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S&P says new rules will hit big bank profits
November 2, 2010-The new regime of financial regulation will hit annual profits at the US’s eight biggest banks by between $19.5bn and $22bn, according to one of the first assessments of the new law.
Standard & Poor’s analysts say there will be a noticeable loss of income as a result of restrictions on proprietary trading, credit card fees and derivatives activity at Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, PNC Financial, US Bancorp and Wells Fargo.
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Source: FT.com
Vanguard launches Global ex-U.S. Real Estate ETF
November 2, 2010--Today Vanguard introduced a new international real estate ETF, further rounding out our ETF lineup across multiple asset classes. Vanguard Global ex-U.S. Real Estate ETF (VNQI) is benchmarked to the S&P Global ex-U.S. Property Index. The new ETF is a share class of Vanguard Global ex-U.S. Real Estate Index Fund, which also offers traditional share classes. The fund invests in real estate investment trusts (REITs) and real estate operating companies (REOCs) in developed and emerging markets excluding the United States.
The Global ex-U.S. Real Estate ETF can serve as a complement to Vanguard REIT ETF (VNQ), which holds only domestic real estate securities.
"Modest exposure to real estate investments in a broadly diversified investment portfolio can help moderate overall portfolio volatility and serve as a hedge against inflation," Vanguard Chief Investment Officer Gus Sauter said. "With international real estate securities representing a growing portion of the overall real estate market, a counterpart to our domestic REIT ETF is a natural addition to our ETF lineup."
Low costs
Vanguard Global ex-U.S. Real Estate ETF, with an estimated expense ratio of 0.35%, continues the Vanguard tradition of offering mutual funds and ETFs with expense ratios that are among the lowest in the industry. In fact, competing international real estate ETFs charge an average expense ratio of 0.55%, (source: Morningstar, Inc., as of December 31, 2009).
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Source: Vanguard
Joint Statement by CFTC Chairman Gary Gensler and European Commissioner Michel Barnier on Financial Oversight
November 2, 2010--United States Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler and European Commissioner Michel Barnier met today in Chicago to discuss a range of issues concerning the oversight of commodity markets and the regulation of over-the-counter (OTC) derivatives. Chairman Gensler also accompanied Commissioner Barnier to meetings with the Chicago Mercantile Exchange, industry traders and intermediaries and the Chicago Climate Exchange.
Chairman Gensler and Commissioner Barnier reaffirmed their commitment to strong regulation and enhanced transparency of the commodity markets. They also expressed general support for the IOSCO Task Force on Commodity Futures Markets and related efforts in the G20, which are working to improve the regulatory oversight and transparency of futures and physical commodity markets.
Commissioner Barnier and Chairman Gensler discussed position concentration in commodity markets and the role that position limits play in the oversight of physical commodity futures and swaps markets. They also discussed potential reforms to the Markets in Financial Instruments Directive and the Market Abuse Directive, which will assist in the overall efforts to reform commodity oversight in Europe.
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Source: CFTC.gov
Minutes of the Meeting of the Treasury Borrowing Advisory Committee Of the Securities Industry and Financial Markets Association
November 2, 2010--The Committee convened in closed session at the Hay Adams Hotel at 9:03 a.m. All Committee members were present. Assistant Secretary for Financial Markets Mary Miller, Deputy Assistant Secretary (DAS) for Federal Finance Matthew Rutherford and Director of the Office of Debt Management Colin Kim welcomed the Committee. Other members of Treasury staff included Fred Pietrangeli, Moji Jian, Jennifer Imler and Alfred Johnson. Federal Reserve Bank of New York members Mark Cabana and Dina Marchioni were also present.
DAS Rutherford opened the discussion with a presentation to the Committee. He noted that the budget deficit for FY10 printed at $1.294 trillion. This was an improvement from the Administration's previous estimate of approximately $1.45 trillion. Rutherford noted that the recent improvement in the fiscal situation was led by improvements in tax receipts, led by a 43 percent year-over-year increase in corporate taxes. Personal income tax receipts also continue to rise, although at a more gradual pace as the economy continues to experience below potential growth. Ongoing TARP repayments have been another source of income that has reduced Treasury's borrowing needs.
