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KAS Selections Volume 17, issue 4, December 2010

WorldPensionSummit offers insight on essential ‘crossroads’ in pensions Stress test for pension funds New developments in the pensions arena: performance & risk ‘Determining Share Prices’ Convention The changing value chain and its impact on broker/dealers CCP derivatives clearing KAS BANK joins the afme Post-Trading Division

KAS Selections

Editorial As 2010 nears its end, we can look back on a year that was certainly “interesting”. This term is much used by

KAS Selections is a quarterly newsletter from KAS BANK N.V. Although the information in this issue is drawn up with the utmost precision, no rights can be derived from it.

the British, and can often be open to interpretation. And that, perhaps, is how best to describe 2010. The markets have certainly been capricious, amid periods of historically low volumes. We even faced an actual crash, not in the traditional month of October, but in May.

Volume 17, Issue 3, December 2010 Contents: KAS BANK joins the afme Post-Trading Division ‘Determining Share Prices’ Convention Stress test for pension funds KAS Investment Servicing administers five new investment funds SIBOS Amsterdam well attended The changing value chain and its impact on broker/dealers WorldPensionSummit offers insight on essential ‘crossroads’ in pensions CCP derivatives clearing Client wins Global Custody Network News Client Service Review: the client speaking New developments in the pensions arena: performance & risk Personnel notes Laurens Vision

And it only lasted 20 minutes: 2010, the year of the flash crash. 3 6 9 9 10 12 15 16 17 18 20 21 22 22

This year also saw KAS BANK launch many ground-breaking initiatives, all designed to increase our focus and attention on you, our clients. We will continue this programme in 2011 and inform you of our progress through your client teams. On 15 December we hope to welcome you to our traditional year-end reception, which promises to be very well-attended as usual. Prior to the reception we will present our newly developed pension fund stress test, which we anticipate the Dutch Central Bank will make compulsory next year. Yet another innovation is an ‘app’ for our pension fund dashboard, allowing

Comments on this issue, suggestions for future articles and mailing list requests should be addressed to: Clearing & Banking Services Associate director: Financial Institutions Germany Associate director: Fund & Investment Services Associate director: Sicco Plesman Institutional Services Associate director: Bob Meijer KAS Investment Servicing GmbH CEO & Managing director: Relationship Management UK Managing Director UK: Sub & Core custody Associate director: Translation: Interpret Tekst & Vertalingen Text editor: Matthew Binnington Editor: Carla Boogers KAS BANK N.V. Marketing & Communication P.O. Box 24001, 1000 DB  Amsterdam The Netherlands +31 20 557 5812 Graphic Design: Ebbenhorst Design, De Meern Print: KAS BANK, Document & Systems Services

you to view up-to-date pension fund reports on your iPad, wherever you are and at any time. At the year-end reception we will demonstrate a prototype version to those interested. Another lesson of 2010 is that the financial markets change rapidly. One such development is the implementation of a central counterparty for derivatives. Broker/dealers must respond to these initiatives, which often have a direct influence on their place in the value chain. Elsewhere, the impact of high frequency trading on share prices is receiving much attention. And pension fund trustees are under constant pressure to deliver on their most significant promise to scheme members: the guaranteed payment of pension benefits. KAS BANK specialists are regularly invited to speak on these subjects, both in the Netherlands and abroad, and their reports can be found in this edition of KAS Selections. As you know, KAS BANK is an active member of several market steering groups and trade associations. We have recently joined the Post-Trading Division of the Association for Financial Markets in Europe (AFME). You can read more about the Post-Trading Division’s plans for 2011 in an interview with Christian Krohn, director at AFME. We hope you find this final KAS Selections of 2010 to be interesting and thought-provoking. For now I wish you happy holidays and a prosperous new year on behalf of all KAS BANK staff.

Sikko van Katwijk Chief Commercial Officer, KAS BANK Managing Board

KAS BANK joins the Post-Trading Division KAS BANK recently became a member of the AFME PostTrading Division, which represents the views and interests of its members regarding developments in the European post-trade environment. KAS BANK is already an active member of numerous market steering groups and industry associations, and AFME and KAS BANK share a common focus on the European markets. As a clearing, settlement and custody specialist KAS BANK is at the heart of discussions over T2S, CCP messaging, EC legislation concerning CCPs and CSDs, the implementation of market standards for corporate actions, interoperability, and so on. Membership of AFME will enhance KAS BANK’s ability to influence these discussions and remain abreast of key issues and market developments, gaining insight and knowledge that we will then be able to pass onto our clients. We spoke to Christian Krohn, a Director at AFME, about the association’s plans and some of the key issues in the posttrade space.

What is on the AFME agenda for the next

The AMFE office at St. Michaels House, George Yard, London

12-18 months ? “The AFME Post Trade division is about to commence the

Is AFME in favour of a regulatory approach

process of determining priorities for 2011. The process is

to improving market efficiency, or will

as follows: each of the five-strong Post Trade Committee

heightened competition be the best solution ?

(Clearing, Settlement, Custody, Tax and Legal) will over

“We take the view that the progress to date of the

the coming weeks develop their proposals for Committee

industry on the harmonisation and standardisation of

activities in 2011. The proposals for activity/work-stream

operational processes, including settlement cycles and

include: the overall objective of the activity; milestones;

market standards for corporate actions processing,

timelines; success criteria; and resource allocation. The

demonstrates unequivocally that market participants are

proposals will then be submitted for approval by the AFME

best placed to develop standards, analyse the gaps

Post-Trade Board resulting in a consolidated action plan

between these and local practices and on this basis

similar to that for 2010. In terms of content the Action

execute national implementation plans. While certain

Plan 2011 for the Clearing Committee 2011 is likely to

areas of such operational processing standardisation may

include: CCP interoperability and input on the EC’s

benefit from targeted regulatory support, we believe that

proposed regulation on OTC derivatives, CCPs and trade

public sector action should be strictly targeted on the

repositories (aka ‘EMIR’).”

areas of securities law, fiscal procedures and risk regulation, supervision and oversight.”


