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Speech by SEC Chairman:Mary L. Schapiro Address to Financial Services Roundtable
September 24, 2009--Thank you very much, Bob [Robert P. Kelly, Chief Executive Officer, Bank of New York Mellon Corporation] for that kind introduction. I am pleased to be here tonight.
I'd like to focus this evening on the SEC as a capital markets regulator, reviewing what we've been doing and where we've been focused in the last several months. And, importantly, I will discuss where we expect to direct our energy in the months ahead. In all of our activities, we have been guided by a few core principles, with the most important one being this: "investors first."
Each of our initiatives is evaluated from the perspective of how it will help investors. And despite challenges, criticisms and stumbles, we as an agency return to our core value of serving as the investor's advocate, hour-by-hour, day-by-day in all that we do.
We also recognize that fully regenerating confidence in America's securities markets is critical to our nation's continuing economic recovery. Restoring our markets to their position as a revered model for the rest of the world to follow, is goal each of us in this room, and at the SEC, likely hold in common.
SEC as a Capital Markets Regulator In order to achieve the goals of renewed investor confidence and restored market stature, it is essential that this country have a strong and effective capital markets regulator. And that regulator must have a top-of-mind and undiluted commitment to promoting the interests of investors.
Throughout its history, the SEC has served this role. And as we reform and re-energize our agency, we have a renewed commitment to our investor protection mandate and our responsibilities to effectively regulate the capital markets.
Looking Back
So, what have we been doing to fulfill this role? The SEC has spent the last several months rebuilding ourselves to be a stronger, more focused and more effective capital markets regulator — the kind of capital markets regulator that investors expect and deserve. Throughout this period, the SEC has dedicated much of its efforts to pursuing an investor-centric rulemaking agenda, ensuring that investor interests are promoted in regulatory reform efforts, and re-vamping our enforcement program.
Rules Addressing the Financial Crisis
SEC Announces Panelists for Securities Lending and Short Sale Roundtable
September 25, 2009--The Securities and Exchange Commission today announced the panelists for its September 29 and September 30 roundtable in Washington D.C. to discuss securities lending and short sale issues.
The roundtable will begin at 9:30 a.m. on both days with opening remarks from SEC Chairman Mary L. Schapiro.
"Securities lending was once thought to be a way to earn a few extra points of return, with little or no risk," said Chairman Schapiro. "Events of last year reveal the risk was present. As a result, we need to consider ways to enhance investor-oriented oversight of this multi-trillion dollar market."
Chairman Schapiro added, "We also must focus on a flip-side of securities lending — short selling. That's why the roundtable will also examine potential short sale pre-borrow and hard locate requirements and short sale disclosures."
Panel topics will include discussions of securities lending practices, possible short sale pre-borrowing requirements and additional short sale disclosures.
Roundtable participants will include representatives of corporate issuers, financial services firms, beneficial owner lenders, lending agents, borrowers of securities, self-regulatory organizations, international regulators and the academic community.
The roundtable will be held at the SEC's headquarters at 100 F Street NE in Washington, D.C., and will be open to the public with seating on a first-come, first-served basis. The roundtable also will be webcast on the SEC's Web site.
For additional information about the roundtable, contact the SEC's Division of Trading and Markets at (202) 551-5720.
Additional Materials
- Spotlight on Short Sales
- Notice of Roundtable Discussion; Request for Comment
- View comments
- Submit comments
Schwab files with the SEC
September 25, 2009--Charles Schwab Investment Management, Inc.
Schwab Strategic Trust have filed an amended application for exemptive relief with the SEC.
VIEW FILING
Barclays Global Investors Lists Three iShares Russell 200 Index ETF’s on NYSE Arca
September 25, 2009--NYSE Euronext (NYX) announced that its
wholly-owned subsidiary, NYSE Arca, today began trading the iShares
Russell Top 200 Value Index Fund (IWX), iShares Russell Top 200 Index
Fund (IWL) and iShares Russell Top 200 Growth Index Fund (IWY). The
ETFs are sponsored by Barclays Global Investors.
iShares Russell Top 200 Index Fund
The Fund seeks investment results that correspond generally to the price
and yield performance, before fees and expenses, of the Russell Top
200®Index (the "Underlying Index"). The Underlying Index is a
float-adjusted, capitalization-weighted index that measures the
performance of the largest capitalization sector of the U.S. equity
market. The Underlying Index includes securities issued by the
approximately 200 largest issuers in the Russell 3000® Index
representing approximately 65% of the market capitalization of all
publicly-traded U.S. equity securities.
