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Opening Statement Before the Technology Advisory Committee-Chairman Gary Gensler
July 14, 2010--Good afternoon. Thank you Commissioner O’Malia for chairing today’s meeting of the Technology Advisory Committee. This is the Technology Advisory Committee’s first meeting since its charter was renewed this year. The futures marketplace has evolved substantially over the course of the last decade. We’ve gone from open outcry trading to predominantly electronic trading platforms. In fact, in today’s futures marketplace, roughly 90 percent of the market is traded electronically.
Though we are fortunate to receive daily trade data and position data electronically, there is much we can learn and great deal more we can do regarding technology. For instance, while in some cases we still receive paper forms from market participants, we are considering putting out rules to automate our Form 40 and Form 102. This will allow us to automate the receipt of important information from the marketplace.
Internally, we are moving toward automation of our surveillance. While market participants have the technology to automate their trading, we must improve our ability to employ modern technology to automate our surveillance.
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Source: CFTCF.gov
FINRA to Make Additional Information About Brokers, Former Brokers Publicly Available Through BrokerCheck
Full Records of Brokers Leaving Industry to Remain Available for 10 Years; Criminal Convictions, Civil Injunctions, More to Remain Available Permanently
July 13, 2010--The amount of information available to the public about current and former securities brokers will expand significantly in coming months, as the Financial Industry Regulatory Authority (FINRA) implements changes to its free, online BrokerCheck service recently approved by the Securities and Exchange Commission.
The changes will increase the number of customer complaints reported publicly; extend the public disclosure period for the full record of a broker who leaves the industry from two years to 10 years; and, make certain information about former brokers available permanently, such as criminal convictions and certain civil injunctive actions and arbitration awards against the broker.
The changes will also formalize a dispute process for current or former brokers to dispute the accuracy of, or update, factual information disclosed through BrokerCheck.
"This additional information will benefit investors who are considering whether to conduct, or continue to conduct, business with a particular securities firm or broker," said FINRA Chairman and CEO Rick Ketchum. "Just as important, it will provide valuable information about persons who have left the securities industry, often not of their own accord, who have established themselves in other segments of the financial services industry and can still cause great harm to the investing public."
When the expansion is implemented, BrokerCheck will:
* Disclose all "historic" complaints against a broker dating back to 1999, when electronic filing of broker information began. Generally, historic complaints are customer complaints, arbitrations or litigations more than two years old that have not been adjudicated or have been settled for an amount less than the reporting requirement (currently $15,000). They are currently reported on BrokerCheck when the broker has three or more currently disclosable regulatory actions, customer complaints, arbitrations, litigations or historic complaints. The expanded BrokerCheck will disclose all historic complaints dating back to 1999 for individual brokers who are currently registered or whose registrations were terminated within the preceding 10 years.
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Source: FINRA
Commentary: Pessimism is the new black - the latest fashion
July 13, 2010--It is hard to recall a time when investor pessimism has been more in vogue than it is today. Yes, there is plenty of bad news to go around - imploding European economies, slipping US job growth, record deficits, and fears of a dreaded double dip.
What's worse, even good news is being interpreted as bad. Record corporate cash of $10 trillion is seen as corporate timidity, rather than prudent deleveraging. Many efforts to sustain economic expansion are seen as too late, too slow, too tepid, too fleeting. You'd think it was 1937 again. Is all this gloom really justified, and what's it mean for investors?
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Source: Osbon Capital
Direxion files with the SEC
July 13, 2010--Direxion has filed a post-effective amendment, registration statement with the SEC for
Direxion Airline Shares, Direxion Auto Shares, Direxion Daily Canada Bull 2X Shares, Direxion Daily Canada Bear 2X Shares, Direxion Daily Russia Bull 2X Shares, Direxion Daily Russia Bear 2X Shares, Direxion Daily Agribusiness Bull 2X Shares, Direxion Daily Agribusiness Bear 2X Shares, Direxion Daily Gold Miners Bull 2X Shares, Direxion Daily Gold Miners Bear 2X Shares, Direxion Daily Home Construction Bull 2X Shares,
Direxion Daily Home Construction Bear 2X Shares, Direxion Daily Natural Gas Related Bull 2X Shares, Direxion Daily Natural Gas Related Bear 2X Shares, Direxion Daily Brazil Bull 3X Shares, Direxion Daily Brazil Bear 3X Shares, Direxion Daily Indonesia Bull 3X Shares, Direxion Daily Indonesia Bear 3X Shares, Direxion Daily Malaysia Bull 3X Shares, Direxion Daily Malaysia Bear 3X Shares, Direxion Daily South Korea Bull 3X Shares, Direxion Daily South Korea Bear 3X Shares, Direxion Daily Taiwan Bull 3X Shares, Direxion Daily Taiwan Bear 3X Shares, Direxion Daily Thailand Bull 3X Shares, Direxion Daily Thailand Bear 3X Shares, Direxion Daily Commodity Related Bull 3X Shares, Direxion Daily Commodity Related Bear 3X Shares, Direxion Daily Global Infrastructure Bull 3X Shares, Direxion Daily Global Infrastructure Bear 3X Shares, Direxion Daily Regional Banks Bull 3X Shares, Direxion Daily Regional Banks Bear 3X Shares, Direxion Daily Water Bull 3X Shares, Direxion Daily Water Bear 3X Shares, Direxion Daily Wind Energy Bull 3X Shares and Direxion Daily Wind Energy Bear 3X Shares
view filing
Source: SEC.gov
Standard & Poor's Announces Changes In The S&P/TSX Venture Composite Index
July 13, 2010-Standard & Poor's will make the following changes in the S&P/TSX Venture Composite Index after the close of trading on Tuesday, July 13, 2010:
Verena Minerals Corp. (TSXVN:VML) will change its name to Belo Sun Mining Corp.
