Americas ETP News
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Clock Now Ticks for Swaps Compliance
July 30, 2012--The starter's pistol is about to be fired for the swaps industry.
The Commodity Futures Trading Commission is expected to publish on August 2 its recently approved swaps definitions in the Federal Register.
Sixty days later-on October 1-market participants, including asset managers, are expected to comply with the first set of rules related to these definitions.
For example, firms must decide whether they need to register as swap dealers or major swap participants. Other chores include learning and adopting new business conduct codes, such as provisions governing conflicts of interest and monitoring of position limits, and developing systems for recording and reporting swaps transactions.
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Source: Securities Technology Monitor
Statement for the Treasury Borrowing Advisory Committee
July 30, 2012-Economic activity has moderated in recent months, with growth held back by a number of temporary factors, including the run-up in energy prices earlier this year, unusually warm winter weather, and the ongoing sovereign debt crisis in Europe.
Nonetheless, the U.S. economy continues to heal and grow, and evidence of improvement continues to emerge, particularly from the housing sector. While the unemployment rate remains unacceptably high, underlying labor market conditions are recovering gradually. Private-sector forecasters continue to expect growth to strengthen over the second half of 2012 and into 2013, although forecasters expect additional progress in reducing the unemployment rate further this year will be limited. The Administration has proposed a variety of measures to create jobs and boost growth in the near term, including job training, incentives for small businesses to invest and hire, support for state and local governments to keep teachers, firefighters, and police on the job, as well as building and growing our essential infrastructure. The facilitation of mortgage refinancing for troubled homeowners is also expected to support economic activity. At the same time, the Administration remains firmly committed to restoring fiscal sustainability in order to preserve the economy’s long-run growth potential. According to the just-released Mid-Session Review of the FY2013 Budget, the federal budget deficit is projected to decline from 7.8 percent of GDP in FY2012 to 6.1 percent of GDP in FY2013, and then narrow to about 2.6 percent of GDP, achieving primary balance, by the end of the decade.
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Source: US Department of the Treasury
BlackRock Canada Launches a New Suite of Minimum Volatility iShares(R) ETFs Delivering Domestic, International, Developed and Emerging Market Exposure Opportunities
1st suite of its kind in Canada that offers investors variety in minimum volatility investment exposures
July 30, 2012--BlackRock Asset Management Canada Limited (BlackRock Canada), an indirect, wholly-owned subsidiary of BlackRock, Inc., today announced that its iShares business is launching a suite of minimum volatility exchange traded funds (ETFs) to the Canadian marketplace.
This is the first time investors in Canada have access to the full broad market suite of minimum volatility ETFs including Canada, U.S., developed international, global and emerging markets. All five of the iShares ETFs will begin trading on the Toronto Stock Exchange today.
"With the uncertainty in today's markets, investors want to capture potential market upside but still protect their assets," said Mary Anne Wiley, Managing Director, Head of iShares, BlackRock Canada. "To help investors get off the sidelines, we have introduced the new iShares Minimum Volatility Funds which offer investors a unique opportunity to retain equity exposure in their portfolio while seeking to reduce the overall equity risk in these turbulent times. It's a compelling option for investors looking for a contrast or complement to other portfolio management strategies and will also optimize risk-adjusted returns over the long term."
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Source: BlackRock
Citi nudges into US ETF administration market
July 29, 2012--Citi is jumping into the US exchange traded fund administration market and has inked a deal to provide back-office transaction processing to Huntington Asset Advisors' new products.
The bank was named custodian, fund administrator and index receipt agent for Huntington Strategy Shares. The firm’s first ETF, the Huntington EcoLogical ETF, launched last month, and its Rotating Strategy ETF launched last week.
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Source: FT.com
Pragma Research Recommends Market Structure Changes to Reduce Trading Costs for Investors
July 27, 2012-Pragma Securities, an independent algorithmic trading boutique, today announced recommendations for market structure changes which would reduce the amount investors lose in trading costs.
The recommendations are based on recent Pragma research showing that when HFT market makers compete with directional traders, i.e., investors, to earn spreads and rebates by providing liquidity, investors are forced to cross the spread more often, which results in higher costs.
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Source: Pragma Securities
A New Dividend ETF for Schwab, but Has This Trade Become Crowded?
July 27, 2012--Dividend-themed exchange-traded funds have been a popular choice among investors over the past year. The 42 dividend-themed ETFs that we follow raked in $16 billion in flows, nearly a third of every dollar going into equity ETFs, despite the fact that they make up just 5% by count of the 812 equity ETFs available.
With the dividend yield on the S&P 500 Index at 2.1%, well above the 1.7% yield on the Barclays Aggregate Bond Index, who could blame investors for looking to equities? But be cautious when hunting for yield, particularly when moving up the risk ladder from bonds to stocks. Over the past five years, the average dividend ETF has had a volatility of 23%, more than 6 times greater than the 3.6% volatility of the Barclays Aggregate over that same time period.
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Source: Morningstar
IMF Working paper-Latin America: Vulnerabilities Under Construction?
July 27, 2012--Summary: This paper documents developments in mortgage credit and the housing sector in Latin America over the past decade, and compares them with those of other emerging economies. In particular, it examines the real estate and mortgage markets to assess whether (i) growth in mortgage credit is excessive compared to long-term trends; (ii) trends in house prices reflect changes in economic fundamentals;
and (iii) the extent to which household and banking sector vulnerabilities could lead to potential fragilities. Although data limitations hamper a rigorous analysis of trends, our analysis suggests that while there are no imminent misalignments in the real estate and mortgage sectors, they could emerge if current trends persist. Strengthening supervision and addressing data gaps is thus critical to ensure adequate monitoring of risks and vulnerabilities in these sectors.
view the IMF Working paper-Latin America: Vulnerabilities Under Construction?
Source: IMF
ETNs: What You Don't Know Can Hurt You
July 27, 2012--Exchange-traded notes, or ETNs, can easily be mistaken for something else. As unsecured debt securities issued by banks, they look like bonds.
They also can be linked to indexes like exchange-traded funds. But they are neither and it’s worth your time to do a lot of research before you invest in them.
Regulators such as FINRA, which monitors the securities industry, have been warning about the pitfalls of ETNs recently, which usually indicates that investors are running into trouble with them.
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Source: Forbes
CFTC.gov Commitments of Traders Reports Update
July 27, 2012--The current reports for the week of July 24, 2012 are now available.
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Source: CFTC.gov
ISE Introduces Add Liquidity Only Order Type
July 27, 2012--The International Securities Exchange (ISE) today announced that it has introduced a new order type, the Add Liquidity Only Order (ALO). An ALO specifies that the order can only be executed if it adds liquidity to the order book as a "maker."
If the order cannot be added to the book, it will be cancelled, or may be re-priced to rest on the book at the discretion of the firm entering the order.
Boris Ilyevsky, Managing Director of ISE’s options exchange, said, “This new order type gives greater control to our customers as they manage the various fee structures across multiple options exchanges. By using an ALO, a member firm will be able to ensure that an order only executes as a maker on ISE.” ALOs are currently available to member firms connected through ISE’s Direct Trading Interface. The order type will be introduced for FIX and PrecISE connections at a later date.
To learn more, please contact ISE Business Development at bizdev@ise.com.
Source: International Securities Exchange (ISE)
