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CME Group Inc. Reports Solid Second-Quarter 2010 Financial Results
July 29, 2010--CME Group Inc. (Nasdaq: CME) today reported that second-quarter total revenues increased 26 percent to $814 million and operating income increased 29 percent to $515 million from the year-ago period. Second-quarter 2010 operating margin was 63 percent, up from 62 percent in second-quarter 2009. Operating margin is defined as operating income as a percentage of total revenues.
Second-quarter net income was $271 million and diluted earnings per share were $4.11, up 22 percent and 23 percent respectively from the same period last year. Second-quarter 2010 results included a $20.5 million write down of goodwill of the company's subsidiary, Credit Market Analysis Limited (CMA). Excluding the write down, second-quarter diluted EPS would have been $4.43*, a 33 percent increase versus second-quarter 2009.
"During a volatile second quarter, CME Group's markets performed well in their critical functions of providing liquidity, transparency, reliability and security to market participants," said CME Group Executive Chairman Terry Duffy. "Our extensive track record of operating safe and secure markets is what our customers rely on, and what helped us achieve strong second quarter results. We are pleased that the newly signed Dodd-Frank Act reinforces the value of these attributes, and look forward to working with market participants to efficiently implement the tenets of the Act while preserving the integrity of U.S. financial markets."
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Source: CME Group
CME Group Gold Futures Reach Record Volume
July 29, 2010-- CME Group, the world’s leading and most diverse derivatives marketplace, had record volume yesterday in its COMEX gold futures contract of 424,316 contracts. The prior record was 409,842 on May 25, 2010.
Additionally, it was the third highest volume for the metals complex ever with 560,564 contracts traded in the gold, silver, copper, palladium, platinum and US steel futures and options on futures listings. That record volume for the complex is held at 581,484 on November 27, 2009.
As the world’s leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through its CME Globex electronic trading platform and its trading facilities in New York and Chicago. CME Group also operates CME Clearing, one of the largest central counterparty clearing services in the world, which provides clearing and settlement services for exchange-traded contracts, as well as for over-the-counter derivatives transactions through CME ClearPort. These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk in both listed and over-the-counter derivatives markets.
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Source: CME Group
CFTC Adopts Amendment Regarding the Operation of a Commodity Broker in Bankruptcy
July 29, 2010-- The Commodity Futures Trading Commission (CFTC) today announced that it adopted an amendment to its regulations regarding the operation of a commodity broker in bankruptcy. Under appropriate circumstances, as determined by the Commission, the amendment would permit the trustee of a commodity broker in bankruptcy to operate the business of such commodity broker in the ordinary course, including entering into new commodity contracts on behalf of customers.
Currently, Regulation 190.04(d)(2) prohibits a bankruptcy trustee, immediately upon the commencement of the commodity broker’s bankruptcy case, from processing any new trades on behalf of customers (with limited exceptions). This amendment is intended to more fully protect customers of a bankrupt commodity broker in cases where a transfer may be practicable: e.g., where customer property in segregation is sufficient, and where the commodity broker has sufficient capital to operate. Moreover, it permits customers to manage their accounts during the bankruptcy.
The amendment will become effective 30 days after publication in the Federal Register. Copies of the regulation may be obtained by contacting the CFTC's Office of the Secretariat, Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581, 202-418-5100, or by accessing the CFTC's website, www.cftc.gov.
Source: AME Info
Global X Funds Lists Global X Brazil Financials ETF on NYSE Arca
July 29, 2010--–- NYSE Euronext (NYX) announced that its wholly-owned subsidiary, NYSE Arca, today began trading the Global X Brazil Financials ETF (Ticker: BRAF). The ETF is sponsored by Global X Funds.
The Global X Brazil Financials ETF seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Brazil Financials Index, which is designed to reflect the performance of the financial sector in Brazil.
Source: NYSE Euronext
ETFs: Fixed Income: Defined Maturity Fixed Income ETFs - A "Maturing" Investment-Morgan Stanley
July 29, 2010--The introduction of fixed income ETFs with defined maturity dates is an important evolutionary development within the ETF
market. In an environment where many investors are concerned about rising rates, defined maturity
ETFs, which terminate and distribute their net asset
value at predetermined dates, offer a compelling alternative to traditional fixed income funds.
