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BlackRock seeks tougher swap rules
September 30, 2010--BlackRock, one of the world’s biggest investment managers, has created a stir in the derivatives industry by recommending that regulators set stricter rules for clearing privately traded swaps than those that apply to the clearing of exchange traded futures.
The fund manager is concerned that rules being drafted might not be tough enough and could leave it too heavily exposed to the default of other investors.
A move to rules advocated by BlackRock could increase operational costs for clearing houses and change the economics of clearing, according to industry participants. The point of contention is whether customer assets and margin payments towards cleared derivatives positions are held in pooled accounts or in separate, or segregated, accounts. BlackRock favours segregation.
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Source: FT.com
UBS Announces the 16th ETN in its E-TRACS Platform Which Gives Short Exposure to the Alerian MLP Infrastructure Total Return Index
September 30, 2010--UBS Investment Bank announced today the addition of a new exchange traded note (ETN) to its E-TRACS platform, the UBS E-TRACS 1X Monthly Short Alerian MLP Infrastructure Total Return Index. It is the 16th ETN in UBS’s rapidly growing E-TRACS platform, and the fourth ETN with Alerian. It began trading today on NYSE Arca under the ticker symbol, MLPS, and is designed to provide short exposure to the Master Limited Partnership (MLP) market by tracking the inverse performance of the Alerian MLP Infrastructure Total Return Index.
“This is our fourth ETN with Alerian and expands even further our spectrum of MLP ETN choices, giving investors an easily accessible, exchange-traded vehicle to hedge their exposure to the Master Limited Partnership market,” said Christopher Yeagley, Managing Director and US Head of Equity Structured Products. “We are proud of the diversity of our E-TRACS platform and are excited that we can continue offering investors interesting and useful products.”
UBS E-TRACS belong to an innovative class of investment products offering access to markets and strategies that had not previously been readily available to investors, and offer unique diversification opportunities in a number of different sectors.
UBS has 15 other existing E-TRACS ETNs – 10 that track the performance of various UBS Bloomberg CMCI indexes, like platinum, silver, gold, livestock, food, etc; one that tracks the total return of the Dow Jones-UBS Commodity Index; one that is linked to the S&P 500 Gold Hedged Index; one linked to the Alerian MLP Infrastructure Index; one that offers 2x leveraged exposure to the Alerian MLP Infrastructure Index; and one linked to the Alerian Natural Gas MLP Index.
The Alerian MLP Infrastructure Total Return Index is comprised of 25 energy infrastructure MLPs whose constituents generally earn the majority of their cash flow from the transportation and storage of energy commodities. This index provides investors with a benchmark for the infrastructure component of this emerging asset class.
UBS E-TRACs are senior unsecured notes issued by UBS AG, are traded like any other security on NYSE Arca, and can be bought and sold through a broker or financial advisor. For more information about UBS E-TRACs, please visit www.ubs.com/e-tracs.
Source: UBS
CFTC Issues Request for Comment on Options for a Proposed Exemptive Order Relating to the Trading and Clearing of Precious Metal Commodity-Based ETFs and Concept Release
September 30, 2010--The Commodity Futures Trading Commission (CFTC) today issued a Federal Register release containing both a Request for Comment on Options for a Proposed Exemptive Order Relating to the Trading and Clearing of Precious Metal Commodity-Based Exchange-Traded Funds (ETFs) and a Concept Release regarding a March 1, 2010, submission from the Options Clearing Corporation (OCC).
The OCC has requested approval of a rule amendment that would permit options and futures on ETF Securities Ltd.’s Physical Palladium Shares (symbol: PALL) and Physical Platinum Shares (symbol: PPLT) to be traded and cleared as options on securities and security futures, respectively. Both PALL and PPLT are exchange-traded funds (ETFs) registered with the Securities Exchange Commission (SEC) and listed on NYSE Arca. The ETFs are commodity-based ETFs in that their only assets consist of holdings of the underlying physical commodity, usually a precious metal (in this case, palladium or platinum). Commodity-based ETFs purport to allow investors to track the market price of the underlying commodity.
The pending request follows previous exemptions granted by the CFTC with respect to gold and silver commodity-based ETF products issued by SPDR® (exemptions issued on June 5, 2008), iShares® (exemptions issued on December 30, 2008) and ETF Securities Ltd. (exemptions issued on June 15, 2010). After granting each of the previous exemptions pursuant to Section 4(c) of the Commodity Exchange Act, the CFTC approved rule amendments that permitted options and futures on the gold and/or silver ETFs in question to be cleared as options on securities and security futures, respectively. The OCC’s pending submission represents the first time the Commission has reviewed a request to trade and clear options and futures on either palladium or platinum ETFs.
By issuing the Release, the Commission is examining the unique character of the palladium and platinum markets as compared to the gold and silver markets. The Commission also is considering and requesting comment on whether it should adopt a categorical approach (via exemption, rule or otherwise) to address requests to trade and clear options and futures on commodity-based ETFs holding physical gold, silver, palladium and/or platinum. The Release’s comment period will run for thirty days from its publication date in the Federal Register.
