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CESR publishes feedback statement and Q&A to its consultation on MiFID's complex and non-complex financial instruments
November 3, 2009--CESR publishes today a feedback statement and Questions and Answers (Q&A) to respond to comments made and points raised in response to its consultation on MiFID complex and non-complex financial instruments for the purposes of the Directive’s appropriateness requirements (Ref. CESR/09-295). The consultation paper was published on 14 May 2009.
view feedback statement-MiFID complex and non complex financial instruments for the purposes of the Directive’s appropriateness requirements
View Q&A MiFID complex and non complex financial instruments for the purposes of the Directive’s appropriateness requirements
Source: COMMITTEE OF EUROPEAN SECURITIES REGULATORS (CESR)
CESR publishes its own and the 3L3's Work Programme for 2010
November 3, 2009--CESR published today its Work Programme for 2010 alongside with the Work Programme of the 3L3 Committees, CESR, the Committee of European Banking Supervisors (CEBS) and the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS).
View Work Programme for 2010
Work Programme of the 3L3 Committees
CESR's Work Programme 2010 is accompanied by an annex table.
Source: COMMITTEE OF EUROPEAN SECURITIES REGULATORS(CESR)
SII response to FSA CP09/18 on distribution of retail investments (Delivering RDR)
November 2, 2009--Following consultation with its members, the Securities & Investment Institute has responded broadly positively to the FSA’s consultation document (CP09/18) on its proposals to raise standards of professionalism.
The SII organised a series of presentations across the country and received feedback from 500 members, who demonstrated consistently high support for compulsory Continuing Professional Development, an industry-wide Code of Ethics and also for the raising of examination levels for investment advisers across the sector affected by the RDR.
However, whilst the SII is supportive of the general thrust of the professionalism proposals, it is aware that there are many unanswered questions, particularly over the role of the proposed Professional Standards Board, on which a consultation paper is about to be issued.
The SII endorses the FSA’s approach to professionalism, which seeks to go beyond the rhetoric of exhorting best practice in maintaining competence and behaving ethically, by setting out specific proposals around the monitoring and measurement of relevant CPD and an ethical code which is similar to the SII’s own Code of Conduct.
The securities and investment sector has a distinguished record of examinations recognised at graduate level. Whilst the Institute and its members strongly support the raising of standards for existing advisers across the sector from Level 3 to Level 4, equating to first year undergraduate level, there was also overwhelming support from roadshow participants for new entrants to aspire to Level 6, the level of a graduate qualification.
We therefore call upon the FSA to ensure that professional bodies seeking to ensure relevance and excellence for specific job roles covered by the RDR, are supported in offering provision above Level 4. We believe that the FSA should consider stating a longer term objective to raise standards to Level 6 for new entrants post 2012.
We also urge the FSA to review its proposals for alternative assessments, especially for the small number of experts in specialised areas such as Eurobonds, who are already operating at a level well above Level 4, for whom the new examination proposals will not be relevant, but who nevertheless fall under the RDR requirements. We suggest that a restricted license may be an option.
Simon Culhane FSI, Chief Executive of the SII, said: “We received strong feedback from our members for the FSA to consult specifically on the case for mandatory membership of a professional body. Not only is this cost effective, but membership of a credible, chartered, professional body whose sole remit is to combine holistically examinations, Continuing Professional Development and ethics, is the embodiment of professionalism and is well understood by the public from its interaction with other professionals in other sectors.”
Ruth Martin, the SII’s Managing Director added: “The SII roadshows endorsed the proposals and demonstrated that in preparing for the RDR, our members are ready to embrace change, for the benefit of the industry, its reputation and its users, even though for many of them it means more examinations.”
Source: Chartered Institute For Securities & Investment
Longevity market could double in 2010
November 3, 2009--Longevity deals by pension funds could double in 2010 as the market is starting to see convergence on price following the first few deals, according to market specialists.
Credit Suisse was the counterparty in the deal arranged by Babcock International to hedge the longevity of three of its pension schemes. Two of the deals have been completed - for the Devonport Royal Dockyard scheme and the Rosyth Royal Dockyard scheme - while the longevity hedging of the Babcock International Group Pension Scheme is still under discussion.
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Source: IPE.com
Pension deficits soar
November 2, 2009-A return to relative calm in financial markets has turned out to be bad news for UK pension fund deficits, as the negative effect of falling bond yields more than outweighed the benefits of the recent surge in equities.
Pension funds of FTSE 100 and FTSE 350 companies have swung into deficit over the past year, and their deficits widened by 27 cent in the month of October alone.
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Source: FT.com
Markit creates e-trade loan platform
November 2, 2009-Markit, the financial information provider, has acquired ClearPar of the US to create a platform that for the first time will allow banks and investors to process loan trades electronically from start to finish.
The move is intended to help reduce counterparty and operational risk in a market with $1,000bn of loans outstanding.
read more
Source: FT.com
db x-trackers launches ETF tracking short daily performance of Hang Seng
November 2, 2009-db x-trackers, Deutsche Bank’s exchange-traded fund platform, has launched the HSI Short Daily Index ETF, the first ETF to offer European investors access to the short daily performance of an Asian stock market.
The ETF tracks the daily inverse performance of the Hang Seng Index, the most widely quoted indicator of the Hong Kong stock market.
Manooj Mistry, head of db x-trackers UK, says: “The db x-trackers ETFs on short daily indices are very popular with investors across Europe. These products now have assets of over EUR2bn and are amongst the most actively traded ETFs in Europe. The launch of the db x-trackers’ HSI Short Daily Index ETF complements the existing range of short daily index ETFs and provides a diversified option for investors looking for exposure to short performance of an Asian stock market.”
