Global ETF News Older than One Year
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 10, 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 issued today 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.
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 issued today 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
DB Global Equity Index & ETF Research : European ETF Market Monthly Monitor : Q3-11 equity price declines weigh down 2011 ETF market growth prospects
NEW REPORT LAUNCH: Monthly ETF Market Monitor
October 10, 2011--We are happy to announce the launch of our new European ETF Market Monthly Monitor. This new report will cover both European ETFs and ETCs and will also provide summary facts on the global and US markets.
Going forward, we are retiring our quarterly ETF market review publication. Moving from a quarterly to a monthly reporting schedule will permit us to provide enhanced and timely coverage. We will maintain our weekly reports, which will also get a facelift.
In addition to continuing our existing coverage on ETF assets, cash flows, turnover and new products, we have made several other enhancements to our reporting content:
Cash Flows: We are happy to report the most complete and timely ETF cash flow statistics on the street, providing analysis by ETF provider, by asset class and by segment.
Investment trends: Cumulative progressive cash flow analysis by asset class and by segment, both for intra-month as well as year to date. We have also created new classification categories, such as country and strategy type, which will permit the reader to better track ETF investment activity.
ETF trading share: We will capture and report ETF turnover relative to cash equities turnover, both for the European as well as US markets, including ETF OTC turnover relative to on-exchange turnover for Europe.
ETFs vs unlisted mutual funds: Reporting of ETF industry asset size and cash flows versus the unlisted mutual fund industry, for both the US and Europe.
Cost of investing: Updated total expense ratio [TER] averages for both ETFs (by investment strategy type) and ETCs (by segment). [Figures 63-66].
Turnover activity ranking by ETF listing: This is something which is particularly relevant in Europe where cross-exchange turnover is not fungible. [Figures 89-92]
ETF industry growth: Growth attribution analysis, distinguishing between (asset) price and cash flow/new money impact. [Figures 45-48]
Replication style analysis: European ETF industry analysis by replication style utilized, including analysis by asset class as well as by provider.
Global ETF provider ranking tables: We provide market share analysis both in terms of assets as well as new money/cash flow, turnover and products, at a European as well as at a global level, for both ETF and ETC providers.
ETF broker rankings: Competition has intensified not only among ETF providers in the past year, but also among ETF brokers. We initiate ETF and ETC broker ranking reporting, for €/$ activity as well as volume, based on advertised interest as reported by brokers. [Figures 100-103].
Exchange rankings: We track both the turnover by exchange and by exchange family, for both ETFs and ETCs. In addition, we report on-exchange vs OTC ETF turnover statistics for three major European exchanges. [Figures 85-92]
We will keep updating our content as information availability permits and would welcome any suggestions you might have in making the research more useful. In the meantime, many thanks for following our research and we look forward to continuing and strengthening the dialogue as the ETF industry continues to evolve.
To request a copy of the report
Source: Christos Costandinides, European Head of ETF Research & Strategy, Deutsche Bank
NYSE Euronext Announces Trading Volumes for September 2011 and Other Metrics
Double-Digit Growth in Trading Volumes Across All Venues Year-Over-Year
Global Derivatives ADV Up 23%; U.S. Equity Options ADV Up 32%
European Cash ADV Up 35%; U.S. Cash ADV Up 12%
October 7, 2011--NYSE Euronext (NYX) today announced trading volumes for its global derivatives and cash equities exchanges for September 2011[1].
Trading volumes across all venues were significantly higher year-over-year, but mostly declined sequentially from unseasonally strong levels in August 2011, which were driven by heightened market volatility in the U.S. and Europe.
Global derivatives average daily volume (“ADV”) of 9.5 million contracts in September 2011 increased 23.2% versus the prior year, driven by a 32.1% increase in U.S. options ADV. Cash equities ADV in September 2011 was strong, with European cash trading ADV increasing 34.6% and U.S. cash trading ADV increasing 12.3% from September 2010 levels.
Highlights
NYSE Euronext global derivatives ADV in September 2011 of 9.5 million contracts increased 23.2% compared to September 2010, but decreased 8.4% from elevated August 2011 levels.
Source: NYSE Euronext
Collapsing Deutsche Boerse Takeover of NYSE Can Still Return 45%: Real M&A
October 7, 2011--The Deutsche Boerse AG (DB1) acquisition of NYSE Euronext is valuing the owners of the New York Stock Exchange and Frankfurt bourse at $16.6 billion, about the same as the German exchange when the deal was announced in February -- diminished by the European debt crisis and an economy teetering on the brink of recession.
