Tuesday 27th January 2015
NEWS TICKER, JANUARY 27TH: BNP Paribas’ 4th Quarter 2014 Results will be available on Thursday February 5th from 6:00 am (London time) on the bank’s website. A live webcast in English with synchronised slides of the analysts presentation hosted by Jean-Laurent Bonnafé (CEO) will be available on the website starting at 1:30 pm (GMT). - Kurdish forces say they have expelled the Islamic State fighters from the Syrian town of Kobani, near the Turkish border. However, this is the now the fourth time in as many months that this news has been disseminated - - Deutsche Börse will announce its preliminary results for the 2014 operating year on February 19th - S&P has lowered the Russian credit rating to junk with negative outlook as the sliding oil prices and tensions in Ukraine now look to be a serious threat to the country’s financial and political stability, says SwissQuote. The FX analytics firm notes that the USD/RUB is testing 70 offers. “Should the sell-off gains momentum above 70, we expect the CBR to intervene to temper the ruble depreciation. The CBR meets on January 30th and is expected to keep the bank rate unchanged at 17%. Given the selling pressures on the ruble, we do not expect any cut yet. Russia’s forex reserves eases toward 2009 lows, $379.4bn as of January 16th. With the free-floating RUB, the FX reserves will certainly keep fading, therefore should bring the CBR to find alternative ways to intervene to slowdown the debasing”. - Latvia’s prime minister’s office, has issued a statement about events in the Ukraine. "We express our concern about the deteriorating security and humanitarian situation in eastern Ukraine. We condemn the killing of civilians during the indiscriminate shelling of the Ukrainian city of Mariupol on 24 January 2015. We note evidence of continued and growing support given to the separatists by Russia, which underlines Russia's responsibility. We urge Russia to condemn the separatists' actions and to implement the Minsk agreements. We recall the European Council conclusions of 18 December 2014, where we said that "the EU will stay the course" and that we are "ready to take further steps if necessary." In view of the worsening situation the office asks “the upcoming Foreign Affairs Council to assess the situation and to consider any appropriate action, in particular on further restrictive measures, aiming at a swift and comprehensive implementation of Minsk agreements,” says the statement. Latvia has assumed the presidency of the EU for the six months to June. - Data from the IMF suggests that The Netherlands has raised its gold holdings, having bought 9.61 tonnes in December last year. Russia too continues to build its gold reserves and has increased stock for the ninth consecutive month, buying 20.73 tonnes last month. The purchases by the Dutch central bank follows its move in November to repatriate more than 120 tonnes of gold from vaults in the United States - UK GDP looks to be weaker than expected but remains good news for investors. “The first estimates of the Q4 GDP numbers came in slightly below expectations at 0.5% and markedly slower than the previous three quarters of 2014. The primary driver of the reduced growth rate was the construction sector, which saw output fall by 1.8%. However, the slowdown was not enough to prevent the fastest full year growth rate of 2.7% since the financial crisis,” says Helal Miah, investment research analyst at The Share Centre. “Despite numbers being slightly weaker than expected, we believe the UK economy remains relatively robust. After a fantastic few years in the construction sector it is quite natural to see a return to normal markets conditions. The services element of the UK economy remains healthy and the full benefits of the plunge in the price of oil are still to come. Low inflation will hold back interest rate rises and we therefore believe that for investors the equity market remains the asset class of choice.” - Societe Generale Securities Services (SGSS) has launched a new website, Sharinbox, for corporations and their registered shareholders and employees who benefit from free share plans, stock options plans and other incentive schemes. Operational since December 13th last year, the website, www.sharinbox.societegenerale.com, provides users with direct, multilingual access to an online resource with information regarding their share and employee ownership plans in order to manage their personal data and transactions – According to Michael Hewson, chief market analyst at CMC Markets, “Given the headwinds being felt by major oil companies around the world, the share price performance since the beginning of last year, while uninspiring, has still out performed the oil price which given the macro economic back drop is all the more surprising … We’ve already seen the effects that the slump in the oil price is having on the oilfield service providers in the US, with both Baker Hughes and Halliburton announcing job losses as the companies see rig counts drop, and margins decline. We’ve also seen WBH Energy, a Texas based shale producer file for bankruptcy. Despite all these concerns the shares have outperformed, though that probably has more to do with the buyback program the company has been doing than anything to do with outperformance relative to its peers. The company has been buying back shares on a fairly steady basis over the past 12 months and this undoubtedly will have accounted for the relative outperformance”.The FSCS has started paying compensation in respect