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What is your view on the efforts to achieve

consultation paper is the next step in the legislative

interoperability between EuroCCP, EMCF, LCH

process for harmonising the legal framework for securities

Clearnet, and X-clear ?

holding and transactions in the EU and arrived

“Given that the process of establishing interoperability

considerably later than originally expected (March/April

commenced over 18 months ago (under the EU Code of

2010). The EC hopes to produce legislative proposals on

Conduct on clearing and settlement), we have been

the issue (Securities Law Directive, or SLD) before summer

disappointed by the pace of progress. We understand (and

2011 aimed at increasing legal certainty for investors in

indeed fully support, given that it is ultimately clearing

cross-border situations and improving the efficiency of

member capital at risk) the need for the regulatory

securities holding and improving the protection of

authorities of the Netherlands, Switzerland and the UK to

investors’ rights. The consultation covers the full scope of

have assurance that the additional risks of interoperability

the possible legislative approach but excludes some issues

are properly identified, monitored and mitigated. We

raised in the first consultation which will be dealt with

understand that a joint announcement approving the

separately (e.g. CSDs). We shall be responding to this via

proposed interoperability arrangements is expected in the

the AFME Post Trade Legal Committee. It remains to be

coming weeks.”

seen whether the potential for the SLD to reduce systemic legal risk will eventually trump remaining member state

Do you think a pan-European securities law

preferences to retain national legal specificities.”

is likely to be achieved in the future ? “The EC has published a second public consultation on a

What impact will MiFID II have on the post-

new legal framework for intermediated securities. The

trade environment ? “At this time (in advance of the EC MiFID Review consultation paper) it is difficult to predict the impact of

Christian Krohn works for the Association for

MiFID II on post-trade processing. However, the general

Financial Markets in Europe focusing on European

political/regulatory push for a greater degree of

regulatory and market issues. Mr Krohn is a LLM and

centralised trading of all asset classes may lead to more

MBA graduate with 16 years’ experience working in

centralised post trade processing (i.e. clearing)

the financial services industry. Prior to his current

especially by trading platforms that own/control

position he worked in the FSA Market Policy

clearing providers.”

Department focusing on the UK implementation of the Transparency Directive and the development and

What role do regulators play in discussions

implementation of FSA policy relating to the clearing

surrounding pre-trade risk management ?

and settlement of securities transactions. From 2000-

“Regulatory change dictating new practices related to

2002 Mr Krohn was legal consultant to the Association

sponsored access appears inevitable with naked sponsored

of National Numbering Agencies (ANNA - international

access coming under greater regulatory scrutiny and lead

entity standardising securities data and disseminating

to a greater degree of standardisation of sponsored access

financial information), and from 1995-2000 he was in-house legal advisor to the Danish Securities Centre

“CCPs should only clear products for which they are capable of managing related risk”

(an electronic securities depository and clearing house).



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arrangements. While uniformity and standardsation in requisite pre- and post-trade risk checks may go a long

KAS BANK will be represented in the AFME Post-

way in paving the way for fair competition, all market

Trading Division by Laurens Vis, Managing Director of

participants must continue with their due diligence and

KAS BANK UK. Laurens brings a wealth of experience

scheduled audits to ensure that sponsored access

to this pivotal role, having been an influential

arrangements remain a beneficial force in market structure

member of several industry steering groups and


committees over numerous years.

Does AFME support the view that all

Laurens Vis:

products should be cleared through

“KAS BANK has been at the heart of the securities

a central counterparty ?

industry for many decades, and we take our

“No, CCPs should only clear products for which they are

responsibilities to the post-trade community very

capable of managing related risk. In addition, in our July

seriously. We are therefore delighted to be teaming

response to the EC consultation paper on EMIR we gave

up with AFME. We bring considerable experience to

examples of contracts that should be excluded from a

the Post-Trading Division, and hope to take a leading

mandatory clearing regime, including contracts required to

role in shaping debate, developments and trends to

manage risk within groups; contracts required to manage

the benefit of the industry and, most importantly, our

risk from non-clearable exposures; overly-directional


positions of CCP members, etc.”

The Association for Financial Markets in Europe (AFME) The Association for Financial Markets in Europe (AFME) was formed in response to the increasing globalisation of the financial markets. A joint venture between LIBA (the London Investment Banking Association) and the European operations of SIFMA (the Securities Industry and Financial Markets Association), AFME represents a broad array of global and European participants in the wholesale financial markets. The chief objective of AFME is to promote safe, sound, and efficient wholesale financial markets. They accomplish this through their members, which include pan-EU and global banks as well as key regional banks, brokers, law firms, investors, and other participants in the European financial markets. AFME offers its members the opportunity to engage directly with policymakers to work towards open European and global markets that benefit from well-crafted, globally consistent regulations; to participate in the formulation of market-led solutions, standards and practices; to communicate authoritative industry expertise and views to public officials, private individuals, and the media; and to participate in networking and educational events such as conferences, seminars, and workshops.


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How do HFTs affect share prices?

‘Determining Share Prices’ Convention On Wednesday 10 November 2010, KAS BANK organised its

According to Spanbroek, HFTs make a positive contribution

“Determining Share Prices” convention. Focal points were

to increasing liquidity and reducing market volatility.

the impact of high-frequency trading on liquidity,

Furthermore, he also emphasised that most market players

determining prices of securities and the role of regulated

are themselves asking for far-reaching pre- and post-trade

markets and MTFs.

transparency, through the European consultation on MIFID II among other channels.

The participants were welcomed by Sikko van Katwijk (Chief Commercial Officer, KAS BANK Managing Board,

After the break, Cees Vermaas, CEO

after which he gave the floor to Laurens Vis, the first of

and Chairman of NYSE Euronext

the four speakers.

Amsterdam and member of the NYSE Euronext Management Committee, Laurens Vis, Managing Director of

discussed the changing role of the

KAS BANK UK, explained that the

regulated markets with regards to the

emergence of MTFs and new clearing

new alternative trading platforms, the MTFs. Vermaas

organisations, such as EMCF, has

acknowledged that, for now, only the regulated markets

done more to fragment the securities

play a role in determining share prices. Vermaas also sees

landscape than to harmonise it. Nor

a role for NYSE Euronext as a network provider and a

is real pre- and post-trade transparency in place. Vis went

supplier of trading technology. Furthermore, he sees a

on to say that this is partly due to the fact that today’s

clear role for markets as suppliers of capital, particularly to

regulated markets owe approximately 30 percent of their

smaller companies and small- and medium-sized

turnover to making their market and pricing data

businesses. He believes that political support for this role

commercially available, which is not exactly beneficial to

is essential.

transparency and interoperability. Vis concluded his

Vermaas also clarified that a single European market is a

argument by sharing his greatest wish: uniform European

distant concept, which he illustrated by mentioning that

securities legislation.

Euronext already has to deal with five supervisory institutions in five different countries.

