Monday 27th April 2015
NEWS TICKER: MONDAY, APRIL 27th 2015:Luc Luyet, CIIA – Senior Market Analyst AT Swissquote says that yesterday, “the SNB surprised the market by announcing that the number of sight deposit account holders that are exempt from negative interest has been reduced. This decision doesn’t change much the domestic banks’ situation as the “20 times the minimum reserve requirement” rule is still running. On the other side, the institutions associated with the Confederation, such as the pension fund of the Confederation or the pension fund of the SNB, are no longer exempt of negative interest. Consequently, only the account holders of the national social security system are still fully exempt.” - High yield debt issuance remains buoyant. Issuance volume for the week ending April 17, 2015, slowed down a bit from the previous week, but remained strong. Junk bond, or high-yield debt, issuers continued to issue bonds as yields remained favourable. High-yield debt is tracked by the SPDR Barclays Capital High Yield Bond ETF and the iShares iBoxx $ High Yield Corporate Bond Fund. According to data from S&P Capital IQ/LCD, dollar-denominated bonds amounting to $10.75bn were issued across 16 transactions in the week ending April 17th. The issuance volume fell by 3.2% from the week ending April 10. Pricing was evenly spread across the week. The number of transactions fell from 18 to 16 week-over-week. Last week brought the total US dollar issuance of high-yield debt to $115.8bn in 2015 YTD, up some 15% from the same period in 2014, the bulk of which is refinancing of older debt - Moody's says EMEA auto ABS performance remained stable during the three-month period ending February 2015. The sector's average performance trend was positive in terms of delinquency ratios and cumulative losses. The 60+ day delinquencies decreased to 0.66% in February 2015 from 0.77% in February 2014, while cumulative defaults decreased to 1.06% from 1.20% over the same period. This decrease was due mainly to the good performance of the German and Dutch markets. The prepayment rate increased slightly to 13.49% in February 2015 from 13.30% a year earlier. As of February 2015, the pool balance of all outstanding rated auto ABS transactions was €27.55bn - According to Sino specialists Red Pulse, China’s State Council is considering allowing daily repatriation for QFII. Currently, RQFII enjoys T+1 repatriation while QFII is restricted to T+5. QFII is the largest channel for foreign investment into China with quota of USD150bn, however, only half of the quota is in use, like at least partly due to the five-day repatriation stipulation - Malaysia’s state pension fund will offer a Shari’a-compliant investment option for its members by 2017, Prime Minister Datuk Seri Najib Razak said today. Najib says it will create the largest Shari’a fund of its kind in the world. Malaysia has one of the world’s largest Islamic finance sectors and the authorities are keen to develop it further. They envision the industry accounting for 40% of the country’s total banking assets by 2020 compared with latest figures of around 23% released last year. The $160bn (MYR577.4bn) Employees Provident Fund (EPF) already invests about a third of its portfolio in stocks and bonds that comply with Islamic principles, which ban interest payments and pure monetary speculation. The fund reportedly hired consultants last year to study the feasibility of a state-backed pension fund focusing entirely on Shari’a-compliant investments. Additionally, local press reports says that Malaysia’s sovereign wealth fund Khazanah Nasional has received regulatory approval to issue a MYR1billion (around $275m) socially responsible Islamic bond - The NASDAQ OMX Group, Inc has declared a regular quarterly dividend of $0.25 per share on the company's outstanding common stock, an increase of 67% from the prior $0.15 per share quarterly dividend. The dividend is payable on June 26TH 2015, to shareowners of record at the close of business on June 12TH 2015 - Lazard Ltd today reported operating revenue1 of $581m for the quarter ended March 31st. Adjusted net income was $103m, or $0.77 (diluted) per share for the quarter. These results exclude a pre-tax charge of $63m relating to a debt refinancing2. Q1 2015 net income on a U.S. GAAP basis, including the pre-tax charge, was $56m, or $0.42 (diluted) per share. "Our Financial Advisory and Asset Management businesses continue their strong performance," says Kenneth M. Jacobs, Chairman and Chief Executive Officer of Lazard. "In the first quarter, we refinanced and repaid a portion of Lazard's long-term debt, significantly reducing our interest costs," adds Matthieu Bucaille, chief financial officer of Lazard. "Consistent with our capital management objectives, we have increased the quarterly dividend by 17%, the fifth increase in as many years." -

