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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
Source: ETF Securities
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.
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Source: CFTC,gov
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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Source: Aram Flores and Shan Lan -DB Index Research
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.
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Source: U.S. Department of the Treasury.
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."
Source: NYSE Euronext
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 $5 trillion in household wealth.
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Source: U.S. Department of the Treasury.
ISE Introduces Dual Currency Conventions for ISE FX Options®
September 23, 2009--The International Securities Exchange (ISE) today
announced that dual currency conventions are now available for four currency pairs in its portfolio
of ISE FX Options. The “in US$” 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.
Source: International Securities Exchange (ISE)
SIFMA’s Small Firms Chair Testifies On Need for a Federal Fiduciary Standard
September 23, 2009--The Chair of the Securities Industry and Financial Markets Association’s (SIFMA) Small Firms Committee, E. John Moloney, who is president and CEO of Moloney Securities Company today testified before the House Committee on Small Business concerning the impact of financial regulatory restructuring on small businesses and community lenders.
Moloney noted SIFMA and his own firms support financial reform, especially minimizing systemic risk, so that no firm is too big or interconnected to fail, or could pose a risk to the larger financial system. And, he noted another area where smaller firms such as his are supporting major reform that would impact nearly every American investor - the creation of a new, federal fiduciary standard.
“SIFMA has long advocated the modernization and harmonization of the disparate regulatory regimes for brokers, dealers, investment advisers and other financial intermediaries. When broker-dealers and investment advisers engage in the identical service of providing personalized investment advice about securities to individual investors, they should be held to the same standard of care,” said Moloney in prepared testimony. “The hallmark of a new federal standard should be putting investors’ interests first.”
As of August 2009, FINRA, the Financial Industry Regulatory Authority, reported that there are 4,797 registered broker-dealers. Of these, it is estimated that some 4,600 are smaller broker-dealers defined by FINRA as having 150 registered persons, or fewer. Moloney Securities is a general securities broker-dealer with 110 registered brokers and 20 support staff, with three Offices of Supervisory Jurisdiction (OSJ) located in St. Louis, Kansas City and Denver, plus nineteen additional registered branches located in fourteen states. The firm was not a TARP recipient.
For his full testimony please visit: http://www.sifma.org/legislative/testimony/pdf/John-Moloney-testimony-092309.pdf.
Source: SIFMA
Standard & Poor's Announces Changes In The S&P/TSX Venture Composite Index
September 23, 2009--Standard & Poor's will make the following changes in the S&P/TSX Venture Composite Index after the close of trading on Wednesday, September 23, 2009:
The shares of Challenger Energy Corp. (TSXV:CHQ) will be removed from the index. The shares of the company have been acquired by Canadian Superior Energy Inc. (TSX:SNG) pursuant to an Arrangement Agreement. Shareholders of the company will receive 0.51 shares of SNG for each common share held.
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.
Source: Online NBews
NYSE Euronext’s U.S. Options Penny Pilot Expansion Filing Adopted by the SEC
Adds 300 More Issues for a Total of 363 Options Issues Trading in Pennies-
Represents Approximately 85% of the Volume in U.S. Options
September 23, 2009--NYSE Euronext (NYX) today announced that its
proposal for the expansion of the Securities and Exchange Commission’s
(SEC) Penny Pilot program, filed by NYSE Arca options, has been approved
for market-wide implementation by the SEC. The approval will extend the
proposed pilot through December 31, 2010, including four quarterly
additions to the pilot consisting of 75 issues each.
Representing over 85% of the overall volume in U.S. options, this
expansion of the penny pilot offers many benefits to the investing
public, including increased transparency, improved price discovery and
reduced spreads," said Paul Finnegan, Senior Director, NYSE Euronext
U.S. Options. "By adding 300 new issues in a systematic fashion over a
defined period of time, the endorsement of NYSE Euronext's proposal to
allow for an appropriate expansion benefits the investing public while
safeguarding the integrity of industry quoting activity. We are very
pleased with the SEC’s decision and we look forward to offering our
customers the highest levels of market quality and execution choice as
this program is carefully rolled out."
