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State Street Files with SEC
May 12, 2010--State Street has filed a post effective amendment, registration statement with the SEC for
SPDR Nuveen Barclays Capital Build America Bond ETF
Climate bill would slash US carbon output
May 12, 2010--A draft bill setting out sharp cuts in US greenhouse gas emissions was unveiled in the Senate yesterday, offering new incentives for nuclear power and offshore drilling at a time when the BP spill in the Gulf of Mexico makes support for oil exploration politically difficult.
The draft, however, includes several new protections against spills, including one that allows states to veto drilling plans up to 75 miles from their shores or if they stand to suffer significant adverse impacts in the event of an accident.
The bill, presented by John Kerry, a Democrat, and Joe Lieberman, independent, aims to cut emissions by 17 per cent by 2020 and 83 per cent by 2050.
U.S. One, Inc. Launches One Fund(R) Global Stock ETF
May 12, 2010--U.S. One, Inc. launched its inaugural exchange-traded fund, One Fund®, designed specifically for investors seeking a tax efficient, low cost stock ETF. Trading began today ( ONEF). One Fund® is aimed at the individual investor who wants a simple and easy way to own a globally diversified, professionally managed stock portfolio in a single fund.
The Fund's approach simplifies the investment process by consolidating multiple, growth-oriented stock investments into the portfolio of One Fund®. For investors seeking long term growth of their money, they can purchase One Fund® and be done.
One Fund® invests in a broad range of stocks, across many industry segments, in both established and emerging markets. The Fund invests in underlying ETFs based on their ability to accurately represent the desired target market segment with an additional preference for those ETFs with low expense ratios. By investing in One Fund®, investors have the potential to gain exposure to more than 5,000 different companies in the U.S. and around the world.
One Fund® Cost Structure
The management fee for One Fund® is 0.51%, which is roughly 60% lower than the fee an average actively managed stock mutual fund will charge investors and below the 0.57% management fee of the average ETF.(1) ETFs are, however, subject to commission cost.
One Fund® Marketing and Sales Approach
U.S. One, Inc. will be the first ETF issuer to market directly to investors primarily through online channels. The Fund's website, coupled with innovative online marketing strategies, will provide more information, education and opportunity for engagement with investors than those of typical fund companies.
CFTC to Hold Open Meeting to Consider the Trading of Contracts Based on Motion Picture Box Office Receipts and Gather Views of Interested Parties
May 12, 2010-- The United States Commodity Futures Trading Commission (CFTC) will hold a public meeting on Wednesday, May 19, 2010, to consider issues related to the trading of futures and binary options based on motion picture box office receipts. The Commission will hear presentations by panels of invited witnesses representing Media Derivatives Exchange (MDEX), Cantor Exchange (Cantor), segments of the motion picture industry and other interested parties.
The meeting will be open to the public and will be webcast via the internet. In addition, audio of the meeting will be available via a listen-only conference call.
Nasdaq says over 10,000 trades have been cancelled
May 11, 2010--In the wake of the stock market's May 6 chaos, more than 10,000 trades have been cancelled, according to the Nasdaq OMX Group.
Exchanges including Nasdaq and NYSE Euronext's New York Stock Exchange agreed to cancel "clearly erroneous" trades after hundreds of stocks and exchange-traded funds lost as much as 99 percent of their value and then fully recovered in a 20-minute period on Thursday.
Regulators are still struggling to understand what caused the bizarre trading.
The Nasdaq "broke" 10,468 trades totaling 1.4 million shares in 236 different securities, Executive Vice President Eric Noll said on Tuesday in prepared testimony at a hearing of the House Committee on Financial Services in Washington, D.C. Noll did not give a dollar figure for the cancelled trades.
Only trades that occurred between 2:40 p.m. and 3 p.m. EST (1840 GMT and 1900 GMT) at prices at least 60 percent above or below a security's price at 2:40 p.m. were cancelled, prompting howls of protest from some investors.
Van Eck files with the SEC
May 11, 2010--Van Eck has filed a post effective amendment, registration statement with the SEC for
Market Vectors GDP – International Equity ETF
Market Vectors GDP – Emerging Markets Equity ETF
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AdvisorShares files with the SEC
May 11, 2010--AdvisorShares has filed a post effective, registration statement with the SEC for
Peritus High Yield ETF
NYSE Ticker: HYLD
Total Annual Fund Operating Expense afterReimbursements: 1.35%
Exemption sought to OTC derivatives rules
May 11, 2010--Large US industrial and manufacturing groups have intensified their campaign to ensure they will be exempt from proposed rules to reform the over-the-counter derivatives market. They say the draft legislation does not ensure that they will be allowed to continue using the contracts to hedge against interest-rate and currency fluctuations.