However, they also entail additional complexities.
Defined maturity ETFs seek to blend many of the favorable characteristics of traditional mutual funds
(diversification, professional management, daily liquidity, monthly income) with those of ETFs
(transparency, trading flexibility) and individual bonds
(specified maturity dates, known yield to maturities).
In January 2010, BlackRock’s iShares division introduced the first six defined maturity ETFs, which are focused on the municipal bond market. Each ETF holds a portfolio of bonds maturing between June 1 and August 31 of a referenced year and are designed to provide a yield to maturity consistent with a diversified portfolio of bonds maturing in that year. Bonds included in the ETFs’ reference indices are non-callable, investment grade, and AMT-free. Recently, Claymore Advisors issued seven definedmaturity investment grade corporate bond ETFs.
Defined maturity ETFs can be useful tools for implementing or plugging holes in existing bond ladders, matching maturities with anticipated major expenses, and can enable investors to target specific positions on the yield curve. While investors will have a fairly accurate gauge of the yield to maturity at the time of purchase, the major complexity of defined maturity ETFs is that distributions and final maturity values are likely to fluctuate in offsetting directions.
Introduction
Fixed income has been a primary driver of ETF asset growth over the past two years. By our estimates, fixed income ETFs have taken in roughly $85 billion in net new assets since the beginning of 2008, which is equivalent to roughly 26% of the total new assets raised in US-listed ETFs. During that time, 54 additional fixed income ETFs have been issued, bringing the current number to 100, and the fixed income share of the ETF market has increased from 5% to 16%. While many of the more recently issued fixed income ETFs have targeted new markets such as international corporate bonds, low duration, and convertible bonds, the defined maturity structure marks an important and significant evolution in the ETF industry.
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Source: Morgan Stanley
U.S. Department of the Treasury Economic Statistics - Monthly Data Update
July 29, 2010--The U.S. Department of the Treasury Economic Statistics - Monthly Data has been updated.
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Source: U.S. Department of the Treasury
BNY Mellon Depositary Receipts 2010 Mid-Year Review is now available
July 29, 2010--Depositary Receipt Market Highlights
American and global depositary receipt (DR) trading volume increased 8.3% to 78.1 billion, a record high.
During the first six months of 2010, $1.84 trillion of DRs traded on U.S. and non-U.S. markets and exchanges, a record high and a 41.5% increase year-over-year.
The total value of U.S. investment in non-U.S. equities (both DRs and non-U.S. shares) increased 68% to about $4.2 trillion. At the same time, non-U.S. equities accounted for 19.8% of all equity investment in the U.S., an increase from 18.4% at the same time last year.
At the mid-year mark, companies from 19 countries had established 64 new sponsored DR programs, and 50 new unsponsored DR programs had been established for issuers from 15 countries. The number of available DR programs rose to 3,214 from 3,096 a year ago. Industry-wide, DR programs for issuers from 76 countries were available to investors.
The number of DR capital-raising transactions was significantly higher than the 13 at the mid-year mark last year. In the first half of 2010, issuers from nine countries completed 44 new primary and follow-on DR offerings, raising nearly $4.1 billion. India and China together accounted for 34 of the offerings and about half the total value raised.
During the first half of 2010, overall DR performance as evidenced by The BNY Mellon ADR Index was broadly lower. On June 30, 2010, the Composite ADR Index closed at 152.86, down 15.76% year-to-date, while still managing a 4.71% gain year-on-year.
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Source: BNY Mellon
RiverPark Advisors, LLC files with the SEC
July 29, 2010--RiverPark Advisors, LLC
has filed an amended application for exemptive relief with the SEC for actively managed ETFs.
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Source: SEC.gov
Global X Funds, the New York-based provider of exchange traded funds, launched today the Global X Brazil Financials ETF (ticker: BRAF). This is the first ETF to offer targeted access to the rapidly growing Brazilian financial sector.
July 29, 2010-Global X Funds, the New York-based provider of exchange traded funds, launched today the Global X Brazil Financials ETF (ticker: BRAF). This is the first ETF to offer targeted access to the rapidly growing Brazilian financial sector.
The Global X Brazil Financials ETF tracks the Solactive Brazil Financials Index, which is designed to track the performance of the Brazilian financial sector. As of July 20, 2010, the largest index components were banks Itau Unibanco, Banco Bradesco and Banco do Brasil.
