Global ETF News Older than One Year
World Federation of Exchanges Reports on High Frequency Trading (HFT)
May 29, 2013--The World Federation of Exchanges (WFE) today released a review on High Frequency Trading (HFT), describing it as a technology that financial firms are embracing around the world. Besides, the study notes the many initiatives and risk management practices that exchanges have adopted to enhance the safety, stability and integrity of the markets.
The review was directed by the WFE Board of Directors. “Exchanges have enacted many safeguards to ensure orderly markets. The WFE is committed to coordinating information and sharing principles among market operators on surveillance and risk management practices which may also be applied to HFT.” said Hüseyin Erkan, Chief Executive Officer of WFE.
Among the key points in the review
All around the world and across all markets, economic pressures and competition are pushing businesses to find the most effective ways to invest and hedge risks. Today, strategies using algorithmic trading and HFT play a central role on financial exchanges, alternative markets, and some banks’ internalized (over-the-counter) dealings.
Exchanges have adapted to the speed and automation of today’s markets by deploying sophisticated risk mitigation and surveillance technology, and are continuing to innovate in these areas to further enhance the safety, stability and integrity of the markets.
Today’s exchange markets are unquestionably faster, more transparent and more efficient than the market structures that preceded them. The substantial majority of the empirical research has concluded that HFT has had measurable beneficial impacts on a variety of core market quality metrics[1], including tighter spreads, increased liquidity, more efficient price formation, reduced transaction costs for market participants and lower market volatility in most circumstances.
view the Understanding High Frequency Trading (HFT) paper
Source: World Federation of Exchanges (WFE)
Trading precious metals using ETP data returns as much as 30%-JPMorgan
The bank says trading precious metals using ETPs would have returned an annual profit of about 30% since 2007.
May 29, 2013--Trading precious metals against each other based on purchases and sales through exchange-traded products would have returned an annual profit of about 30 percent since 2007, according to JPMorgan Chase & Co.
The bank rates investment in the products on a weekly basis, buying the metal with the highest current holding relative to the past six months and selling the one with the lowest relative holding. The strategy, which was first calculated this month, would have been successful about 56 percent of the time since 2007, according to JPMorgan.
Source: MineWeb.com
Foreign Investors Under Stress: Evidence from India
Summary: Emerging market policy makers have been concerned about the financial stability implications of financial globalization. These concerns are focused on behavior under stressed conditions.
Do tail events in the home country trigger off extreme responses by foreign investors -are foreign investors `fair weather friends'? In this, is there asymmetry between the response of foreign investors to very good versus very bad days? Do foreign investors have a major impact on domestic markets through large inflows or outflows -are they 'big fish in a small pond'? Do extreme events in world markets induce extreme behavior by foreign investors, thus making them vectors of crisis transmission? We propose a modified event study methodology focused on tail events, which yields evidence on these questions. The results, for India, do not suggest that financial globalization has induced instability on the equity market.
view the IMF working paper-Foreign Investors Under Stress: Evidence from India
Source: IMF
First Set of Global Data on Energy Access, Renewable Energy and Energy Efficiency Released
Global Tracking Framework Report identifies countries with most potential to make "high-impact" progress on sustainable energy and specifies policy measures to scale up action
May 28, 2013-- About 1.2 billion people-almost the population of India- don't have access to electricity, 2.8 billion have to rely on wood or other biomass to cook and heat their homes,
renewable energy accounts for 18 percent of the global energy mix, and the largest energy savings and greatest expansion of renewables happened in China.
These are just some of the findings of a unique new report by a multi-agency team led by the World Bank.
view the Global tracking framework (Vol. 3 of 3):Main report
Source: World Bank
IIFM releases 3rd edition of Sukuk report 'A Comprehensive Study of the Global Sukuk Market'
May 28, 2013--The International Islamic Financial Market (IIFM) today released its much awaited IIFM Sukuk Report (3rd Edition) which consists of A Comprehensive Study of the Global Sukuk Market. The research report sheds light on the growth and development of international and domestic Sukuk issuances from 2001-Jan 2013
Mr. Ijlal Ahmed Alvi, Chief Executive Officer of IIFM said, “The last two years were record years of Sukuk issuances which reached BHD35bio and BHD52bio in 2011 and 2012 respectively. This year has also started on a positive note and as per the report over BHD4bio worth of Sukuk was issued in January 2013 and the growth trend is expected to continue in coming years”.
