Global ETF News Older than One Year
Synthetic route has real appeal
March 23, 2012--When correlations go to one; when securities are hard to borrow; and when banks are looking to do bespoke trades rather than commoditised executions, prime brokers are increasingly turning to a common solution: Delta one.
Delta one is so-named after the Greek symbol that indicates “change”, because it strives to create derivatives for clients that replicate the performance of an underlying instrument – a change of one-to-one. It is also known as “synthetic”, as opposed to “cash”, in which the client owns the underlying instruments directly.
Source: FT.com
SEC Establishes New Supervisory Cooperation Arrangements With Foreign Counterparts
March 23, 2012--The Securities and Exchange Commission today announced that it has established comprehensive arrangements with the Cayman Islands Monetary Authority (CIMA) and the European Securities and Markets Authority (ESMA) as part of long-term strategy to improve the oversight of regulated entities that operate across national borders.
The two memoranda of understanding (MOUs) reached this month follow on a similar supervisory arrangement that the SEC concluded with the Quebec Autorité des marchés financiers and the Ontario Securities Commission in 2010 and expanded to include the Alberta Securities Commission and the British Columbia Securities Commission last September.
The SEC’s latest supervisory cooperation arrangements will enhance SEC staff ability to share information about such regulated entities as investment advisers, investment fund managers, broker-dealers, and credit rating agencies. The Cayman Islands is a major offshore financial center and home to large numbers of hedge funds, investment advisers and investment managers that frequently access the U.S. market. ESMA is a pan-European Union agency that regulates credit rating agencies and fosters regulatory convergence among European Union securities regulators.
“Supervisory cooperation arrangements help the SEC build closer relationships with its counterparts to cooperate and consult on each other’s oversight activities in ways that may help prevent fraud in the long term or lessen the chances of future financial crises,” said Ethiopis Tafara, Director of the SEC’s Office of International Affairs.
Source: SEC.gov
ESMA issues a report on its first examinations of credit rating agencies
March 22, 2012--ESMA today publishes a report (ESMA/2012/207) on the supervision of Credit Rating Agencies (CRAs) registered in the European Union (EU).
The report provides an overview of ESMA’s supervisory activity and summarises the results of the first examinations ESMA conducted in December 2011 of three groups of CRAs, namely Fitch Ratings (Fitch), Moody’s Investor Services (Moody’s) and Standard and Poor’s Rating Services (S&P).
view the ESMA’s Report on the Supervision of Credit Rating Agencies
Source: ESMA
IOSCO Publishes Updated Systemic Risk Data Requirements for Hedge Funds
MArch 22, 2012--The Technical Committee of the International Organization of Securities Commissions (IOSCO) has published an updated list of categories of data for the global collection of hedge fund information which it believes will assist in assessing possible systemic risks arising from the sector.
The data categories were first published in February 2010 with the first IOSCO hedge fund survey in September 2010.
The Task Force on Unregulated Financial Entities (Task Force) has agreed to conduct a second hedge fund survey in September 2012. In support of this the Task Force has reviewed the categories of data used for the first survey and based on lessons learned and recent legislative developments in the US and Europe, has amended the list of data it will collect for the second survey. IOSCO believes that regular monitoring of hedge funds by securities regulators for systemic risk indicators/measures, such as size, interconnectedness and substitutability, will provide a vitally important time series of data that will help to monitor trends in hedge funds and therefore provide an invaluable insight into any potential systemic risks that hedge funds may pose to the global financial system.
Source: IOSCO
Deutsche Avoids Dodd-Frank Rule
German Bank Restructures U.S. Unit to Avoid New Capital Requirements; Regulators Don't Object.
March 22, 2012--Deutsche Bank AG changed the legal structure of its huge U.S. subsidiary to shield it from new regulations that would have required the German bank to pump new capital into the U.S. arm.
The bank on Feb. 1 reorganized its U.S. subsidiary, known as Taunus Corp., so that it is no longer classified as a "bank-holding company," according to disclosures by the bank and on the U.S. Federal Reserve's website. Deutsche Bank is at least the second large European bank to make such a change, following in the footsteps of the U.K.'s Barclays PLC.
Source: Wall Street Journal
Written Testimony of Secretary Geithner before the House Financial Services Committee on the State of the International Financial System
As Prepared for Delivery
March 20, 2012--Chairman Bachus, Ranking Member Frank, and members of the Committee, thank you for the opportunity to testify today on developments in Europe. Europe is a key strategic and economic partner of the United States, and we have an enormous stake in the success of European efforts to restore financial stability and secure growth.
The U.S. recovery is getting stronger, but the strength of our recovery will depend in part on events beyond our shores, as we saw last year when U.S. growth was buffeted by headwinds from Europe.
Since that time, European leaders have taken a series of steps to address the crisis and we are encouraged by the progress to date. We hope Europe will build on that progress with additional actions to calm the financial tensions that have been so damaging to global economic growth and put in place a stronger framework of policies and institutions to make the European Monetary Union viable over the longer term and help the member countries to strengthen economic growth.
