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Quarterly benchmarks on financial intermediation – 3rd Quarter 2020

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Execution of orders on behalf of third parties

During the third quarter of 2020, the volume of orders placed on the spot market by financial intermediaries operating in Portugal totalled 25,988.5 million euros, 22.9% less than in the previous quarter and 23.4% less than in the same period in 2019.

Orders on private and public debt increased compared to the second quarter with 3.6% and 27.9%, respectively while shares registered a decrease of 31.8%.

Off-market transactions represented 22.5% of total amount of orders, decreasing by 26.5% down to 5,852.9 million euros. The internalisation of orders fell 34.1% down to 8,413.5 million euros. Transactions in domestic markets weighed 3.3% of the total in the third quarter and amounted to 866.8 million euros, 43.3% less than in the previous three months.

Banco Comercial Português was the financial intermediary with the highest market share (32.3%) in the equity segment, followed by Banco Santander Totta (18.7%) and Caixa – Banco de Investimento(13,1%). Public debt orders were led by BNP Paribas – Sucursal em Portugal, with a market share of 99.3%, followed by Banco Santander Totta (0.3%) and Caixa – Banco de Investimento (0.2%). As to private debt, BNP Paribas – Sucursal em Portugal had the largest market share, with 97.8%, followed by Banco Santander Totta (1.5%) and Haitong Bank (0.2%).

In the futures market, the traded value between July and September totalled 21,553.6 million euros, less 35.1% than during the previous three months and 35.3% less than in the same period of 2019. CFDs represented 64.8% of total orders executed in this market, and the amount traded in this financial instrument was 13,964.5 million euros. Futures contracts weighed 0.5% of the total and options, 3.2% and other derivatives, 31.5%.

Derivative contracts were the most sought-after underlying asset in this period (56.0% of the total amount), with orders totalling 12,079.8 million euros.

Derivatives orders were mostly internalised (64.4% of the total), while 32.6% were executed off-market, 0.5% on domestic markets and 2.4% in international markets.

 

Reception of orders on behalf of third parties
Between July and September, the value of orders received on the spot market by financial intermediaries registered at the CMVM amounted to 27,664.5 million euros, 24.3% less than during the previous three months and 28.3% more than the same period in 2019.
Resident investors accounted for 35.1% of the value of orders received, amounting to 19,722.3 million euros, a 29.6% decrease over the second quarter of the previous year. Conversely, non-resident investor orders increased by 108.8% up to 22,396.3 million.
Public debt was the most sought-after financial asset (60.6% of the total) although registering a quarterly increase of 30.3%, followed by private debt and shares, which amounted to 5,764.6 million euros and 3,709.4 million, respectively.  
Regarding the investment by country, France received 34.1% of the value of orders (4,617.0 million euros), followed by United Kingdom (26.3%), USA (10.7%)  and Portugal (9.0%).   
The traditional channels (telephone, fax, face-to-face) are still the most used means for order transmission (69.6% of the total). The use of the internet for transmission of orders decreased by 35.2%. 
In the forward market, the volume of orders received by financial intermediaries stood at 35,200.3 million euros, an downsurge of 26.1% compared to the previous three months. CFDs (65.2% of the total amount) and futures (14.5%) were the financial instruments most used by investors during this period, while as to underlying assets, preference was derivative contracts  (34.4%) and exchange rates (20.9%). 
Trading for own account
In the spot market, the value traded by the financial intermediaries for own account increased by 20.7% up to 44,361.1 million euros during the third quarter of 2020, compared to the previous three months, decreasing by 9.3% apropos the same period. 
Public debt was the most sought-after security for trading for own account with 69.3% of the total amount. Transactions in private debt securities dropped 26.2% during the period under consideration, down to 4,408.9 million euros.
In the equity segment, the value traded for own account increased by 30.3% compared to the second quarter of 2019, having increased by 227.6% over the same period. The most traded national securities were those of NOS (99.2% of the total amount), REN (0.2%), Jerónimo Martins  (0.2%) and EDP (0.2%).
In the futures market, the value of trading for own account dropped 18.3% down to 6,801.3 million euros. Of this amount, 80.6% was for trading purposes, while 19.4% was for hedging.
Futures contracts were the most widely used derivative financial instrument in trading portfolios, accounting for 97.9% of the trading value. Medium and long-term interest rates and short-term interest rates were the preferred underlying assets of financial intermediaries, representing respectively 30.1% and 9.6% of total derivatives.
Granting of credit for securities transactions
The amount used[1] on credits granted for transactions in securities totalled 1,361.5 million euros between July and September, a decrease of  2.1% than in the previous quarter. Of this amount, 33.4% was granted by Caixa Geral de Depósitos and 33.1% by ABANCA – Sucursal em Portugal and 25.6% by Banco Comercial Português.  
Registration and deposit of securities on behalf of third parties 
The amount of registration and deposit of securities on behalf of a third-party amounted to 236,391.9 million euros during the third quarter of this year, 0.7% more than in the previous three months and 5.9% more than in the same period of 2019. Resident clients accounted for 78.3% of the total amount by end September, with 44.8% operating on regulated markets. 
Registration and deposit of securities for own account
The amount of registration and deposit of own-account securities amounted to 136,425.1 million euros in the third quarter, 0.1.% less than in the previous quarter and 4.0% more than in the same period. Resident issuers accounted for 65.4% of the total amount, with 44.8% operating on regulated markets.
Equity situation and economic and financial indicators
The net fees charged by brokerage firms and financial brokerage companies stood at 14.8 million euros at the end of the second quarter, which represents a decrease of 11.4% over the same period. Assets and liabilities, adjustments for transactions pending settlement, increased during the same period by 10.1% and 11.5%, respectively.  
Own equity and equivalent of financial intermediaries represented 15.6% of liabilities at the end of June, against 16.9% in the same period of the previous year. Return on equity was 4.0%, against 10.9% in June 2019. 
___________________________
 [1] The amount used is calculated based on the balance recorded at the end of the previous quarter, plus the values used and subtracted from the quarterly redemptions.

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Regulator Information

Abbreviation: CMVM
Jurisdiction: Portugal

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