The new ticker symbol will be "BSX" and the new CUSIP number will be 080588 10 9. There is no consolidation of capital.
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
BofA Merrill Lynch Fund Manager Survey Finds Bear Market Sentiment Is Back
Investors Move out of U.S. and into Emerging Markets
July 13, 2010--Investors have turned bearish in their outlook for the global economy and corporate earnings, according to the BofA Merrill Lynch Survey of Fund Managers for July.
The survey shows a net 12 percent of respondents predicting the global economy will deteriorate in the coming 12 months, the first negative forecast since February 2009. This represents a big turnaround from June when a net 24 percent forecast the economy to strengthen.
A net 4 percent of the panel expects corporate profits to worsen in the coming year, also the first negative outlook in more than a year. It compares with a net 28 percent forecasting earnings growth just last month. A net 1 percent says that profit margins will fall in the coming year, compared with a net 31 percent predicting improved margins in May.
Risk appetite has dipped with investors moving into cash and reducing exposure to cyclical stocks. Cash now comprises 4.4 percent of an average portfolio, up from 4.1 percent in May. A net 39 percent of the panel is taking lower than normal risk, more than double the proportion in May. Allocations towards Pharmaceuticals, a classic bear market sector, increased to the highest level since March 2009.
"July's survey echoes the sentiment that investors expressed during the recession in early 2009," said Gary Baker, head of European Equities strategy at BofA Merrill Lynch Global Research. "Growth and profit expectations have double-dipped. Should upcoming data fail to confirm a double-dip, risk assets will have a much better third quarter," said Michael Hartnett, chief Global Equity strategist at BofA Merrill Lynch Global Research.
Out of the U.S., into Emerging Markets and eurozone
Investors are more concerned about the outlook for U.S. equities than at any point since November 2006, with a net 14 percent of the panel saying it is the region they would most like to underweight. In June a net 14 percent said the U.S. was the region they most wanted to overweight. Global asset allocators have already reduced exposure to the region, with net 7 percent of panel overweight U.S. equities, down from a net 20 percent in June.
Global Emerging Markets (GEM) has been gaining in popularity while investors are also returning to the eurozone -- in spite of weakened economic sentiment towards China and Europe respectively.
A net 34 percent of global asset allocators are overweight GEM equities, up from 19 percent in May. A net 48 percent of investors identify GEM as the region they would most like to overweight over the next 12 months, more than double the reading in May. Over the same period, the proportion of respondents predicting a weaker Chinese economy has surged to a net 39 percent up from a net 3 percent. The proportion of asset allocators underweight eurozone equities has fallen to a net 10 percent, down from a net 27 percent in June. At the same time, a net 17 percent of European investors expect the region's economy to weaken.
Buying expensive bonds; selling cheap equities
Respondents have scaled back positions in global equities while moving into bonds in the past two months. The proportion of asset allocators overweight equities has slipped to a net 11 percent from 30 percent in May. The proportion underweight bonds has fallen to a net 15 percent, down from 29 percent in May. This is despite investors acknowledging that equities are increasingly undervalued and bonds increasingly overvalued. The spread in perceived valuations of bonds and equities is at its widest since 2003.
Risk aversion is not restricted to long-only investors. Hedge funds have reduced their net equity exposure to its lowest since March 2009.
Four out of 10 investors predict no Fed rate hike for a year
Inflation concerns have eased as sharply as growth concerns have appeared. A net 12 percent of investors predict inflation to fall in the coming year, a turnaround from June when a net 12 percent were forecasting higher inflation. As a result investors are pushing back the date they expect next to see a rate hike in the U.S. or eurozone. Four out of 10 respondents to the Global Survey are ruling out any rate hike by the Fed before July 2011, and only 4 percent predict an increase this year. The Regional Survey shows 47 percent of European investors predict no rate hike from the ECB before July 2011.
Survey of Fund Managers
A total of 202 fund managers, managing a total of US$530 billion, participated in the global survey from 1 July to 8 July. A total of 170 managers, managing US$393 billion, participated in the regional surveys. The survey was conducted by BofA Merrill Lynch Global Research with the help of market research company TNS. Through its international network in more than 50 countries, TNS provides market information services in over 80 countries to national and multi-national organizations. It is ranked as the fourth-largest market information group in the world.
