Global ETF News Older than One Year
IOSCO publishes final report on Intermediary Internal Controls on SFP Price Verification and Regulatory Approaches to Liquidity Risk Management
February 17, 2011--Chapter 1 Background and Purpose of the Project
In May 2008, the IOSCO Technical Committee (TC) published its Report on the Subprime Crisis (Subprime Report).2 The TC noted in the Subprime Report that, among other things, many institutional investors and investment banking firms had inadequate risk modelling and internal controls in place to understand and address the risks they were assuming when buying many types of structured finance products.
The TC further noted the work of the Senior Supervisors Group (SSG) in analyzing this issue.3 As a result of its findings, the TC recommended that its Standing Committee on the Regulation of Market Intermediaries (TCSC3) ?undertake a study of the internal control systems of financial firms, including asset managers, in different IOSCO jurisdictions and develop principles to address any concerns identified.
The Subprime Report also addressed the critical importance of balance sheet liquidity for financial institutions. It observed that firms that proved more resilient during the market turmoil also appear to have more effectively managed their contingent liquidity needs. In some cases, this led firms to forego investments and business lines related to the subprime market because of the contingent liquidity risk they potentially posed. By contrast, firms that experienced greater difficulties tended to not align their treasury functions with their risk management processes, or may have based their contingency funding plans on incomplete or inaccurate information or faulty valuation practices. Indeed, the TC concluded that many institutional investors and investment banking firms had inadequate balance sheet liquidity, even when adequately capitalized.
Source: IOSCO
NYSE and Deutsche Börse set $340m break-up fee
February 17, 2011-NYSE Euronext and Deutsche Börse, who agreed a merger earlier this week, have set a price of €250m for abandoning the deal in favour of another combination.
The large break-up fee is meant to discourage rivals from attempting to break up the deal, which is being done as a stock swap with only a nominal premium being paid for NYSE Euronext shares.
Source: FT.com
Cotton prices hit record as mills scramble
February 17, 2011--Cotton prices have burst through $2 a pound for the first time, threatening sharp rises in the price of jeans, tee-shirts and other everyday clothing, as mills around the globe race to secure supplies.
The gains to record levels have been stoked by a short-term squeeze as the mills have scrambled to buy futures contracts to fix the prices of physical supplies before Friday, the last available day they can do this on the current March contract
Source: FT.com
Silver rises to 30-year high as mints start to ration coins
February 17, 2011--Silver jumped to a 30-year high amid record levels of investor buying that has drained mints of silver coins.
The price of the precious metal hit $31.37 a troy ounce on Thursday, up 16 per cent since mid-January and the highest since March 1980. The world’s leading mints have reported record sales of silver coins in January and some, including the Royal Canadian Mint and Austrian Mint, have had to ration sales.
Source: FT.com
South Africa and France to sign EUR 1bn pact
February 17, 2011-- France and South Africa will sign a one billion euro pact ($1.36 billion) next month when President Jacob Zuma makes a two-day state visit, Pretoria's foreign minister said Thursday.
"A major objective of the visit is to strengthen trade and investment ties with France and to addresss the challenges of the trade deficit that exists," of 10 billon rands ($1.4 billion, 1 billion euros) in France's favour in 2009, Maite Nkoana Mashabane told journalists.
Source: EUbusiness
Shanghai forges bourse link with Brazil
February 16, 2011--The Shanghai Stock Exchange and BM&F Bovespa, Latin America’s biggest exchange operator, are set to sign an agreement on Monday that is expected to lead to the cross-listings of stocks
Cross-listings, which would give benchmark Brazilian stocks access to liquidity in China and would increase trading of them during the Asian day, will add another element to one of the world’s most important emerging bilateral trade relationships.
Source: FT.com
Deutsche Börse AG And NYSE Euronext Agree To Combine To Create The Premier Global Exchange Group
Creates a world leader in derivatives and risk management and the premier global venue for capital raising
Combined group to offer clients global scale, product innovation, operational and capital efficiencies, and an enhanced range of technology and market information solutions
New group, incorporated in the Netherlands to be dual headquartered in New York and Frankfurt
Combined group to have key businesses, infrastructure and executives located in Paris, London, Luxembourg and other locations
Expected cost synergies of EUR 300 million/US$ 400 million and substantial opportunities for incremental revenues
Ownership: 60% by Deutsche Boerse shareholders, 40% by NYSE Euronext shareholders on a fully diluted basis
Each share of Deutsche Boerse stock will be exchanged for 1 share of the new company stock and each share of NYSE Euronext stock will be exchanged for 0.4700 shares of the new company stock
February 15, 2011--Deutsche Boerse AG (XETRA:DB1) and NYSE Euronext (NYSE:NYX) today announced that they have entered into a business combination agreement following approval from both companies’ Boards.
