Global ETF News Older than One Year
FSB publishes peer review of risk disclosure practices in respect of exposures
March 18, 2011--The Financial Stability Board (FSB) published today a thematic peer review report of risk
disclosure practices by financial institutions in FSB member jurisdictions in respect of
exposures to structured credit products.
The recent financial crisis highlighted the importance to market confidence of firms making clear disclosures of their exposures to risks. The Financial Stability Forum (predecessor to the FSB) recommended, in its report on Enhancing Market and Institutional Resilience published in April 2008, improvements in disclosures about structured credit products and certain other risk exposures that were of concern to market participants in 2008.
This FSB report reviews both financial institutions’ public disclosures of these risk exposures as well as the actions undertaken by FSB member jurisdictions and the private sector participants to enhance disclosure practices. The review finds that FSB member jurisdictions have successfully prompted financial institutions to improve their disclosure of exposures to structured credit products. Most FSB members have also taken steps to implement enhanced Pillar 3 disclosures regarding securitisation and related exposures published by the Basel Committee on Banking Supervision in July 2009. More generally, standard setting bodies have improved their disclosure requirements for financial institutions in these areas in the wake of the financial crisis.
view the Thematic Review on Risk Disclosure Practices Peer Review Report Draft
Source: Financial Stability Board (FSB)
Imperfect Information and Saving in a Small Open Economy
March 18, 2011-- Summary: Emerging markets are more volatile and face different types of shocks, in size and nature, compared to their developed counterparts. Accurate identification of the stochastic properties of shocks is difficult. We show evidence suggesting that uncertainty about the underlying stochastic process is present in commodity prices.
In addition, we build a dynamic stochastic general equilibrium model with informational frictions, which explicitly considers uncertainty about the nature of shocks. When formulating expectations, the economy assigns some probability to the shocks being temporary even if they are actually permanent. Parameter instability in the stochastic process implies that optimal saving levels (debt holdings) should be higher (lower) compared to a process with fixed parameters. Imperfect information about the nature of shocks matters when commodity GDP shares are high. Thus, economic policies based on misperception of the underlying regime can lead to substantial over/under saving with important associated costs.
view IMF Working paper-Imperfect Information and Saving in a Small Open Economy
Source: IMF
Russell Launches New Global Index Series With Enhanced Investability - Index Series Complements Russell Global Index, Increases Liquidity For Tradable Products
Index series complements Russell Global Index, increases liquidity for tradable products
March 17, 2011-- Russell Investments announced today the launch of the new Russell Global 3000™ Index series of 18 indexes – all sub-components of the comprehensive Russell Global Index – for investors who seek enhanced tradability features for investment vehicles. The new series, which extends Russell's trademark U.S. market index naming method for the first time globally, features the Russell Global 1000™ Index and Russell Global 2000™ Index, as well as the Russell Global ex-U.S. variants and growth and value sub-component indexes.
Based on three decades of experience in innovative index design, which today accounts for $3.9 trillion in benchmarked assets, the new series uses the same global-relative methodology as the Russell Global Index. The new series also provides investors with exposure to the Russell Global investable universe through more liquid equity indexes with enhanced investability.
"The Russell Global Index comprehensively represents the investable global opportunity set," said Rolf Agather, managing director of index research & innovation at Russell Investments. "The Russell Global 1-2-3 series optimizes that broad universe to produce a smaller basket of stocks designed for passive investment while still closely tracking the Russell Global Index. Our widely-used benchmark products, which are broad, deep and descriptive of the investable market opportunity, now have a complementary series that offers the option of highly liquid indexes with reduced membership."
In order to offer optimized global exposure in convenient, smaller baskets, the Russell Global 1000 and Russell Global 2000 Indexes, for example, are comprised of a smaller number of large-cap and small-cap stocks, in order to represent the respective global investable market capitalization tiers. The 2,000 global small-cap stocks in the Russell Global 2000 Index, for example, are the largest members of the comprehensive Russell Global Small Cap Index, which comprises about 7,000 securities. Similar to the pattern for the U.S. benchmarks, the Russell Global 1000 Index and the Russell Global 2000 Index equal the Russell Global 3000 Index.
Source: Russell
EDHEC-Risk Institute announces the launch of EDHEC-Risk Indices & Benchmarks
March 17, 2011--EDHEC-Risk Institute has announced the creation of a spin-off, EDHEC-Risk Indices & Benchmarks, which aims to be one of the leading beta designers for the investment industry. EDHEC-Risk Indices & Benchmarks will be based in London, New York, Nice and Singapore and has recruited two experienced executives to spearhead business development in Europe and North America. Profiles of these new recruits, Eric Shirbini and Vijay Vaidyanathan, can be found overleaf.
Professor Noël Amenc, Director of EDHEC-Risk Institute and Chairman of EDHEC-Risk Indices & Benchmarks said, “EDHEC-Risk Indices & Benchmarks hopes to be perceived as a concept and implementation provider for smart beta. We believe that the index and benchmarking research that EDHEC-Risk Institute has conducted since it was founded in 2001 has led to a series of products that provide more efficient and more academic-based solutions to investors’ needs than the indices and benchmarks currently available on the market. EDHEC-Risk Indices & Benchmarks is the channel through which these solutions will be made available to the investment community.”
Source: EDHEC-Risk Institute
Pension reforms must deliver affordable and adequate benefits, warns OECD
March 17, 2011--Recent reforms will still be insufficient to cover increased pension costs in the future, despite increases in retirement ages in half of OECD countries, according to a new OECD report.