iShares Russell Top 200 Value Index Fund
The Fund seeks investment results that correspond generally to the price
and yield performance, before fees and expenses, of the Russell Top 200®
Value Index (the "Underlying Index"). The Underlying Index is a style
factor weighted index that measures the performance of the largest
capitalization value sector of the U.S. equity market and is a subset of
the Russell Top 200® Index.
iShares Russell Top 200 Growth Index Fund
The Fund seeks investment results that correspond generally to the price
and yield performance, before fees and expenses, of the Russell Top 200®
Growth Index (the "Underlying Index"). The Underlying Index is a style
factor weighted index that measures the performance of the largest
capitalization growth sector of the U.S. equity market and is a subset
of the Russell Top 200® Index.
Pax World Funds, ALPS Trust files with the SEC
September 24, 2009--On an Application dated September 17, 2009 the undersigned applicants, Pax World Funds Trust II, Pax World Management Corp. and ALPS Distributors, Inc. (the “Distributor” and, collectively with the Trust and the Adviser, “Applicants”), apply for exemptive relief.
view filing
Credit Quality Declines in Annual Shared National Credits Review
September 24, 2009--Credit quality declined sharply for loan commitments of $20 million or more held by multiple federally supervised institutions, according to the 32nd annual review of Shared National Credits (SNC).
The credit risk of these large loan commitments was shared among U.S. bank organizations, foreign bank organizations (FBO), and nonbanks such as securitization pools, hedge funds, insurance companies, and pension funds. Credit quality deteriorated across all entities, but nonbanks held 47 percent of classified assets in the SNC portfolio, despite making up only 21.2 percent of the SNC portfolio. U.S. bank organizations held 30.2 percent of the classified assets and made up 40.8 percent of the SNC portfolio.
The 2009 review covered 8,955 credits totaling $2.9 trillion extended to approximately 5,900 borrowers. Loans were reviewed and categorized by the severity of their risk—special mention, substandard, doubtful, or loss—in order of increasing severity. The lowest risk loans, special mention, had potential weaknesses that deserve management attention to prevent further deterioration at the time of review. The most severe category of loans, loss, includes loans that were considered uncollectible.
Key findings were:
Criticized assets, which included SNCs classified as special mention, substandard, doubtful, or loss, reached $642 billion, up from $373 billion last year, and represented 22.3 percent of the SNC portfolio compared with 13.4 percent in 2008.
SNC commitment volume increased $92 billion, or 3.3 percent, while the number of credits remained virtually unchanged. Classified assets, which included SNCs classified as substandard, doubtful, or loss, rose to $447 billion from $163 billion and represented 15.5 percent of the SNC portfolio, compared with 5.8 percent in 2008. Classified dollar volume increased 174 percent from a year ago. Special mention assets, which exhibited potential weakness and could result in further deterioration if uncorrected, declined to $195 billion from $210 billion and represented 6.8 percent of the SNC portfolio, compared with 7.5 percent in 2008.
The severity of criticism increased with the volume of SNCs classified as doubtful and loss rising to $110 billion, up from $8 billion in 2008. Loans in nonaccrual status also increased nearly eight times to $172 billion from $22 billion. Nonaccrual loans included $32 billion in credits classified as loss and $56 billion classified doubtful.
The distribution of credits across U.S. bank organizations, foreign bank organizations, and nonbanks remained relatively unchanged. U.S. bank organizations held 40.8 percent, while FBOs and nonbanks held 38 percent and 21.2 percent, respectively. Nonbanks continued to hold a disproportionate share of classified assets. Nonbanks held 47 percent of classified assets and 52 percent of nonaccrual loans. Federal Deposit Insurance Corporation-insured institutions held 24.2 percent of classified assets and 22.7 percent of nonaccrual loans.
Criticized volume was led by the Media and Telecom industry group with $112 billion, Finance and Insurance with $76 billion, and Real Estate and Construction with $72 billion. These three groups also represented the highest shares of criticized credits with 17.3 percent, 11.7 percent, and 11.2 percent of criticized credits in the SNC portfolio, respectively.
The review identified significant deterioration in credit quality of leveraged finance credits, with these loans representing more than 40 percent of the dollar volume of total criticized assets. About 72 percent of the dollar volume of the 50 largest leveraged finance SNCs were criticized, which represents one-third of all criticized assets.
