Global ETF News Older than One Year
Too much of a good thing
The risks created by complicating a simple idea
June 23, 2011--ANY industry would be proud of an average annual growth rate of 34% over ten years and of a global reach from Austria to Taiwan. But the headlong expansion of exchange-traded funds (ETFs), which by May this year controlled almost $1.5 trillion of assets (not far short of the $2 trillion in hedge funds), has become a matter for concern among financial regulators. Could ETFs be the next source of financial scandal, or even of systemic risk?
ETFs have been around since 1990, when the first fund was launched in Canada. The original idea was to create portfolios of shares replicating a stockmarket index, such as the S&P 500. Index-tracking funds had been available to institutional investors since the 1970s. Companies such as Vanguard offered them to individuals in the form of mutual funds. However, as the name suggests, the key feature of an ETF was that it was itself listed on a stockmarket, so that investors could buy and sell it easily. Unlike units in a conventional mutual fund, ETFs can be traded all day long.
Source: The Economist
Maple Group Increases Offer Price To $50 And Proportion Of Cash Consideration To A Maximum Of 80% In Transaction To Acquire TMX Group
June 23, 2011--Maple Group Acquisition Corporation (Maple), a corporation whose investors comprise 13 of Canada's financial institutions and pension funds, announced that it has increased the offer price and the maximum cash consideration being offered to shareholders of TMX Group. Inc. as part of an integrated acquisition transaction to acquire 100% of the TMX Group shares now valued at approximately $3.8 billion.
Under the enhanced terms, Maple is increasing its offer price to $50 per share from $48, and is increasing the number of shares to be purchased for cash under the offer from 70% to a maximum of 80% of the TMX Group shares. The offer remains subject to a non-waivable minimum tender condition of 70% of the TMX Group shares. The offer will be followed by a second step court-approved plan of arrangement providing for a corresponding increase in the value of the share consideration per TMX Group share. The increased cash purchase price will be funded entirely by additional proportionate equity investments by the Maple investors. Assuming the minimum of 70% of the TMX Group shares are acquired for cash under Maple's offer, former TMX Group shareholders would own 41.7% of Maple following the second step plan of arrangement, up from 40%. This will ensure that TMX Group shareholders receive equivalent value per share on the first step offer and second step arrangement.
Source: Maple
IEA makes 60 million barrels of oil available to market to offset Libyan disruption
June 23, 2011--International Energy Agency (IEA) Executive Director Nobuo Tanaka announced today that the 28 IEA member countries have agreed to release 60 million barrels of oil in the coming month in response to the ongoing disruption of oil supplies from Libya.
This supply disruption has been underway for some time and its effect has become more pronounced as it has continued. The normal seasonal increase in refiner demand expected for this summer will exacerbate the shortfall further. Greater tightness in the oil market threatens to undermine the fragile global economic recovery.
In deciding to take this collective action, IEA member countries agreed to make 2 million barrels of oil per day available from their emergency stocks over an initial period of 30 days. Leading up to this decision, the IEA has been in close consultation with major producing countries, as well as with key non-IEA importing countries.
The IEA estimates that the unrest in Libya had removed 132 mb of light, sweet crude oil from the market by the end of May. Although there are huge uncertainties, analysts generally agree that Libyan supplies will largely remain off the market for the rest of 2011. Given this loss and the seasonal increase in demand, the IEA warmly welcomes the announced intentions to increase production by major oil producing countries. As these production increases will inevitably take time and world economies are still recovering, the threat of a serious market tightening, particularly for some grades of oil, poses an immediate requirement for additional oil or products to be made available to the market. The IEA collective action is intended to complement expected increases in output by these producing countries, to help bridge the gap until sufficient additional oil from them reaches global markets.
Source: IEA
Managing Sovereign Debt and Debt Markets through a Crisis - Practical Insights and Policy Lessons-IMF Working paper
June 23, 2011--Summary: The crisis highlighted the importance of debt management in containing debt-related risks and the associated impact on debt markets. The impact of the crisis on debt levels, and the consequent implications for fiscal consolidation, has been the subject of much discussion and analysis.
However, there has been relatively less focus on the issue of how that debt should be managed, including how its composition should be structured so as to mitigate key risk exposures, and its implications for debt market functioning. That task proved significantly complex and challenging through the crisis, particularly in advanced economies, with additional dimensions of risk revealed.
Source: IMF
Social investments deserve priority in economic recovery schemes – UN report
June 22, 2011-- A new United Nations report finds that many governments did not pay enough attention to the social implications of the recent global financial crisis and urges that social investments be given priority in recovery programmes.
