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Global Securities Regulators Adopt New Principles and Increase Focus on Systemic Risk
June 10, 2010--The International Organization of Securities Commissions (IOSCO) has published its revised Objectives and Principles of Securities Regulation (Principles) to incorporate eight new principles, based on the lessons learned from the recent financial crisis and subsequent changes in the regulatory environment, which are designed to strengthen the global regulatory system against future crises.
The eight new principles cover specific policy areas such as hedge funds, credit rating agencies and auditor independence and oversight, in addition to broader areas including monitoring, mitigating and managing systemic risk; regularly reviewing the perimeter of regulation; and requiring that conflicts of interest and misalignment of incentives are avoided, eliminated, disclosed or otherwise managed.
The Principles, which are an agreed set of high-level global standards outline the basis of an appropriate, effective and robust securities regulatory system, therefore their proper implementation by securities regulators is critical to the creation and maintenance of a sound global regulatory system. The Principles also play an important role in promoting a sound global financial regulatory system through their use by the International Monetary Fund (IMF) and World Bank assessors in the performance of the securities sector element of country Financial Sector Assessment Programs.
Systemic Risk Principle
This new Principle recognises the need for Regulators to be conscious of systemic risk and the role they play in relation to it. The financial crisis has highlighted that financial markets which IOSCO members regulate, or may be exempt from regulation, can be the mechanism by which risk is transferred within the financial system. Under the new principle the Regulator should have, or contribute to, regulatory processes to monitor, mitigate and appropriately manage such risks. Regulators should have particular regard to investor protection, market integrity, transparency and the proper conduct of business within markets as contributing factors to reducing systemic risk.
The eight new principles added to the current 30 are:
Principle 6: The Regulator should have or contribute to a process to monitor, mitigate and manage systemic risk, appropriate to its mandate;
Principle 7: The Regulator should have or contribute to a process to review the perimeter of regulation regularly;
Principle 8: The Regulator should seek to ensure that conflicts of interest and misalignment of incentives are avoided, eliminated, disclosed or otherwise managed;
Principle 19: Auditors should be subject to adequate levels of oversight.;
Principle 20: Auditors should be independent of the issuing entity that they audit;
Principle 22: Credit rating agencies should be subject to adequate levels of oversight. The regulatory system should ensure that credit rating agencies whose ratings are used for regulatory purposes are subject to registration and ongoing supervision;
Principle 23: Other entities that offer investors analytical or evaluative services should be subject to oversight and regulation appropriate to the impact their activities have on the market or the degree to which the regulatory system relies on them; and
Principle 28: Regulation should ensure that hedge funds and/or hedge funds managers/advisers are subject to appropriate oversight.
view the revised Objectives and Principles of Securities Regulation
Source: IOSCO
Bankers fear effect of Basel rules
June 10, 2010--Economic growth in the eurozone, the US and Japan will be cut by three percentage points between now and 2015 if current proposals to force banks to hold more capital and liquid assets go forward unchanged, the world’s leading banking industry group warned on Thursday.
As a result, 9.7m fewer jobs would be created in those areas over the period, according to an impact assessment issued by the Institute of International Finance at a meeting in Vienna.
The group is pushing hard for the Basel Committee on Banking Supervision to rewrite or at least delay implementation of the proposals, known as Basel III, which are slated to be voted on later this year.
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Source: FT.com
EU will go beyond trillion-dollar bailout limit: Van Rompuy
June 10, 2010--- A near trillion-dollar bailout fund for debt-burdened euro nations will be increased if required, the European Union's appointed president said in an interview published on Thursday.
Herman Van Rompuy, who is in Berlin to meet German Chancellor Angela Merkel seven days from an EU summit dominated by disputes over how to install new cross-border economic governance, told Belgian business magazine Trends-Tendances that the 750-billion-euro EU-IMF fund of loan guarantees could be extended.
"Is it enough? Today, there is not even the hint of anyone asking to put this rescue plan into action," he told the magazine.
However, "if the plan proves insufficient, my answer is simple: in this case, we will do more."
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Source: EUbusiness
FSA publishes annual report for the year 2009/10
June 10, 2010--The Financial Services Authority (FSA) has published its Annual Report, outlining its performance against the priorities set out in its 2009/10 Business Plan and the FSA's statutory objectives.
In his foreword, FSA chairman, Adair Turner, commented that over the last three years, the FSA has transformed its approach to regulation and supervision and as a result, has had to go through a process of intense internal change.