Underwriting standards in 2008 improved from prior years, with examiners identifying fewer loans with structurally weak underwriting characteristics compared to credits written in 2007 and 2006. However, the SNC portfolio contained loans with structurally weak underwriting characteristics that were committed before mid-2007 that contributed significantly to the increase in criticized assets.
The SNC program was established in 1977 to provide an efficient and consistent review and classification of SNC, which includes any loan and or/formal loan commitment, and any asset such as real estate, stocks, notes, bonds, and debentures taken as debts previously contracted, extended to borrowers by a federally supervised institution, its subsidiaries, and affiliates that aggregates to $20 million or more and is shared by three or more unaffiliated supervised institutions. Many of these large loan commitments are also shared with foreign banking organizations and nonbanks, including securitization pools, hedge funds, insurance companies, and pension funds.
In conducting the 2009 SNC review, agencies reviewed $1.2 trillion of the $2.9 trillion credit commitments in the SNC portfolio, or 41 percent of the credits by dollar volume. The 2009 SNC sample was heavily weighted toward non-investment grade and criticized credits. The results of the review are based on analyses prepared in the second quarter of 2009 using credit-related data provided by federally supervised institutions as of December 31, 2008, and March 31, 2009.
Attachments
Shared National Credits Program 2009 Review
Standard & Poor's Announces Changes In The S&P/TSX Venture Composite Index
September 24, 2009--Standard & Poor's will make the following changes in the S&P/TSX Venture Composite Index after the close of trading on Thursday, September 24, 2009:
The shares of MagIndustries Corp. (TSXV:MAA) will be removed from the index. The company will graduate to trade on TSX under the same ticker symbol.
The shares of Kinbauri Gold Corp. (TSXV:KNB) will be removed from the index.
The shares of the company will be delisted from the Venture Exchange at its own request.
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.
iBoxx corporate bond ETF to reflect index changes
September 24, 2009--Markit Group is making changes to the methodology of the iBoxx USD Liquid Investment Grade Index.
Barclays Global Fund Advisors intends to continue to manage the iShares iBoxx USD Investment Grade Corporate Bond Fund so as to seek investment results that correspond generally to the price and yield performance, before fees and expenses, of the U. dollar denominated investment grade corporate bond market as defined by the iBoxx USD Liquid Investment Grade Index.
ETF Securities continues expansion with the hire of Head of Sales for Latin America
September 23, 2009--ETF Securities Ltd (ETFS), the global pioneers of Exchange Traded Commodities (ETCs), and 3rd generation Exchange Traded Funds (ETFs), continues to grow its business with the hire of Pedro Echenique, who will cover Latin America.
ETF Securities Ltd (ETFS), the global pioneers of Exchange Traded Commodities (ETCs), and 3rd generation Exchange Traded Funds (ETFs), continues to grow its business with the hire of Pedro Echenique, who will cover Latin America.
Pedro’s appointment is in direct response to growing investor demand in the Latin American markets for ETCs and ETFs and he will be responsible for ETFS’ sale growth and business development in the region.
Pedro joins ETF Securities following the recent completion of a Master in Finance at London Business School in June 2009. Pedro started his career in Chile working for Penta Estrategia & Inversiones one of the top research companies where he developed and successfully implemented a fund selector model. In 2004, he moved to AFP Habitat, the second largest pension manager in Chile, as an international fund allocator, responsible for mutual fund selection and held several roles on the fixed income and foreign exchange desks. Pedro holds a BA in Business Administration from Universidad Catolica de Chile and an MSc in Finance from the London Business School.
This hire comes at a time when ETF Securities sees spectacular growth within ETCs and ETFs, as assets under management break $14.9bn*.
Commenting on continued team expansion, Hector McNeil, Managing Partner, ETF Securities:
“We are delighted to announce the appointment of Pedro Echenique as he will be a key acquisition for our drive into the Latin American markets. This hire shows our commitment to expanding our business and continued growth of ETF investing globally.”
*As at 21st September 2009
Speech of Commissioner Jill E. Sommers, CFTC
Before the Investment Company Institute Capital Markets Conference, New York, NY
September 24, 2009--Good morning. It’s an honor to be here today to discuss the regulatory reform efforts that are underway in Washington and at the Commodity Futures Trading Commission (CFTC). Not since the Commodity Exchange Act (CEA) and the securities laws were passed in the 1930s has there been a time when events have coalesced, as they have over the past year, to bring into such sharp focus the need for harmonizing regulation and closing regulatory gaps.
