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CFTC Seeks Public Input for a Study Regarding the Oversight of Existing and Prospective Carbon Markets
November 19, 2010--The Commodity Futures Trading Commission (CFTC) has approved for publication in the Federal Register a Notice and Request for Comment that is expected to assist in the formulating of recommendations for the oversight of existing and prospective carbon markets.
Section 750 of the Dodd-Frank Wall Street Reform and Consumer Protection Act establishes an interagency working group headed by the CFTC to conduct a study on the oversight of existing and prospective carbon markets to ensure an efficient, secure and transparent carbon market, including oversight of spot markets and derivative markets.
The members of the interagency group are the Chairman of the CFTC, the Secretary of Agriculture, the Secretary of the Treasury, the Chairman of the Securities and Exchange Commission, the Administrator of the Environmental Protection Agency, the Chairman of the Federal Energy Regulatory Commission, the Chairman of the Federal Trade Commission and the Administrator of the Energy Information Administration, or their designees. In conducting the study, the Dodd-Frank Act directs the interagency group to consult, as appropriate, with representatives of exchanges, clearing houses, self-regulatory bodies, major carbon market participants, consumers and the general public.
Comments must be received on or before 21 days after publication in the Federal Register.
Picard Joins Lyxor Asset Management, Further Strengthening Its U.S. Business
November 19, 2010---- Lyxor Asset Management Inc. ("Lyxor U.S.") has hired Robert Picard as U.S. Head of Managed Account Development. Mr. Picard is based in New York and reports to Lionel Erdely, CEO of Lyxor U.S.
Prior to joining Lyxor, Mr. Picard was Senior Advisor to Navigant Consulting's Financial Institutions Restructuring Solutions Team and active in advising emerging hedge funds. Earlier, he was Chief Investment Officer and Head of Hedge Fund Research at Optima Fund Management overseeing $6.5 Billion of hedge fund investments and a Managing Director at The Carlyle Group where he built and managed an institutional platform for alternative investments. Prior to joining Carlyle, Mr. Picard was Managing Director at RBC Capital Risk Advisors. His Group actively managed more than US $10 billion of Royal Bank's proprietary assets through arbitrage trading, hedge fund investments and structured private equity investments.
Opening Statement, Meeting of the Commodity Futures Trading Commission
Chairman Gary Gensler
November 19, 2010--Good morning. This meeting will come to order. This is a public meeting of the Commodity Futures Trading Commission to consider issuance of the following proposed rulemakings under the Dodd-Frank Wall Street Reform and Consumer Protection Act:
Protections of collateral of counterparties to uncleared swaps before and after commodity broker bankruptcies;
An advanced notice of proposed rulemaking regarding protections of collateral for uncleared swaps customers before and after commodity broker bankruptcies.
Requirements and duties of swap data repositories;
Real time public reporting requirements of swaps transactions; and
Recordkeeping and reporting requirements for swaps entities.
Before we hear from the staff, I’d like to thank Commissioners Mike Dunn, Jill Sommers, Bart Chilton and Scott O’Malia for all their thoughtful work to implement the Dodd-Frank Act. I’d also like to welcome members of the public, market participants and members of the media to today’s meeting, as well as welcome those listening to the meeting on the phone or watching the live webcast.
Statement on Support of the Dodd-Frank Rulemaking of Chairman Gary Gensler
November 19, 2010--Statements for the record on each rule:
Advanced Notice of Proposed Rulemaking on Protection of Cleared Swaps Customers before and after Commodity Broker Bankruptcies
I support the advance notice of proposed rulemaking concerning protection of collateral of customers entering into cleared swaps. There has been much public input into these matters, but I think it is appropriate to have a formal ANPR soliciting input on a number of options and questions on how best to protect customers’ collateral in the event of another customer’s default.