Source:Bank of America Merrill Lynch
Presentation by Andrei Kirilenko, Senior Financial Economist, CFTC Office of the Chief Economist on High Frequency Traders and Asset Prices
July 13, 2010--Committee Meeting to Discuss Best Practices for HFT/ALGO.
view presentation
Source: CFTC.gov
CFTC Announces Members of the CFTC’s Technology Advisory Committee – Committee to Meet on July 14, 2010 to Discuss Best Practices for HFT/ALGO
July 12, 2010--The first meeting of the CFTC’s Technology Advisory Committee (TAC), titled “Technological Trading in the Markets,” will be held on July 14, 2010 at 1:00 p.m., at the CFTC’s Washington, DC headquarters’ Hearing Room. The meeting will address the topics of algorithmic (Algo) and high frequency trading (HFT). Andrei Kirilenko, a Senior Financial Economist in the CFTC’s Office of the Chief Economist, will present his paper, High Frequency Traders and Asset Prices; Richard Gorelick of RGM Advisors, LLC, will present a high frequency trading firm’s perspective on HFT; and a representative from FIA will present the paper Market Access Risk Management Recommendations regarding standards on direct market access.
Commissioner Scott D. O’Malia, Chairman of the TAC, has requested that members come to the first meeting prepared to debate the impacts Algo and HFT have on the market and whether or not best practices and/or regulatory standards related to Algo and HFT should be implemented by the Commission.
“The new TAC includes members with a wide range of technology expertise in the financial markets and will be charged with keeping the TAC abreast of new technological advances. With the depth of knowledge of the various TAC members, this new committee can play a vital role assisting the Commission’s efforts to better oversee the evolution of the derivatives markets,” stated Commissioner O’Malia.
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Source: CFTC.gov
NYSE Liffe U.S. to Become Sole U.S. Exchange for MSCI-Based Futures
For Futures on MSCI’s Emerging Markets and EAFE Indices, No Later Than June 2011, New Products Coming
July 12, 2010--NYSE Liffe U.S., the U.S. futures exchange of NYSE Euronext (NYX), today announced that it will coordinate with its global customer base to complete the orderly transition of trading and open interest of all existing MSCI-linked stock index futures in the U.S. to its platform no later than June 17, 2011. Earlier today, MSCI announced that other contracts listed in the US under its existing licenses are expected to cease trading on that date. To ensure the transition is effective, NYSE Liffe U.S. will begin working with market participants immediately.
“Listing of futures based on MSCI EAFE and EM Indices is part of our plan to be the premier venue for customers to access a diverse global equity product offering based on the well-known MSCI family of indices. In the coming months, we will continue to expand our offering by introducing additional contracts based on MSCI indices,” said Thomas F. Callahan, CEO, NYSE Liffe U.S. “We anticipate that customers who need to move open interest onto our exchange will want to begin that process well in advance of the June 2011 deadline and we’ll be working closely with these firms to support them throughout the process. Our goal is to build a unique exchange with exceptional liquidity, technology and service to our global customers.”
In May 2009, NYSE Liffe U.S. signed a license agreement with MSCI to offer a broad suite of domestic and international index futures products built on a range of MSCI equity indices. These indices include style and sector exposures as well as flagship MSCI indices like the MSCI Emerging Markets (EM), MSCI EAFE and MSCI BRIC Indices. MSCI calculates over 120,000 equity indices daily as part of a diverse index portfolio including broad and efficient market coverage of U.S. and European equity markets. MSCI indices are recognized and used by leading asset managers around the world.
A unit of NYSE Euronext, NYSE Liffe U.S. recently sold a substantial minority ownership stake to six leading market participants, Citadel Securities, DRW Ventures LLC (an affiliate of DRW Trading Group), GETCO, Goldman Sachs, Morgan Stanley, and UBS. NYSE Liffe U.S. utilizes the proven LIFFE CONNECT® trading platform designed and maintained by NYSE Technologies that matched more than 3 million contracts per day in 2010 year-to-date on the NYSE Liffe European markets. NYSE Liffe U.S. offers a wide variety of global connectivity options allowing members to efficiently transact on the platform in a highly cost-effective manner.
For more information on licenses for these indices please see MSCI’s announcement at http://www.mscibarra.com/products/indices/licd/changes_to_licensees_for_futures_contracts.html
and the NYSE Liffe U.S. website at www.nyse.com/nyseliffeus
Source: NYSE Euronext
Emerging Markets Week in Review -7/5/2010 - 7/9/2010
July 12, 2010--The Dow Jones Emerging Markets Sector Titans Composite Index was up a strong 3.71% last week, its largest weekly increase since April. Financials and Consumer Services led the market up, increasing 4.74% and 4.39% respectively, while Utilities were up the least with a 1.23% return.
As markets continue to be driven by weak economic data from the United States, focus will shift this week to China as it releases its latest figures for GDP, inflation and production.
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Source: Emerging Global Advisors
