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“How Big is Big?”
Speech of Commissioner Bart Chilton Presenting at “Oil and the Macroeconomy in a Changing World”, Symposium sponsored by the Federal Reserve Bank of Boston
June 9, 2010--Thank you for the opportunity to be with you today to talk about energy markets and changes in technology, energy market pricing, and markets in general. We will also spend some time on financial regulatory reform, which as you know has gained a great deal of momentum in recent weeks and from my perspective that's a really good, and long overdue, occurrence.
Big
Remember the movie "Big”? Tom Hanks, after being humiliated when he wasn’t tall enough to get on a ride at an amusement park puts money in the mysterious “Zoltar Speaks” machine and wishes to be big. The next morning, the 13-year-old boy becomes a 31-year-old man, and he really is big. He's wearing the same kid pajamas, but he's nearly twice the size. The theme of the film is that even though he is big, he really isn’t prepared for the environment around him. So, how big is big?
Flash Crash
First, I’d like to focus on the events of May 6—the flash crash—a very big deal. It was a serious and significant event. These are markets that consumers rely upon to ensure fair and equitable pricing. They are of national importance. On that day, the Dow dropped nearly 1,000 points only to regain most of that loss. All of this took place one afternoon. To put it in perspective, how big it was, the biggest Dow point drop was 778 points on September 29, 2008. That was a 7% drop. The biggest percentage drop ever was Black Monday, October 19, 1987—508 points but a 23% drop.
While we do not yet know the impetus for the events of May 6th, we do know that the volatility was exacerbated by financial technology—fintech.
CFTC Publishes Advisory on the Extent to which U.S. Investors May Trade in Foreign Security Futures Products Dreyfus files for exemptive relief with the SEC Institutional investors consider tar sands litigation in potential addition to oil company woes Global Equity Index & ETF Research -- US Weekly ETP Market Review Net Cashflows
Within Equity ETPs, Emerging Markets Regional ETPs received the largest inflows ($301 mm) followed by Emerging Country ETPs, while US Sector ETPs saw the largest outflows ($789 mm) followed by Small Cap ETPs.
Among Fixed Income ETPs, Sovereign ($536 mm) and Broad Market ETPs ($397 mm) contributed the most to the positive flows within the asset class.
Within Commodity ETPs, Gold ETPs, albeit less than in previous weeks, led the inflows with $799 mm, followed by products tracking Crude Oil.
Turnover
Assets Under Management (AUM)
To request a copy of the report NASDAQ OMX Selected as Best Data Provider
"We are thrilled to have been recognized by our customers, prospects, and distribution partners," said Randall Hopkins, Senior Vice President, NASDAQ OMX Global Data Products. "Our team is dedicated to providing services and products of the highest quality so that we can continue to meet the growing demands of traders, investors and data distributors across the globe."
NASDAQ Basic is a real-time product that provides NASDAQ BBO (the best bid and offer with associated size on NASDAQ) and NASDAQ Last Sale (tick-by-tick price and size information for trades executed on NASDAQ or reported to the FINRA/NASDAQ Trade Reporting FacilityTM (TRF TM)). NASDAQ Basic data is based on NASDAQ trading in NASDAQ, NYSE, NYSE Amex- and regional exchange-listed securities. NASDAQ Basic can be deployed in a wide variety of investor tools –– such as charts and portfolio trackers –– and can be more quickly accessed by receiving the data directly from NASDAQ.
This is the third year since 2006 that NASDAQ OMX was selected by Inside Market Data's readership as Best Data Provider and the second consecutive year it was recognized as developer of the best new data product.
For more information about NASDAQ Basic and other NASDAQ Data Products, visit http://www.nasdaqtrader.com/gdp or send an email to datasales@nasdaqomx.com.
For more information about NASDAQ OMX Global Data Products, visit the NASDAQ OMX DataStore at www.data.nasdaqomx.com or send an email to datastore@nasdaqomx.com. CME Group and Dow Jones Indexes Announce Launch of FX Dollar Index and Futures The new index combines six currency futures and represents the relative value of the U.S. dollar versus six major currencies. The currencies included are the Australian dollar, British pound, Canadian dollar, Euro, Japanese yen, and Swiss franc. The Dow Jones CME FX$INDEX futures contract will provide a more efficient way for global market participants to trade a basket of six major currencies against the U.S. dollar.