Under the agreement, the companies will combine to create the world’s premier global exchange group, creating the world leader in derivatives trading and risk management, and the largest, most well known venue for capital raising and equities trading. The combined group will offer clients global scale, product innovation, operational and capital efficiencies, and an enhanced range of technology and market information solutions.
The transaction will strengthen Frankfurt and New York as key financial centers, while benefiting Paris and London as well as Luxembourg. Each of the group’s national exchanges, including those in Amsterdam, Brussels, and Lisbon, will keep its name in its local market and all exchanges will continue to operate under local regulatory frameworks and supervision. The combined group will work closely with regulators in all markets to facilitate transparency and standardization of capital markets globally.
The combined group will have 2010 combined net revenues of EUR*1) 4.1 billion/US$ 5.4 billion, and 2010 EBITDA of EUR 2.1 billion /US$ 2.7 billion, thus becoming the world’s largest exchange group by revenues and EBITDA. Based on 2010 net revenues, the combined group will earn approximately 37% of total revenues in derivatives trading & clearing, 29% in cash listings, trading & clearing, 20% in settlement & custody, and 14% in market data, index & technology services.
Source: Deutsche Börse
LME-SGX metals futures successfully launched
February 15, 2011--Singapore Exchange (SGX) and the London Metal Exchange (LME) successfully launched LME-SGX copper, aluminium and zinc futures today at 8.00am Singapore time to provide retail investors in Asia and beyond easy access to global metals markets.
The new futures contracts have already attracted strong interest with three market makers and 20 active traders signed up to the initiative. The market markers are GS Energy Partners LLC (from USA), Susquehanna Pacific Pty Ltd (from Sydney) and a market maker from Asia Pacific (confidentiality requested).
The futures will have 12 consecutive contract months listed for trading and will be cash settled at expiry based on the LME Official Cash Settlement Price for the relevant metal. The trading hours for the new contracts will cover the Asian trading day (T-session) from 8:00am to 3:20pm Singapore time and the European trading day (T+1 session) from 4:00pm to 2:00am the following day, Singapore time. The contracts are traded and cleared exclusively on SGX.
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Source: London Metal Exchange
Infrastructure investments lag significantly behind population growth trend
As governments struggle to make ends meet, private investors are filling in the gaps for these projects, and the implications for environmental, social and governance (ESG) factors on the sector are intensifying. This sector report is the 12th in a series. Dexia Asset Management provided the research and a steering committee composed of representatives from CDC Climat, CM-CIC Asset Management and Threadneedle oversaw the project. view the Infrastructure Sector Report
Source: Eurosif
Fitch Ratings Scenario: Euro Dollar Parity
Cost Mismatches Common Impact Greatest on Manufacturers But Effects Vary
Source: Fitch Ratings
Febryary 15, 2011--According to Eurosif’s Infrastructure Report, the major issues affecting the infrastructure sector include a growing population, under financing, security and climate change. Demand for infrastructure and public utilities is increasing, putting pressure on governments, infrastructure assets and resources. The OECD predicts that about €1.5 trillion will be required annually to finance world infrastructure by 2030.
Picking Winners (and Losers) in EMEA
February 15, 2011--Summary: Positive for Minority of European Issuers
The effect of a hypothetical 30% depreciation of the euro, bringing it broadly to parity with the USD, would on average be positive for the profitability of European
corporate issuers. However, the global nature of most of these companies implies a considerable variety of outcomes, with only a minority likely to benefit materially.
Euro/dollar parity brings into focus often significant currency mismatches in
European issuers’ cost and revenue bases. While they are used to dealing with exchange rate fluctuations — through hedging, pricing and sourcing — currency has a greater positive or negative impact on some sectors and issuers than others.
A weakening euro is generally positive for manufacturers (including some
technology companies), as expected. Fitch Ratings estimates that most European manufacturers have a larger proportion of EUR?denominated costs than revenue, which makes a falling euro profit?enhancing.
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