October 26, 2011 at 5:20am
Rude health, and a changing of the guard?
By Detlef Glow, Head of EMEA Research at Lipper. The views expressed are his own.
The European exchange-traded-fund (ETF) industry has shown some resilience in the face of questions about management practices raised by market observers like the Financial Stability Board (FSB) and regulatory bodies like the FSA in the UK.
The segment grew by 7.74 percent over the first seven month of 2011, with assets under management up by 17.20 billion euros to reach 239.37 billion.
This has come as some critics have characterised ETFs as a systemic risk for financial markets, due to the use of swaps to replicate the underlying index. Another risk that has been highlighted was the liquidity of some securities accepted as collateral to secure the positions in derivatives and for security lending strategies. Also raised was the outstanding short volume in some ETFs.
But as the ETF industry is fully regulated by market authorities and uses typical techniques for derivatives and securities-lending strategies, the risks highlighted are already known. In addition, the assets under management of the global ETF industry are still less than ten percent of the total, and the issues might be better raised with respect to all funds, instead of pointing the finger at one market segment.
Despite publicity surrounding these issues, and in contrast to the expectations of some market observers, the industry has shown a pretty normal growth pattern in terms of newly-launched funds, with 167 new products hitting the market during the first half of 2011. Most of those were equity funds (102), with commodity funds a significant minority (22).
To see details of the new ETF launches click here and here.
There might be some shuffling of the pack, however. IShares is still the leader, way ahead of the other ETF promoters. But since July 2011 the second largest promoter in Europe is Deutsche Bank’s db x-trackers, which has overtaken Societe Generale’s Lyxor in terms of market share.
The race for second place in the European ETF industry has been touch-and-go for a while. Lyxor started reshuffling management and sales teams in the spring of 2010 but couldn’t fend of Deutsche’s push. Nevertheless, the difference in assets under management between Lyxor and db x-trackers is very small, so the race will continue in the future.
A healthy rivalry, you might say, and a sign of an industry displaying healthy growth patterns. And you can add to that mix the positive effect of new players like Ossiam entering the European market.
The industry still has a decent story to tell, even if ETF providers were caught unawares by the spotlight suddenly turned on their industry. And it’s true that there might be some hurdles to jump now that regulators’ gaze has fallen on ETFs: perhaps we’ll see some restrictions in the use of securities as collateral; and a further effort to boost transparency.
October 12, 2011 at 7:31pm
WSJ Europe disputes circulation scam report
* WSJ Europe parent News Corp embroiled in ethics scandalOct 12 (Reuters) - The publisher of the Wall Street Journal
Europe was forced to resign over a scam used by the paper to
boost its circulation, Britain’s Guardian newspaper reported,
citing documents and e-mails it said it had obtained.The Journal responded by saying the report on Wednesday was
“replete with untruths and malign interpretations”.WSJ Europe parent Dow Jones had said the previous day that
Andrew Langhoff had quit over ethical issues raised by the
paper’s commercial relationship with Dutch consulting firm
Executive Learning Partnership (ELP).It did not disclose the nature of the relationship.Rupert Murdoch’s News Corp parent of Dow Jones, has been
fighting accusations of ethical missteps related to phone
hacking at its now defunct News of the World newspaper in
London.Much of the reporting on the phone-hacking scandal has been
led by the Guardian.On Wednesday, it reported that the WSJ Europe had been
channeling money through European companies to secretly buy
thousands of copies of its own paper for as little as 5 cents
per copy.This had the effect of inflating its circulation and
misleading advertisers about the Journal’s true circulation,
the Guardian said.Both the Guardian and WSJ Europe said the UK Audit Bureau
of Circulation had signed off on the program.The partnership also involved a contract in which the
Journal promised to publish articles that promoted ELP’s
activities, the Guardian said.”The Guardian’s inflammatory characterization of WSJE’s
former ELP circulation program is replete with untruths and
malign interpretations,” the Journal said in an e-mailed
statement. “Andrew Langhoff resigned because of a perceived
breach of editorial integrity, not because of circulation
programs, whose copies were certified by the ABC UK.”The Guardian said that a former employee, who was not
identified, was a whistleblower who helped to reveal the
circulation-boosting effort.The whistleblower’s position was made redundant in January
after he raised concerns about the circulation
circulation-boosing effort, the Guardian said.”In fact, that employee was first investigated by the
company because of concerns around his business dealings,” the
Journal said in its statement.”REPORTERS PRESSURED”The Guardian said former Dow Jones Chief Executive Les
Hinton, a close ally of Murdoch, had been aware of the
circulation effort. A Dow Jones spokeswoman declined to comment
on Hinton’s involvement.In an article on its website on Tuesday, the Journal said
an internal investigation had found that Langhoff had
personally pressured two reporters into writing articles
featuring ELP.The agreement between the paper’s circulation department
and the Dutch firm, now expired, was not disclosed to readers
of the articles, the Journal said in a note attached to the
articles on its website.ELP did not respond to e-mailed requests for comment.”There is — and should be — an inviolable boundary
between our commercial relationships and the content we
produce,” Langhoff said in an internal memo on Tuesday.”The perception that this boundary was crossed via a broad
agreement between the WSJE Circulation department and a company
called Executive Learning Partnership has been of great concern
to me,” he said.The phone-hacking allegations, which have led to a number
of arrests, have prompted critics to demand the resignation of
Murdoch and other executives, including his son James.News Corp has fiercely defended Murdoch and other directors
saying it “vehemently disagrees” with critics of the company’s
practices.Dow Jones competes with Thomson Reuters Corp.
