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Testimony of Chairman Gary Gensler, before the Senate Committee on Banking, Housing, and Urban Affairs, Subcommittee on Securities, Insurance, and Investment and Senate Committee on Homeland Security and Governmental Affairs, Permanent Subcommittee on Inv
December 8, 2010--Good afternoon Chairman Reed, Chairman Levin, Ranking Member Bunning, Ranking Member Coburn and members of the Subcommittee on Securities, Insurance, and Investment and the Permanent Subcommittee on Investigations. I thank you for inviting me to today’s hearing. I am pleased to testify alongside Securities and Exchange Commission (SEC) Chairman Mary Schapiro. This is our seventh time testifying together, and our third on issues related to the May 6 market events.
Since we last testified before the Subcommittee, staff from the Commodity Futures Trading Commission (CFTC) and SEC released a supplemental report on October 1 on the unusual market events of May 6, 2010. As outlined in the joint staff report, there were three chapters of the May 6 market events:
very fragile and uncertain markets due in part to the unsettling news concerning the European debt crisis;
a liquidity crisis in the E-Mini S&P 500 futures contracts (E-Mini) and related index securities; and
a liquidity crisis in individual securities.
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Source: CFTC.gov
Claymore files with the SEC
December 8, 2010--Claymore has filed a post-effective amendment, registration statement with the SEC for
Guggenheim Enhanced Short Duration High Yield Bond ETF.
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Source: SEC.gov
Direxion Adds Two Leveraged ETFs
New Funds Offer Leveraged Long and Short Exposure to the Gold Mining Industry
December 8, 2010--Direxion, a pioneer in providing alternative investment strategies to sophisticated investors, announced today the launch of two new Direxion Daily Shares 2x ETFs to its existing line up of multi-directional, leveraged funds. The new ETFs are leveraged Bull and Bear funds that seek 200% of the daily performance, or 200% of the inverse of the daily performance (before fees and expenses), of the NYSE Arca Gold Miners Index (“Index”).
The Index is a comprised of publicly traded companies that operate globally in both developed and emerging markets, and are involved primarily in the mining of gold and silver.
“Direxion’s leveraged ETFs are extremely athletic investment tools designed to provide sophisticated investors with a vehicle to take advantage of short-term market opportunities,” said Direxion President Dan O’Neill. “By providing exposure to select markets on the long and short side, we help investors hedge positions and respond to cyclical pricing movement as part of their overall active investment strategies. Gold mining stocks are essentially a play on gold and the stock market. Investors trade the miners instead of the metal because, as the price of gold goes up, miners' higher profit margins can boost earnings exponentially, and vice versa. Of course, traders have to get the direction right, but the Direxion ETFs provide a way to for investors to seek competitive returns in rising and falling markets.”
The new funds, and all Direxion Shares ETFs, are intended for use only by sophisticated investors who understand the risks associated with seeking daily leveraged investment results and plan to actively monitor and manage their positions in the funds. There is no guarantee that the funds will achieve their objective.
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Source: Direxion
Direxion Launches Airline Shares ETF
December 8, 2010--Direxion, a pioneer in providing alternative investment strategies to sophisticated investors, is pleased to announce the launch of the Direxion Airline Shares ETF (FLYX). This is Direxion’s first non-leveraged ETF, and is designed to seek investment results, before fees and expenses, of the price performance of the NYSE Arca Airline Index (“Index”). The Index is designed to measure the performance of highly capitalized and liquid U.S. and international passenger airline companies listed on developing and emerging global market exchanges.
“Direxion is focused on continually developing new investment tools that provide sophisticated investors with direct exposure to a multitude of sectors. We’re very pleased to offer our first non-leveraged ETF for the passenger airline space, which reflects our commitment to meeting market demands in a variety of forms,” said Direxion President Dan O’Neill. “As the passenger airline space experiences increased trading volume, this new ETF provides direct access for investors looking to execute institutional-style strategies within this market. With exposure to only one European airline and no exposure to Asian airlines, FLYX offers investors cost-efficient, focused access to some of the most actively traded airline stocks in the Americas, so they can take a more surgical portfolio position.”
The fund is different from the other Direxion Shares ETFs in that it does not seek a daily magnified goal. This makes it a more suitable investment to be bought and held without being exposed to daily compounding and other risks associated with leveraged ETFs. There is no guarantee that the fund will achieve its objective.
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Source: Direxion
BlackRock Announces Further Refinement to iShares Gold Trust
December 8, 2010--BlackRock, Inc. (NYSE: BLK) today announced that the iShares Exchange Traded Funds (ETFs) business, the world's largest ETF manager, has completed the final stage of planned refinements to the iShares Gold Trust (NYSE Arca: IAU). With this final refinement, IAU will begin daily valuation of the Trust's gold using the London PM Fix Price, which is a widely followed and recognized benchmark for the price of gold.