EU’s threatened financial transaction tax could magnify FX costs

Friday, 03 February 2012
EU’s threatened financial transaction tax could magnify FX costs An EU financial transaction tax (FTT), could increase FX transaction costs, says Oliver Wyman research. http://www.ftseglobalmarkets.com/

An EU financial transaction tax (FTT), could increase FX transaction costs, says Oliver Wyman research.

Research by oliver Wyman, commissioned by the Global Financial Markets Association’s (GFMA’s) global FX division, suggests that, given the tight margins that exist in foreign exchange markets, any increase in transaction costs will, in turn, hit the real economy as these costs would largely be passed on to all end users. The report, Proposed EU Commission Financial Transaction Tax; Impact Analysis of Foreign Exchange Markets’, evaluates the impact of the European Union’s proposed financial transaction Tax (FTT) on European FX markets, estimating its impact on FX cash and derivatives users in particular.
The report not only recognises that the primary impact of the tax will be an increase in transaction costs, relocation of trading and reduction in notional turnover, but also it suggests the tax will result in a potential reduction in liquidity leading to a widening of bid/ask spreads.
The research suggests that a proposed FTT could directly increase transaction costs for all transactions by three to seven times and by up to 18 times for the most traded part of the market. It could eventually result in the relocation between 70% and 75% of tax eligible transactions outside of the EU tax jurisdiction. This possible outcome, combined with reduced transaction volumes (of approx 5%), could reduce market liquidity and increase indirect transaction costs by up to a further 110%, the report suggests.
Inevitably however, the tax will predominantly hit the real economy and the institutional market, comprising pension funds, asset managers, insurers and corporations, as both direct and indirect costs are largely passed on to end‐users, which will be least able to move transactions to jurisdictions not subject to the tax.
While the tax is expected to only have a limited impact on speculative trading, as this activity will most likely relocate outside the EU tax jurisdiction, it will result in an inefficient tax on the economy as raising €1 of tax would likely cost the economy more than €1, due to the indirect costs associated with reduced and more fragmented liquidity.
James Kemp, managing director of GFMA’s global FX division, says:  “It is essential to fully understand the impact of the proposed financial transaction tax and the Oliver Wyman study is an important contribution to the debate. “The foreign exchange industry is an essential part of a stable and sustainable economy, underpinning international trade and investing. This study shows that the proposed tax would in effect penalise Europe’s businesses for sensible risk management—by using FX products to manage currency fluctuations—and also threaten to impose further costs on the investment returns of pension funds and asset managers.”
UK premier David Cameron led a charge against the tax at the Davos World Economic Forum in late January, telling Eurozone members that it was no time for tinkering in the financial markets and that the tax was “madness”.

Tweets by @DataLend

DataLend is a global securities finance market data provider covering 42,000+ unique securities globally with a total on-loan value of more than $1.8 trillion.

What do our tweets mean? See: http://bit.ly/18YlGjP

Related News

Related Articles

Related Blogs

Related Videos

  • Forces shaping the UK pension industry Thursday, 18 October 2012 Forces shaping the UK pension industry
    Rosalind Knowles, partner, Linklaters Pension Practice Group provides the first Keynote Speech at FTSE Global Markets’ Transition Management conference at Gibson…
  • ALFI speaks to George Bock, about FATCA Thursday, 29 March 2012 ALFI speaks to George Bock, about FATCA
    Alfi speaks to George Bock, Partner and Head of Tax Department at KPMG Luxembourg about the adoption of FATCA. Mr Bock…
  • Investing in Russia (Part 1) Friday, 01 July 2011 Investing in Russia (Part 1)
    Mattias Westman, founding partner, Prosperity Capital Management, discusses the key challenges and opportunities of investing in Russia during the Accessing…