2.0%, compared with +2.3% in the third quarter. In Japan, economic growth decreased to -0.2%, following the strong rebound (+1.7%) in the third quarter. GDP fell by 0.3% in both the EU271 and the euro area1 in the fourth quarter of 2011, the first fall since the second quarter of 2009.
Today’s release of the G20 GDP aggregate marks the first release of a G20 aggregate in the context of the implementation of the Data Gaps Initiative - a set of 20 recommendations on the further enhancement of statistics as agreed by the G20 Finance Ministers and Central Bank Governors. The process is coordinated by the Inter Agency Group on Economic and Financial Statistics2: International Monetary Fund, Bank for International Settlements, European Central Bank, Eurostat, OECD, United Nations and the World Bank. The dissemination of this G20 aggregate provides a timely measure of economic growth for the G20.