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CFTC.gov Financial Data for Futures Commission Merchants Update
January 12, 2012--Selected FCM financial data as of November 30, 2011 (from reports filed by January 2, 2012) is now available.
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Source: CFTC.gov
WisdomTree Announces Investment Sub-Advisory Relationship with Western Asset Management for Fixed Income ETFs In Credit Space
Western Asset Management is One of the World’s Leading Global Fixed Income Managers
January 12, 2012 – WisdomTree (NASDAQ: WETF), an exchange-traded fund (“ETF”) sponsor and asset manager, today announced a new investment sub-adviser relationship with Western Asset Management, a subsidiary of Legg Mason (NYSE: LM). The collaboration will be in the global fixed income area with a focus on credit products.
“We are pleased to tap the expertise of the Western team, one of the world’s leading fixed income managers, as we look to build on our progress in the international fixed income space,” said Bruce Lavine, WisdomTree President & COO.
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Source: Wison Tree
FlexShares files with the SEC
January 12, 2012--FlexShares has filed a pre-effective amendment, registration statement with the SEC for the FlexSharesSM Morningstar Developed ex-US Markets Factor Tilt Index Fund.
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Source: SEC.gov
FlexShares files with the SEC
January 12, 2012-FlexShares has filed a second and restated application for exemptive relief with the SEC for actively-managed ETFs.
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Source: SEC.gov
Vanguard files with the SEC
January 12, 2011--Vanguard has filed a post-effective amendment, registration statement with the SEC.
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Source: SEC.gov
Opening Statement, Eighth Open Meeting to Consider Final Rules, Pursuant to the Dodd-Frank Act-Commissioner Jill E. Sommers
January 11, 2012--Thank you Mr. Chairman. And, as always, I thank the teams who have worked so diligently on the proposal and final rules we are considering today.
Today we are considering a Volker Rule proposal and final rules relating to registration of swap dealers and major swap participants, external business conduct standards, and segregation of collateral for cleared swaps. The Volker proposal and the external business conduct rules are lengthy and extremely complex and I do not think we have taken sufficient time to fully consider all of their implications. This is due in part to the fact that much of our time over the past few weeks has been taken up with considering a host of policy questions regarding how best to address segregation and bankruptcy issues for both futures and swaps, and whether we should forge ahead with final rules that fail to include futures. I am troubled that this is the path the Commission has chosen. I am also very concerned that in just two weeks we will again be voting on rules that are both massive in length and extremely complicated without taking sufficient time to consider all of their implications. I have been advised that on January 25th, the Commission and the SEC will vote to finalize joint rules defining the terms swap dealer and major swap participant, and that the CFTC will also vote on internal business conduct standards and final rules for CPOs and CTAs. I don’t think this schedule is workable, and if we go through with these votes two weeks from now, I think that will be ill-advised.
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Source: CFTC.gov
Direxion Strengthens Buy-and-Hold Product Offerings With Three Volatility Response ETFs
Exchange-Traded Funds Give Investors Index Equity Exposure That Seeks Improved Risk/Return Characteristics as Compared to Traditional Index Investing
January 11, 2012--Direxion, a leader in alternative investment solutions, is pleased to announce that it has launched three exchange-traded funds that seek to better control risk in equity investments.
The Funds track indices in the newly launched S&P Dynamic Rebalancing Risk Control Index Series. The Direxion S&P 500 RC Volatility Response Shares (Ticker: VSPY), Direxion S&P 1500 RC Volatility Response Shares (Ticker: VSPR) and Direxion S&P Latin America 40 RC Volatility Response Shares (Ticker: VLAT) follow the S&P 500 Dynamic Rebalancing Risk Control Index, S&P Composite 1500 Dynamic Rebalancing Risk Control Index and S&P Latin America 40 Dynamic Rebalancing Risk Control Index, respectively.
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Source: Direxion
Opening Statement Before a Meeting of the Commodity Futures Trading Commission, Washington, DC-Chairman Gary Gensler
January 11, 2012--Good morning.
This meeting will come to order. This is a public meeting of the Commodity Futures Trading Commission (CFTC) to consider final and proposed rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). I’d like to welcome members of the public, market participants and members of the media, as well as those listening to the meeting on the phone or watching the webcast to our first Commission meeting in 2012.