Looking ahead to FY11, DAS Rutherford noted that total receipts are projected to increase to 15.8 percent of GDP. Over the coming years, receipts as a percentage of GDP are expected to gradually increase back towards the historical average of 18 percent. This improvement is built into many forecasters' estimate of the deficit. A survey of the primary dealers found that the average deficit forecast for FY11 is $1.214 trillion, over $200 billion below OMB's forecast.
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Source: CFTC.gov
Joint Statement by CFTC Chairman Gary Gensler and European Commissioner Michel Barnier on Financial Oversight
November 2, 2010--United States Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler and European Commissioner Michel Barnier met today in Chicago to discuss a range of issues concerning the oversight of commodity markets and the regulation of over-the-counter (OTC) derivatives. Chairman Gensler also accompanied Commissioner Barnier to meetings with the Chicago Mercantile Exchange, industry traders and intermediaries and the Chicago Climate Exchange.
Chairman Gensler and Commissioner Barnier reaffirmed their commitment to strong regulation and enhanced transparency of the commodity markets. They also expressed general support for the IOSCO Task Force on Commodity Futures Markets and related efforts in the G20, which are working to improve the regulatory oversight and transparency of futures and physical commodity markets.
Commissioner Barnier and Chairman Gensler discussed position concentration in commodity markets and the role that position limits play in the oversight of physical commodity futures and swaps markets. They also discussed potential reforms to the Markets in Financial Instruments Directive and the Market Abuse Directive, which will assist in the overall efforts to reform commodity oversight in Europe.
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Source: CFTC.gov
NASDAQ OMX Launches Innovative Alpha Indexes(TM)
Indexes Designed to Measure Performance Between Stocks and ETFs
November 1, 2010--The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) today announced the launch of five NASDAQ OMX Alpha IndexesTM designed to help market participants measure performance between stock and exchange traded funds (ETFs). The new indices, which began real-time calculation and dissemination on October 11, 2010, will highlight a suite of new derivatives products that will allow investors and traders the opportunity to generate returns even when the market is down.
NASDAQ OMX Alpha Indexes are an innovative way for market participants to track the return of a single stock or Exchange Traded Fund (ETF) against a leading ETF or another single stock of the same type, allowing investors and traders to capitalize on opportunities to generate returns. For example, if the price of a stock declines less than a specific ETF, the NASDAQ OMX Alpha Index tracking the specific relationship between the two will increase. This ability to track correlation gives market players the opportunity to adjust their portfolios in accordance with the particular market relationship being tracked.
"NASDAQ OMX Alpha Indexes have the potential for being as widely used as other indexes that are industry standards for market volatility and price," said Robert E. Whaley of Vanderbilt University's Owen Graduate School of Management. "With NASDAQ OMX Alpha Indexes, you're trading correlation—moreover, correlation between some important asset classes like bonds versus stocks, gold versus stocks or emerging market equities versus US equities. The recent financial crisis tells us how important that can be."
"NASDAQ OMX has a long history of new product and market innovation from the creation of the NASDAQ-100 Index® to PHLX sector indexes," said Eric Noll, Executive Vice President of US Transaction Services at NASDAQ OMX. "The debut of NASDAQ OMX Alpha Indexes will allow us to list proprietary options in the near future on PHLX or the NASDAQ Options Market."
The NASDAQ OMX Alpha Indexes were developed by NASDAQ OMX in conjunction with Jacob S. Sagi, Financial Markets Research Center Associate Professor of Finance, and Robert E. Whaley, Valere Blair Potter Professor of Management and Co-Director of the FMRC, both of the Owen Graduate School of Management, Vanderbilt University.
The NASDAQ OMX Alpha Indexes use a proprietary calculation, which measures the performance of a single stock or ETF, which is the target, against another single stock or leading ETF, which is the benchmark. The relative performance of the target and benchmark is calculated by comparing daily price returns plus dividends to the previous trading day. The initial Alpha Indexes have a starting point of 100.00 as of January 1, 2010.
NASDAQ OMX Alpha Indexes that are tracking highly liquid symbols are now available:
NASDAQ OMX Alpha AAPL vs. SPY Index (Nasdaq:AVSPY) shows how AAPL has performed compared to the SPDR® S&P® 500 ETF;
NASDAQ OMX Alpha GLD vs. SPY Index (Nasdaq:GVSPY) shows how SPDR® Gold Trust has performed compared to the SPDR® S&P® 500 ETF;
NASDAQ OMX Alpha TLT vs. SPY Index (Nasdaq:TVSPY) shows how treasury notes have performed compared to the SPDR® S&P® 500 ETF;
NASDAQ OMX Alpha C vs. XLF Index (Nasdaq:CVXLF) shows how Citigroup has performed compared to the Financial Select Sector SPDR® Fund;
and NASDAQ OMX Alpha EEM vs. SPY Index (Nasdaq:EVSPY) shows how iShares MSCI Emerging Markets ETF has performed compared to the SPDR® S&P® 500 ETF.