The next speaker was Mark Spanbroek, Director of Strategic

Finally, capital market lawyer Joost

Development and Market Structure at

Schutte, a partner at De Brauw

Getco Europe, Ltd., who delivered an

Blackstone Westbroek, discussed the

enlightening talk about this global

legal differences in the European

market maker’s operating procedures

regulatory systems for both regulated and alternative markets (MTFs). One

and the (alleged) influence of high-frequency traders on liquidity and prices in the market. Speed and market

area where this is relevant, for example, is the supervisory

knowledge are timeless, said Spanbroek. Only now we are

regime applicable to a certain stock market. Despite MiFID,

talking about microseconds and algorithms, instead of a

regulation in Europe is still subject to differences in

‘feel’ for the market.

interpretation between the supervisory institutions and



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“HFTs make a positive contribution to increasing liquidity”

added that this does not have an impact on market stability. Laurens Vis wanted to broaden the statement. He said that stability is more than just determining prices; it also

governments. One of MiFID II’s tasks is to find a solution

encompasses the operational and risk management systems

for this, by paying particular attention to post-trade

used by a platform.

reporting and the degree of transparency required. During 2. Issuing institutions should be concerned about

an interruption, Mark Spanbroek pointed out the fact that the market players themselves insist on a ‘consolidated

disintegrating liquidity and the role played by high-

ticker tape’ for all European markets to avoid any

frequency trading.

appearance of insider trading or ‘free rides’.

(agreed: 38% / disagreed: 35% / no opinion: 27%)

Statements and discussion

Vermaas pointed out that issuing institutions are concerned

The presentations were followed by a voting round during

about the lack of clarity over who their shareholders are,

which all participants could vote electronically on seven

while the increase in OTC transactions makes trading in less

statements. After each vote, the four speakers responded

transparent general.

to the result and to questions from the audience.

According to Schutte, listings on several platforms make little sense for issuing institutions. Vermaas agreed with this. This is even less relevant to lower-liquidity funds, as

1. High-frequency traders provide liquidity, and therefore stability.

MTFs do not offer the support that regulated markets are

(agreed: 71% / disagreed: 13% / no opinion: 16%)

capable of providing. One of the participants argued that the solution is more

Cees Vermaas pointed out that on the contrary, aggressive

likely to be found in requiring a best price rather than best

trading can undermine market stability. The brokers

execution, as the former already includes the trading fees

present expressed concerns about the potential for market

for the relevant platform.

abuse since HFTs can slow or accelerate the market with 3. Is one local supervisory institution capable of ensuring

their enormous numbers of electronic orders. Spanbroek disagreed, arguing that high-frequency trading is based on

fair and reasonable trading on all platforms (dark and

algorithms and technology. The models used all work


independently, and sometimes even against each other.

(Yes: 31% / No: 69% / no opinion: 0%)

For this reason, they ultimately have no impact on

“Issuing institutions are concerned about the lack of clarity over who their shareholders are”

determining prices as such. While he did admit that this may lead to frustration among brokers’ end customers, he K A S

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“The prevention rapid collapse of the financial markets after the ‘flash crash’ could well have been due to the existence of multiple CSDs, CCPs and supervisory institutions”

In this discussion the representative of the AFM spoke up regularly, pleading for greater European supervision and improved cooperation between the supervisory institutions, among other things. He suggested that maximum centralisation will automatically bring the (interpretations of) regulations closer together. He also

financial structures is not desirable. He preferred that

announced the upcoming publication of an AFM research

Europe acts as a unified entity with regards to the

report on high-frequency trading, which was published on

functioning of the market. When a member of the

18 November 2010.

audience referred back to the function of the stock

Issues surrounding supervision have implications for

market, Vermaas said that the stock market does not equal

sovereignty, said Schutte. The more countries that transfer

Europe. Enforcing the rules, for example where large

supervision to a central institution, the smaller the

withdrawals are concerned, is better than more regulation,

possibility of ‘regulatory arbitration’, which currently still

which would only promote protectionist behaviour.

provides the potential for competitive advantage. Vermaas

Schutte responded by stating that while MiFID is not ideal

also pleaded for a uniform European supervisory

in terms of its net impact, the situation in the US isn’t


either, in spite of the existence of a single CSD and supervisory institution.

4. Computer trading has been around for years, but it is 6. High-frequency traders’ computer programs are

the media that are suddenly turning it into a big issue when actually no major changes have been made.

sufficiently monitored and consequently the risk of

(agreed: 58% / disagreed: 33% / no opinion: 9%)

them causing a stock market crash is zero. (agreed: 9% / disagreed: 58% / no opinion: 33%)

Laurens Vis again pointed out that the images formed in the media are determined by the direction in which the

The AFM argued that direct monitoring of the manner in

stock market is heading: up = popular, down = on the

which companies earn their money is undesirable due to

chopping block. The AFM mainly looks to a fact-based

the risk of ‘moral hazard’. The focus of the monitoring

discussion for a solution, as the exchange of information

should be placed on the algorithms used, not on the basic

increases confidence in the market.

assumptions. In addition, proper emergency procedures must be ready in case computers fail or ‘go crazy’.

5. Harmonisation in Europe should take place through the


free market system instead of through increased regulation.

In his conclusion, Sikko van Katwijk

(agreed: 46% / disagreed: 48% / no opinion: 6%)

noted that there may be a positive side to the fragmentation within

Referencing his presentation, Laurens Vis argued that

Europe. He argued that the

further regulation is precarious. The situation already

prevention of a rapid collapse of the

leans more towards fragmentation than harmonisation.

financial markets after Lehman and

The effect achieved is often different from the regulators’

the ‘flash crash’ last May could well have been due to the

intent. Therefore, the free market should be allowed to do

existence of multiple CSDs, CCPs and supervisory

its job, but in a supervised manner. Vermaas agreed,

institutions instead of one central counterparty, as in the

noting that the financial crisis has shown that allowing

United States.

the free market system to have complete influence on



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Stress test for pension funds

KAS Investment Servicing administers five new investment funds In cooperation with Postbank Financial Services, KAS Investment Servicing GmbH has launched five

KAS BANK has developed a stress test for pension funds that

new funds for investors in the German market. All

will enable trustees to gain a better understanding of how

funds meet the guidelines for special funds

resilient their pension scheme would be in times of extreme

(‘Sondervermögen’) for investors and have been

economic crisis.

approved for public sale.

