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Public Citizen
February 28, 2011--Good afternoon. I thank Robert Weissman for that kind introduction as well as Public Citizen for inviting me to speak today.
The 2008 financial crisis left us with many lessons and many challenges to tackle. At the Commodity Futures Trading Commission (CFTC), we swim in the derivatives lane. In July of last year, Congress passed – and the President signed – the Dodd-Frank Wall Street Reform and Consumer Protection Act to, among other things, bring the unregulated over-the-counter derivatives markets under comprehensive regulation. Those derivatives, also known as “swaps,” were not the only cause of the 2008 financial crisis, but they played a significant role.
Markets work best when they are transparent, open and competitive. The American public has benefited from these attributes in the futures and securities markets since the great regulatory reforms of the 1930s. In enacting reforms after this generation’s financial crisis, Congress directed the CFTC and the Securities and Exchange Commission (SEC) to bring similar features to the swaps and securities-based swaps markets. We are in the midst of the rule-writing process to fulfill Congress’s direction.
CFTC Background and Funding Needs
The CFTC is charged with overseeing the commodity futures markets. This includes contracts on agricultural commodities, such as wheat, corn and cotton. It also includes energy and metals commodities, such as crude oil, heating oil, gasoline, copper, gold and silver. Lastly, it includes contracts on financial products, such as interest rates, stock index futures and foreign currency. These markets – and our regulatory oversight – affect tens of thousands of farmers, ranchers, oil producers, corporations and anybody else who wants to hedge a risk and get the benefits of transparent pricing in competitive markets.
PAX World files with the SEC
February 28, 2011--PAX World Funds Trust II has filed a post-effective amendment, registration statement with the SEC for the Pax MSCI North America ESG Index ETF (NASI) and
the Pax MSCI EAFE ESG Index ETF (EAPS).
FocusShares files with the SEC
February 28, 2011--FocusShares has filed a post-effective amendment, registration statement with the SEC for 15 ETFs. They are the
Focus Morningstar US Market Index ETF
Focus Morningstar Large Cap Index ETF
Focus Morningstar Mid Cap Index ETF
Focus Morningstar Small Cap Index ETF
Focus Morningstar Basic Materials Index ETF
Focus Morningstar Communication Services Index ETF
Focus Morningstar Consumer Cyclical Index ETF
Focus Morningstar Consumer Defensive Index ETF
Focus Morningstar Energy Index ETF
Focus Morningstar Financial Services Index ETF
Focus Morningstar Health Care Index ETF
Focus Morningstar Industrials Index ETF
Focus Morningstar Real Estate Index ETF
Focus Morningstar Technology Index ETF
Focus Morningstar Utilities Index ETF
Yorkville files with the SEC
February 28, 2011--Yorkville ETF Advisors have filed an application for exemptive relief with the SEC.
view filing
Grail files with the SEC
February 28, 2011--Grail Advisors has filed a post-effective amendment, registration statement with the SEC for Grail Advisors Actively Managed ETFs. The funds are the RP Growth ETF (RPX) and
RP Focused Large Cap Growth ETF (RWG).
Rydex files with the SEC
February 28, 2011--Rydex has filed a post-effective amendment, registration statement with the SEC for the Rydex S&P 500 Equal Weight ETF (NYSE Arca, Inc .: RSP)
(formerly, Rydex S&P Equal Weight ETF)
and
Rydex Russell Top 50 ® ETF (NYSE Arca, Inc.: XLG)
PowerShares files with the SEC
February 28, 2011--PowerShares has filed a post-effective amendment, registration statement with the SEC for the PowerShares 1-30 Laddered Treasury Portfolio (PLW)
PowerShares Build America Bond Portfolio (BAB)
PowerShares Emerging Markets Sovereign Debt Portfolio (PCY).
