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Six further jurisdictions to join IOSCO’s fight against cross border securities market misconduct
June 8, 2010--The International Organization of Securities Commissions (IOSCO) has today announced that six further securities regulatory authorities have been invited to become full signatories of the IOSCO Multilateral Memorandum of Understanding concerning Consultation, Cooperation and the Exchange of Information (MMoU).
This follows the acceptance of the current IOSCO members from South Korea and Uruguay as full signatories to Appendix A of the MMoU. These members were listed on Appendix B of the MMoU having previously being assessed as needing to make changes to their legal systems to allow them to comply with the requirements of the MMoU. Recent assessments found that they had both made the necessary changes to address the previously identified gaps in their powers.
Additionally, the securities regulators from Iceland, the Republic of the Maldives, the Kingdom of Saudi Arabia and Syria have been assessed, following rigorous expert reviews, as meeting the cooperation and enforcement requirements needed to become full signatories to Appendix A of the MMoU. Their accession is pending approval of their applications for IOSCO membership on Wednesday 9 June.
Crude Oil Leads the S&P GSCI Lower in May
June 8, 2010-- Standard & Poor's, the world's leading index provider, announced today that the S&P GSCI ended May with a 13.19% decline as global economic concerns pressured the Index during the month. Energy (-15.92%) was the worst performing sector in May, while Precious Metals (+2.33%) was the only sector to post a positive monthly return.
"Economic sensitive assets were highly correlated in May, as the 14% plunge in front month crude oil futures drove down the returns of several other S&P GSCI components," says Michael McGlone, Director of Commodity Indexing at S&P Indices and author of the Market Attributes Commodities posted monthly to http://www.spgsci.standardandpoors.com/.
"When the world's most widely traded commodity futures contract declines this rapidly, it often has a tendency to impact most other commodities, and that certainly was the case with crude oil in May."
In May, crude oil futures witnessed its largest monthly percentage decline since December 2008 as the S&P GSCI Energy Index fell 15.92% during the month. Year-to-date (YTD), the Index has fallen back into negative territory with a return of -11.99%.
Flight to safety and risk reduction was also at play in May, as strength in gold led the S&P GSCI Precious Metals Index to post a 2.33% monthly gain despite a 10.56% decline in the S&P GSCI Industrial Metals Index.
The S&P GSCI ended May with a Year-to-date decline of 11.58%, accompanied by a 14.21% YTD decline in the Euro currency versus the U.S. Dollar. By the end of May, only the S&P GSCI Precious Metals and Livestock sector indices maintained year-to-date gains.
Enhanced indices fared a bit better in May, as measured by the 11.80% decline in the S&P GSCI Enhanced Index, which is now registering a year-to-date loss of 8.58%. The 12.01% monthly decline in the S&P GSCI 3-Month Forward Index has now resulted in a 8.49% year-to-date decline for the Index.
A table showing performance returns for the S&P GSCI and its components can be found below.
The S&P GSCI is the most closely followed benchmark for investment performance in the commodity markets. For more information on the S&P GSCI, please visit: http://www.spgsci.standardandpoors.com/.
G20 to delay tough bank regulations
June 4, 2010--Group of 20 finance ministers are set to delay the implementation of tougher regulations for the world’s banks as splits emerge over the scope of the new regulations.
Officials and ministers from the G20 group of industrialised nations, meeting in Busan, South Korea, acknowledged there were still big differences on the “Basel III” proposals that are due to be finalised by November. The disagreements cover the scale, scope and timing of the increases in capital and liquidity banks will be required to hold, as well as the leverage they will be allowed.
In response to the splits, the UK and the US are offering to delay the implementation of the Basel reforms in a bid to ensure that the principles do not get watered down.
Safe haven reputation sees dollar surge
June 4, 2010--The dollar surged on Friday as investors dashed for cover after weaker-than-expected US employment data and concerns that Hungary’s economy may be in a perilous condition.
Non-farm payrolls data showed that 431,000 jobs were created in the US in May, falling short of most forecasts, which had factored in a huge intake of government jobs in the census department.
Hungary’s forint fell 2.7 per cent to Ft289.10 versus the euro after Peter Szijjarto, a spokesman for Prime Minister Viktor Orban, said Hungary’s economy was in a “very grave situation” due to the last government manipulating official data.
ETF Landscape: Industry Review April 2010
June 3, 2010--The April 2010 edition the monthly ETF Landscape Industry Review. This report is a review of the Exchange Traded Funds (ETFs) and Exchange Traded Products (ETPs) industry through the end of April 2010.
At the end of April 2010 the global ETF industry had 2,189 ETFs with 4,354 listings, assets of US$1,113.1 Bn from 122 providers on 42 exchanges around the world.
Year-to-date assets have increased by 7.4 per cent, which is more than the 2.6 per cent increase in the MSCI World index in US dollar terms.
