Global ETF News Older than One Year
Using ETFs to Conceal Insider Trading
February 1, 2023--Abstract
We show that exchange traded funds (ETFs) are used in a new form of insider trading known as "shadow trading." Our evidence suggests that some traders in possession of material non-public information about upcoming M&A announcements trade in ETFs that contain the target stock, rather than trading the underlying company shares, thereby concealing their insider trading.
Using bootstrap techniques to identify abnormal trading in treatment and control samples, we find significant levels of shadow trading in 3-6% of same-industry ETFs prior to M&A announcements, equating to at least $212 million of such trading per annum. Our findings suggest insider trading is more pervasive than just the "direct" forms that have been the focus of research and enforcement to date.
Source: ssrn.com
WTO-Exports of intermediate goods post sustained growth in second quarter of 2022
February 1, 2023--World exports of intermediate goods (IGs) grew 4% year-on-year in the second quarter of 2022 to US$ 2.5 trillion, driven by the increase in shipments of intermediate food products. The overall growth, while slower than the increase recorded in the same period a year ago, continues to indicate stable activity in global supply chains.
The share of IGs in total trade (excluding fuels) remained at 50% in the second quarter of 2022, a ratio that has remained constant over the last decade. IGs refer to inputs used to produce a final product and are an indicator of the activity in global supply chains. In comparison, world IG exports grew by 47% year-on-year in the second quarter of 2021.
Source: WTO (World Trade Organization)
IMF-Inflation Peaking amid Low Growth
January 2023
January 31, 2023--Overview
Global inflation will fall in 2023 and 2024 amid subpar economic growth
Global growth is projected to fall from an estimated 3.4 percent in 2022 to 2.9 percent in 2023, then rise to 3.1 percent in 2024. The forecast for 2023 is 0.2 percentage point higher than predicted in the October 2022 World Economic Outlook (WEO) but below the historical (2000-19) average of 3.8 percent. The rise in central bank rates to fight inflation and Russia’s war in Ukraine continue to weigh on economic activity.
The rapid spread of COVID-19 in China dampened growth in 2022, but the recent reopening has paved the way for a faster-than-expected recovery. Global inflation is expected to fall from 8.8 percent in 2022 to 6.6 percent in 2023 and 4.3 percent in 2024, still above pre-pandemic (2017–19) levels of about 3.5 percent.
The balance of risks remains tilted to the downside, but adverse risks have moderated since the October 2022 WEO. On the upside, a stronger boost from pent-up demand in numerous economies or a faster fall in inflation are plausible. On the downside, severe health outcomes in China could hold back the recovery, Russia's war in Ukraine could escalate, and tighter global financing costs could worsen debt distress. Financial markets could also suddenly reprice in response to adverse inflation news, while further geopolitical fragmentation could hamper economic progress.
Source: imf.org
New study finds insider traders using ETFs
January 31, 2023--Criminals with inside knowledge of M&A deals are now using ETFs to hide their insider trading from regulators, according to experts in illegal financial market behaviour.
The same financial market researchers who found that insider trading in stocks occurs before 20 per cent of takeover deals now say criminals are using exchange-traded funds to cover their illegal trading activity.
This method of avoiding the scrutiny of regulators is called "shadow trading" and it is widespread in financial markets, according to Vinay Patel and Talis Putnins from the University of Technology Sydney.
The paper, called Using ETFs to conceal insider trading, has just been published by Patel and Putnins , and Elza Eglite and Dans Staermans from the Stockholm School of Economics.
The central finding of the paper is that before a merger and acquisition announcement, some insiders trade ETFs, which contain the company involved in the takeover deal. This avoids investing directly in the company that is the subject of the M&A announcement.
