Global ETF News Older than One Year
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.
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Source: ETF Securities
Global economy on recovery path, risks remain--IMF chief
March 18, 2012--The global economy has stepped back from the brink of danger and signs of stabilisation are emerging from the euro zone and the United States, but high debt levels in developed markets and rising oil prices are key risks ahead, the IMF said on Sunday.
The global economy may be on a path to recovery, but there is not a great deal of room for maneuver and no room for policy mistakes," International Monetary Fund (IMF) Managing Director, Christine Lagarde, said in a speech in Beijing.
In a separate talk on the same day, Lagarde said that China's yuan could become a reserve currency in the future, adding that the country needed a roadmap for a stronger, more flexible exchange rate system
Source: Reuters
Dubai Gold & Commodities Exchange Weekly Market Commentary - March 18, 2012
March 18, 2012--Economic Data Overview
The largest rise in US consumer prices in ten months did not cause Treasury yield to rise. However strong jobs data and continued signs of growth in the US economy as well as concerns about the inflationary threat of energy costs saw US ten year yields make the most sustained advance in six years last week.
All markets are very nervous about inflation. The interest rate forward curve is now predicting a 25bp rise in US rates in the third quarter of 2013 instead of no change in rates until the final quarter of 2014.
The prospect of a further round of US quantitative easing now looks more distant. Growth is what the markets want to see out of the US but not inflation. The worst combination is limited growth and higher inflation, as the measures need to address inflation will suppress growth. With yields still not far from their all-time lows across the US yield curve, all the panic will be to upside inflationary shocks. Last year in crisis-torn markets the place to be was in the bonds and not stocks. This year equities are proving resilient as higher inflation may give companies the opportunity to grow margins. So far the official response is not to worry and the Fed suggests that the recent advance in energy costs will be temporary and overall inflation is expected to remain subdued.
Source: Dubai Gold & Commodities Exchange (DGCX)
Call to adopt US flash crash reforms globally
March 16, 2012--Reforms by the US authorities following the May 2010 “flash crash” should also be be introduced by other regulators, according to the International Organisation of Securities Commissions (Iosco), the umbrella body for the world’s market regulators.
In a consultation paper on exchange traded funds published on Wednesday, Iosco said ETF exchanges should consider adopting rules to mitigate the occurrence of liquidity shocks (such as the flash crash) and their transmission across correlated markets.
Source: FT.com
BRICS Exchanges To Cross-list Benchmark Equity Index Derivatives
March 16, 2012--Bombay Stock Exchange said the five of the world's leading emerging market indices would commence cross list their derivative indices on each other's trading platforms from March 30.
The cross-listing of benchmark equity index derivatives is likely to facilitate liquidity growth in the BRICS markets and will considerably strengthen their international position.
The derivatives to be cross-listed and offered in the local currency and local trading hours of each of the exchanges will include Brazil's IBOVESPA futures, Russia's MICEX Index futures, India's Sensex Index futures, Hong Kong's Hang Seng Index futures and Hang Seng China Enterprises Index futures, and South Africa's FTSE/JSE Top40 futures.
Further, JSE will also list options on the benchmark futures of the other four member exchanges.
Source: NASDAQ OMX