The top 100 ETFs, out of 2,189, account for 64.2 per cent of global ETF AUM, while 423 ETFs have less than USD10.0m in assets.
Year-to-date the number of ETFs increased by 12.4 per cent with 253 new ETFs launched.
The number of ETFs listed in Europe has surpassed the US with 932 ETFs listed in Europe, compared to 839 in the US.
Aggregate Impact of Basel, Other Global Reform Measures Could Stifle Economic Growth, Job Creation, GFMA Says
June 3, 2010--The Global Financial Markets Association (GFMA) issued the following statement today on global financial regulatory reform ahead of the June 4-5 meeting of G20 Finance Ministers:
"GFMA welcomes the continued measures that governments and industry have taken in building a framework for a more robust financial system.
As these measures are being developed and refined, we call on governments to assess the cumulative impact of these regulations on the financial markets, and the corresponding impact these changes will have on global economic growth and job creation. We believe that these changes – increasingly fragmented – are likely to have a negative impact on both the financial system and the hundreds of millions of people and businesses that it serves,” said Chief Executive Officer, Tim Ryan.
“Importantly, we are concerned over possible hasty implementation of the Basel capital proposals which would reduce the ability of the industry to provide capital to businesses and consumers to support economic growth. Finalizing the proposed revisions to the Basel Accord by the end of this year without providing additional time to comment will not give enough time to assess their wider economic consequences and make any necessary changes,” noted Ryan.
EDHEC-Risk Institute and Rothschild set up a research
June 3, 2010--EDHEC-Risk Institute and Rothschild have announced the creation of a research chair entitled ‘The
Case for Inflation-Linked Corporate Bonds: Issuers’ and Investors’ Perspectives’. The purpose of the
research chair is to support research undertaken at EDHEC-Risk Institute on the benefits of inflationlinked
corporate bonds both from the issuers’ as well as from the investors’ points of view.
The chair
will also focus on contrasting the analysis, in corporate finance, and perceptions of inflation-linked
corporate bonds both by issuers and investors. The chair is led by Lionel Martellini, scientific director
of EDHEC-Risk Institute.
According to Professor Martellini, “While a dominant fraction of inflation-linked debt is issued by sovereign states, there has been recent interest amongst various state-owned agencies, municipalities and also corporations, in particular from the utility, financial-services and real estate sectors, to issue inflation-linked bonds. On the supply side, intuition suggests that if a given firm's or a municipality’s revenues tend to grow with inflation, then inflation-linked issuance is naturally hedged through evolution of revenues. On the demand side, strong interest is expected as inflation hedging has become a concern of critical importance for pension funds with inflation-linked liabilities, and for private investors, who consider inflation as a direct threat with respect to the protection of their purchasing power.”
Financial hubs to be replaced by 'spider web'
June 1, 2010--A de-linking of emerging economies from dependence on the traditional financial market centres of New York and London is taking place and will develop further, delegates at the International Capital Markets Association annual meeting heard in Brussels last week.
The world’s economic centre of gravity, which in the mid 1970s was located somewhere in the mid-Atlantic, has now moved eastwards to between Dubai and Shanghai, according to Dr Nasser Saidi, chief economist to the Dubai International Financial Centre.
The shift in capital market centres has followed growing production of goods, and oil and gas.
Saidi described the financial crisis and great recession of 2008 as the “end of the US financial empire”. This was resulting in a “tectonic movement” away from the “Western-centric” culture.
He said that the financial crisis was contributing to the demise of the hub-spoke model, centred on London and New York. This was giving impetus to a transition to a polycentric “spider web” model.
Whereas in 1999 the US held 46% of capital market activity, by last year this had fallen to 28%. Emerging markets during the same period picked up from a 14% share to 45%.
FEAS May 2010 Newsletter
June 1, 2010--The FEAS May 2010 Newsleeter is now available.
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Annual inflation rate in OECD remains stable at 2.1% in April 2010
June 1, 2010--Consumer prices in the OECD area rose by 2.1% in the year to April 2010, unchanged from March. Energy and Food prices rose at slightly higher rates in April compared with March (12.2% and 0.7% respectively, compared with 11.3% and 0.2%). But excluding food and energy, consumer prices increased by 1.2% only in April, the lowest rate on record..
In Chile1, a member of the OECD since 7 May 2010, consumer prices rose by 0.9% year-on-year in April, compared with 0.3 % in the year to March.
Deflation continued in Japan where consumer prices fell by 1.2% in the year to April after a decrease of 1.1% in the year to March and inflation decelerated in Germany (1.0% compared to 1.1%) and the United States (2.2% compared to 2.3%). Annual inflation rose in the United Kingdom (3.7% up from 3.4%), Canada (1.8% up from 1.4%), France (1.7% up from 1.6%) and Italy (1.5% up from 1.4%). Euro area annual inflation (HICP) was 1.5% in April 2010 compared with 1.4% in March.
