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Efficient collateral management service targeted for Canada: new plans announced by Clearstream and CDS Clearing and Depository Services
Canada's CDS looks to join Brazil, Australia and South Africa in the use of Clearstream's Liquidity Hub GO (Global Outsourcing) * Exclusive talks to develop a triparty collateral management service for Canada *CDS clients to gain by using collateral more effectively
March 12, 2012--Canadian financial institutions are set to benefit from a new efficient and effective collateral management service planned for development by Clearstream and CDS Clearing and Depository Services Inc. (CDS). The two companies signed a letter of intent last week and will now move forward in exploring the creation of a new triparty collateral management service for Canada.
The service would enable Canadian market participants to meet demands for collateral in the most cost effective and operationally efficient way possible: CDS, the Canadian central securities depository, would utilise Clearstream’s collateral management infrastructure and the Liquidity Hub GO service to allocate, optimise and substitute domestically held collateral on a fully automated basis and in real time.
Liquidity Hub GO for Canada would reduce operational risks and costs as well as minimize the opportunity cost associated with collateral fragmentation. CDS clients would be able to handle their collateral needs more strategically. Collateral would remain in the domestic market. Clearstream is the only collateral management services provider which can manage collateral across time zones and regions while enabling the assets to remain in the respective domestic market and under local legislation.
Dubai Gold & Commodities Exchange Weekly Market Commentary
March 11, 2012--Economic Data Overview
The theme of the month ahead was set this week, as the Greek debt swap was finally agreed and 95.7% of Greece's privately held bonds will participate in the swap after so-called collective action clauses are triggered. For now the debt crisis and euro currency uncertainty may have been put on the back burner.
However, there are still huge issues in Europe which have yet to feed through to the market. The use of collective action clauses may trigger $3 billion of insurance payouts, and where is this money going to come from? Pension funds and European banks are going to see reserves plundered and balance sheets undermined on non-insured bonds while other financial institutions will have to come good on insurance obligations.
The ECB which left rates unchanged yesterday, but raised its inflation target ceiling to 2.3%, is set to sail a difficult course this year. The combined problems of austerity, increasing commodity prices - especially oil - credit restriction on corporate and personal lending by banks trying to survive in depressed economies, will make it hard to let that work in all Eurozone regions. Europe's biggest economy, Germany is set to grow much faster than the smaller debt-crippled economies, so keeping inflation under control while tending to the needs of a two speed Europe will be very hard to achieve. However, Draghi is convinced that better liquidity, recapitalised banks, stability and renewed confidence in the euro project are all enough to generate growth and attract external investment. Even if all these factors remain in place, the market still has to deal with referendums on the new Fiscal Compact and failure to pass this will cut off the lifeline to further bailout funds. This is something even an optimistic Draghi is unwilling to comprehend.
US Jobs data, released on Friday was strong and keeps the trend of growth in America, one of the main bright sparks in the world economy, intact. In addition, a revision to previous month's data releases means that an overall number of 300,000 new jobs were reported in Friday's data.
NYSE Euronext Announces Trading Volumes for February 2012
Global Derivatives ADV Down 21% Year-over-Year
European Cash ADV Down 9%; U.S. Cash ADV Down 21%
March 9, 2012--NYSE Euronext (NYX) today announced trading volumes for its global derivatives and cash equities exchanges for February 2012[1]. Trading volumes declined year-over-year and month-over-month across most venues.
Global derivatives average daily volume ("ADV") of 7.0 million contracts in February 2012 decreased 21.4% versus the prior year, with European Derivatives declining 35.7% and U.S. equity options decreasing 9.2%. European cash trading ADV decreased 8.7% year-over-year, but increased 7.1% from January 2012 levels. U.S. cash trading ADV decreased 21.0% from February 2011 levels.
BlackRock New Report New Report: ETP Landscape Industry Highlights, February 2012
March 9, 2012--The Exchange Traded Products (ETP) industry maintained its strong start to the year in February, attracting $18.4bn in net new assets during the month according to BlackRock's latest ETP Landscape Report. Global assets held in ETPs reached $1,720bn at the end of February 2012, an increase of 12.8% year to date, with combined inflows for January and February standing 111% higher than recorded in the first two months of 2011.
