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Remarks of Chairman Gary Gensler, OTC Derivatives Regulation, George Washington University Law School Symposium
October 23, 2009-Good morning. It is a pleasure to be with you today at one of the defining moments in our nation’s financial history. I’d like to thank Professor Mitchell for that kind introduction and George Washington University Law School for inviting me.
One year ago, the financial system failed the American public. The financial regulatory system failed the American public.
Congress responded swiftly to the crisis and committed more than $700 billion of taxpayer money to rescuing the financial industry – without which the financial system never would have stabilized. The crisis was not isolated to Bear Stearns, Lehman Brothers or AIG. It threatened the savings and livelihoods of every American. Let us recall, the financial bailout was only a means of getting a sinking ship back to port. It is now our responsibility to fix the ship before it can set sail again. We must ensure that this type of failure never threatens our nation again.
I speak to you today as someone who spent half my adult life working on Wall Street. I worked with talented individuals from around the world who operated at the highest levels of professionalism. The industry plays a fundamental role in pricing and allocating capital and risk in our economy. But being talented and working in such a critical industry doesn’t mean that individuals can’t make mistakes or that the system is flawless. The crisis eased only through strenuous effort and some considerable good fortune.
Now we must ensure that the risks generated by the financial sector are never allowed to push us so close to the brink again. Some may accuse us of overreacting and overreaching. But the worst financial crisis in 80 years demands the most comprehensive regulatory reform in generations
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Source: CFTC.gov
DB Index Research -- Weekly ETF Reports -- US
October 22, 2009-Highlights
ETF Volume
US ETF turnover declined by 1.1% to US$58.4bn in the previous week. Turnover in the S&P 500 SPDR ("Spider") was US$19.0bn. The PowerShares QQQ Nasdaq 100 had turnover of US$4.3bn followed by the iShares MSCI Emerging Markets with turnover of US$2.8bn.
There were no new ETFs launched in the last week.
In the previous week, average daily turnover in the Large Cap, US Sector Leveraged and global regional products was US$24.9bn (-0.9%), US$9.0bn (-1.7%), US$8.1bn (-3.5%) and US$4.3bn (3.4%) respectively.
Among the Emerging country ETFs, iShares MSCI Brazil ETF turnover was US$1,197m followed by iShares FTSE/Xinhua China ETF with turnover of US$796m. In non-US developed market flows, iShares MSCI Japan had turnover of US$315m. In non-domestic regional flows, emerging market turnover was US$3.1bn and developed markets regional flows EAFE had turnover of US$1.0bn.
Assets under Management (AUM)
Total assets under management for equity based ETFs rose by 3.4% in the previous week, AUM were US$574.5bn.
To request a copy of the report click here
Source:Aram Flores and Shan Lan -DB Index Research
Agency's First-Ever Web Site Devoted Exclusively to Investor Education
October 22, 2009--The Securities and Exchange Commission today launched its first-ever Web site devoted exclusively to investor education, providing investors with in-depth information and "top tips" on how to invest wisely, plan for the future, and avoid being scammed.
By visiting www.investor.gov, investors can access information in a user-friendly format that is specifically tailored to their needs. The site includes sections specifically for those just getting started investing, for those saving for a child's education, and for those planning for retirement. It also has a detailed "Seniors Care Package" section for senior citizens and caretakers.
In a welcome video on the new site, SEC Chairman Mary Schapiro says, "Investing information is available from thousands of online resources — some good, some not so good. Through Investor.gov, we are adding our own online voice to provide investors with unbiased and factual investing information."
Chairman Schapiro adds, "You'll find resources that can help you analyze your current holdings or even check the background of a registered financial professional."
Investor.gov also offers a section exclusively in Spanish, targeting the millions of Spanish-speaking investors in the United States. The "En Español" portion presents information about what to do if an investor feels that he or she has been a fraud victim, as well as a Spanish-language podcast explaining the history and functions of the SEC.
The site will be further enhanced with additional investor education resources in the coming weeks and months.