Source: afr.com
IOSCO revises its 2011 Principles for the Regulation and Supervision of Commodity Derivatives Markets to ensure market integrity
January 31, 2123--The Board of the International Organization of Securities Commissions today has published a revised version of its 2011 Principles for the Regulation and Supervision of Commodity Derivatives Markets. The aim of the revision is to ensure that these Principles continue to provide a resilient framework for the regulation and oversight of the commodity derivatives markets.
While the Principles reflected the characteristics of commodity derivatives markets in 2011, these markets have continued to evolve over the past decade, spurred by various market developments and international events in the form of external disruptions, such as the COVID-19 pandemic and the Russia-Ukraine conflict.
Source: IOSCO
Countries Should Act Now to Limit Rising Risks From Corporate Distress
January 31, 2023--Sharp rises in global interest rates could spark corporate distress and pose wider problems for many economies
Corporate debt rose by more than $12 trillion in advanced and emerging economies during the pandemic as companies borrowed to strengthen their balance sheets and survive the economic shock.
But steep rises in interest rates and more expensive debt service are stretching firms' finances, even as global debt declines as a share of gross domestic product.
This build-up of risk in the corporate sector and a doubling of funding costs for even the safest issuers could pose serious problems for many economies and their financial systems. A new machine-learning model developed by IMF staff predicts the probability of corporate distress spilling over into systemic economic risk, based on lessons from previous crises in 55 advanced and emerging economies since 1995. We identify around 50 indicators-from firms' debt ratios to credit expansion and overvalued assets-that might have power to predict future crises and then train the model.
Source: imf.org
Global Economy to Slow Further Amid Signs of Resilience and China Re-opening
January 30, 2023--The fight against inflation is starting to pay off, but central banks must continue their efforts
The global economy is poised to slow this year, before rebounding next year. Growth will remain weak by historical standards, as the fight against inflation and Russia's war in Ukraine weigh on activity.
Despite these headwinds, the outlook is less gloomy than in our October forecast, and could represent a turning point, with growth bottoming out and inflation declining.
Economic growth proved surprisingly resilient in the third quarter of last year, with strong labor markets, robust household consumption and business investment, and better-than-expected adaptation to the energy crisis in Europe. Inflation, too, showed improvement, with overall measures now decreasing in most countries-even if core inflation, which excludes more volatile energy and food prices, has yet to peak in many countries.
Source: imf.org
How Innovation is Revolutionizing Global Trade
January 30, 2023--Global trade, in many ways, makes the world go round. Think of any electronic good, clothing item, or perhaps a chocolate bar; all everyday items which are in consumers hands and homes because of global trade, providing countless jobs.
Mona Haddad, the Global Director for Trade, Investment and Competitiveness at the World Bank Group, explains: "Trade is an engine of growth that creates better jobs reduces poverty and increases economic opportunity."
Mona adds that trade liberalization increases GDP, and that it has, "lifted more than one billion out of poverty since 1990."
Source: worldbank.org
Crypto ETFs roar into life with eye-popping 2023 returns
January 30, 2023--Rebound has extended to tech funds such as ARKK, which has risen 25% this year
A swarm of cryptocurrency-focused equity exchange traded funds have enjoyed astonishing starts to 2023, chalking up sharp gains rarely seen by diversified stock funds.
The $3.9mn Valkyrie Bitcoin Miners ETF (WGMI) has led the way with a 101 per cent return since the turn of the year, but a flock of rival funds have also chalked up gains of between 40 and 80 per cent.
Source: ft.com
IOSCO report provides new insights into global investment funds industry
January 27, 2023--The Board of the International Organization of Securities Commissions (IOSCO) today published the second edition of the Investment Funds Statistics Report (IFSR), which provides new insights into the global investment funds industry.
The report is based on a comprehensive collection of IOSCO members' supervisory data as of end-02021.
The IFSR is an annual exercise that aims to facilitate the regular collection and analysis of investment fund data, enabling regulators and stakeholders to share information and observe trends in the global investment funds sector. It builds on the foundations of IOSCO's previous biennial Hedge Funds Survey.
Source: IOSCO