Claymore Lists Seven New Corporate Bond ETFs on NYSE Arca
Claymore BulletShares 2013 Corporate Bond ETF (Ticker: BSCD)
Claymore BulletShares 2014 Corporate Bond ETF (Ticker: BSCE)
Claymore BulletShares 2015 Corporate Bond ETF (Ticker: BSCF)
Claymore BulletShares 2016 Corporate Bond ETF (Ticker: BSCG)
Claymore BulletShares 2017 Corporate Bond ETF (Ticker: BSCH) U.S. International Reserve Position
June 9, 2010--The U.S. Commodity Futures Trading Commission’s (CFTC’s) Division of Clearing and Intermediary Oversight (DCIO) today published an Advisory clarifying the extent to which certain sophisticated customers located in the U.S. may transact in foreign security futures products (FSFPs).
The Advisory is intended to address questions raised by members of the public following the Securities and Exchange Commission’s publication of an order on June 30, 2009, which exempts certain sophisticated persons from provisions of the Securities Exchange Act of 1934 that prohibit the offer and sale of FSFPs to U.S. persons.
June 9, 2010--Dreyfus has filed an application with the SEC for exemptive relief to permit an actively managed fund to issue exchange-traded shares.
view filing
June 8, 2010--An investor climate lobby group consisting of many of the world’s biggest pension fund and asset managers says some of its members are weighing up legal action against oil companies involved in controversial tar sands extraction projects in Alberta, Canada.
Any litigation could be a further blow to the embattled oil industry, notably to BP, which faced significant investor uprising at its April AGM over its plans to extract oil from controversial tar sands projects in Canada, and which is embroiled in controversy over the Deepwater oil spill disaster in the Gulf of Mexico that has wiped as much as 30% from its share value. In a separate case, BP already faces legal action from the Lothian Pension Fund in the UK over share price losses, which it estimates at $500m, after a pipeline leak in its Prudhoe Bay field in Alaska four years ago. The Institutional Investors Group on Climate Change (IIGCC), which comprises more than 50 European pension funds and asset managers with a combined worth of around €5trn, said in a new report that its members were focusing increasingly on the risk of environmental litigation. It said more than half of asset owner (pension fund) signatories said the issue was a concern in 2009, against just 15% previously.
June 8, 2010--Highlights
New Listings and Delistings
Last week added two new alternatives to the ETP product list, which have already started trading at NYSE Arca.
United States Commodity Funds LLC launched a new Crude Oil ETP which will intend to track the performance of North European Brent crude oil prices, mainly, by holding positions in Futures contracts traded on the ICE Exchange.
The remaining ETP was launched by PowerShares and will offer exposure to the International Corporate bond market. This new product offers a TER 5 bps cheaper and a more diversified currency exposure than its direct competitor, the SPDR Barclays Capital International Corporate Bond ETF, which was recently launched a couple of weeks ago.
Overall the US ETP market experienced outflows for $251 mm. Fixed Income, Commodity and Currency ETPs had inflows of $1.1 bn, $698 mm and $71 mm, respectively. Equity ETPs, on the other hand, experienced outflows of $2.1 bn.
After a successive series of increases, Avg. Daily Turnover retreated and decreased by 4.6% totaling $111 bn. However turnover still remains on the high levels.
Driven by negative weekly performance in most of the major equity markets, US ETPs AUM decreased by 1.7% totaling $786 bn at the end of the week. Equity ETPs account for 72% of the assets with $565 bn, followed by Fixed Income fundswith $129 bn and 16% of market share.
June 8, 2010--The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) has been recognized as the best data provider among the world's securities exchanges. Additionally, NASDAQ Basic has been recognized as the Best New Data Product of the Year. These recognitions of excellence were announced recently at the 8th annual Inside Market Data Awards in New York.
NASDAQ's acknowledgements as a world-class data provider and developer of the best new product were determined by the readership of Inside Market Data, a key publication for senior level data and technology executives within the financial services and securities industries throughout the world.
Provides More Precise, Convenient Trading of U.S. Dollar vs. Basket of Major Currencies
June 8, 2010--?CME Group, the world’s leading and most diverse derivatives marketplace, and Dow Jones Indexes, a leading global index provider, today announced the launch of the new Dow Jones CME FX$INDEX.
The index will serve as the basis of a new futures contract, which is expected to launch in the third quarter 2010. The contracts will be listed with, and subject to, the rules and regulations of CME.
June 7, 2010--NYSE Euronext (NYX) announced that its wholly-owned subsidiary, NYSE Arca, today began trading seven new corporate bond ETFs. The ETFs are advised by Claymore Advisors, LLC and distributed by Claymore Securities, Inc.