of 13 firms, including seven investment advice firms and three life and pension advice firms that have gone into default. The financial advice firms which have entered default, according to the scheme are: Barry Norris & Associates, Premier Financial Advice, The Financial Consultancy (UK), True Financial Management (formerly HNL Financial Services), Unleash Advice Partnership, and AJ Buckley Financial Management formerly AJ Buckley Overseas, City Insurance Consultants. Last week, the FSCS published its plan and budget for the coming year, which revealed investment advisers would be paying £125m towards the FSCS annual levy for 2015/16. Life and pension intermediaries are paying a £57m levy, an increase of £24m compared to the £33m the FSCS levied against the funding sub-class for 2014/15. Since it was set up in 2001, the FSCS has paid out more than£975 million in compensation to customers of defaulted advice firms. In November 2014, the FSCS said it had dealt with the default of 2,391 independent advice firms since it was set up. - Retail Sales in the United Kingdom unexpectedly increased in December, as the drop in oil prices boosted the country’s spending power. The increase came from a 5.2% gain in computers, telecoms, toys, and sporting goods sales, while food sales alone contributed 1.3%. There was a decline in sales of some items, such as clothing and household goods, reflecting a boost from Black Friday discounts the previous month - The Source Goldman Sachs Equity Factor Index Europe UCITS ETF has been launched, the second Source ETF to be launched that provides access to Goldman Sachs’ multi-factor indices. “Smart beta funds have proven successful in certain markets, providing investors with the potential to generate better returns than the more common market-cap weighted benchmarks, particularly on a risk-adjusted basis,” says Michael John Lytle, chief development officer at Source. “The Goldman Sachs series of factor-based indices offer exposure to multiple factors, rather than just the one or two that are applied to many other funds on the market.” – Mixed news from the US over the weekend. Housing starts in the US surged, as builders broke ground in December on the most houses in almost seven years. Work began on 728,000 houses at an annual rate, a 7.2% increase from November and the most since March 2008. On the other hand, building permits, a representation for future construction declined 1.9% in December to a 1.03m pace, however more Americans filed applications for unemployment benefits last week, signaling that the holiday employment turnover is taking its toll on the jobs market. Jobless claims dropped by 10,000 to 307,000 in the week ending January 17th down from a revised rate of 317,000 in the prior week, a Labor department report shows. Applications for jobless benefits were expected to decline to 300,000, according to market surveys by economists - German ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, climbed for a third consecutive month in January to 48.4 from 34.9 in December. Economists forecast an increase to 40, according to the median of 37 estimates in a Bloomberg News survey. The sentiment index jumped to the highest level in 11 months - Singapore Exchange is partnering Clearbridge Accelerator to address financing gaps small and medium-sized enterprises (SMEs) and entrepreneurs face by providing the investing community with greater transparency. SGX said on Monday (Jan 26) it signed a Memorandum of Understanding (MoU) with CBA, a Singapore venture capital and incubation firm specialising in early-stage investments. Under the agreement, both parties will form a joint-venture (JV) company to develop the fund-raising platform, which aims to address financing gaps SMEs and entrepreneurs face by providing the investing community with greater transparency. The JV will identify and form a strategic equity partnership with an experienced platform operator and industry stakeholders such as financial institutions to operate the new capital-raising platform. It will also identify other partners and collaborators to create demand among investors for the offerings on the platform, according to the press release. The move to help smaller firms raise funding marks the entry of SGX into a new business area. Besides operating the stock market, which caters to the equity needs of more to established firms, SGX also offers a platform for bonds as well as derivatives and commodities. Enterprise development agency SPRING Singapore will play a supporting role in the formation of the JV, as part of its ongoing efforts to make the financing environment more conducive to SMEs and entrepreneurs, the statement added. - Hedge funds swung to betting on price falls in cotton, soybeans and wheat, amid ideas of easier supplies, as they cut bullish positioning in agricultural commodities to the weakest in three months Managed money, a proxy for speculators, cut its net long position in futures and options in the top 13 US-traded agricultural commodities, from coffee to cattle, by more than 43,000 contracts in the week to last Tuesday, according to data from the Commodity Futures Trading Commission regulator - Richard Bruton TD, Minister for Jobs, Enterprise and Innovation, today announced that the Viagogo Group, which operates www.viagogo.com, the ticket marketplace, intends to double its workforce in Ireland over the next three years, taking it from 100 to over 200 employees. The jobs are supported by the Department of Jobs, Enterprise and Innovation through IDA Ireland -