"Investor.gov will help you if you are invested in the market, are considering investing, or care for a relative who has retirement savings," said Lori Schock, Director of the SEC's Office of Investor Education and Advocacy. "Investor.gov provides an extensive collection of investor education materials, tools, calculators, checklists, as well as valuable investor alerts."
Source: SEC.gov
Toronto Stock Exchange And TSX Venture Exchange Head To China To Promote Canada’s Public Equity Capital Markets
October 22, 2009--Toronto Stock Exchange and TSX Venture Exchange's 2009 Fall Canadian Public Equity Markets China Roadshow kicks off today in Beijing, China. The goal of the Roadshow, which also includes visits to Xi'an on October 26 and Suzhou on October 28, is to highlight how China-based companies can benefit from listing on the Canadian equity exchanges.
"Toronto Stock Exchange and TSX Venture Exchange provide unique opportunities for Chinese companies to access North American capital," said Ungad Chadda, Senior Vice President, Toronto Stock Exchange. "Our exchanges promote a strong growth culture that is ideal for emerging companies and we want to ensure Chinese companies are aware of our strengths."
Toronto Stock Exchange and TSX Venture Exchange are world leaders in resource equities and small-to-mid-cap companies, and are important listing destinations for Chinese companies. As at September 30, 2009, there were 47 Chinese companies listed on the Exchanges with a total market capitalization of C$6.9 billion. Six new Chinese companies have listed so far in 2009.
The Roadshow will include seminars, panel discussions, presentations from Canadian lawyers, auditors and investment bankers, and one-on-one meetings with Chinese companies. For more information, please visit www.tmx.com/china.
Source: TMX
SEC to Hold Small Business Capital Formation Forum on November 19 "Since 1982, this annual event has served as an important way for the SEC and its staff to interact with the small business community and exchange ideas about how best to improve small business capital formation," said Gerry Laporte, Chief of the SEC's Office of Small Business Policy.
The all-day forum will begin at 9 a.m. ET, and roundtable sessions will be webcast on the SEC's Web site. During the breakout group sessions in the afternoon, participants will work together to formulate specific policy recommendations. The breakout group sessions will not be webcast, but those who cannot attend in person can still participate through a telephone conference call. Those wishing to participate in a forum breakout group, whether in person or by telephone conference call, need to register online by November 16, 2009.
The SEC is looking for suggestions on specific topics to be discussed at the forum and for recommendations to be considered by the forum breakout groups. Suggestions and recommendations can be e-mailed to the SEC's Office of Small Business Policy at SmallBusiness@sec.gov. Questions about the forum also may be sent to that e-mail address, or call (202) 551-3460 for more information. The Special Master for TARP Executive Compensation Issues First Rulings
1. Reform Pay Practices for Top Executives to Align Compensation With Long-Term Value Creation and Financial Stability
Reject cash bonuses based on short-term performance, as required by statute, in favor of company stock that must be held for the long term
Restructure existing cash "guarantees" into stock that must be held for the long term
2. Significantly Reduces Compensation Across the Board
Average cash compensation down by more than 90 percent
Approved cash salary limited to $500,000 for more than 90 percent of relevant employees
Average total compensation down by more than 50 percent
Exceptions where necessary to retain talent and protect taxpayer interests
3. Require Salaries to Be Paid in Company Stock Held Stock Over the Long Term
Stock is immediately vested, requiring executives to invest their own funds alongside taxpayers read more Financial Services Committee Votes to Create the Consumer Financial Protection Agency
A summary of the bill, which was approved by a vote of 39-29. The committee today also defeated a large number of Republican amendments intended to prevent or weaken the CFPA.
“The Committee vote today is a rifle shot at abusive financial practices, not a shotgun blast that would hit community banks making an honest living from fair lending practices. It’s no surprise that the lenders with the worst practices are still fighting tooth and nail against this bill. The last thing they want is to have to make an honest living,” said Rep. Brad Miller (D-NC).