PowerShares Fundamental High Yield® Corporate Bond Portfolio(PHB)
PowerShares Insured California Municipal Bond Portfolio(PWZ)
PowerShares Insured National Municipal Bond Portfolio(PZA)
PowerShares Insured New York Municipal Bond Portfolio(PZT)
PowerShares International Corporate Bond Portfolio(PICB)
PowerShares Preferred Portfolio(PGX)
PowerShares VRDO Tax-Free Weekly Portfolio(PVI)
Morgan Stanley ETF Weekly Update
February 28, 2011--Weekly Flows: $929 Million Net Inflows
ETFs Traded $340 Billion Last Week
Launches: 8 New ETFs
Vanguard Makes Fee & Name Changes
US-Listed ETFs: Estimated Flows by Market Segment
ETFs had net inflows of $929 mlnlast week; third consecutive week of net inflows
Net inflows were led by US Equity ETFs last week and were somewhat offset by EM Equity ETF outflows
ETF assets stand at more than $1 trillion, up 4% YTD
13-week flows were mostly positive among asset classes
$31.7 billion of net inflows into ETFs over past 13 weeks (majority into US Equity ETFs)
EM Equity ETFs posted meaningful net outflows ($9.0 bln) over the past 13 weeks; EM Equity outflows coincide with market underperformance vs. both US and International-Developed equity markets
US-Listed ETFs: Estimated Largest Flows by Individual ETF
SPDR S&P 500 ETF (SPY) bounced back last week, posting $2.3 blnnet inflows (most of any ETF last week)
US Equity ETFs(including leveraged and inverse) accounted for 9 of 10 top netinflow spots last week
iSharesMSCI Emerging Markets Index Fund (EEM) exhibited the largest net outflows last week and over the past 13 weeks; over the last 13 weeks EEM has posted net outflows of $10.8 bln
Preliminary Report on Foreign Holdings of U.S. Securities at End-June 2010
February 28, 2011--Preliminary data from a survey of foreign portfolio holdings of U.S. securities at end-June 2010 are released today.
A revised table on Major Foreign Holders of Treasury Securities, where estimates through end-December 2010 are based in part on survey data, is also released at(http://www.treasury.gov/resource-center/data-chart-center/tic/Pages/ticsec2.aspx, on line 1 of Part A). Final survey results, which will include additional detail as well as possible revisions to the preliminary data, will be reported on April 29, 2011. The survey was undertaken jointly by the U.S. Treasury, the Federal Reserve Bank of New York, and the Board of Governors of the Federal Reserve System. The next survey will be for end-June 2011 and preliminary data are expected to be released by February 28, 2012.
Complementary surveys measuring U.S. holdings of foreign securities are also carried out annually. Data from the most recent survey, reporting on securities held on year-end 2010, are currently being processed. Preliminary results are expected to be reported by August 31, 2011.
Overall Preliminary Results
The survey measured foreign holdings of U.S. securities as of June 30, 2010, to be $10,701 billion, with $2,813 billion held in U.S. equities, $6,930 billion in U.S. long-term debt securities1 (of which $1,167 billion are holdings of asset-backed securities (ABS) 2 and $5,763 billion are holdings of non-ABS securities), and $959 billion held in U.S. short-term debt securities. The previous survey, conducted as of June 30, 2009, measured total foreign holdings of U.S. securities at $9,641 billion, with holdings of $2,252 billion in U.S. equities, $6,240 billion in U.S. long-term debt securities, and $1,149 billion in U.S. short-term debt securities.
view the Preliminary Report on Foreign Holdings of U.S. Securities at End-June 2010
Semiannual Report on International Economic and Exchange Rate Policies
February 28, 2011--The Treasury Department's Report to Congress on International Economic and Exchange Rate Policies outlines the currency practices of America's major trading partners.
view the Report to Congress on International Economic and Exchange Rate Policies
CBOE Holdings Announces Plans For S&P 500 Index Options on C2
February 28, 2011--CBOE Holdings, Inc. (Nasdaq: CBOE) announced plans today to list on C2, the company's new alternative exchange, an electronically-traded version of its flagship S&P 500 Index option (SPX), which it is calling "SPXpm." The Company submitted a rule filing to the Securities and Exchange Commission (SEC) today and plans to list SPXpm upon SEC approval.
Under the proposed rule change filed with the SEC, SPXpm will be identical in structure to CBOE's traditional SPX index option product, except it will have "p.m." settlement.
The company intends to broaden its customer reach by providing this "point-and-click," "p.m." settled version of its most actively traded index product. As proposed, SPXpm will enable customers to trade SPX options with a settlement convention found in the OTC market, without having to sacrifice the benefits and safeguards of exchange trading and clearing.
"We worked very closely with our customers to determine how best to design and roll out an electronic version of this very popular product," said William J. Brodsky, CBOE Holdings Chairman and CEO. "Feedback from market participants indicated that p.m. settlement could bring new users into our market."
CBOE and CFE to Begin Trading CBOE Gold ETF Volatility Index (GVZ) Futures and Options
February 28, 2011---- CBOE Holdings, Inc. (Nasdaq: CBOE) today announced plans to launch futures and options on the CBOE Gold ETF Volatility Index (Ticker - GVZ). Pending regulatory approval, CBOE Futures Exchange (CFE) will begin trading GVZ futures on Friday, March 25, and CBOE will introduce GVZ options a few weeks later.
