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Trading in financial products – new rules for safer markets
September 20, 2010--Proposed changes to EU rules would make short-selling and trading in over-the-counter derivatives safer and more transparent.
The reforms are part of a series of steps being taken by the Commission to create a more harmonised and sounder financial system for the EU in the wake of the global economic crisis.
The proposals, announced yesterday, would reduce risk and help coordinate preventative action among EU countries, says internal market commissioner Michel Barnier.
One of the draft regulations would require investors to clear trades in over-the-counter derivatives through central counterparties. The trades would have to be reported to registered central repositories under the regulation of the new European Securities Market Authority.
view the Regulation of The European Parliament and of The Council on OTC derivatives, central counterparties and trade repositories
Source: Europa
Eurex to Launch New Future on Short-term Italian Government Bonds
Listing on 18 October 2010/ Existing Euro BTP Future to be complemented
September 20, 2010--The international derivatives exchange Eurex announced today that it will be launching a new future that is based on notional short-term debt instruments issued by the Republic of Italy (Buoni del Tesoro Poliennali – BTP) on 18 October 2010. The contract will complement the Eurex benchmark interest rate derivatives family; along with the existing 10-year Euro BTP Future, the short-term BTP contract will serve as an appropriate hedging instrument for all non-triple-A-rated European government bonds as well as for other interest rate instruments (such as swaps).
Following the launch of the new future, the short-term Italian government bond market will additionally benefit from the ensuing increase in basis and repo trading opportunities. Spread trading strategies will also be possible, thereby enhancing trading volumes in both futures.
“The success of the Euro BTP Future we launched in September 2009 underlines the market needs for a complementary short-term hedging instrument,” said Peter Reitz, member of the Eurex Executive Board. “Since its launch, more than 1.3 million contracts have been traded in our Euro BTP Future. This shows that market participants are actively using our contract as a hedging instrument for government bonds with a non-triple-A-rating.”
The short-term Euro BTP Future will be based on deliverable bonds with a remaining maturity of 2 to 3.25 years and have a notional coupon of 6 percent as well as a contract value of EUR 100,000. The minimum tick size will be 0.01 percent (EUR 10 per tick) in line with the tick sizes of the BTP, Bund and Bobl futures. Trading hours will be from 8:00 a.m. to 7:00 p.m. CET.
Eurex will also be offering a market-making program. Various banks have already shown an interest in market-making to provide sufficient liquidity from the outset.
Source: Eurex
Euronext calls for OTC trade threshold
September 20, 2010--Regulators should impose a minimum size on trades that can be done in off-exchange share markets because a large proportion of such transactions are not contributing to the way prices are established in the markets overall, NYSE Euronext has said.
The call by Rolande Bellegarde, head of NYSE Euronext’s European cash equities business, highlights the tension between exchanges and participants, such as banks, that do much of their trading in over-the-counter markets.
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Source: FT.com
EU to rein in commodity speculation
September 20, 2010--Reforming commodities markets to curb speculation activity will be a key aim for Brussels officials as they overhaul the rules for trading in Europe during the coming months.
EU internal market commissioner Michel Barnier said on Monday he planned to use the review of the Markets in Financial Instruments directive and the Market Abuse directive to tackle what officials view as dangerous price volatility.
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Source: FT.com
iShares launches its first swap-based ETFs
September 20, 2010--iShares has launched its first swap-based ETFs offering exposure to multiple counterparties in a bid to minimise counterparty risk.
The iShares MSCI Russia Swap ETF will track the MSCI Russia Capped Index, while the iShares S&P CNX Nifty India Swap ETF will track the S&P CNX Nifty India Index.
RBS, UBS and Credit Suisse are all counterparties to the products, which aim to provide exposure to indices that physical-based ETFs cannot.
Axel Lomholt, head of product development at iShares EMEA, said the new swap-based ETFs would allow investors to avoid the liquidity constraints which exist in certain markets.
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Source: City Wire
Barclays Wealth unveils risk-rated fund range
September 20, 2010--Barclays Wealth has unveiled the full details of its new global markets proposition, saying the multi-asset range will consist of five risk-rated funds that will invest only in exchange-traded funds.
The group says the UK-domiciled Oeics will offer ultra-low fees and tap into the trend in the IFA market towards outsourcing asset allocation work ahead of the Retail Distribution Review.
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Source: Money Marketing
First Source hedge fund ETF launched on Xetra
September 17, 2010-- A new exchange-traded index fund issued by Source has been tradable in Deutsche Börse’s XTF segment since Friday.
ETF name: BofAML Hedge Fund Factor Euro Source ETF
Asset class: equity index ETF
ISIN: IE00B3NY0D27
Management fee: 0.70 percent
Distribution policy: non-distributing
Benchmark: ML Factor Model (EUR Adjusted) Index
The BofAML Hedge Fund Factor Euro Source ETF tracks the performance of the Merrill Lynch Factor Model Index with currency hedging. The index measures the performance of a hypothetical investment portfolio that comprises renowned and liquid equities from the following indices: S&P 500, Russell 2000, MSCI EAFE and MSCI Emerging Markets. The investment portfolio can enter both long and short positions and is adjusted every month. The composition of the portfolio is based on the algorithms of Merrill Lynch International with the objective of tracking the Hedge Fund Research Inc. Weighted Composite Index.
