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Morgan Stanley Exchange-Traded Funds: US ETF Weekly Update
Weekly Flows: $3.8 Billion Net Inflows
ETFsTraded $262 Billion Last Week
Launches: 4 New ETFs
Russell Plans to Acquire U.S. One, Inc.
Expense Reduction on 34 iSharesETFs
January 18, 2011--US-Listed ETFs: Estimated Flows by Market Segment
ETFshave generated net inflows of $12.0 billion during the first two weeks of the year
Net inflows were led by US Equity ETFslast week, specifically US Large Caps (net inflows of $3.1 bln)
ETF assets stand at more than $1 trillion; EM Equity is now 15%of market share
13-week flows remain mostly positive among asset classes
$43.0 bln of net inflows into ETFs over past 13 weeks (71% intoUS Equity ETFs)
We note that Fixed Income ETFsposted net outflows over the past 13 weeks, a big reversal frommost of 2010
US-Listed ETFs: Estimated Largest Flows by Individual ETF
For the second straight week, SPDR S&P 500 ETF (SPY) posted large net inflows
Albeit early, SPY’s 1st quarter net inflows are unusual; SPY has exhibited net outflowsduring the 1stquarter of every year since 2005
Vanguard Emerging Markets ETF (VWO) has generated largest net inflows over past 13 weeks ($5.4 bln)
US-Listed ETFs: ETF Dollar Volume
ETF monthly $ volume has recently declined to 26% of listed trading volume (lowest % since May ’08)
US Large Cap accounts for 38% weekly ETF volume, but only has 22% of market cap
International Equity accounts for only 16% weekly ETF volume, but has 25% of market cap
request report
Source: ETF Research-Morgan Stanley
Van Eck files with the SEC
January 18, 2011--Van Eck has filed a post effective amendment, registration statement with the SEC for Market Vectors Germany Small-Cap ETF.
view filing
Source: SEC.gov
Georgetown Investment Management LLC files with the SEC
January 18, 2011--Georgetown Investment Management LLC has filed an amended application for exemptive relief with the SEC.
view filing
Source: SEC.gov
Fact Sheet: The Financial Stability Oversight Council Chairman’s Study on “Risk Retention”
“Skin in the Game” to Help Ensure a Safe and Strong Securitization Market
January 18, 2011--The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) requires the Chairman of the Financial Stability Oversight Council (FSOC) to issue a study on the Dodd-Frank Act’s risk retention requirements within 180 days of enactment. This risk retention study was delivered to Congress on January 18, 2011 and examines the ways that risk retention, also known as “skin in the game,” can help reform the securitization market, protect the public and the economy against irresponsible lending practices, and facilitate economic growth by allowing for safe and stable credit formation for consumers, businesses, and homeowners.
Preserving the Benefits of Securitization for the Economy by Keeping “Skin in the Game”
The study notes that asset-backed securitization provides important economic benefits by improving the availability and affordability of credit to a diverse group of consumers, businesses, and homeowners. •However, as the recent financial crisis demonstrated, without reform, risks in the securitization process can detract from these benefits. Leading up to the recent crisis, originators and securitizers made loans, bundled them together, and then sold them off to a broad array of outside investors, often without retaining a meaningful share of the risk. Because originators had little interest in whether the borrowers would be able to repay the loans, underwriting standards deteriorated and excessively risky mortgages flooded the market. This helped fuel the financial crisis. •To address this serious flaw in the pre-crisis securitization market, the Dodd-Frank Act generally requires that securitizers or originators have “skin in the game” by retaining at least 5 percent of the credit risk of an asset sold to investors through the securitization process, which should allow market participants to price credit risk more accurately and allocate capital more efficiently. •By putting in place such safeguards, the Dodd-Frank Act can help ensure that securitization is a stable and reliable source of credit for consumers, businesses, and homeowners in the United States.
view report-Macroeconomic Effects OF Risk Retention Requirements
Source: US Department of the Treasury
Standard & Poor's Announces Changes in the S&P/TSX Canadian Indices
January 18, 2011--Standard & Poor's Canadian Index Operations announces the following index changes:
The shareholders of Citadel Resource Group Limited (ASX:CGG) have accepted the cash and share bid from Equinox Minerals Limited (TSX:EQN).
The relative weight of Equinox Minerals will increase in the S&P/TSX Composite and Capped Composite, the S&P/TSX Equity and Capped Equity, the S&P/TSX Completion and Equity Completion, the S&P/TSX Global Mining and Global Base Metals, the S&P/TSX Capped Materials and the S&P/TSX Capped Diversified Metals & Mining indices to reflect the issuance of Equinox shares as part of the transaction. These changes will be effective after the close of trading on Wednesday, January 26, 2011.