Highlights of NYSE Euronext’s plan include:
· The addition of the next 300 most active issues into the program for a total of 363 issues
· The phase in of 75 issues on a quarterly basis: 10/09, 1/10, 4/10, 7/10
· Provides structure to replace delisted pilot issues on a semi-annual basis
· Excludes high priced underlying issues (>$200)
For more information on NYSE Euronext’s U.S. Options exchanges, please
visit: http://www.nyse.com/options
Source: NYSE Euronext
Secretary Geithner before the House Financial Services Committee
September 23, 2009--Chairman Frank, Ranking Member Bachus, members of the House Financial Services Committee, I am pleased to be back before you today as our Administration and this Congress work toward comprehensive reform of our financial regulatory system.
The Chairman has set an ambitious schedule of hearings that will lead to your markup of legislation and facilitate enactment this year. We have now provided more than 600 pages of legislative language, and I am aware and appreciative of the long hours you have spent working through the critical details of reform. My staff has been in constant contact with members of this committee and with your staff, and will continue to be as we work through key issues.
As you prepare to put this legislation together and we prepare to help, it might be useful to remind ourselves why we have a financial system in the first place and why we have reached this moment of decision.
Stripped of its complexities, the purpose of a financial system is to let those who want to save--whether for vacation, retirement or a rainy day--save. It is to let those who want to borrow--whether to buy a house or build a business--borrow. And it is to use our banks and other financial institutions to bring savers' funds and borrowers' needs together and carefully manage the risks involved in transfers between them.
The job of a financial system, in other words, is to efficiently allocate savings and risk.
Last fall, our financial system failed to do its job, and came precariously close to failing altogether.
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Source: U.S. Department of the Treasury.
The Options Industry Council Announces New Study Finds Collar Strategies Outperform Buy And Hold
September 23, 2009--The results of a new study examining the use of options in a collar strategy (both active and passive implementations) on the PowerShares QQQ™ exchange-traded fund (ETF) show it provides superior returns to the traditional buy and hold strategy while reducing risk by almost 65%.
The Options Industry Council (OIC) is pleased to note the study reaffirms the risk management potential of equity options, finding that during the entire 10-year study period, including the sub-periods around the tech bubble and credit crisis, collars significantly outperformed the QQQ, providing much needed capital protection.
“Loosening Your Collar: Alternative Implementations of QQQ Collars,” by Edward Szado and Thomas Schneeweis, looked at data from March 1999 to May 2009. It concluded that over the entire 122 month period the passive collar returned almost 150%, while the QQQ lost one-third of its value. The active collar outperformed both strategies and returned more than 200%.
Additionally, the study simulated a collar on a small-cap mutual fund. The return of the active mutual fund collar was four times the return of the fund, while the standard deviation was about one-third lower. The study was conducted by the Isenberg School of Management’s Center for International Securities and Derivatives Markets (CISDM) at the University of Massachusetts.
This is the third in a series of studies OIC has helped to support, studies which demonstrate the effectiveness of implementing options strategies on specific products over specific time periods covering a variety of market conditions. By supporting these studies in cooperation with CISDM, OIC remains dedicated to its mission of providing education and research to institutional investors. The study is available to all investors at www.optionseducation.org/institutional/research/pdfs/qqq_collar_study.pdf.
About OIC
OIC is an industry cooperative funded by the Boston Options Exchange, Chicago Board Options Exchange, International Securities Exchange, NASDAQ OMX PHLX, NASDAQ Options Market, NYSE Amex Options, NYSE Arca Options, and The Options Clearing Corporation. OIC was formed in 1992 to educate investors and their financial advisors about the benefits and risks of exchange-traded equity options. OIC's resources include:
The Options Industry Services Help Desk at 1-888-OPTIONS, educational Web sites at
www.OptionsEducation.org, www.OptionsEducation.org/advisor
and www.OICoptions.com, evening seminars throughout the continental United States and Canada, instructional DVDs and educational literature and software.
Source: The Options Industry Council
Deloitte Says ETFs Need to Grow Assets to Challenge Mutual Funds
September 22, 2009-With half of all Exchange Traded Funds (ETF) falling short of the $50 million minimum net assets required to maximize profitability, attracting capital will be key to remaining competitive and potentially challenging mutual funds' dominant market share, according to Deloitte's "Exchange-Traded Funds: Challenging the Dominance of Mutual Funds?" paper, released today.
"For retail investors hurt by market volatility over the last year, an ETF may be more appealing longer term than actively managed assets like mutual funds. When this perceived safety net is coupled with the tax efficiencies that are attractive to retail investors, it appears the stars may be aligning to end mutual funds' 69-year dominance," said Cary Stier, Deloitte's U.S. Asset Management Services leader. "But in order to execute on this opportunity, ETFs will have to expand investor friendly attributes beyond transparency and low costs to compete for a share of the asset influx."
