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States may sue utilities over climate, court says
September 22, 2009-- A U.S. Appeals Court reinstated on Monday a 2004 lawsuit by eight states and the city of New York against five of the largest U.S. utilities over their carbon dioxide emissions.
Monday's ruling by the U.S. Court of Appeals for the 2nd Circuit in New York said the judge "erred in dismissing two complaints on the ground that they presented non-justiciable political questions."
Source: The Energy Collective
Treasury, Energy SURPASS $1 Billion MILESTONE IN RECOVERY ACT AWARDS for Clean Energy Projects
Geithner, Chu Hold Roundtable Discussion with Energy Companies on Expanding Development of Clean, Domestic Sources of Energy
September 22, 2009-This morning, Treasury Secretary Tim Geithner and Energy Secretary Steven Chu hosted a group of clean energy developers and manufacturers at the White House to discuss how the American Recovery and Reinvestment Act (Recovery Act) is creating jobs and helping expand the development of clean, renewable domestic energy. At the meeting, Secretaries Geithner and Chu announced $550 million in new awards through the Recovery Act's 1603 program, bringing the total to more than $1 billion awarded to date to companies committed to investing in domestic renewable energy production.
"This Recovery Act program is an example of a true federal partnership with the private sector," said Treasury Secretary Geithner. "Not only are our Recovery dollars meeting an immediate funding need among innovative companies, they are also jumpstarting private sector investment in communities across the country – with benefits for the renewable energy industry and our economy alike."
Said Secretary Chu: "These investments are crucial to ensuring America can compete and win in the race for the clean energy jobs of the future. With American workers and American innovation, we can and must lead the world when it comes to the new Industrial Revolution in clean energy."
Created under Section 1603 of the Recovery Act, the program provides cash assistance to energy producers in place of tax credits. The payments improve project viability, enabling companies to create and retain jobs, and establish sufficient financing bases for projects that may otherwise not be possible, dramatically expanding and accelerating the development of renewable energy projects throughout the country. Under this program, the federal government provides a cash payment in lieu of a tax credit totaling 30 percent of the qualifying cost of the project; for each federal dollar spent in payments, more than two dollars are spent in private sector investments.
Today the Treasury Department will make the second round of awards, all of which will be made in half the statutorily mandated turnaround time of 60 days. The first round of awards totaling $502 million was announced on September 1, 2009. Today's announcement provides an additional $550 million. The 1603 program is having an immediate effect on the renewable energy industry by significantly increasing the availability and liquidity of project capital in three ways:
· Recycling grants into new projects. Project developers are able to begin construction of additional projects thanks to the extra capital from the grants they are receiving.
· Increasing the flow of capital. By reversing the drop in availability of equity investment available, the 1603 program brings significant private capital off the sidelines to finance more renewables projects.
· Attracting investment for domestic projects. Large project developers allocate capital across many countries, and the 1603 program is attracting billions of dollars of additional capital towards projects in the US.
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Source: U.S. Department of the Treasury
NASDAQ OMX and Clean Edge Introduce the NASDAQ OMX Clean Edge(R) Smart Grid Infrastructure Index
September 22, 2009--The NASDAQ OMX Group, Inc.
(Nasdaq:NDAQ) and Clean Edge, Inc. announced today the introduction of
the NASDAQ OMX(R) Clean Edge(R) Smart Grid Infrastructure Index(SM)
(Nasdaq:QGRD), a new benchmark for the smart grid and electric
infrastructure sector. The NASDAQ OMX(R) Clean Edge(R) Smart Grid
Infrastructure Index is a modified market-capitalization index and
includes companies that are primarily involved in electric grid;
electric meters, devices and networks; energy storage and management;
and enabling software used by the smart grid and electric infrastructure sector.
"This index brings sharper focus to an industry that is transforming
our nation's energy grid, an extremely significant endeavor that will
help shape our nation's future," said NASDAQ OMX Executive Vice
President John Jacobs. "Investors, thanks to this index, can now easily
track companies that are working diligently to help fully implement an
energy grid that is more efficient, cleaner and resilient."
