Global ETF News Older than One Year
From Stimulus to Consolidation: Revenue and Expenditure Policies in Advanced and Emerging Economies
October 12, 2010-Preface
An extraordinary global effort on fiscal and monetary policy has been
required to support economic activity in the wake of the Great Recession.
A key challenge now facing the world economy is to ensure that economic
growth resumes in a strong, sustained, and balanced way. As the recovery
becomes entrenched, policymakers will need to start reducing public debt
ratios to more prudent levels.
This paper by the Fiscal Affairs Department (FAD) aims to assist International Monetary Fund (IMF) member countries in this endeavor by providing a strategy for fiscal adjustment that can help support sustainable growth over the longer term. It was presented at an IMF Executive Board seminar in May 2010. It discusses a menu of specific revenue and spending policy measures that could be considered to implement this strategy. On the spending side, the paper suggests a two-pronged strategy focused on stabilizing pension and public health spending ratios to GDP and reducing other outlays, including public wages, untargeted social spending, and subsidies. On the revenue side, particular attention is given to measures that could raise revenues by reducing existing distortions in the tax system.
Source: IMF
OECD composite leading indicator shows stronger sign of peak in expansion
October 11, 2010--OECD composite leading indicators (CLIs) for August 2010 reinforce signals of slowing economic expansion already seen last month. The CLI for the OECD area decreased by 0.1 point in August 2010, marking the fourth month in a row that the index has shown negligible or negative growth.
The outlook given by the CLIs for Canada, France, Italy, the United Kingdom, Brazil, China and India points strongly to a downturn. Stronger signals of a peak are emerging in the United States. For Germany, Japan and Russia the CLI points to a continuation of the expansion phase.
Source: OECD
Blow to bank crisis plans
October 11, 2010--Regulators are struggling to create a global mechanism that could wind down a big financial institution without the disruption caused by Lehman Brothers’ collapse in 2008.
The US is due on Tuesday to propose its own so-called “resolution” regime that would allow officials to stabilise a big, distressed bank, sell off assets over time and force creditors to take a discount on the value of their debt, without taxpayer money or market disruption.
Source: FT.com
Fragmented markets gave HFT rationale, says Rolet
October 11, 2010-Algorithmic and high-frequency trading’s main purpose is not to provide liquidity to markets but to trade between fragmented markets, according to the chief executive of the London Stock Exchange.
The comments, by Xavier Rolet, came the same day that the LSE revealed that a new trading system installed for its Turquoise trading platform – partly to attract high-frequency traders – was the fastest trading system in the world, at 124 microseconds for a trade to be done.
They come as regulators are scrutinising the role of computer programmes known as algorithms to drive trading automatically in markets, as well as the role of high-frequency trading, which refers to certain trading startegies that often use algorithms to get trades done at high speed
Source: FT.com
Study highlights CDS shortcomings
October 11, 2010-Financial derivatives that are widely tracked as a measure of creditworthiness of companies and countries have in many cases been poor indicators of default in the financial crisis, says Fitch Ratings.
The findings of the Fitch study highlight how privately-traded credit default swaps, where even the most actively traded contracts change hands only a few times per day, are influenced by many factors beyond the fundamental credit positions of companies or countries concerned.
Source: FT.com
Financial Sector Taxation: The IMF’s Report to the G-20 and Background Material
October 8, 2010--Foreword
At their September 2009 Pittsburgh Summit, G20 Leaders requested the International
Monetary Fund to prepare a report on how the financial sector could make a ‘fair and substantial contribution’ to meeting the costs associated with government interventions to
repair it. In response, a talented team of Fund experts was assembled, recognizing both the
topic’s importance and the analytical challenge it posed. The question of how best to reconfigure the tax system to serve this purpose – while aligning it with a regulatory regime
that itself is under significant reforms – goes to the core of the difficulties faced in dealing
with financial system failures.
Surprisingly, previous academic work and policy debates provided very little guidance in this critical subject. Moreover, the issue was – and remains – both politically charged and highly controversial. This made the project one of the most difficult and fascinating that the IMF has undertaken in recent years.
The report that we delivered to the G20 Leaders Toronto Summit provided a concise summary of our analysis and views. Not surprisingly, policymakers’ reactions varied widely – in some countries, policies are being implemented along the lines suggested. In other cases, the proposals were met with strong objections.
view Financial Sector Taxation: The IMF’s Report to the G-20 and Background Material
Source: IMF
Growth Returning to Emerging Europe And Central Asia, But Concerns Center on Jobless Recovery
October 8, 2010?Economic growth has returned to the Emerging Europe and Central Asia (ECA) Region, but it has come with concerns about its jobless nature and doubts about its durability, according to the World Bank at a press briefing during the World Bank/IMF Annual Meetings 2010.
