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US investors pile into exchange-traded funds
May 18, 2011--US investors are piling into exchange-traded stock funds, even as they become more bearish and pull back from actively managed funds.
Investors pumped a net $14.2bn into equity ETFs by the middle of the second quarter, nearly double the pace of investment in the first quarter, when net inflows for the entire period were $12.9bn, according to data from brokerage ConvergEx Group.
Speech by SEC Chairman: Opening Statement at SEC Open Meeting by Chairman Mary Schapiro
May 18, 2011--Good morning. This is an Open Meeting of the Securities and Exchange Commission on May 18, 2011. Today, we will consider proposing rules that are intended to strengthen the integrity and improve the transparency of credit ratings.
These proposals arise from provisions of Title IX of the Dodd-Frank Wall Street Reform and Consumer Protection Act – which substantially augmented the Commission’s oversight of credit rating agencies that are registered as Nationally Recognized Statistical Rating Organizations (NRSROs).
The rules would establish new requirements for credit rating agencies, providers of third-party due diligence services with respect to asset-backed securities (ABS), and issuers and underwriters of asset-backed securities.
Proposals to Bolster the Integrity of Ratings In passing the Dodd-Frank Act, Congress noted the systemic importance of credit ratings. It also noted that ratings that were applied to structured financial products proved inaccurate – and contributed significantly to the mismanagement of risks by financial institutions and investors.
SEC Proposes Rules to Increase Transparency and Improve Integrity of Credit Ratings
May 18, 2011--The Securities and Exchange Commission today voted unanimously to propose new rules and amendments intended to increase transparency and improve the integrity of credit ratings.
The proposed rules would implement certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act and enhance the SEC’s existing rules governing credit ratings and Nationally Recognized Statistical Rating Organizations (NRSROs).
“In passing the Dodd-Frank Act, Congress noted that credit ratings applied to structured financial products proved inaccurate and contributed significantly to the mismanagement of risks by financial institutions and investors,” said SEC Chairman Mary L. Schapiro. “Our proposed rules are intended to strengthen the integrity and improve the transparency of credit ratings.”
view the Proposed Rules for Nationally Recognized Statistical Rating Organizations
Standard & Poor's Announces Changes In The S&P/TSX Venture Composite Index
May 18, 2011--Standard & Poor's will make the following changes in the S&P/TSX Venture Composite Index after the close of trading on Thursday, May 19, 2011:
Explorator Resources Inc. (TSXVN:EXO) will be removed from the index.
The company will be delisted from the TSX Venture Exchange.
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.
Securitisation shake-up dubbed ‘death by 1,000 cuts’
May 18, 2011--Hundreds of pages of rules proposed by US regulators to render safer battered securitisation markets, from commercial real estate to car loans, instead threaten to make them "unviable" and suffer
"death by 1,000 cuts", lawmakers were warned on Wednesday.
Many billions of dollars of losses on securities backed by risky US mortgages were at the heart of the financial crisis, as mortgage-backed bonds with triple A ratings proved much riskier than expected and defaults soared.
Fed seeks annual US bank stress tests
May 18, 2011--The Federal Reserve wants to subject US banks to annual capital tests, reserving the right to veto dividend pay-outs if they do not pass.
A draft of the new rule is set to be approved by the Federal Reserve Board and put out for public comment within weeks. Bank executives told the Financial Times that they have begun discussing the proposal with Fed officials, who remain wary of a return to the over-generous shareholder pay-outs that left financial institutions under-capitalised during the crisis.
Minutes of the Federal Open Market Committee, April 26-27, 2011
May 18, 2011--The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on April 26-27, 2011. A summary of economic projections made by Federal Reserve Board members and Reserve Bank presidents for the April 26-27, 2011 meeting is also included as an addendum to these minutes.
The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board's Annual Report. Summaries of economic projections are released on an approximately quarterly schedule. The descriptions of economic and financial conditions contained in these minutes and in the Summary of Economic Projections are based solely on the information that was available to the Committee at the time of the meeting.
view the Minutes of the Federal Open Market Committee, April 26-27, 2011
SEC probing electronic platform failures
May 18, 2011--The Securities and Exchange Commission (SEC) is investigating computer system failures at electronic marketplaces including Nasdaq to determine whether internal controls are sufficient, the Financial Times reported, citing people familiar with the matter.
The investigation is being handled by the enforcement division's market abuse unit, the paper reported, and is part of a broader regulatory review of stock exchanges following last year's "flash crash,"' recent hacking attempts and trading glitches.
US investors pile into exchange-traded funds
May 18, 2011--US investors are piling into exchange-traded stock funds, even as they become more bearish and pull back from actively managed funds.
Investors pumped a net $14.2bn into equity ETFs by the middle of the second quarter, nearly double the pace of investment in the first quarter, when net inflows for the entire period were $12.9bn, according to data from brokerage ConvergEx Group
Economic Survey of Mexico 2011
May 17, 2011--Following a deep recession associated with a strong global downturn, Mexico is experiencing a robust recovery, with GDP growth of 5½ per cent in 2010 and 4 ½ per cent in 2011. Export growth is expected to slow after the exceptional rebound of 2010, but stronger domestic demand should keep the recovery on track.