Pensions at a Glance 2011 says that by 2050 the average pensionable age in OECD countries will reach 65 for both sexes.
This represents an increase of about 1.5years for men and 2.5 years for women. But life expectancy is rising even faster, outstripping the increase in pension ages by about 2 years for men and 1.5 years for women.
This means that in all but five OECD countries the time spent in retirement will continue to grow. Recent reforms are a step in the right direction to rein in public pension spending rising as a result of population ageing. The size of the working-age population in the OECD will peak around 2015 and decline by over 10% in 2050. But governments should consider the impact of benefit cuts on the most vulnerable. Pension reforms in OECD countries since the early 1990s have reduced future benefits on average by 20 per cent.
view the Pensions at a Glance 2011: Retirement-Income Systems in OECD and G20 Countries
Source: OECD
Creditless Recoveries -IMF Working paper
March 15, 2011--Summary: Recoveries that occur in the absence of credit growth are often dubbed miracles and named after mythical creatures. Yet these are not rare animals, and are not always miracles. About one out of five recoveries is "creditless", and average growth during these episodes is about a third lower than during "normal" recoveries.
Aggregate and sectoral data suggest that impaired financial intermediation is the culprit. Creditless recoveries are more common after banking crises and credit booms. Furthermore, sectors more dependent on external finance grow relatively less and more financially dependent activities (such as investment) are curtailed more during creditless recoveries.
view IMF Working paper-Creditless Recoveries
Source: IMF
Advancing Food Security in a Changing Climate
Agricultural production needs to increase by 70% by 2050 to feed a world population of 9 billion.
In the next 40 years, agricultural land will be lost to urbanization, desertification, sea level rise and increasingly salty water.
Bangladesh, Kenya eye climate-smart farming practices.
March 15, 2011 – In November 2007, powerful Cyclone Sidr claimed the lives of thousands of people in Bangladesh and wiped out a lot of the country's rice crop. A year later, Bangladesh became the first country to put together a multibillion dollar strategy on climate change, including a plan to boost agricultural production and food security in anticipation of more adverse weather.
“If one country is aware and taking action, it's Bangladesh,” says Maria Sarraf, a senior environmental economist for the World Bank's South Asia region. “While other countries are projecting climate change, Bangladesh has already suffered from it.”
Like Bangladesh, the majority of developing countries have economies grounded in agriculture. Globally, 75% of poor people live in rural areas and most depend on agriculture for their living. For this reason, agriculturally-based economic growth is two to four times more effective in reducing poverty than growth in other sectors. But, investment in agriculture and rural development has fallen short in the last several decades, and much more is needed to meet the needs of the future.
Experts predict agricultural production will have to increase by 70% by 2050 to feed a population of some 9 billion people.
And climate models predict a much more uncertain climate in the next several decades. A new study by the Foresight Project, The Future of Food and Farming, warns that in the next 40 years, agricultural land will be lost to urbanization, desertification, sea level rise and increasingly salty water in which few crops can grow.
view the report-The Future of Food and Farming: Challenges and choices for global sustainability
Source: World Bank
Global Futures and Options Trading Rose 25.6% in 2010
March 15, 2011—The Futures Industry Association today released a
report on trading volume in the global listed derivatives markets. The report, which measures volume based on the number of contracts traded on derivatives exchanges, indicates that 22.3 billion futures and options contracts changed hands during 2010, an
increase of 25.6% compared to 2009.
For the first time ever, Asia-Pacific accounted for the largest share of global volume traded during 2010. Total volume on the derivatives exchanges in that region of the world reached 8.86 billion contracts in 2010, an increase of 42.8% from the previous year. Exchanges in South Korea, China and India accounted for the majority of the volume in this region. North America, which had the largest share in 2009, came in second with 7.17 billion contracts traded in 2010, up 12.8% from the previous year.
The Korea Exchange was once again the world’s largest exchange by volume, due mainly to the continuing popularity of its Kospi 200 stock index options. The exchange’s total volume in 2010 was 3.75 billion contracts, up 20.8% from the previous year. Coming in second was CME Group, which includes the Chicago Board of Trade and the New York Mercantile Exchange. CME’s total volume in 2010 rose 19.0% to 3.08 billion contracts.
Source: FIA
Composite Leading Indicators (CLIs), OECD, March 2011
March 14, 2011-- Composite leading indicators (CLIs) for January 2011, designed to anticipate turning points in economic activity relative to trend, continue pointing to expansion in most OECD countries.
The CLIs for Germany, Japan, and the United States continue pointing to robust expansion relative to trend. Signs of regained growth momentum characterise the CLIs for France and Canada. The CLI for the United Kingdom points to a slow but stable pace of expansion. The CLI for Italy continues pointing to a moderate downturn.
The CLIs for other major economies are little changed from last month's assessment. The CLI for China continues pointing to the possibility of a moderate downturn. The CLI for Brazil remains near its long-term potential. The CLI for India continues pointing to a slowdown relative to trend and the CLI for Russia continues pointing to expansion.
Source: OECD
Nasdaq sounds out bankers on NYSE bid
March 14, 2011--Nasdaq is edging closer to a possible hostile offer for the New York Stock Exchange and has been sounding out bankers about a financing package for a bid.
People familiar with the situation said that no decision had yet been made and Nasdaq could shy away from what would be an ambitious attempt by the smaller exchange to break up its rival’s agreed deal with Deutsche Börse
Source: FT.com