This is particularly important as we move forward to implement Congress’s mandate that for the first time standardized swaps must be cleared. I am hopeful that we will hear from a broad range of market participants, including clearinghouses, futures commission merchants, pension funds, asset managers and other end-users, on the costs, benefits and feasibility of various approaches to protecting customers’ money.
Protection of Collateral of Counterparties to Uncleared Swaps
I support the proposed rulemaking concerning protection of collateral of counterparties to uncleared swaps. The proposal includes important protections for end-users when entering into bilateral or customized swaps. The proposal follows the Congressional direction that end-users must have a choice to have any initial margin that they post with a swap dealer to be kept in a segregated account and with a third party custodian. The proposed rules would protect market participants while promoting the financial integrity of the marketplace. The proposal also includes necessary housekeeping details with regard to the Bankruptcy code.
Real Time Public Reporting
I support the proposed rulemaking to implement a real-time public reporting regime for swaps. The proposed rules are designed to fulfill Congress’s direction to bring public transparency to the entire swaps market, both standardized and customized swaps. This post-trade transparency will enhance price discovery and liquidity while ensuring anonymity and protection for large trades in appropriate cases. Per Congress’s direction, the proposal requires real time reporting for swap transaction and pricing data to occur as soon as technologically practicable for trades other than trades of large notional size or block trades. Congress mandated that these trades be reported without delay regardless of whether they are standardized or customized.
Latin America’s tumble puts decoupling thesis to test
November 18, 2010--Is it time to revisit the notion that emerging markets have decoupled? Maybe, at least in Latin America.
The old investment rubric used to be that when the US caught a cold, Latin America came down with pneumonia.
Morgan Stanley Exchange-Traded Funds: 2010 Year-End CEF and ETF Tax Strategies
November 19, 2010--Closed-End Fund (CEF) and Exchange-Traded Fund
(ETF) prices have generally rallied in 2010, but there are still a number of funds trading below multi-year
highs, creating opportunities to implement tax swap strategies. We see opportunities for tax swaps within
the CEF and ETF markets and believe investors with unrealized losses in their portfolios could benefit from
tax-management strategies.
Tax swaps can be structured to comply with the wash sale rule. A tax swap involving the sale of one
fund and the simultaneous purchase of another with similar objectives may create losses while maintaining
market exposure and may not be subject to wash sale rules. These losses can be used to offset realized or future gains from other holdings.
Morgan Stanley & Co.’s strategists believe that QE2 will result in continued strong performance in risk assets and commodities and in the US Dollar weakening further. In addition, MS & Co.’s economists continue to expect growth from abroad, particularly within emerging markets, to result in a sustainable US economic recovery.
BNY Mellon Analytical Insights - Third Quarter 2010 Edition
November 19, 2010--Market Review
The pace of US GDP growth continued to slow in the third quarter, as the US economy grew at an annualized rate of just 1.7%, according to the most recent revision. The slowdown in growth prompted the Federal Reserve to announce a second round of quantitative easing.
Financial Markets Review
For the eighth consecutive quarter, the Federal Reserve left the Fed Funds rate at the target of 0-0.25%. The treasury yield curve continued to flatten as it had in the second quarter. Treasuries at all maturities experienced decreasing yields although the drop was more pronounced at mid-to long maturities. The declining dollar led to strong positive returns for commodities. For the quarter, the S&P Goldman Sachs Commodity Index returned 8.3%. Real Estate, after another strong quarter, lead all major asset classes in the year-to-date and 1-year time periods, with returns of 19.1% and 30.3%, respectively. As the quarter drew to a close, investors in international equities had to contend with rising pressure on US lawmakers to encourage China to re-value its currency.
As of September 30, 2010, all major asset classes had positive returns for the quarter, year-to-date and 1-year time periods. Aided by the falling dollar, investors in international equities achieved the greatest quarterly returns. Equity investors in all regions experienced strong, positive third quarter returns.
