Americas ETP News
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BM&FBOVESPA Announces Reduction in the Round Lot for ETFs
July 21, 2010-- BM&FBOVESPA has announced that as of August 2, 2010 the round lot for index funds or ETFs (Exchange Traded Funds) will be reduced from 100 units to 10 units, which means that the minimum value needed to invest in this product will be ten times less than it was. For example, a round lot for the ETF BOVA11, which mirrors the Bovespa Index, based on its closing price on July 19, would be reduced from BRL6,280.00 to BRL628.00.
The objective of this round lot reduction is to increase the trading potential of these funds especially for individual investors.
ETFs are funds which mirror indexes and their units are traded on the Exchange just like shares. When investors buy the units of any given ETF, they become holders of all the component shares of the index which that ETF replicates without having to buy the shares of each company in the index separately. As a result, ETFs provide investors with a fast, efficient and practical investment opportunity which also facilitates their ability to closely follow the performance of their investment in the respective index.
There are currently seven index funds (ETFs) trading at BM&FBOVESPA. Six are managed by BLACKROCK BRASIL and they are: BOVA11 (iShares Ibovespa Fundo de Indice), SMAL11 (iShares BM&FBOVESPA Small Cap Fundo de Indice), MILA11 (iShares BM&FBOVESPA MidLarge Cap Fundo de Indice), BRAX (iShares Indice Brasil IBrX-100 Fundo de Indice); CSMO (iShares Indice BM&FBOVESPA de Consumo Fundo de Indice); and MOBI (iShares Indice BM&FBOVESPA Imobiliario Fundo de Indice). The seventh, PIBB11 (PIBB Fundo de Indice Brasil - 50 - Brasil Tracker), is managed by Banco Itau.
Source: BM&FBOVESPA
Horizons AlphaPro launches actively managed global dividend ETF
July 21, 2010--The Horizons AlphaPro Global Dividend ETF is set to begin trading Wednesday on the Toronto Stock Exchange under the symbol HAZ, AlphaPro Management Inc., the manager of the Horizons AlphaPro Exchange Traded Funds says.
The sub-advisor to the Global Dividend ETF is Guardian Capital LP, which has been managing private client and institutional money for more than 40 years and currently oversees more than $13.4 billion in assets under management.
The investment objective of the Global Dividend ETF is to seek long-term returns consisting of regular dividend income and modest long-term capital growth. The new ETF invests primarily in equity and equity-related securities of companies with operations located anywhere in the world.
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Source: Investment Executive
Stirred, Not Shaken: Senior Fixed Income Investors Steady on U.S. Credit Recovery
July 21, 2010--Summary
Despite disappointing employment gains and a renewed bout of risk aversion following the sovereign debt crisis in Europe, the most recent Fitch Ratings/Fixed Income Forum
Survey of Senior Investors, conducted in June, finds some surprising resiliency in investor sentiment on U.S. growth prospects and the pace of the credit recovery. Most
investors still expect moderate growth for the U.S. in 2010, predict stability or credit improvement across multiple investment areas, and believe lending standards will loosen in the next 12 months.
Similar to the Fitch/ Fixed Income Forum January survey, investors remain constructive on the U.S. corporate sector, although opinions
surrounding corporate fundamentals, spread movement, and issuance are tamer than six months ago. Of special note, for the first time in several years, a majority of investors said they expected some improvement across prime mortgage-backed bonds, while the share of investors expecting significant credit deterioration across
commercial mortgage-backed issues fell to the lowest level in two years.
June 2010 Survey Highlights
Already the area with the weakest growth expectations early in the year, Europe sank further in the recent survey, with 59% of respondents placing growth at 1% or less over the coming year. In the January survey one-quarter of investors shared this grim view. However, in the June survey 63% of investors placed U.S. growth at a level of at least 2% or higher over the coming year (up from 59% in January) while 67% continued to believe Emerging Market growth would equal or top 3% (also up from January’s 65%).
