Americas ETP News
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Bitcoin: Current US Regulatory Developments
November 26, 2013--In recent months Bitcoin has become a hot topic in the financial, regulatory and legal
community and has received widespread attention from newspapers such as The Wall Street Journal and The New York Times. Katten Muchin Rosenman LLP has been actively working on Bitcoin-related matters for the past year and has become a legal thoughtleader
in the area.
As such, we would like to update our clients and friends on the current
US regulatory developments regarding Bitcoin.
Bitcoin was introduced in 2009 and has produced a dynamic new economy composed of merchants, users, service providers and start-up enterprises. Over the past 12 months the value of bitcoins has appreciated by more than 6000 percent, and Bitcoin has achieved a current market capitalization of over $8 billion. In addition to gaining traction as a medium of exchange and a unit of account, Bitcoin has caught the attention of members of the financial industry, who are beginning to recognize Bitcoin for its potential as a short- and/or long-term investment opportunity. For example, the proposed Winklevoss Bitcoin Trust is designed to be the first exchange-traded fund product based in Bitcoin.1
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Source: Katten Muchin Rosenman, LLP
ISE Gemini Completes Fourth Successful Product Rollout: Approximately 1,000 Products Listed
November 26, 2013--ISE Gemini announced today that it has completed the rollout of 302 additional products, representing the fourth successful product rollout since launch.
ISE Gemini now lists 996 total products and has an equity options market share of 2.9 percent through the month of November, excluding dividend trades.
ISE Gemini Notable Milestones:
August 5, 2013: First day of trading with six symbols listed
August 26, 2013:Becomes fastest new exchange to surpass two percent market share
August 28, 2013: Surpassed one million total contracts traded
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Source: ISE Gemini
CFTC Staff Issues Time-Limited No-Action Letter on the Applicability of Transaction-Level Requirements in Certain Cross-Border Situations
November 26, 2013--The Commodity Futures Trading Commission's (CFTC) Divisions of Swap Dealer and Intermediary Oversight (DSIO), Clearing and Risk, and Market Oversight (collectively, the Divisions) issued a time-limited no-action letter today that provides relief to swap dealers (SDs) registered with the CFTC that are established
under the laws of jurisdictions other than the United States (Non-U.S. SDs) from certain transaction-level requirements under the Commodity Exchange Act.
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Source: CFTC.gov
Global X Funds Lists Three ETFs on Colombian Stock Exchange
November 26, 2013--Global X Funds, the New York-based provider of exchange-traded funds (ETFs), announced it is listing today three ETFs on Bolsa de Valores de Colombia, the Colombian stock exchange.
This marks the first time that a foreign ETF is listed on the Colombian exchange.
The three ETFs are the Global X FTSE Colombia 20 ETF (NYSE Arca: GXG), the Global X Guru Index ETF (NYSE Arca: GURU), and the Global X SuperDividend™ ETF (NYSE: SDIV).
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Source: Global X
iShares Announces Index Change for Ireland ETF
November 26, 2013--BlackRock, Inc. announced today that its iShares Exchange Traded Funds (ETFs) business, the world's largest manager of ETFs(1), will change the investment objective of the iShares MSCI Ireland Capped ETF to track a new underlying index effective November 27, 2013.
The new index is the MSCI All Ireland Capped Index which includes companies that are domiciled in or have significant business in Ireland. The changes are being implemented in order to increase the fund's diversification. The Fund's name and trading symbol will not change.
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Source: MarketWatch
SPDR University-What's Yellen Got to Do With It?
November 25, 2013--Markets were on the move well before the debt ceiling debacle and subsequent
16-day US government shutdown. The Federal Reserve's unexpected decision in late September to delay tapering the $85 billion of assets they purchase each month was the real factor. By holding back, the Fed seemingly acknowledged that the extent of
fiscal uncertainty made it difficult to remove any stimulus. Continuing QE3 caused US Treasuries to rally, the US dollar to weaken and knock-on effects that continue to reverberate across markets.
Thus, it's clear that while politicians remain a steady source of news, the future path of monetary policy should actually be of greater interest to investors.
CEILINGS, SHUTDOWNS & TAPERS
When it's all said and done, the government shutdown will
likely have only a minor impact on fourth quarter GDP. The
greater question is what impact this will have on confidence
across corporations, consumers and investors. Recent data
suggests that economic confidence was negatively impacted by Washington's lack of resolve. Markets, however, seemed to have shrugged off the turmoil relatively easily, but that may not
have been the case if monetary policy conditions weren't as
accommodative. So, President Obama's decision to nominate Janet Yellen to succeed Ben Bernanke as the Chairman of
the Federal Reserve amid the over two-week government shutdown warrants further attention.
