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Treasury International Capital Data for March
May 17, 2010-Treasury International Capital Data for March
The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for March 2010. The next release, which will report on data for April 2010, is scheduled for June 15, 2010.
Net foreign purchases of long-term securities were $140.5 billion.
Net foreign purchases of long-term U.S. securities were $157.7 billion. Of this, net purchases by private foreign investors were $125.0 billion, and net purchases by foreign official institutions were $32.7 billion.
U.S. residents purchased a net $17.1 billion of long-term foreign securities.
Net foreign acquisition of long-term securities, taking into account adjustments, is estimated to have been $120.4 billion.
Foreign holdings of dollar-denominated short-term U.S. securities, including Treasury bills, and other custody liabilities increased $13.8 billion. Foreign holdings of Treasury bills increased $23.9 billion.
Banks' own net dollar-denominated liabilities to foreign residents decreased $123.8 billion.
Monthly net TIC flows were $10.5 billion. Of this, net foreign private flows were negative $13.3 billion, and net foreign official flows were $23.8 billion.
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Source: U.S. Department of the Treasury
NASDAQ OMX and SunGard to Deliver Risk Analytics for NASDAQ OMX Indexes
May 17, 2010--SunGard and The NASDAQ OMX Group, Inc. are offering new risk analytics for a range of selected NASDAQ OMX indexes, helping investment firms effectively manage financial risk and better respond to volatile markets. Through SunGard's APT, which provides risk modeling, reporting, risk attribution and scenario analysis capabilities, firms will be able to gain greater insight into NASDAQ OMX indexes, in turn helping enhance investment decision making.
SunGard's APT is a leading solution for risk-based investment management decisions. APT helps investment firms manage risk by providing models and reporting that include risk measures (such as portfolio tracking error, value at risk (VaR) and volatility), risk attribution and scenario analysis. This information will be updated automatically to provide analytics on a range of NASDAQ OMX indexes, including thematic indexes. To access the APT and NASDAQ OMX risk reports, visit www.sungard.com/go/apt/nasdaq. In addition, NASDAQ OMX and SunGard provide a subset of this information on their respective Web sites as a complimentary offering.
"Five years ago, many investors were less concerned about financial risk but as we emerge from the global financial crisis, risk management is now essential to a comprehensive investment strategy," said John Jacobs, executive vice president, NASDAQ OMX Global Index Group. "We are delighted to have SunGard's APT provide such a robust data analysis of selected NASDAQ OMX indexes, enabling investors to more effectively monitor and manage financial risk".
Julie Rice, managing director, Americas for SunGard's alternative investments business, commented: "Investors in the current economic climate are looking for more transparent risk assessments of global indexes. By working with a global leader in the provision of indexes, we are able to offer both NASDAQ OMX and SunGard customers access to a range of risk analytics across key benchmarks to help support their investment decision making processes in an efficient and transparent manner."
Through SunGard's APT solution, new risk analytics are offered on the following NASDAQ OMX indexes:
| Index | Symbol | |
| NASDAQ-100 | NDX | |
| NASDAQ Clean Edge Green Energy | CELS | |
| NASDAQ OMX Clean Edge Smart Grid Infrastructure | QGRD | |
| NASDAQ OMX CRD Global Sustainability 50 | QCRD | |
| Wilder NASDAQ OMX Global Energy Efficient Transport | HAUL |
Source: NASDAQ OMX
Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues to Meet on May 24
May 17, 2010--The Securities and Exchange Commission and the Commodity Futures Trading Commission (CFTC) today announced that the first meeting of the Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues will be held on Monday, May 24.
The Joint Committee will discuss the preliminary findings of the staffs of the CFTC and SEC related to the unusual market events of May 6.
The CFTC and SEC also announced today that Nobel Laureate and Columbia Business School Professor Joseph Stiglitz will be a member of the Joint Committee.
SEC Chairman Mary Schapiro and CFTC Chairman Gary Gensler are the co-chairs of the Joint Committee. Other members of the Joint Committee named last week:
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Source: SEC.gov
Old Mutual Global Index Trackers to Ring Bell at NYSE; ETF Provider Completes Launch of GlobalShares ETFs
Announces Reduced Fee Structure on Emerging Market ETF (GSR), Limits Net Expense Ratio to 0.25% for One-Year Period Effective June 1, 2010*
May 17, 2010--Old Mutual Global Index Trackers announced today that it will be ringing the opening bell at the NYSE on Tuesday, May 18th to celebrate its launch completion of five ETFs focused on emerging and developed markets.
The company also announced it has voluntarily agreed to limit the total annual operating expenses of Global Shares FTSE Emerging Market Fund to 0.25% of average daily net assets for one-year.* GSR now is the lowest cost broad emerging market ETF in the industry.