"Our current electric grid is dated and deteriorating," said Ron Pernick, Clean Edge Co-founder and Managing Director. "To keep up with energy demand and meet modern energy needs, the next evolution in our electric grid will include the embedding of smart meters, controls, and networks to make the grid more intelligent and the introduction of a two-way flow of electrons and energy storage to enable better integration of renewable power and energy efficiency. This build-out is already under way and offers an unprecedented opportunity to reshape the way energy is generated, stored, transmitted, and delivered."
The NASDAQ OMX(R) Clean Edge(R) Smart Grid Infrastructure Index is the latest in the line of eco-themed indexes created by NASDAQ OMX and its partners. NASDAQ OMX is leading the way in creating indexes designed to help the investment community track the next generation of companies involved in alternative energy, efficient transportation, and energy management.
The NASDAQ OMX(R) Clean Edge(R) Smart Grid Infrastructure Index is calculated in real-time across the combined exchanges and is disseminated by NASDAQ OMX in U.S. Dollars. The Index commenced calculation today with a value of 250.00.
The NASDAQ OMX(R) Clean Edge(R) Smart Grid Infrastructure Index is currently comprised of companies that are screened by Clean Edge. To view the companies in the NASDAQ OMX(R) Clean Edge(R) Smart Grid Infrastructure Index, visit our website www.nasdaqomx.com/indexes.
NASDAQ OMX is a global leader in creating and licensing strategy indexes and is home to the most widely watched indexes in the world. As a premier, full-service provider, the NASDAQ OMX Global Index Group is dedicated to designing powerful indexes that are in sync with a continually changing market environment. Utilizing its expanded coverage as a global company, NASDAQ OMX has more than 1,500 diverse equity, commodity and fixed-income indexes in the U.S., Europe, and throughout the world.
NASDAQ OMX's calculation, licensing and marketing support provide the tools to measure and replicate global markets. The NASDAQ OMX Global Index Group's range of services covers the entire business process from index design to calculation and dissemination. For more information about NASDAQ OMX indexes, visit https://indexes.nasdaqomx.com/.
Access to essential historical index data for NASDAQ OMX indexes can be
accessed from a single source, NASDAQ OMX Global Index Watch. For
additional information, please visit
https://indexes.nasdaqomx.com/indexwatch.aspx.
Source: NASDAQ OMX
Testimony of Chairman Gary Gensler, Commodity Futures Trading Commission Before the House Committee On Agriculture
September 22, 2009--Good morning Chairman Peterson, Ranking Member Lucas and members of the Committee. Thank you for inviting me to testify today regarding the regulation of over-the-counter derivatives. I am pleased to testify on behalf of the Commodity Futures Trading Commission (CFTC).
One year ago, the financial system failed the American public. The financial regulatory system failed the American public. We must now do all we can to ensure that it does not happen again. While a year has passed and the system appears to have stabilized, we cannot relent in our mission to vigorously address weaknesses and gaps in our regulatory structure. As a critical component of reform, I believe that we have to bring comprehensive regulation to the over-the-counter (OTC) derivatives markets. We must lower risk, promote greater market integrity and improve market transparency.
The need for reform of our financial system parallels what we faced as a nation in the 1930s. In 1934, President Roosevelt boldly proposed to the Congress “the enactment of legislation providing for the regulation by the Federal Government of the operation of exchanges dealing in securities and commodities for the protection of investors, for the safeguarding of values, and so far as it may be possible, for the elimination of unnecessary, unwise, and destructive speculation.” The Congress responded to the then clear need for reform by enacting the Securities Act of 1933, the Securities Exchange Act of 1934 and the Commodity Exchange Act of 1936.
We need the same type of comprehensive regulatory reform today. Just as we then brought regulation to the commodities and securities markets, we now need to bring regulation to markets for risk management contracts called over-the-counter derivatives.
Comprehensive Regulatory
Framework Comprehensive regulation of the OTC derivatives markets will require two complementary regimes – one for regulation of the derivatives dealers, or the actors, and one for regulation of the derivatives markets, or the stages.