The new service examines the likely impact of several

The new ‘fund family’ consists of a fund of funds

worst-case scenarios in terms of the funding level of their

(‘Dachfonds’) and four sub-funds. Each fund has its

scheme, and can be implemented on an annual, monthly

own investment strategy and will invest in various

or quarterly basis. This stress test, which is also available

financial instruments. These include equities, money

in the Netherlands and Germany, is in response to the

market instruments, mortgage bonds and corporate

more stringent requirements in the UK market and around


the world following the global economic downturn. This structure allows the investor to create a portfolio Commenting, Stephen Isgar, UK Business Development

drawing on the various funds within the fund of

Manager, said: “Since the collapse of Lehman Brothers and

funds. The funds have been established in cooperation

the subsequent economic turmoil, there has been greater

with the experienced asset management team of

demand for services that help prepare pension funds for

Deutsche Postbank Financial Services GmbH in

the worst possible outcome. The new stress test identifies

Frankfurt, who also act as fund manager.

risks in a pension fund’s portfolio, enabling trustees to get

KAS Investment Servicing GmbH acts as ‘Master-KAG’

a full grasp of the dangers potentially facing the pension

for these funds, and KAS BANK German branch as

scheme in the event of severe market movements. This fits

‘depotbank’ and custodian.

perfectly within the ongoing development of innovative “These five new funds represent

institutional risk management services at KAS BANK.”

a significant expansion of our fund administration services in the German market,” says Jörg Sittmann, CEO of KAS Investment Servicing GmbH. “As an independent ‘insourcer’ of administrative services we provide services for German financial institutions and institutional investors that are no longer in their core service area. We are also the only independent provider of Depotbank services as well as so called KAG services. We expect a further expansion of our services in other German-speaking countries such as Austria and Switzerland.”


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SIBOS Amsterdam More than 8,700 participants visited this year’s SIBOS conference and SWIFT fair in Amsterdam, the ultimate networking event for the financial industry. KAS BANK was also present at the Amsterdam RAI congress centre, with a stand at the show. We can look back upon a very successful event as the congress resulted in over 100 appointments. KAS BANK was delighted to welcome so many delegates to our home city of Amsterdam. A large number of participants visited KAS BANK’s greenliveried stand during the week where our team of specialists informed them about KAS BANK’s products and services.

This year the Sibos conference programme has been built around three big themes:

Henk Brink presents

engage with regulators earlier and more collaboratively.

1. Regulation

2. Rebuilding trust

We will look at the industry’s collective response to

We will explore how the industry should go about

regulation following the financial crisis and examine


the operational impact of financial reform. We will also

regaining the confidence of its customers, its

consider whether we should – and if so, how we should

counterparts and the public at large. How do we tackle


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Meeting at the KAS BANK stand

The KAS BANK stand

the inevitable conflict between reducing risk and


reducing costs? We will consider, for example, whether

Furthermore, Henk Brink, Director of Network Management

we should change the measure of success beyond

& Global Custody, organised a much-appreciated workshop

profits and share price. We also intend to showcase

on ‘EU harmonisation’. Brink focused on Target2Securities,

some pragmatic, actionable CSR ideas for the financial

the European Central Bank’s new settlement system.

industry. 3. Recovery

As at other events, the traditional KAS BANK shuffleboard

There are differing opinions about when and how it

competition proved to be a great success. Some visitors

will come about but the one thing everyone agrees on

returned to our stand several times to improve their

is that a recovery is coming. We will discuss what

personal scores. The daily prizes went to Juha Mokka

financial services players can do to be ready to

(Pohjola Bank plc, Helsinki), Ulf Rohloff (Nord/LB,

capitalise on it. Can we “innovate our way out of this”

Germany), KB Larsen (Nordea, Denmark) and Mike Clayton

as Steve Jobs once said? How do we best leverage

(Butterfield Bank, Guernsey).

technology? We will also examine the uncertainty that prevails in the marketplace and discuss where to compete and where to collaborate.


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The changing value chain and its impact on broker/dealers The financial markets are changing rapidly. The main factors

even today, will no longer sustainable. Either regulation

behind these changes are the regulatory environment, the

(the MiFID review) or commercial pressure is likely to

‘Europeanisation’ of the financial markets and the

enforce links to multiple platforms.

incredible pace with which new technologies are changing the way that trading is conducted. This has also influenced

Order execution

distribution models for financial (and trading) services and

The incredible pace of new technologies has changed the

the need for all market participants to focus on costs to stay

heart of a broker/dealer’s business: it no longer involves

competitive. All these developments change the way the

physical contact between traders, but can take place

different participants in the financial markets interact with

entirely on the basis of computerised models. Increasingly

each other – and therefore change the value chain of a

sophisticated algorithms analyse any movements stock

trading order from the

(and other parameters in the system) make and react

moment it is generated

within nanoseconds. It has had a major impact on the

until the moment the

number and composition of transactions.

transaction is settled

More sophisticated systems have also made trading access

and confirmed. How

to stock markets so much easier for institutional as well as

this impacts broker/

retail investors. But in order to facilitate this, you need a

dealers is explained by

system that can instantaneously compare different

Ryanne Cox, Managing

markets; smart order routing systems. And while you have

Director KAS BANK

such a system in place, the possibilities to make use of

Germany, at the third Annual bwf/ICMA Capital Markets

arbitrage opportunities between these different platforms

Conference in Frankfurt, Germany.

are within reach. The forerunners to these technology are liquidity providers/market makers on these platforms. They

The different stages of the value chain

have been the first to adopt new technologies and have established multiple memberships. Their constant, automated order flow ensures highly liquid markets where

Order generation

any price differentials are minimised.

One of the main developments we have seen in the execution phase is that the sheer number of alternatives

“Either regulation (the MiFID review) or commercial pressure is likely to enforce links to multiple platforms”

for executing blue chip/equity products is baffling nowadays – just looking at RMs and MTFs, for some stocks 25+ different trading platforms are available. If MTFs and other (secondary) platforms continue to gain market share

Post-trading services

from the primary exchanges, it can be expected that

Clearing providers have responded quickly to the

sooner or later a definition of best execution as “always

developments in the trading leg of the process. Parallel to

execute the transaction on the primary market”, possible

MTFs trading pan-European equities, pan-European



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clearing houses have emerged. It is however not an option for a trading platform to appoint just one clearing house for their transactions. Under pressure from the European Code of Conduct for Clearing and Settlement Services, trading platforms need to be open to multiple clearing houses. In order for this to work effectively, these clearing houses should be interoperable: they need to enter into cross-connectivity agreements in which risk management and margining is organised between both clearing houses. (instead of doing so via an agent bank) more realistic for broker/dealers.