For more information on NASDAQ OMX Alpha Indexes please visit our website: http://www.nasdaqomxtrader.com/alpha
Source: NASDAQ OMX
BlackRock New ETF Landscape: US Handbook,
November 1, 2010--This is a comprehensive directory of all 1,031 ETFs and ETPs with assets of US$813.9 Bn from 44 providers on two exchanges in the US.
This handbook is free of charge to SWFs, pension plans, insurance companies, asset managers, private banks, hedge funds, financial advisors, banks and brokerage firms to provide a central source of the key data on all ETFs and ETPs listed in the US at the beginning of September 2010 including: Bloomberg and Reuters tickers, annual TERs, total AUM, average daily volume, dividend status, fund structures, index replication method and exchange listings.
The growth in ETF listings can be explained, in large part, by strong investor demand for these types of products. The proliferation of new offerings has also made it more challenging in terms of decision-making.
to request report
Source: Global ETF Research & Implementation Strategy Team, BlackRock
Morgan Stanley Exchange-Traded Funds-US ETF Weekly Update
November 1, 2010--Weekly Flows: $1.3 Billion Net Inflows
ETFs Traded $267 Billion Last Week-Launches: 2 New ETFs
State Street to Make Name, Ticker, Index Changes
US-Listed ETFs: Estimated Flows by Market Segment
For the ninth week in a row, ETFs generated net inflows —$1.3 bln last week
Weekly net inflows driven by FI & EM Equity ($937 mln); offset by US Small & Micro-Cap ($543 mlnnet outflows)
ETF assets stand at $930 bln; up 19% YTD
13-week flows were mostly positive among asset classes
$35.9 bln net inflows into ETFs over past 13 weeks (49% into EMEquity)
We estimate ETFs have posted net inflows 31 out of 43 weeks YTD
US-Listed ETFs: Estimated Largest Flows by Individual ETF
XLF posted net inflows of $442 mln last week, the most of any ETF
Amid questions regarding foreclosure processes, financials haveonce again garnered a great deal of attention
XLF, which consists of a number of large-cap banks, had net inflows of $442 mlnlast week
Over a 13-wk period, EM Equity ETF (VWO & EEM) has taken in most new money($11.6 bln)
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Source: ETF Research-Morgan Stanley
Emerging Markets Week in Review -10/25/2010 - 10/29/2010
November 1, 2010--The Dow Jones Emerging Markets Sector Titans Composite Index climbed 0.34% last week and ended October up 3.73%.
The broad emerging markets index has increased in 9 of the last 10 weekly periods. The Consumer sector, the best performing group this year, continued to lead the market up, gaining 1.5% while Financials and Utilities fell by 1.25% and 0.88% respectively.
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Source: Emerging Global Advisors
Statement for theTreasury Borrowing Advisory Committee of the Securities Industry and Financial Markets Association
Alan B. Krueger -Assistant Secretary for Economic Policy & Chief Economist
November 1, 2010--The U.S. economy continues to recover from the deepest and longest recession since the end of World War II. Real GDP continues to expand, consumer spending is growing steadily at a moderate pace, business investment is rising, and firms are adding workers to their payrolls. More than 850,000 private-sector jobs, on net, have been added so far this year.
Nevertheless, the unemployment rate remains elevated at 9.6 percent. The subpar labor market performance is weighing on the housing market, which, although still weak, is generally more stable than a year ago. Conditions in financial and credit markets have improved in recent months, following an uptick in volatility related to developments in European debt markets during the spring. The improvement in the economy over the past year has led to improvement in U.S. government finances. The federal budget deficit narrowed to 8.9 percent of GDP in FY2010 from 10 percent of GDP in FY2009, and is expected shrink significantly further in the next few years as the recovery gains momentum. Private forecasters generally expect another moderate increase in real GDP in Q4, and see growth strengthening in 2011.
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Source: US Department of the Treasury