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Source: Fitch Ratings
SEC Approves Disclosure Form Changes to Provide Investors Greater Information About Their Investment Advisers
July 21, 2010--Securities and Exchange Commission today voted unanimously to adopt changes to the principal disclosure document that SEC-registered investment advisers must provide to their clients and prospective clients.
Form ADV, Part 2 — commonly referred to as the “brochure” — explains to the investor an investment adviser’s qualifications, investment strategies, and business practices.
The brochure in its current format requires advisers to respond to a series of multiple-choice and fill-in-the-blank questions organized in a “check-the-box” format that frequently does not correspond well to an adviser’s business. In some cases, the required disclosure may not describe the adviser’s business or conflicts in a way that is truly accessible to the investor.
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Source: SEC.gov
Derivatives reform hits non-financials
July 21, 2010--BP, Royal Dutch Shell, Cargill and other large energy and commodity companies face new costs in their derivatives trading activities following Wednesday’s signing of the US financial reform law.
The US reforms authorise regulators to label commercial enterprises that actively sell or make markets in derivatives as “swap dealers”, a title customarily reserved for Wall Street banks.
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Source: FT.com
BNY Mellon Depositary Receipts Plays Integral Role in Launch of First Actively Managed International Exchange-Traded Fund
New “AADR” ETF offers U.S. investors unique opportunity to diversify portfolio
July 21, 2010-- BNY Mellon’s Classic ADR Indexsm has been selected as the referenced index for a new actively managed international exchange-traded fund (ETF) to be listed in the United States. The Fund’s investment objective, as stated in its prospectus (see: http://aadr.advisorshares.com) is long-term capital appreciation greater than international benchmarks, such as the BNY Mellon Classic ADR Index, which is the Fund’s primary benchmark.
The WCM/BNY Mellon Focused Growth ADR ETF is sponsored by AdvisorShares Investments, LLC. The new ETF will trade on the New York Stock Exchange under the symbol “AADR.”
“In bringing AADR to market, we believe investors who are looking to diversify their portfolios have a more efficient mechanism to invest globally,” said Michael Cole-Fontayn, chief executive officer of BNY Mellon’s Depositary Receipts business. “As a company, BNY Mellon continues to place a high level of importance on devoting resources to developing creative and unique products, as evidenced by the 18 ETFs benchmarked to the family of BNY Mellon DR Indices that trade in the U.S., Canada and Korea.”
“We’re pleased to be working with WCM and AdvisorShares in providing innovative and timely solutions that benefit foreign private issuers as well as the U.S. investment community,” said Julio Lugo, global head of BNY Mellon’s Depositary Receipts Structured Products business.
WCM helps clients achieve their financial goals by utilizing a variety of disciplined techniques for security selection and portfolio construction. As of December 31, 2009, WCM had approximately $1.4 billion in assets under management. For more information, visit www.wcminvest.com.
AdvisorShares is a turnkey platform for investment managers seeking to offer their investment strategy in an actively managed ETF. AdvisorShares works with money managers to combine their money management expertise with the benefits the ETF structure provides. For more information, visit www.advisorshares.com.
BNY Mellon acts as depositary for more than 2,100 American and global depositary receipt programs, acting in partnership with leading companies from 67 countries. With an unrivaled commitment to helping securities issuers succeed in the world’s rapidly evolving financial markets, the company delivers the industry’s most comprehensive suite of integrated depositary receipt, corporate trust and stock transfer services. Learn more at www.bnymellon.com/dr.
Source: BNY Mellon
SEC Proposes Measures to Improve Regulation of Fund Distribution Fees and Provide Better Disclosure for Investors
July 21, 2010-- The Securities and Exchange Commission today voted unanimously to propose measures aimed to improve the regulation of mutual fund distribution fees and provide better disclosure for investors.
The marketing and selling costs involved with running a mutual fund are commonly referred to as a fund's distribution costs. To cover these costs, the companies that run mutual funds are permitted to charge fees known as 12b-1 fees. These fees are deducted from a mutual fund to compensate securities professionals for sales efforts and services provided to the fund's investors.