Company additions to and deletions from an S&P equity index do not in any way reflect an opinion on the investment merits of the company.
Source: Standard & Poors
Remarks, Financial Stability Oversight Council
Chairman Gary Gensler
January 18, 2011--Good afternoon. I thank Secretary Geithner for calling today’s meeting of the Financial Stability Oversight Council (FSOC). I also thank my fellow regulators and FSOC members for their coordination and consultation on the rule-writing process to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Lastly, I want to thank the staffs of all the agencies – and particularly the Treasury staff – for all of their efforts in coordinating amongst eight agencies and also their willingness to take our comments on the studies and proposal being considered today.
Volcker Rule Study
I support releasing the Study & Recommendations on Prohibitions on Proprietary Trading & Certain Relationships with Hedge Funds & Private Equity Funds, also known as the Volcker Rule study. The study provides thoughtful recommendations to carry out Congress’s intent to separate proprietary trading from otherwise permitted activities of banking entities. The study also provides a basis upon which each of our agencies can move forward with the required rule-writing to carry out Congress’s mandate
Source: CFTC.gov
CFTC to Hold Open Meeting on Tenth Series of Proposed Rules under the Dodd-Frank Act
January 18, 2011-- The Commodity Futures Trading Commission (CFTC) will hold a public meeting on Thursday, January 20, 2011, at 9:30 a.m. to consider the issuance of proposed rulemakings under the Dodd-Frank Wall Street Reform and Consumer Protection Act on the following topics:
Commodity Options and Agricultural Swaps; and
Swap Trading Relationship Documentation Relating to Termination Provisions Implicated Under Title II of the Dodd-Frank Act.
The Commission may also vote on a notice of future scheduled meetings to consider various proposed rules.read more
Source: CFTC.gov
Markit launches emerging market bond indices
January 17, 2011-- Markit, a leading, global financial information services company, today announced the launch of the Markit iBoxx USD Emerging Markets Sovereigns family of benchmark and tradable indices referencing US dollar-denominated emerging market debt.
The Markit iBoxx USD Emerging Markets Sovereigns index family has been introduced in response to increased investor interest in emerging market debt and complements Markit’s GEMX index, launched in 2008, which tracks the performance of emerging market sovereign debt denominated in local currency. Markit's fixed income emerging market indices use multiple pricing sources, helping to ensure they are independent, objective and transparent.
The index family includes a liquid tradable index which will be used as the basis for index-linked tradable products such as exchange traded funds (ETFs). The benchmark index comprises 37 emerging market countries and 190 bonds, and is rebalanced monthly. The tradable index comprises 20 countries and 36 bonds which are selected quarterly from the benchmark index based on the total amount outstanding for each country in the benchmark index and the latest quarterly bond trading volumes.
Stephan Flagel, Managing Director and Head of Indices at Markit, said: “One of our priorities was to create an independent benchmark for emerging market debt and a corresponding highly liquid index with multi contributor pricing that could be used as the basis for tradable products. The new Markit iBoxx USD Emerging Markets Sovereigns index family complements our existing indices and positions Markit as a leading emerging market index provider.”
Markit publishes the index rules and daily index levels on www.markit.com
Source: Markit
BMO Financial Group Announces Changes in Distribution Frequency for BMO Exchange Traded Funds
January 17, 2011---- BMO Financial Group announced today that starting January 2011, BMO Exchange Traded Funds (ETFs)(i) will pay monthly distributions on 14 funds that previously paid distributions on a quarterly basis. Additionally, distributions on nine funds are changing from a quarterly basis to an annual basis.
"The goal of our ETFs is to ensure that they continue to meet Canadian investors' needs effectively and efficiently. In current markets, investors are increasingly recognizing the benefits of income within their portfolios, and are placing a greater emphasis on regular income generation. We believe that by changing to monthly distributions on our higher yielding ETFs, we are simplifying investment decisions for our customers," said Rajiv Silgardo, Co-CEO, BMO Global Asset Management.
read more
Source: iStock Analyst
SEC Proposes Rule for the Timely Acknowledgment and Verification of Security-Based Swap Transactions
January 14, 2011--The Securities and Exchange Commission today voted to propose a rule governing the way in which certain security-based swap transactions are acknowledged and verified by the parties who enter into them.
Under the proposed rule, security-based swap dealers and major security-based swap participants, collectively known as SBS entities, would have to provide to their counterparties a trade acknowledgement detailing information specific to the transaction.
The new rule, Rule 15Fi-1, is being proposed under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act which generally authorizes the SEC to regulate security-based swaps. Among other things, the new law gives the SEC the authority to establish standards for the confirmation and documentation of security-based swap transactions entered into by SBS entities.
view the Proposed Rule
Source: CFTC.gov