Claymore BulletShares 2011 Corporate Bond ETF (Ticker: BSCB)
The Fund seeks investment results that correspond generally to the performance, before the Fund's fees and expenses, of an investment grade corporate bond index called the BulletSharesTM USD Corporate Bond 2011 Index, which is a rules-based index comprised of, as of April 30, 2010, approximately 154 investment grade corporate bonds with effective maturities in the year 2011.
Claymore BulletShares 2012 Corporate Bond ETF (Ticker: BSCC)
The Fund seeks investment results that correspond generally to the performance, before the Fund's fees and expenses, of an investment grade corporate bond index called the BulletSharesTM USD Corporate Bond 2012 Index, which is a rules-based index comprised of, as of April 30, 2010, approximately 171 investment grade corporate bonds with effective maturities in the year 2012.
The Fund seeks investment results that correspond generally to the performance, before the Fund's fees and expenses, of an investment grade corporate bond index called the BulletSharesTM USD Corporate Bond 2013 Index, which is a rules-based index comprised of, as of April 30, 2010, approximately 182 investment grade corporate bonds with effective maturities in the year 2013.
The Fund seeks investment results that correspond generally to the performance, before the Fund's fees and expenses, of an investment grade corporate bond index called the BulletSharesTM USD Corporate Bond 2014 Index, which is a rules-based index comprised of, as of April 30, 2010, approximately 187 investment grade corporate bonds with effective maturities in the year 2014.
The Fund seeks investment results that correspond generally to the performance, before the Fund's fees and expenses, of an investment grade corporate bond index called the BulletSharesTM USD Corporate Bond 2015 Index, which is a rules-based index comprised of, as of April 30, 2010, approximately 138 investment grade corporate bonds with effective maturities in the year 2015.
The Fund seeks investment results that correspond generally to the performance, before the Fund's fees and expenses, of an investment grade corporate bond index called the BulletSharesTM USD Corporate
Bond 2016 Index, which is a rules-based indexcomprised of, as of April 30, 2010, approximately 86 investment grade corporate bonds with effective maturities in the year 2016.
The Fund seeks investment results that correspond generally to the performance, before the Fund's fees and expenses, of an investment grade corporate bond index called the BulletSharesTM USD Corporate Bond 2017 Index, which is a rules-based index comprised of, as of April 30, 2010, approximately 124 investment grade corporate bonds with effective maturities in the year 2017.
June 7, 2010--The Treasury Department today released U.S. reserve assets data for the latest week. As indicated in this table, U.S. reserve assets totaled $124,176 million as of the end of that week, compared to $124,972 million as of the end of the prior week.
I. Official reserve assets and other foreign currency assets (approximate market value, in US millions)
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May 28, 2010 |
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A. Official reserve assets (in US millions unless otherwise specified) 1 |
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124,176 |
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(1) Foreign currency reserves (in convertible foreign currencies) |
Euro |
Yen |
Total |
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(a) Securities |
8,814 |
14,309 |
23,123 |
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of which: issuer headquartered in reporting country but located abroad |
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0 |
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(b) total currency and deposits with: |
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(i) other national central banks, BIS and IMF |
12,901 |
7,015 |
19,917 |
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ii) banks headquartered in the reporting country |
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0 |
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of which: located abroad |
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0 |
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(iii) banks headquartered outside the reporting country |
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0 |
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of which: located in the reporting country |
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0 |
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(2) IMF reserve position 2 |
11,159 |
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(3) SDRs 2 |
54,376 |
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(4) gold (including gold deposits and, if appropriate, gold swapped) 3 |
11,041 |
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--volume in millions of fine troy ounces |
261.499 |
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(5) other reserve assets (specify) |
4,560 |
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--financial derivatives |
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--loans to nonbank nonresidents |
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--other (foreign currency assets invested through reverse repurchase agreements) |
4,560 |
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B. Other foreign currency assets (specify) |
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--securities not included in official reserve assets |
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--deposits not included in official reserve assets |
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--loans not included in official reserve assets |
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--financial derivatives not included in official reserve assets |
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--gold not included in official reserve assets |
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--other |
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Second Meeting of the U.S.-China Strategic & Economic Dialogue-U.S. Fact Sheet – Economic Track
June 7, 2010--s the world's third largest and fastest growing major economy, China presents enormous opportunities for U.S. workers and firms but also considerable challenges. President Obama is committed to making our relationship with China more beneficial for the American people, and his goal of doubling exports in the next five years to support two million U.S. jobs will be achieved in part through expanded trade with China. Reducing Chinese trade and investment barriers that create an uneven playing field for U.S. workers and companies and rebalancing to ensure that major surplus economies like China depend more on their own domestic demand for growth are key components of our efforts to achieve the President's goal.
