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Real estate investment trusts have taken off dramatically in Japan, providing a new way to invest in the property market and an attractive rate of return compared to other investment products. Can the boom last? Andy Wright reports.

Vneshtorgbank

Delay could mean SEC is reconsidering terms

With banks more cautious about straight lending and bond spreads tight, real estate securitization through commercial mortgage backed securities is becoming increasingly popular, with conduit issuance taking a growing share of the market. Laurence Neville reports.

News that Knight Trading has agreed to acquire Attain, a small ECN, passed almost unnoticed as the securities industry's attention was focused on the New York Stock Exchange's dramatic decision to merge with electronic rival Archipelago, and on Nasdaq's acquisition of I-Net.

Brazil: keep your eye on the ball

FX settlement system CLS has responded to its member board's request to investigate the feasibility of adding a matching and netting facility for non-eligible currencies (NECs) and the settlement of FX option premiums, non-deliverable forwards (NDFs), interest rate swaps and credit derivatives. CLS Bank Settlement Members have been meeting with CLS to thrash out the design and the attractiveness of the inclusion of these more complicated FX-related products. While use of FX derivatives has grown, some banks have voiced concerns that the pace of growth is stretching their back offices. "FX players are now being squeezed between the conflicting forces of growth and the need to tidy up their operations," says Jonathan Butterfield, executive vice-president at CLS. "The optimal way to do this is to establish a level of standardization and use of common infrastructures collectively."

Despite a more uncertain rate and credit environment, new issuers and investors continue to enter the covered bond market. As the boundaries between traditional and structured products blur, Asia and the US are the targets.

Looming implementation of the EU Prospectus Directive is adding momentum

Combined group has the potential to be a domestic market leader

The expansion of the MENA region's equity and debt capital markets must go hand in hand with stronger corporate governance and financial regulation. Financial market reform requires better governance structures, necessitating legal reforms as well as improvements in policies and procedures required to foster private sector development and tackle inefficient, ineffective and discriminatory government practices.

The Asian bond markets have given investors an easy ride in the past two years. Now, with inflation and interest rate uncertainty, buyers need to be smarter.