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U.S. ETF and ETP Assets Break Through $1 Trillion Milestone
December 17, 2010--Assets in U.S.-listed exchange traded funds (ETFs) and exchange traded products (ETPs) broke through the $1 trillion milestone – reaching $1.027 trillion -- for the first time on 16 December 2010, according to BlackRock’s Global ETF Research and Implementation Strategy Team.
As of 16 December 2010, in the U.S., there were 894 ETFs with assets of $887.2 billion from 28 providers on two exchanges. At the end of December 2009 the U.S. ETF industry had 772 ETFs, assets of $705.5 billion, from 29 providers on two exchanges. Year to date, 171 new ETFs have been launched in the U.S. with another 828 new ETFs in the pipeline, while 49 ETFs were delisted.
Additionally, as of 16 December 2010, there were 185 ETPs listed in the U.S. with assets of $115.5 billion, from 20 providers on one exchange. At the end of December 2009, there were 142 ETPs with assets of $88.1 billion from 17 providers on one exchange.
ETFs are index based open-ended funds that can be bought and sold like ordinary shares on a stock exchange. They have become popular and widely used investment vehicles to facilitate many investment and diversification strategies — from short-term tactical applications to longer-term strategic applications. The ETP industry includes other product structures such as trusts, partnerships, commodity pools and notes.
Capturing Benchmark Performance
Growth in the U.S. market for ETFs and ETPs reflects expansion in the use of the vehicle through retail channels, as well as their continuing popularity among institutional investors of all kinds, said Deborah Fuhr, Global Head of ETF Research and Implementation Strategy at BlackRock.
“Increasingly both retail and institutional investors are building global, multi-asset portfolios that are designed to capture the performance of key ‘benchmarks’ for attractive market sectors -- an application for which ETFs and ETPs are particularly well suited,” Ms. Fuhr said.
“ETF providers are expanding their product ranges into more specialized areas to cater to the growing number of professional and retail investors using ETFs as advanced portfolio construction tools,” she said. “The increasing availability of these highly-specialized ETFs and ETPs across the full spectrum of equities, fixed-income and alternative investments means that investors can use these vehicles to instantly deploy capital to take advantage of new investment opportunities – with complete transparency into the underlying investments as well as low cost.
“Cost features make ETFs and ETPs among the most ‘democratic’ of investments, as a product’s pricing is consistent regardless of the type of investor or level of assets invested,” she said.
Growing Interest in North American Equity, and Emerging Markets
Net new asset flows for U.S.-listed ETFs for 2010 to date provide evidence of growing interest in both developed and emerging markets equity ETFs/ETPs, with these flows greater this year than in 2009, Ms. Fuhr said. At the same time, net new asset flows indicate less focus on fixed income and commodities.
Through November, net new flows into North American equity ETFs/ETPs have totaled $21 billion, compared with just $2 billion in 2009. Over the same time period this year, flows into emerging markets equity ETFs/ETPs overall have totaled $29 billion, compared with $27 billion last year. Of this total, flows into “multi-region” emerging markets products have totaled $26 billion year to date, compared with $16.7 billion last year.
Flows into fixed income products have totaled $31.2 billion, compared with $44.8 billion last year, and flows into commodity products have totaled $11.4 billion, compared with $32.6 billion last year.
Through November, the ETF average daily trading volume in U.S. dollars has increased by 26 percent, to US $57.7 billion. ETF trading volume in November accounted for 24.1% of all United States equity turnover.
An Educational Need Market-Wide
Growth in the utilization of ETFs and ETPs – as well as the expanding diversity of the product set – is leading to greater urgency of a market wide educational need, Ms. Fuhr said. “Investors need to understand that under the overall ETF/ETP umbrella, many different product structures, underlying investments (securities, futures, physical commodities, etc.), regulatory regimes and tax treatments are represented,” she said. “Within the ‘gold’ category, for example, an investor can find funds and notes based on physical gold, gold futures, gold mining stocks – each with quite different performance, regulatory and tax implications.
“As market growth and product innovation proceeds, it will become only more essential for investors of all kinds to deeply understand the full range of ETF and ETP structures, benchmarks, underlying features and applications, if they are to most effectively realize all the many potential benefits of the ETF/ETP approach,” she said.
Source: BlackRock
CME Pulls Back on ETF Futures
December 17, 2010--CME Group Inc.'s Chicago Mercantile Exchange plans to stop listing futures contracts based on exchange-traded funds.
The exchange operator, which has listed futures on the Nasdaq-100 Tracking Stock (QQQQ), Standard & Poor's 500 Depositary Receipts (SPY) and the iShares Russell 2000 (WM) since 2005, said it will refrain from listing any new futures contracts on the ETFs.
The company won't delist any contract months while there are open positions.
The move, announced by CME Thursday morning in a memo reviewed by Dow Jones Newswires, reflects weak volumes seen in the ETF futures contracts.
