Global ETF News Older than One Year
IMF Working Paper-Discriminatory Pricing of Over-the-Counter Derivatives
May 7, 2019--Summary:
New regulatory data reveal extensive price discrimination against non-financial clients in the FX derivatives market. The client at the 90th percentile pays an effective spread of 0.5%, while the bottom quarter incur transaction costs of less than 0.02%.
Consistent with models of search frictions in over-the-counter markets, dealers charge higher spreads to less sophisticated clients. However, price discrimination is eliminated when clients trade through multi-dealer request-for-quote platforms. We also document that dealers extract rents from captive clients and market opacity, but only for contracts negotiated bilaterally with unsophisticated clients.
view IMF Working Paper-Discriminatory Pricing of Over-the-Counter Derivatives
Source: IMF
Growth and economic well-being: fourth quarter 2018, OECD
May 7, 2019--OECD household income growth picks up in the fourth quarter of 2018, outpacing GDP growth
Growth in real household income per capita, which provides a better picture of changes in households' economic well-being than real GDP growth per capita, picked up to 0.5% in the OECD area in the fourth quarter of 2018, compared with 0.1% in the third quarter of 2018, outpacing real GDP growth per capita, which stood at 0.2% in the fourth quarter.
Source: OECD
World Gold Council-Global gold-backed ETF holdings fell 2% in April, resulting in net 2019 outflows to date
May 7, 2019--In April, holdings in global gold-backed ETFs and similar products fell across all regions by 57 tonnes(t) to 2,424t, equivalent to US$2.2bn in outflows. Global assets under management (AUM) in US dollars fell by 3% to US$100bn, as the price of gold of gold fell 1% during the month. Global gold-backed ETFs have now lost assets of US$377mn, 0.4% AUM on the year, reversing January's strong start.
Regional fund flows
North American funds saw outflows of 46t (US$1.9bn, 3.7% AUM)**
Holdings in European funds fell by 8t (US$257mn, 0.6%)
Funds listed in Asia decreased by 2.5t (US$114mn, 4%)
Other regions saw outflows of 0.4t (US$16mn, 1.3%).
Individual fund flows
In North America, SPDR(R) Gold Shares lost 38t (US$1.6bn, 5%) and iShares Gold Trust lost 6t (US$252mn, 2%), the lion's share of the region's outflows
iShares Physical Gold and ETFS Physical Gold in the UK each lost ˜6t, collectively losing around US$500mn
Source: World Gold Council
Wahed Becomes the First Globally-Accessible Halal Robo-Advisor
May 7, 2019--Wahed Inc. ("Wahed"), the parent company of Wahed Invest LLC, the first halal robo advisor in the United States, today announces it is expanding its operations globally.
The platform, which was previously available only to US and UK communities, now provides access to Islamic value-based investing to residents of over 130 countries including key markets across Nigeria, India, Pakistan and the MENA region.
Wahed looks to change how the Muslim community participates in global financial markets by making investing accessible and ethically compliant for the 1.8 billion Muslims globally.
Source: Wahed Inc.
IMF Working Paper-Inefficient Fire-Sales in Decentralized Asset Markets
May 6, 2019--Summary:
Classic models of fire-sales that emphasize liquidity-constrained natural buyers can-not fully account for the asset fire-sales during the Financial Crisis of 2008. I present a model to demonstrate that fire-sales may happen even when there is a sizable pool of natural buyers and in the absence of asymmetric information, due to a coordination failure among buyers.
In particular, I show that when trade is decentralized and participation is endogenous, constrained asset demand and liquidity needs that are ex-pected to increase over time create complementarity among buyers' decisions to wait. This complementarity makes competitive markets prone to coordination failures and fire-sales which may be inefficient. I also discuss various policy options to eliminate the risk of fire-sales in such a setup.
Source: FTSE Russell
Who to Sue When a Robot Loses Your Fortune
May 5, 2019--The first known case of humans going to court over investment losses triggered by autonomous machines will test the limits of liability.
Robots are getting more humanoid every day, but they still can't be sued.
So a Hong Kong tycoon is doing the next best thing. He's going after the salesman who persuaded him to entrust a chunk of his fortune to the supercomputer whose trades cost him more than $20 million.
The case pits Samathur Li Kin-kan, whose father is a major investor in Shaftesbury Plc, which owns much of London's Chinatown, Covent Garden and Carnaby Street, against Raffaele Costa, who has spent much of his career selling investment funds for the likes of Man Group Plc and GLG Partners Inc. It's the first-known instance of humans going to court over investment losses triggered by autonomous machines and throws the spotlight on the "black box" problem: If people don't know how the computer is making decisions, who's responsible when things go wrong?
Source: Bloomberg
Accounting body proposes temporary relief during Libor phase out
May 3, 2019--A global accounting standard setter has proposed a fast-track temporary fix to help banks and businesses manage Libor-based contracts worth $400 trillion during the transition to alternative interest rate benchmarks.
Regulators have set a December 2021 deadline for effectively ending the use of the London Interbank Offered Rate after banks were fined billions of dollars for trying to rig the benchmark.
Source: Reuters
ULTUMUS Announces Partnership With Velox To Develop Next Generation of Delta One Desktop Products
May 2, 2019--ULTUMUS, the leading global provider of data services for Index and ETF products, today announces a partnership with Velox Financial Technology (Velox), a provider of customized real-time trading technology solutions to provide portfolio management, trading & analytics solutions to investment banks and the asset management community.
Due to the rapid expansion of synthetic products such as ETFs and Indices, our clients find themselves significantly under invested in technology that will allow their businesses to scale while providing efficiency and lower operational risk.
Source: ULTUMUS