Policy makers have an historic opportunity to reshape financial markets oversight to better serve the public by strengthening regulation where needed and eliminating inefficiencies where possible. Organizations such as ICI perform a valuable service by promoting the interests and understanding of the U.S. fund industry and deliver a critical voice in this dialogue.
Congress created the CFTC in 1974 as an independent federal agency with the mandate to regulate commodity futures and options markets in the United States. At that time, most futures trading took place in the agricultural sector. Contracts on products such as wheat, corn and cattle were traded in open outcry pits where traders wearing colorful jackets flashed hand signals and jostled each other for position. Over time, increasingly complex financial products were developed. While agricultural trading still makes up about eight percent of the market, and open outcry trading still exists, today’s markets encompass a vast array of financial contracts traded at lightning speed through electronic networks.
Since 1974, the CFTC’s mission has been to protect market users and the public from fraud, manipulation, and abusive trading practices related to the sale of physical and financial futures and options, and to foster open, competitive, and financially sound markets. The CFTC endeavors to ensure the economic utility of the markets through a strong regulatory oversight program that includes market surveillance to detect and prevent manipulation and other market anomalies, and by ensuring the financial integrity of the clearing process.
Through effective oversight, the CFTC facilitates the important hedging and price discovery functions that the futures markets were designed to serve. Although the regulated futures exchanges and futures firms have performed well throughout the financial crisis, there is widespread belief that measures should be taken to prevent a recurrence of the run up in commodity prices that occurred last year, and broad consensus that more transparency must be brought to the markets, especially the over-the-counter (OTC) markets.
DB Index Research -- Weekly ETF Reports -- US
September 24, 2009--Highlights
ETF Volume
US ETF turnover rose by 1.8% to US$56.5bn in the previous week. Turnover in the S&P 500 SPDR ("Spider") was US$18.8bn. The PowerShares QQQ Nasdaq 100 had turnover of US$4.0bn followed by the Direxionshares Financial Bull 3X Shares with turnover of US$2.7bn.
There were four new ETFs launched in the previous week. State Street GA, Emerging Global Shares, AdvisorShares Trust and ALPS Fund Services Inc launched one new ETF each. All these ETFs are listed on NYSE Arca.
In the previous week, average daily turnover in the Large Cap, Leveraged, US Sector and global regional products was US$24.4bn (0.4%), US$8.6bn (3.6%), US$8.4bn (5.7%) and US$3.8bn (4.1%) respectively.
Among the Emerging country ETFs, iShares MSCI Brazil ETF turnover was US$846m followed by the iShares FTSE/Xinhua China ETF with turnover of US$836m. In non-US developed market flows, iShares MSCI Japan had turnover of US$300m. In non-domestic regional flows, emerging market turnover was US$2.6bn and developed markets regional flows EAFE had turnover of US$1.1bn.
Assets under Management (AUM) Total assets under management for equity based ETFs rose by 1.8% in the previous week, AUM were US$547bn.
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Deputy Treasury Secretary Neal S. Wolin Remarks to Financial Services Roundtable
September 24, 2009--Thank you, John, for that kind introduction. Good afternoon, everyone, and thanks for the opportunity to be with you today.
This is, I think, a particularly important time for you to be gathering – and a particularly opportune moment for me to talk with you about some of the reforms that the Administration has proposed to strengthen our financial system.
One year ago tomorrow, Washington Mutual was closed by the FDIC – the largest U.S. bank failure ever. And of course, it was just over a year ago that Lehman Brothers filed for bankruptcy. In the panic that followed, our financial system nearly ground to a halt.
A swift response prevented a truly catastrophic collapse. But last September's events revealed deep weaknesses in our financial system.
It did not take long for the financial contagion to infect the real economy. When President Obama took office, America's growth rate had hit negative 6.3 percent, and monthly job losses had reached 750,000 - the worst in decades.
There are indications that we have moved back from the financial brink and are headed toward economic recovery. Important parts of the financial system are back to functioning on their own. Some of the damage to people's savings has been repaired. We have taken the first steps towards reducing the government's direct involvement in the system and reducing the risks that taxpayers are bearing.
But we cannot ignore the urgent need for action: our regulatory system is outdated and ineffective, and the weaknesses that contributed to the financial crisis persist. The progress of recovery must not distract us from the project of reform.