This regulatory framework must cover both standardized and customized swaps. This should include all of the different products, such as interest rate swaps, currency swaps, commodity swaps, equity swaps and credit default swaps, as well as all of the derivative products that may be developed in the future. We should eliminate exclusions and exemptions from regulation for OTC derivatives.
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Source: CFTC.gov
KLD Partners with Newsweek to Create The First Annual Green Ranking Of The Largest 500 Companies
Ranking of Corporate Environmental Practices and Performance Based on KLD’s Research and Analysis
September 21, 2009--KLD Research & Analytics, Inc. of Boston, MA, is the lead research partner with Newsweek in the creation of Newsweek’s first annual Newsweek Green Ranking of 500 of the largest publicly traded companies in the U.S. The Rankings are to be released on September 21 and can be viewed at http://www.newsweek.com/green. KLD provided research, analysis and scores on each company’s policy and programmatic commitments to managing their environmental footprints. In addition, as the lead research firm on the project, KLD organized the overall analysis, designed the scoring model, and compiled the actual rankings.
“Americans are more concerned than ever about the environment” said Eric Fernald, KLD Director of Research. “We hope the Green Rankings will foster a more informed conversation concerning private sector firms and their impact on the environment, and encourage greater transparency concerning the environmental footprint of the largest U.S. corporations. KLD is excited to partner with Newsweek and our other research associates on this project.” The Green Rankings are based on research and scores provided by KLD, Trucost Plc, and the Corporate Register.com. KLD ranked all 500 firms based on each company’s Green Score. The Green score consists of the weighted sum of three scores - KLD’s Green Policies Score (45%), Trucost’s Environmental Impact Score (45%), and Corporate Register.com’s Reputation Score (10%). KLD’s Green Policy Score is based on an analysis of company environmental policies, programs and initiatives, and negative company environmental events resulting in regulatory and/or other community actions.
Trucost’s Environmental Impact Score is based on Trucost’s proprietary estimate of each firm’s overall environmental footprint.
Corporate Register.com’s Reputation Score is based on a survey of corporate executives and sustainability professionals, reporters and researchers.
Source: KLD Research & Analytics, Inc.
EXCHANGE-TRADED FUNDS FIXED INCOME: CHANGES TO LQD'S INDEX
September 18, 2009--On September 17, 2009, Markit Group Limited announced rule changes to their Markit iBoxx USD Liquid Investment Grade (IG) Index. Changes, most of which are positive in our opinion, will impact the iShares iBoxx $ Investment Grade Corporate Bond Fund (LQD), which is designed to track this index.
The new rules for Markit's IG index will result in a broader, more representative index. Previously, the index consisted of just 100 equally-weighted securities. There was no issuer cap and, to be eligible for inclusion in the index, the bonds had to have an outstanding face value greater than or equal to $500 million. As the IG market has doubled over the past decade, the old rules resulted in the index becoming less representative of the IG market. Under the new rules, the index will include all IG securities that have an outstanding face value greater than or equal to $750 million and are issued by a company that has at least $3 billion USD outstanding of face value of bonds. The index, which will now include roughly 650 bonds, will be modified-market capitalization weighted with each issuer capped at 3%.
The new rules will be effective beginning September 30, 2009. The index transition will occur over a period of three months on a pro-rata basis. For instance, on September 30th, the weight of the original universe (the index as of 8/31/09) will be 2/3. LQD is expected to transition in line with the monthly changes to the index.
LQD's diversification will increase, but tracking error may also move higher. The benefits to holders of LQD are expected to include: better diversification, lower trading costs, and improved index liquidity. In addition, the cap-weighted methodology should improve transparency around index additions and deletions. However, we note that tracking error may also increase, as LQD will likely rely on optimization techniques to track the index.
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Source: Morgan Stanley
The Key to Trading and Investing in ETFs
(Submitted September 19, 2009)
September 15, 2009-An ETF does not require a certain amount of trading volume in order to be liquid. The underlying securities of the ETF determine its liquidity. Many within the industry do not grasp this reality and are missing out on a lot of quality ETFs.
