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Standard & Poor's Announces Changes In The S&P/TSX Venture Composite Index
September 23, 2009--Standard & Poor's will make the following changes in the S&P/TSX Venture Composite Index after the close of trading on Wednesday, September 23, 2009:
The shares of Challenger Energy Corp. (TSXV:CHQ) will be removed from the index. The shares of the company have been acquired by Canadian Superior Energy Inc. (TSX:SNG) pursuant to an Arrangement Agreement. Shareholders of the company will receive 0.51 shares of SNG for each common share held.
Company additions to and deletions from an S&P equity index do not in any way reflect an opinion on the investment merits of the company.
Source: Online NBews
NYSE Euronext’s U.S. Options Penny Pilot Expansion Filing Adopted by the SEC
Adds 300 More Issues for a Total of 363 Options Issues Trading in Pennies-
Represents Approximately 85% of the Volume in U.S. Options
September 23, 2009--NYSE Euronext (NYX) today announced that its
proposal for the expansion of the Securities and Exchange Commission’s
(SEC) Penny Pilot program, filed by NYSE Arca options, has been approved
for market-wide implementation by the SEC. The approval will extend the
proposed pilot through December 31, 2010, including four quarterly
additions to the pilot consisting of 75 issues each.
Representing over 85% of the overall volume in U.S. options, this
expansion of the penny pilot offers many benefits to the investing
public, including increased transparency, improved price discovery and
reduced spreads," said Paul Finnegan, Senior Director, NYSE Euronext
U.S. Options. "By adding 300 new issues in a systematic fashion over a
defined period of time, the endorsement of NYSE Euronext's proposal to
allow for an appropriate expansion benefits the investing public while
safeguarding the integrity of industry quoting activity. We are very
pleased with the SEC’s decision and we look forward to offering our
customers the highest levels of market quality and execution choice as
this program is carefully rolled out."
Highlights of NYSE Euronext’s plan include:
· The addition of the next 300 most active issues into the program for a total of 363 issues
· The phase in of 75 issues on a quarterly basis: 10/09, 1/10, 4/10, 7/10
· Provides structure to replace delisted pilot issues on a semi-annual basis
· Excludes high priced underlying issues (>$200)
For more information on NYSE Euronext’s U.S. Options exchanges, please
visit: http://www.nyse.com/options
Source: NYSE Euronext
Secretary Geithner before the House Financial Services Committee
September 23, 2009--Chairman Frank, Ranking Member Bachus, members of the House Financial Services Committee, I am pleased to be back before you today as our Administration and this Congress work toward comprehensive reform of our financial regulatory system.
The Chairman has set an ambitious schedule of hearings that will lead to your markup of legislation and facilitate enactment this year. We have now provided more than 600 pages of legislative language, and I am aware and appreciative of the long hours you have spent working through the critical details of reform. My staff has been in constant contact with members of this committee and with your staff, and will continue to be as we work through key issues.
As you prepare to put this legislation together and we prepare to help, it might be useful to remind ourselves why we have a financial system in the first place and why we have reached this moment of decision.
Stripped of its complexities, the purpose of a financial system is to let those who want to save--whether for vacation, retirement or a rainy day--save. It is to let those who want to borrow--whether to buy a house or build a business--borrow. And it is to use our banks and other financial institutions to bring savers' funds and borrowers' needs together and carefully manage the risks involved in transfers between them.
The job of a financial system, in other words, is to efficiently allocate savings and risk.
Last fall, our financial system failed to do its job, and came precariously close to failing altogether.
read more
Source: U.S. Department of the Treasury.
The Options Industry Council Announces New Study Finds Collar Strategies Outperform Buy And Hold
September 23, 2009--The results of a new study examining the use of options in a collar strategy (both active and passive implementations) on the PowerShares QQQ™ exchange-traded fund (ETF) show it provides superior returns to the traditional buy and hold strategy while reducing risk by almost 65%.
The Options Industry Council (OIC) is pleased to note the study reaffirms the risk management potential of equity options, finding that during the entire 10-year study period, including the sub-periods around the tech bubble and credit crisis, collars significantly outperformed the QQQ, providing much needed capital protection.
“Loosening Your Collar: Alternative Implementations of QQQ Collars,” by Edward Szado and Thomas Schneeweis, looked at data from March 1999 to May 2009. It concluded that over the entire 122 month period the passive collar returned almost 150%, while the QQQ lost one-third of its value. The active collar outperformed both strategies and returned more than 200%.
Additionally, the study simulated a collar on a small-cap mutual fund. The return of the active mutual fund collar was four times the return of the fund, while the standard deviation was about one-third lower. The study was conducted by the Isenberg School of Management’s Center for International Securities and Derivatives Markets (CISDM) at the University of Massachusetts.
