Global ETF News Older than One Year
ECB threatens to stop trading swaps with US counterparties
October 27, 2011--ECB invokes US legal amendment providing it with broad immunities and says it might stop using US dealers unless granted exemptions from Dodd-Frank Act rules
The European Central Bank (ECB) has warned in a letter to the Commodity Futures Trading Commission (CFTC) that it might have to stop trading over-the-counter derivatives with US counterparties if it – and other eurozone central banks – are not granted exemptions from clearing, execution and reporting elements of the Dodd-Frank Act. The ECB also wants to be exempt from proposed rules on margining for uncleared trades.
Source: Risk.net
TABB Says Proposed Margin Rules for OTC Interest-Rate Derivatives Will Severely Damage Swaps Market Liquidity
Proposed Rules will Render Many Trade Structures Extinct and Represent $1.4 Trillion in New Capital Allocation Globally for Rates Swaps
October 26, 2011--Regulatory mandates requiring firms to post initial margin on over-the-counter derivatives (OTCD) are among the biggest changes that Dodd-Frank legislation is set to bring about. According to TABB Group estimates in new research, these new margin rules will cause OTC interest-rate derivatives market participants to shoulder at least $1.4 trillion in new capital charges globally within the next three to five years.
Although dealers have readily adopted clearing for the most vanilla segment of their OTC derivative portfolios, these exposures require comparatively little initial margin since they represent the cream of the proverbial crop,” says E. Paul Rowady, Jr., a TABB senior analyst and author of “Initial Margins for OTC Derivatives: The Burden of Opportunity Costs.” This new research examines the detailed costs of imposing new initial margin requirements on all OTC interest-rate derivatives, whether cleared or not.
For exotic OTC derivative positions and smaller portfolios held by a majority of other end users, however, Rowady explains that the initial margin requirements will range from painful to the outright extinction of some types of trades. “Only through cross-margining and other offset mechanisms can these opportunity costs be minimized.”
Source: TABB Group
FTSE Licenses NASDAQ OMX With The Industry Classification Benchmark (ICB) Across Seven European Exchanges
October 26, 2011--FTSE Group (“FTSE”), the award winning global index provider, today announces that worldwide exchange NASDAQ OMX will be adopting the widely used global standard for company classification - Industry Classification Benchmark (ICB).
The global classification system will be adopted across Stockholm, Copenhagen, Helsinki, Reykjavik, Tallinn, Riga and Vilnius, aligning the exchanges with the classification system currently employed by NASDAQ OMX in the US.
NASDAQ OMX will replace its current company classification system with ICB, to aid the classification and analysis of companies listed on these seven exchanges. The change will be made effective as of 1st February 2012.
Source: FTSE
UBS Updates Its 2010 Financial Controls Assessment
October 25, 2011--Following the discovery of the unauthorized trading activities that UBS announced in September, management has determined that certain internal controls were not effective on December 31, 2010, but at the same time has reconfirmed the reliability of the financial statements included in UBS's 2010 annual report. The financial effect of the unauthorized trading activity is fully reflected in UBS's third quarter 2011 financial report.
As a US-listed company, UBS is required under the Sarbanes-Oxley Act to evaluate the effectiveness of its "internal control over financial reporting" and "disclosure controls and procedures" on an annual basis. Following the discovery of the unauthorized trading activities, management has determined that these controls were not effective on December 31, 2010. In a document submitted to the US Securities and Exchange Commission (SEC), we have identified two control deficiencies: (i) the control requiring bilateral confirmation with counterparties of trades within our Investment Bank's equities business with settlement dates of greater than 15 days after trade date was not operating, and, when such trades were cancelled, re-booked or amended, the related monitoring control to ensure the validity of these changes had ceased to operate effectively, and (ii) the controls in the inter-desk reconciliation process within the Investment Bank’s equities and fixed income, currencies and commodities businesses to ensure that internal transactions are valid and accurately recorded in our books and records, including controls over cancellations and amendments of internal trades that require supervisor review, intervention and resolution, did not operate effectively. We have taken and are taking measures to address these control deficiencies.
Source: UBS
Nasdaq plans European derivatives platform
October 25, 2011--Nasdaq OMX, the US exchange operator, is planning to set up a European derivatives trading platform based in London in a bid to compete against Deutsche Börse, NYSE Euronext and the London Stock Exchange, three people familiar with the matter said.
