Global ETF News Older than One Year
Bats Pushes Derivatives, New Markets as It Reviews IPO
April 1, 2012--Bats Global Markets Inc. (BATS) will offer derivatives trading in Europe and push growth in markets such as Brazil as the third-largest U.S. equity-exchange operator seeks to re-establish credibility after a technical glitch forced it to cancel its initial public offering.
Bats, which also runs the biggest pan-European market after its purchase of Chi-X Europe, could trade derivatives in London as soon as the fourth quarter, Mark Hemsley, chief executive officer of Bats Chi-X Europe, said in an interview. The Lenexa, Kansas-based company is pressing ahead with its plans and will decide on a European clearinghouse to process the transactions in the third quarter. Equity-based contracts will probably be the first to be introduced, he said.
Source: Bloomberg
Dubai Gold & Commodities Exchange Weekly Market Commentary-April 1, 2012
April 1, 2012--Economic Data Overview
Oil dominated the headlines over the past week as the prospect of a release of European and US strategic reserves weighted on the market. WTI fell over 3% on the week.
Supplies are now deemed to be ample for President Barak Obama press ahead with his policy of sanctions against countries that import oil from Iran and restrictions on banks who process fund destined for Iran. OPEC has increased oil production and industry analysts suggest there is plenty of supply to meet current demand. Key producers have also been quoted talking down oil prices.
Opinion is divided, as we head into the most important data week of the month, about the strength and sustainability of US growth. Investors have not yet written off the prospect of QE3 which would see gains in both oil and gold prices, but the chances are declining with every passing month.
The first quarter of 2012 has seen the major US stock indices' rally by over 10%. Bonds on the other hand have posted the first quarterly losses since the beginning of last year. The US Federal Reserve engaged in another operation twist this week when it sold short dated debt and bought longer maturities in an attempt to keep mortgage rates lower. This policy is designed to underpin housing prices and boost consumer spending. However, bonds only held up briefly and were sold after the cooperation was completed. Both stocks and bonds are closer to pricing in increased inflationary pressures.
Amongst the growing evidence that the growth outlook for the US will continue to improve is the weekly jobless claims data. This week, the number of unemployed benefit seekers fell to the lowest level since 2008 and there were less people seeking extended benefit payments.
However, last year's final quarter growth at 3% was a little less than the market hoped for and there is continued concern about the pace of growth in corporate profits. This highlighted some temporary bond buying as investors feared that business investment would slow. Surveys of business sentiment have begun to show more positive signs with the Business Roundtable economic outlook index climbing to 96.9 from 77.9 in the previous three quarters. The Thomson Reuters/University of Michigan consumer sentiment index also rose to 76.2 from 75.3.
It is not surprising the Ben Bernanke has to continue to underpin economic confidence. When he spoke this week he stressed that accommodative policies will still be required for a long time. However, in the market, the timing for a Fed hike has come back nine months from late 2014 to the end of 2013. Also some members of the Fed have stressed the need for pre-emptive hikes to make sure that as growth becomes more firmly established, future inflation can be kept under control.
Next week the market will focus on the European unemployment rate which is expected at 10.8%. There are a series of interest rate decisions in Australia, the UK and Europe and no changes are expected. On Friday US Non-Farm Payrolls is expected at 211,000, slightly below last month's number ...
Source: Source: Dubai Gold & Commodities Exchange (DGCX)
Spotlight on Inequality: Why We Should Care
Inequality is of growing concern to people in rich as well as poor countries
World Bank economist Branko Milanovic: Disparity can hamper growth, threaten social stability
Richest 5 percent of Indians make less than lower middle-class Americans
March 30, 2012--Since World Bank economist Branko Milanovic published his book The Haves and the Have-Nots in early 2011, the discussion over inequality has heated up around the globe.
In the Western world, the focus on disparities in income and opportunity comes as the United States and Europe continue to struggle with a prolonged economic downturn that appears to be widening the gap between rich and poor. It has spurred street protests in Europe and become a lightning rod in the American presidential election.
At the same time, inequality is getting more attention in some developing nations such as China and India that seem to have sailed through the Great Recession relatively unscathed. A growing body of research indicates that growth and decreasing poverty rates in regions such as East Asia are coinciding with rising inequality which, in turn, leads to social tensions.
Source: World Bank
BRICS Bourses Start Cross-Listing Derivative Indices
BRICS nations start cross-listing emerging market derivatives indices but success depends on liquidity
March 30, 2012--Looking to expand product offerings beyond home markets, five of the world's leading emerging market indices, have started to cross-list derivative indices from Friday.
Brazil’s IBOVESPA futures; Russia’s MICEX Index futures; Hong Kong’s Hang Seng Index futures; and South Africa’s FTSE/JSE Top40 futures got listed on the BSE on Friday.