OTC derivatives have been blamed for exacerbating the financial crisis, and reforming the market is central to regulatory reforms being considered by the Senate. US lawmakers and regulators want most OTC deals – in which two parties privately agree a customised contract – to be traded?and?cleared?centrally.
Watchdogs weigh uniform ‘circuit breakers’
May 11, 2010--US regulators on Tuesday failed to offer a full explanation for last week’s wild market swings but told lawmakers that they may introduce uniform industry-wide “circuit breakers” and new rules to maintain market liquidity in times of stress.
Mary Schapiro, chairman of the Securities and Exchange Commission, and Gary Gensler, chairman of the Commodity Futures Trading Commission, said that “fat-fingered” traders inputting mistaken orders were not responsible for the volatile equity markets last Thursday.
“We may learn that the extraordinary disruption in trading, however it may have been triggered, was the result of a confluence of events which, taken together, exacerbated what already had been a down day,” Ms Schapiro told the House financial services subcommittee hearing, adding that the SEC had issued “a number of subpoenas” in its probe.
Aluminum May Get $500 Boost From Start of ETFs, Citigroup Says
May 11, 2010-- Aluminum may rise by $500 a metric ton if providers of exchange-traded funds introduce ETFs backed by the lightweight metal, Citigroup Inc. said, implying a potential 24 percent gain.
The forecast is based on an ETF holding aluminum that global consumers would use in two weeks, or about 1.4 million tons, David Thurtell, a Citigroup analyst in London, said in a report today. United Co. Rusal, the world’s biggest producer, said last month it was in talks to supply metal to banks for possible ETFs.
Testimony Before the House of Representatives Committee on Financial Services, Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises
May 11, 2010--Good afternoon Chairman Kanjorski, Ranking Member Garrett and members of the Subcommittee. I thank you for inviting me to today’s hearing on the unusual volatility in the capital markets last week. I also am pleased to testify alongside Securities and Exchange Commission Chairman Mary Schapiro. Staff of the Commodity Futures Trading Commission (CFTC) and SEC have been in constant communication since Thursday afternoon. We will continue to work closely together to review the events of last week and make joint recommendations to protect the integrity of our markets and the American public. This afternoon, I will focus my testimony primarily on issues related to the futures marketplace and allow Chairman Schapiro to address the securities markets.
The Equity Index Futures Markets
Before I turn to the events of last Thursday, I will discuss the makeup of the stock index futures markets. I will also address the market protection mechanisms in place for orders entered into the electronic trading systems of the two U.S. futures exchanges where the highest-volume equity futures trade.
Stock index futures are derivatives contracts that trade on central exchanges. Much like a crude oil futures contract is based upon the price of crude oil, a stock index futures contract is based on the level of a broad based stock index. The stock index futures marketplace consists almost entirely of futures contracts based on four principal stock indices. Futures on many U.S. stock indices, including the S&P 500, the Nasdaq 100 and the Dow Jones Industrial Average, trade on the Chicago Mercantile Exchange (CME). Futures on other U.S. stock indices, including the Russell 2000 Index, trade on the IntercontinentalExchange, Inc. (ICE). The total outstanding notional value of the futures contracts on these indices is approximately $360 billion. This compares to a total U.S. equity market value of approximately $13 trillion.
Standard & Poor's Announces Changes In The S&P/TSX Venture Composite Index
May 11, 2010--Standard & Poor's will make the following changes in the S&P/TSX Venture Composite Index after the close of trading on Tuesday, May 11, 2010:
* MTY Food Group Inc. (TSXVN:MTY) will be removed from the index.
* The company will graduate to TSX where it will trade under the same ticker symbol.
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.
Statement of Commissioner Michael V. Dunn on Meeting to Discuss Significant Price Discovery Contracts
May 11, 2010--When the initial legislation creating Significant Price Discovery Contracts (SPDC) was enacted, I was under the impression that there might be a half-dozen contracts that would fall into this category. The 90 plus ECM contracts initially identified as potential SPDCs and the subsequent in-depth analysis and Federal Register (FR) release of 41 of these contracts, frankly took me by surprise.
I commend the staff on their diligence in carrying out the provisions of the SPDC legislation and thank the public for their comments on the FR releases. During my briefing on the SPDC proposals we are considering today, I was struck by the time and effort expended by the CFTC staff to get us to this point.