“Protecting consumers is a must in any new financial regulatory system, and the Consumer Financial Protection Agency will help make that happen. I commend Chairman Frank for his leadership on these issues, and I look forward to working with him and other Members as we move forward in the process to improve not only CFPA, but the rest of the financial regulatory reform package so we can strengthen protections for all consumers, investors and taxpayers,” said Rep. Dennis Moore (D-KS).
“We need a brand new agency with consumer protection as its sole mission. A Consumer Financial Protection Agency that looks after the interests of consumers will also benefit responsible lenders and safeguard the safety and soundness of our financial system,” said Rep. Keith Ellison (D-MN).
Currently, consumer protection rule-making and authority is spread across several different agencies, all of which have failed repeatedly to use the tools provided by Congress to protect Americans. H.R. 3126 addresses this inaction by transferring consumer protection authority from the Federal Reserve and other banking regulators to the CFPA. The consolidation of these powers at the CFPA also ensures that financial firms will no longer be able to shop around for the weakest regulator to supervise their products.
In addition, the agency will closely monitor the marketplace for any new financial products or services that could potentially harm consumers as well as the larger economy. Once the agency identifies these threats or abuses, it will have the power to write rules that can regulate, restrict or ban them. It will also have the power to establish guidelines so that companies issue clear and fair disclosures to customers on products such as credit cards and mortgages.
For more information on Summary of H.R. 3126 Assistant Secretary Barr before the House Judiciary Committee The topic before the committee today is central to the task of reform. Just over a year ago, the collapses of Washington Mutual, Wachovia, and Lehman Brothers, and the extraordinary interventions in AIG, severely tested our collective ability to respond to the financial crisis. In the panic that followed, our financial system nearly ground to a halt.
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 741,000 - 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 both reducing the government's direct involvement in the financial 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. Our citizens are paying the price everyday for the failures in our financial system. The progress of recovery must not distract us from the project of reform.
The Administration has put forward comprehensive reforms and we are working closely with Congress to enact legislation by the end of this year.
Our goals are simple: to give responsible consumers and investors the basic protections they deserve; to lay the foundation for a safer, more stable financial system, less prone to panic and crisis; and to safeguard American taxpayers from bearing risks that ought to be borne by shareholders and creditors.
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Allison Written Testimony before the Congressional Oversight Panel
One year ago, we were in the midst of one of the worst periods in our financial history. Immediate, strong action was needed to avoid a complete meltdown of the financial system.
On October 3, 2008, Congress passed the Emergency Economic Stabilization Act of 2008, recognizing the need to take difficult but necessary action and giving the Treasury Department unprecedented authority to stabilize the U.S. economy by creating TARP.
The actions of the Treasury Department under TARP last fall must be viewed together with many other actions taken by the government to address the crisis, including Treasury's Money Market Mutual Fund Guarantee Program, the Federal Reserve's liquidity programs that support both financial institutions and the commercial paper market, and the FDIC's Temporary Liquidity Guarantee Program. These efforts collectively succeeded in preventing a catastrophic collapse of our financial system. However, 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 America faced was no longer just a financial crisis; it was a full-blown economic crisis. In January alone, we lost 741,000 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. Overall, American families had lost $10 trillion in household wealth.
In short, the economy was in a free fall and there was increasing concern we were headed towards a second Great Depression. Christina Romer, the Chair of the President's Council on Economic Advisors, recently gave a speech outlining just how close we came to a second Great Depression. She noted that the decline in household wealth from December 2007 to December 2008 was 17% - five times the decline that occurred in 1929.
