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DB Global Equity Index & ETF Research : US ETP Market Weekly Review
September 21, 2010--New Listings and Delistings
There were two new products listed over the previous week in NYSE Arca. These offerings provide new ways to invest in global economic themes such as Natural Resources and emerging-market Consumers companies.
Four Claymore funds were delisted on Sep 10th and finally liquidated on Sep 17th. The funds’ tickers are: CRO, EXB, IRO and RBO, the AUM for these funds at the time of delisting ranged from $3 million to $18 million and all of them were liquidated at an NAV above (1.7%-2.6%) their respective last-trading price.
Net Cashflows
Total ETP inflows in the US added up to $10.7 bn during the previous week. Equity, Fixed Income, Commodity and Currency ETPs had inflows of $9.3 bn, $466 mm, $512 mm and $348 mm, respectively.
Within Equity ETPs, Large Cap ETPs received the largest inflows ($8.3 bn) followed by Emerging Markets Regional ETPs, while US Sector ETPs saw the largest outflows ($2.1 bn).
The Fixed Income ETPs inflows were led by Corporates ETPs ($572 mm), while Broad Debt Market ETPs experienced the largest outflows ($159 mm).
Commodity ETPs netted out on the positive side with Gold ETPs attempting to make a comeback ($653 mm) and energy-based Crude Oil and Natural Gas products experiencing outflows.
Turnover
Overall, Avg. Daily Turnover remained flat and totaled $59 bn at the end of the week. Within the asset class level, Commodity and Currency ETPs recorded a relatively significant weekly increase of 8.2% and 7.5%, respectively.
Assets Under Management (AUM)
US ETPs AUM rose by 2.6% driven almost evenly by positive market performance (1.45% as measured by the S&P 500 Index) and inflows. The end of week AUM reached $864 bn, which represent a 10.6% increase YTD.
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Source: Deutsche Bank Global Equity Index & ETF Research
First Trust Advisors Announces Approval of Interim Advisory Agreements for Exchange-Traded Funds
September 21, 2010--First Trust Advisors L.P. (“FTA”) announced today that it will enter into interim investment management agreements with First Trust Exchange-Traded Fund, First Trust Exchange-Traded Fund II and First Trust Exchange-Traded AlphaDEX® Fund (each, a “Trust” and collectively, the “Trusts”). FTA is the investment advisor to each portfolio (each, a “Fund” and together the “Funds”) of each Trust.
On August 24, 2010, James A. Bowen, President of FTA, entered into a stock purchase agreement to purchase 100% of the general partnership interest of FTA (the “Transaction”). The Transaction is scheduled to be completed in October 2010 and is subject to normal closing conditions. The consummation of the Transaction may be deemed to be an “assignment” (as defined in the Investment Company Act of 1940, as amended) of the investment management agreement between each Trust and FTA, which would result in the automatic termination of the agreements. The Board of Trustees of each Trust has approved the interim investment management agreements, which will be entered into effective upon the closing of the Transaction and will be in effect for a maximum period of 150 days. New investment management agreements will be submitted to shareholders of each Fund for approval and would take effect upon such shareholder approval. The new agreements will be substantially similar to each Trust’s current agreement and the Transaction will not impact the day-to-day operations of any of the Funds. A special shareholder meeting of each Fund to vote on a proposal to approve the new investment management agreements is expected to be held later this year. There can be no assurance that the necessary percentage of the shareholders of the Funds will vote to approve the new investment management agreements.
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Source: First Trust Advisors L.P
CME Group Announces Fourth Quarter Launch of Crude Oil (WTI) and Gold VIX Futures Based Upon New Volatility Indexes
September 21, 2010--CME Group, the world's leading and most diverse derivatives marketplace, announced that in the fourth quarter of 2010 it will begin offering futures and options contracts based on volatility indexes that combine CME Group's options market data with the Chicago Board Options Exchange (CBOE) Volatility Index® (VIX®) methodology. These contracts will be listed with, and subject to, the rules and regulations of NYMEX and COMEX.
The CBOE/NYMEX WTI Volatility Index and the CBOE/COMEX Gold Volatility Index are the first to launch since CME Group entered a seven-year licensing agreement with CBOE, which gives CME Group worldwide rights to list futures and options on futures for volatility indexes on a variety of asset classes. In addition, futures on corn and soybean VIX indexes are expected to launch in the first quarter of 2011.
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Source: CME Group
FOMC statement
September 21, 2010--Information received since the Federal Open Market Committee met in August indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit.
Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. Housing starts are at a depressed level. Bank lending has continued to contract, but at a reduced rate in recent months. The Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be modest in the near term.
Measures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability. With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to remain subdued for some time before rising to levels the Committee considers consistent with its mandate.
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period. The Committee also will maintain its existing policy of reinvesting principal payments from its securities holdings.
The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh.
