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Tools to Avoid the Pitfalls of ETFs
July 18, 2011--A wealth manager earlier this year bought some exchange-traded funds on behalf of a client, and got chatting to the sponsor at a conference.
To his horror, he learnt he had unwittingly bought a synthetic ETF underpinned by a swap, breaking a legal agreement with his clients not to deal in derivatives. He rushed out of the event to cancel the trade. If such a mix-up is possible among investment professionals, investors are unlikely to be aware of the myriad risks and rewards in the ETF industry. Confusion even results from the brand, with ETF being loosely used as an umbrella term for a variety of products, including structured notes. As a preparation for guarding against possible surprises, here follows a short guide to factors that investors should consider before incorporating ETFs in their portfolio.
Maple Group Update on Regulatory Process
July 18, 2011-Maple Group Acquisition Corporation ("Maple"), a corporation whose investors comprise 13 of Canada's leading financial institutions and pension funds, reported on developments on the regulatory process for its proposed acquisition of the TMX Group and subsequent acquisitions of CDS and Alpha Group.
Maple filed its pre-merger notification filings with the Competition Bureau on June 16 and today received Supplemental Information Requests, indicating that the Bureau requires additional information in order to complete its review of the proposed transactions. The Supplemental Information Requests were expected given the scale and scope of the proposed transactions. Maple will continue to work with the Competition Bureau in the usual course through its ongoing review.
US muni market braced for busiest week of year
July 18, 2011--The US municipal bond market where US states, cities and other local bodies raise money is braced for what could be its biggest week this year with nearly $10bn of new issuance expected.
Over the last few months, new bond sales have been rising as the market has been healing from a period of turmoil at the start of the year. Fears of widespread defaults in the aftermath of the US recession have begun to ease and buyers have returned to the market.
Schwab suffers as investors stay cautious
July 18, 2011--US retail investors put more money to work in the market in the second quarter, but they are still avoiding risk by trading little and investing mostly in bond funds, Charles Schwab, the largest US discount brokerage, said as it reported earnings.
Schwab on Monday said earnings improved for the quarter thanks to a boost in fund flows, but its trading levels could herald depressing results from other brokerages. Increasing worry about the state of the US and global economy have caused active investors to pull back, leading to a sharp decline in volatility and volumes across asset classes.
Standard & Poor's Announces Changes In The S&P/TSX Venture Composite Index
July 15, 2011--Standard & Poor's will make the following changes in the S&P/TSX Venture Composite Index after the close of trading on Friday, July 15, 2011:
Wildcat Silver Corporation (TSXVN:WS) will be removed from the index.
The company will graduate to trade on TSX under the same ticker symbol.
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.
WisdomTree to List on NASDAQ Global Market
Company to trade under new symbol "WETF" on July 26, 2011
July 15, 2011--WisdomTree , an exchange-traded fund ("ETF") sponsor and asset manager, today announced the Company anticipates that its common stock will become listed
on The NASDAQ Global Market on or about Tuesday, July 26, 2011. WisdomTree will trade under new ticker symbol "WETF".
CFTC.gov Commitments of Traders Reports Update
July 15, 2011--The current reports for the week of July 12, 2011 are now available
view updates
Update: As Previously Announced, Treasury to Employ Final Extraordinary Measure to Extend U.S. Borrowing Authority Until August 2
July 15, 2011-- Today, the U.S. Department of the Treasury released the following statement from Jeffrey Goldstein, Under Secretary for Domestic Finance, regarding the use of the last of the four previously announced measures available to keep our nation under the statutory debt limit, suspension of reinvestment of the Exchange Stabilization Fund.
“Today, as previously announced, the Treasury Department will suspend reinvestment of the Exchange Stabilization Fund, the last of the measures available to keep the nation under the statutory debt limit. In order to prevent a default on the nation’s obligations, Congress must enact a timely increase of the debt ceiling.”
SEC Announces July 29 Field Hearing on the State of the Municipal Securities Market
July 15, 2011 – The Securities and Exchange Commission today announced that it will hold a municipal securities market field hearing in Jefferson County, Ala., on July 29. Topics will include distressed communities, small issuers, disclosure, derivatives and pre-trade price transparency.
“Hearing directly from those who are affected by our policies helps to shape better rules,” said Chairman Mary L. Schapiro. “That’s especially the case with municipal securities.”