The European Policy Response
With our encouragement and the support of the IMF, Europe’s leaders have put in place a comprehensive strategy to address the crisis. This strategy has the following key elements:
Economic reforms in the member states to restore fiscal sustainability, restructure the banking systems, and improve competitiveness and growth prospects;
Institutional reforms, including the “Fiscal Compact,” that establish stronger disciplines on the fiscal policies of the member states to limit future deficits and debt as a share of GDP;
A coordinated strategy to recapitalize the European financial system, with government guarantees of funding; and
A “firewall” of funds to provide financial support to governments that are undertaking reforms to help assure access to financing on sustainable terms.
These efforts by governments have been reinforced by a substantial amount of support from the European Central Bank.
The European economies at the center of the crisis have made very significant progress.
The causes of the crisis were years in the making and were very different across the continent.
Source: US Department of the Treasury
Rising global growth hopes fuel equity appetite: BofA poll
March 20, 2012--Investors' mood improved in March as brighter prospects for global growth and scaled back predictions of further monetary easing benefited equities, a closely-watched fund managers' survey showed on Tuesday.
The monthly poll from Bank of America Merrill Lynch showed a dramatic rise in investor expectations that the global economy will improve, adding to bullish sentiment from last month's poll.
Source: Economic Times
The Global Financial Centres Index 11 Report
March 19, 2012-Foreword
The Global Financial Centres Index is a
barometer, tracking the shifts of
competitiveness in global financial centres, andover the last few years it has shown that Canada’s economy is weathering the storm. We
entered the downturn in better condition than many, because when times were good we managed surplus budgets and kept down the national debt. Today Canada has the lowest net
debt to GDP ratio in the G-7.
Forbes magazine ranks Canada as the best country in the world inwhich to do business. We have generous R&D tax incentives, first rate technology and innovation, a highly skilled workforce, investor protection and a lack of red tape. The OECD and the IMF predict that our economy will continue to be a leader in the industrialised world over the next two years.
The main headlines of GFCI 11 are:
The past trend of large rises in the ratings of Asia/Pacific centres has paused. Hong Kong, Singapore, Tokyo, Shanghai, Beijing, Taipei and
Shenzhen all decline in GFCI 11. Centres on the mainland of China have seen significant declines with Shanghai down 37 points and Beijing down 11. Hong Kong sees a 16 point
drop and is now 27 points below London.
view The Global Financial Centres Index 11 report
Source: Z/Yen
IMF Paper-Managing Volatility in Low-Income Countries - The Role and Potential for Contingent Financial Instruments
March 19, 2012--Summary:The paper examines the case for contingent financial instruments for low-income countries (LICs), from both the market and official sector. These include commodity price hedging instruments, contingent debt instruments (commodity-linked bonds, deferred repayment loans), and natural disaster insurance, for example.
The paper considers the adequacy of the existing framework of ex post and ex ante support to LICs facing exogenous shocks, and examines the need for and possible constraints to greater availability of contingent instruments. Would there be a role for the international community, particularly the IMF and World Bank, in helping to address the constraints that limit development and use of these instruments?
Source: IMF
ETFS Precious Metals Weekly: Platinum Price Surges Past Gold as Cyclical Assets Rally on Macro Outlook
March 19, 2012--Gold price falls, platinum price rallies as global growth confidence continues to improve. The gold price fell to its lowest
level in two months last week as continued improvements in US
economic data and an increase in the Fed’s assessment of the
economic outlook cuased investors to reduce their expectations of
further near-term monetary easing.
While the recent price correction has pushed gold down below its 200-day moving average, underlying structural fundamentals supporting the gold price such as low real interest rates, currency debasement concerns, sovereign debt risks, emerging market central bank diversification of reserve assets into gold, rising China consumer and investor demand, have not changed. Perhaps not surprisingly, with confidence in a sustainable global growth rebound improving, cylically-sensitive precious metals such as platinum and palladium are benefitting, with the platinum price surging above the gold price last week for the first time in six months. As long as this growth optimism continues, the more cyclically sensitive precious metals will likely continue to outperform.
India doubles gold import duties in an attempt to slow rising current account deficit. India’s finance minister, in his budget speech, announced that the basic customs duty on standard gold coins and bars will be increased fom 2% to 4% in a bid to reduce the current account deficit. Mr Muherjee noted that ‘one pf the primary drivers of the current account deficit has been the growth of almost 50% in imports of gold and precious metals’. The rise in duties is expected to be passed onto consumers by jewellers and likely to be another constraint on the world’s largest jewellery market at a time when the Indian rupee is hovering near 2-month lows against the US Dollar.
Zimbabwe pushes ahead with ‘indigenisation’ plans. Impala Platinum’s Zimbabwean subsidiary, Zimplats, has agreed to transfer a 51% stake to local indigenous groups and the government after a threat by the government to nationalise the company. Platinum Group metals prices have remained well supported despite the selloff in both gold and silver in recent weeks.
visit www.etfsecurities.com for more info
Source: ETF Securities
