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FSB Report on Progress in the Implementation of the G20 Recommendations for Strengthening Financial Stability.
February 19, 2011--The FSB published on 19 February its progress report FSB Report to G20 Finance Ministers and Central Bank Governors on implementation of regulatory reforms for strengthening financial stability.
The report focuses on international policy development and implementation that has taken place since the G20 Seoul Summit in November 2010.
BATS enters big league with Chi-X merger
February 18, 2011--From his headquarters in Kansas City, Joe Ratterman can hardly believe that, as of Friday, the company he runs will soon account for more share trading in Europe than the London Stock Exchange
BATS Global Markets began life in 2005 as a technology project to make trading faster and more efficient; the brainchild of Mr Ratterman, a commercially-qualified pilot, and 12 others
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Source: FT.com
Spain brings in new bank capital rules
February 18, 2011--Spain has approved a law obliging its banks to reinforce their capital by September or face partial nationalisation but has granted unlisted cajas or savings banks until March next year to organise stock market flotations.
Spain’s strict new law on “strengthening the financial sector”, approved by the cabinet on Friday, is the latest step in a plan to restructure a savings bank sector burdened by bad property loans.
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Source: FT.com
Six new ETFs from iShares launched on Xetra
First ETFs on the MSCI Japan and MSCI World indices with currency hedge
February 18, 2011--Six equity index funds issued by iShares (BlackRock Inc.) have been tradable on Xetra since Friday.
ETF name: iShares MSCI Japan Monthly EUR Hedged
Asset class: equity index ETF
ISIN: DE000A1H53P0
Total expense ratio: 0.64 percent p.a.
Distribution policy: non-distributing
Benchmark: MSCI Japan 100% Hedged to EUR Index Net
ETF name: iShares MSCI World Monthly EUR Hedged
Asset class: equity index ETF
ISIN: DE000A1H53Q8
Total expense ratio: 0.55 percent p.a.
Distribution policy: non-distributing
Benchmark: MSCI World 100% Hedged to EUR Index Net
ETF name: iShares S&P 500 Monthly EUR Hedged
Asset class: equity index ETF
ISIN: DE000A1H53N5
Total expense ratio: 0.45 percent p.a.
Distribution policy: non-distributing
Benchmark: S&P 500 Euro Hedged Index
The indices underlying these three ETFs are weighted according to free float market capitalisation. The MSCI Japan Index tracks the performance of the developed equity markets in Japan, the MSCI World Index the international equity markets of industrialised nations, and the S&P 500 Total Return Net Index the 500 largest US stock corporations. These three iShares ETFs are hedged against exchange rate fluctuations between the euro and the US dollar.
ETF name: iShares MSCI Russia Capped Swap
Asset class: equity index ETF
ISIN: DE000A1H53L9
Total expense ratio: 0.74 percent p.a.
Distribution policy: non-distributing
Benchmark: MSCI Russia Capped Index
The MSCI Russia Capped Index is weighted by market capitalisation, and comprises components of the Russian standard index MSCI Russia. At present it only covers Russia.
ETF name: iShares S&P CNX Nifty India Swap
Asset class: equity index ETF
ISIN: DE000A1H53K1
Total expense ratio: 0.85 percent p.a.
Distribution policy: non-distributing
Benchmark: S&P CNX Nifty
The S&P CNX Nifty Total Return comprises 50 equities from 22 sectors of the Indian economy and thus approximately 55 percent of the market capitalisation of the National Stock Exchange of India.
ETF name: iShares MSCI USA
Asset class: equity index ETF
ISIN: DE000A1H53M7
Total expense ratio: 0.40 percent p.a.
Distribution policy: non-distributing
Benchmark: MSCI USA Index
The MSCI USA Index is weighted according to free float market capitalisation and tracks the performance of the developed equity markets in the USA.
Source: Deutsche Börse
Altering the Structure of Regulation is Fine but it's the Culture That Must Change
The Treasury's latest consultation document on the future of our regulatory system is a welcome development.
February 18, 2011--It tells us something about what the post-crisis future will look like. No system will be perfect but the creation of three interconnected regulatory entities responsible for conduct, individual firms including banks, and the system as a whole, stands a better chance of avoiding a repeat of 2007 than the fractured and discredited tripartite system of Treasury, Financial Services Authority (FSA) and Bank of England.
It is also clear, however, that we have an unrealistic view of what regulators can achieve – the recent crisis is testament to that. If we expect regulators to second-guess management and to be there to anticipate management's every move, we will end up with expensive, ineffective regulation trying to achieve unrealistic aims. The new system must set basic priorities and protect them, but let the cost of failure be borne by those willing to take risk.