"This change marks the conclusion of our planned refinements to the iShares Gold Trust," said Noel Archard, Head of US iShares Product at BlackRock. "The IAU refinements we've undertaken during the past six months position our gold ETF as an instrument of choice in gold investing, and in response to investor feedback, focuses specifically on addressing key risk factors around gold custody, inspection and allocation."
During the six months ended November 30, 2010, IAU has seen an 84% increase in trading volume. "We believe that investors are applying rigorous standards in evaluating commodity ETFs and that standard is based on quality of exposure," said Archard. "We are very pleased with the recent flows into IAU and believe they represent sound due diligence during the ETF selection process."
Source: BlackRock
Rydex announces six equal weight ETFs. Rydex’s 16 equal weight ETF offerings to span U.S., Emerging, International and Global Markets.
December 8, 2010---- Rydex today unveiled six new equal weight (EW) ETFs, which are ETFs that weight investment holdings equally across either index constituents and/or market segments. A pioneer in the EW ETF space, the firm's flagship ETF, Rydex S&P Equal Weight ETF (RSP), was launched in 2003 and has grown to approximately $2 billion in assets under management. The ETF line-up at Rydex, with the exception of CurrencyShares®, is known in the marketplace as RydexShares(SM), and includes nine sector ETFs.
The addition of these six new ETFs brings Rydex’s total number of EW ETFs to 16 and total number of exchange traded products to 34, with assets over $6 billion, reflecting the firm’s
continued dedication to being a leader in EW investing.
The new ETFs, which began trading today on the NYSE Arca, are:
Rydex Russell 1000® Equal Weight ETF (EWRI)
Rydex Russell 2000® Equal Weight ETF (EWRS)
Rydex Russell Midcap Equal Weight ETF (EWRM)
Rydex MSCI EAFE Equal Weight ETF (EWEF)
Rydex MSCI Emerging Markets Equal Weight ETF (EWEM)
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In
Source: Rydex
Dreyfus files with the SEC
December 7, 2010--Dreyfus has filed an amended application for exmeptive relief with the SEC for actively-managed exchange-traded funds.
view filing
Source: SEC.gov
ISE Partners with Structured Solutions to Launch Family of Brazilian-Based Sector Indexes
NEW YORK, December 7, 2010 – The International Securities Exchange (ISE) announced today that it has partnered with Structured Solutions AG, a leading global index service provider and creator of the Solactive index platform, to launch a family of five Brazilian sector indexes. The indexes will track the performance of Brazilian public companies that are active in the consumer products, utilities, financial
services, industrial and materials industries.
The Solactive-ISE Brazilian indexes hold securities that are
domiciled in Brazil and traded on BM&F Bovespa. ISE and Structured Solutions are focused on working
with exchange-traded product issuers in Brazil and around the globe to launch innovative Exchange Traded Funds (ETFs) and structured products on the new family of indexes.
“We are incredibly pleased to partner with Structured Solutions to expand the global reach of ISE’s index business with the launch of this family of unique Brazilian-based sector indexes,” said Kris Monaco, ISE’s Director of New Product Development. “Brazil is one of the most closely followed emerging markets, and the new Solactive-ISE indexes will provide international and Brazilian-based investors alike with local benchmarks for the largest sectors in the Brazilian economy.”
“We are very glad to enter into a cooperation with ISE. With our new partner we will expand our international presence and offer valuable index concepts for global investors. Brazil is one of the most dynamic countries in the world and is a perfect starting point for our collaboration,” adds Steffen Scheuble, CEO of Structured Solutions.
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Source: International Securities Exchange (ISE)
Regulators push for ‘strict’ prop definition
December 6, 2010--US regulators are pressing for strict definitions of proprietary trading activities to be banned under the Dodd-Frank financial reform law in a move that could anger bankers and some of their toughest critics.
The question facing regulators is whether detailed descriptions of forbidden activities would lead to stricter enforcement or would help sophisticated Wall Street traders find ways round the ban on banks trading on their own account.
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Source: FT.com
CME Group Announces the Launch of Three Additional E-Micro Forex Futures Contracts
December 6, 2010--CME Group, the world's leading and most diverse derivatives marketplace, today announced the launch of three new E-micro Forex futures contracts scheduled for Sunday, December 19, for trade date Monday, December 20. These contracts will be listed with, and subject to, the rules and regulations of CME.
"These three new currency pairs will complement our existing suite of E-micro Forex contracts and provide our retail customers with a product that has the right risk/reward ratio for their financial risk management needs," said Derek Sammann, CME Group's Managing Director of FX and Interest Rate Products. "We continue to see strong growth in our existing E-micro contracts with average daily volume up 115 percent versus last year. The main reasons for this growth are CME Group's highly liquid and transparent markets, better customer awareness of the benefits of counterparty risk mitigation and our recent shift to physical delivery, which makes it easier to offset risk with our standard FX futures contracts."
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Source: CME Group
