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Testimony before the U.S. Senate Committee on Banking, Housing, and Urban Affairs, Hearing on International Harmonization of Wall Street Reform: Orderly Liquidation, Derivatives, and the Volcker Rule, Washington, DC
Director, Office of International Affairs Jacqueline H. Mesa
March 22, 2012--Good morning Chairman Johnson, Ranking Member Shelby, and members of the Committee. I am Jacqueline Mesa, the Director of the Office of International Affairs at the Commodity Futures Trading Commission.
Thank you for the opportunity to testify today regarding international aspects of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). This morning, I will provide an overview of global commitments for over-the-counter (“OTC”) derivatives reform, an update on Dodd-Frank Act implementation efforts at the Commodity Futures Trading Commission (“CFTC” or “Commission”), global initiatives to bring financial reform to OTC derivatives, and coordination with international regulators in regulating the swaps market.
G-20 Commitment for OTC Derivatives Reform
The financial crisis generated international consensus on the need to strengthen financial regulation by improving transparency, mitigating systemic risk, and protecting against market abuse. As a result of the widespread recognition that transactions in the OTC derivatives market increased risk and uncertainty in the economy and became a significant contributor to the financial crisis, a series of policy initiatives were undertaken to better regulate the financial markets.
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Source: CFTC.gov
CFTC's Division of Market Oversight Issues Letter to Market Participants Regarding Compliance with Large Trader Reporting System for Physical Commodity Swaps and Swaptions
Division to Provide Temporary and Conditional No-Action Relief for Less than Fully Compliant Reporting
March 22, 2012--The Commodity Futures Trading Commission's (CFTC) Division of Market Oversight today issued a letter to market participants providing temporary and conditional no-action relief for less than fully compliant reporting under the CFTC’s large trader reporting system for physical commodity swaps and swaptions.
Clearing organizations and clearing members began reporting under the system on November 21, 2011. This temporary relief is intended to provide sufficient time for the industry and the CFTC to transition to fully compliant reporting by July 2, 2012.
This no-action is only available to market participants making a good faith effort to comply with the new rules. In addition, parties relying on the no-action relief must submit month-end open interest reports to the Commission that cover the period from March 1, 2012, to June 30, 2012. Parties that wish to rely on the no-action relief must also submit an e-mail to the Division, at submissions@cftc.gov and SwapsLTR@cftc.gov no later than March 30, 2012, that includes information on arrangements being made to come into full compliance with the rules, as well as the expected date of such compliance.
Testimony Concerning "International Harmonization of Wall Street Reform: Orderly Liquidation, Derivatives, and the Volcker Rule"
by Commissioner Elisse B. Walter
U.S. Securities and Exchange Commission
Before the Committee on Banking, Housing, and Urban Affairs
United States Senate
March 22, 2012--Chairman Johnson, Ranking Member Shelby, and members of the Committee, thank you for inviting me to testify on behalf of the Securities and Exchange Commission (SEC) about international cooperation in the realm of financial regulation.
Markets are global, and regulators have long been mindful that domestic changes can have an impact outside their own countries. The impact of regulation across borders has become ever more important as business has become increasingly global. As part of our rulemaking efforts to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the SEC has been actively engaged in discussions with our counterparts abroad to encourage international coordination of regulatory reforms.
Our international efforts include both informal and formal bilateral discussions and arrangements, and we also work through multilateral organizations, where we have leadership roles in several task forces and working groups.
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Source: SEC.gov
Invest n Retire Hires Gus Fleites As CEO
March 22nd 2012--Invest n Retire, LLC, (INR) a record keeper for tax-deferred retirement plans has recently announced the appointed of Agustin J. (Gus) Fleites as Chief Executive Officer.
Mr. Fleites, current Managing Director of Boston-based Beta Capital Advisors, LLC brings over 20 years of leadership experience to INR. He has extensive experience both as an investment manager and business leader helping investors apply passive investment strategies to meet their investment needs. At State Street Global Advisors Mr. Fleites established the asset allocation group where he worked closely with defined contribution and other retirement plans, endowments, and foundations developing and managing their investment plans. He was also a director of CitiStreet, a State Street- Citigroup venture and industry leader in defined contribution benefit plan administration services.
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Source: Invest n Retire
Chairman Ben S. Bernanke The European Economic and Financial Situation
Before the Committee on Government Oversight and Reform, U.S. House of Representatives, Washington, D.C.
March 21, 2012--Thank you, Chairman Issa, Ranking Member Cummings, and other members of the Committee for inviting me to testify about the economic and financial situation in Europe and the actions taken by the Federal Reserve in response.
Developments in Europe and Their Effects on the U.S. Economy
For almost two years, developments in Europe have had an important influence on the tenor of global financial markets and on the global economy more generally. The combination of high debts, large deficits, and poor growth prospects in several countries using the euro has raised concerns about fiscal sustainability and, consequently, led to sharply higher sovereign borrowing costs--initially for Greece, but subsequently for other euro-area countries as well. Pessimism about these countries' fiscal and economic situations, in turn, has undermined confidence in the strength of European financial institutions, increasing the cost and difficulty those institutions have faced in obtaining funding and reducing their willingness to supply credit.