Voting against the policy was Thomas M. Hoenig, who judged that the economy continues to recover at a moderate pace. Accordingly, he believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted and will lead to future imbalances that undermine stable long-run growth. In addition, given economic and financial conditions, Mr. Hoenig did not believe that continuing to reinvest principal payments from its securities holdings was required to support the Committee’s policy objectives.
Source: Board of Governors of the Federal Reserve System
NASDAQ OMX Commodities and GFI Group Inc. Announce Agreement to Electronically Clear Physical U.S. Power and Natural Gas Transactions
NASDAQ OMX Commodities continues to expand its global presence in energy clearing
Positions NASDAQ OMX and GFI as market leaders in the physical and financial energy markets
Electronic trading platform and physical clearing alliance allows simultaneous transactions and clearing for both power and natural gas throughout continental U.S.
Delivers a seamless transaction and clearing experience
September 21, 2010--The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) and GFI Group Inc. (Nasdaq:GFIG) today announced a strategic agreement to offer electronic trading and clearing of continental U.S. power and natural gas. The agreement broadens the clearing options for energy traders in the U.S and expands NASDAQ OMX Commodities' global presence.
Customers who trade in physical and financial power and natural gas may as a result of this agreement conduct transactions using GFI's electronic commodities trading platform, EnergyMatch®, with NASDAQ OMX Commodities Clearing Company serving as the clearing solution. The electronic trading and clearing allows for immediate execution and automatic clearing of trades.
"As pioneers in physical clearing of power and natural gas, we have a proven track record of delivering innovative solutions to our customers," said President of NASDAQ OMX Commodities Clearing Company George Sladoje. "This agreement combines our respective strengths in electronic trading and physical clearing and delivers seamless transactions, quality and value to our customers."
NASDAQ OMX is an experienced operator in the energy and commodities space through its ownership of the world's largest power derivatives exchange, which has been in operation for 15 years. It was also the first exchange in the world to offer a market for carbon emission allowances (EUAs and CERs). Recently, the exchange group launched N2EX, a marketplace for physical UK power contracts, together with Nord Pool Spot AS.
Ron Levi, GFI Group COO, said: "We are pleased to add a gold standard in global clearing to our customers trading in North American commodity products. This development represents another meaningful step in bringing greater competition, transparency and efficiency to the OTC commodity markets."
GFI Group's hybrid business model combines state-of-the-art electronic trading platforms with highly specialized and experienced brokers that can accommodate any customer demand.
GFI operates a number of electronic trading platforms in addition to EnergyMatch®. These are: EnergyMatch® Europe -- etrading platform for numerous commodities in the European markets, CreditMatch® -- leading trading platform for fixed income and fixed income derivatives and GFI ForexMatch™ -- trading of forwards, NDFs and FX options.
Source: NASDAQ OMX
NASDAQ OMX Launches First U.S. Equity Price-Size Exchange
New NASDAQ OMX Trading Platform With Innovative Market Structure to go Live on October 8th
September 20, 2010--he NASDAQ OMX Group, Inc. (Nasdaq:NDAQ), the world's largest exchange company, today announced that on October 8th, 2010, it will launch NASDAQ OMX PSXsm (PSXsm), the first U.S. equity trading platform with a price-size priority model. The platform, which will be operated as a facility of the NASDAQ OMX PHLX exchange, has been approved by the Securities and Exchange Commission (SEC).
PSX, for the first time in U.S. market structure, will be an equity exchange model that encourages participants to display more shares at a price level. The allocation of shares is pro-rated based on a participant's size relative to the total size at that price level. More displayed volume encourages greater transparency in the public marketplace and increased depth at a price level for customers.
"In direct response to some of the market developments this year, NASDAQ OMX is excited to launch a true market structure innovation, which will provide a different trading model for customers looking for an equity exchange that rewards size and liquidity," said Eric Noll, Executive Vice President of Transaction Services at NASDAQ OMX. "We are pleased to deliver new opportunities that meet the needs of our buy-side and sell-side trading customers as well as other market participants enabling them to add liquidity to a lit marketplace," he added.
Kevin Cronin, Director of Global Equity Trading at Invesco said, "In today's markets, posted liquidity and average execution size is low and the difficulty of trading large blocks of stock has increased due to challenges that have been created by developments within the US equity market structure." Cronin added, "Institutions need a platform to encourage posting of liquidity in today's markets. The new PSX price-size model provides an innovative solution to this challenge and comes at a crucial time."
Mark Kuzminskas, Director of Equity Trading at Robeco Investment Management said, "The concept of a price-size model encourages participants to post larger orders and favors institutional traders who have a higher degree of conviction to secure greater liquidity with more efficient pricing. This is especially important in smaller cap securities."
NASDAQ OMX gives participants the ability to choose from three different market models for U.S. equities trading. PSX gives customers the ability to execute orders with price-size priority while The NASDAQ Stock Market and NASDAQ OMX BX give customers the ability to execute orders with price-time priority with different pricing and functionality. NASDAQ OMX will continue to leverage the speed and efficiency of its core INET technology across all exchanges.