This is the third in a series of studies OIC has helped to support, studies which demonstrate the effectiveness of implementing options strategies on specific products over specific time periods covering a variety of market conditions. By supporting these studies in cooperation with CISDM, OIC remains dedicated to its mission of providing education and research to institutional investors. The study is available to all investors at www.optionseducation.org/institutional/research/pdfs/qqq_collar_study.pdf.
About OIC
OIC is an industry cooperative funded by the Boston Options Exchange, Chicago Board Options Exchange, International Securities Exchange, NASDAQ OMX PHLX, NASDAQ Options Market, NYSE Amex Options, NYSE Arca Options, and The Options Clearing Corporation. OIC was formed in 1992 to educate investors and their financial advisors about the benefits and risks of exchange-traded equity options. OIC's resources include:
The Options Industry Services Help Desk at 1-888-OPTIONS, educational Web sites at
www.OptionsEducation.org, www.OptionsEducation.org/advisor
and www.OICoptions.com, evening seminars throughout the continental United States and Canada, instructional DVDs and educational literature and software.
Source: The Options Industry Council
Deloitte Says ETFs Need to Grow Assets to Challenge Mutual Funds
September 22, 2009-With half of all Exchange Traded Funds (ETF) falling short of the $50 million minimum net assets required to maximize profitability, attracting capital will be key to remaining competitive and potentially challenging mutual funds' dominant market share, according to Deloitte's "Exchange-Traded Funds: Challenging the Dominance of Mutual Funds?" paper, released today.
"For retail investors hurt by market volatility over the last year, an ETF may be more appealing longer term than actively managed assets like mutual funds. When this perceived safety net is coupled with the tax efficiencies that are attractive to retail investors, it appears the stars may be aligning to end mutual funds' 69-year dominance," said Cary Stier, Deloitte's U.S. Asset Management Services leader. "But in order to execute on this opportunity, ETFs will have to expand investor friendly attributes beyond transparency and low costs to compete for a share of the asset influx."
According to Deloitte, several factors could enable ETFs to attract additional capital and become more profitable:
- Link to less exotic indices. Some of the best performing ETFs are linked to less exotic indices, such as commodities and equities. The data shows exotic funds, on average, have not performed as well as regular ETFs. This is not to say exotic funds haven't performed well, but exotic ETFs are difficult for regular investors to understand. In other words, the simpler, the better. Also, simpler betas are cheaper than their more exotic counterparts.
- Focus on indices with long-term appeal. There are a number of ETFs that are launched to benefit from a current market situation. Inverse financial sector ETFs, for example, profit from the ailing financial sector. However, most investors recognize that these ETFs have a limited shelf life. Being linked to an index with a long-term appeal is usually more attractive to investors, particularly retail investors.
- Increase appeal to 401(k) investors. The barrier for 401(k) funds investing in ETFs is its higher costs compared to index mutual funds. Given that 401(k) assets will probably reach $7.5 to $8.5 trillion in 2015, ETF sponsors need to make themselves 401(k) friendly to tap into this huge pool of assets that primarily invests in mutual funds.
- Become more retail-investor-friendly. When small investors buy ETFs, they incur commission costs, as well as the bid-ask spread. These costs usually make the difference between small investors putting their money in index mutual funds or ETFs. While commissions and bid-ask spread may not have a large impact on big investors, it is significant for investors who put in small but consistent sums of money. In essence, ETFs will have to maintain their 'good' characteristics but mimic index mutual funds.
- Keep it institution-friendly. The rise of ETFs is mainly attributable to institutional investors, such as hedge funds and pension funds. These funds were drawn to ETFs because of their low cost, risk diversification and efficient beta. Another reason for large investors to be drawn to certain ETFs is their strong liquidity.
- Ensure low tracking error. The tracking error is the difference between the net asset value of an ETF and its benchmark. Typically, the simpler the benchmark, the lower the tracking error. A lower tracking error is also one of the primary determinants of choosing an ETF.
To learn more about Deloitte's Exchange-Traded Funds: Challenging the Dominance of Mutual Funds, please visit http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/us_fsi_IM_ExchangeTradedFunds_061009(1).pdf.
Source: PR Newswire
CME Group Announces The Launch Of Long-Term U.S. Treasury Bond Futures - 'Ultra' Treasury Bond In Response To Customer Demand - Increased Treasury Issuance
September 22, 2009--CME Group, the world's largest and most diverse derivatives marketplace, today announced the launch of Long-Term U.S. Treasury Bond futures, or "Ultra" Treasury Bonds, beginning in early first quarter 2010. This contract will be listed with, and subject to, the rules and regulations of the CBOT.
