Americas ETP News
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Direxion to Alter 8 ETFs (BGU, ERX, TYP)
June 7, 2012--Direxion, the second-largest U.S. issuer of inverse and leveraged ETFs, announced today it will makes changes to the indexes eight of its ETFs track.
The modifications will take effect on or about June 29, 2012, Direxion said in a statement.
The Direxion Daily Large Cap Bull 3X Shares and the Direxion Daily Large Cap Bear 3X Shares will stop tracking the Russell 1000 Index in favor of the S&P 500. In addition, Direxion Daily Large Cap Bull 3X Shares will be renamed Direxion Daily S&P 500 Bull 3X Shares and Direxion Daily Large Cap Bear 3X Shares will be renamed Direxion Daily S&P 500 Bear 3X Shares, Direxion said. The funds will also change their tickers to "SPXL" for the bullish ETF and to "SPXS" for the bearish play.
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Source: MarketWatch
DB Equity Research Equity Research-US ETF Market Monthly Review : Fixed income ETPs received record inflows of $9.1bn in May
June 7, 2012--US ETP assets plunged 5.7% MoM, but were still 7.2% up YTD in May
ETP assets in the US dropped by $67.3bn to $1.12 trillion last month, still accumulating an increase of 7.2% YTD after the first five months of the year.
Global ETP industry assets pulled back to $1.52 trillion, or 6.1% up YTD.
Risk-off trade spurred loud and clear flight to safety during May
US ETP flows experienced inflows of $5.0bn during May (+$60.1bn, 5.7% of last year’s AUM).
Within long-only ETPs, total flows were +5.9bn in May vs. +$3.7bn in April.
Equity, Fixed Income, and Commodity long-only ETPs experienced cash flows of -$1.7bn, +$8.9bn, and -$1.0bn, respectively.
Concerns over European country solvency and US economic soft patch solidified during May adding momentum and fueling a sizeable market correction. Consequently, the risk-off trade was reflected clearly in ETP flows.
In contrast to April, May flows clearly described the essence of a full-blown risk-off trade. Long-only ETP flows were dominated by robust inflows into high quality fixed income segments such as US Sovereign and Investment Grade debt with a focus on the front end of the yield curve reflecting a desire to move away from both interest rate and credit risk. In addition, Equity ETPs experienced significant outflows across the board, with very few exceptions, among which we found US Defensive sector and Dividend ETPs.
Some of the relevant flow trends of the month were: (1) investment grade debt (+$9.0bn), part of which was (2) Sovereign debt (+$5.1bn), and (3) emerging market equities (-$3.5bn).
New Launch Calendar: moving away from equity-only strategies
There were 6 new ETPs and 2 new ETNs listed during the previous month. All of the products were listed in the NYSE Arca. Out of the 8 new launches 6 seek passive and 2 seek active return objectives.
Last month additions extended the offering in the Fixed Income, Multi Asset strategy, and Alternative space.
Floor activity rose by 22% driven by higher volatility
Total monthly turnover increased by 22% to $1.46 trillion vs. $1.19 trillion in the previous month.
US ETP trading made up 29.2% of all US cash equity trading in May, down from both its recent peak of 37.5% last August and its 3-year monthly average of 30.0%.
The largest increase was on Equity ETP turnover, which rose by $225bn or 21% to $1.29 trillion, followed by Fixed Income products turnover which grew by $18.6bn, totaling $81bn for the month of May. Meanwhile, Commodity ETP turnover rose by $15.4bn to $71.6bn last month.
to request report
Source: Deutsche Bank-Equity Research-North America
Bolsa de Valores de Colombia, Toronto Stock Exchange and TSX Venture Exchange sign Memorandum of Understanding to formalize and promote cooperation between their markets
June 7, 2012--Bolsa de Valores de Colombia (BVC), Toronto Stock Exchange (TSX) and TSX Venture Exchange today announced the signing of a Memorandum of Understanding (MoU) to promote cooperation among the securities markets of Colombia and Canada.
Under the MoU, Toronto Stock Exchange, TSX Venture Exchange and Bolsa de Valores de Colombia will cooperate to share certain information and to undertake certain activities together to facilitate the dual listing of companies in each other's jurisdiction and assist each other with understanding the regime, process and rules for listing and trading securities in each other's jurisdiction. The exchanges will also explore and develop joint marketing opportunities.
Juan Pablo Cordoba, President of the BVC, was very pleased with the signing of the MoU and explained that "it seeks to bring together Colombian and Canadian markets, and also includes the investor community and issuers from both countries, who have shown a great enthusiasm for taking advantage of opportunities that exist not only in exploration and production of the oil industry, but in all sectors of the economy".
