Global ETF News Older than One Year
IMF Working Paper-Designing Central Bank Digital Currencies
November 18, 2019--We study the optimal design of a central bank digital currency (CBDC) in an environment where agents sort into cash, CBDC and bank deposits according to their preferences over anonymity and security; and where network effects make the convenience of payment instruments dependent on the number of their users.
CBDC can be designed with attributes similar to cash or deposits, and can be interest-bearing: a CBDC that closely competes with deposits depresses bank credit and output, while a cash-like CBDC may lead to the disappearance of cash. Then, the optimal CBDC design trades off bank intermediation against the social value of maintaining diverse payment instruments. When network effects matter, an interest-bearing CBDC alleviates the central bank's tradeoff.
view the IMF Working Paper-Designing Central Bank Digital Currencies
Source: IMF
Bassanese Bites: QE is coming
November 18, 2019--Global Markets
Global markets are currently enjoying a "no news is good news period"-ever hopeful that a US-China trade deal will get done, and no news to the contrary is encouraging as it suggests both parties are still at least talking.
What we don't want is President Trump flying off in a rage again-and jacking up tariffs-due to 11th hour haggling by the Chinese. But as I’ve discussed here previously, Trump seems less likely to do this now given growing signs that an extension of the trade dispute would put the US economy at risk as we head into the 2020 Presidential election year.
Source: BetaShares
Alarm sounds over heavy short selling of junk bond ETFs
November 17, 2019--Funds' holdings and 'design flaws' vulnerable to market downturn prompt concern
Junk bond exchange traded funds are being short sold in bulk.
Almost 40 per cent of the US's biggest junk bond ETFs available for borrowing are on mortgage...
Source: FT.com
NSE may set up derivatives desk in Riyadh
November 11, 2019--However, restrictions on future share sales mean an international IPO may be ruled out
The National Stock Exchange has signed a deal with Saudi Arabia's Tadawul stock exchange to collaborate, share information and technology, and facilitate joint assignments in both the countries in its first such deal, said two people with direct knowledge of the matter.
Source: economictimes.indiatimes.com
OTC derivatives statistics at end-June 2019
November 8, 2019--Notional amounts of OTC derivatives rose to $640 trillion at end-June 2019. This is up from $544 trillion at end-2018 and the highest level since 2014. It marks a continuation of the trend increase evident since end-2016.
The gross market value of OTC derivatives, summing positive and negative values, also rose, from $9.7 trillion to $12.1 trillion, led by increases in euro interest rate derivative contracts.
The lastest semiannual data benefit from the addition of more comprehensive information for smaller dealers collected as part of the BIS Triennial Survey.1 Dealers in emerging market economies (EMEs) accounted for 9% of the outstanding notional amounts of foreign exchange and commodity derivatives globally at end-June 2019, up from 7% at end-June 2016.
Source: BIS
Pensions Venture Into Risky Corners of the Market in Hunt for Returns
November 7, 2019--Retirement programs are increasing bets on private debt, junk bonds and real estate as negative yields pare asset growth
Some pension-fund managers are venturing further into unusual investment territory as this year's plunge in bond yields makes it harder to find decent long-term returns.
Funds are dabbling in riskier asset classes, including private markets, real-estate projects, infrastructure financing and direct lending. Some are making riskier fixed-income bets, buying volatile assets such as 100-year Argentine government bonds. Others are going farther afield, investing in greenhouses and waste management.
Source: Wall Street Journal
Growth fears force exchange traded funds into gold
November 6, 2019--SPDR Gold Trust, the world's biggest gold ETF, sees inflows of $6.5bn this year.
Source: FT.com
Statement on IOSCO study of emerging global stablecoin proposals
November 4, 2019--At its meeting on 30th October in Madrid, the Board of the International Organization of Securities Commissions (IOSCO) met, amongst other things, to consider the risks and benefits arising from 'stablecoin' initiatives with a potential global reach ('global stablecoins'), and how securities market regulation may apply to such initiatives.
This year, IOSCO has examined a number of these initiatives. The IOSCO Board acknowledges that stablecoins can potentially offer benefits to market participants, consumers and investors. However, it is also aware of potential risks in a number of areas, including consumer protection, market integrity, transparency, conflicts of interest and financial crime, as well as potential systemic risks.
To support its discussions, the IOSCO FinTech Network produced an assessment for the Board of how IOSCO Principles and Standards could apply to global stablecoin initiatives. The detailed assessment concluded that a case-by-case approach is needed to establish which IOSCO Principles and Standards, and national regulatory regimes, would apply.
Source: IOSCO
Mystery is part and particle of smart beta
November 4, 2019--Mainstream theory says quantum particles can exist in many places and states at the same time, yet when they are observed the spell is broken...
Source: FT.com
IMF Working Paper-Swing Pricing and Fragility in Open-end Mutual Funds
November 4, 2019--Summary:
How to prevent runs on open-end mutual funds? In recent years, markets have observed an innovation that changed the way open-end funds are priced. Alternative pricing rules (known as swing pricing) adjust funds' net asset values to pass on funds' trading costs to transacting shareholders.
Using unique data on investor transactions in U.K. corporate bond funds, we show that swing pricing eliminates the first-mover advantage arising from the traditional pricing rule and significantly reduces redemptions during stress periods. The positive impact of alternative pricing rules on fund flows reverses in calm periods when costs associated with higher tracking error dominate the pricing effect.
view the IMF Working Paper-Swing Pricing and Fragility in Open-end Mutual Funds
Source: IMF