The Strategic and Economic Dialogue allows U.S. and Chinese officials at the highest level to work together to address these and other important challenges through candid and constructive engagement. Secretary Geithner led a delegation of 10 heads of U.S. government agencies to Beijing for discussions with President Hu, Premier Wen, Vice Premier Wang, and a delegation comprised of all key Chinese economic ministry and agency heads.
Creating New Opportunities for U.S. Workers and Firms: The United States and China are among the largest beneficiaries of open trade and investment. Ensuring a thriving and mutually beneficial bilateral trade and investment relationship between our two dynamic economies is a key priority. China has become the third largest export destination for U.S. goods and services -- and one of the fastest growing. U.S. exports to China are now growing faster than overall U.S. exports. Reducing Chinese barriers to U.S. exports will help the U.S. take full advantage of the many growing opportunities represented by trade with China and create jobs for U.S. workers We made progress on several key trade and investment goals at the S&ED, and will continue to pursue them:
Ensuring that innovation policies encourage the best ideas wherever they originate.
China and the United States committed to innovation policies consistent with strong principles, including nondiscrimination, intellectual property rights protection, market competition, and no government interference in technology transfer.
China agreed to launch expert and high-level bilateral innovation discussions with all relevant U.S. and Chinese agencies and to take into account the results of these discussions in formulating and implementing its innovation measures.
Emerging Markets Week in Review-6/1/2010 - 6/4/2010
June 7, 2010--The Dow Jones Emerging Markets Composite Index slipped 0.44% last week as Hungary joined a growing set of European countries facing mounting fiscal deficits. Consumer Goods and Technology were the best performing sectors last week, up 1.49% and 0.91% respectively, and remain two of the only positive sectors in 2010.
Materials led the decline for the week, down 3.84%, and continues to be one the weakest sectors year to date. Over the weekend, Hungary assured the markets there is no risk of default on their sovereign debt but, broadly speaking, emerging markets continue to be dominated by weaker than expected economic data from the U.S.
S&P Launches Equal Weighted Version of the S&P/TSX 60-Licenses BetaPro to List & Trade an ETF Based Upon the Index
June 7, 2010--Standard & Poor's, the world's leading index provider, announced today that it has launched an equal weighted version of the S&P/TSX 60, the primary large cap benchmark for the Canadian equity market. The S&P/TSX 60 Equal Weight Index has the same constituents as the market capitalization weighted S&P/TSX 60, but each company in the equally weighted version is allocated an equal weight at each quarterly rebalancing.
When compared to its underlying counterpart, the S&P/TSX 60 Equal Weight Index offers higher exposure to relatively smaller companies, lower exposure to larger companies and a different risk/return profile.
S&P Indices also announced today that it has licensed BetaPro Management Inc. ("BetaPro"), to list and trade an ETF based upon the S&P/TSX 60 Equal Weight Index.
"By design, equal weighted indices give greater importance to smaller-cap companies than traditional market-cap weighted indices," says Steve Rive, Managing Director at S&P Indices. "As a result, equal weighted indices will have different risk/return profiles and different sector exposures than their market-cap brethren."
At each quarterly rebalancing, every constituent in the S&P/TSX 60 Equal Weight Index is assigned an equal weight. Between rebalancings, as stock prices move, the respective constituent weightings in the Index will deviate from the equal weight target. While these deviations could be reduced through more frequent rebalancing, the result would be a much higher level of turnover in the index, leading to higher trading costs for index users. Therefore, the Index is rebalanced quarterly to coincide with the quarterly share adjustments of the S&P/TSX 60, which take place after the close of the market on the third Friday of each quarter. Quarterly rebalancing allows the Index to strike an appropriate balance between turnover and the goal of equal weighting.
The S&P/TSX 60 Equal Weight Index is a member of the S&P/TSX Equal Weight Index Series. For more information on the Index, please visit: www.standardandpoors.com/indices.
Dow Jones makes changes to Asia Select Dividend 30 Index
June 7, 2010-Dow Jones Indexes has completed its annual and regular quarterly review of the Dow Jones Select Dividend Indexes.
The changes will be effective after the close of trading on 18 June 2010.
In the Dow Jones Asia Select Dividend 30 Index, Daegu Bank will be replaced by Giga-Byte Technology.
The dividend yield of the reconstituted Dow Jones Asia Select Dividend 30 Index will increase to 5.69 per cent from 5.21 per cent as a result of this regular annual review.
There will be no component changes to the Dow Jones Hong Kong Select Dividend 30 Index as a result of this regular annual review. The dividend yield of the index has increased to 4.18 per cent from 4.07 per cent as a result of this regular annual re-weighting.
