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Extreme Bets Versus Euro Rise
June 16, 2011--Hedge funds are making bigger bets on a plunge in the euro, which sank against the dollar Wednesday on growing fears of a Greek debt default. Emboldened by deepening concerns about Europe's sovereign-debt crisis, funds are increasingly willing to wager big money on the chance the euro may sink toward parity with the dollar.
For months, Europe's common currency has swung wildly within a tight range, forcing hedge-fund traders to make relatively modest trades. When worries over Europe's sovereign-debt woes eased, the euro clambered up to $1.50. When fears resurfaced, the currency dropped toward $1.40. But in recent weeks, wrangling between European politicians and central bankers over whether Greece's private-sector creditors should accept losses as part of a new rescue plan has raised the specter of a Greek default as soon as next month. That is prompting some funds to make riskier wagers against the euro using bigger amounts of borrowed cash, observers say.
Protectionist Responses to the Crisis: Damage Observed in Product-Level Trade -IMF Working paper
June 16, 2011--Summary: This paper investigates how trade flows are being affected by new discriminatory measures implemented during the global financial crisis. We match data on behind-the-border measures (e.g., bailouts and subsidies) and border measures implemented through April 2010 to monthly HS 4-digit bilateral trade data. Our estimation strategy relies on a first-differenced gravity equation and time-varying fixed effects to disentangle the impact of new discriminatory measures.
Trade in exporter-importer pairs subject to new measures decreased by 5 to 8 percent relative to trade in the same product among pairs not subject to new measures. These product-level results imply global trade declines at the aggregate level of about 0.2 percent, or $30-35 billion a year. These aggregate figures would be higher, if one third of measures had not been excluded due to incomplete data. The paper then goes on to dissect protectionism’s trade impact by disaggregating measures by type, advanced/developing countries, regions, sectors, and time. Behind-the-border measures are found to have been more harmful than border measures at the product level. Among border measures, impacts tend to be higher for less transparent measures. Advanced countries are found to be responsible for 2/3 of the trade decline due to crisis protectionism, but their exports also absorbed 2/3 of this decline. When breaking down measures in a time dimension, we find that those taken in the first nine months after the Lehman collapse were most harmful and likely continue to constitute a drag on trade.
Deutsche Börse Supervisory Board and NYSE Euronext Board of Directors approve special dividend of € 2.00 per Holdco share and purchase of remaining stake in Eurex
June 16, 2011--The Supervisory Board of Deutsche Börse AG and the Board of Directors of NYSE Euronext today announced that they have approved two resolutions previously announced on June 7, 2011:
1) To recommend to the Board of Directors of the holding company of the merged group, Alpha Beta Netherlands Holding N.V. (“Holdco”), that Holdco pay a one–time special dividend of €2.00 per Holdco share shortly after closing of the combination of Deutsche Boerse and NYSE Euronext, and;
2) To indirectly purchase the remaining 50% stake in Eurex Zurich AG from Six Group and to make Deutsche Börse AG sole owner of the derivatives market as well as Six Group a shareholder in Holdco.
Background on special dividend: Based on the share exchange ratios agreed under the business combination agreement, the intended distribution translates into a special dividend of €2.00 for every Deutsche Boerse share which is tendered in the current exchange offer (exchange ratio 1:1) and into a special dividend of €0.94 / US$ 1.37 per NYSE Euronext share (exchange ratio 0.47:1 and assuming an exchange rate of $1.4576 per euro). The total dividend amount paid out by Holdco is expected to amount to approximately €620 million / US$904 million, assuming 100 percent acceptance by Deutsche Boerse shareholders in the current exchange offer. The cash distribution, payable from Holdco’s capital reserves, is subject to certain approvals and conditions being met, including the approval of the Board of Directors of Holdco post-closing of the combination of Deutsche Boerse and NYSE Euronext.
EFETnet and DTCC Selected By Industry to Develop Commodity Derivatives Trade Repository
Collaboration Combines EFETnet’s strength in the commodities market with DTCC’s in OTC derivatives trade repositories
June 16, 2011-- EFETnet and DTCC Deriv/SERV LLC (DTCC), announced that the two at-cost, user governed industry cooperatives are collaborating with market participants in the commodities industry to establish a global Commodity Derivatives Trade Repository.
The proposed new repository, which will be domiciled in Europe and jointly owned by DTCC and EFETnet, follows EFETnet and DTCC being selected by the International Swaps and Derivatives Association, Inc.'s (ISDA) Commodities Steering Committee to work with the industry on the next stage of development for this new service.
EFETnet and DTCC’s industry non-commercial cooperative models will create a joint neutral platform where many competing organizations can come together to participate in a single non-commercial reporting solution. Such a single, non-commercial, truly transatlantic solution allows regulators globally to receive from one source most if not all of the OTC commodity derivative trade data in which they have a regulatory or supervisory interest - without each regulator having to aggregate data from multiple sources which may result in double counting or omissions, or simply in improper understanding due to variations in data formatting. It will also allow aggregate market information made available to the general public to be more complete and accurate.
Dow Jones Indexes Divests Its 50% Interest in Industry Classification Benchmark
Dow Jones Indexes to Immediately Implement
New, Proprietary Classification System for Its Own Indexes
June 16, 2011-- Dow Jones Indexes, a leading global index provider, today announced it had sold to FTSE Group its 50% interest in Industry Classification Benchmark (ICB), a sector classification system.
