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ESMA tables tougher regulations for ETFs
July 25, 2011--Fund managers may be forced to offer greater transparency to investors on risks associated with investing in exchange traded funds in Europe under plans revealed by the European Securities and Markets Authority.
A consultation document released by the European Union financial regulatory body, known as ESMA, includes a raft of measures aimed at improving investor safety when dealing with ETFs.
At present ESMA claims that there is not sufficient regulation in place to fully explain the specific features and risks associated with both Ucits ETFs and structured Ucits. Greek Sovereign Debt Q&A (Update)
First, the official sector part: more aid money; expansion of EFSF. All we have so far is the Statement of Heads of State and some general news reports. On the basis of these, there does not appear to be anything relevant to CDS.
view more Eurozone Greece bailout: main points
GREEKS BEARING CUTS
NEW GREECE BAILOUT
read more UK turns down ECB securities project read more Euro rallies after rescue deal read more EU watchdog may ban some ETF retail sales
The European Securities and Markets Authority (ESMA) said current safeguards on selling ETFs within the EU's mutual funds framework, known as UCITS, were insufficient as the more complex types of products pose possible risks to the wider financial system to undermine financial stability.
ETFs are mutual funds that can be traded like shares and are popular because of their cheap fees. read more Amundi ETF strengthens presence in Germany, Italy, the Netherlands and Switzerland read more ESMA Seeks Preliminary Views On The Potential Shape Of Future Regulationof Exchange-Traded Funds And Structured UCITS A lexicon of debt crisis terms CREDIT DEFAULT SWAPS: Financial instruments which insure investors against a debt default by a country or company. So called "CDS" are also traded in their own right. The terms of the underlying insurance contract may be triggered if investors in Greece are forced to bear part of the costs of a rescue, and this leads to a formal default rating. CREDIT EVENT: A deterioration in a country's creditworthiness which prompts investors to use a CDS to curb their losses.
read more Big European banks to attend eurozone summit: report
Bank executives are expected to support some sort of participation by private creditors in a second rescue plan for Athens once political proposals have been worked out. read more
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Source: Citywire
July 25, 2011--The following are responses to the most frequently-asked questions that ISDA has received in connection with the application of credit derivatives to a potential restructuring or reprofiling of Greek sovereign debt. The following does not constitute legal advice, and is subject in all respects to any determination that the ISDA EMEA Credit Derivatives Determinations Committee may make in relation to CDS referencing the Hellenic Republic (Greece). ISDA makes no comment on the likelihood of the events described in this Q&A.
UPDATE JULY 25:
The determination of whether the Eurozone deal with regard to Greece is a credit event under CDS documentation will be made by ISDA’s EMEA Determinations Committee when the proposal is formally signed, and after a market participant requests a ruling from the DC. Based on what we know at this point, we can say the following. The package is in two parts:
Source: ISDA
July 22, 2011--Here are extracts of some of the main points in eurozone leaders' final statement at a summit that agreed a second emergency bailout for Greece to prevent a debt crisis engulfing the eurozone.
159 BILLION EUROS
IMF and European contributions total 109 billion euros, with private lenders providing a further 50 billion, equivalent to a total of $229 billion.
WHATEVER IT TAKES
"We reaffirm our commitment to the euro and to do whatever is needed to ensure the financial stability of the euro area as a whole and its member states."
"We welcome the measures undertaken by the Greek government to stabilise public finances and reform the economy... We are conscious of the efforts that the adjustment measures entail for the Greek citizens."
"We agree to support a new programme ... designed, notably through lower interest rates and extended maturities, to decisively improve the debt sustainability and refinancing profile of Greece."
Source: EUbusiness
July 22, 2011--Britain has opted out of an ambitious European Central Bank project to streamline Europe’s multiple securities settlement systems, even though the project could eventually help lower the cost of trading in the region’s capital markets.
The move comes as the debt crisis in the eurozone has raised questions among some eurosceptic politicians about integration of the UK’s financial system with the region.
Source: FT.com
July 22, 2011--The euro rallied sharply this week as European leaders struck a second bail-out deal for debt-stricken Greece.
The single currency climbed to a two-week high against the dollar as confidence rose that the €109bn rescue package for Greece agreed at an EU summit on Thursday could contain the eurozone’s debt crisis.
Source: FT.com
July 22, 2011--The European Union's markets watchdog warned on Friday it may ban the sale of some exchange-traded-funds (ETFs) to small investors because they are risky and hard to understand.
The EU watchdog published a consultation paper on how to better contain risks in a sector which has seen explosive growth in the past decade and could hit the $2 trillion level by next year globally.
Source: Reuters
July 22, 2011--The intensive European roll-out plan of the Amundi ETF range continues with the introductions of quality, cost-efficient and innovative products widening investors’ access to an increasing number of products in the range with recent registrations and cross-listings in Germany, Italy, the Netherlands and Switzerland.
Today, the Amundi ETF range exceeds 100 products on NYSE Euronext in Paris and 300 registrations and cross-listings on in Germany, Italy, the Netherlands, Switzerland, and the UK.
Source: ETF Express
July 22, 2011--ESMA publishes today a discussion paper (ESMA/2011/220) setting out policy orientations on guidelines for UCITS Exchange-Traded Funds (ETFs) and structured UCITS. The Authority has reviewed the current regulatory regime applicable to such funds and considers that the existing requirements are not sufficient to take account of the specific features and risks associated with these types of fund. In the discussion paper,
ESMA examines the possible measures that could be introduced to mitigate the risk that particu-larly complex products, which may be difficult to understand and evaluate, are made available to retail investors. In this document, ESMA also raises the potential systemic risk caused by these types of fund and their impact on financial stability. ESMA will use the feedback received to this paper to develop draft guidelines for such funds.
July 21, 2011--Here are definitions of some of the key financial terms and concepts used by the officials and bankers discussing ways to end the eurozone debt crisis:
BOND: A promise by a debtor, such as a country, to pay back a loan with interest. The sovereign bonds of Greece and other eurozone countries are in peril in the current debt crisis.
BUYBACK: An arrangement for Greece to use money from a European rescue fund to buy back some of its own debt at a lower price on so-called secondary bond markets. A way effectively to lower the amount of the debt and interest Greece owes and give it more time to pay its way out.
Source: EUbusiness
July 21, 2011--The bosses of major European banks will attend a eurozone summit in Brussels Thursday that aims to come up with a rescue plan for Greece, the German newspaper Bild reported.
Josef Ackermann, the chief executive of the biggest German bank, Deutsche Bank, is one of those slated to join heads of state and government for the event, the mass circulation daily said.
Source: EUbusiness