“The good news is that economic growth has returned to Emerging Europe and Central Asia, after the region suffered a sharp decline during the global economic crisis,” said Philippe Le Houérou, World Bank Vice President for the Europe and Central Asia Region. “Today, the region is back on the road to recovery. Thanks to stronger economies in Poland, Russia, and Turkey, growth went from a negative 5.1 percent dip in 2009 to a projected 3.9 percent growth in 2010.”
Source: World Bank
Business must press governments on climate change ahead of the Cancun summit
CDP FTSE 350 report shows just 1 in 10 companies encouraging policy action that drives mitigation and adaptation
HSBC Holdings, Reckitt Benckiser, Royal Bank of Scotland Group, Scottish and Southern Energy and Tesco among UK companies leading efforts to tackle climate change
October 8, 2010-Carbon Disclosure Project (CDP) urges companies to engage with governments in the lead up to the UN climate change summit to encourage policy action and demonstrate the significant opportunities that are now recognised across UK boardrooms from action on climate change. The CDP FTSE 350 report, prepared by PricewaterhouseCoopers (PwC) and released today, reveals that only one in ten companies are engaging with policymakers to encourage policy action that drives climate change mitigation and adaptation.
Despite this, more than eight out of ten FTSE 350 companies that reported to CDP identify significant opportunities from climate change. Responses indicate that not only do “cleaner” and “greener” operations and products put companies at a competitive advantage in terms of regulation and reputation, they capture shifting consumer demands and present significant new market opportunities.
Speaking in September at the CDP global forum, Christiana Figueres, the executive secretary for the UN Framework Convention on Climate Change, said: “If you want to push governments you have to push them at home. The green race has started and we are on the verge of a new industrial revolution which must succeed. Businesses best course is to press governments to give companies and investors the regulatory framework, the incentives and benchmarks to push this new revolution forward on to a global scale”.
Source: Carbon Disclosure Project
“Lower bank profits can cover the costs of stricter regulation”
October 7, 2010--The Riksbank and Finansinspektionen (the Swedish Financial Supervisory Authority): The banks’ shareholders and customers must share the costs ensuing from new and tougher bank regulations. The new Basel III regulations have laid a global foundation for a more stable financial system in the future. The details of the regulations are complex, but based on simple insights, such as the banks' need for more and better capital.
One criticism that is often put forward is that stricter bank regulations lead to larger costs for society. We will probably have to live with slightly higher lending rates in the future. But banks which take less risk do not need to make such large profits. So some of the adjustment can be made through the banks accepting lower profits, write Stefan Ingves and Martin Andersson
Following the collapse of the major US bank Lehman Brothers in autumn 2008 the international financial crisis was a reality. Unease spread rapidly across the globe and confidence between the banks vanished overnight. When the global financial market had ceased to function, governments and pubic authorities in the countries concerned were forced to resort to special measures to maintain stability in the financial system. With the aid of loans and capital injections it was possible to avoid a total collapse. But the financial crisis nevertheless had considerable consequences, as the economic situation deteriorated, unemployment rose and deficits in public finances grew alarmingly around the world.
Source: Finansinspektionen
TOPIX Futures to launch on NYSE Liffe on 18 October 2010
October 7, 2010--Tokyo Stock Exchange, Inc (“TSE”) and NYSE Liffe today announce that TOPIX Futures will be available for trading on NYSE Liffe from 18 October 2010, making this benchmark index available in both Tokyo and London.
The Tokyo Stock Exchange’s TOPIX (Tokyo Stock Price Index) is the most popular index for benchmarking Japanese equity portfolios, and TOPIX Futures are already actively traded by investors worldwide.
The NYSE Liffe launch of TOPIX Futures will increase the number of potential investors who can access these products, particularly outside Asia. The NYSE Liffe market will remain available for trading for 11 hours (10 hours during British Summer Time) following the close of the TSE market. There will also be simultaneous trading in London and Tokyo during the final TSE trading session, leading to potential arbitrage opportunities.
The two exchanges have established a position transfer mechanism so that all NYSE Liffe TOPIX Futures positions at the end of each day will be transferred to the TSE. TOPIX Futures on TSE and NYSE Liffe will be fully fungible, allowing a single, fungible pool of Open Interest to exist in Tokyo.
Source: NYSE Liffe