12b-1 fees were developed in the late 1970s when funds were losing investor assets faster than they were attracting new assets, and self-distributed funds were emerging in search of ways to pay for necessary marketing expenses. These fees amounted to an aggregate of just a few million dollars in 1980 when they were first permitted, but that total has ballooned as the use of 12b-1 fees has evolved. These fees amounted to $9.5 billion in 2009.
"Despite paying billions of dollars, many investors do not understand what 12b-1 fees are, and it's likely that some don't even know that these fees are being deducted from their funds or who they are ultimately compensating," said SEC Chairman Mary L. Schapiro. "Our proposals would replace rule 12b-1 with new rules designed to enhance clarity, fairness and competition when investors buy mutual funds."
The SEC's proposal would:
Protect investors by limiting fund sales charges. Improve transparency of fees for investors. Encourage retail price competition. Revise fund director oversight duties. There will be a 90-day public comment period after the SEC's proposal is published in the Federal Register.
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Source: SEC.gov
CFTC Releases List of Areas of Rulemaking for Over-the-Counter Derivatives
July 21, 2010-- The Commodity Futures Trading Commission (CFTC) today released the list of 30 areas of rulemaking to implement the Wall Street Reform and Consumer Protection Act. Some of these areas will require only one rule, while others may require more. The CFTC is required to complete these rules generally in 360 days, though some are required to be completed within 90, 180 or 270 days.
“The CFTC, working along with the SEC and other regulators, will have a full and busy rule-writing agenda over the coming year,” CFTC Chairman Gary Gensler said. “The financial reform bill presents new responsibilities and authorities for the agency. The Commission looks forward to taking on these new responsibilities to lower risk, promote transparency and protect the American public.
“We have begun preparing for the task of writing rules for the swaps marketplace by identifying 30 topic areas where we have determined rule-writing to be necessary. Teams of staff within the agency have been assigned to each rule-writing area and will see the process through, from analyzing the statute’s requirements, to broad consultation, to recommending proposed rulemakings to publishing final rules.”
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Source: CFTC,gov
CFTC Chairman Gensler Comments on Enactment of Wall Street Reform and Consumer Protection Act
July 21, 2010- Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler today commented on the President’s signing of the Wall Street Reform and Consumer Protection Act.
Chairman Gensler said:
“The Wall Street reform bill will – for the first time – bring comprehensive regulation to the over-the-counter derivatives marketplace.
Derivatives dealers will be subject to robust oversight. Standardized derivatives will be required to trade on open platforms and be submitted for clearing to central counterparties. The Commission looks forward to implementing the Dodd-Frank bill to lower risk, promote transparency and protect the American public.”
Source: CFTC.gov
Barclays Capital Launches First Exchange Traded Note Linked Inversely to a Volatility Index
July 20, 2010--Barclays Capital today announced the listing of the Barclays ETN+ Inverse S&P 500® VIX Short-Term FuturesTM ETN on the NYSE Arca stock exchange under the ticker symbol XXV. The ETN is designed to provide investors with a cost-effective way to implement a ‘short’ view on volatility in the U.S. equities markets.
“Investors are increasingly looking for diversified ways to access equity market volatility,” said Philippe El-Asmar, Head of Investor Solutions at Barclays Capital. “We are pleased to provide them with the first exchange traded product that allows them to express a bearish view on volatility.”
This new ETN is linked to the inverse performance of the S&P 500® VIX Short-Term FuturesTM Index Excess Return (the “Index”). The Index is designed to reflect the returns that are potentially available through an unleveraged investment in short-term futures contracts on the CBOE Volatility Index® (the “VIX Futures”). VIX Futures reflect the implied volatility of the S&P 500® Index, which provides an indication of the pattern of stock price movement in the US equities market. This new ETN is an uncollateralized debt obligation of Barclays Bank PLC with a 10-year maturity.
The prospectus can be found by visiting EDGAR on the U.S. Securities and Exchange Commission (SEC) website at: http://www.sec.gov/Archives/edgar/data/312070/000119312510160327/d424b2.htm
Source: Barclays Capital
