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Dissent of Commissioner Scott D. O’Malia to the Fiscal Year 2011 Commission Spending Plan
Commissioner O’Malia
June 15, 2011-I respectfully dissent from signing the fiscal year 2011 Commission Spending Plan allocating funding per the direction provided in Public Law 112-10, The Department of Defense and Full-Year Continuing Appropriations Act, 2011.
The Commission's spending plan continues to concentrate resources on an ever-expanding staff hiring plan that is both fiscally unsustainable and detrimental to the Commission's already ailing technology programs. This spending plan proposes to hire 50 additional federal employees—12 of which will implement internal reorganization in support of new Dodd-Frank authorities—and an undisclosed number of contractors.1· Instead of complying with the explicit Congressional directive establishing a $37.2 million floor for technology spending, the proposal caps spending at this minimum level while completely ignoring clear statutory direction to prioritize such funding for higher priority information technology activities. I am mindful of the challenge of adjusting the budget priorities within the resources provided. However, in the face of the broad new statutory authority to oversee and monitor both the futures and derivatives markets, the Commission cannot afford delays in the development and deployment of automated surveillance tools, or in real-time trade monitoring, integration of trade data provided from the swap data repositories and the development of new risk analytics.
$150 Oil. It could be worse.
July 7, 2011--A lengthy Barron's article by Gene Epstein over the weekend calls for $150/barrel oil in the next 12 months. As one of the 8 most important prices in the world, the tab for oil can have a profound impact on business performance, economic growth, and the risk and return of investment portfolios.
. So what happens if the Barron's prediction is correct? Should you make changes in your portfolio based on the possibility?
How bad is it?
An oil shock of $150, or even $170, coming in next year, translates to $4.50/gallon gas, according to Epstein.
Cloud ETF Causes Stir With Netflix Pick
July 7, 2011--The launch of the First Trust ISE Cloud Computing Index Fund(SKYY) is the latest micro-niche fund to hit the market. Some will scoff at the find, some will trade it actively and some will find genuine investment merit.
The fund is U.S.-based, will have 40 holdings, most of which are technology related; will rebalance quarterly; and will charge a 0.60% expense ratio. At the industry level the fund is dominated by software 32%, Internet services 22% and communications equipment 16%. One other industry in there that might be a surprise is Internet and catalog retail at 7.75%, with the largest name from that segment being Netflix(NFLX_).
“It’s Time to Pull Back the Curtain and Make the Final Rulemaking Process as Transparent as Possible”
Opening Statement by Commissioner Scott D. O’Malia: Public Hearing: Anti-Manipulation, Large Trader Reporting, Agricultural Commodities, FCRA, and GLB
July 7, 2011--Good morning. Today, we are voting on the first major tranche of regulations to be finalized under the Dodd-Frank Act. Before we start, I would like to thank each of the five teams for their work on the regulations. Moving from proposed to final regulations has been – to say the least – an involved process, and each team has advanced with unrelenting dedication.
With the Commission’s approval, the regulations before us today will become not only the law of the land, but the Commission’s official statement as to its interpretation of the Act it is charged with administering. So, it is appropriate to consider our duties to market participants and the public generally before issuing final regulations. Our duties can be characterized in two words: (i) transparency and (ii) clarity.
RBC moves a step closer to launching its first ETFs
Initial line-up will consist of eight corporate-bond funds with fixed maturity dates.
July 7, 2011--With this week's filing of a preliminary prospectus, RBC Financial Group confirmed that it's about to enter the rapidly growing market for exchange-traded funds.
It's been common knowledge on the Street for months that RBC was actively looking to expand into ETFs, and it seemed to be only a matter of when.
Once regulatory and other approvals are received, RBC will make its debut with a suite of eight fixed-income index ETFs to be listed on the Toronto Stock Exchange, Each ETF will invest in investment-grade Canadian corporate bonds, and each will be terminated on or not long after its maturity date.
The eight upcoming offerings range from RBC Target 2013 Corporate Bond, holding bonds with two-year maturities, to RBC Target 2020 Corporate Bond, holding bonds that will mature in nine years. If held to maturity, the ETFs are designed to produce total returns (less fees, expenses and taxes) that will be comparable to direct investment in Canadian corporate bonds of similar quality and maturity.
Income Generation Continues to Be Front of Mind With ETF Users
Fixed Income ETFs Led All Other Asset Classes in Q2 With $633 Million in Net New Assets
July 7, 2011--Canadian fixed income exchange-traded funds (ETF) experienced 8 per cent growth in assets under management (AUM) in the second quarter of 2011, including $633 million in net new assets.
Conversely, Canadian equity ETFs experienced a -8 per cent retraction in AUM and $691 million in net outflows, according to information compiled by the iShares® ETF business at BlackRock Asset Management Canada Limited (BlackRock® Canada), an indirect, wholly-owned subsidiary of BlackRock, Inc.
"In these uncertain economic times, investors have made income generation a priority and sought the safe harbour of fixed income investments," said Mary Anne Wiley, head of iShares distribution, BlackRock Canada.