The report also highlights the different Sukuk structures used by international Sukuk issuers as well as Sukuk structures used at domestic level by various jurisdictions active in issuing Sukuk.
Source: International Islamic Financial Market (IIFM)
Automated Trader: "Eurex Exchange releases results of proprietary HFT research"
May 27, 2013--Eurex Exchange is the first exchange in Europe to share part of its proprietary quantitative research on high-frequency trading (HFT) with the public. Key findings of this research include: (a) HFT participants played an important and beneficial role during one of the most extreme market situations Eurex Exchange has seen in recent years,
(b) HFT participants play a unique and indispensable role in the recovery of market quality right after large trades, and (c) Eurex Exchange did not find evidence of abusive HFT activity. In contrary, in the article in Automated Trader, Vassilis Vergotis, Dr. Randolf Roth and Bernard Hosman explain why, according to the study, high-frequency trading activity is an important positive contributor to overall market quality and stability.
Source: Eurex/Automated Trader
ETF Securities-Precious Metals Weekly: Palladium Rallies on Supply Concerns, Gold Retraces 1976 Patterns
May 27, 2013--Precious metal prices saw divergent trends last week, with two of the more
industrially-oriented metals-palladium and silver-seeing gains, while gold was
whip-sawed by Fed comments and US growth data.
Looking forward, we continue to expect the white metals to outperform on the back of continued improvements in global growth data and supply side constraints on palladium and platinum. The gold price in the near term will likely remain under pressure on perceptions the Fed's monetary stance will soon become less accommodative and the related strength of the US dollar.
Medium-term, however, strong physical buying by the public and central banks and a reversal of highly stretched short positions in the futures market make a strong case for a gold price rally later this year. Gold price whip-sawed by perceptions of Fed policy. With the Fed’s policy now tightly tied to highly unpredictable economic data, gold price volatility has increased and technical short-term trading has dominated the futures market.
Source: ETF Securities
Silver prices to remain under pressure this year-Barclays
Barclays says it expects the silver market to produce a its second largest surplus on record in 2013.
May 27, 2013--Silver is likely to be the weakest performer of the precious metals complex over 2013, Barclays says.
Writing in its Weekly Commodities note, the bank said it expects the silver market to deliver its second largest surplus in record this year, which is likely to put pressure on prices.
Source: MineWeb
Fund flows continue to dance to QE tune ahead of warning that the music may stop
May 24, 2013--Going into the third week of May QE was unequivocally shorthand for quantitative easing, the fuel that has propelled a number of benchmark equities indexes to multi-year highs during the current quarter.
By the end of the week, however, some investors were wondering if the acronym may be associated with “quick escape” in the weeks ahead as markets digested fresh signals from the US Federal Reserve that it is looking to normalize monetary policy as soon as the US economy is strong enough to cope.
Overall, flows into EPFR Global-tracked Equity Funds remained strong during the week ending May 22. But daily data showed commitments to all the major groups except Japan Equity Funds tailing off as the week progressed while flows into Bond Funds gained momentum. Bond Funds ended the week having taken in a net $4.49 billion versus $7.49 billion for Equity Funds and $16.03 billion for Money Market Funds.
Visit epfr.com for more info.
Source: EPFR
Eurex may copy CME swap futures
May 24, 2013--German exchange seeking legal advice on scope of Goldman Sachs patent behind CME's interest rate swap futures
Eurex is consulting with dealers and buy-side firms on the potential launch of a euro-denominated interest rate swap future contract that may mimic the design of contracts traded on US rival CME Group, Risk has learned.
Source: Risk.net