The event is the third in a series of hearings examining issues that affect investors in the municipal securities market. The first was held in San Francisco in September, 2010, followed by a hearing in December at the SEC’s headquarters in Washington, D.C.
iShares files with the SEC
July 15, 2011--iShares has filed a pre-effective amendment no.3 to Form S-1 registration statement with the SEC for the iShares Copper Trust.
view filing
AdvisorShares files with the SEC
July 15, 2011--AdvisorShares has filed a post-effective amendment, registration statement with the SEC for the AdvisorShares Global Echo ETF
NYSE Arca Ticker: GIVE.
Russell files with the SEC
July 15, 2011--Russell has filed a post-effective amendment, registration statement with the SEC for the:
Russell Developed ex-U.S. Low Beta ETF
Russell Developed ex-U.S. High Beta ETF
Russell Developed ex-U.S. Low Volatility ETF
Russell Developed ex-U.S. High Volatility ETF
Russell Developed ex-U.S. High Momentum ETF
Russell files with the SEC-4 ETFs
July 15, 2011--Russell has filed a post-effective amendment, registration statement with the SEC for 4 ETFs.
The Russell Small Cap Aggressive Growth ETF
Russell Small Cap Consistent Growth ETF
Russell Small Cap Contrarian ETF
Russell Small Cap Low P/E ETF
view filing
Concurrence Statement on the Order Regarding the Effective Date for Swap Regulation
Commissioner Scott D. O’Malia
July 14, 2011--I concur with the Commission’s decision to use its exemptive authority under section 4(c) of the Commodity Exchange Act (CEA) to provide temporary relief from certain provisions of the Dodd-Frank Act. This order will provide much needed legal certainty to the market, at least until December 31, 2011, while the Commission continues its efforts to adopt final rules under the Dodd-Frank Act.
Whereas I support the Commission in providing legal certainty, albeit limited, I am disappointed in the lack of harmonization between our order and the exemptive relief that the Securities and Exchange Commission (S.E.C.) provided. I am also disappointed that the final order ignored a number of comments from market participants, those that have most at stake in each of the Commission’s decisions. I hope that this order does not foreshadow the direction of final rulemakings to come.
Lack of Harmonization
In general, the S.E.C.’s order provides exemptive relief until the relevant final rulemaking is implemented. The Commission’s order provides such relief only until December 31, 2011. I proposed an amendment that would have conformed the two orders that the Commission rejected. The S.E.C. is a full partner in many of our rulemakings; it only makes sense to develop identical relief policies. The C.F.T.C.’s sunset provision is based on an arbitrary date and cuts short the very legal certainty that this order purports to provide. Moreover, participants from every aspect of our market – including investor advocates, a designated contract market and derivatives clearing organization, a potential swap execution facility, and multiple trade associations representing intermediaries – commented that the December 31, 2011, expiration date is unnecessary. In contrast, only one commenter supported the expiration date.
ISE Enhances Price Improvement Mechanism to Accept Multi-Legged Options Orders
New Functionality Introduced as part of Optimise™ Rollout
July 14, 2011 – The International Securities Exchange (ISE) announced that starting tomorrow, Friday, July 15, 2011, the Price Improvement Mechanism (PIM) for options classes traded on the OptimiseTM platform will be enhanced to accept multi-legged option orders. In addition to the numerous technical benefits of the new trading system, such as lower latency and higher throughput, this feature represents one of the first value-added attributes of the new technology that will directly benefit options customers.
Through PIM, member firms will now be able to facilitate their customers’ orders of less than 50 contracts at a price that is at least one cent better than the best bid or offer available on ISE. PIM orders are exposed for further price improvement to all ISE market participants for one second. By allowing for complex orders to be entered into PIM, customers can now benefit from a price improvement auction that provides the opportunity to achieve a better net price for multi-legged orders.
“We are excited to offer this enhanced functionality to ISE’s customers as part of our introduction of Optimise,” said Boris Ilyevsky, Managing Director of ISE’s options exchange. “By leveraging the unique capabilities and flexibility of Optimise, we are now able to provide access to PIM for multi-legged orders, resulting in the very tangible benefit of price improvement to customers.”
This latest enhancement makes PIM ISE’s third crossing order type that accepts multi-legged orders in addition to ISE’s Facilitation and Solicitation mechanisms. PIM will initially be enabled to accept multi-legged orders made up only of options legs. ISE plans to enable PIM for multi-legged orders that include a stock component within the coming months.