Whereas this direct competition between clearing houses has brought clearing costs down, it has introduced a new level of operational complexity: in order to have full

These developments in the CCP and CSD environment

flexibility, multiple clearing links need to be maintained,

increase transparency and reduce direct costs under

each with their own margining and operational

pressure of competition. While transaction processing


becomes more and more commoditised, the focus shifts to risk management: managing collateral and financing the

“While transaction processing becomes more and more commoditised, the focus shifts to risk management”

trade flow. Is this realistic in the short term?

What will the new value chain look like ?

The introduction of CCP clearing for instruments until now

In the new value chain the different order generators

traded bilaterally, such as OTC derivatives, will lead to

(not just end-investors but also proprietary traders) can

exploding clearing volumes, placing further focus on the

themselves submit orders to various, multiple, fairly

margining systems, collateral management and risk

standardised and efficient trading platforms; upon

profiles of the clearing houses and their members alike.

execution the transactions are cleared and settled potentially via the order generator’s own accounts at one

Among the central securities depositories, competition is

(or several) of the multiple clearing houses and CSDs of

also increasing, albeit from existing rather than newly

the generator’s choice; who confirm the transaction of the

established players. As the European authorities stimulate

settlement and report these to the relevant authorities.

competition between CSDs they will need to compete for

“The service broker moves between the order generator and the trading platforms”

clients and therefore will need to ensure they can differentiate themselves from other CSDs: increase scale, differentiate on client services, value added, etc. chain: become hybrids between infrastructures and agent

What does this all mean for the broker/dealer?

banks. This may make the option to link directly to a CSD

Multi-platform trading is more complex to clear and settle

Therefore, CSDs can be expected to move up the value


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must be adequately allocated. If the broker/dealer has

What will the new value chain potentially look like ?

appointed a clearing and settlement agent to take care of

The traditional broker/dealer that becomes a service

this, it needs to make sure this agent is ready for this

broker is effectively also an order generator in this value

added complexity – not many are!

chain. A new breed emerges however: the order gatherer,

When trading across various platforms it is more important

providing efficient trading access across multiple venues.

than ever that an agent bank can efficiently manage

This model allows broker/dealers to specialise in

margin requirements across those markets/CCPs and ensure

something other than execution services. The execution

that settlements are financed. Failing to do so will

process – in particular exchange connectivity and smart

constitute a risk and cost!

order routing technology – is the specialism of the order

Finally, while execution services are increasingly

gatherer, potentially in tandem with a technology

commoditised, a differentiator for a broker/dealer can be


– broker/dealers typically need more new links and margin

the quality of settlement it can offer, also on alternative

“The excecution process is the specialism of the order gatherer potentially in tandem with a technology provider”

trading platforms – whether this is done by the broker/ dealer itself or its agent bank.

How should broker/dealers react to these developments ?

We expect that, similar to the order gatherer in the

We see two main strategies:

trading phase, a ‘transaction gatherer’ emerges in the

- Broker/dealers differentiate on service. For instance by

post-trading phase. This transaction gatherer has the

focusing on specific types of clients and adapting their

systems and the processes in place to efficiently link to

service model and added-value services to this.

the necessary clearing houses and CSDs and, perhaps most

Margins are gained from added-value services (for

importantly, organise the financing of trade flows and

instance, personalised advice) rather than the

collateral management in an efficient and cost-effective

execution or trading services themselves, which are


mainly offered in a facilitating role.

How does KAS BANK fit into this picture ? - Broker/dealers become ‘order gatherers’, i.e.

KAS BANK has effectively been a transaction gatherer

concentrators of flow. Decreasing margins are made up

since 1806. We are the independent specialist for

for by attracting greater flow. Typically, in this case

transaction and asset servicing as banker to broker/

the broker/dealer makes effective use of technology

dealers, other banks, asset managers and institutional

(or even teams up with a technology provider) – for

investors. We focus on European securities services via our

instance by facilitating excellent connectivity to

direct processing platform, linking into all major European

multiple platforms, trading systems for end-investors.

markets and interwoven with our back-office outsourcing services for broker/dealers. In doing so we support the

This means that the service broker moves between the

effective service delivery of ‘service brokers’ as well as the

order generator and the trading platforms. Effectively

’order gatherers‘ since we facilitate seamless trading on

executing the order is not core business anymore for this

25+ platforms. Which means our place in the value chain

broker; the order gatherer focuses on the trading venues

is right in the centre.

and offers more than pure execution services, it also provides technology.



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WorldPensionSummit offers insight on essential ‘crossroads’ in pensions Between Wednesday 17 November and Friday 19 November the Westergasfabriek in Amsterdam hosted the WorldPensionSummit. KAS BANK’s Sikko van Katwijk gave a presentation on ‘Trustees under pressure’. The WorldPensionSummit is a top level environment for pension professionals and a platform for the exchange of business insights on essential ‘crossroads’ in pensions. WorldPensionSummit is a unique platform for international, high-level networking. decision-­­making and control. It is also critical that trustees Some 260 professionals listened to a great number of high-

fulfil their fiduciary role supported by an interactive tool

level speakers from around the world. On Thursday Sikko van

and that compliance monitoring is actively taken up by an

Katwijk (member of the KAS BANK Managing Board)

independent party (KAS BANK for example).

illuminated the role of trustees in his presentation on ‘Trustees under pressure’. How can trustees manage

Custodians such as KAS BANK do not only provide basic

expectations regarding the pension fund’s most important

information for the financial administration but also deliver

promise: delivering your pension entitlements? Answer: by

relevant management information that helps the pension

organising their investment and information processes as

fund board to remain in control. They can also play an

efficiently as possible.­­­

explicit role in monitoring the execution of the investment policy within the risk and policy framework determined by

Sikko van Katwijk’s presentation

the board. In this way, the board provides an effective

Trustees deal with many and varied parties. All these groups

counterweight to commercial asset management providers.

perform parts of the overall pension fund management

Furthermore, on the basis of the reports provided they are

process. It is important that trustees are able to use a

able to inform the fund’s participants and pensioners in a

single source providing independent data. By doing so,

transparent manner of the results and the fund’s risk

pension fund trustees benefit from a solid basis for

management. Thanks to these stable checks and balances the pension fund can focus on its core business and the board will be continuously in control of the entire investment process. With this, the fund will be prepared for 21st century pension governance.