Dow Jones Indexes said it plans to immediately implement a new proprietary classification standard, based on the ICB system, for its own indexes as well as for indexes it calculates, maintains and disseminates for clients.
Medium-Term Oil and Gas Markets 2011
June 16, 2011--Annual growth in oil demand could average 1.2 million barrels per day (mb/d) between now and 2016, while natural gas demand could grow by around 500 billion cubic meters – around 2.5 times Russia’s current gas exports – during the same time, according to the IEA’s Medium-Term Oil and Gas Markets 2011.
The report, launched today at the St. Petersburg International Economic Forum, seeks to make sense of the increased divergence in oil and gas markets by providing a comprehensive outlook for fundamentals through 2016.
“This report shows that oil’s twilight as an industrial fuel continues, and it becomes ever more concentrated in the transport and petrochemical sectors,” said International Energy Agency Executive Director Nobuo Tanaka. “Gas on the other hand continues to increase in power generation as well as industry and space heating. In terms of market structure and pricing, oil is a genuinely global commodity, while gas markets, although globalising, remain bound by some key regional constraints, not least in terms of transportation.”
For oil, the projections are based on prevailing futures prices, which form an assumption as opposed to a price forecast. The crude price assumption used in the outlook averages $103 per barrel, or around $20 more than in last year’s MTOGM. Based on this assumption, the report projects the following outcomes in oil markets:
FIA and ISDA Publish Documentation for Cleared Swaps
June 16, 2011--The Futures Industry Association and the International Swaps and Derivatives Association, Inc. (ISDA) today announced the publication of the FIA-ISDA Cleared Derivatives Execution Agreement as a template that can be used by participants in the cleared swaps markets in negotiating execution-related agreements with counterparties to over-the-counter derivatives that are intended to be cleared.
The agreement was developed with the assistance of a committee comprised of representatives from both buy-side and sell-side firms with expertise in both futures and OTC derivatives. More than 60 organizations provided input during the development of this document.
Michael Dawley, FIA chairman and managing director, Goldman Sachs, said: “We expect that this agreement will help provide a sound foundation for the expanded use of clearing in the global OTC derivatives marketplace. We are very pleased that this industry initiative has come to fruition and we thank all the members of the working group for their contributions to the development of this important agreement.”
Stephen O’Connor, ISDA chairman and managing director, Morgan Stanley, said: “Encouraging greater use of central clearing by all market participants is one of the important ways in which ISDA works to ensure safe, efficient OTC derivatives markets. This agreement marks further progress toward that goal.”
Richard Prager, managing director and head of global trading, BlackRock, said: "The derivatives industry’s collaborative effort has resulted in a modular give-up document that meets the needs of all market participants, promotes deep, liquid and efficient market structure and supports principles of the Dodd-Frank Act."
Emerging Markets Remain Popular with Buy-Side Investors but Prime Brokers Hold Keys to the Kingdoms, Says TABB
New TABB Research Shows Investors Seek Sector- and Company-Based Investment Strategies over Emerging Market Groupings in Their Continued Search for Alpha
June 15, 2011-- Institutional buy-side investors see the emerging financial markets as a source of ongoing positive returns as developed markets continue to show slower growth and increased risks. But according to TABB Group in new research published today, prime brokers hold the key to the hardest-to-access markets based on their ability to provide cost-efficient access products as well as technology platforms, including direct markets access (DMA) systems and cross-region, cross-asset portfolio management tools.
Emerging-market investors are now utilizing both company- and sector-based strategies rather than macro country strategies, says Kevin McPartland, author of the new TABB report, “The Emerging Market Resurgence: Access, Risk and Reward,” leading to demand for swaps and other access products. “Swaps, participation notes and other similar access structures can offer institutional buy-side investors more well-rounded investment opportunities than exchange-traded funds (ETFs) and depository receipts (DRs). which provide less flexibility. Continued growth in these broad-based, emerging-market ETFs will come largely from retail investors.”
May 2011 FIF Market Share and Market Dynamics Reports – Executive Summary
April 15, 2011--In May 2011, off-exchange trading accounted
for 30% of the shares traded in NMS Equity Securities.
Share volumes traded across Tape A, B, and C increased 7% monthly and decreased 35% annually to 152 billion shares.
Share volumes in NYSE-listed securities
increased 1% monthly and decreased 39%
annually to 80 billion shares.
NASDAQ-listed securities traded over
exchange increased 11% monthly and
decreased 21% annually to 43 billion shares.view more
The OECD composite leading indicators signal mild loss of growth momentum
June 15, 2011--Composite leading indicators (CLIs) designed to anticipate turning points in economic activity relative to trend, point to a mild loss of growth momentum in most major economies for April 2011.
A notable exception is the United States which continues expanding relative to trend, albeit more moderately than in last month’s assessment.
The CLIs point to a stable pace of expansion in Germany and the United Kingdom, clear signs of slowdown in the pace of activity in France and Italy, and a likely moderation of growth towards its long-term trend in Canada.
The CLI for China points to a possible moderation in economic activity. Other CLIs indicate a slowdown in Brazil and India and the first sign of a loss of growth momentum in Russia.
Because of the exceptional circumstances the country is facing, it is not possible to provide reliable estimates of the CLI for Japan at this stage.
The OECD Development Centre's Asian Business Cycle Indicators (ABCIs) suggest that in ASEAN economies the growth momentum will continue.