- As stated in the current prospectus, as amended, Old Mutual Global Index Trackers has voluntarily agreed to waive its management fees and reimburse other expenses (not including brokerage or other transaction-related expenses, taxes, interest, litigation expenses and other extraordinary expenses) such that total operating expenses do not exceed 0.25% for the period June 1, 2010 through May 31, 2011. (Expenses are also subject to a contractual expense cap of 0.37 % until January 31, 2012.) The Fund's current gross expense ratio is 0.51%.
Old Mutual Global Index Trackers, a division of the $450 billion asset manager Old Mutual, is a South African-based index adviser with $5 billion under management. Old Mutual celebrated its 165th year of operations yesterday. To date, the firm has launched the following ETF products:
•GlobalShares FTSE All Cap Asia Pacific ex Japan Fund (NYSE:GSZ), the only ETF listed in the U.S. that provides exposure to all caps (specifically small cap stocks) in the Asia Pacific region.
•GlobalShares FTSE Emerging Markets Fund (NYSE:GSR).
•GlobalShares FTSE Developed Countries ex US Fund (NYSE:GSD).
•GlobalShares FTSE All-World ex US Fund (NYSE:GSO).
•GlobalShares FTSE All-World Fund (NYSE:GSW).
"We're very pleased to be ringing the opening bell at the NYSE to recognize the completion of our ETF family, which includes the only emerging market ETF managed by an emerging market adviser," said Tendai Musikavanhu, CEO of Old Mutual Global Index Trackers. "Our products seek to provide investors with well-diversified portfolios, which we believe are particularly relevant now, as we continue to see volatility in isolated markets such as Greece. This is the reason why we have reduced the net expense ratio of GSR to 0.25%. We believe this will help demonstrate to Emerging Market investors that we can be the cost leader in this end of the market."
By completing its launch, Old Mutual Global Index Trackers continues in its mission to offer broadly diversified, low-cost FTSE products, which are designed for both retail and institutional investment portfolios. The products were created with the belief that the playing field should be leveled between large institutions and everyday, retail investors. The ETFs were also launched in order to enable investors to have broader index participation, and to offer global diversification and simplicity. GlobalShares products seek to provide a low tracking error, which allows investors to be exposed to the performance of the underlying FTSE index. (Tracking error is the annualized standard deviation of the difference between two sets of returns over a specified period of time.)
The firm is in the early stages of building out a strong distribution channel and its ETFs have been added to the select list of major brokerage houses. To date, eleven authorized participants have signed up to distribute GSR.
"Many investors today realize that core diversified equity products are more important than ever in terms of building a long-term portfolio," said Mr. Musikavanhu. "We use the best research and on-the-ground analysis available, coupled with the selective screening process of the FTSE indices. We're very pleased to celebrate the offering of our products with the NYSE bell ringing."
Source: Old Mutual Global Index Trackers
Emerging Markets Week in Review-5/10/2010 - 5/14/2010
May 17, 2010--The Dow Jones Emerging Markets Composite Index gained 3.47% last week in a volatile week of trading. Two of the most cyclically sensitive sectors, Consumer Services and Technology, gained 6.42% and 5.08% respectively while Health Care and Industrials were up 2.21% and 3.13% respectively.
As investors continue to digest the newest government measures to curb spiraling sovereign debt problems in Europe, the underlying expectation of emerging markets driving positive global economic growth in 2010 remains strong.
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Source: Emerging Global Advisors
Exchange-Traded Funds: Fixed Income ETF Asset Allocation Model Update
May 17, 2010--Morgan Stanley Smith Barney's (MSSB) Fixed Income Strategists maintain four sector-based asset allocation models. This report focuses on recent changes to the moderate asset allocation model.
They reduced their weightings in preferred securities by 5% and increased their allocation to federal agencies by 5%. The moderate model now has the following allocations: 40% investment grade credit, 25% federal agencies, 10% MBS, 10% certificates of deposit, 5% preferreds, 5% non-USD sovereign debt, and 5% TIPS.
MSSB's strategists favor reallocating a portion of fixed income portfolios into floating-rate securities. We note that no US-listed ETFs currently provide exposure to taxable floating-rate debt.
ETFs are available for most sectors in the various models. This report illustrates index-linked ETFs and weightings to best implement the moderate asset allocation model. Investors might choose to follow the model or just invest in favored sectors.
CEFs are also available for most sectors in the model. We provide the closed-end funds that offer the purest exposure to the asset classes in the model. Ratings on the closed-end funds included in the model are subject to change.
As with any investment, index-linked ETFs have risks. These include the general risks associated with investing in securities, potential tracking error and the possibility that particular indices may lag other market segments or active managers.
Investing in closed-end funds also involves risks. These include changes in market prices relative to NAVs and manager performance. Some funds also use leverage or invest in securities with currency risk.