The Administration confronted this situation by taking forceful action on several fronts. A comprehensive strategy was put in place to stabilize the financial system and the housing market, to stimulate economic activity, and to provide help to those in most need. We still have a way to go before complete recovery takes hold, but we have stepped back from the brink. read more
Setback for US crackdown on oil speculation read more Thomson Reuters and Alpha to Address Market Data Fragmentation in Canadian Equities Market
The new suite of services will allow traders to see share prices offered across the various exchanges and alternative trading facilities in Canada, including Alpha ATS, Pure, Chi-X and the TMX Group. Thomson Reuters feed handlers will be placed adjacent to most information sources including Alpha Trading Systems, providing market data access at the lowest possible latency. Clients will be able to access all best bid and offer data from and across all contributing marketplaces. In addition they will have full order book access attributed by dealer and marketplace. Furthermore the Thomson Reuters offering will include time and sales data from the sources.
Jon Robson, President of Enterprise, Thomson Reuters, said: “In today’s evolving market, accessing a complete real-time view of liquidity is a challenge. This is a significant breakthrough for the Canadian marketplace, delivering a consolidated view of all liquidity across multiple venues, enabling each individual trader to operate with absolute confidence that they are trading at optimum levels for their clients. Well managed consolidated data is a key means to help drive efficient trading and market liquidity. We are delighted to be working with Canadian participants in Alpha to provide this benchmark standard for the market.”
“Access to adequate consolidated market data is an issue of major concern in the Canadian marketplace. Without it, market participants cannot discover and exploit the best trading opportunities. Working in close collaboration with Thomson Reuters will enable us to provide the Canadian marketplace with a competitive solution that is driven by the industry and addresses key concerns around cost, reliability, low-latency and quality,” noted Jos Schmitt, CEO of the Alpha Group. Speech of Commissioner Bart Chilton before the Argus Media Summit, Houston, Texas The Experiment Before we get too much into the meat of the remarks, I’d like to share a survey. Abbreviated, it consists of five questions that are to be ranked from one to five. If you disagree strongly with the statement, record a 1. If you agree strongly, record a five. If you are neutral, record a three, etc. There are no right or wrong answers, no right or wrong numbers. 1. “Most people are basically good and kind.” 2. “Never tell anyone the real reason you did something unless it is useful to do so.” 3. “Generally speaking, people won’t work hard unless they are forced to do so.” 4. “One should take action only when sure it is morally right.” 5. “The best way to handle people is to tell them what they want to hear.”1 Tally your numbers and remember the total. We will circle around to it again, I promise, and think you will find it interesting. Renaissance Men We are fascinated with Renaissance men. They were those iconic figures that appeared to be masters of many disciplines. They sailed to foreign shores, hunted exotic animals and met those of other cultures, learning and teaching alike. view more Speech By SEC Commissioner Luis A. Aguilar: Market Structure Reform Should Be Guided By Values Of Fairness, Transparency, and Efficiency
Fortunately, Congress foresaw that the Commission would need to effectively oversee dramatic changes in the markets. Thus, when Congress empowered the Commission to regulate the National Market System, it provided us with broad authority to regulate competition among brokers, dealers, exchanges, and other trading venues, and it gave us a clear standard to uphold: “the public interest, the protection of investors, and the maintenance of fair and orderly markets.” This broad mandate enables the Commission to act now — motivated by the right principles — without having to ask Congress for more authority. read more
Standard & Poor's Announces Changes In The S&P/TSX Canadian Indices
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.
SEC Issues Proposals to Shed Greater Light on Dark Pools "We should never underestimate or take for granted the wide spectrum of benefits that come from transparency, which plays a vital role in promoting public confidence in the honesty and integrity of financial markets," said SEC Chairman Mary Schapiro. "Today's focus on dark pools is just one part of our broader ongoing review of how the equity markets are structured."
The number of active dark pools transacting in stocks that trade on major U.S. stock markets has tripled since 2002. Given this growth of dark pools, a lack of transparency could create a two-tiered market that deprives the public of information about stock prices and liquidity.
To make trading through dark pools more transparent, the SEC's proposals generally would require that information about an investor's interest in buying or selling a stock be made available to the public instead of just a select group operating with a dark pool. The proposals also would require that dark pools publicly identify that it was their pool that executed the trade.
"Today's proposals are intended to prevent the development of a two-tiered market in access to pricing information, further promote displayed liquidity, and enhance transparency of trade information," said James Brigagliano, Co-Acting Director of the Division of Trading and Markets.