Source: Online News
New Exchange Traded Funds (ETFs) on SIX Swiss Exchange
November 2, 2009--8 new products have been listed in the Exchange Traded Funds segment of SIX
Swiss Exchange, taking the total to 208 ETFs. The new funds are:
db x-trackers DJ EURO STOXX 50® ETF (1C). The trading currency is CHF.
db x-trackers Russell 2000 ETF (1C). The trading currency is USD.
db x-trackers MSCI AC ASIA ex JAPAN TRN INDEX ETF (1C). The trading
currency is USD.
db x-trackers MSCI PACIFIC ex JAPAN TRN INDEX ETF (1C). The trading currency is USD.
db x-trackers DJ STOXX® 600 ETF (1C). The trading currency is CHF.
db x-trackers CAC 40® Short Daily ETF (1C). The trading currency is CHF.
db x-trackers DB COMMODITY BOOSTER DJ-UBSCI ETF (4C). The trading
currency is CHF.
db x-trackers DB HEDGE FUND INDEX (5C). The trading currency is CHF.
Deutsche Bank London Branch will perform the market making for these
products.
Source: SIX Swiss Exchange
A CESR analysis sees room for better compliance with IFRS disclosures
November 2, 2009--CESR publishes today an analysis (Ref. CESR/09-821) of the compliance of European financial institutions with disclosure requirements related to financial instruments. For the purposes of the analysis, CESR reviewed the 2008 year-end financial statements of 96 listed banks and/or insurers, including 22 companies from the FTSE Eurotop 100 index.
The findings revealed that, in some areas, a significant proportion of companies failed to comply with mandatory disclosure requirements relating to financial instruments, for example regarding the use of valuation techniques and on relationships with special purpose entities (SPEs).
Source: CESR
New TABB Group Research Shows Dark Trading in Europe is on the Rise
Buy-Side Traders Say Better Aggregation and More Innovation Needed to Optimise Execution
November 2, 2009--As the SEC in the US puts pressure on measuring and defining dark pool activity, the same debate is occurring in Europe, where buy-side equity traders are having a love-hate relationship with the dark. Trading in dark environments is estimated by TABB Group, the capital markets research and consulting firm, at 4.1% of daily turnover in major European markets, forecast to increase 7% in 2010 as buy side traders acquire the knowledge, tools and insight to increase their confidence to trade where they cannot see.
According to Miranda Mizen, a principal at TABB and author of a new research report, “Trading in the Dark in Europe: Choice and Complexity on the Cusp of Change,” trading in the dark is just scratching the surface of its potential in Europe.” Although the infrastructure for trading in a multi-layered, pan-European marketplace is largely in place, the buy side is still adopting and upgrading tools, the sell side is expanding the intelligence of algorithms and traders tell TABB that they need time to adjust.
Across the market, algorithms are becoming better at preventing information leakage, and spotting crossing opportunities and liquidity aggregators is gaining in sophistication. Data is available to those who know what they want, when they want it and have the means to process it when they receive it. Still, in a European marketplace very much in flux, the buy side is picking through a plethora of algorithms, leading TABB Group to pinpoint eight questions buy-side traders should ask about their broker’s dark strategy to determine what, where, when and how their order is being traded.
According to Mizen, the pending regulatory review in Europe should add clarity, review the MiFID waivers and remove the ambiguity around dark environments, thereby anchoring dark trading as a legitimate alternative that complements the lit markets. “Regulation may restrict unfettered expansion of dark environments by raising the bar on competition, but it will also marginalise those with paltry liquidity.” Current reporting standards, the spectre of a regulatory review and lack of volume in some have created uncertainty about how much volume is traded in the dark, and a reluctance to share.
TABB Group estimates there are 33 dark environments operated by a combination of brokers, lit multi-lateral trading facilities (MTFs) and exchanges but the large choice “does not de facto add to the quality of the dark environment,” says Mizen. Unless regulation becomes a barrier, TABB Group believes the number of dark environments will continue to increase but “as liquidity splinters, this will work against the buy side as liquidity becomes harder to find without leaking information,” and this increases the need for smarter aggregation.
Knowledge, tools, visibility and standardisation create greater demand for differentiation and innovation, and this will result in the concentration of liquidity in the more sophisticated environments. If providing transparency in the marketplace and shedding light on the mechanics sounds juxtaposed when it comes to dark liquidity, it is because this is a work in progress. “The best is yet to come as innovation takes off in earnest and the stakes are raised to attract order flow into the dark; but only the most sophisticated will be able to show the kind of value for which the buy side is willing to pay a premium,” concludes Mizen.
The 25-page report with 12 exhibits is an in-depth analysis of interviews with 16 head buy-side traders in Europe and the US, and incorporates data and analysis on dark trading from TABB Group’s “European Equity Trading Study 2009: Counterparties, Capital and Control,” where 53 head traders across the major markets of Europe were interviewed. It covers estimated daily turnover in Europe; dark environments throughout the execution chain; multiple types of dark environments; protecting order flow through three areas of innovation, e.g., functionality, aggregation and visibility; ownership structures for dark environment; choosing between trading in lit or dark environments or both; and estimated growth of dark trading in Europe, 2005-2010.
The report can be downloaded by TABB Group Research Alliance Equity clients and pre-qualified media at http://www.tabbgroup.com/login.aspx.
For an Executive Summary or to purchase the report, go to http://www.tabbgroup.com or write to info@tabbgroup.com.
Source: TABB Group
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