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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
iShares Announces Launch of Three New iShares Emerging Markets Exchange Traded Funds: iShares Introduces the First Philippines ETF
September 29, 2010-BlackRock, Inc. (NYSE: BLK) today announced that the iShares Exchange Traded Funds (ETFs) business, the world's largest provider of ETFs, launched three new iShares emerging markets ETFs on the NYSE Arca. The new funds are the iShares MSCI Brazil Small Cap Index Fund (EWZS), iShares MSCI China Small Cap Index Fund (ECNS) and the iShares MSCI Philippines Investable Market Index Fund (EPHE). With the launch today, the iShares international single country offering includes over 30 ETFs and 18 dedicated to emerging countries.
"The new iShares single country emerging market ETFs provide financial professionals, institutions and individuals access to emerging markets that have potential for strong economic growth and moderate inflation," said Noel Archard, Head of US Product at iShares, BlackRock. "The new iShares funds further enhance our large single country iShares ETF lineup to respond to investors' requests for greater precision in implementing their international-focused investment strategies and interest in getting deeper access to small capitalization stocks to help diversify portfolios."
Source: BlackRock
US Congress backs action on renminbi
September 29, 2010--Beijing has hit back at the bill passed by the US House of Representatives that would punish China for the alleged undervaluation of the renminbi, saying it violates global trading rules and could damage relations between the two countries.
The House voted 348-79 on Wednesday to approve the bill, heightening the already tense bilateral ties. The legislation would allow the US to use estimates of currency undervaluation to calculate countervailing duties on imports from China and other countries.
China’s reaction was relatively restrained, in part reflecting the obstacles the bill faces before it can become law, although Chinese officials made it clear there would be repercussions if the measure was approved
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Source: FT.com
BM&FBOVESPA Sets New Trading Record For ETFs - The Number Of ETF Trades Hits New Historic High Of 4,737
September 29, 2010--BM&FBOVESPA hit a new historic high today with a total of 4,737 ETF trades. In just one day the BOVA11 registered 4,457 trades (872,200 shares at the average price of BRL68.54), reaching BRL59.8 million in total financial volume.
All of the other ETFs together registered a total of 280 trades. The previous record was set on August 3 of this year when a total of 2,247 ETF trades were registered, at that time 2,134 were from the BOVA11 and 113 were from all other ETFs.
Source: BM&FBOVESPA
CME Group Announces the Launch of NASDAQ-100 Weekly Options
September 28, 2010--CME Group, the world's leading and most diverse derivatives marketplace, today announced the launch of NASDAQ-100 weekly options beginning October 18, 2010. These contracts will be listed with, and subject to, the rules and regulations of the CME.
"Our customers continue to look for more precise ways to manage their financial risk tied to market movements that occur throughout the month," said Thomas Boggs, CME Group Director of Equity Index Products and Services. "The NASDAQ-100 weekly options will expand the number of expirations and provide our customers with more trading opportunities and increased flexibility for more efficient position management."
Standard and E-mini weekly options will be listed for trading and both will be European-style. Benefits include expanded trading choices, certainty of exercise, and the precision and flexibility of additional listings.
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Source: CME Group
Remarks Before EUROFI Financial Services Forum
September 28, 2010--Good morning. I thank the Belgian E.U. Presidency and Eurofi for inviting me to speak this morning on regulatory reform of over-the-counter (OTC) derivatives, or swaps, markets. I also want to thank Commissioner Michel Barnier for his open invitation to come to Brussels to continue our partnership and coordination on these issues. Lastly, I want to thank each of my fellow CFTC Commissioners and our staff for all of their hard work.
This is my third trip to Brussels since last September. As the crisis once again so proved, capital and risk know no geographic boundaries. We are partners in the global effort to lower risk throughout our economies.
In 2008, both the financial system and the financial regulatory system failed. Though there were many causes of the crisis, as evidenced by the $180 billion that U.S. taxpayers put into an ineffectively regulated AIG, derivatives did play a significant role. Over-the-counter derivatives – initially developed to help manage and lower risk – can actually concentrate and heighten risk in the economy and to the public.
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Source: CFTC.gov
CFTC Seeks Comment Regarding Agricultural Swaps
September 28, 2010--The Commodity Futures Trading Commission today published an Advance Notice of Proposed Rulemaking (ANPRM) seeking public comment regarding the appropriate regulatory treatment of agricultural swaps.
The Dodd-Frank Wall Street Reform and Consumer Protection Act provides that swaps in an “agricultural commodity” (as defined by the Commission) are prohibited unless entered into pursuant to a rule, regulation or order of the Commission adopted pursuant to section 4(c) of the Commodity Exchange Act, the Commission’s general exemptive authority.
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Source: CFTC.gov
Joint Statement by CFTC Chairman Gary Gensler and European Commissioner Michel Barnier on the Financial Reform Agenda
September 28, 2010--United States Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler and European Commissioner Michel Barnier spoke today and reaffirmed their strong determination to cooperate closely in strengthening the global financial system. Specifically, Chairman Gensler and Commissioner Barnier discussed regulatory reform of the over-the-counter (OTC) derivatives markets with respect to Dodd-Frank Wall Street Reform and Consumer Protection Act and the September 2010 European proposal for a Regulation on OTC derivatives, central counterparties and trade repositories.
Commissioner Barnier and Chairman Gensler discussed a number of issues pertaining to enhancing oversight and reducing risk in the OTC derivatives market including: (i) comprehensively regulating derivatives dealers for capital and margin, recordkeeping and reporting and business conduct standards; (ii) requiring standardized OTC derivatives to be cleared by central counterparties, imposing stringent prudential and organization rules for central counterparties and imposing risk mitigation standards for non-standardized contracts that are not centrally cleared; and (iii) increasing transparency of the OTC
Derivatives markets through trading, where appropriate reporting to data repositories and reporting to the public. Commissioner Barnier and Chairman Gensler emphasized the need for international co-operation to ensure global access to all data on derivatives transactions maintained by trade repositories.
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Source: CFTC.gov