I would like to thank Commissioners Sommers, Chilton, O’Malia and Wetjen for their significant contributions to the rule-writing process. I also want to thank the CFTC’s hardworking and dedicated staff.
Today is the 23rd open meeting on Dodd-Frank rules. We will consider three final rules:
Segregation of customer funds for cleared swaps;
Registration of swap dealers and major swap participants; and
Business conduct standards for swap dealers and major swap participants with counterparties, what we’ve come to call external business conduct.
In addition, we will vote on a proposed rule on proprietary trading prohibitions and restrictions, commonly known as the “Volcker Rule.”
And lastly, we’ll be voting on an order delegating certain registration authorities to the National Futures Association.
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Source: CFTC.gov
Prohibitions and Restrictions on Proprietary Trading and Certain Interests In, and Relationships With, Hedge Funds
Statement of Commissioner Scott D. O’Malia
January 11, 2012--Introduction
The Commission is considering today a Notice of Proposed Rulemaking (“Proposal”) to implement the statutory requirements of Section 619 of the Dodd-Frank Act (the “DFA”), amending the Bank Holding Company Act of 1956, commonly known as the “Volcker Rule”. Congress gave us a difficult mandate to separate proprietary trading from legitimate and essential market-making, underwriting and hedging responsibilities.
However, establishing a bright line is far easier said than done.
Today’s Proposal sets in motion what Sheila Bair, the former Chairman of the Federal Deposit Insurance Corporation and a former Acting Chairman and Commissioner of the CFTC, aptly described as an “[u]nder…300-page Rube Goldberg contraption of a regulation….proposed by federal agencies [(the Joint Proposal”)] to implement the Volcker Rule.”1 The deadline for comments on the Joint Proposal was recently extended another thirty days until February 13, 2012. This extension is a byproduct of the unrealistic expectations placed upon the industry and the regulators to implement the will of Congress without completely decimating liquidity. In their current forms, both the Joint Proposal and the Proposal before the Commission today in their complexity fall short of providing an appropriate foundation for a rigorous and reliable rulemaking process, and it seems inevitable that we and our fellow regulators will have to engage in re-proposals that, at a minimum, reduce the complexity and clarify the regulatory roles for the five regulatory entities involved.
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Source: CFTC.gov
“That it was all very complicated.”1
January 11, 2012--Opening Statement of Commissioner Scott D. O’Malia, Open Meeting on Three Final Rules, One Proposed Rule, and One Delegation of Authority Order
January 11, 2012--Introduction
“That it was all very complicated,” writes Michael Lewis in his 2010 book The Big Short: Inside the Doomsday Machine. He was writing about how customers were sold publicly-traded credit default swaps (CDOs) by Wall Street firms and were kept in the dark about the nature and value of these investments.
It was complicated because who would want to believe that customers were being duped into paying to essentially take out the trash generated by the housing bubble’s magnificent burst? Fortunately, today’s rulemaking slate seeks to require dealers to be more accountable to their customers and offer improved protection of segregated funds held by futures commission merchants.
I would like to thank the four teams responsible for today’s three final rules and one proposed rule. Combined, these documents total over 1,000 pages -- a massive amount of work for the Commodity Futures Trading Commission (“Commission” or “CFTC”) to review and provide comment. I commend the staff for their patience and willingness to help inform the Commission under very short timetables.
External Business Conduct Standards for Swap Dealers and Major Swap Participants
As was made clear from the Big Short, many customers were not provided a full picture of the risks of various products, including specifically mortgage-backed securities, let alone the inherent conflicts-of-interest when dealers took a position opposite their customers. Today’s final rules relating to external business conduct standards represent an informed integration of the statutory language, congressional intent, existing statutory, regulatory, and self-regulatory requirements for market professionals, securities law, and industry best practices. The final rules do not preserve unworkable proposals such as the proposed best execution standards and prohibition against trading and front running, which were not supported by comments. As well, there are multiple modifications to the proposed rule text to, where possible and appropriate, avoid creating trading delays or barriers through the chilling of communications between swap dealers (“SDs”) and major swap participants (“MSPs”) and their counterparties. One significant manner in which this is accomplished is by allowing, in many instances, demonstration of and compliance with the rules on a relationship basis through disclosures and counterparty representations in counterparty relationship documentation.
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Source: CFTC.gov