The calculation of the CBOE Gold ETF Volatility Index ("Gold VIX") is based on the well-known CBOE VIX methodology applied to options on the SPDR Gold Trust (Ticker - GLD). The Gold VIX is an up-to-the-minute market estimate of the expected 30-day volatility of GLD, calculated using real-time bid/ask quotes of GLD options that are listed on CBOE.
"Each year we've added greater depth to our suite of volatility products," CBOE Holdings Chairman and CEO William J. Brodsky said. "Most recently we've extended the reach of our VIX methodology to new asset classes, including highly active commodity ETF options. With the addition of CBOE Gold ETF Volatility Index futures and options, market participants will have valuable products that will allow them to hedge volatility in a new way."
CME Group to Offer Significant Cross-Margining Efficiencies Between Interest Rate Futures Positions and U.S. Treasury Securities
New Financial Instruments Clearing Membership (FICM) Provides Margin Benefits of up to 65 Percent
February 28, 2011--
CHICAGO, Feb. 28, 2011 /PRNewswire/ -- CME Group, the world's leading and most diverse derivatives marketplace, announced the creation of a new clearing membership class for interest rate futures allowing for significant margin offsets between CME Group Interest Rate futures and U.S. Treasury securities. The Financial Instruments Clearing Membership (FICM), which is expected to be offered by the end of the first quarter, will provide margin offsets of up to 65 percent to qualified firms that trade both U.S. Treasury securities and CME Group Interest Rate futures products.
"We are establishing this new clearing membership category to provide customers who trade both U.S. Treasury securities and CME Group's Interest Rate futures with greater capital efficiencies, enabling firms to trade cash/futures strategies in a highly cost-effective manner," said Bryan Durkin, CME Group's Chief Operating Officer and Managing Director of Products and Services. "With our interest rate complex open interest at 37 million contracts or $30 trillion in notional value, the new FICM membership provides a strong value proposition for our global customers who trade these products."
CME launches pre-emptive attack on NYSE Liffe
February 28, 2011--CME Group, operator of the largest US futures exchange, has launched a pre-emptive strike against rival exchange operator NYSE Euronext by offering cross-margining between its two flagship futures products in a bid to undermine similar plans by its New York rival.
The move aims to cut the cost of using the CME’s products – the two most widely traded futures contracts in the world – by reducing the total amount of upfront margin payments that must be made to trade them.
Factor Advisors Launches New ETFs on the NYSE Arca
February 28, 2011-- Factor Advisors, a New York-based asset management firm, announced the launch of FactorShares, a family of spread exchange traded funds (ETFs) that allow investors to simultaneously hold both a bull and a bear position in one leveraged ETF.
Designed to ease spread trading and lower its cost barriers, the company noted, the new FactorShares ETFs will enable investors to track two market segments, one long and one short, in a single ETF position. The initial five FactorShares ETFs pair up major asset classes from among the S&P 500 Index, US Treasury Bonds, Gold, Oil and the US Dollar.
"As a portfolio manager, I used to become frustrated about being charged twice the transaction fees and double the margin requirements in order to implement spread trades," explained Stuart Rosenthal, CEO and Co-Founder of Factor Advisors. "I was determined to bring greater efficiency to spread trading. With the creation of FactorShares, spread trading among the major asset classes requiring two separate positions and indiscriminate rebalancing is in the past."
The initial suite of FactorShares spread ETFs are designed to rebalance daily to achieve the desired effect of maintaining dollar neutrality. FactorShares ETFs are also capital efficient, targeting a daily leverage ratio of 4:1, where each dollar invested provides approximately two dollars of long futures exposure and two dollars of short futures exposure, immediately after daily rebalancing. FactorShares ETFs seek investment results for a single day only, not for longer periods.
In 2009, Rosenthal teamed up with investment banker and entrepreneur Karlheinz Muhr and UCLA Anderson School of Management's award-winning Professor of Finance, Dr. Richard Roll, to found Factor Advisors. The three men believed that Dr. Roll's risk factor-based investment approach could be the basis for creating simple spread ETFs and by this shared viewpoint FactorShares products were created.
"The innovation behind FactorShares is another industry milestone for transforming alternative investment strategies into accessible, transparent ETF products" said Muhr, Chairman of Factor Advisors. "The introduction of these ETFs is Factor Advisors' first step in our commitment to building a comprehensive suite of factor-based products that will advance the way the marketplace approaches alternative investing."
Factor Advisors has also entered into a marketing agreement with Interactive Brokers, a global low-cost provider of electronic trading, to offer its brokerage clients commission-free trading of FactorShares ETFs with no minimum holding period and no short-term trading fees.
More Information:
www.factorshares.com
