Global ETF News Older than One Year
Open Protocol Enabling Risk Aggregation: Publication of The Overture and the start of the consultative phase
June 7, 2011-On December 1st 2010, a Working Group comprised of leading investors, hedge funds, administrators and prime brokers was formed to develop an Open Protocol Enabling Risk Aggregation: an attempt to standardise how hedge funds collect, collate and convey market risk information. Today, co-chairs Albourne Partners and Thomson Reuters are pleased to publish a preliminary version of the Protocol, so as to be able to solicit feedback and suggestions from all, and any, interested parties.
It is envisaged that this period of public consultation will last until July 15th. There will then follow a period of re-writing and revision, as required, with a formal launch targeted for August 9th in London and August 11th in New York.
“We are very pleased to have been able to contribute our thoughts and time”, explained Bruce Cundick of Utah Retirement Systems, “as we think this initiative has the potential to substantially increase the utility of the risk information that we already receive, as well as prove to be a step towards greater industry-wide transparency”. While there is no formal obligation for the hedge funds on the Working Group to agree to submit information based on the final protocol, the D. E. Shaw group added, “We have been pleased to be involved in this process because as active practitioners, we have to grapple with this kind of technical detail and how best to present complex information every day.”
Source: The Open Protocol Enabling Risk Aggregation Working Group
World Bank Says Developing Countries Need to Shift From Crisis-Fighting to Policies That Will Sustain Growth
June 7, 2011--– As they put the financial crisis behind them, developing countries need to focus on tackling country-specific challenges such as achieving balanced growth through structural reforms, coping with inflationary pressures, and dealing with high commodity prices, the World Bank says in its June 2011 edition of Global Economic Prospects.
In contrast, prospects for high-income countries and many of Europe’s developing countries remain clouded by crisis-related problems such as high unemployment, household and banking-sector budget consolidation, and concerns over fiscal sustainability among other factors.
The World Bank projects that as developing countries reach full capacity, growth will slow from 7.3 percent in 2010 to around 6.3 percent each year from 2011-2013. High-income countries will see growth slow from 2.7 percent in 2010 to 2.2 percent in 2011 before picking up to 2.7 percent and 2.6 percent in 2012 and 2013 respectively.
view the report-Global Economic Prospects
Source: World Bank
Deutsche Börse AG and NYSE Euronext announce special dividend of €2.00 per share for shareholders of the combined group
Cash Distribution Expected To Be Paid Shortly After Closing
June 7, 2011--Deutsche Boerse AG and NYSE Euronext today announced that they have recommended to the Board of Directors of the holding company of the merged group, Alpha Beta Netherlands Holding N.V. (“Holdco”), to pay a one-time special dividend of €2.00 per Holdco share from Holdco’s capital reserves shortly after closing of the combination of Deutsche Boerse and NYSE Euronext.
The cash distribution is subject to certain approvals and conditions being met, including the approval of the Supervisory Board of Deutsche Boerse AG and the Board of Directors of NYSE Euronext, which are both scheduled for June 16, 2011, as well as the Board of Directors of Holdco post-closing of the combination of Deutsche Boerse and NYSE Euronext. The Chairman of the Supervisory Board of Deutsche Boerse AG and the Chairman of the Board of Directors of NYSE Euronext expressed their support of the measure based on the management’s financial projections and following discussions within their Boards.
Source: Deutsche Boerse
ESMA and the Japanese FSA establish cooperation framework for credit rating agencies
June 6, 2011--On 1 June 2011, the European Securities Markets and Authority (ESMA) and the Financial Services Agency of Japan (FSA), exchanged letters (known as “Exchange of Letters” (EOL)) regarding supervision and information sharing of credit rating agencies (CRAs).
The purpose of this EOL is notably to establish a mechanism for cooperation on cross border CRAs. This will create conditions for the exchange of information between authorities and the procedures concerning the coordination of supervisory activities.
Source: ESMA
ETFS Precious Metals Weekly: Gold and Silver Prices Diverge on Rising Sovereign Risk and Global Growth Concerns
June 6, 2011--Gold price rises through $1550/oz level driven by Greek sovereign risk and global growth concerns. Ratings agency Moody’s Investor Services last week said
that there is ‘at least an even chance of default over the rating horizon’ for Greece. Rising concerns about possible Greek default together with weak global growth data drove investors into the perceived safety of gold.
Silver price drops 7% as global industrial activity slows sharply. Poor manufacturing data in the US and the Eurozone and disappointing US nonfarm payrolls weighed on the silver price last week, highlighting the metal’s relatively high sensitivity to the global growth cycle.
Platinum and palladium prices soften on slump in US auto sales. Platinum group metals prices gave back early gains last week as weaker than expected US auto sales raised demand concerns.
Gold price rises through $1550/oz as Greek credit rating downgrade causes investors to move into perceived safe havens. Moody’s investor Services cut Greece’s credit rating again last week, highlighting their view of a 50% chance of a default over the ratings period. The market is now focusing increasingly on ‘when and how’ a restructuring will occur rather than ‘if’ it will take place. Concerns about European sovereign risk together clear signs of softening global growth have caused investors to shun cyclical and risk assets and move into perceived safe havens. Gold has been a key beneficiary of this trend.
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Source: ETFS Securities
Business Cycles in Emerging Markets: The Role of Durable Goods and Financial Frictions -IMF Working paper
June 6, 2011-- This paper examines how durable goods and financial frictions shape the business cycle of a small open economy subject to shocks to trend and transitory shocks. In the data, nondurable consumption is not as volatile as income for both developed and emerging market economies.
The simulation of the model implies that shocks to trend play a less important role than previously documented. Financial frictions improve the ability of the model to match some key business cycle properties of emerging economies. A countercyclical borrowing premium interacts with the nature of durable goods delivering highly volatile consumption and very countercyclical net exports.
Source: IMF
US regulator attacks queue jumping by traders
JUne 6, 2011--Ultrafast traders are winning preferential access to deals because computers used by exchanges are programmed to accept bigger orders first when matching prices, says a top US regulator.
Bart Chilton, a commissioner at the Commodity Futures Trading Commission, will on Wednesday voice concern from some traders over what he says is the use of “allocation algorithms” that may be used at some exchanges.
Source: FT.com
Gold rises to highest level in a month
June 6, 2011--The price of gold rose to its highest level in a month as investors fretted about the outlook for growth in the US and Europe.
The precious metal, a traditional haven against economic turmoil, rose 0.8 per cent on Monday to a peak of $1,553.30 a troy ounce – the highest since early May.
Source: FT.com
Risky Bank Lending and Optimal Capital Adequacy Regulation
June 6, 2011--We study the welfare properties of a New Keynesian monetary economy with an essential role for risky bank lending. Banks lend funds deposited by households to a financial accelerator sector, and face penalties for maintaining insufficient net worth.
The loan contract specifies an unconditional lending rate, which implies that banks can make loan losses. Their main response is to raise lending rates to rebuild net worth. Prudential rules that adjust minimum capital adequacy requirements in response to loan losses significantly increase welfare. But the gains from eliminating limited liability and moral hazard would be an order of magnitude larger.
view the IMF Working paper-Risky Bank Lending and Optimal Capital Adequacy Regulation
Source: IMF
Component Changes Made To Dow Jones Sector Titans And Dow Jones Emerging Markets Sector Titans Indexes - Changes Are the Result of the Regular Annual Review
June 3, 2011--Dow Jones Indexes today announced the results of the regular annual review of the Dow Jones Emerging Markets Sector Titans indexes. The changes will be effective after the close of trading on Friday, June 18, 2010.
Source: Dow Jones Indexes