United States Commodity Funds Lists United States Short Oil Fund, LP on NYSE Arca
September 24, 2009-- NYSE Euronext (NYX) announced that its
wholly-owned subsidiary, NYSE Arca, today began trading the United
States Short Oil Fund, LP, sponsored by United States Commodity Funds
LLC, under the ticker symbol “DNO”. This is the sixth United States
Commodity Funds LLC exchange traded vehicle to list on NYSE Arca.
he investment objective of the Fund is to have the changes in
percentage terms of its units’ net asset value inversely reflect the
changes in percentage terms of the spot price of light, sweet crude oil
delivered to Cushing, Oklahoma, as measured by the changes in the price
of a designated benchmark futures contract on light, sweet crude oil as
traded on the New York Mercantile Exchange, less the Fund’s expenses.
For more details, see the Fund’s prospectus and other information at www.unitedstatescommodityfunds.com.
"We are pleased to expand our relationship with United States Commodity
Funds," said NYSE Euronext Executive Vice President, Exchange Traded
Funds and Indices, Lisa Dallmer. "Today's listing demonstrates NYSE
Euronext's growing breadth of issuer relationships and commitment to
bringing some of the most uniquely designed funds to the market."
Assistant Secretary Allison Written Testimony Before Senate Banking Committee.
September 24, 2009--Chairman Dodd, Ranking Member Shelby and members of the Committee, thank you for the opportunity to testify today. As we approach the one-year anniversary of the Troubled Assets Relief Program or TARP, I welcome this chance to update you about the progress we have made in restoring our financial stability.
A year ago, we were in the midst of one of the worst periods in our financial history. Fannie Mae and Freddie Mac were taken into federal conservatorship; Lehman Brothers went bankrupt and AIG nearly followed; Wachovia, Washington Mutual and Merrill Lynch were sold in distress; and weakness at a prominent mutual fund sparked a dangerous "run" on money market mutual funds. Credit markets froze as banks refused to lend, even to one another. Immediate, strong action was needed to avoid a complete meltdown of the system.
On October 3, 2008, Congress rose to this challenge by passing the Emergency Economic Stabilization Act of 2008. With the leadership in particular of many of you on this Committee, Congress recognized the need to take difficult but necessary action and gave the Treasury Department unprecedented authority to stabilize the U.S. economy by creating TARP.
Policy interventions executed last Fall by the Treasury Department and the federal banking regulators, succeeded in achieving the critical, but narrow objective of preventing a catastrophic collapse of our financial system. But when President Obama took office, the financial system remained extremely fragile and the Administration faced a rapidly evolving set of grave challenges.
In January 2009, what we faced was no longer just a financial crisis; it was a full-blown economic crisis. In January alone, 741,000 Americans lost their jobs, the largest single month decline in 60 years. Home foreclosures were increasing at a rapid rate. Businesses and families were struggling to find credit. It was feared that those banks that remained standing had too little capital and too much exposure to risky assets. Secondary markets for credit had essentially come to a halt; and liquidity in a broader range of securities markets had fallen sharply. In a matter of three months, American families had lost $5 trillion in household wealth.
ISE Introduces Dual Currency Conventions for ISE FX Options®
September 23, 2009--The International Securities Exchange (ISE) today
announced that dual currency conventions are now available for four currency pairs in its portfolio
of ISE FX Options. The “in US$” currency convention, typically used in the FX spot market, is
now available alongside ISE’s USD-based currency convention for options on the Australian
dollar, British pound, Euro and New Zealand dollar. The ISE Spot EURUSD (Symbol: EUU), ISE
Spot GBPUSD (Symbol: GBP), ISE Spot AUDUSD (Symbol: AUM) and ISE Spot NZDUSD
(Symbol: NDO) began trading on September 22, 2009. Timber Hill is serving as the Primary
Market Maker for these new products.
“We are excited to expand our ISE FX Options product suite with the introduction of dual
currency conventions,” said Kris Monaco, ISE’s Director of New Product Development. “Our new
FX Options products will appeal to a broad range of FX market participants because it aligns
them more closely with the needs of the OTC institutional market while also providing additional
choice and flexibility for individual investors to hedge their currency exposure risk.”
ISE currently lists FX options on nine currency pairs. The USD-based, or “per US$,” currency convention is available for all nine pairs and allows investors to express their views on the strength or weakness of the U.S. dollar relative to global currencies while adopting the trading strategies they currently use for equity and index options. The “in US$” currency convention, which is the inverse of the USD-based convention, is the traditional convention used in the FX spot market.
As exchange-listed securities, ISE FX Options can be easily accessed through most major brokerage accounts that are approved for trading equity and index options. These products are cash-settled and have European style exercise.
For more information, please visit
www.ise.com/fx.