When evaluating the quality of an ETF offering or its suitability for a client, the issues of trading volume and liquidity come up often. Due to a general shortage of information on of the nuances of ETFs and a lack of education about ETFs in the investment advisor community, these issues have become driving forces in determining which ETFs are best tailored for client portfolios.
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Source: Paul Weisbruch, RevenueShares ETFs
U.S. Commodity Funds to Start Brent Oil Exchange-Traded Fund
September 18, 2009-- United States Commodity Funds LLC plans to start an exchange-traded fund focused on changes in the price of Brent crude, the benchmark European grade of crude oil.
The company, the parent of the United States Oil Fund and the United States Natural Gas Fund, filed a registration form for the new fund with the Securities and Exchange Commission.
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Source: Bloomberg
Companies rush to US bond market
September 19, 2009--Companies this week raised $36bn in the US corporate bond market, drawn by low borrowing costs, taking total US dollar borrowing to an annual record and marking one of the busiest weeks of the year
Bankers, pointing to some of the best financing conditions in years, are now optimistic that corporate debt sales in the US could top $1,000bn this year, should the market remain robust.
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Source: FT.com
CME Group Opens Credit Default Swaps Initiative To Additional Partners And Focuses Solution On Clearing Services
September 18, 2009--CME Group, the world's largest and most diverse derivatives marketplace, today announced that its credit default swap (CDS) joint effort with Citadel Investment Group will be restructured as a strategic program targeted at providing clearing-only services for the nearly $27 trillion credit default swap (CDS) market, effective immediately. Key features developed as part of the joint effort with Citadel, which was known as CMDX, will be carried forward in the clearing-only service, including state-of-the-art trade booking and legacy trade migration facilities.
Citadel remains a founding member of the newly restructured CDS initiative. The other buy-side founding members are: AllianceBernstein, BlackRock, BlueMountain Capital Management, the D. E. Shaw group and PIMCO. A number of leading sell-side participants are in the process of becoming founding members. CME Group plans to announce the launch of the clearing initiative's pilot program in the weeks ahead.
"We remain committed to bringing stability and transparency to the CDS market, while further enhancing confidence in the financial marketplace," said Terry Duffy, Executive Chairman, CME Group. "Over the past several months, we have been working closely with all market participants. As a result of this collaborative process, we have refocused our offering to provide clearing-only services. Both buy-side and sell-side participants have expressed an interest in continuing to execute their CDS transactions the same as they do today, but with the added benefit of central counterparty clearing."
"With the increasing collaboration of key founding members from both the buy- and sell-side, we are confident our offering remains the strongest and most effective CDS clearing solution available," said Craig Donohue, Chief Executive Officer, CME Group. "Our solution offers point of execution clearing of CDS trades, the greatest breadth of products to clear which includes single name CDS, a comprehensive and transparent risk management system, the security of our approximately $8 billion financial safeguards package, and an established regulatory framework to protect customer positions and offer margining efficiencies."
CME's clearing solution builds on the existing over-the-counter (OTC) market, with ISDA-based CDS contracts that are economically equivalent to the current OTC contracts, and incorporates the proven benefits of CME Group's straight-through-processing clearing model to deliver:
A time-tested regulatory segregation and portability framework that protects both customer positions and margin in the event that a clearing member defaults;
Clearing of CDS trades at the point of execution rather than through batch processing, which provides immediate cleared trade confirmation and settlement and leaves no window of credit exposure between bi-lateral parties to a trade they wish to clear;
Migration of legacy non-cleared positions to cleared trades, simplified through use of existing market infrastructure;
The ability for investors to leverage their existing relationships and connectivity with CME clearing members; and
CME Group's more than 100 years of experience in clearing, settlement and risk management.
Products supported at launch will include a range of Markit CDX indices and liquid single name CDS. CME Clearing also supports trade entry through its CME ClearPort platform, enabling connectivity from any trading platform.
More information can be found at www.cmegroup.com/cds.
Source: CME Group