IOSCO consults on liquidity risk management for collective investment schemes

Thursday, 26 April 2012
IOSCO consults on liquidity risk management for collective investment schemes The Technical Committee of the International Organisation of Securities Commissions has published the consultation report Principles of Liquidity Risk Management for Collective Investment Schemes, which outlines a set of principles against which both the industry and regulators can assess the quality of regulation and industry practices relating to liquidity risk management for collective investment schemes (CIS).  http://www.ftseglobalmarkets.com/

The Technical Committee of the International Organisation of Securities Commissions has published the consultation report Principles of Liquidity Risk Management for Collective Investment Schemes, which outlines a set of principles against which both the industry and regulators can assess the quality of regulation and industry practices relating to liquidity risk management for collective investment schemes (CIS). 

The Technical Committee of the International Organisation of Securities Commissions has outlined a set of principles against which both the industry and regulators can assess the quality of regulation and industry practices relating to liquidity risk management for collective investment schemes (CIS).   

Since the outbreak of the global financial crisis, the issue of liquidity has been a major concern for regulators, although the discussions on regulatory reform have focused more on the importance of liquidity in the banking sector rather than in other sectors. However, the asset management sector has specificities to be kept in mind when setting policy recommendations.



 Good liquidity risk management is a key feature of the correct operation of a CIS, as the right to redeem units/shares is a defining characteristic of open-ended schemes. Liquidity risk management is complex and a CIS may experience liquidity issues as, for example, when the market in which it is invested closes unexpectedly. However, asset managers have regulatory and practical tools to manage liquidity both on the asset side and on the investor side.  In exceptional circumstances, a liquidity issue could lead to a CIS temporarily suspending all investor redemptions. IOSCO recently published the report Principles on Suspensions of Redemptions in Collective Investment Schemes addressing this issue.

The fundamental requirement of liquidity risk management is to ensure that the degree of liquidity that the open-ended CIS manages allows it in general to meet redemption obligations and other liabilities.  The principles of liquidity risk management provide details on how compliance with this requirement can be achieved. Generally, these principles aim to reflect a level of common approach and to be a practical guide for regulators and industry practitioners. Implementation of the principles may vary from jurisdiction to jurisdiction, depending on local circumstances and legal and regulatory structures.

The principles of liquidity risk management for CIS

 The principles of liquidity risk management for CIS are divided into two groups related to the life span of a CIS: the pre-launch and the day-to-day liquidity risk management. They include the following:

 Principle 1

The responsible entity should draw up an effective liquidity risk management process, compliant with local jurisdictional liquidity requirements

 Principle 2

The responsible entity should set appropriate liquidity limits which are proportionate to the redemption obligations and liabilities of the CIS

 Principle 3

The responsible entity should carefully determine a suitable dealing frequency for units in the CIS  

 Principle 4

Where permissible and appropriate for a particular CIS, and in the interests of investors, the responsible entity should include the ability to use specific tools or exceptional measures which could affect redemption rights in the CIS’s constitutional documents

 Principle 5

The responsible entity should consider liquidity aspects related to its proposed distribution channels

 Principle 6

The responsible entity should ensure that it will have access to, or can effectively estimate, relevant information for liquidity management

 Principle 7

The responsible entity should ensure that liquidity risk and its liquidity risk management process are effectively disclosed to prospective investors

 Principle 8

The responsible entity should effectively perform and maintain its liquidity risk management process

 Principle 9

The responsible entity’s liquidity risk management process must be supported by strong and effective governance

 Principle 10

The responsible entity should regularly assess the liquidity of the assets held in the portfolio

  Principle 11

The responsible entity should integrate liquidity management in investment decisions

Principle 12

The liquidity risk management process should facilitate the ability of the responsible entity to identify an emerging liquidity shortage before it occurs

 Principle 13

The responsible entity should be able to incorporate relevant data and factors into its liquidity risk management process in order to create a robust and holistic view of the possible risks

 Principle 14

The responsible entity should conduct assessments of liquidity in different scenarios, including stressed situations

 Principle 15

The responsible entity should ensure appropriate records are kept, and relevant disclosures made, relating to the performance of its liquidity risk management process

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