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OSE’s New Derivatives Trading System, J-GATE, Launched
February 14, 2011--Osaka Securities Exchange Co., Ltd. (OSE) has successfully launched its new derivatives trading system, "J-GATE", compliant with international standards and equipped with new trading functions and the world's highest order processing capacity. The system is powered by NASDAQ OMX trading technology.
OSE decided in 2009 to adopt trading technology provided by NASDAQ OMX for its new trading platform for derivatives products, which has been developed with assistance from NTT Data Corporation as its System Integrator.
The launch of J-GATE delivers improved processing capabilities, such as reduced processing latency, and enables the introduction of market rules and functions employed by major overseas exchanges, which will further enhance the competitiveness of the OSE's market.
Michio Yoneda, President & CEO of OSE said "We would like to express our gratitude and appreciation to all who have contributed to the successful launch of the J-GATE. Through the utilization of the world's highest-level processing capabilities and the global standard trading functions of J-GATE, OSE continues to further enhance the competitiveness of its market, which we hope leads to strengthening competitiveness of the Japanese market."
New ETF funds buy bullion
February 11, 2011--Instead of investing through gold-backed exchange-traded funds (ETFs) available in the market, investors can now invest directly in gold bullion.
Thanachart Fund Management yesterday launched two gold funds with a passive investment strategy.
The funds will not track the global gold index like other ETFs or engage in short-term speculation in gold prices. However, they will invest the money on gold bullion according to their clients' demands.
The company will buy physical gold from gold refiners that are approved by the London Bullion Market Association (LBMA).
Currently there are 61 gold refiners from 20 countries in the association.
DB Index & ETF Research: Asia-Pac ETF Market Weekly Review : Good Activity, but Flat Flows Across the Board
February 10, 2011--Market Review
Markets within the region have been mixed year to date, with developed countries outperforming emerging countries. So far this year, in the DMs the Nikkei 225, the Hang Seng Index, and the S&P ASX 200 Index have risen by 3.1%, 3.8%, and 2.5%, respectively. While on the EM side, the CSI 300 has declined by 1.6%, and the KOSPI 200 has slightly risen up to 0.8% in the same period. However in the last week returns were more correlated with all of them mixed and within the 0.9% to 1.8% range.
New launch activity was considerably quieter than in the previous weeks, with only 1 new listing during the week ending on Feb 4th. This is probably one of the dimensions, along with the weekly turnover, which suffered the effect of a shorter and silent week due to the Lunar New Year celebrations. The only ETP brought to market last week was listed on the National Stock Exchange of India, and tracks Mid Cap Indian stocks.
ETP Monthly Flows:
Overall flat flows due to offsetting trends
Overall ETP flows were flat at +$26 mm for the month of January vs. +$210 mm in December. This January, Fixed Income products received the largest inflows with $55 mm, while Equity and Commodity ETPs recorded outflows of $17 mm and $19 mm, respectively. Month over month, Fixed Income has gathered the largest amount of new cash with $165 mm inflows.
Within Equity products, Emerging Country had the largest inflows with $296 mm, while Asia-Pac Developed countries had the largest outflows with $492 mm. Outside Equities, Sovereign debt products received interesting inflows of $86 mm, while Gold ETPs experienced outflows of $38 mm. We still believe that the Equity and Fixed Income flow patterns are based on product adoption trends in the region, rather than asset allocation decisions. However Gold flows came in line with what we saw in the underlying precious metal market and in other regions.
Turnover Review: Short week cuts trading activity by more than 40%
Mainly impacted by a short week due to the Lunar New Year Holidays, total ETP weekly turnover was down by 41% as compared to the previous week, totaling $2.5 bn. Equity ETPs took the hardest hit with and almost same-size drawdown of 42%, totaling $2.4 bn. Last week’s turnover was about 47% down from last year’s weekly average of $4.8 bn.
However, other ETP markets not closed due to the festivities such as the Australian and Japanese markets had a very active week. Trading activity was unusually busy in Australia registering growth of $395 mm (380%). In addition, Japan had a normal trading week a bit towards the upside even (6% up).
Asset Under Management Review
Mainly driven by a good equity market, assets rose by 1.5% to $85 bn vs. $84 bn in the previous week. Year to date, assets have increased by $1.1 bn, rising 1.3% above last year’s closing.
To request a copy of the report
Public Bidding Invitation for 22nd SSE Joint Research Plan
February 10, 2011--To boost the research, marketization and standardization of China's securities market, accelerate the market innovation and provide decision-making support for leadership, the Shanghai Stock Exchange (SSE) has run 21 SSE Joint Research Plans. The plans aim to make full use of relevant domestic and foreign research resources, make intensive research on hot and frontier issues of China's securities market in a standardized, precise and pragmatic manner, improve market research, and promote exchange of excellent research results.
All this is to provide independent, rational, high-level, and forward-looking policy suggestions and implementation schemes for the development of China's securities market.
To ensure the transparency and accessibility and enhance the quality and efficiency of the research plan, the SSE seeks bidders for research subjects from home and abroad.
Major research subjects of the 22nd SSE Joint Research Plan include:
1. ETF market mechanism optimization and control of operational risk;
2. Feasibility and design of stock options;
3. Effectiveness of information disclosure of listed companies;
4. Legal content and judicial adjudication criterion of performance of due diligence by directors of listed companies;
5. Asset securitization products development strategy;
6. Development of exchange’s corporate bonds market;
7. SSE index system development plan;
8. Monitoring system of systematic risk in capital market;
9. International comparison of evolution of functions of Securities Acts and perfection of China’s “Securities Law”;
10. New pattern of innovation and development of capital market as well as amendment and improvement of “Company Law”.
Institutional applicants can download the application forms at the SSE website (http://www.sse.com.cn). For details, please contact the SSE Research Center via telephone, fax, E-mail, etc. The deadline for bidding invitation is February 28.