White Paper A KAS BANK white paper on this topic will be published on our website shortly.


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CCP derivatives clearing The financial crisis has brought over-the-counter (OTC)

4. To improve collateral management procedures for all

derivatives to the forefront of regulatory attention. The

OTC derivatives that are still cleared bilaterally

near-collapse of Bear Stearns in March 2008, the default of

5. The adoption of more standard contracts and processes

Lehman Brothers on 15 September 2008 and the bail-out of

by market participants.

AIG the following day highlighted the shortcomings in the functioning of the OTC derivatives market. Within that

There was a unanimous plea from non-financial

market, regulators devoted particular attention to the role

institutions to be excluded from any kind of future

that credit default swaps (CDS’s) played during the crisis

legislation on OTC derivatives, among others by the

and obtained a commitment from the major dealers in the

Federation of German Industries and umbrella

market to start clearing European-referenced CDS

organisations for Dutch pension funds. Their main

transactions through a central counterparty (CCP) by the

argument, besides their exposure to a significant increase

end of July 2009. In October 2009 the European Commission

in their costs, was that their dealings in OTC derivatives

set out the future policy actions intended to increase

do not represent a systemic risk. And the European

transparency, reduce counterparty and operational risk,

Commission has taken that into account.

enhance market integrity and oversight in derivatives

The preferred solution is now to leave non-financial

markets and also announced that it would come forward

institutions outside the scope of the proposals unless their

with legislative proposals in 2010.

positions are substantial. In this case the non-financial institutions represent an indirect risk if their failure could cause the failure of an important market participant.

The European Commission has presented a proposal for the regulation of the OTC derivatives market. The general increasing the safety and efficiency of the OTC derivatives

What are the advantages of clearing through a CCP ?


A CCP environment reduces counterparty risk. A market

objective of this proposal is to reduce the systemic risk by

participant always knows its own exposure to its

What are the preferred options presented in this draft ?

counterparties. What it does not know, however, is what

1. To report all requested information on outstanding OTC

market participants including, most importantly, its other

the exposure of any of its counterparties is to other

derivatives contracts to trade repositories. Or if that is

counterparties. In other words, a market participant knows

not possible, directly to supervisors

the direct, but not the indirect exposure that is created when it enters into an OTC derivatives contract.

2. To publish aggregated data on OTC derivatives for the

central counterparties (CCPs) mitigate their counterparty

benefit of the general public

credit risk exposure through four lines of defence, typically

3. To clear all contracts that meet pre-defined eligibility

including access restrictions, risk-management tools (such

criteria via a CCP

as collateralisation), and loss mutualisation. These mechanisms are jointly known as the ‘risk waterfall’ of the CCP. • Access restrictions (such as membership requirements) are a CCP’s first line of defence. CCPs only deal with parties that meet their standards for creditworthiness and operational capability and may revoke access



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Client wins Amstel Securities, Netherlands: Clearing and Settlement Charity Bank, UK: privileges for those who fail to maintain these


standards and meet other obligations to the CCPs. This permits the CCPs to limit their risk exposure to those

Credo Banka, Croatië:

parties they are able to monitor.

Custody and settlement

• The second line of defence is represented by the CCP’s counterparty credit risk management techniques. A CCP

Launch of five new Fund to Funds, KAS BANK Germany

usually uses several of them. For example, positions

(see page 9):

and payment requirements are multilaterally netted. CCPs also typically impose collateral requirements (i.e.

Generali Group, Netherlands:

initial margin) on market participants that have direct

Global custody, investment and financial administration

access to the CCP. In addition, gains and losses due to mark-to-market fluctuations in open positions are

Haywood Securities, UK:

posted to a clearing member’s margin account on a

Securities and back-office outsourcing services

regular (usually daily) basis and result in calls for Jefferies International, UK:

variation margin. • If the initial margin posted is not sufficient to offset a

Treasury services

loss resulting from failure of a clearing member, the third line of defence is activated. After exhausting the

Method, UK:

failed clearing member’s initial margin, a CCP will use

European clearing and settlement services

the latter’s contribution to the default fund to cover any residual losses. If this were to prove insufficient,

Oikocredit, Netherlands:

the CCP can then proceed to share any remaining loss

Custody, securities lending

among all (or certain classes of) clearing members by Orca Finance, Netherlands:

using their default fund contributions. • The fourth, and final, line of a CCP’s defence is its own

Global Fund Services

capital. Pensioenfonds Medewerkers Apothekers, Netherlands: One of the consequences of introducing a clearing

Global custody, investment and financial administration

requirement is that those market participants that would not meet the criteria to become clearing members of a CCP

Portaal, Netherlands:

would have to access it indirectly, through a general

Global custody, settlement and order execution

clearing member (GCM). As a specialist in CCP clearing KAS BANK will arrange meetings with its clients to explain the implications of this new settup.


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Global Custody Network News Europe Netherlands – implementation of registration date

meeting date. This term is also applicable to extraordinary

shares for general meeting of shareholders

general meetings.

With effect from 1 July 2010, a new act has become effective in the Netherlands regarding the rights of

Netherlands – new law to prevent misuse of tax reclaim

shareholders of listed organisations. With this, the


Netherlands has put into effect the EU guideline 2007/36/

The Netherlands has implemented a new law to prevent

EG. The aim of the new act is to increase shareholder

misuse of tax reclaim possibilities. The new law will be

participation in the decision-making process during the

effective for any securities that have an ex date of

general meeting. According to the legislator, the new act

22 November 2010 onwards and applicable to ISIN codes

also provides shareholders with increased clarity about

that come under the Dutch withholding tax legislation.

whether their shares have been borrowed with the objective of voting. Due to the amendment shareholders

Under the new law tax reclaims may only be based on the

no longer have to block their shares during a particular

securities amount of the dividend statement. As this

period prior to the general meeting of shareholders.

securities amount is fixed at the record date, market

Instead, the 28th day prior to a meeting will become

claims may not be included in the entitlement. Therefore,

‘registration date’. All parties possessing shares on this

market claims do not result in a dividend payment but in a

date have the right to cast a vote during the meeting.

compensation payment which is 85 percent of the gross

This is unrelated to whether the shares are actually in

dividend. Consequently, no tax reclaim can be submitted

their possession on the day of the general meeting. As the

with regard to this compensation.

shares are no longer blocked, they can be traded

The record date is also applicable to securities lending,

immediately after registration date. In the former

both the balances of lent and borrowed securities.

situation trade during the blocked term was impossible.