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Source: TMX
Doubts raised over corporate bond ETFs
June 7, 2012--Large institutional trades in corporate bond exchange traded funds could be distorting the prices of shares in the funds, according to analysts and investors.
Institutional investors have been drawn to ETFs to trade illiquid corporate bond securities, as Wall Street dealers reduce their bond inventories in an effort to reduce risk.
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Source: FT.com
ISDA to Partner with Markit to Develop Compliance Solution
June 7, 2012--The International Swaps and Derivatives Association, Inc. (ISDA) announced today that it has chosen Markit to partner with the Association to develop a technology-based solution that enables counterparties to amend their
over-the-counter (OTC) derivatives documentation for the purpose of facilitating compliance with Dodd-Frank regulatory requirements. ISDA and Markit expect that the solution will also be enhanced to facilitate compliance with regulatory requirements in other jurisdictions as they are finalized.
The Dodd-Frank Act and related regulatory rulemakings impact OTC derivatives documentation by either requiring amendments to such documentation or imposing compliance requirements on market participants that must be satisfied by amending such documentation. Major dealers may have in excess of 10,000 counterparties with whom they have signed Master Agreements, and many end-users may be counterparties with multiple dealers. This creates significant levels of legal and administrative complexity and the potential for duplication of efforts as firms attempt to comply with the new rules.
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Source: ISDA
ISDA-Unique Swap Identifier (USI): An Overview Document
June 7, 2012--Introduction
Various international regulators and supervisory bodies1 have called for the use of three unique identifiers in relation to derivatives data reporting:
Unique Swap Identifier (USI) or Unique Trade Identifier (UTI)
Legal Entity Identifier (LEI) or Unique Counterparty Identifier (UCI)
Unique Product Identifier (UPI)
This paper focuses on one of those identifiers: how to uniquely identify a trade or contract. The CFTC is furthest along in specifying the requirements for this trade identifier. We believe and hope that the majority of the principles can be leveraged and applied internationally and it is indeed the desire from the industry to come up with a global accepted solution for unique trade identifiers. For the remainder of this document though we will focus on the CFTC requirements and hence use the CFTC term of USI.
view paper
Source: ISDA
Federal Reserve Board Approves Final Rule To Implement Changes To Market Risk Capital Rule
June 7, 2012--The Federal Reserve Board on Thursday approved a final rule to implement changes to the market risk capital rule, which requires banking organizations with significant trading activities to adjust their capital requirements to better account for the market risks of those activities.
The final rule implements certain revisions made by the Basel Committee on Banking Supervision to its market risk framework between 2005 and 2010. The final rule will better capture positions for which the market risk capital rule is appropriate, reduce procyclicality in market risk capital requirements, enhance sensitivity to risks that are not adequately captured by the current regulatory methodologies, and increase transparency through enhanced disclosures.
view the Risk-Based Capital Guidelines: Market Risk
Source: Federal Reserve
Standard & Poor's Announces Changes In The S&P/TSX Canadian Indices - A Deletion From The S&P/TSX Venture Composite Index
June 7, 2012--S&P Canadian Index Services will make the following changes in the S&P/TSX Canadian Indices:
The Toronto Stock Exchange announced today in the Daily Bulletin that the shares of Yellowhead Mining Inc. (TSXVN:YMI) will graduate to trade on TSX at the open of trading on Monday, June 11, 2012.
The ticker symbol will remain "YMI" and the CUSIP number will remain 98563A 10 0. The company will be removed from the S&P/TSX Venture Composite Index after the close of trading on Friday, June 8, 2012.
Source: Standard & Poor's
Bond ETFs smash sales record in May
Investors desperate to find safe havens for their cash put a record $11bn into fixed income exchange-traded funds in May, of which half, totalling $5.6bn, flowed into sovereign bonds.
June 7, 2012--According to a survey by asset manager BlackRock, bond ETF inflows smashed a previous monthly record of $9.1bn set in January 2012.
Sales of ETFs across every sector saw gains of $19.2bn in May.
In the year-to-date, bond ETF inflows hit $36.5bn, a 150% increase on the same period a year ago. In the same period the entire ETF sector saw $85.3bn of inflows, an 18% increase.
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Source: Financial News
CFTC prepares recommendations for swap-clearing requirements
June 7, 2012--Interest rate and credit index swaps will be the first derivatives to face clearing requirements this year under the Dodd-Frank Act, said U.S. Commodity Futures Trading Commission chairman Gary Gensler.
The agency’s staff is preparing recommendations to require clearing of fixed-to-floating interest rate swaps as well as indexes of North American investment grade and high-yield credit swaps, Gensler said in a speech prepared for the Sandler O’Neill Global Exchange and Brokerage Conference in New York.
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Source: Bloomberg
