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FSA publishes review of firms' structured product design processes and proposes new guidance on retail product development
November 2, 2011--The Financial Services Authority (FSA) has today introduced further guidance for firms when developing new structured products which they want to market to consumers.
The FSA assessed seven major providers of structured products, responsible for approximately 50% of structured products in the UK retail market by volume and value. The review was conducted between November 2010 and May 2011 and found that while there had been some improvements, weaknesses remain in the way firms are designing and approving structured products - increasing the risk to consumers. Firms tended to focus on their own commercial interests rather than consumer needs.
Following this review, the FSA is publishing guidance that firms should consider when designing structured products and dealing with the after sales process. Much of the guidance is also relevant to other retail products.
Firms should:
identify the target audience and then design products that meet that audience's needs;
pre-test new products to ensure they are capable of delivering fair outcomes for the target audience;
ensure a robust product approval process is in place for new products; and
monitor the progress of a product throughout its life cycle. Further and more detailed actions for firms are outlined with the publication. The guidance is open for consultation until 11th January 2012.
view the Guidance Consultation: Retail Product Development and Governance - Structured Products Review
Source: FSA
Deutsche Börse Selects Juniper Networks As Technology Provider For 10 Gbit/S Trading And Market Data Connections
November 2, 2011--Deutsche Börse has chosen Juniper Networks as the technology provider for the new 10 Gbit/s network for clients of Deutsche Börse Group's co-location service.
With effect from 12 December 2011, Deutsche Börse will be using Juniper Networks' powerful technology to significantly reduce the network run-time for Eurex derivatives market and Xetra cash market co-location clients and thus further increase liquidity on Eurex and Xetra. The International Securities Exchange also plans to use Juniper Networks to support customer co-location in its data centres.
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Source: Deutsche Börse
Default processing of clearing member MF Global UK Limited completed
Safety measures of the clearinghouse proved to be effective/ Closing of open positions finalized/ Clearing Fund has not been utilized
November 2, 2011--Eurex Clearing, Europe’s leading clearing house, has successfully wound down its clearing member MF Global UK Limited (MF Global). MF Global had entered Special Administration Regime on Monday evening, 31 October 2011, as confirmed by the responsible UK regulatory body, the Financial Services Authority (FSA). According to its clearing conditions, Eurex Clearing terminated the clearing agreement with MF Global on 1 November 2011.
The termination triggered the
liquidation of corresponding positions at Eurex Clearing by way of market transactions; the exposure was at all times fully covered by collateral placed by MF Global. At no time there was a need to draw on the Clearing Fund.
”The implemented safeguards of Eurex Clearing have again proven to be effective, and underline our high standards in risk management. In this critical situation, Eurex Clearing directly mitigated counterparty risks, thus contributing to the integrity and stability of markets”, said Thomas Book, member of the Eurex Executive Board, responsible for clearing.
MF Global was licensed as a Clearing Member for the markets Eurex Exchange, Eurex Repo, European Energy Exchange, Xetra and Irish Stock Exchange.
Source: Eurex
Europe scrambles to deflect panic after shock Greek move
November 1, 2011--Europe's big two, France and Germany, called emergency talks Tuesday as angry EU leaders scrambled to ward off financial mayhem in the wake of the Greek prime minister's shock referendum call.
President Nicolas Sarkozy and Chancellor Angela Merkel will hold talks Wednesday "with the European institutions and the IMF as well as a meeting with the Greek side," a Franco-German statement said.
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Source: EUbusiness
Regulators could focus on ETFs after UBS losses
November 1, 2011--Regulators could take some time to change the rules surrounding the exchange-traded products involved in the UBS rogue-trading losses, but banks might see an impact soon in capital terms
Investigations continue into the rogue-trading loss earlier this year at UBS. The UK Financial Services Authority (FSA) and the Swiss Financial Markets Supervisory Authority (Finma) remain quiet about the progress of their joint inquiry into the apparently unauthorised trades that lost the Swiss bank a total of $2.3 billion. The parallel internal inquiry commissioned by UBS itself, led by senior independent director David Sidwell, and assisted by two other UBS directors – former Swiss Re chief financial officer Ann Godbehere, who acted as interim chief financial officer at Northern Rock after it was nationalised, and Joseph Yam, formerly head of the Hong Kong Monetary Authority – may not report for months.