The SEC's proposals address three specific concerns related to dark pools:
The first proposal would require actionable Indications of Interest (IOIs) — which are similar to a typical buy or sell quote — to be treated like other quotes and subject to the same disclosure rules.
The second proposal would lower the trading volume threshold applicable to alternative trading systems (ATS) for displaying best-priced orders. Currently, if an ATS displays orders to more than one person, it must display its best-priced orders to the public when its trading volume for a stock is 5 percent or more. Today's proposal would lower that percentage to 0.25 percent for ATSs, including dark pools that use actionable IOIs.
The third proposal that would create the same level of post-trade transparency for dark pools - and other ATSs - as for registered exchanges. Specifically the proposal would amend existing rules to require real-time disclosure of the identity of the dark pool that executed the trade.
In its proposals, the Commission is seeking public comment and data on certain issues relating to dark pools. Dark pools of liquidity are one of several issues that the Commission is currently considering as part of its broad review of equity market structure.
Public comments on today's proposal must be received by the Commission within 90 days after its publication in the Federal Register.
The full text of the proposed rule amendment will be posted to the SEC Web site as soon as possible. Fact Sheet About Dark Pools
October 22, 2009-- The Securities and Exchange Commission today announced that it will hold its annual forum on small business capital formation on November 19 at its Washington, D.C., headquarters.
The SEC forum will include both roundtable and breakout group sessions that are expected to focus on the economic recovery and the SEC's "accredited investor" definition for private and limited offerings. The roundtable participants and full agenda for the forum will be announced at a later date and posted on the SEC Web site.
Source: SEC.gov
October 22, 2009--Today, the Special Master for TARP Executive Compensation Kenneth R. Feinberg released determinations on the compensation packages for the top executives at firms that received exceptional TARP assistance. Under the Emergency Economic Stabilization Act (EESA) as amended in 2009, the Special Master has a mandate to review all forms of compensation for five most senior executive officers and the next 20 most highly compensated employees at the seven firms that received exceptional TARP assistance (AIG, Citigroup, Bank of America, Chrysler, GM, GMAC and Chrysler Financial).
The determinations announced today for the top 25 most highly paid at the seven firms receiving exceptional assistance:
Source: U.S. Department of the Treasury.
Committee strengthens regulation to protect consumers from deceptive and abusive financial products
October 22, 2009-- Today, the Financial Services Committee approved legislation that will establish a new, independent federal agency solely devoted to protecting Americans from unfair and abusive financial products and services. As called for by President Obama, the Consumer Financial Protection Agency (CFPA) represents one of the most significant efforts by Congress to bring about long overdue financial reform and ensure that Americans are able to take advantage of capitalism’s benefits without falling victim to industry abuses. As last year’s crisis demonstrated, deceptive financial products – such as predatory mortgages and hidden credit card fees – not only damage the livelihoods of American families, but can destabilize the entire economy.
The creation of the CFPA will finally put the interests of consumers at the forefront of the federal government’s attention and enforcement efforts. As outlined in H.R. 3126, the agency’s mission will be to promote a fair and transparent marketplace for financial products and to safeguard the American public from abusive industry tactics. In an unprecedented move, the bill also extends federal supervision to a host of financial industries, such as payday lenders and mortgage originators, which have long escaped oversight.
Source: House Committe on Financila Services
October 22, 2009--Thank you Chairman Conyers, Chairman Cohen, Ranking Member Smith, and Ranking Member Franks. I appreciate the opportunity to testify today.
A swift response prevented a truly catastrophic collapse. But last September's events revealed deep weaknesses in our financial system.
Source: U.S. Department of the Treasury.