The financial sector in Brazil is large and benefits from a decade of restructuring. Brazilian loan portfolio values far exceed that of any other Latin American country, and are five-fold higher than second-ranking country Mexico, according to BNamericas data. Brazilian M&A deals reported by Dealogic in Q1 2010 were worth $37.8 billion and double the deal flow posted a year ago. Financial investment in Brazil is expected to grow by 22% annually through year 2020, according to Itau Unibanco.
"Brazil is establishing itself as the financial center of the region, thanks to strong macroeconomic trends over the past half decade of decreasing fiscal debt and unemployment, rising credit and industrial production," says Bruno del Ama, CEO of Global X Funds. "Such trends plus favorable projections give a solid platform for financial sector growth going forward. The Global X Brazil Financial ETF provides efficient access to these themes."
The Brazil Financials ETF (BRAF) is part of a family of Brazil ETFs, which includes the Global X Brazil Consumer ETF (BRAQ) and Brazil Mid Cap ETF (BRAZ) that were recently launched on July 8 and June 22, respectively. Other members of the fund family yet to launch include the Brazil Industrials, Materials, and Utilities ETFs.
Source: Global X
Exchange Traded Funds See Strong Asset Inflows in First Half of 2010, According to State Street Global Advisors
July 29, 2010--Exchange traded fund (ETF) industry assets in the United States decreased 0.4 percent during the first half of 2010, as investors held $772 billion in 897 ETFs as of June 30, 2010, according to State Street Global Advisors (SSgA), the investment management business of State Street Corporation (NYSE: STT [FREE Stock Trend Analysis]). During the same period, equity markets, as measured by the widely followed S&P 500 Index fell, 8.9 percent.
“Despite the market’s performance during the first half of 2010, ETF net inflows are ahead of last year’s pace,” said Tom Anderson, director of strategy and research for the Intermediary Business Group at State Street Global Advisors. “This growth has been driven by financial professionals, individual investors and institutions, and underscores the way investors build and maintain portfolios in every market cycle using these innovative investment products.”
Three key trends helped shape the ETF industry during the first six months of 2010:
Continued Growth of Fixed Income ETF Assets
The growth of fixed income ETF assets, which increased 78 percent in 2009, remained a key trend during the first half of the year. Fixed-income ETF assets increased by $21.2 billion or 21 percent in the six months to June 30, 2010, as the number of bond ETFs available to investors reached 105. This growth illustrates the rapid evolution in the ETF industry in order to meet the needs of investors. In 2006, just six fixed income ETFs existed, representing approximately $20 billion in assets. In the first half of 2010, six of the 10 ETFs with the highest net cash flows were bond ETFs.
The growth in bond ETFs was broad based — every category, from corporate bonds to municipal bonds to Treasury Inflation Protected Securities (TIPs) and US Treasuries, saw positive cash flows year-to-date. The most popular fixed-income asset classes included short-term bond and US Treasury ETFs, which attracted more than $7 billion and $5 billion in net cash flows, respectively.
Gold ETF Assets Reach New High
Amid concerns about the European debt crisis and the pace of economic recovery in the US, investors continued their search for non-correlated returns, as assets in gold ETFs increased by 30.2 percent during the first half of the year. SPDR Gold Shares (GLD) currently leads all exchange traded funds in net cash flows, attracting more than $7.6 billion during the first half of the year, as GLD’s total assets surpassed $50 billion in the second quarter — a milestone that reflects both the increased acceptance and application of gold ETFs as a means of gaining exposure to this asset class.
“Flash Crash” Does Not Shake Investor Confidence in ETFs
With ETFs accounting for more than 60 percent of all cancelled trades during the market disruption that occurred between 2:40 p.m. and 3:00 p.m. on May 6, 2010, several third parties questioned their role in the market turmoil. Preliminary findings, which are consistent with internal reviews, indicate that the events of May 6 were the result of market structural issues, including the lack of published, uniform standards on erroneous trades, market circuit breakers and speed bumps, and were not caused or exacerbated by ETFs or ETF trading. Investor confidence in ETFs in the weeks that followed the “flash crash” remained strong, as net new inflows into ETFs totaled $20.2 billion in May and June.
Source: State Street Global Advisors