ETF AUM overall dropped in the second quarter, partly resulting from significant weakness in the equity markets (the S&P®/TSX® Composite Index returned -5.1 per cent in the second quarter). Total AUM of Canadian ETFs was $39.7 billion in Q2, compared to $41.4 billion AUM in Q1, representing a drop of 4 per cent. iShares ETFs continue to be the market leader amongst all the providers with 70.5 per cent of market share and $28 billion AUM followed by Claymore Investments, Inc. with 15.8 per cent and $6.3 billion AUM.
Global X files with the SEC-14 ETFs
July 7, 2011--Global X has filed a post-effective amendment, registration statement with the SEC for 14 ETFs.
The funds are:
Global X FTSE Portugal 20 ETF
Global X Slovakia ETF
Global X FTSE Ukraine ETF
Global X Qatar ETF
Global X FTSE Greece 20 ETF
Global X Kuwait ETF
Global X Hungary ETF
Global X Nigeria ETF
Global X Luxembourg ETF
Global X FTSE Bangladesh ETF
Global X FTSE Morocco 20 ETF
Global X FTSE Sri Lanka ETF
Global X Czech Republic ETF
Global X Kazakhstan ETF
ProShares files with the SEC
July 7, 2011--ProShares has filed a post-effective amendment, registration statement with the SEC for the ProShares Hedge Replication ETF.
view filing
AdvisorShares files with SEC
July 7, 2011--AdvisorShares has filed a post-effective amendment, registration statement with the SEC for the Rockledge SectorSAM ETF.
view filing
Van Eck files with the SEC
July 7, 2011--Van Eck has filed a post-effective amendment, registration statement with the SEC for the CEF Municipal Income ETF (XMPT).
view filing
Pimco files with the SEC
July 7, 2011--Pimco has filed a Post-Effective Amendment No. 32 to the Registration Statement for the PIMCO Total Return Exchange-Traded Fund
(TRXT).
view filing
Treasury volumes fall in second quarter
July 7, 2011--Trading in Treasuries during the second quarter declined from the first three months of the year, according to revised data issued by the leading US banking industry group.
The falling volumes, coming amid still-depressed equity trading, could weigh on second-quarter results for financial institutions such as banks and exchanges that start arriving next week.
ProFunds Group names Troy Goldstein director of national accounts
July 7, 2011--)--ProFunds Group, a premier provider of alternative ETFs and mutual funds, announced today that Troy Goldstein has been named to the newly created role of Director of National Accounts. Mr. Goldstein, most recently with UBS AG, will oversee the National Accounts Group for ProShares ETFs and ProFunds mutual funds.
He reports to Donald Roberson, Managing Director, Distribution for ProShares and ProFunds.
“Troy has extensive industry relationships and a proven track record of building teams, delivering strategies and providing investment solutions,” said Mr. Roberson. “He’ll be a valuable asset to the team as financial advisors increasingly turn to our alternative ETFs and funds to be part of their clients’ portfolios.”
Opening Statement: First Open Meeting to Consider Final Rules Pursuant to the Dodd-Frank Act
Commissioner Jill E. Sommers
July 7, 2011--Good Morning. Thank you Mr. Chairman and thank you to the five teams who have final rules before us today. Over the past year you have all been under an incredible amount of pressure to complete drafts by certain deadlines.
We are all aware that you have worked late nights and weekends to meet those deadlines and we are very grateful to all of you for your dedication to your work and to this agency. Obviously we could not do this without you.
We are starting the process of finalizing rules today with a group of rules that do not relate to the structural and broader issues of trading and clearing swap transactions. Nonetheless, we are beginning without a plan. There have been no Commission decisions regarding the internal process or the implementation schedule for this very important and complicated task we have in front of us to finalize the rules and regulations required by the Dodd Frank Act. We have been discussing the appropriate sequencing of final rules as well as an implementation plan for many months and at this point I am still hopeful that the Commission will move forward to adopt a reasonable phased-in approach supported by market participants.
Morgan Stanley-US ETF Weekly Update
July 6, 2011--Weekly Flows: $2.1 Billion Net Inflows
ETF Assets at $1.1 Trillion, Up 10% YTD
No ETF Launches or News
US-Listed ETFs: Estimated Flows by Market Segment
ETFs exhibited net inflows of $2.1 billion last week, rebounding from the prior week’s outflows
EM Equity and Fixed Income ETFs posted the largest net inflows last week (combined $3.0 bln net inflows)
ETF assets stand at $1.1 trillion, up 10% YTD; we estimate from both net new money and market appreciation
ETF assets up 4% last week amid equity market gains
13-week flows remained mostly positive among asset classes
$28.4 billion net inflows into ETFs over past 13 weeks (Fixed Income up $9.9 bln; Commodity down $3.3 bln)
We estimate ETFs have generated net inflows 16 out of 26 weeks YTD; YTD net inflows of $56.7 bln
US-Listed ETFs: Estimated Largest Flows by Individual ETF
For the second consecutive week, Vanguard MSCI EM ETF (VWO) generated the most net inflows
The top and bottom net in/outflows were dominated by US equity ETFs
Over the past 13 weeks, VWO has put up the most net inflows ($3.5 bln) while the iShares Silver Trust (SLV)
has posted the largest net outflows ($2.1 bln)
