Global ETF News Older than One Year
EDHEC-Risk Institute Position Paper Shows that the 2008 Short Sale Ban did not Ease Downward Pressure in the Financial Markets
May 5, 2010--In a new position paper entitled “Spillover Effects of Counter-cyclical Market Regulation: Evidence from the 2008 Ban on Short Sales,” Professor Abraham Lioui, Professor of Finance at EDHEC Business School looks at the impact of the ban on broad market indices in the US and in Europe (the United Kingdom, France, and Germany).
Since these indices and their performance are of great concern to the asset management and hedge fund industries, it is important for practitioners and policymakers to understand the impact of changing the rules of the game (banning short sales) on the return distribution of these indices and to assess the potential spillover effects of a counter-cyclical regulation affecting only one segment of the financial market.
Among the main conclusions of the study:
The ban leads to a considerable increase in the dispersion of investor opinions and this dispersion, in turn, leads to great increases in the volatility of stocks and indices. This effect is evident even when such events as the Lehman Brothers bankruptcy and the longstanding sub-prime crisis are controlled for.
Nor does the ban relieve the downward pressure on stock prices. Short selling does not migrate to the derivatives markets; the sustained fall of prices is, instead, the result of long traders exiting the market.
The market does not seem to believe that short sellers or the hedge fund industry were responsible for the turmoil of 2008.
The position paper “Spillover Effects of Counter-cyclical Market Regulation: Evidence from the 2008 Ban on Short Sales,” which represents a substantial revision to a previous EDHEC position paper from April 2009 entitled “The Undesirable Effects of Banning Short Sales,”.
Source: EDHEC
World Economic Outlook (WEO) April 2010
May 3, 2010--In 2010, world output is expected to rise by about
4¼ percent, following a ½ percent contraction in 2009.
Economies that are off to a strong start are likely to
remain in the lead, as growth in others is held back
by lasting damage to financial sectors and household
balance sheets. Activity remains dependent on highly
accommodative macroeconomic policies and is subject
to downside risks, as fiscal fragilities have come to the
fore. In most advanced economies, fiscal and monetary
policies should maintain a supportive thrust in 2010
to sustain growth and employment.
But many of these economies also need to urgently adopt credible mediumterm strategies to contain public debt and later bring it down to more prudent levels. Financial sector repair and reform are additional high-priority requirements. Many emerging economies are again growing rapidly and a number have begun to moderate their accommodative macroeconomic policies in the face of high capital inflows. Given prospects for relatively weak growth in the advanced economies, the challenge for emerging economies is to absorb rising inflows and nurture domestic demand without triggering a new boom-bust cycle.
Recovery Has Proceeded Better than Expected
The global recovery has evolved better than expected, with activity recovering at varying speeds–– tepidly in many advanced economies but solidly in most emerging and developing economies. Policy support was essential to jump-start the recovery. Monetary policy has been highly expansionary and supported by unconventional liquidity provision. Fiscal policy provided a major stimulus in response to the deep downturn.
Source: IMF
Risk aversion drives away investors
May 3, 2010--Emerging market equities and currencies were broadly lower on Monday, with a combination of sovereign debt concerns and China’s liquidity tightening measures driving investors away from risk worldwide.
With many developed markets struggling for support after a €110bn ($145bn) bail-out of Greece, Europe’s emerging markets were weaker.
Turkey encountered sovereign issues of its own after foreign investors stayed away from an auction of three-year bonds. read more
Source: FT.com
Better data needed to regulate markets
May 5, 2010--The stability and efficiency of financial markets are critical to the well-being of nations. The US Senate is now debating legislation intended to correct failings that contributed to the near collapse of the global financial system in 2008.
While there are disagreements over which specific new regulatory authorities will be included in the final bill, there is one matter over which there is no debate. This crisis revealed how painfully inadequate current data and analytic tools are for understanding threats to financial stability and for guiding financial regulators and policymakers during times of crisis.