The Report on the World Social Situation 2011: The Global Social Crisis, published today by the UN Department of Economic and Social Affairs (DESA), explores the ongoing adverse social consequences of the 2008-2009 financial and economic crisis – the worst since the Great Depression of the 1930s.
One consequence of the crisis is that unemployment rose sharply to 205 million people in 2009 from 178 million in 2007. The loss of jobs means not only a loss of incomes but also an increase in vulnerability, especially in developing countries without comprehensive social protection, notes the report.
view UN report-Report on the World Social Situation 2011: The Global Social Crisis
Source: UN Report
TMX Group Statement Regarding Revised Maple Group Offer
June 22, 2011--TMX Group Inc. acknowledges the issuance of a press release by Maple Group Acquisition Corporation (Maple) on June 22, 2011, stating that it has revised the terms of its offer for the outstanding shares of TMX Group.
The Board of Directors of TMX Group (the Board) will fulfill its fiduciary responsibility and will review Maple's notice of variation regarding its revised terms, which Maple has indicated will be filed shortly, and respond in a directors' circular. The Board will also reassess whether the revised Maple offer constitutes a superior proposal, or could reasonably be expected to result in a superior proposal.
TMX Group will make no other public comment until the Board of Directors has completed its analysis.
Source: TMX Group (TSX-X)
London Stock Exchange Group plc special dividend of 84.1 pence per LSEG share and C$4.00 per TMX Group share and proposed new dividend policy of LTMX Group plc
June 22, 2011-London Stock Exchange Group plc (“LSEG”) announced on 9 February 2011 an agreed all-share merger of equals with TMX Group Inc. (“TMX Group”) to create an international growth-focused transatlantic exchange leader.
Today, LSEG is pleased to announce, together with its merger partner TMX Group, a proposed special cash dividend (the “Special Dividend”) for holders of LSEG shares and TMX Group shares and a revised progressive dividend policy for the merged business, LTMX Group plc (“LTMX”), both effective upon completion of the merger.
Special Dividend of 84.1 pence per share for LSEG shareholders
Special Dividend of C$4.00 per share for TMX Group shareholders
Progressive dividend policy for LTMX, to be based off current TMX Group dividend
Strong cash returns for both LSEG and TMX Group shareholders, while maintaining disciplined leverage
Reflects the financial strength and flexibility of LTMX
Demonstrates confidence in the substantial growth opportunities for LTMX
TMX Group has reiterated its recommendation of the LSEG / TMX Group merger and rejection of the Maple proposal
Source: London Stock Exchange
Internet economy: Wireless broadband subscriptions top half a billion, says OECD
June 22, 2011--The fast-growing popularity of smartphones and tablet PCs is driving growth in mobile broadband services.
Wireless broadband subscriptions in OECD countries had exceeded half a billion by the end of 2010, an increase of more than 10 percent on June 2010, according to new OECD statistics.
Fixed broadband subscriptions reached 300 million for the first time, but growth slowed to 6% year-on-year, the lowest growth rate since the OECD started collecting broadband statistics just over a decade ago. This reflects higher broadband penetration and market saturation in some countries.
The Netherlands and Switzerland lead the table, with 38.1 subscriptions per 100 inhabitants, followed by Denmark (37.7) and Norway (34.6). Fibre subscriptions continue to grow and account for 12.3% of all fixed broadband connections.
Source: OECD
Trades reveal China shift from dollar
June 21, 2011--China began diversifying away from the US dollar in earnest in the first four months of this year, most likely by buying far more European government debt than US dollar assets, according to estimates from Standard Chartered Bank.
China's foreign exchange reserves expanded by around $200bn in the first four months of the year, with three-quarters of the new inflow invested abroad in non-US dollar assets, the bank estimated.
Source: CNN
Trading Halt For Certain Trading Groups On The NYSE Euronext Regulated Cash Markets On Tuesday 21 June 2011
June 21, 2011--Executive Summary
This morning, Tuesday 21 June 2011, due to a technical issue, NYSE Euronext halted trading in the regulated markets on one trading unit hosting a number of trading groups including the AEX and BEL20 index stocks. This resulted in the inability to trade the specified securities between 09:03:36 CET and 11:00 CET.
This morning NYSE Euronext observed increasing latencies to the point of material degradation in service on certain trading groups, including AEX and BEL20 stocks, hosted by its trading unit number two. NYSE Euronext took the decision to halt trading for these trading groups at 09:03:36 CET. During the trading halt, members were not able to enter, amend or cancel their orders. See the appendix for the full list of trading groups impacted by this halt.
Source: NYSE Euronext