Domestic Equity Review
Off-setting the losses across all styles in the prior quarter, the third quarter provided gains for US equity investors in growth, value, large and small strategies. Additionally, positive returns were achieved by investors in all US equity sectors. Volatility, as defined by the standard deviation of the Russell 3000 Index returns, increased slightly to 18.9% for the year ended September 2009. Confronted by the possibility of continued quantitative easing by the Federal Reserve, the equity markets rallied into the quarter’s end.
CFTC.gov Commitments of Traders Reports Update
November 19, 2010--The CFTC.gov Commitments of Traders Reports have benn updated for the week of November 16, 2010 are now available.
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First Fully-Electronic Interest Rate Swap Trade Executed and Cleared in U.S.
November 19, 2010--Tradeweb, a leading global provider of fixed income and derivatives markets, today announced the completion of the first interest rate swap trade by a client to be electronically executed and cleared in the U.S.
The U.S. dollar-denominated swap transaction was executed on the Tradeweb platform between a U.S.-based asset manager and Deutsche Bank, with Deutsche Bank acting as the clearing member. The trade was then cleared by CME Clearing, and is the first transaction which could be considered swap execution facility (SEF)-ready under the expected regulatory framework soon to be defined and finalized by the CFTC and SEC.
"This trade is an evolutionary step forward for the derivatives markets," said Lee Olesky, CEO of Tradeweb. "As more clients adopt the central clearing model in anticipation of new regulatory requirements, we are happy to lead the way in providing what we anticipate will be a SEF-ready derivatives marketplace."
SEC Proposes Rules on Security-Based Swap Reporting
November 19, 2010--The Securities and Exchange Commission today voted unanimously to propose new rules entailing how security-based swap transactions should be reported and publicly disseminated.
The rules are proposed under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which generally authorizes the SEC to regulate security-based swaps. The proposed rules (Regulation SBSR) represent an important step in the SEC's continuing effort to increase the transparency of the security-based swap market and fulfill mandates under the Dodd-Frank Act.
SEC Proposes Rules to Outline Obligations of Security-Based Swap Repositories
November 19, 2010--The Securities and Exchange Commission today voted unanimously to propose new rules that would require security-based swap data repositories (SDRs) to register with the SEC. The proposed rules also lay out other requirements with which SDRs must comply.
Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act generally authorizes the SEC to regulate security-based swaps. The SEC's proposal aims to increase accountability and transparency in the security-based swap market, and ensure these repositories retain and maintain complete records of security-based swap transactions that can be accessed by regulators.
"The need for these repositories stems from the opaque nature of the swaps market — a market where transaction-level data has not been widely available or required to be recorded," said SEC Chairman Mary L. Schapiro. "These repositories have a crucial role to play in the development of a healthy and robust security-based swap market."
SEC Proposes Rules to Improve Oversight of Investment Advisers
November 19, 2010--The Securities and Exchange Commission today voted to propose new rules to strengthen the SEC's oversight of investment advisers and fill key gaps in the regulatory landscape.
The SEC's proposed rules would implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act that, among other things:
Facilitate registration of advisers to hedge funds and other private funds with the SEC.
Implement the Dodd-Frank Act's mandate to require reporting by certain advisers that are exempt from SEC registration.
Increase the asset threshold for advisers to register with the SEC.
Define "venture capital fund" and provide clarity regarding certain exemptions to investment adviser registration.
ETF Securities USA LLC files with the SEC
November 19, 2010--ETF Securities USA LLC has filed a pre-effective amendment, Form S-1 with the SEC for
ETFS White Metals Basket Trust.
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State Street files with the SEC
November 19, 2010--State Street has filed a post effective amendment, registration statement with the SEC for
SPDR Barclays Capital Emerging Markets Local Bond ETF.
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State Street filed withe the SEC
November 19, 2010--State Street has filed a post effective amedment, registration statementwith the sec for SPDR S&P Emerging Markets Dividend ETF.
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