The move comes as the proposed combination of Deutsche Börse with NYSE Euronext, a bid by the LSE for LCH.Clearnet, the UK clearing house, and a raft of new European market regulations have thrown the exchange landscape into a state of flux.
Source: FT.com
Northern Trust makes new appointment to lead Alternatives Group unit
October 25, 2011--Northern Trust has hired Robert Morgan to lead a new unit, Northern Trust Alternatives Group, formed to develop and manage all alternative investment products, including hedge and private equity funds of funds, for institutional and personal clients.
In his role, Morgan, who had previously been director of private equity, will oversee approximately $3.5bn under management or advisory as managing director of the new group.
Morgan has more than 20 years of financial industry experience and has invested in more than 100 private equity funds covering the buyout, venture capital, real estate and international markets.
Source: BBR
EDHEC-Risk Institute study sheds new light on commodity investment and financialisation of commodity markets
October 25, 2011--A number of policy-makers have blamed the decade-long rise in commodity prices and recent market volatility on the growing influence of financial investors and called for new regulation restricting their participation in commodity markets. Market financialisation has also led investors to worry about higher integration between commodity and traditional financial markets weakening the portfolio benefits of commodity investment
EDHEC-Risk Institute Professor Joëlle Miffre addresses these concerns in a study released today entitled “Long-Short Commodity Investing: Implications for Portfolio Risk and Market Regulation”, produced with market data and support from CME Group.
The study first examines the performance and risk characteristics of long-only commodity index investments favoured by passive investors and of long/short commodity strategies of the kind implemented by hedge fund managers.
Over 1992-2011, strategies involving going long and short in commodity futures based on signals such as momentum, term structure or hedging pressure are found to dominate investment in long-only commodity indices, in terms of raw as well as risk-adjusted performance.
Source: EDHEC
Yen hits record high vs dollar on weak US economic news; Euro falls on rocky crisis talks
October 25, 2011--The Japanese yen rose against other major currencies Tuesday after U.S. consumer sentiment weakened and talks on Europe’s debt crisis appeared to break down.
The dollar fell to a record low against the yen after news that U.S. consumers’ views of the economy are the worst since the middle of the Great Recession. The Conference Board’s index of consumer sentiment was the worst since March 2009, far lower than analysts had expected.
Source: Washington Post
NASDAQ OMX Acquires Glide Technologies
First Exchange to Offer Integrated PR and IR Content Management, Monitoring and Analysis in a Single Product Set
October 24, 2011--The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) today announced that it has agreed to acquire Glide Technologies Limited, a leading London-based software-as-a-service (SaaS) provider specializing in corporate communications and reputation management solutions.
Glide Technologies will be integrated into NASDAQ OMX's Corporate Solutions to create the first and only fully-integrated workflow solution for investor relations and public relations professionals.
NASDAQ OMX Corporate Solutions helps public and private companies minimize risk, maximize efficiency and increase transparency with a suite of products that improves market intelligence, communications effectiveness with key constituencies, corporate governance and overall visibility.
NASDAQ OMX Corporate Solutions will integrate Glide Technologies' media monitoring, measurement, content management and newsroom offering with NASDAQ OMX Corporate Solutions' communications suite of services. This will provide public relations and investor relations professionals with a unified platform that allows them to easily plan and implement media and investor campaigns, build media lists, distribute press releases and closely monitor the effectiveness of their campaigns.
Source: NASDAQ OMX
RTS and MICEX Merger awarded "Deal of the Year"
October 24, 2011--MICEX and RTS were awarded "Company of the year" in the category "Deal of the year".
On its web-site the organizer of the competition, business weekly magazine "KOMPANIYA" (Rodionov’s publishing house), informs that the decision on awarding was made by a council of experts which includes famous journalists, independent experts, representatives of business associations and state bodies.
The deal between MICEX and RTS is estimated at one billion US dollars. The legal merger of two bourses will be finalized on December 19, 2011.
The merger of Russia’s major exchanges is aimed at establishing the integrated exchange which will be able to compete with leading global trading venues in terms of investors and issuers and meet high demands of an international financial center.
Source: MICEX and RTS