Source: FT.com
NASDAQ OMX Announces First Quarter 2010 Results
May 3, 2010--The NASDAQ OMX Group, Inc. ("NASDAQ OMX®"; NASDAQ: NDAQ) today reported net income attributable to NASDAQ OMX of $61 million, or $0.28 per diluted share, for the first quarter of 2010 compared with net income attributable to NASDAQ OMX of $43 million, or $0.20 per diluted share, in the fourth quarter of 2009, and net income attributable to NASDAQ OMX of $94 million, or $0.44 per diluted share, in the first quarter of 2009.
Included in first quarter of 2010 results are:
•$40 million in charges related to the recognition of unamortized debt issuance costs associated with a credit facility refinanced in the first quarter of 2010, and costs to terminate an associated interest rate swap; and
•$7 million in asset retirements and other non-recurring expenses. Excluding the above items, net income attributable to NASDAQ OMX calculated on a non-GAAP basis was $92 million for the first quarter of 2010, compared with non-GAAP net income attributable to NASDAQ OMX of $99 million for the fourth quarter of 2009 and $102 million for the first quarter of 2009. Non-GAAP diluted earnings per common share were $0.43 for the first quarter of 2010 compared with non-GAAP diluted earnings per common share of $0.46 for the fourth quarter of 2009 and $0.48 for the first quarter of 2009.
"During the quarter we remained focused on executing our plan to leverage our world class technology platform while diversifying our product offering," commented Bob Greifeld, NASDAQ OMX's Chief Executive Officer. "With the launch of INET in the Nordics, positive developments in our interest rate swaps clearing business, and expansion of our efforts within energy commodities, the breadth of our business has grown substantially, placing NASDAQ OMX in a favorable position to capitalize on changes within our industry." read more
Source: NASDAQ OMX
IntercontinentalExchange Announces Acquisition Of Climate Exchange - Climate Exchange's Emissions Markets Complement ICE's Leading Integrated Futures And OTC Markets
April 30, 2010--IntercontinentalExchange (NYSE: ICE), a leading operator of regulated global futures exchanges, clearing houses and over-the-counter (OTC) markets, today announced that it has agreed on terms to acquire Climate Exchange plc (Climate Exchange or CLE), a leader in the development of traded emissions markets. Climate Exchange operates the European Climate Exchange (ECX), the Chicago Climate Exchange (CCX) and the Chicago Climate Futures Exchange (CCFE).
Under the terms of the acquisition, Climate Exchange shareholders will receive 7.50 pounds Sterling in cash for each share in Climate Exchange held at today’s date, valuing the entire existing issued and to be issued share capital of Climate Exchange at approximately 395 million pounds ($604 million(1)). The transaction consideration will include $220 million that has been drawn from ICE’s existing credit facilities for these purposes(2) and the remainder from existing cash resources. The transaction is expected to be accretive to earnings in 2011 and slightly dilutive to earnings for the balance of the current year(3) following an anticipated closing at the end of July 2010. ICE, through its wholly-owned subsidiary IntercontinentalExchange Holdings, acquired a 4.8% stake in CLE on June 22, 2009 for 6.45 pounds a share. Additional details will be provided upon the completion of the transaction, at which time Climate Exchange will be a wholly-owned subsidiary of ICE, operating under the Climate Exchange’s respective brand names.
Source: IntercontinentalExchange
NASDAQ OMX Announces First Quarter 2010 Results
Non-GAAP Diluted EPS $0.43 (GAAP Diluted EPS $0.28)
April 30, 2010--The NASDAQ OMX Group, Inc. ("NASDAQ OMX®") (Nasdaq:NDAQ) today reported net income attributable to NASDAQ OMX of $61 million, or $0.28 per diluted share, for the first quarter of 2010 compared with net income attributable to NASDAQ OMX of $43 million, or $0.20 per diluted share, in the fourth quarter of 2009, and net income attributable to NASDAQ OMX of $94 million, or $0.44 per diluted share, in the first quarter of 2009.
Included in first quarter of 2010 results are:
* $40 million in charges related to the recognition of unamortized debt issuance costs associated with a credit facility refinanced in the first quarter of 2010, and costs to terminate an associated interest rate swap; and
* $7 million in asset retirements and other non-recurring expenses.