Part of the common linkage platform, the cross-listing however, could run into the same chicken-and-egg problem that has derailed similar efforts like liquidity.
The idea to give investors in one country exposure to another hot market in their local currency carries appeal, on paper at least
Source: Business World
Deborah Fuhr: understanding the counterparty risks
March 29, 2012--We have seen over the past two years a significant increase in regulatory concerns due to the rapid growth in exchange traded funds (ETFs) and other types of exchange traded products (ETPs).
Broadly, those concerns may be categorised under four headings. First, ETFs that use derivatives to replicate their index and especially so where the product provider and the derivative counterpart are part of the same corporate group. Second, the risks associated with securities lending, which is more typically confined to physically replicating funds, and third, the increased complexity of products and exposures, especially leveraged and inverse offerings.
Fourth, and to a significantly lesser emphasis, the risks associated with unregulated exchange traded products.
Source: CityWire
MSCI Launches Economic Exposure Indices
March 29, 2012-- MSCI Inc. (NYSE: MSCI), a leading provider of investment decision support tools worldwide, announced today that it has launched a family of MSCI Economic Exposure Indices which aim to reflect the performance of companies with significant exposure to specific regions or countries, regardless of their domicile. Many companies conduct business globally
and are exposed to the economies of multiple countries and regions. MSCI has developed a consistent and transparent methodology for estimating a firm’s economic exposure using the geographic distribution of its revenues, despite the many disparities in the way companies report their sales across geographic segments.
Source: MSCI
Mirae BRIC's Weekly
March 29, 2012--Markets Lose Momentum on Policy Concerns.
Hong Kong stock markets reversed its uptrend while China bourses traded lower with cyclical sectors the laggards when the further loosening policies, which were widely expected by the market, failed to materialize.
Mainland developers continued to retreat amid falling home prices due to housing curbs mentioned during the National People's Congress.
Indian Budget to Target Fiscal Consolidation.
The India market experienced volatility as investor sentiment waned with climbing oil prices hurting margins. However, foreign funds supported the markets on expectations that monetary easing will continue.
Priorities have been given to fiscal consolidation and reviving the investment cycle in the 2012-13 Budget. The FY13 Budget targets a fiscal deficit of 5.1 % of GDP, down from the 5.9% expected to print in FY12.
Source: Mirae Asset Management
Economy: US and Europe facing separate growth tracks, says OECD
March 29, 2012-- Economic growth in the G7 countries is expected to be firmer through the first half of 2012, but the recovery remains fragile and will likely proceed at different speeds in North America and Europe, the OECD said in its latest Interim Economic Assessment.
The Assessment, presented in Paris by Chief Economist Pier Carlo Padoan, says the G7 economies are projected to grow by 1.9 percent in both the first and second quarters of 2012, although a strong variance in outcomes is expected across this group of countries.
"Our forecast for the first half of 2012 points to robust growth in the United States and Canada, but much weaker activity in Europe, where the outlook remains fragile,” Mr Padoan said. “We may have stepped back from the edge of the cliff, but there’s still no room for complacency."
view the What is the economic outlook for OECD countries?-An interim assessment
Source: OECD
ISDA Final IRS, Credit and Equity Derivatives Matrix and Legend published (Standardisation Q2 2011)
March 29, 2012--ISDA has published the Standardisation Q2 (April-June) 2011-Final Interest Rate Derivatives Matrix and Legend Standardisation Matrix / corresponding legend.
Source: ISDA
Accounting Devices and Fiscal Illusions
March 28, 2012--EXECUTIVE SUMMARY
A government seeking to reduce its deficit can be tempted to replace genuine spending cuts or tax increases with accounting devices that give the illusion of change without its
substance, or that make the change appear larger than it actually is.
Under ideal accounting standards, this would not be possible, but in real accounting it sometimes is. For example, governments can sometimes sell assets or borrow money and count the proceeds as revenue, or defer unavoidable spending without recognizing a liability. In each case, this year’s reported deficit is reduced, but only at the expense of future deficits. The result is that the reported deficit loses some of its accuracy as a fiscal indicator.
The use of accounting stratagems cannot be eliminated, but several things can be done to reduce their use or at least bring them quickly to light. Governments can be encouraged to prepare audited financial statements—income statement, cash-flow statement, and balance sheet—according to international accounting standards, and statisticians, who in many countries use accounting data to compile the most important (“headline”) fiscal indicators, can be given the resources and independence to be both expert and impartial, as well as the authority to revise standards in the light of emerging problems. To help reveal remaining problems in headline fiscal indicators, a variety of alternative fiscal indicators can be monitored, since a problem suppressed in one fiscal indicator is likely to show up in another. Many of the devices documented in this note would be revealed if governments also reported change in net worth and high-quality long-term forecasts of the headline indicator of the deficit under current policy.
view the IMF Report-Accounting Devices and Fiscal Illusions
Source: IMF
