Global ETF News Older than One Year
ISDA publishes Additional Provisions relating to Credit Derivative Transactions with a Restricted Delivery Party where Physical Settlement applies
June 25, 2013--The International Swaps and Derivatives Association, Inc. (ISDA) today announced the publication of Additional Provisions relating to Credit Derivative Transactions with a Restricted Delivery Party where Physical Settlement applies.
The Additional Provisions are for use where the settlement method is physical settlement (either as the fallback settlement method or otherwise) and either party to the Credit Derivative Transaction is restricted from holding a Loan or there is a limit on the outstanding principal balance of a Bond which it may hold. This may be the case where, for example, the protection seller is a UCITS (Undertakings for Collective Investment in Transferable Securities) fund. The Additional Provisions provide for cash settlement rather than physical settlement to occur in these cases.
Source: International Swaps and Derivatives Association, Inc. (ISDA)
Northern Trust White paper-Understanding Factor Tilts
Style factor tilts can play a valuable role in portfolio
June 25, 2013--Although their efficacy conflicts with modern financial theory, investors have successfully employed style factor tilts for more than 40 years to improve on passive capitalization weighted equity portfolios.
Empirical studies of popular style tilts like value, small size and momentum repeatedly have been shown to outperform benchmarks across most global markets. Because these results are inconsistent with the classic notion that return is a function of risk alone, they are considered anomalous.
To better understand the role factor tilts can play in a portfolio, it is helpful to understand their origin and historical track record. From here, we will examine the theoretical justification for their effectiveness and the consistency of their returns through time. In doing so, we have expanded the traditional scope of style factors to include volatility, quality and dividend yield, among others.
view the Northern Trust White paper-Understanding Factor Tilts
Source: Northern Trust
ETF Securities-Precious Metals Weekly: Precious Metals: Opportunities Open Up For Contrarian Investors
June 24, 2013--Most cyclical asset prices fell after Fed Chairman Bernanke announced that the Fed, on certain conditions, projects an end to quantitative easing (QE) by the
middle of 2014.
Prices of precious metals fell sharply as a hardening of QE removal expectations hit gold and silver prices, and platinum and palladium prices were pulled down by a broad-based sell-off of cyclical assets. A rebound of the US dollar exacerbated the sell-off. While tactical sentiment towards gold and silver prices will likely remain negative as long as interest rate expectations continue to rise and the US dollar continues to strengthen, there are reasons for contrarian investors to look favourably on precious metals. At current levels gold, silver, platinum and palladium are estimated to be trading around or below their respective marginal costs of production.
In addition, physical buyers at current prices-particularly of gold -have started to step in again. Short gold futures positioning on COMEX is at an all-time high and nearly every broker is now negative gold. Therefore, while further downside in the short-term is possible, investors with longer-term time-horizons may start to look at the recent sell-off as a longer-term accumulation opportunity.
Source: ETF Securities
ETFs Need Tougher Collateral and Disclosure Rules, Iosco Says
June 24, 2013--Global markets regulators called for tougher oversight of exchange-traded funds, recommending stricter rules on collateral and investor information.
ETFs that track stock markets should publish daily the identities of the securities, they buy and sell, the International Organization of Securities Commissions said in a statement on guidelines published today. The Madrid-based group of global markets regulators said authorities should also ensure ETFs that trade derivatives have enough collateral to manage risks with their counterparties.
Source: Bloomberg
Global regulators agree framework for exchange-traded funds rules
June 24, 2013--Global securities regulators published a framework for further regulation of the $1.9 trillion Exchange Traded Funds (ETFs) market on Monday, seeking to make ETFs more consumer friendly as their index-based investment strategies grow in popularity.
The Madrid-based umbrella group International Organisation of Securities Commissions (IOSCO) wants national regulators to encourage more disclosure to help investors differentiate between the growing range of exchange-traded products and the specific risks of each ETF type.
Source: Reuters
EU clears ICE, NYSE Euronext stock market tie-up
June 24, 2013--The European Commission approved Monday the acquisition of NYSE Euronext, which operates the New York stock exchange and several bourses in Europe, by InterContinental Exchange.
The deal did "not raise competition concerns as (the two) are not direct competitors in the markets concerned and would continue to face competition from a number of other competitors," the Commission said in a statement.
Source: EUbusiness
IOSCO Publishes Principles for the Regulation of Exchange Traded Funds
June 24, 2013--The Board of the International Organization of Securities Commissions today published the final report on Principles for the Regulation of Exchange Traded Funds (ETFs), containing nine important principles intended to guide the regulation of ETFs and foster industry best practices in relation to these products.
Investor interest in ETFs has increased worldwide as evidenced by the sharp increase in funds invested in these types of products. Assets managed under ETF structures totaled almost USD 1.9 trillion at end January 2013, representing roughly 7% of the global mutual fund market. This dynamic growth in ETFs has gradually attracted the attention of regulators, concerned about the potential impact of ETFs on investors and on the broader marketplace, as the industry has continued to evolve through diversification and the launch of new innovative products.
view the Principles for the Regulation of Exchange Traded Funds Final Report
Source: IOSCO
Making the most of borrowed time: repair and reform the only way to growth, says BIS in 83rd Annual Report
June 23, 2013--Only a forceful programme of repair and reform will return economies to strong and sustainable real growth, writes the Bank for International Settlements (BIS) in its 83rd Annual Report, released today.
In its main economic review for the year, the BIS points out that although six years have passed since the eruption of the global financial crisis, robust, self-sustaining growth still eludes the global economy. During this time, central banks in advanced economies have been forced to look for ways to increase their degree of accommodation. But central banks cannot solve the structural problems that are preventing a return to strong and sustainable growth.
Source: BIS
Regulatory glut hampers fund market growth
June 23, 2013--Scores of asset managers are being blocked from easily selling investment products into new markets after being hit by a wave of "complex and often contradictory" regulations, a survey by KPMG, the financial services firm, suggests.
The governments around the world are imposing rigid rules on the asset management sector. These regulations vary widely from Europe and Asia to the US. And this throws a wrench into plans by fund houses to expand into Africa, the Middle East and other potentially lucrative regions, according to the report.
Source: FT.com
BlackRock to cull 250 funds
Focus switches to products that account for higher proportion of revenues
June 23, 2013--BlackRock plans to cut 250 funds from its range to focus on products that account for a higher proportion of revenues.
The cull is meant to help remedy the fact that the top 50 per cent of BlackRock’s funds currently account for 99 per cent of fund revenues, Rich Kushel, the deputy chief operating officer, told attendees at the fund manager’s annual investor day last week.
Source: Gulf News