Nevertheless, reversed market claims (trades with a trade date on or after the ex date that are settled between ex

Furthermore, listed organisations are obliged to publish

date and record date or on the record date) may occur

the agenda at least 48 days prior to the announced

incidentally. With a reversed market claim, the securities balance is mentioned on the dividend statement issued to the buyer, while the dividend itself is paid to the selling party. The buying party could reclaim taxes with regard to a securities balance of which he holds no rights. To minimise reversed market claims, both parties should adhere to the Dutch settlement cycle of T+3 where possible. To prevent a buyer from reclaiming tax with regard to dividends not received, both the buyer and seller should adhere to the Dutch settlement cycle of S+3 (= T+3) where possible.



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Outside Europe CHINA – retrospective dividend tax payment, B-shares

The amount of the fail charge may be netted between

B-shares dividends paid to non-resident investors in 2009

parties during the month.

out of profits generated in 2008 without tax being withheld could be taxable retrospectively and subject to

THAILAND – tax on government debt as per 13 October

penalties. It has become increasingly certain that such

The Thai cabinet has endorsed the Finance Ministry’s

retrospective payments are being viewed as a mandatory

proposal to impose a 15 percent withholding tax (WHT) on


interest income and capital gains tax (CGT) on government bonds.

INDONESIA – government debt trades interest

The new tax imposition on government bonds became


effective on record date 13 October 2010. Your holdings in

The Indonesian Debt Management Office has issued an

debentures until 12 October 2010 are exempt.

official guideline that the accrued interest calculation for

The re-imposition of the WHT tax scheme is in line with

Indonesian government bonds is to be based on the

other types of bonds and debentures. Non-resident

‘Actual/Actual’ method. The accrued interest is calculated

investors are presently subject to a standard rate of 15

in order to establish the total settlement amount of a

percent WHT on capital gains plus a WHT of 15 percent on


interest income earned from bonds issued by corporates

Although this interest calculation method (for all series of

and any other bonds. For non-resident investors, domiciled

government debt securities) is officially only applicable to

in countries that signed the double tax treaties (DTT) with

trades with the Debt Management Office, Ministry of

Thailand, they are subject to tax rates as agreed in those

Finance, for the secondary market to avoid failed


settlements we highly recommend that traders agree with

The measure aims to curb the strong baht and restricts

counterparties to ensure that the same method of interest

inflows into the bond market. This is to revoke a long-

calculation is used.

standing waiver on WHTs for foreign investors in the local bond market which has been effective since 25 January

ISRAEL – corporate bonds settlement on T+1


The Tel Aviv Stock Exchange has announced that with effect from 28 November 2010, corporate bonds are settled

BRAZIL – IOF tax increased twice

on trade date +1 (T+1). Currently, settlement takes place

In October 2010, the Brazilian government has raised the

on T+0 for the securities and T+1 for the cash leg. Since

Tax on Financial Operations (IOF Tax) twice by 2 percent

28 November, both legs will settle on T+1.

to reach the current rate of 6 percent. Please find below the IOF tax details and the changes:

JAPAN – fail charge on government securities

1. Different IOF tax rate for fixed and variable income investments

With effect from 1 November 2010, all trades in Japanese Government Securities (JGS) including cross-border

2. Account structure (renamed)

transactions will be subject to a charge on failed

3. Funds transfered between a variable income strategy account and a fixed income strategy account

settlements on and after the effective settlement date

4. ADR conversions.

with the following exceptions: • Settlement fails caused by buyers (receivers) • Free of payment transactions.

For additional information please refer to our Global

The fail charge is calculated as follows:

Custody Network News dated 16 October 2010 which can

(3%-overnight call rate) x settlement amount x (number of

be found, for our clients, on KAS-Web Documentation,

days failed / 365)

News Archive.


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Client Service Review: the client speaking will be attended by other members of the client team and

“Customer Service is very good. Always someone to answer phone calls”

the product managers, if required, he or she will discuss the results and remarks from the CSR with the client. To

Clients are the central focus at KAS BANK. Therefore, we

closely monitor the improvement process a list with

attach great value to clients opinion about the quality of

follow-up actions will be drawn up. The client will be

our services and how we can further improve them. That is

informed of the progress on a regular basis.

why at least once a year the client receives our online


service survey, the Client Service Review.

We would like to thank all clients for the participation in

Client Service Review

the Client Service Review. Their responses are a valuable

The Client Service Review (CSR) consists of a ‘customised’

instrument for further improving our services and products

questionnaire on the specific services that KAS BANK

as well as the relationship with KAS BANK. That is why the

provides to the client. A score from 1-7 can be awarded to

Client Service Review is conducted annually. In 2010, over

each part of our service. Furthermore, the client can also

400 surveys have been completed and returned. In general

add remarks per subject about our services, the clients

our clients appear to be satisfied with their relationship

relationship with KAS BANK and the added value of our

with our staff at all levels within the bank. Certain product

services in realising the objectives of the clients

groups score highly, as well as the majority of the basic


services in the area of custody, clearing and settlement. Issues such as flexibility, decision-making and time-to-

“Meet expected benchmark”

market have been awarded lower scores on average. We will actively study the points for improvement clients have

After the results of the survey have been processed, the


client relationship manager will schedule a Service Review

Our goal is to achieve better more regular contact with our

meeting at the clients office. During this meeting, which


“Personal contact has considerably improved since last reform”



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New developments in the pensions arena: performance & risk New developments happen in rapid succession in pensions as a result of which pension funds are confronted with fundamental questions about their investment portfolio, such as the optimal asset mix, currency hedge ratio, overlay, etc. Performance analysts therefore use state-of-the-art software packages which enable them to efficiently execute performance and risk calculations. In general, fund managers calculate the return figure of your investment portfolio on the basis of the time-weighted return method. KAS BANK calculates the performance of your asset managers not only on a money-weighted basis but also on a time-weighted basis.

Money-weighted return (MWR) This method calculates the performance over the average capital invested, which is particularly useful if influence can be exercised on deposits and withdrawals. The average capital invested is calculated by adding the sum of the weighted deposits and withdrawals to the starting market value. This implies that a deposit or withdrawal at the beginning of a period has more weight than at the end of the period.

on cash flows, however. For example, in the event that in the course of a month cash is added to their current account on an unfavourable day, this will have a negative effect on the total return if the MWR method is applied. That is one of the reasons why fund managers apply performance measurement on a daily basis. Furthermore, the Global Investment Performance Standards (GIPS) have prescribed this performance measurement method since 1 January 2010. However, with regards to the entire portfolio the figure in conformity with MWR does correctly represent the result over the average capital invested, as the MWR performance calculation considers the result in euros compared to what has been invested on average and therefore provides a correct representation of the result in euros.

