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FMSB publishes new financial markets misconduct research
July 27, 2018--The FICC Markets Standards Board ("FMSB") today publishes its Behavioural Cluster Analysis ("BCA") study. This is a unique piece of research that has reviewed the behavioural patterns in 390 cases of misconduct in financial markets over an extended period of time (225 years stretching back to 1792) and covering 26 countries and multiple asset classes.
This review indicates that the behavioural patterns evident in misconduct events are not unique to each case but that the same 25 behavioural patterns are evident in market misconduct cases and these consistently repeat and recur over time.
The purpose of the work is practical. This work addresses a number of the findings of the Fair and Effective Markets Review 2015 (FEMR). In particular, identifying the root causes and relevant behaviours which underlie market misconduct is an essential step in preventing them recurring and the work leverages the experience of domestic and international markets to do this.
view the FMSB Behavioural Cluster Analysis ("BCA") study
DECPG Global Weekly
July 27, 2018--TAKING STOCK
U.S. GDP growth accelerated in 2018Q2; composite PMI edged down in July
The U.S. and European Union reached agreement to ease trade tensions
The ECB kept policy on hold; Euro Area composite PMI softened in July
Japan's manufacturing PMI fell to a 20-month low in July
Capital outflows from EMDEs slowed in July
Financial world doomed to repeat bad behaviour
July 26, 2018--Worst types of transgressions have a habit of being repeated
Seven sins of finance have been repeated for centuries, as fraudsters carry out the same tricks to rip off investors despite tightening levels of regulatory scrutiny and advances in technology.
From gilt investors spreading false news that Napoleon Bonaparte had been killed in 1814 to two authors of the Daily Mirror's "City Slickers" column trading in shares they tipped almost two centuries later, there are a "limited number of behaviour patterns" that keep being repeated in financial fraud.
ERI Scientific Beta Newsletter-Quarterly,Issue 22, July 2018
July 25, 2018--Managing Sector Risk in Factor Investing
Common smart factor indices give explicit exposures to priced risk factors that should provide good long-term risk-adjusted performance. But they are also known to expose investors to a number of hidden or implicit risks as it has been documented in a recent Scientific Beta white paper (Shirbini, 2018).
In particular, investors expose themselves to an implicit bet on market beta, since most smart factor indices have a market beta below one. Other implicit risks are macroeconomics risks and sector or country risks. In this article, we will focus on the implicit sector risk taken by smart factor indices and will try to understand the implications on their short and long-term risk-adjusted performance. We will also discuss possibilities to avoid sector risks through appropriate risk control options, in particular the sector neutrality constraints introduced in Amenc and Goltz (2013) and available on the Scientific Beta index platform since its launch in 2013.
From Parts to Products: Why Trade Logistics Matter
July 24, 2018--STORY HIGHLIGHTS
The sixth edition of Connecting to Compete reveals a persistent gap between high-income and low-income countries on logistics performance. High-income countries score, on average, 48% better on logistics than low-income countries.
Logistics relates to how efficiently countries can move physical goods across and within borders. A country's performance in this area can determine how it participates in international markets.
Emerging trends in logistics include eco-friendly logistics options, labor shortages in both developed and developing countries, and preparedness for cyber threats.
Take a close look at your smart phone for a moment. What do you see? A glass screen. A button equipped with fingerprint recognition. A camera lens, flashlight, microphone, and speaker. Each of these components, and others-including chips, processors, batteries-are independently sourced from companies located all over the world and assembled into a finished product at factories, often in China. Any smart phone you purchase, and its components, has likely passed through customs several times, landed on multiple countries and continents, and been touched by countless workers.
view the DECPG Global Monthly-July 2018 Special Focus: The implications of high corporate debt
Millennials Value Financial Planning as Much as a Bonus Prolonged Slump in Bond Liquidity Rattles Markets Bitcoin Rises to U.S.$7,400 As Crypto Markets Hit U.S.$297 Billion First Bridge Data-ETF Global Snapshot-July 2018 Vanguard announced that it was eliminating online transaction fees for most ETFs
bought and sold on its brokerage platform, including those of its competitors.
There were 20 new ETF listings in the US in June 2018, and another 76 listings
outside the US.
US small cap healthcare, Internet and online retail stocks were among the best
performing ETF categories this year (based on YTD total return through July 17,
2018). Turkish and Philippines equities and sugar futures were among the worst
performing categories in the same time period.
US large caps ('SPY'; 1.6%) outperformed five other major asset classes in the
trailing 1-month through July 18, 2018.
July 23, 2018--Overview
Global growth appears to be decelerating, with a noticeable slowdown in global goods trade.
Among emerging market and developing economies (EMDEs), commodity exporters seem to have lost some momentum in the first half of 2018, while solid domestic demand and elevated energy prices are leading to rising inflation in many commodity importers.
Most commodity prices fell in July as U.S.-China trade tensions intensified. U.S. soybean prices were particularly affected.
Average corporate debt in EMDEs has risen from about 60 percent of GDP in 2006 to 86 percent of GDP in 2017, reaching levels comparable to that of government debt.
Excluding China, foreign currency debt has contributed nearly half of the recent rise in EMDE corporate debt.
High levels of debt leave EMDE corporates vulnerable to higher interest rates, foreign currency appreciation, and capital flow reversals; is associated with weak investment; and may affect banks’ ability to extend credit.<>view more
July 23, 2018--They also believe having an adviser they can trust is important for their financial confidence.
Seventy-five percent of Millennials say they would attend an in-person financial seminar, compared to 69% of Gen X and 62% of Baby Boomers, a survey by Guardian found.
Additionally, 87% of Millennials say that if they knew more about financial services and products, they would be more confident about reaching their financial goals. Nearly 100% of Millennials who have a financial plan and are on track to meet their financial goals say knowing more about financial products and services helps their confidence.
July 22, 2018--Investors are finding it harder to buy and sell bonds
Many bonds around the globe are becoming harder to trade, prompting some investors to shift to other markets and raising concerns about a broad decline in liquidity.
The median gap between the price at which traders offer to buy and sell, a proxy for the ability to move in and out of markets quickly, has widened this year across European corporate debt and emerging-market government and corporate bonds, according to data from trading platform MarketAxess.
July 21, 2018--Bitcoin, the world's largest cryptocurrency has traded above $7,400, posting an 11 per cent jump just as the digital currency market added $25 billion to reach a market valuation of $297 billion. With the good news of growing institutional involvement in the crypto space, Bitcoin was trading at $7455.46 as at press time according to the data on CoinMarketCap.
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July 20, 2018--Key Highlights
Our monthly 'ETF 20/20' report briefly summarizes recent Exchange Traded Fund (ETF)
trends globally. It uses data from the First Bridge ETF database that includes all global ETPs.
Global ETF assets were $T5.037 as of June 30, 2018.
On June 28, 2018 the US SEC proposed rule 6c-11 that will allow sponsors to bring
many ETFs to market more quickly, without requiring 'exemptive relief'.