Excluding the above items, net income attributable to NASDAQ OMX calculated on a non-GAAP basis was $92 million for the first quarter of 2010, compared with non-GAAP net income attributable to NASDAQ OMX of $99 million for the fourth quarter of 2009 and $102 million for the first quarter of 2009. Non-GAAP diluted earnings per common share were $0.43 for the first quarter of 2010 compared with non-GAAP diluted earnings per common share of $0.46 for the fourth quarter of 2009 and $0.48 for the first quarter of 2009.
"During the quarter we remained focused on executing our plan to leverage our world class technology platform while diversifying our product offering," commented Bob Greifeld, NASDAQ OMX's Chief Executive Officer. "With the launch of INET in the Nordics, positive developments in our interest rate swaps clearing business, and expansion of our efforts within energy commodities, the breadth of our business has grown substantially, placing NASDAQ OMX in a favorable position to capitalize on changes within our industry."
First Quarter 2010 Business Highlights
* Announced the approval of a share repurchase program, authorizing NASDAQ OMX to repurchase in the aggregate up to $300 million of its outstanding common stock. During the first quarter of 2010, NASDAQ OMX repurchased 2.3 million shares of common stock with an aggregate principal value of $46 million.
Source: NASDAQ OMX
BlackRock Joins Blackstone in Loan Fund Frenzy: Credit Markets
April 29, 2010--BlackRock Inc., the world’s largest asset manager, and Blackstone Group LP’s GSO Capital Partners LP are forming mutual funds to invest
in loans as the London interbank offered rate rises to the highest level since August.
Within the past two months, the firms have joined Goldman Sachs Group Inc. in announcing funds that invest in leveraged loans pegged to short-term interest rates. Investors poured more than $2.5 billion into bank loan mutual-funds in March and the first three weeks of April, more than triple the amount for March and April last year, according to Lipper FMI data.
The Federal Reserve will likely raise its target rate for overnight loans between banks to 0.75 percent by the end of this year, up from 0.25 percent, according to the median estimate of 67 analysts surveyed by Bloomberg. The S&P/LSTA U.S. Leveraged Loan 100 Index has returned 5.68 percent this year, building on last year’s record 52 percent as lending continues to open up. New money “will provide financing, which will help” merger and acquisition deals get done, according to Invesco Ltd.’s Tom Ewald.
Source: Bloomberg
The Istanbul Stock Exchange and Takasbank sign MoU with the Abu Dhabi Securities Exchange
April 28, 2010--The 3rd Working Committee meeting of the Organization of the Islamic Conference (OIC) Member States’ Stock Exchanges Forum, initiated in 2005 with a decision taken in line with the request made by the OIC for launching a framework of cooperation among the OIC stock exchanges, is held in Abu Dhabi, United Arab Emirates, on April 27-28, 2010. The event is dedicated this year to discuss the Islamic financial instruments tradable on exchanges, the creation of OIC indexes and awareness and investor education about Islamic financial markets.
The representatives of International Islamic Financial Market (IIFM) contributed to the meeting with their presentations. In addition, the representatives of FTSE, MSCI Barra & Standard and Poor's participated to the meeting.
Source: Istanbul Stock Exchange (ISE)
Huge investor coalition demands bribery policy clarity from 21 major companies
Defence and construction sectors under particular focus.
April 28, 2010--A coalition of 20 pension fund investors and fund managers with assets of $1.7 trillion – all signatories to the United Nations Principles for Responsible Investment – is pressuring major companies, notably in the defence and construction sectors, to reveal their management policies on bribery and corruption. The campaign follows a slew of recent cases involving large multinationals and alleged kickbacks.
Last week, BHP Billiton, the Australian mining group, announced it was under investigation by the U.S. Securities and Exchange Commission over possible violations of anti-corruption laws involving interactions with government officials. The company said it was co-operating with the investigation. The investor campaign said it had contacted 21 major companies in the defence, construction and other sectors in 14 countries to reveal the measures they have in place to avoid bribery and corruption in business with their suppliers.
Source: Responsible Investor
