Global ETF News Older than One Year
Investors seek dollar havens after yen action
October 31, 2011--Currency markets were in risk aversion mode on Monday, but investors were limited in their choice of havens after Japan's intervention to weaken the yen left the dollar as the next best safe bet.
Japan's third foray into the foreign exchange markets to weaken the yen this year was prompted after the currency rose to a new high versus the dollar - with the US currency falling as low as Y75.35.
Source: FT.com
Financial Stability Board Publishes Recommendations To Strengthen Oversight And Regulation Of Shadow Banking
October 27, 2011--The Financial Stability Board (FSB) published today a report on Shadow Banking: Strengthening Oversight and Regulation. This report provides the FSB’s recommendations on this subject that were requested by the G20 Leaders at the November 2010 Seoul Summit.
The “shadow banking system” can broadly be described as “credit intermediation involving entities and activities outside the regular banking system.” According to one measure, the global shadow banking system grew rapidly before the crisis, from an estimated $27 trillion in 2002 to $60 trillion in 2007, and remained at around the same level in 2010.1
Intermediating credit through non-bank channels can have advantages, for example by providing an alternative source of funding and liquidity. However, as the recent financial crisis has shown, the shadow banking system can also be a source of systemic risk both directly and through its interconnectedness with the regular banking system. It can also create opportunities for arbitrage that might undermine stricter bank regulation and lead to a build-up of additional leverage and risks in the overall financial system. Enhancing supervision and regulation of the shadow banking system in areas where systemic risk and regulatory arbitrage concerns are inadequately addressed is therefore important.
Source: Financial Stability Board
Brazil’s Bovespa-Index Futures to List in Hong Kong Next Year, Pinto Says
October 27, 2011--Brazilian stock-index futures will be listed in Hong Kong by the second quarter of next year, as emerging markets accelerate efforts to boost cross-border trading, according to BM&FBovespa SA’s chief executive officer.
Brazil’s Bovespa index futures will be traded in the local currency in Hong Kong, Edemir Pinto said in an interview during a forum in Shanghai. The Shanghai and Shenzhen stock exchanges have also signed a letter of intent to join the so-called BRICS alliance, which includes Brazil, South Africa, India and Russia.
Source: Bloomberg
D.Boerse urges EU regulators to take wider futures view
D. Boerse says OTC trading dominates derivatives market
EU regulator's statement of objections warns of near-monopoly of combined entity
Regulator says no substitute between exchange-listed futures and OTC trade
Exchange operators seek to defend deal in two-day hearing
October 27, 2011-- Deutsche Boerse AG (DB1Gn.DE) sought to convince EU regulators to judge its bid for NYSE Euronext by assessing over-the-counter derivatives trading and not only its impact on the smaller exchange-listed market, in its bid to win clearance for the deal.
The European Commission is reviewing the $9 billion transaction only in terms of the exchange-listed market, sources have told Reuters. Securing EU regulatory approval is seen as the biggest hurdle for the operators, whose combination would create the world's largest exchange operator.
Source: Reuters
Oil and copper enjoy strong rebound
September 27, 2011--Commodities prices witnessed their sharpest one-day jump since March as investors sought to pick up industrial raw materials such as oil and copper at low prices following a series of heavy falls.
The benchmark Reuters-Jefferies CRB index, a basket of commodities including wheat, copper and oil, rallied 2.6 per cent, one of the biggest one-day rises since the 2008 financial crisis. However, it remained 4.4 per cent below its level one week ago, when the fall in prices accelerated.
Source: FT.com
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