NASDAQ OMX is leveraging the trading license from its 2007 acquisition of the former Philadelphia Stock Exchange, known today as NASDAQ OMX PHLX.
Source: NASDAQ OMX
US: Efficient spending key to strengthening public finances, says OECD survey
September 20, 2010--Supported by substantial stimulus measures, the US economy has started to grow again after one of the most severe economic crises it has faced since the Great Depression, according to the OECD’s latest US Economic Survey.
After shrinking through the first half of 2009, US GDP began to increase again and is now projected to be 2.6% higher in 2010 than the year before. Employment has also started to rise, although the unemployment rate is likely to stay above the pre-crisis level for an extended period and long-term unemployment remains a concern.
Presenting the Survey in New York City, OECD Secretary-General Angel Gurría said: “It is becoming increasingly clear that the economy has entered a soft patch, but this is not inconsistent with previous recoveries. We don’t see a risk of a double-dip recession. That said, we don’t see either a recovery that is strong enough to put a significant dent in unemployment.”
view OECD Economic Surveys:
United States, September 2010
Source: OECD
CBOE Now Disseminating Calculations On Two New Volatility Benchmarks Based On CME Group Exchange Products - Agreement Extends CBOE's Volatility Index (VIX) Methodology Into Commodity-Based Sectors
Agreement Extends CBOE's Volatility Index (VIX) Methodology Into Commodity-Based Sectors
September 20, 2010-- The Chicago Board Options Exchange (CBOE) announced that it has begun disseminating calculations on two new volatility benchmark indexes based on options on futures contracts presently listed on CME Group exchanges.
The CBOE/NYMEX WTI Volatility Index (ticker symbol OIV) and the CBOE/COMEX Gold Volatility Index (ticker symbol GVX) are the first in a series of new volatility benchmark indexes to be created as a result of the licensing agreement between CBOE and CME that was first announced in March 2010 (www.cboe.com/AboutCBOE/PressReleases.aspx).
CBOE is calculating the new volatility benchmark indexes by applying its established CBOE Volatility Index® (VIX®) methodology to the prices from existing options on futures contracts on gold and crude oil products at CME Group exchanges. CBOE is also the initial disseminator of the price data for each of the volatility benchmark indexes.
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Source: CBOE
S&P 500 leaders seizing climate change opportunities, but, overall, still behind global peers
Cisco Systems, Consolidated Edison, News Corporation, Praxair and Spectra Energy Among US corporations leading efforts to tackle climate change
September 20, 2010--While leading companies are forging ahead to cut emissions and seize business opportunities, US companies still lag their global peers in the numbers and types of actions they are taking to reduce greenhouse gas emissions. However, some 70 percent of firms surveyed believe they can seize new commercial opportunities and improve relations with customers, employees and other stakeholders by addressing sustainability and climate change issues.
These were a few of the findings in the 2010 Carbon Disclosure Project (CDP) S&P Report, produced by PwC. The report also notes a well-defined group of American business leaders is emerging, including Cisco Systems, ConEd, News Corp., Praxair and Spectra Energy.
The results were launched today in New York at an event hosted by Bank of America Merrill Lynch, one of CDP’s global sponsors.
Bob Moritz, PwC's U.S. chairman and senior partner, believes companies are waking up to the significant commercial potential for products and services that reduce carbon emissions. "As a result," he said, "companies are not just talking differently about climate change, they are also acting differently. More and more of them see the upside of climate related business opportunities."
There are three times as many Global 500 companies* (48) compared to S&P 500** (14) that scored well enough to be recognized on this year’s new Carbon Performance Leadership Index (CPLI). Those are companies with the highest performance scores that have demonstrated a commitment to strategy, setting emissions reductions plans, governance and stakeholder communications.
view the Carbon Disclosure Project 2010
S&P 500 Report
Source: Carbon Disclosure Project
U.S. Corporate Credit-Risk Index Increases as New Series Begins Trading
September 20, 2010--A benchmark indicator of U.S. corporate credit risk rose as banks, hedge funds and other money managers started moving trades into a new series of the index.
Series 15 of the Markit CDX North America Investment Grade Index, a credit-default swaps benchmark that investors use to hedge against losses on corporate debt, traded at 106.6 basis points as of 6:37 p.m. in New York, 5.1 basis points wider than Series 14, according to broker Phoenix Partners Group.
New versions of the index are created every six months to replace companies that are no longer investment grade. Issues are also taken out of the index if they’re no longer among the most actively traded in the $25 trillion credit swaps market or fail to meet other index criteria.
Most of the difference between the two series “is probably coming from the fact that you’re rolling to a longer maturity,” said Andrew Kuan, senior trader at Primus Asset Management in New York. “It’s only one name coming in and out. It’s not really changing the makeup of the risk that people have on.”
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Source: Bloomberg