Time-weighted return (TWR) This method calculates the performance over the start-up capital, which provides a true picture of the performance if no influence can be exercised on deposits and withdrawals. In the event that several deposits and withdrawals are made in the reporting period, the market value of the entire portfolio must be determined for each external cash flow. In example 1 it becomes clear how these different methods influence the return figure. A deposit of 50 euros (20 + 30 euros) amounts to 5 percent of the start value and results in a small return gap, namely 0.02 percent. In the event that a deposit in a portfolio amounts to more than 10 percent of the starting value, the return figures will deviate significantly, which is clearly exposed in example 2. The difference in return now amounts to over 0.20 percent. This is a considerable difference and may become the difference between outperformance and underperformance.

KAS BANK provides the following solutions: • Fund manager performance figures are calculated on a daily basis so that the result of their actions is not influenced by external cash flows, the time-weighted return method. • On an aggregated level the return figures for your fund are based on the average capital invested (MWR). • Dependent on the structure of your portfolio these different methods can be applied to your performance report.

Time-weighted method Fund managers want to be assessed on the basis of decisions that they are responsible for. They do not have any influence


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Personnel notes

Laurens Vision The Association of UK Investment Companies has recently counted 420 investment trusts with over £95 billion of assets. When an investment trust is formed, shares are


offered to investors in order to raise the required funds for

Frank Vogel will become Managing Director, Sales of

investment. After the initial launch period, the number of

Germany with effect from 1 January 2011. He will be

shares is fixed and quoted on an exchange. The trust has

responsible for all sales activities in Germany, Austria and

commenced its ‘closed-ended’ investment life, and its share

Switzerland. His appointment emphasises KAS BANK’s

price is now free to move with the flow of supply and

ambitious growth strategy in the German market.

demand, with a temporary discount or premium to the net asset value a possible consequence.

Client Management Netherlands Jan-Albert Koopman and Jan-Willem Bakker are

Winterflood Securities has analysed the returns of

appointed as Specialist Relationship Manager Institutional

investment trusts compared to ‘open-ended’ vehicles (such

Services, as well as Veronica Cherekhovitch per 1 January

as unit trusts, OEICS and ETFs). In most popular


investment categories, they comfortably outperformed them. The investment trusts, having their investment pot

Product Managers

closed upon introduction, seem to allow their managers to

Pol de Jaeger, Maarten Aarts and René Hoogeland have

take a more long-term view than ‘open-ended’ colleagues,

been appointed as the new product managers at

who must worry about inflows and outflows of cash in

Investment Management Services, Global Fund Services

good and bad times, and often end up buying and selling

and Broker Services.

to manage their cash flows rather than delivering investment performance.

The role of Product manager is a new position at KAS BANK. Based on their product, market and client

That having been said, open-ended exchange traded funds

knowledge they will seek new opportunities to further

(ETFs) have become very popular in the US. Introduced as

improve our products. Furthermore, they will analyse our

index funds in 1993, they are structurally a mixture of unit

products in collaboration with you and will also advise

trusts and investment trusts. And as of 2008, the

during the intake of new clients.

Securities and Exchange Commission has also allowed the

For operational issues your Client Team remains your

creation of actively managed ETFs. These are fully

single point of contact.

transparent and publish their underlying securities portfolios daily. This very fact has put these ETFs at risk


from arbitrage activities by market participants who are

Floris Jan Zwijnen is appointed on 1 December 2010 as

driven by momentum rather than long(er) term investment

Product Sales Manager


United Kingdom

In May this year, ETFs underwent a severe test in this

Sarah Aziz started on 1 September 2010 as Assistent to

regard during the so called ‘flash crash’. The regulatory

the Sales Department.

review of the flash crash in the US stock markets showed that almost 90 percent of all broken trades had limit prices, and were not market orders in search of the best available liquidity regardless of price. On that day, price



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limits for stock orders were resubmitted over (and over) again in a free-falling market until many executed as ‘penny’ stocks. Overall, nearly 20 billion shares were traded and even the low turnover ETFs became exposed to hectic price swings, with only one market maker who, having abandoned ship, took the remaining liquidity with him. And, as such, they became a major factor in the crash as they became literally decoupled from their underlying baskets of stock, while the prices of some specific stock simultaneously swung wildly. Fortunate were those who did not panic and only heard about the crash after the equally sudden recovery after fewer than 15 long ‘crash’ minutes. Where the investment trust is best run by a patient manager, the ETF needs a patient investor. An investor who refrains from making (loss) stopping orders, which, in volatile markets, are a

Laurens Vis, Managing Director, KAS BANK UK

certain recipe for financial damage. And yet, patience is on the back foot where the financial

But towards the end of the year the financial markets

markets are concerned. Even in times of orderly markets,

themselves slow down and come to a halt over the

the average duration of equity holdings fell from five years

Christmas period, a time of reflection where even the

in the 1970s, to two years in the 1980s, to one year at the

quick quick become slow. Which makes my mind drift to

turn of the century and to just six months as I write.

the lyrics of that famous Quickstep tune:

Corporate secretaries of some quoted companies have already waved goodbye to shareholders before the first

“Give me the quick quick slow,

quarterly financial report hits their doormats.

Get there before you go, Give me the quick quick slow,

But there is no doubt that the Formula 1 class of investors

Lay it down far below,

in this day and age are the high-frequency traders. They

Let’s get on with the show,

who trade in milliseconds, who consider holding a stock

Give me the quick quick slow.”

for 20 seconds to be ‘long’ and who now dominate the equity markets with a market share of around 70 percent

But for now, we at KAS BANK wish you and your loved

in the US and 40 percent in Europe. Having said this, their

ones a well-deserved and peaceful cross-over into the New

market share of 10 percent in the Asian markets is dwarfed


by the 80-90 percent for day trading activity by small retail investors on the Shanghai Stock Exchange. What unites these Chinese day traders with the highfrequency traders in the US and Europe? All positions are closed before the markets do, and the global markets could soon begin to haunt them. Because in volatile markets correlation is high, between unrelated stocks, sectors and markets.


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KAS Selections  

KAS Selections December 2010

KAS Selections  

KAS Selections December 2010