The product offering in Deutsche Börse’s XTF segment currently contains a total of 703 exchange-listed index funds, making it the largest offering of all European stock exchanges. This selection, together with an average monthly trading volume of around €14 billion, makes Xetra Europe’s leading trading venue for ETFs.
Source: Deutsche Börse
DB Global Equity Index & ETF Research : European Weekly ETP Review: ETFs in all Flavors- 38 New Listings Across Europe
September 17, 2010--Net Cash flows
The market temperature remained on positive figures for second week in a row after a series of weeks in the downside. The Euro Stoxx 50 index was up 1.2%, the CAC 40 index was up by 1.5%, the DAX index rose by 1.3% and the FTSE 100 did alike, up by 1.4%. The Euro was down against the US Dollar by 1.7% while the price of gold (USD/oz) remained flat on the week ending on September 10th 2010
Weekly total European ETP inflows totaled €759 million (vs. €1.0 billion inflow in previous week). Flows remain moderate with more than €2.0 billion pouring into European ETPs during the last three weeks.
Equity ETPs experienced inflows of €626 million (vs. €560 million inflow last week). Fixed Income saw almost-flat inflows of €14 million (vs. €418 million inflow last week). Commodity ETPs registered inflows of €103 million inflow (vs. €139 million inflow during the previous week).
Equity ETF inflows were driven by investment in Emerging Markets Regional equity indices (€199 million), while Leveraged Long ETFs (€87 million) and Other Thematic ETFs (€42 million) experienced outflows.
Fixed income flows were very timid with no major significant flows overall. Sovereign ETPs received the largest inflows (€66 million) and Money Market ETPs experienced the largest outflows (€85 million).
Commodity ETP inflows were driven by Broad Benchmarked Commodity (€58 million) and Natural Gas (€57 million) products, while Copper (€11 million) and Gold (€10 million) related ETPs ranked among the largest outflows.
New Listings
The listing calendar was back in full with 6 new products and 32 new cross listings, across four different trading venues. These new alternatives, brought to the market by four issuers, range from equity products tracking developed and emerging markets at a country and regional level both inside and outside Europe to fixed income ETPs tracking the returns of Euro-Country Government debt and Cash. The new offering also includes a handful of Strategy products as well.
Turnover
On-exchange daily average ETP turnover for this week declined by 2.2%, to €1.70 billion.
Average daily equity ETF turnover declined by 2.7%, reaching €1.24 billion. Fixed Income ETF turnover decreased by 2.3%, reaching €208 million. Commodity turnover was up by 0.7%, to €238 million.
Assets Under Management (AUM)
European ETP assets were up 1.6% in line with the European equity markets performance, finishing the week at €205.9 billion. Year to date, European ETP AUM are up by 21.0%.
Request a copy of the report
Source: DB Global Equity Index & ETF Research
Private equity faces EU curbs on asset stripping
EU president says more talks on new rules this month
Britain concerned with EU compromise so far
UK regulator watching hedge funds for systemic risks
September 17, 2010--Private equity groups face curbs on asset stripping as part of efforts to end a logjam over new European Union rules to regulate alternative funds, EU president Belgium said on Thursday.
The alternative investment fund managers directive (AIFM) has been bogged down for months as EU governments and the European Parliament fail to agree on a common text.
Didier Reynders, finance minister for EU presidency Belgium, said there will more talks later this month in a bid to reach a deal before parliament votes in early October. The EU is already trailing the United States in implementing global pledges to crack down on hedge funds.
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Source: Reuters
SIX Swiss Exchange celebrates tenth anniversary of its ETF segment
Impressive growth ever since the start – best conditions for the success story to continue.
September 17, 2010--As one of the first European exchanges to do so, SIX Swiss Exchange launched an ETF trading segment on 18 September 2000. Over the past ten years, through good markets and bad, this segment has recorded impressive growth in all respects and in practically all market situations.
Year after year, trading turnover in the ETF segment of SIX Swiss Exchange has registered new highs. In 2009, it totaled more than CHF 50 billion, and a new record can be expected yet again this year. The number of available products has also increased continually. In recent years, this growth has even accelerated: alone in 2010, more than 200 new ETFs have been listed thus far, thereby exceeding the collective total for the years 2000 through 2008.
During the course of their successful growth, ETFs have moved on from just covering stock indices to now include other asset classes such as government and corporate bonds, the money market, commodities and real estate investment companies. And an ever-increasing array of regions and countries, corporate sectors, investment strategies as well as investment segments and themes are being addressed by an expanding number of issuers.
In step with the market growth of the ETF segment on SIX Swiss Exchange, liquidity has also increased steadily. The broadening circle of market makers has led to narrower spreads between bid and ask prices, even as competition between the ever-growing number of issuers has had a favorable influence on cost developments as well as spurred product innovation and diversity.
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Source: SIX Swiss Exchange
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