Emerging markets equity led in February: Equity ETPs gathered $9.0bn for the month, primarily driven by emerging markets equity inflows of $7.9bn. Fixed income ETPs came in strong again with $4.4bn of inflows following a record-setting January with $9.1bn of inflows for the category.
Combined inflows for January and February of $52.4bn are 111% higher than the first two months of 2011 when the industry captured $24.8bn.
Global assets held in ETPs reached $1,720bn at the end of February 2012, an increase of 12.8% year to date, up $195.8bn in the first two months of 2012. Market and exchange rate move of $143.4bn combined with $52.4bn of new cash inflows to raise asset levels.
The trend towards risk assets was also evident in fixed income products. Investors favored investment grade and high yield corporate bond ETPs during February, which gathered $3.2bn and $2.7bn in net new assets respectively, while government bond products saw outflows of $2.5bn. These two corporate bond categories have gathered 96% of all fixed income ETP flows so far this year, attracting assets of $12.9bn in total. Fixed income ETPs accounted for 23.9% of all ETP inflows in February.
As tensions in Iran helped to drive up oil prices, energy equity and commodity ETPs also gathered strong flows for the second consecutive month with inflows totaling $2.2bn in February.
Visit https://www.blackrockinternational.com/Intermediaries/InvestmentInsight/ETF/registration/index.htm to request report.
US banks could lose competitive edge in Europe, says EIB
March 9, 2012--The European Investment Bank (EIB) has warned it will avoid trading over-the-counter derivatives with US banks if it is forced to clear through a central counterparty (CCP).
The warning follows similar comments from the European Central Bank (ECB), which stated in a letter to the Commodity Futures Trading Commission last October that it might stop trading with US counterparties if eurozone central banks are not granted an exemption from clearing, execution and reporting requirements under the US Dodd-Frank Act.
"The US rules, as currently drafted, contain no exemptions for foreign sovereigns, central banks and multilateral development banks – and this is far from ideal," says Eila Kreivi, director and head of capital markets at the EIB in Luxembourg.
Euro crisis not going to cause 'huge' damage: US
March 9, 2012--"People here in the United States and around the world can be more confident now that Europe is not going to cause a huge amount of damage to the global economy or to our economy," Geithner said on the 'Nightly Business Review' show on the Public Broadcast Service (PBS) network.
Geithner's comments came in response to a question about whether he thought the worst of the European financial crisis had past.
SPDR University Latest Commentary- March 2, 2012
March 8, 2012--Manufacturing PMIs are weak across the G7. The US data is decidedly mixed. GDP growth slows in Canada. Housing improves in the UK. Unemployment rises in France, Italy, and the overall eurozone but holds steady and low in Germany. Industrial
production rises strongly in Japan. Retail sales remain restrained in Australia. GDP growth slows markedly in India.
MARKETS: The ECB continues to inject substantial liquidity into the system. Equities generally rise. French and Italian government bonds are strongly bid. EUR is offered. Oil fluctuates.
THE WEEK IN REVIEW-US
Fourth quarter GDP GROWTH was revised up two ticks to 3.0% (annual
rate), reflecting slight upward revisions to consumer spending,
fixed investment and government purchases. Inventories and net
exports didn’t change materially. Consequently, all the upward
revision was reflected in final domestic demand growth (which
abstracts from both inventories and net exports), although it
was still disconcertingly weak at just 1.1%. The price data were
generally revised up, but the implicit GDP price deflator, the
broadest measure of inflation, still rose only a modest 0.9%
(annual rate) in Q4.
The tone of the FED’S LATEST BEIGE BOOK suggested a continuing gradual pace of recovery over the first month and a half of 2012. Yet there was some optimism sprinkled throughout the report. The increase in overall economic activity was described as “modest to moderate” although a few districts highlighted some improvement from the end of 2011. Consumer spending was generally described at “tepid” with seasonal items in particular depressed by the mild winter. But there was optimism that sales will improve. Moreover, reports on auto sales were upbeat on balance. Manufacturing gains were steady. Residential real estate actually reported some improvements with gains in sales and construction highlighted. Commercial real estate “also showed positive results” and there was some improvement in banking conditions. Hiring reportedly picked up, while wage and price pressures remained "limited." Finally, agricultural conditions were described as mixed while energy and mining were robust.