Aluminium hots up as supplies start to buckle
February 9, 2011--For much of the past two years, aluminium was the metal everyone loved to hate. While copper, the darling of hedge funds, has raced to one record after another, hitting $10,000 a tonne last week for the first time, aluminium, the most widely used metal after steel, lagged far behind.
As Klaus Kleinfeld, chief executive of Alcoa, the US aluminium producer, said recently: “Whenever I go around, people are saying, my God, wouldn’t it be great if aluminium would be like copper?”
Japanese growth prospects lure buyers
February 9, 2011--What is Asia’s best performing stock market in 2011? Not China, not Indonesia, certainly not India. As investors have pulled out money from emerging market equity funds, they have poured it into developed markets. Long unloved by investors, Japan is the region’s biggest gainer.
The draw is the country’s strengthening industrial growth and exports, just as developing economies such as China and India face a bruising battle with inflation. “Suddenly people are seeing that they can get some form of growth without the tightening risk in the developed markets,” says Jonathan Allum, strategist at Mizuho International.
Hang Seng Indexes to Use CBOE VIX Methodology and S&P Calculation for HSI Volatility Index
February 9, 2011--The Chicago Board Options Exchange (CBOE) and Standard & Poor's (S&P) announced today that Hang Seng Indexes Company Limited (Hang Seng Indexes) will begin disseminating a volatility index for the Hang Seng Index on February 21, 2011, which will use the CBOE Volatility Index (VIX) methodology.
The new HSI Volatility Index (VHSI) will reflect expected equity market volatility over the next 30 days, using bid/ask quotes for Hang Seng Index options traded on the derivatives market of Hong Kong Exchanges and Clearing Limited to calculate a weighted average of the implied volatility of the options using the proprietary VIX methodology owned by CBOE.
The HSI Volatility Index has been created under a licensing agreement with Standard & Poor's with the permission of CBOE. Standard & Poor's will calculate and maintain the HSI Volatility Index, calculated back to January 2, 2001.
"We welcome Hang Seng indexes to the growing international roster of major index providers now using CBOE's VIX methodology to calculate volatility. We are excited about further broadening the application of CBOE's VIX methodology in Asia through our long-standing partnership with S&P," said CBOE Executive Vice President Richard DuFour. "As the benchmark of the Hong Kong Stock Market, the Hang Seng Index is one of the best known indices in Asia."
"S&P, along with CBOE, has been active over the last several months in bringing the VIX methodology to key markets throughout the world — including Canada, Australia and now Hong Kong," said Robert Shakotko, Managing Director at S&P Indices. "This new Index will not only serve as a key market measure of risk, but will also lead to the development of a volatility trading and hedging market in Hong Kong."
CBOE, through its partnership with Standard & Poor's, has licensing agreements allowing other exchanges — including NYSE Euronext, Taiwan Futures Exchange, National Stock Exchange of India, the Australian Stock Exchange, and the TMX Group — to use the VIX methodology.
Thai Capital Market Bodies Urge Monitoring Situation
February 9, 2011--Thai stock prices have been affected by several factors, e.g., the Thai-Cambodian border tension, imposition of the Internal Security Act in seven Bangkok districts, and anti-government rallies, which are planned to intensify on February 11, noted Mr. Paiboon Nalinthrangkurn, chairman of the Federation of Thai Capital Market Organizations (FeTCO).
He suggested that investors buy stocks with sound fundamentals while keeping updated on global economic movement. The Stock Exchange of Thailand (SET) affirmed that it has received no reports that any listed firm has been significantly affected by the Thai-Cambodian border crisis, while assuring that it has been closely monitoring events.
Index Drops But Trading Value On Thai Bourse Rises In January
February 9, 2011--In 2010, The Stock Exchange of Thailand (SET) had the second-highest rate of return in all of Asia, at 40.60% for the year. It was therefore no surprise that foreign investors cashed in on some of their profits in January 2011, as they did in other emerging markets that had given such high returns in 2010, moving to markets expected to benefit from the US economic recovery.
Thus, as of January 31, the SET Index closed at 964.10, down 6.65% from end-2010. The decrease in stock prices led SET’s market capitalization to drop to THB7.81 trillion (approx. USD 254.43 billion), while the SET’s forward P/E ratio also dropped from 14.55 at end-2010 to 11.48 at end-January 2011. However, daily average trading value of the SET and Market for Alternative Index (mai) rose to THB36 billion (approx. USD 1.17 billion), an 89.23% year-on-year surge and a 12.06% month-on-month increase. The daily average trading volume on the derivatives market also increased in all products, particularly 10-baht weight gold futures, went up to 2,925 contracts, which is the highest record since it opened for trade in August 2010.
KRX Revision of Regulations Related to Ex-post Margin System
February 9, 2011--I. Background
To prevent the reoccurrence of event similar to that occurred on November 11, 2010 (the option expiry day) and reduce the risks associated with the nonfulfillment of settlement obligation by the institutional investors, the KRX has revised the regulations related to the ex-post margin and position limit in itsDerivatives Market.
II. Main points of revision
A. Ex-post margin system
1. Reinforcement of selection criteria of qualified institutional investors (QIIs)
Existing regulation: According to the Financial Investment Services and Capital Market Act, the professional investors who meet the institutional category criteria* may be selected and allowed to pay the ex-post margin**.