12:31pm
Yemeni protesters rally for U.N. council resolution
“We hope the world’s conscience will be awakened! We hope the U.N. will take a historic step for the Yemeni people,” a speaker called out to the crowd gathered on Sanaa’s 60 Street, where they were waving U.N. flags and peace signs.”We call to the world, our voices high — no protection, no guarantees, the people want to try the president! The people want to try the murderer!” they chanted.Clashes between security forces siding with protesters and soldiers loyal to Saleh killed more than 100 people four weeks ago, but have all but abated as all sides await moves by the Security Council.The U.N. special envoy left Yemen earlier this month after a fruitless two weeks trying to mediate between Saleh’s government and the opposition.A wily politician who has ruled Yemen with an iron fist for 33 years, Saleh has already pulled back from a Gulf Arab plan that calls for him to form an opposition-led cabinet and then hand power to his deputy before early parliamentary and presidential elections.With rebels in the north, separatists in the south and an active wing of al Qaeda, Saleh had so far managed to stay in power with the support of the United States and neighboring Saudi Arabia, who fear that al Qaeda will exploit chaos in Yemen to launch more attacks.Al Qaeda in the Arabian Peninsula claimed responsibility for the attempted attack by a Nigerian man who is accused of trying to use a bomb in his underwear to blow up a plane in December 2009. The man, Umar Farouk Abdulmutallab, appeared in a U.S. court on Wednesday and asked to plead guilty to charges against him. [ID:nN1E79B0KZ]Protesters in Yemen first took to the streets in January of this year to demand reforms and an end to Saleh’s grip on power in the impoverished country, where two-thirds of the population live on less than $2 per day.”We are here to tell the Security Council they need to take a moral stance toward our peaceful revolution in Yemen,” said Hana Yahya, 36.”We turn to them to say we want freedom and we want to build a democracy. You need to stop supporting a dictator in this country.”The Security Council issued a statement on Yemen in late June voicing “grave concern” and supported mediation efforts by Gulf countries.Russia and China had initially objected to that statement, but diplomats in New York said they were not likely to block the newly proposed resolution.
October 11, 2011 at 12:47pm
What I want from the Pentagon
This op-ed by Editor-in-Chief David Schlesinger appeared in The Guardian.
When Wikileaks published the harrowing video of the deaths in Iraq of my colleagues Namir Noor-Eldeen, 22, and his assistant and driver Saeed Chmagh, 40, the world finally had the transparency it should have had about this tragedy.
It was impossible for me to watch and not feel outrage and great sorrow – but this is not about trying to tell anyone else what to feel. This is about trying to find out exactly what happened and how to ensure it doesn’t happen again.
What I want from the Pentagon – and from all militaries – is simple: Acknowledgment, transparency, accountability.
Acknowledgment means both understanding at headquarters and training in the field that journalists have a right to be on the battlefield, and not just those embedded with a military unit. A journalist’s mission is to provide understanding, provide context and provide the reporting that citizens deserve. That mission requires journalists cover the story from multiple angles, including ones that potentially put them in harm’s way. A war prosecuted in darkness is a war without accountability. The journalist’s role is vital for a democracy and it must be acknowledged.
Then, there must be acknowledgment that true journalists come in every race, both sexes and a multitude of nationalities. Within Reuters, our 2,800 journalists come from 80 different nationalities. They all have a right to safety.
As too many tragic deaths, including those of Namir and Saeed, have proven, soldiers in tense warfare repeatedly mistake cameras and tripods for weapons. They’re not. There must be a way of training soldiers to distinguish the forms. It is imperative to have the consciousness that the shape in the scope might not be a threat.
Transparency is vital. This is the honesty for all to learn lessons from what has transpired. Soon after the incident, Reuters editors were shown only one portion of the video . We immediately changed our operating procedures – the first portion of the video made clear that anyone walking with a group of armed people could be considered a target. We immediately made it a rule that our journalists could not even walk near armed groups.
However, we were not shown the second part of the video, where the helicopter fired on a van trying to evacuate the wounded. Had we seen it, we could have adjusted our procedures further.
Transparency saves lives.
We have been trying for more than two and a half years to get this video from the military through formal legal means without success and in fact have an appeal to their last denial of our request still pending; now it transpires that officials who repeatedly told us that what the video contained was important enough for security reasons to withhold it from us, made no efforts to secure it and weren’t even clear where it was. It took a whistleblower to make sure the world had the transparency it needed and deserved.
I want the Pentagon to join me in a search for thorough and complete transparency.
Finally there is accountability. There are rules of war as there are in peace. The lack of transparency has meant there’s been absence of accountability.
Let’s dig behind the video. Let’s fully understand the rules the military were operating under. Let’s have a complete picture of what was going through the fliers’ minds. Let’s hear the Pentagon explain its interpretation of the rules of engagement and the Geneva Convention and how the actions either did or did not accord with them in its view. And importantly, let’s keep in mind that while we focus on this particular tragedy, it is the rare circumstance that when a journalist is injured or killed in a conflict area, there is a video of the death, and even more rare as this case demonstrates, for the public to see such a video.
And then let’s have the debate. Seeing the hundreds of articles and thousands of comments in the wake of the video’s release, it’s clear that people on every side of the issue have strong feelings. Let’s have a debate based on fact and not on emotion.
Acceptance, transparency and accountability – these add up to true justice. And that, in the end, is what I am after. I want justice for the journalists who lost their lives.
Justice is not vengeance. Justice is about holding all to account to make sure that proper lessons are learned, that mistakes aren’t repeated and that tragedies don’t happen again.