Key elements of this transformation process are:
A radically changed approach to prudential supervision and in particular to the supervision of high impact firms, including stress testing, accounting reviews, challenges to business models, detailed liquidity assessments and reviews of remuneration policy.
Dramatically increased involvement in international and European fora to help drive global agreement on the complete revision of the prudential regulatory regime, with recommendations for such major change set out in the Turner Review and associated discussion and consultation papers.
view the report
Source: FSA.gov.uk
ETF Landscape: European STOXX 600 Sector ETF Net Flows, week ending 04-Jun-10
June 9, 2010--This is a weekly publication analysing Net Flows in aggregate in the seven families of ETFs tracking the 19 STOXX 600 sectors.
Last week saw US$191.8 Mn net inflows to STOXX 600 sector ETFs. The largest sector ETF inflows last week were in Banks with US$309.9 Mn and Industrial Goods & Services with US$20.1 Mn while Health Care experienced net outflows of US$50.4 Mn.
Year-to-date, Media has had the largest net inflows with US$288.4 Mn net new assets, followed by Industrial Goods & Services with US$85.4 Mn YTD. Basic Resources sector ETFs have had the largest net outflows with US$235.3 Mn YTD. In total, STOXX 600 sector ETFs have seen US$327.2 Mn net outflows YTD.
The assets invested in the ETFs are greater than the open interest in the corresponding futures contract in 17 out of 19 sectors.
to request report
Source: Global ETF Research & Implementation Strategy Team, BlackRock
Launch of Options on Five ETFs on NYSE Liffe
June 9, 2010--On June 7, NYSE Liffe launched options on five ETFs on the Paris derivatives market:
Option Underlying ETF:Lyxor ETF Stoxx 600 Banks
ETF ISIN:FR0010345371
Option Symbol:BNK
Option Underlying ETF:Lyxor ETF Stoxx 600 Oil & Gas
ETF ISIN:FR0010344960
Option Symbol:LOG
Option Underlying ETF:Lyxor ETF Stoxx 600 Basic Resources
ETF ISIN:FR0010345389
Option Symbol:BRE
Option Underlying ETF:Lyxor ETF Stoxx 600 Telecommunications
ETF ISIN:FR0010344812
Option Symbol:TEL
Option Underlying ETF:Lyxor ETF China Enterprise (HSCEI)
ETF ISIN:FR0010204081
Option Symbol:ASI
Source: NYSE Euronext
FTSE Italia Index Series Review June 2010
June 9, 2010-The FTSE Italia Joint Executive Group has approved the following changes to the FTSE Italia Index Series which will become effective after the close of business on Friday, 18 June 2010 (i.e. on Monday, 21 June 2010).
Il FTSE Italia Joint Executive Group ha approvato le seguenti modifiche per la serie di indici FTSE Italia che diverranno effettive dopo la chiusura delle contrattazioni di Venerdì 18 Giugno 2010 (Lunedì, 21 Giugno 2010).
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Source: FTSE
FESE Response To CESR Consultation Paper On Transparency For Bonds
June 9, 2010--FESE welcomes the opportunity given by CESR to respond to the Consultation Paper on technical advice to the European Commission in the context of the MiFID review on transparency for bonds.
View FESE Response_CESR CP 10-510 on Transparency for Bond
Source: FESE
IOSCO expands its global membership to include Iceland, the Maldives, Saudi Arabia and Syria
June 9, 2010--The International Organization of Securities Commissions (IOSCO) has today welcomed the securities markets regulators from Iceland, the Republic of the Maldives, the Kingdom of Saudi Arabia and Syria as its newest members.
The four newest members’ applications for membership were accepted at today’s meeting of IOSCO’s Presidents’ Committee, which is made up of the chairmen and chief executives of it member securities regulators.
In fulfilling the criteria for membership the applicants demonstrated their commitment to IOSCO’s Objectives and Principles of Securities Regulation and that their regulatory regimes allowed them to become signatories to Appendix A of the Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information.
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Source: IOSCO
Measures adopted by CESR Members on short selling-Updated
June 9, 2010--EU securities regulators are closely monitoring the functioning of the markets under the current
circumstances and are considering together possible actions which might be taken to contribute to
orderly functioning markets. Any such actions will be taken with a view to strengthening confidence in
financial markets and protecting investors
Particularly, CESR, in its role as a network bringing together EU securities regulators, has been coordinating
actions by its Members regarding the short selling practices, in particular in financial
companies. Some EU securities regulators have adopted measures in their respective markets either to
limit, or to introduce stringent requirements or further reporting obligations by firms to supervisory
authorities on short-selling.
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Source: CESR
