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Q+A: SEC's widened probe of ETFs: What you need to know
February 16, 2012--Retail investors, institutions and hedge funds like ETFs because they are an easy way to get exposure to a sector or an index. They are traded throughout the day on exchanges.
The SEC has widened its examination of the trillion-dollar exchange-traded funds industry. ETFs are baskets of stocks, commodities or other securities that trade like stocks on an exchange. There is concern in the industry about instances where trades in ETFs fail to settle on time.
Here is quick look at what the SEC examination means.
What exactly is the U.S. Securities and Exchange Commission examining?
The SEC is looking at whether there is a connection between how hedge funds and high-frequency traders use popular exchange-traded funds and the fact that some of them are failing to settle their trades within the standard four-day window.
How do hedge funds and high-frequency traders use ETFs?
A hedge fund, for example, can make a big bet on a single stock, and then hedge its trade by short-selling an ETF, thus shorting the entire sector in one swoop.
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Source: Reuters
BlackRock Set To Slice Corporate Bond ETFs By Sector
February 16, 2012--Three new iShares ETFs are expected to launch to provide investors with finer tools to slice and dice investment-grade corporate bonds
BlackRock expects to come out with more at a later date to cover a wider range of different segments
The latest expansion in bond funds comes as investors continue to flock into high-grade investment bonds at a record pace
The iShares unit of global asset management giant BlackRock (BLK) is planning to launch Thursday what is expected to be the industry's first sector-specific ETFs tracking U.S. corporate high-grade issues.
Income-hungry investors have been flocking to investment-grade corporate bond exchange-traded funds at record rates this year, and the new set of funds are designed to let them target market segments in their search for higher yields and lower portfolio volatility. The initial three ETFs will follow Barclays indexes concentrating separately on financials (MONY), utilities (AMPS) and industrials (ENGN).
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Source: Wall Street Journal
Citigroup, JP Morgan and RBS announced as counterparties to new XIE Shares
February 16, 2012--Enhanced Investment Products' XIE Shares (EIP), the first Hong Kong-domiciled swap-based synthetic ETF platform to be authorised by the Securities and Futures Commission, has appointed Citigroup Global Markets Limited, JP Morgan Chase Bank, NA and The Royal Bank of Scotland Plc as counterparties to its range of exchange traded funds.
XIE Shares’ seven ETFs, which correspond to the performance of local Emerging Asian stock exchange indices, are expected to provide liquid and low cost passive investment in India, Indonesia, Korea, Malaysia, the Philippines, Taiwan and Thailand. These country-specific products intend to provide an estimated Total Expense Ratio# (TER) of 39 bps.
The funds will be managed by Paul So, Head of Beta Products at EIP. So says: “Because we are an independent asset manager, we are able to adopt a flexible approach and change counterparties if needed, allowing us to manage the ETFs’ counterparty risks. We are pleased to announce Citigroup, JP Morgan and RBS as the counterparties to XIE Shares. We chose these particular financial institutions because they are major, reputable financial houses and provide investors with confidence.”
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Source: Canadian ETF Watch
CFTC to Hold Open Meeting to Consider Two Final Rules and One Proposed Rule
February 16, 2012--The Commodity Futures Trading Commission (CFTC) will hold a public meeting on Thursday, February 23, 2012, at 9:30 a.m., on the following topics:
Final Rule: Further Definition of "Swap Dealer," "Security-Based Swap Dealer," "Major Swap Participant," "Major Security-Based Swap Participant" and "Eligible Contract Participant;"
Final Rule: Swap Dealer and Major Swap Participant Recordkeeping and Reporting, Duties, and Conflicts of Interest Policies and Procedures; Futures Commission Merchant and Introducing Broker Conflicts of Interest Policies and Procedures; Swap Dealer, Major Swap Participant, and Futures Commission Merchant Chief Compliance Officer; and
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Source: CFTC.gov
Minutes of the Federal Open Market Committee January 24-25, 2012
February 15, 2012--The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on January 24-25, 2012. A summary of economic projections made by Federal Reserve Board members and Reserve Bank presidents for the January 24-25, 2012 meeting is also included as an addendum to these minutes
The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board's Annual Report. Summaries of economic projections are released on an approximately quarterly schedule. The descriptions of economic and financial conditions contained in these minutes and in the Summary of Economic Projections are based solely on the information that was available to the Committee at the time of the meeting.
view Minutes of the Federal Open Market Committee January 24-25, 2012
Source: FRB
SEC Tightens Rules on Advisory Performance Fee Charges
February 15, 2012--The Securities and Exchange Commission today announced it is tightening its rule on investment advisory performance fees to raise the net worth requirement for investors who pay performance fees, by excluding the value of the investor's home from the net worth calculation.
Under the SEC’s rule, registered investment advisers may charge clients performance fees if the client’s net worth or assets under management by the adviser meet certain dollar thresholds. Investors who meet the net worth or asset threshold are deemed to be “qualified clients,” able to bear the risks associated with performance fee arrangements.
The revised rule will require “qualified clients” to have at least $1 million of assets under management with the adviser, up from $750,000, or a net worth of at least $2 million, up from $1.5 million. These rule changes conform the rule’s dollar thresholds to the levels set by a Commission order in July 2011. The Commission-ordered increase in the thresholds was required by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. In addition, the revised rule will exclude the value of a client’s primary residence and certain property-related debts from the net worth calculation; the change was not required by the Dodd-Frank Act, but is consistent with changes the Commission approved in December to net worth calculations for determining who is an “accredited investor” eligible to invest in certain unregistered securities offerings.
view Final Rule Release No. IA-3372
Source: SEC.gov
State Street files with the SEC
February 15, 2012--State Street has filed a post-effective amendment, registration statement with the SEC for the SPDR BofA Merrill Lynch Emerging Markets Corporate Bond ETF (EMCD)
and
SPDR BofA Merrill Lynch Crossover Corporate Bond ETF (XOVR)
view filing
Soirce: SEC.gov
Advisor Shares files with the SEC
February 15, 2012--AdvisorShares has filed a post-effective amendment No. 45, registration statement with the SEC for the AdvisorShares Global Alpha & Beta ETF.
view filing
Source: SEC.gov
State Street plans OTC derivatives platform
February 15, 2012--State Street, the investment management and custody company, plans to challenge Wall Street banks involved with derivatives trading with the launch of an electronic trading platform for over-the-counter swaps.
The move is a sign that the market for OTC derivatives is set to be contested by “buyside” institutions not hitherto associated with such markets.
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Source: FT.com
Banks and brokers rush to lobby CFTC on SEF trading model
Trading Banks and brokers rush to lobby CFTC on SEF trading model
Regulator hit with letter campaign
February 15, 2012--Banks, trading firms and brokers have fired off a torrent of correspondence at the Commodity Futures Trading Commission in a last minute bid to influence which derivatives should be traded on swap execution facilities and electronic markets.
With the comment period for the proposed rule ending this week, organisations including JP Morgan, Isda and the Wholesale Markets Brokers Association have launched scathing attacks on the CFTC's proposed "made available trade" rules, which set out the conditions for mandatory trading of swaps on SEFs.
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Source: Credit flux