Source: CFTC.gov
Van Eck Associates' Derek Van Eck Dies Unexpectedly
October 1, 2010--Derek van Eck, a Principal and Director at Van
Eck Associates Corporation, died unexpectedly last night. He was 46 years old.
Mr. van Eck, whose father, John van Eck, founded the company in 1955, joined
his father and brother, Jan, at Van Eck Associates Corporation in 1993 and served as Chief Investment Officer as well as Portfolio Manager of the Van Eck Global Hard Assets Fund, Van Eck VIP Global Hard Assets Fund, and Van Eck’s long/short Hard Assets funds.
He will be succeeded in his portfolio management roles by Shawn Reynolds and Charles Cameron, who have been named Co-Portfolio Managers. Mr. Reynolds joined the company in 2005 and currently leads the energy investment team. Mr. Cameron has been with Van Eck for more than 15 years and is currently director of trading. Combined, they have 49 years of industry experience and are supported by a team of seven analysts and traders.
Mr. van Eck graduated from Williams College in 1986 with a BA in Economics, and received his Masters of Business Administration (MBA) from the J.L. Kellogg Graduate School of Management (Northwestern) in 1993. He began his career in the securities business in 1986 at CS First Boston. He was a member of the New York Society of Security Analysts and the Association of Investment Management and Research (AIMR), and served on the board of the Fred M. van Eck Forest Trust, managed in conjunction with the Pacific Forest Trust.
Mr. van Eck is survived by his wife, Deborah S. van Eck, and two children Willem
J. van Eck and Kathryn M. van Eck; his parents, Sigrid and John C. van Eck; and his
brother, Jan van Eck, who continues as Principal of Van Eck Associates Corporation;
and his sister-in-law, Cynthia van Eck. Mr. van Eck was a resident of New York City
and Sharon, CT.
Source: Van Eck Global
Treasury Deputy Secretary Neal Wolin Written Testimony before the Senate Banking Committee on “Implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act”
Chairman Dodd, Ranking Member Shelby, and members of the Committee, thank you for the opportunity to testify about the progress Treasury has made in implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act).
September 30, 2010--Introduction
Two months ago, against tough odds, Congress enacted the strongest set of financial reforms since those that followed the Great Depression. The Dodd-Frank Act will ultimately reshape our financial system and will affect us all in a number of important ways.
The Act builds a stronger financial system by addressing major gaps and weaknesses in regulation that helped cause the financial crisis that led to the recession. It puts in place buffers and safeguards to reduce the chance that another generation will have to go through a crisis of similar magnitude. It protects taxpayers from bailouts. It brings fairness and transparency to consumers of financial services. And it lays the foundation for a financial system that is pro-investment and pro-growth.
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Source: U.S. Department of the Treasury
Testimony by Chairman Bernanke on regulatory reform implementation
Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, Washington, D.C.
September 30, 2010--Chairman Dodd, Ranking Member Shelby, and other members of the Committee, thank you for the opportunity to testify about the Federal Reserve's implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act).
In the years leading up to the recent financial crisis, the global regulatory framework did not effectively keep pace with the profound changes in the financial system. The Dodd-Frank Act addresses critical gaps and weaknesses of the U.S. regulatory framework, many of which were revealed by the crisis. The Federal Reserve is committed to working with the other financial regulatory agencies to effectively implement and execute the act, while also developing complementary improvements to the financial regulatory framework.
The act gives the Federal Reserve several crucial new responsibilities. These responsibilities include being part of the new Financial Stability Oversight Council, supervision of nonbank financial firms that are designated as systemically important by the council, supervision of thrift holding companies, and the development of enhanced prudential standards for large bank holding companies and systemically important nonbank financial firms designated by the council (including capital, liquidity, stress test, and living will requirements). In addition, the Federal Reserve has or shares important rulemaking authority for implementing the so-called Volcker Rule restrictions on proprietary trading and private fund activities of banking firms, credit risk retention requirements for securitizations, and restrictions on interchange fees for debit cards, among other provisions.
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Source: Board of Governors of the Federal Reserve System
Fee Rate Advisory #2 for Fiscal Year 2011
September 29, 2010--When fiscal year 2011 starts on Oct. 1, 2010, the Securities and Exchange Commission expects to be operating under a continuing resolution that will extend through Dec. 3, 2010. During this period, fees paid under Section 6(b) of the Securities Act of 1933 and Sections 13(e), 14(g) and 31 of the Securities Exchange Act of 1934 will remain at their current rates.
As previously announced, 30 days after the date of enactment of the Commission's regular fiscal year 2011 appropriation, the Section 31 fee rate applicable to securities transactions on the exchanges and in the over-the-counter markets will increase from their current rate of $16.90 per million dollars to a new rate of $19.20 per million dollars. The assessment on security futures transactions under Section 31(d) will remain unchanged at $0.0042 for each round turn transaction.