For all of the disappointment, traders buying NYSE Euronext shares today can make 45 percent after the deal is approved by regulators.
Since the two venues agreed to merge, the value of the acquisition has fallen more than any all-stock takeover in the U.S. this year as investors fled European equities, according to data compiled by Bloomberg. NYSE Euronext owners lost billions of dollars by tying themselves to Deutsche Boerse’s stock, which slid almost 40 percent from $16.2 billion eight months ago.
Source: Bloomberg
Dow Jones Islamic Market Indexes September 2011 Performance Report - Monthly Report On The Performance Of The Dow Jones Islamic Market Indexes
October 6, 2011--The global Dow Jones Islamic Market Titans 100 Index, which measures the performance of 100 of the leading Shari’ah compliant stocks globally, had a down month in September with a loss of 7.19%, closing at 2019.36.
In comparison, the Dow Jones Global Titans 50 Index, which measures the 50 biggest companies worldwide, posted a loss of 6.24%, closing at 160.21.
The Dow Jones Islamic Market Asia/Pacific Titans 25 Index, which measures the performance of 25 of the leading Shari’ah compliant stocks in the Asia/Pacific region, decreased 8.62% in September, closing at 1848.95. The Dow Jones Asian Titans 50 Index, in comparison, posted a loss of 8.74%, closing at 116.08.
Measuring Europe, the Dow Jones Islamic Market Europe Titans 25 Index, which measures the performance of the 25 of the leading Shari’ah compliant stocks in Europe, closed at 1874.93, a loss of 10.38% in September, while the conventional Dow Jones Europe Index loss 11.31%, closing at 221.76.
Source: Mondovisione
FSB Consultation Paper on a Common Template for Global Systemically Important Banks
October 6, 2011--The Financial Stability Board (FSB) has published a Consultation Paper on a Common Template for Global Systemically Important Banks.
Source: Financial Stability Board (FSB)
U.S. and China moving toward trade war?
October 5, 2011--China says it could be on the march to a trade war with the United States. That’s after the U.S. Senate on Monday passed a key test vote that targets countries believed to keep their currencies artificially weak.
If the bill passes in the Senate – perhaps as early as this week – it would be the next step at shooting new tariffs onto exports from those countries. Looking between those Congressional crosshairs, this week’s legislation is clearly aimed at China.
Source: CNN
NYSE Euronext and Deutsche Boerse Statement on Statement of Objections
October 5, 2011--NYSE Euronext and Deutsche Boerse Statement on Statement of Objections
Deutsche Boerse AG (XETRA:DB1) and NYSE Euronext (NYSE:NYX) today issued
the following statement regarding the issuance of a Statement of Objections by
the EU Competition Commission:
We can confirm that we have received a Statement of Objections from the European Commission. The Statement of Objections is a normal step in a second phase merger procedure. It sets out a provisional position of the Commission and does not prejudge the final outcome of the case.
We continue to strongly believe that our combination provides substantial capital and cost savings to users; advances the goal of a unified, liquid EU capital market for raising money and managing risk; and does not materially alter the competitive landscape.
We have worked closely with the European Commission during this process, and we look forward to continuing our open and constructive discussions as we work to complete the transaction by the end of this year.
Source: Deutsche Börse
Broker-Dealers Fund Markit's New Commission Management Platform
October 4, 2011-Markit, the New York and London-based valuations and post-trade service provider, has teamed up with some of the world’s largest broker dealers to launch a new commission management system which it claims will help fund managers allocate their commission credits effectively.
Funding the development of the new Markit Commission Manager are BofA Merrill Lynch; Barclays Capital, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan and Morgan Stanley.
A key component of commission management services are commission sharing agreements which allow fund managers to consolidate their trading activities with the best counterparties while directing commission payments to other sources of investment research.
Source: Securities Technology Monitor
Concern grows over dangers of ‘synthetic’ ETFs
October 4, 2011--First it was CDOs, then SPVs. Now the latest alphabet soup of financial products to come under scrutiny from regulators as potential threats to investor protection and economic stability are ETFs and ETPs – exchange-traded funds and similar products.
Securities regulators in the US and EU are worried that these increasingly complex products are being mis-sold to unwary investors who do not understand the counterparty and derivatives risks they are running.
Source: FT.com