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Source: Morgan Stanley
ETF Weekly Update-Morgan Stanley
May 17, 2010--US ETF Weekly Update-Highlights
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Weekly Flows: $ETFs had net cash inflows of $9.9 bln last week
2nd strongest week of net inflows this year. Trails only the week of 3/22/10, which had $11.0 bln inflows
Flows driven largely by two US Equity ETFs. One large-cap, one small-cap.
Over 13-week period, US Large-Cap and Fixed Income ETFs have strongest inflows
$46.8 bln net inflows into ETFs over past 13 weeks with almost all categories exhibiting net inflows
Third straight week, SPY has the largest net inflows for US ETFs at $5.8 billion
On a 13-week basis, SPY has the strongest net inflows for all US-listed ETFs at $10.1 billion
Over 13-week period, 55% ETFs posted net outflows vs. 31% with net outflows
US-Listed ETFs: New Listings For the Week
Ticker: BABS
Name:SPDR Nuveen Barclays Capital Build America Bond ETF
Ticker:ONEF Name:One Fund
Rydex to Close 12 Leveraged & Leveraged Inverse ETFs
- Last day of trading is this Friday, 5/21/10
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Source: Morgan Stanley
Senate votes on new rules for credit rating agencies
May 14, 2010--Credit rating agencies faced a growing threat to their business model yesterday after the Senate voted to establish a government-appointed panel to decide who rates an individual asset-backed security.
The amendment to the financial regulation bill was offered by Al Franken, a Democratic senator from Minnesota, and approved 64-35 with some Republicans backing the move.
“There is a staggering conflict of interest affecting the credit-rating industry,” said Mr Franken. “Issuers of securities are paying for the credit ratings. They shop around for their ratings.”
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Source: FT.com
Market View-Why were ETFs so affected by the trading glitch of May 6, 2010?
Richard Keary, Principal/Founder at Global ETF Advisors, LLC shares his views of why the markets were affected by the events on May 6, 2010.
May 10, 2010--I am sure there are many different opinions out there and since we still do not have any definitive information from the exchanges and the SEC (they are meeting today) we can only speculate.
I believe this issue is nothing more than unintended consequences of regulation. High frequency trading and arbitraging in ETFs were not the issue nor was it excessive order flow because stocks shut down. ETFs are regulated from a trading perspective just like stocks, so if stocks shut down so can ETFs.
The main rule book for equity trading in the U.S. is called Reg NMS.
The main rule book for equity trading in the U.S. is called Reg NMS. Those rules state that all market centers (NYSE, NASDAQ, BATS, Direct Edge, etc.) must connect to each other and deliver a trade within one second (in reality it occurs in nano seconds). In addition, each market center in times of market stress can deem themselves to be "slow markets" and thus slow down their trading process. This is a voluntary action.
On Thursday, the NYSE was the only market center to deem itself "slow". Thus the Lead Market Makers on the NYSE listed ETFs could have been frozen out of the market for 90 second intervals based on the rules (I have not been able to confirm this with a lead market maker at the time of this writing). The NYSE’s CEO was on CNBC Thursday stating that the exchange did choose to become "slow" at various points (not sure if it was the whole exchange or determined on a stock to stock basis). This would cause major pricing issues in ETFs as the LMMs could not operate as the main pricing mechanism. ETF prices would no longer correlate to their indexes and since there was pricing issues in stocks as well, the arbitrage function in ETFs could not operate correctly either thus adding to the price discovery problems. The perfect storm scenario.
The NYSE did nothing wrong, it was a judgment call which according to the regulation, they have every right to make. The consequences of that judgment could not have been foreseen. Regulations can be changed so that all markets are either "fast markets or "slow markets" during times of stress. This would be my guess as one of the outcomes of today’s meeting between the SEC, NYSE and NASDAQ. Again, this is unintended consequences of Reg NMS.
As someone who came from an exchange environment, I know that ETFs are not on the top of mind of exchange officials when determining trading policy. Their concern is on their big listed companies and their market share of equity volumes.
As the facts begin to appear, I hope exchange and regulatory officials will take notice and get better acquainted with ETFs. ETFs now account for well over 25% of all trading in the U.S. equity markets and hopefully trading policy will not have such an adverse effect on a growing population of ETF investors.
Comment or Question?
Source: Richard Keary, Principal/Founder at Global ETF Advisors, LLC
U.S. Department of the Treasury TIC Annual and Benchmark Surveys Update
May 14, 2010--The U.S. Department of the Treasury TIC Annual and Benchmark Surveys have been updated.
Table 2 was revised on 5-13-2010, regarding agency securities. Percentage figures in associated text were also changed.
view Foreign Portfolio Holdings of
U.S. Securities-as of June 30, 2009
Source: U.S. Department of the Treasury.
