Global ETF News Older than One Year
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
IMF Working Paper-Global Fossil Fuel Subsidies Remain Large: An Update Based on Country-Level Estimates
May 2, 2019--Summary:
This paper updates estimates of fossil fuel subsidies, defined as fuel consumption times the gap between existing and efficient prices (i.e., prices warranted by supply costs, environmental costs, and revenue considerations), for 191 countries.
Globally, subsidies remained large at $4.7 trillion (6.3 percent of global GDP) in 2015 and are projected at $5.2 trillion (6.5 percent of GDP) in 2017. The largest subsidizers in 2015 were China ($1.4 trillion), United States ($649 billion), Russia ($551 billion), European Union ($289 billion), and India ($209 billion). About three quarters of global subsidies are due to domestic factors—energy pricing reform thus remains largely in countries' own national interest—while coal and petroleum together account for 85 percent of global subsidies. Efficient fossil fuel pricing in 2015 would have lowered global carbon emissions by 28 percent and fossil fuel air pollution deaths by 46 percent, and increased government revenue by 3.8 percent of GDP.
Source: IMF
Millennials And Sophisticated Investors Driving ETF Adoption
May 2, 2019--New Vanguard research examines demographic and behavioral trends of ETF usage
New Vanguard research identified distinctive behavioral trends amongst exchange-traded fund (ETF) investors, concluding that age and investment experience are the foremost drivers of ETF usage.
Early ETF adoption among self-directed investors, published by Vanguard Center for Investor Research, examined the behavior of more than five million retail investor households and revealed that older, more established investors with relatively complex portfolios tend to use ETFs to supplement other investments.
At the other end of the spectrum, ETFs serve as the primary investment vehicle for millennials and new investors.
view moreview the Early ETF adoption among self-directed investors report
Source: Vanguard
World Gold Council-Gold Demand Trends Q1 2019-Central bank buying and ETF inflows lifted global gold demand
May 2, 2019--Highlights
This was the highest Q1 since 2013.
Robust Indian gold jewellery demand drove global gains.
Healthy wedding-related buying lifted Indian demand to 125.4t (+5% y-o-y).
ETFs and similar products added 40.3t in Q1.
Products listed in Western markets grew by a combined 46t.
Bars and coin investment diverged: bars lost 5% while coins grew 12%.
Japanese net disinvestment was a key driver of the fall in gold bar demand.
Gold used in technology contracted 3% to 79.3t.
Demand for consumer electronics faced headwinds from economic challenges.
Source: World Gold Council
New OCC Study: Listed Index and ETF Option Overlays May Improve Endowment Performance
May 1, 2019-- OCC, the world's largest equity derivatives clearing organization, today shared the results of a new study, Endowment Risk Management and Return Enhancement with Listed Index and ETF Options, that found that both buy-write and put spread collar overlays improved risk-adjusted performance within the study sample for small, mid-sized and very large endowments, with the small endowment portfolio seeing the largest benefits.
The research study, commissioned by The Options Industry Council (OIC), was conducted by Dr. Edward Szado, Associate Professor of Finance at Providence College School of Business.
Source: Options Clearing Corporation (OCC)