In addition, five days after the date of enactment of the Commission's regular appropriation, the Section 6(b) fee rate applicable to the registration of securities, the Section 13(e) fee rate applicable to the repurchase of securities, and the Section 14(g) fee rate applicable to proxy solicitations and statements in corporate control transactions will increase from their current rate of $71.30 per million dollars to a new rate of $116.10 per million dollars.
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Source: SEC.gov
Chile-Staff Report for the 2010 Article IV Consultation
September 29, 2010--Executive Summary
Since 2008, Chile’s economy has successfully withstood two large adverse shocks—the global financial crisis and a devastating earthquake in February 2010. The economy’s
resilience has been underpinned by a strong policy framework, a well-capitalized banking system, and the absence of imbalances in the private sector. Real output growth is expected to recover strongly in 2010–11, driven by reconstruction spending and a rebuilding of inventories.
In concluding the 2009 Article IV consultation, Directors strongly supported Chile’s policy
framework and highlighted its track record of exemplary policies, but encouraged the authorities to consider extending the horizon for fiscal policy formulation.
Policy discussions-Staff supported the authorities’ intention to start withdrawing fiscal stimulus in 2011 even with higher spending on reconstruction and normalizing the stance of monetary policy. Staff agreed with the authorities’ decision to review the fiscal rule, with a view to enhancing its effectiveness, and their plans to develop further domestic financial markets and strengthen the prudential framework. The discussions also covered options to better align the fiscal rule with international best practice, policy responses to a possible surge in capital inflows and steps to increase productivity growth.
Analytical Work. Background studies include options for strengthening Chile’s fiscal framework, assessing the extent of “too-connected-to-fail” risk through network analysis, estimating potential output, and measuring the effects of terms of trade shocks on income distribution.
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Source: IMF
Next Investments announces intent to sponsor Nikkei 225 ETF
September 29, 2010--Next Investments is proud to announce its’ association with Mitsubishi UFJ Asset Management Co., Ltd. and Nikkei™ Inc. a leading provider of business media in Japan. Through this relationship, it is our intention to bring to the U.S. market the first ETF based on the preeminent Japanese equity index, the Nikkei 225™.
Nikkei™ Inc., a leading business media provider in Japan, publishes five newspapers and operates online news sites. It consistently provides high-quality information on business and the economy. Nikkei™also sponsors the Nikkei™ Stock Average (Nikkei 225), an equity index which is comprised of 225 liquid stocks in the 1st section of the Tokyo Stock Exchange. It has been known around the globe as the premier index of Japanese stocks for the last 60 years. Many financial products linked to the Nikkei 225™, including investment trusts and index futures, have been developed and are traded on financial exchanges worldwide.
The Nikkei 225 is a price-weighted index with a stock's presumed par value determining its weight. Those stocks which par value are not 50 yen are converted to 50 yen base, e.g. if its par is 500 yen, the price to calculated the index is 1/10 (=50/500) of the original price. The sum of the converted prices is divided by a divisor, which stands at 24.696 as of August 30, 2010. The stocks in the Nikkei 225 are selected by its liquidity. Liquidity is assessed by the following two measures: 1) trading value 2) ratio of price fluctuation to trading volume ((high/low)/volume). The top 450 stocks in the Tokyo Stock Exchange 1st section constitute the "high liquidity group" and 225 stocks are selected from this group, reflecting its’ sector balance. The index is reviewed once a year and changes are made effective at the beginning of October.
view application for exemptive relief
Source: Next Investments
ETF Securities New US Business Passes $2 Billion in Assets Under Management
September 29, 2010--ETF Securities USA LLC (ETFS) announced today that the total assets under management of its four products, ETFS Physical Swiss Gold Shares (SGOL), ETFS Physical Silver Shares (SIVR), ETFS Physical Platinum Shares (PPLT) and ETFS Physical Palladium Shares (PALL), now exceeds $2 Billion as of Sept 21, 2010 since entering the US ETP market 14 months ago.
ETF Securities is the first US ETF Sponsor to provide investors with access to a full suite of precious metal Exchange Traded Commodities (ETCs). Investors can now trade physically-backed Gold, Silver, Platinum and Palladium ETCs from the same provider. The four precious metal ETCs have the following key features:
Track spot price(3) of underlying metal less associated management fees(1) Physically backed by bullion -- minimal counterparty risk(4) Gold vaulted in Switzerland Silver, Platinum & Palladium vaulted in London and Switzerland Bullion holdings audited by specialist audit firm biannually -- audit reports published on the website www.etfsecurities.com Bullion bar list published on website Low cost(1) Options (2) are trading on ETFS Physical Swiss Gold Shares (SGOL) and ETFS Physical Silver Shares (SIVR).
Commenting on this milestone for ETF Securities in the US, William Rhind, Head of Sales & Marketing for ETFS Marketing LLC, commented:
"Reaching $2 billion is a great milestone for ETF Securities in the US market. We will continue to expand the product offerings and look forward to delivering more commodity solutions to our US clients"
Source: ETF Securities USA LLC