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Source: spdrs.com.
Stocks: Nasdaq crosses 4000, can't stay there
The Nasdaq reclaims the 4000 level in intraday trading more than 13 years after it last closed above that key milestone
November 25, 2013-- The Nasdaq composite topped 4000 in intraday trading Monday for the first time since September 2000, a level that most investors thought they would never see again after it crashed 78% to 1114 in the 2000-02 bear market.
But the tech-oriented index couldn't maintain that altitude, settling at 3995 at the close--still a gain of 3 points, or 0.1%, for the day. The Dow Jones industrial average also notched a modest gain--and set a new closing high --while the S&P 500 ended slightly lower.
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Source: USA Today
DB-Synthetic Equity & Index Strategy-North America-Equity ETPs attract $7.0bn in fresh new cash
November 25, 2013--Data in this report is as of Fri, Nov 22
Market and Net Cash Flows Review
Markets were mixed during last week. The US (S&P 500) edged higher by 0.37%; while, outside the US, the MSCI EM (USD) rose by 0.42% and the MSCI EAFE (in USD) ended flat. In the meantime, performance was mixed across US sectors. The Financials (+1.69%) and Healthcare (+1.63%) sectors recorded the biggest weekly gains; while, Utilities (-1.78%) and Technology (-0.53%) were the worst performing sectors; The DB Liquid Commodity Index rose by 0.79%; meanwhile, the Agriculture sector (DB Diversified Agriculture Index), Gold and Silver prices fell by 0.15%, 3.61% and 4.53%, respectively; while, the WTI Crude Oil rose by 1.07%.
Moving into other asset classes, the 10Y US Treasury Yield rose 4 bps ending at 2.75%. Last but not least, Volatility (VIX) rose by 0.57% during the same period.
The total US ETP flows from all products registered $6.0bn (+0.4% of AUM) of inflows during last week vs. $1.3bn (+0.1%) of inflows the previous week, setting the YTD weekly flows average at +$3.3bn (+$157.3bn YTD in total cash flows).
Equity, Fixed Income and Commodity ETPs experienced flows of +$7.0bn (+0.5%), -$0.2bn (-0.1%) and -$0.9bn (-1.3%) last week vs. +$1.9bn (+0.1%), -$0.4bn (-0.2%) and -$0.2bn (-0.3%) in the previous week, respectively.
Among US sectors, Consumer Discretionary (+$0.7bn, +6.1%) and Financials (+$0.6bn, +1.0%) received the top inflows, while Utilities (-$0.3bn, -4.3%) and Telecommunication Services (-$0.0bn, -0.4%) experienced the largest outflows.
Top 3 ETPs & ETNs by inflows: IWM (+$2.0bn), EFA (+$0.8bn), VWO (+$0.5bn)
Top 3 ETPs & ETNs by outflows: SPY (-$0.7bn), DVY (-$0.6bn), GLD (-$0.5bn)
New Launch Calendar: US Financial sector and EM short term debt
There were two new ETF listed during the previous week. Horizons added HFIN, offering exposure to the US Financial sector and potential for additional monthly income through the sell of covered call options; meanwhile, ProShares launched a new Fixed Income ETF (EMSH) which offers exposure to a diversified portfolio of short term USD emerging market bonds.
Turnover Review: Floor activity increased by 8.4%
Total weekly turnover increased by 8.4% to $274.8bn vs. $253.6bn from the previous week. However, last week's turnover level was 1.9% over last year's weekly average. Equity, Fixed Income and Commodity ETPs turnover increased by $17.2bn (++7.5%), $2.3bn (++14.2%) and $1.4bn (++20.5%) during the same period, respectively.
Assets under Management (AUM) Review: assets increased by $6.3bn
US ETP assets rose by $6.3bn (+0.4%) totaling $1.636 trillion at the end of the week. As of last Friday, US ETPs had accumulated an asset growth of +22.7% YTD. Assets for Equity, Fixed Income and Commodity ETPs moved +$8.8bn, -$0.0bn and -$2.5bn during last week, respectively.
