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Three dividend ETFs to fight deflation
Commentary: Biggest funds differ in style, strategy
August 16, 2010-- The subject of dividends is bubbling up again, for a couple of reasons.
First, the 15% tax rate on dividend income is due to expire at the end of this year. Unless Congress takes action, beginning in 2011 dividends will be taxed as ordinary income for the first time since 2003. Desperate for revenue, Congress seems disinclined to step in to prevent this from happening, although pointed mail from voters might help.
Second comes possibly bad news with an opportunity wrapped inside.
The specter of deflation -- broadly falling prices for goods and services -- darkens the horizon as the economic recovery struggles and sputters. Asset managers who think this is a real danger are loading up on high-quality dividend-paying stocks and bonds because the cash flow from those investments would gain purchasing power in a deflationary environment.
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Source: Market Watch
CFTC Issues Letter to CME Group, Inc. Regarding ELX EFF Rule
August 16, 2010--The Commodity Futures Trading Commission (CFTC) on Friday, August 13, 2010, sent a letter to CME Group, Inc. regarding a Chicago Board of Trade (CBOT) self-certified Market Regulation Advisory Notice issued on October 19, 2009.
. In that notice, CBOT stated that its rules do not permit the execution of exchange of futures for futures (EFF) transactions. The notice was issued shortly after the CFTC approved an ELX Futures (ELX) rule authorizing participants on ELX to carry out EFF transactions. The Commission’s August 13 letter supports a previous CFTC staff letter regarding this matter.
CBOT justified its action on the grounds that, in its view, EFF transactions are not supported by CFTC precedent and are prohibited under the Commodity Exchange Act (CEA) and CFTC regulations.
The Commission has reviewed the matter and has found that ELX’s EFF transactions are not wash sales and are consistent with Commission precedent. Further, the Commission has found that ELX’s EFF transactions are neither prohibited nor mandated by Core Principle 9. Thus, ELX’s EFFs are not prohibited by the CEA or Commission regulations. The Commission also has directed staff to separately analyze whether CBOT’s October 19, 2009 notice was consistent with the requirements of CEA Core Principle 18 (antitrust considerations). In that regard, CFTC Division of Market Oversight staff simultaneously sent a separate letter to CBOT addressing the Core Principle 18 analysis. Neither the Commission nor Commission staff has made any determination regarding this analysis.
Source: CFTC.gov