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Source: The Telegraph
Economic Survey of Slovenia 2011
February 18, 2011--Slovenia has been deeply affected by the global crisis, but is now recovering gradually along with the rest of the OECD area. As Slovenia is a small open economy within the euro area, it is crucial for it to rapidly rebalance its economy and restore competitiveness. The proposed pension reform is a first step in the right direction to improve fiscal sustainability and boost labour supply. However, a further comprehensive pension reform is needed. To get closer to the technology and efficiency frontiers, reforms of the education system and policies to promote innovation, labour market flexibility and a friendlier environment for foreign direct investment (FDI) would be helpful.
sustainable consolidation of public finances is necessary to maintain investor confidence. The fiscal targets of the government’s consolidation plan are appropriate, but all spending reductions planned through 2013 should be spelled out in full to foster market confidence, and additional measures should be considered if needed. The introduction of an expenditure rule and the establishment of a fiscal council are welcome, but the government should avoid inconsistency of macroeconomic forecasts by making the Institute of Macroeconomic Analysis and Development (IMAD) the only source of the macroeconomic assumptions used for the budget law, as was the case prior to summer 2010. As the proposed pension reform falls well short of expected financing needs by 2060, a further more comprehensive reform is needed to reduce the generosity of the pension system and move it to actuarial neutrality.
view-Overview of the Economic Survey of Slovenia
Source: OECD
IMF Executive Board Concludes Second Post-Program Monitoring Discussions with Turkey
February 17, 2011--On February 11, 2011, the Executive Board of the International Monetary Fund (IMF) concluded the Second Post-Program Monitoring Discussions with Turkey.1
Background
The Turkish economy’s strong post-crisis recovery continued throughout 2010, supported by high levels of capital inflows.
Growth is projected to have exceeded 8 percent in 2010, placing output above its pre-crisis level, with credit-financed domestic demand the main driver. Helped by a drop in volatile food prices, headline inflation came in just below the 2010 target, while temporary factors compressed core inflation.
Push and pull factors are behind Turkey’s intensified capital inflows. Wide interest rate differentials, Turkey’s relatively healthy public- and private-sector balance sheets, strong near-term growth prospects, increased political certainty, and the prospect of a possible upgrade to investment status have all supported inflows.
Yet availability of abundant low-cost foreign savings has also highlighted Turkey’s vulnerabilities. The rapid bounce-back in the current account deficit (to 6¼ percent of GDP in 2010) reveals the high import content of domestic and external demand and growth’s dependence on capital inflows, which are symptomatic of weak external competitiveness. Predominantly short-term capital inflows—mostly intermediated by the banking sector—have increased exposure to capital flow reversal and associated repricing risks.
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Source: IMF
HM Treasury; A new approach to financial regulation: building a stronger system
February 17, 2011--This consultation document provides further detail on the Coalition Government’s proposals for reforming the framework of financial regulation in the UK. It builds on the Government’s earlier consultation A new approach to financial regulation: judgement, focus and stability published on 26 July 2010, and the summary of consultation responses published on 24 November 2010.
The Government welcomes responses from any interested organisations or individuals.
view the A new approach to financial regulation: building a stronger system document
Source: HM Treasury
European Senior Fixed-Income Investor Survey Q111
February 17, 2011--Highlights
Fitch Ratings’ latest quarterly survey (Q111) of fixed?income investors across
Europe signals a continued rise in optimism regarding the outlook for fundamentalcredit conditions across corporates — in investment grade as well as high yield (HY)and emerging market (EM) segments.
However, as a reminder of the root cause of the financial crisis and the massive government support exercised to achieve a recovery, investor views on banks took a nosedive following the uplift in the Q410 survey, and expectations for developed market (DM) sovereign issuers remained
moribund. Meanwhile, asset managers are expecting reduced flows into the fixedincome asset class in 2011, potentially tightening the supply of funds for all issuers.
While a majority of survey participants expect the euro zone to survive the ongoing troubles, views on DM sovereigns expressed in the survey indicate a general worsening of sentiment towards the asset class. Investors are increasingly concerned about the likelihood of further deterioration in DM sovereigns’ credit fundamentals (expected by 56% of participants, up from 52% in Q410) and their refinancing challenges (56%, up from 51%). DM sovereigns is the asset class least favoured by investors (39%, up from 36%). As in recent quarters, investors also felt that contagion from sovereign debt problems was the greatest risk to credit market stability.
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Source: Fitch Ratings
Emerging market volatility? Blame ETF investors, says BlackRock
February 16, 2011--Passive investors shifting cash in and out of exchange traded funds (ETFs) have added to the volatility of stock markets in emerging markets, according to BlackRock’s emerging markets managers,
Will Landers and Dhiren Shah.
Landers, who runs BlackRock’s Latin American investment trust, said BlackRock's combined mutual funds, investment trusts and ETFs - BlackRock owns iShares, the world’s largest ETF provider - made it the biggest investor in the region with about $20 billion under management.
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Source: Citywire
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