NEXT WEEK PREVIEWED SPOTLIGHT: The Reserve Bank of Australia, the Bank of England, the European Central Bank, and the Bank of Canada will leave policy unchanged. Employment should rise solidly in the US. GDP growth likely slowed in Australia.
visit http://www.spdru.com for more informaton
OPEC Monthly Oil MArket Report March 2012
March 8, 2012--Oil Market Highlights
The OPEC Reference Basket continued to move higher in February, settling at $117.48/b, representing an increase of $5.72/b or 5.1% over the previous month. The increase was supported
by geopolitical factors that were further amplified by a surge in speculative activities in the crude oil
future markets.
The improvement in US economic data and some positive developments in the
Greek financial bailout were also supportive. In February, crude futures also moved higher with Nymex WTI increasing by $1.94 to average $102.26/b and ICE Brent gaining $7.61 to average $119.06/b. Crude oil prices have remained strong in recent days with the OPEC Reference Basket
standing at $124.13/b on 8 March.
World economic growth remains unchanged at 3.4% for 2012 and 3.6% for 2011. The US continues recovering and is expected to grow by 2.2% in 2012, unchanged from the previous month. Japan’s stimulus along with expected reconstruction efforts by the private sector are expected to drive 2012 growth to 1.8%, unchanged from last month The Euro-zone’s deceleration has flattened out and growth expectations for 2012 remain at minus 0.2%. Emerging markets seem to continue expanding at high levels. China’s forecast has been kept at 8.2% for 2012, while growth in India’s economy has slowed and the 2012 forecast has been revised down to 7.1% from 7.2%. While global output activity has recovered to some extent in the past weeks, downside risks prevail.
World oil demand is forecast to grow by 0.9 mb/d in 2012, unchanged from the previous report, following marginally decreased growth of 0.8 mb/d in 2011. The weak pace of growth in the OECD economies is negatively affecting oil demand and imposing a high range of uncertainty on potential consumption growth. Although US economic data points toward a better performance, the situation in Europe along with higher oil prices has resulted in considerable uncertainties on the future oil demand for the remainder of the year.
Non-OPEC oil supply is expected to increase by 0.6 mb/d in 2012, following only minor growth of 30 tb/d in the previous year. The 2012 figure represents a downward adjustment of 0.1 mb/d from the previous month, mainly due to revisions in forecasts for Syria, the former Sudan, and Yemen, as well as changes in the supply profile of some countries, in addition to updates to historical data. OPEC NGLs and non-conventional oils are expected to average 5.7 mb/d in 2012, an increase of 0.4 mb/d over the previous year and unchanged from the previous report. In February, total OPEC crude oil production, according to secondary sources, increased by 140 tb/d to average 30.97 mb/d.
view the OPEC Monthly Oil MArket Report March 2012
The rise of dividend-focused emerging market ETFs
March 8, 2012--The search for income in the current low interest rate environment has led to growing interest in dividend-focused emerging market exchange traded funds.
ETFs linked to emerging markets generally have enjoyed a storming start to 2012 with inflows of $14.5bn in January and February combined, the largest ever for the first two months of a year, according to BlackRock. More than half of this year’s inflows have been grabbed by the two giants of the emerging markets ETF universe, Vanguard’s VWO and iShares EEM.
IMF Working paper-Bank Asset Quality in Emerging Markets: Determinants and Spillovers
March 7, 2012--Summary: This paper assesses the vulnerability of emerging markets and their banks to aggregate shocks. We find significant links between banks' asset quality, credit and macroeconomic aggregates. Lower economic growth, an exchange rate depreciation, weaker terms of trade and a fall in debt-creating capital inflows reduce credit growth while loan quality deteriorates.
Particularly noteworthy is the sharp deterioration of balance sheets following a reversal of portfolio inflows. We also find evidence of feedback effects from the financial sector on the wider economy. GDP growth falls after shocks that drive non-performing loans higher or generate a contraction in credit. This analysis was used in chapter 1 of the Global Financial Stability Report (September 2011) to help evaluate the sensitivity of banks’ capital adequacy ratios to macroeconomic and funding cost shocks.
view the IMF Working paper-Bank Asset Quality in Emerging Markets: Determinants and Spillovers