The difficulties in the euro area have affected the U.S. economy. The European Union accounts for roughly one-fifth of U.S. exports of goods and services. Not surprisingly, U.S. exports to Europe over the past two years have underperformed our exports to the rest of the world. In addition, weaker demand from Europe has slowed growth in other economies, which has also lowered foreign demand for our products.
Financial strains in Europe have also shown through to our financial markets. During times when financial conditions in Europe were at their most turbulent, investors around the world retreated from riskier assets. In the United States, these pullbacks decreased stock prices, increased the costs of issuing corporate debt, and reduced consumer and business confidence. In addition, U.S. financial institutions that were thought to have substantial exposures to Europe saw their stock prices fall and their credit spreads widen.
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Source: FBR
US senators press for position limits in oil markets
Bill would require limits in oil markets
Senators say market not reflecting supply/demand
CFTC chairman doesn't understand urgency-Sanders
March 21, 2012--Ramping up pressure on U.S. commodities regulators, a group of U.S. senators on Wednesday unveiled legislation aimed at lowering skyrocketing fuel prices by reining in excessive speculation in oil markets.
The bill would require the Commodity Futures Trading Commission to use its emergency powers to impose position limits in oil futures markets within 14 days of the measure becoming law.
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Source: Reuters
Market Vectors Launches First U.S. Listed Indonesia Small-Cap ETF
Small-Cap Opportunities in World’s Largest Archipelago
March 21, 2012--Market Vectors ETF Trust today announced the launch of Market Vectors Indonesia Small-Cap ETF (nyse arca:IDXJ), the first U.S.-listed exchange-traded fund (ETF) designed to provide investors with pure play exposure to the small capitalization segment of Indonesia’s stock market.
IDXJ is the second ETF introduced by Market Vectors that focuses exclusively on Indonesia, joining Market
Vectors Indonesia Index ETF (NYSE Arca: IDX), which focuses on the large-cap segment of the fast-growing Indonesia
economy. IDX has earned a 5-star Morningstar rating on both a 3-year and overall basis (as of 2/29/12).+
Indonesia, home to roughly 240 million people, has Southeast Asia’s largest economy: $834 billion in 2011.
Beginning in 1999, the country embarked on a path of sounder fiscal and monetary policies that allowed it to improve its financial condition dramatically.1 As a result, the country has attracted substantial foreign direct investments and its
sovereign debt rating has been upgraded to investment grade by both Fitch Ratings (as of December 15, 2011) and
Moody’s Investors Services (as of January 18, 2012).
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Source: Market Vectors ETFs
UBS Launches ETN with High Monthly Income Potential and Leveraged Exposure to International Real Estate Securities
ETRACS Monthly Pay 2xLeveraged Dow Jones International Real Estate ETN
March 21, 2012--UBS Investment Bank announced that today is the first day of trading on the NYSE Arca for the ETRACS Monthly Pay 2xLeveraged Dow Jones International Real Estate ETN (ticker:RWXL).
RWXL is linked to the monthly compounded 2x leveraged performance of the Dow Jones Global ex-U.S. Select Real Estate Securities Index (the “Index”), reduced by investor fees.
RWXL offers investors:
Monthly compounded 2x leveraged exposure to the Index, less fees, making it the only exchange-traded product with leveraged exposure to this index.
Significant income potential in the form of a variable monthly coupon linked to 2 times the cash distributions, if any, on the Index constituents, less any withholding taxes.
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Source: ETRACS
Direxion Launches NASDAQ-100 Equal Weighted ETF
Equally Weighted Fund Increases Diversification as Compared to Cap-weighted Strategy
March 21, 2012-- Direxion, a leader in alternative investment solutions, has expanded their lineup of ETFs with the launch of the Direxion NASDAQ-100® Equal Weighted Index Shares (Ticker: QQQE).
The Fund provides investors with broader diversification and exposure to the holdings that comprise the NASDAQ-100 index.
The traditional cap-weighted NASDAQ-100 index currently has a significant overweighting to a select number of companies, and a heavy bias toward the technology sector, based on the market capitalization of these few companies. Larger companies in the index receive a higher weight than small companies, which can lead to a portfolio with an over concentration in a limited number of companies and industries. The Direxion NASDAQ-100 Equal Weighted Index Shares Fund utilizes a methodology that weights the holdings of the index equally, regardless of market capitalization or industry. This provides investors with a cost-effective approach to an equal-weighted investment strategy, with performance less reliant on the largest companies.
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Source: Direxion
Statement in Support of OMB Memorandum: Cumulative Effects of Regulations
Commissioner Scott D. O’Malia
March 20, 2012--I am pleased that the Administrator of the Office of Information and Regulatory Affairs released a memorandum today providing guidance to all executive agencies on the appropriate manner in which to conduct rigorous cost-benefit analyses and to consider the cumulative impacts of their regulatory actions in light of new and existing regulations.
I believe this directive is responsive to my letter of February 23, 2012 to the Office of Management and Budget requesting a review of the Commodity Futures Trading Commission’s conduct of cost-benefit analysis.
Specifically, the Administrator’s memorandum clarifies that, among other things, executive agencies should: (1) avoid unnecessary and inconsistent requirements; (2) improve regulatory outcomes by engaging in early and close consultation with affected stakeholders; and (3) coordinate the timing, content and requirements of multiple rulemakings that are contemplated for a particular industry or sector, so as to increase the net benefits.
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Source: CFTC.gov