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Source: Risk.net
Turnover on Xetra increases by 12 percent in October
Transactions on Xetra up by 34 percent
November 1, 2011--Order book turnover on Xetra and the Xetra Frankfurt specialist trading stood at €109.5 billion in October – an increase by 9.6 percent year-on-year (October 2010: €99.9 billion).
Of the €109.5 billion, €104.6 billion were attributable to Xetra (+12 percent y-o-y, October 2010: €93.5 billion). €4.9 billion were attributable to the Xetra Frankfurt specialist trading, a 23 percent decrease y-o-y (October 2010: €6.4 billion). Order book turnover on Tradegate Exchange* totalled €2.8 billion in October.
In equities, turnover reached €90.3 billion on Deutsche Börse’s cash markets (Xetra: €88.3 billion, Xetra Frankfurt specialist trading: €2.0 billion). Turnover in bonds was €1.5 billion, and in structured products on Scoach €2.1 billion. Order book turnover in mutual funds and exchange-traded funds (ETFs) amounted to €15.6 billion.
A total of 21.4 million transactions were executed on Xetra in October, an increase of 34 percent y-o-y (October 2010: 15.9 million).
The DAX security with the highest turnover in October was Deutsche Bank AG at €6.6 billion. Continental AG led the MDAX equities at €772.5 million, while Derby Cycle AG topped the SDAX equity index with €62.6 million, and Aixtron SE headed TecDAX with €305.7 million. The ETF with the highest turnover on Xetra was iShares DAX with €2.8 billion.
Further details are available online in Deutsche Börse’s cash market statistics at www.deutsche-boerse.com. For a pan-European comparison of trading locations, see the statistics provided by the Federation of European Securities Exchanges (FESE) at www.fese.be.
Source: Deutsche Börse
Italy Bonds Slide, Premium to Bunds at Record, on Greece Concern
November 1, 2011--Italian bonds led declines in the securities issued by Europe’s most indebted nations after a Greek plan to hold a referendum on its international bailout added to concern the region’s financial turmoil will deepen.
Italy and France’s 10-year borrowing costs climbed to the highest levels relative to benchmark German bunds since before the creation of the euro in 1999. Bund yields fell the most on record, with the securities outperforming all their euro-area peers, as investors sought the safest assets. Greek two-year yields climbed to a record high 87.28 percent as members of the nation’s ruling party called for Prime Minister George Papandreou to resign.
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Source: Bloomberg Business Week
Eurozone may adopt finance tax without EU backing: Schaeuble
October 31, 2011--Eurozone members could introduce a financial transaction tax even if other EU countries were opposed, German Finance Minister Wolfgang Schaeuble told the Financial Times in an interview published Monday.
Schaeuble said he backed using the 17-member eurozone as a testing ground for the levy, which is designed to restrict speculative trading, even though Britain and its vast financial sector are firmly against it.
Schaeuble said he respected the arguments of Britain, a member of the European Union but not of the eurozone.
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Source: EUbusiness
Flash estimate - October 2011-Eurozone inflation estimated at official 3.0% in October
October 31, 2011--Euro area1 annual inflation2 is expected to be 3.0% in October 2011 according to a flash estimate issued by Eurostat, the statistical office of the European Union. It was also 3.0% in September3.
Computation of flash estimates
Euro area inflation is measured by the Monetary Union Index of Consumer Prices (MUICP). To compute the MUICP flash estimates, Eurostat uses early price information relating to the reference month from Member States for which data are available4 as well as early information about energy prices.
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Source: Eurostat
London 'under constant attack' from EU directives: Cameron
October 28, 2011-British Prime Minister David Cameron said London's financial district was under "constant attack" from European Union directives, the BBC reported Friday.
During a flight from the EU leaders' summit in Brussels to the Commonwealth Heads of Government Meeting in Perth, western Australia, Cameron told a BBC reporter that Britain's finance industry should be protected from EU measures.
"London -- the centre of financial services in Europe -- is under constant attack through Brussels directives," Cameron said.
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Source: EUbusiness
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