October 22, 2009--Chair Warren, Members of the Panel, thank you for the opportunity to testify today regarding Treasury's efforts under the Emergency Economic Stabilization Act of 2008 (EESA) and the Troubled Asset Relief Program (TARP). You have asked me in particular to describe the progress of our efforts and to assess the effectiveness of our strategy in stabilizing the financial sector. You have also asked me to discuss the findings and recommendations of your recent report on our foreclosure mitigation efforts. I am happy to address these subjects and look forward to engaging in a dialogue with you after my testimony.
TARP - Progress to Date and Effectiveness
Source: U.S. Department of the Treasury.
October 21, 2009--US plans for an aggressive crackdown on energy speculation are in danger of unravelling, with leaders at the US commodity regulator raising doubts about proposed reforms.
Two of the Commodity Futures Trading Commission’s five commissioners have voiced worries that proposals to cap investors’ holdings in oil and commodities futures could drive trading from US exchanges.
Source: FT.com
October 21, 2009--Thomson Reuters and Alpha today announced a new suite of initiatives to address market data fragmentation. Leveraging the two organizations’ combined expertise in the Canadian markets and Alpha’s technology facilities, Thomson Reuters will provide an independent consolidated tapeand hosted direct feeds.
The fully integrated and enhanced consolidated data offering will be derived from order and trade data from the various Canadian equity marketplaces, and will include access to pre- and post-trade market data.
Source: Thomson Reuters
October 21, 2009-- Thank you for that kind introduction. It is a pleasure to be with you today. I thank Argus for bringing us all together. There is a lot going on in energy markets and in financial markets. There also is a lot going on in government aimed at affecting markets in a positive way.
Passing financial regulatory reform this year is key to ensuring market and economic integrity. The House Financial Services Committee approved legislation last week addressing financial regulatory reform. The House Agriculture Committee, which passed a bill back in February, is marking-up a revised version of that legislation today. Numerous conversations took place this past week on the Senate side about moving forward expeditiously. While there are myriad critical issues facing Congress and the Administration, I believe that regulatory reform is too important for markets, for traders, consumers and the overall economy. It needs to be done. Concurrently, the CFTC and other financial regulators need to continue to move forward thoughtfully on issues such as position limits and hedge exemptions.
Source: CFTC.gov
October 21, 2009-Thank you, Chairman Schapiro.
As you have heard today, the Commission is undertaking a comprehensive review of market structure. It is important that this review be done with investors in mind. Investors, particularly long-term investors, need to know that the Commission will vigilantly oversee how securities are traded — and that it will step in and take action when markets lack fairness, transparency, and efficiency.
Today’s proposals address just one of the many market structure issues the Commission must evaluate in the coming months. Among the others are flash orders, high frequency trading, co-location, and direct market access (also known as sponsored access). Recent technological changes in the markets may have spawned their own glossary of new terms, but it is important that we evaluate these changes according to our long-standing principles, starting with the protection of investors. Analyzing these market structure issues and the suitable response will require a great deal of work, and the bulk of that will be done by our staff. To all of you who have worked so hard, I too want to recognize you. I also want to thank you, in advance, for the labors to come.
Source: SEC.gov
October 21, 2009--Standard & Poor's Canadian Index Operations announces the following index changes:
The shareholders of Canadian Hydro Developers, Inc. (TSX:KHD) have accepted the $CDN5.25 cash per share offer from TransAlta Corporation (TSX:TA). Canadian Hydro Developers will be removed from the S&P/TSX Composite and Capped Composite, the S&P/TSX Equity and Capped Equity, the S&P/TSX Completion and Equity Completion, the S&P/TSX SmallCap and Equity SmallCap and the S&P/TSX Capped Utilities Indices.
The transaction will be effective after the close on Wednesday, October 28, 2009.
Source: Standard & Poors
Oct. 21, 2009 — The Securities and Exchange Commission today voted unanimously to propose measures intended to increase transparency of dark pools so investors get a clearer view of stock prices and liquidity.
Dark pools are essentially private trading systems in which participants can transact their trades without displaying quotations to the public. The largest dark pools are sponsored by securities firms primarily to execute the orders of their customers and proprietary orders of the firms.
Source: SEC.gov