Global ETF News Older than One Year
The Options Industry Council Announces October Volume Increased 14 Percent
November 1, 2011--The Options Industry Council (OIC) announced today that 390,982,436 total options contracts changed hands in October, a 14.32 percent increase over October of last year when 342,006,211 contracts were traded.
Average daily volume in October was 18,618,211 contracts, 14.32 percent more than the 16,286,010 contracts in October 2010. Year-to-date volume through October stood at 3,898,045,930 contracts compared to 3,205,815,947 contracts traded in the same period last year, representing a 21.59 percent increase. Year-to-date average daily volume was 18,562,123 contracts, up 21.01 percent over 15,338,832 contracts through October of last year.
OIC also reported equity options volume experienced an increase of 12.82 percent with 360,081,121 contracts exchanged in October compared to 319,169,334 contracts for the same year-ago period. Equity options volume on average each day in October was 17,146,720 contracts, up 12.82 percent compared to 15,198,540 contracts for the same month last year. Year-to-date equity options volume through October stood at 3,608,405,887 contracts compared to the same point last year when 2,961,173,470 contracts were traded, representing a 21.86 percent increase.
Source: Options Industry Council (OIC)
ISDA Statement On CDS Credit Event Process
October 31, 2011--The International Swaps and Derivatives Association, Inc. (ISDA) today issued the following statement in order to ensure an accurate understanding of how credit events are determined for credit default swaps contracts.
Today’s statement is intended to underscore key points articulated in the Greek Sovereign Debt Q&A, updated on October 31, which discussed this issue with regards to the Eurozone proposal for Greek debt. Some media accounts of the information contained in the Q&A inaccurately described the credit event process.
The determination of whether a credit event occurs under CDS documentation is made by the relevant ISDA Determinations Committee (DC), which consists of 10 sell-side and five buy-side firms. ISDA serves as secretary to, but does not sit on, the DC. A supermajority of votes (12 of 15 DC members) is required to find that a credit event has occurred without the decision being subject to external legal review. A weaker majority decision would be subject to external legal review that might overturn such a determination.
The DC’s review of a potential credit event comes after a proposal has been announced and its final terms are publicly available and only if a market participant requests the DC to take up the matter. Neither of these has yet occurred with regards to the Greek sovereign debt situation. No debt issued by the Hellenic Republic has been modified to date, nor have the formal terms for any such modification under the Eurozone proposal yet been released. No market participant has yet made such a request to the DC.
Source: ISDA
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