"The Long-Term Treasury Bond futures are being launched in response to strong customer demand for a contract that mimics the duration of a 30-year Treasury bond," said Robin Ross, CME Group Managing Director of Interest Rate Products. "The Ultra Bond contract will complement our existing benchmark U.S. Treasury complex and expand the range of risk management and trading opportunities for market participants."
Deliverable securities for the new Long-Term Bond future will comprise cash Treasury bonds with at least 25 years of remaining term to maturity. By comparison, deliverable securities for the existing Treasury Bond contract are bonds with remaining terms to maturity of 15 years or more. The recent fiscal policy shift toward greater issuance of long-term bonds has enabled CME Group to launch this contract targeted at this important part of the yield curve.
In all other respects, the specifications for the Ultra Bond futures closely resemble those for the existing Treasury Bond contract. They are identical in terms of their notional value, minimum tick size, contract critical dates, and coupon. Initially, the Exchange will list three March-quarterly delivery months in the Ultra Bond futures, beginning with the March 2010 expiry. There will be no modifications to the currently listed Treasury Bond futures contract specifications.
Additional information about the Ultra Treasury Bond futures and CME Group's other interest rate products can be found at http://www.cmegroup.com/trading/interest-rates/index.html.
Source: CME Group
Julie Abbett joins IndexIQ as senior vice president
September 22, 2009-In her new role, Abbett will be responsible for helping to oversee portfolio management of
In her new role, Abbett will be responsible for helping to oversee portfolio management of IndexIQ’s growing line of alternative investment products, including the firm’s separately managed accounts business.
ALPS Debuts Lucky Number Three ETF
September 22, 2009--ALPS Funds has launched their newest fund on Monday. The Thomson Reuters/Jefferies CRB Global Commodity Equity Index Fund
tracks a global index which deals specifically in energy, agricultural, and precious and raw metal companies.
The fund, which is sub-advised by Arrow Investment Advisors charges a 65-basis-point annual expense ratio.
read full story
Source: Mutual Fund Wire
Schwab Hires an ETF Chief
September 22, 2009--Charles Schwab has named Dustin Lewellyn the leader for its new ETF division.
Lewellyn left his position as ETF head at Northern Trust in May 2009, three months after firm closed its ETF business.
read full story
Source: Mutual Fund Wire
Barclays Global Investors announces the launch of new 529 plan advisor tools
September 22, 2009--iShares, a global leader of exchange traded funds (ETFs), and Barclays Global Investors, investment manager of the iShares 529 Plan, today announced the launch of new 529 plan advisor tools -- including the 529 Plan Comparison Calculator and Ugift with advisor referral -- in recognition of September as National College Savings Month. "The significance
of September as College Savings Month is not lost on advisors or their clients," said Robert Nestor, Director of Product Management for iShares. "Families often feel overwhelmed by the cost of higher education, and arming advisors with the best tools possible, helps them to guide their clients to the most effective investment plan for their needs."
The 529 Plan Comparison Calculator was conceived by Archimedes Systems to help financial advisors conduct side-by-side comparisons of 529 college savings plans, factoring in the impact of sales charges, fees, and the potential value of in-state tax deductions. The 529 calculator -- which can be found on www.iShares529.com -- also generates a client friendly report that helps advisors explain some of the reasons for their investment recommendations to clients.
The launch of the calculator follows the introduction of the iShares 529 Plan, as the first no-load, all-ETF 529 solution specifically for fee-only advisors. The Plan's portfolios invest in iShares ETFs. The calculator and supporting tools create a pattern of resources that promote saving for college, such as Ugift� -- Give College Savings, a service that lets account owners suggest that family and friends celebrate children's milestones with the gift of college savings in lieu of traditional gifts. Ugift for the iShares 529 Plan includes an important advisor referral mechanism that allows clients to indicate that their advisor is offering valuable financial guidance around saving for college and other financial challenges.
Mary Ann Lambert, a financial advisor at Lambert Advisors in Philadelphia, echoed Mr. Nestor's sentiments. "At a time when the saving for college conversation is in full tilt, tools like the 529 Plan Comparison Calculator, Ugift, and indeed the iShares 529 Plan itself help me to present the best choices for my practice and my clients," she said. "These resources keep the dialogue going so that we can break down myths about savings plans."
Attributes associated with iShares ETFs, such as transparency, flexibility, and low expenses, were built into the iShares 529 Plan, which allows advisors to customize a solution for their client from among 20 different investment options, including Custom iShares Portfolios, iShares Year-of-Enrollment Portfolios and iShares Asset Allocation Portfolios.
For more information about the iShares 529 visit www.iShares529.com.
Source: Barclays Global Investors/iShares