ECMs were created by the CFMA of 2000, and SPDC determinations were mandated by the CFTC Reauthorization Act of 2008. If a local trader at an exchange had fallen asleep in 2000 and awoke today, that person would be hard pressed to recognize the futures industry. The trader would probably find himself in an abandoned trading pit. The contract he traded would likely have migrated to an electronic platform - globally accessed by multibillion dollar hedge funds through co-located, algorithm driven, high frequency trading strategies. The exchange itself, in all likelihood, would be a publicly traded company closely tied to a clearing house whose membership is made up of closely entwined global financial institutions.
Statement of Commissioner Bart Chilton Regarding the Market Events of May 6th
May 11, 2010--I commend CFTC Chairman Gensler, SEC Chairman Shapiro and Secretary Geithner for their tireless efforts (and those of their staffs) related to the serious and significant market events of May 6th. As we go forward, I am hopeful that we look at four areas of critical importance.
1 – What Happened? We need to figure out—immediately—specifically what happened. Regulators need to use every existing tool at their disposal, and get the answers. "We don't know," or "we aren't sure," is simply not acceptable. The CFTC and the SEC need to focus on this matter, with additional outside experts if need be, in a time-sensitive fashion. In that vein, I’m extremely pleased that we’ve set up a joint SEC/CFTC advisory committee to address issues such as this. Standard operating procedures should not apply. Indeed, the fact that we still do not have an answer to the question of “What happened?” highlights that we need to do more and have better oversight and enforcement tools. The regulatory reform bill making its way through Congress is critical in this regard.
2 – Circuit Breakers. Clearly, the fail-safe measures that were put in place were not safe—and failed. Circuit breakers—that is, systems that trigger a trading halt when certain market-related events occur—need to become mandatory and approved by regulators as appropriate for all markets and all contracts. These circuit breakers are currently voluntarily put in place by exchanges. Not only are such circuit breakers needed, they need to have ensured consistency and be set at appropriate levels, before serious and significant market anomalies take place. The fact that the circuit breakers were not triggered and that trades on some equity exchanges were busted, indicates a clear flaw in the current circuit breaker system. 3 – OTC Authority. Finding out what happened is, in part, made more difficult because oversight agencies don’t have all the regulatory tools that we need to make swift, accurate, and thoughtful determinations about these markets. The over-the-counter (OTC) market is estimated to account for more than $600 trillion in annual trading. By comparison, the regulated U.S. futures exchanges amount to less than $5 trillion.
CFTC and SEC Announce Creation of Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues
May 11, 2010--Commodity Futures Trading Commission Chairman Gary Gensler and Securities and Exchange Commission Chairman Mary Schapiro today announced the formation of a joint committee that will address emerging regulatory issues. The establishment of the Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues was one of the 20 recommendations included in the agencies’ harmonization report issued last year.
The joint committee will develop recommendations on emerging and ongoing issues relating to both agencies. The first item on the committee’s agenda is conducting a review of last Thursday’s market events and making recommendations related to market structure issues that may have contributed to the volatility, as well as disparate trading conventions and rules across various markets.
To orient the Committee’s work, the staff of the CFTC and SEC will provide to the Committee on Monday their joint preliminary findings regarding last Thursday’s market events.
“It is important that we hear from this prominent panel of market practitioners, academics and former regulators about emerging risks in our markets,” Chairman Gensler said. “It is critical that the CFTC and SEC hear from the panel together because our markets are so intertwined. I am particularly interested in the Committee’s first focus: advising on courses of action in response to the lessons learned from the market events of May 6.”
“As last week’s events remind us, our markets are increasingly interrelated and interdependent so we need to appreciate how events in one arena can potentially impact investors and markets elsewhere,” said Chairman Schapiro. “The Joint Committee will serve an essential role in addressing that challenge.”
The Committee’s charter provides for a broad scope of interest, including:
1. Identifying of emerging regulatory risks;
2. Assessing and quantifying of the impact of such risks and their implications for investors and market participants; and
3. Furthering the CFTC’s and SEC’s efforts on regulatory harmonization.
Chairman Gensler and Chairman Schapiro will serve as co-chairs of the Joint Committee.
Members of the Joint Committee include (additional members will join in the coming days):
• Maureen O’Hara, Professor of Management, Professor of Finance, Cornell University
• Brooksley Born, Former Chair of the CFTC
• David Ruder, Former Chair of the SEC
• Jack Brennan, Former Chief Executive Officer and Chairman, Vanguard
• Robert F. Engle, Michael Armellino Professor of Finance at the NYU Stern School of Business
• Richard Ketchum, Chairman and Chief Executive Officer, FINRA
• Susan Phillips, Dean and Professor of Finance, The George Washington University School of Business