Several labour market indicators have improved, although unemployment is decreasing only slowly. Mexico has already started to withdraw the fiscal stimulus of 2009 and increased taxes to calm market worries about fiscal trends. If the recovery unfolds as expected, the government should fully implement its plans to lower the budget deficit further through spending restraint. Since inflation has come down, monetary policy can support the recovery by keeping rates low in the near term.
Mexico was able to implement countercyclical policies in the recession thanks to significant reforms of the macroeconomic policy framework. However, it should continue to strengthen its policy framework to better withstand shocks. Amending the fiscal rule to accumulate more financial assets during periods of high oil prices and economic growth would give the government additional room to support the economy when confronting large shocks. Taking measures to lower price stickiness related to administrative tariffs and uncompetitive markets would give monetary policy more room for manoeuvre and, most importantly, would contribute to a better allocation of resources. Enhancing competition and lowering market entry barriers would also promote the development of more stable consumer-related services, attenuating the effects of shocks.
OECD Economic Surveys-MEXICO-MAY 2011 OVERVIEW Horizons launches enhanced income ETF for financial stocks HEF will invest primarily in a portfolio of equity and equity-related securities of Canadian companies that are primarily exposed to Canadian banking, finance and financial services sectors and are amongst the largest and most liquid issuers listed on the TSX in that sector. To mitigate downside risk and generate income, HEF will generally write slightly out-of-the-money covered call options on 100% of the portfolio securities. The level of covered call option writing may vary based on market volatility and other factors. Lawmakers warning on derivatives rules PowerShares files with the SEC BofA Merrill Lynch Fund Manager Survey Shows Investors Less Confident on Global Growth and Profit Outlook
With prospects for growth more challenging and inflation fears receding, asset allocators have postponed their expectations of a rise in U.S. interest rates. In the April survey, 69 percent of participants anticipated the Federal Reserve first hiking rates by the end of this year; now 73 percent sees this occurring in 2012. Against this accommodating background, risk appetite has fallen only modestly. Fund managers trimmed exposure to equities and commodities, while adding to cash and bond holdings slightly. Risk aversion is more evident in strong sector rotation into more defensive areas, such as consumer staples and pharmaceuticals, and out of more volatile and growth-dependent sectors, such as energy and materials. CFTC’s Agricultural Advisory Committee to Meet May 19, 2011
May 17, 2011--Horizons Exchange Traded Funds Inc. ("Horizons ETFs") and its affiliate AlphaPro Management Inc. (the "Manager"), are pleased to announce the launch of the Horizons AlphaPro Enhanced Income Financials ETF ("HEF"), which offers Canadian investors access to an innovative covered call strategy on Canada's largest financial sector stocks. The ETF will begin trading today on the Toronto Stock Exchange ("TSX") under the ticker symbol HEF.
The investment objective of HEF is to provide its unitholders with: (a) exposure to the performance of an equally weighted portfolio of Canadian banking, finance and financial services companies; and (b) monthly distributions of dividend and call option income.
May 17, 2011--New York lawmakers led by Charles Schumer are warning the Federal Reserve and other regulators that they risk flouting the US Congress with new derivatives rules that impose "significant competitive disadvantages" on US banks.
In a letter to Ben Bernanke, Fed chairman, and other regulatory heads, the members of Congress say that US banks will be unfairly hurt if their foreign subsidiaries are forced to demand collateral from non-US customers.
May 17, 2011--PowerShares has filed a post-effective amendment, registration statement with the SEC for the PowerShares Fundamental Investment Grade Corporate Bond Portfolio (NYSE Arca, Inc. – PFIG).
view filing
Debt Crisis Seen as Damaging Prospects for Eurozone
May 17, 2011--Investors' confidence in the outlook for global growth and corporate profits has dipped, according to the BofA Merrill Lynch Survey of Fund Managers for May.
The proportion of the panel believing that the world economy will strengthen in the next 12 months has fallen to a net 10 percent, down from a net 27 percent in April and a net 58 percent as recently as February. Similarly, only a net 9 percent of respondents now look for corporate profits to improve in the coming year.
Participants' lower conviction is most evident in Europe, where expectations turned negative in May with a net 8 percent expecting the region's economy to weaken in the next year. Just two months ago, a net 32 percent forecast that it would strengthen. This reflects investors' identification of the eurozone sovereign debt crisis as the largest tail risk globally (up to 36 percent, from 21 percent in April).
May 16, 2011--Committee to discuss issues concerning the Dodd-Frank Act including proposed rules on position limits, hedge exemptions, the swap dealer definition, the end user exception and margin requirements for uncleared swaps.
The Commodity Futures Trading Commission (CFTC) will convene a meeting of its Agricultural Advisory Committee (AAC) on Thursday, May 19, 2011, to obtain the views of agricultural futures market experts, national farm organizations, major commodity and agribusiness groups and the farm banking community. The major topics for discussion will be issues related to the Dodd-Frank Act, including position limits, hedge exemptions, the swap dealer definition, the end user exception and margin requirements for uncleared swaps. The AAC also will receive a presentation on recent activities in the major agricultural markets.