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Source: Deutsche Bank-Synthetic Equity & Index Strategy-North America
Morgan Stanley-ETF Weekly Update
November 25, 2013--US ETF Weekly Update
Weekly Flows: $6.0 Billion Net Inflows
$154.8 Billion Net Inflows YTD
ETF Assets Stand at $1.6 Trillion, up 22% YTD
Two ETF Launches Last Week
US-Listed ETFs: Estimated Flows by Market Segment
ETFs posted net inflows for the second consecutive week ($6.0 bln in net inflows last week)
Last week's net inflows were led by International -Developed ETFs at $2.3 bln; conversely, US Dividend Income ETFs posted net outflows of $1.1 bln, the most of any category we measured
ETFs have exhibited net inflows 32 out of 47 weeks YTD
ETF assets stand at $1.6 tln, up 22% YTD; $154.8 bln net inflows YTD
2013 net inflows are ahead of last year's pace (at this point last year, ETFs had posted only $134.9 bln in net inflows)
13-week flows remain mostly positive among asset classes; combined $57.9 bln in net inflows
International - Developed ETFs generated net inflows of $22.5 bln over the last 13 weeks, the most of any category we measured; International - Developed ETFs accounted for 39% of ETF net inflows over the past 13 weeks
Commodity ETFs continue to struggle, posting net outflows of $3.6 bln over the last 13 weeks; specifically, the SPDR Gold Trust (GLD) has exhibited $2.8 bln in net outflows over the 13-week period
US-Listed ETFs: Estimated Largest Flows by Individual ETF
iShares Russell 2000 ETF (IWM) posted net inflows of $2.0 bln this past week, the most of any ETF
The iShares MSCI Japan ETF (EWJ) and the WisdomTree Japan Hedged Equity Fund (DXJ) generated a combined $750 mln in net inflows last week as investors have piled into Japan ETFs in 2013 as Japanese equities have been strong performers YTD
Two of the largest US Dividend Income ETFs, iShares Select Dividend ETF (DVY) and SPDR S&P Dividend ETF (SDY), exhibited a combined $1.1 bln in net outflows last week
Despite posting $749 mln in net outflows last week, the SPDR S&P 500 ETF (SPY) has generated $5.4 bln in net inflows over the last 13 weeks, the most of any ETF
US-Listed ETFs: ETF Dollar Volume
ETF monthly $ volume as a % of listed trading volume was essentially flat for the fourth consecutive month (27% of listed trading volume)
Over the past 5 years, ETFs peaked at 36% of listed trading volume in November 2008
ETFs traded $275 bln last week, up $22 bln from the prior week, however 7% below their 13-week average
Fixed Income ETFs accounted for only 6% of ETF $ volume last week, but make up 15% of ETF market share
US-Listed ETFs: Short Interest Data Unchanged: Based on data as of 10/31/13
The iShares 20+ Year Treasury Bond ETF (TLT) had the largest increase in USD short interest at $728 mln
TLT's shares short (30.4 mln) are at their all-time highest level
723 ETFs exhibited short interest increases while 467 experienced short interest declines over the last period
Aggregate ETF USD short interest decreased by $1.7 bln over the period ended 10/31/13
The average shares short/shares outstanding for ETFs is currently 4.3%, flat from last period
The SPDR Oil & Gas Exploration & Production ETF (XOP) eclipsed the SPDR Retail ETF (XRT) as the most heavily shorted ETF with a shares short as a % of shares outstanding of 280%
Based on multiple borrowings and the ability to continuously create new shares, shares short as a % of shares outstanding can exceed 100% (only seven ETFs exhibited shares short as a % of shares outstanding greater than 100%)
US-Listed ETFs: Most Successful Recent Launches by Assets
$6.0 bln in total market cap of ETFs less than 1-year old -Active ETFs account for 26% of market capitalization of ETFs launched over the past year, the most of any category; over the last 13 weeks, recently launched Active ETFs have generated net inflows of $385 mln
133 new ETF listings and 48 closures/delistings YTD
The top 10 most successful launches make up 49% of the market cap of ETFs launched over the past year
Eight ETF sponsors and two asset classes represented in top 10 most successful launches; we note that the representation of funds with an income orientation is currently five (down from seven at the end of the second quarter)
The db X-trackers Harvest CSI 300 China A-Shares Fund (ASHR) cracked the top 10 most successful launches over the past year with a market cap of $156 mln; ASHR is a China ETF that owns the 300 largest, most liquid stocks in the China A-share market
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Morgan Stanley
Hedged ETPs looking to move beyond currency niche
November 25, 2013--Monetary policy, volatility and interest rate regimes, among other factors, have caught the attention of money managers offering exchange-traded products.
With institutional investors now willing to expand their ETP holdings beyond market-weighted index funds to fundamental and factor-based strategies, fund sponsors have introduced more products with embedded, programmatic hedges.
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Source: Pensions & Investments