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Source: Wall Street Journal
CFTC.gov Commitments of Traders Reports Update
December 17, 2010--The CFTC.gov Commitments of Traders Reports for the for the week of December 14, 2010 are now available.
view current reports
Source: CFTC.gov
Standard & Poor's Announces Changes in the S&P/TSX Venture Composite Index
December 17, 2010--Standard & Poor's will make the following changes in the S&P/TSX Venture Composite Index after the close of trading on Friday, December 17, 2010:
Antares Minerals Inc. (TSXV:ANM) will be removed from the index.
The shares of the company have been acquired by First Quantum Minerals Ltd. (TSX:FM) pursuant to an arrangement agreement.
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
ListSearchPrint Standard & Poor's Announces Changes In The S&P/TSX Canadian Indices
December 17, 2010--Standard & Poor's Canadian Index Operations announces the following index changes:
The unitholders of Enbridge Income Fund (TSX:ENF.UN) have approved the conversion of the company to a corporate structure through a Plan of Arrangement. The units will be exchanged on a 1-for-1 basis for Enbridge Income Fund Holdings Inc. (TSX:ENF).
As a result of the conversion, Enbridge Income Fund Holdings Inc. will be added to the S&P/TSX Equity SmallCap Index. The conversion is effective after the close of Monday, December 20, 2010. The name and ticker change, with no change in capitalization, will be effective in the S&P/TSX SmallCap Index.
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
CFTC Delays Consideration of Proposal Aimed at Restricting Oil Speculation
December 17, 2010--The top U.S. commodities regulator delayed consideration of a plan to curb speculation in raw materials including oil, gold and wheat as part of the most sweeping rewrite of Wall Street rules since the 1930s.
The Commodity Futures Trading Commission postponed an expected vote today on publishing a two-part proposal to restrict the number of contracts one firm can hold for a 60-day public comment period. The plan, if approved, would limit traders to 25 percent of deliverable supply in the contract nearest to expiration, followed by an all-month ceiling of 10 percent of open interest up to the first 25,000 contracts and 2.5 percent thereafter.
Source: Blomberg
Obama woos private capital back to mortgage market
December 16, 2010--The Obama administration is planning to encourage private capital back to the mortgage market by scaling down government guarantees even if Congress fails to pass housing finance reform, according to people familiar with the so-called Plan B for the mortgage market.
The Treasury is due to deliver plans for comprehensive reform in January but officials are already preparing to sidestep what is likely to be a long and bitter battle in Congress over the future of Fannie Mae and Freddie Mac, the government-owned companies that now guarantee more than 90 per cent of all new mortgages.
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Source: FT.com
Brazil targets foreign bond investors
December 16, 2010--Brazil has unveiled a series of measures designed to attract foreign money into its corporate bond market. The move is designed to reduce the role of state banks, which have dominated lending in South America’s biggest economy.
Brazil< needs to invest hundreds of billions of dollars to improve its dilapidated infrastructure, especially ahead of the 2014 World Cup and 2016 Olympics in Rio de Janeiro. But an overabundance of capital inflows have lately proved a headache for policymakers, who have raised a tax on bond inflows to 6 per cent in an attempt to curb the appreciation of the Brazilian currency, the real.
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Source: FT.com
"Position Points"
Statement of Commissioner Bart Chilton, Meeting of the Commodity Futures Trading Commission
December 16, 2010
On Tuesday, in remarks to Americans for Financial Reform, I discussed a proposal that could serve as an interim step prior to the implementation of mandatory position limits required by the new financial reform law. I detailed this "Position Point" proposal yesterday in testimony before Congress. I have also spoken with the heads of exchanges and market participants about Position Points. Here are the details of my proposal:
Once a trader reaches a specific Position Point, it triggers a new level of heightened regulatory scrutiny.
A Position Point is reached when a trader has an aggregate, on-exchange position limit of 10% of the first 25,000 contracts of open interest in one of 28 commodities (in energy, metals, and agricultural commodities), then 2.5% of open interest above 25,000 contracts.
This triggers a special call of that trader’s swaps positions.
If the swaps positions, netted with on-exchange positions, reduced the aggregate to below the Position Point, there is no regulatory action.
If the swaps positions, netted with on-exchange positions, increases the aggregate to above the Position Point, then regulators use all available authorities, as appropriate, to reduce those positions.
Source: CFTC.gov
Opening Statement, Eighth Series of Proposed Rulemakings Under the Dodd-Frank Act
Commissioner Scott O’Malia
December 16, 2010--Mr. Chairman, I am grateful this is the final rulemaking for 2010. As you noted, we have noticed 30 proposed rulemakings, four advanced notices, two interim final rules, and one final rule. While I am thankful that we have just a few more rulemakings left to complete in the new year, I recognize we are only halfway through the process – and it’s probably the case that the easiest portion is past us.
The next step is to digest the mountain of comment letters that I hope market participants will provide. Of course, I am assuming they have had time to read and consider the thousands of pages of proposed rules. For this process to be meaningful, we must ensure that the public has adequate time to digest each rulemaking and we must be mindful that they are working through a cumulative burden of thousands of pages of text and hundreds of questions posed by staff.
Since it is the holiday season, and I have already shared Macey’s list, I figure its time I shared my own wish list with the Commission. I have always operated under the premise that you don’t get what you don’t ask for.
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Source: CFTC.gov