According to Deloitte, several factors could enable ETFs to attract additional capital and become more profitable:
- Link to less exotic indices. Some of the best performing ETFs are linked to less exotic indices, such as commodities and equities. The data shows exotic funds, on average, have not performed as well as regular ETFs. This is not to say exotic funds haven't performed well, but exotic ETFs are difficult for regular investors to understand. In other words, the simpler, the better. Also, simpler betas are cheaper than their more exotic counterparts.
- Focus on indices with long-term appeal. There are a number of ETFs that are launched to benefit from a current market situation. Inverse financial sector ETFs, for example, profit from the ailing financial sector. However, most investors recognize that these ETFs have a limited shelf life. Being linked to an index with a long-term appeal is usually more attractive to investors, particularly retail investors.
- Increase appeal to 401(k) investors. The barrier for 401(k) funds investing in ETFs is its higher costs compared to index mutual funds. Given that 401(k) assets will probably reach $7.5 to $8.5 trillion in 2015, ETF sponsors need to make themselves 401(k) friendly to tap into this huge pool of assets that primarily invests in mutual funds.
- Become more retail-investor-friendly. When small investors buy ETFs, they incur commission costs, as well as the bid-ask spread. These costs usually make the difference between small investors putting their money in index mutual funds or ETFs. While commissions and bid-ask spread may not have a large impact on big investors, it is significant for investors who put in small but consistent sums of money. In essence, ETFs will have to maintain their 'good' characteristics but mimic index mutual funds.
- Keep it institution-friendly. The rise of ETFs is mainly attributable to institutional investors, such as hedge funds and pension funds. These funds were drawn to ETFs because of their low cost, risk diversification and efficient beta. Another reason for large investors to be drawn to certain ETFs is their strong liquidity.
- Ensure low tracking error. The tracking error is the difference between the net asset value of an ETF and its benchmark. Typically, the simpler the benchmark, the lower the tracking error. A lower tracking error is also one of the primary determinants of choosing an ETF.
To learn more about Deloitte's Exchange-Traded Funds: Challenging the Dominance of Mutual Funds, please visit http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/us_fsi_IM_ExchangeTradedFunds_061009(1).pdf.
Source: PR Newswire
CME Group Announces The Launch Of Long-Term U.S. Treasury Bond Futures - 'Ultra' Treasury Bond In Response To Customer Demand - Increased Treasury Issuance
September 22, 2009--CME Group, the world's largest and most diverse derivatives marketplace, today announced the launch of Long-Term U.S. Treasury Bond futures, or "Ultra" Treasury Bonds, beginning in early first quarter 2010. This contract will be listed with, and subject to, the rules and regulations of the CBOT.
"The Long-Term Treasury Bond futures are being launched in response to strong customer demand for a contract that mimics the duration of a 30-year Treasury bond," said Robin Ross, CME Group Managing Director of Interest Rate Products. "The Ultra Bond contract will complement our existing benchmark U.S. Treasury complex and expand the range of risk management and trading opportunities for market participants."
Deliverable securities for the new Long-Term Bond future will comprise cash Treasury bonds with at least 25 years of remaining term to maturity. By comparison, deliverable securities for the existing Treasury Bond contract are bonds with remaining terms to maturity of 15 years or more. The recent fiscal policy shift toward greater issuance of long-term bonds has enabled CME Group to launch this contract targeted at this important part of the yield curve.
In all other respects, the specifications for the Ultra Bond futures closely resemble those for the existing Treasury Bond contract. They are identical in terms of their notional value, minimum tick size, contract critical dates, and coupon. Initially, the Exchange will list three March-quarterly delivery months in the Ultra Bond futures, beginning with the March 2010 expiry. There will be no modifications to the currently listed Treasury Bond futures contract specifications.
Additional information about the Ultra Treasury Bond futures and CME Group's other interest rate products can be found at http://www.cmegroup.com/trading/interest-rates/index.html.
Source: CME Group
Julie Abbett joins IndexIQ as senior vice president
September 22, 2009-In her new role, Abbett will be responsible for helping to oversee portfolio management of
In her new role, Abbett will be responsible for helping to oversee portfolio management of IndexIQ’s growing line of alternative investment products, including the firm’s separately managed accounts business.