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Erroneous trades snag ETFs, ETNs in Thursday's plunge
May 7, 2010--Thursday's market plunge that triggered errant trades in individual stocks such as Proctor & Gamble Co. and Accenture affected exchange-traded funds and notes as well.
The NYSE Arca and the Nasdaq have released lists of securities that will have trades canceled Thursday afternoon if prices moved 60% or more in either direction. The lists included large numbers of ETFs and ETNs.
The New York Stock Exchange called these trades "clearly erroneous." The Nasdaq for its part said it had "no technology or system issues" associated with the market's gyrations on Thursday.
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Source: Market Watch
Silver Miners ETF Launch Attracted Significant Volume and Assets
May 7, 2010 – Since its launch on April 20, the first-ever silver mining exchange-traded fund, Global X Silver Miners ETF (NYSE Arca: SIL), has traded as high as nearly a million shares in daily volume, and raised $35 million in assets in its first ten trading days.
“These results reveal a previously-unmet, large need among investors for this unique play on precious metals,” said Global X Funds CEO, Bruno del Ama. “The magnitude of the market’s demand for this new investment tool is becoming more apparent as the fund grows and continued inquiries come in from institutional and retail investors.”
Silver mining companies are up nearly fourfold since bottoming in 2008, and physical silver has doubled in that time. Because SIL invests in silver mining companies, it provides a differentiated investment profile to investing in physical silver. According to Nick Barisheff, President of Bullion Management Group Inc., “at the beginning of a bull market, it is well documented that mining shares typically rise, and often outperform bullion.”
According to commodities analysts, silver demand should remain strong as a result of both investment interest and increased use in the consumer and industrial sectors. 54% of silver demand is industrial, and silver industrial demand is expected to rise 19% this year according to BMO Capital Markets.
Some of the largest silver-focused mining companies in the Global X Silver Miners ETF include Silver Wheaton, Pan American Silver, Fresnillo, and Industrias Penoles. A number of the component companies are expected to increase silver production this year as new mines are opened, existing mines ramp up output, milling additions and re-permitting take place.
“The Global X Funds Silver Miners ETF is designed to capture this anticipated growth in demand as well as company growth across the silver mining industry,” says del Ama. “This ETF allows investors to gain exposure in a way that is focused on the silver sector while benefiting from the diversification of a basket of stocks.”
Global X Funds is the ETF provider posting the fastest growth rate over the past 6 months, expanding to just under $200 million in assets currently. This growth follows the launch of a family of China sector-specific ETFs and the recent silver and copper miners ETFs. Global X Funds will continue to bring innovative tools to investors, as indicated by its recent filings with the SEC, which include Lithium, Uranium, and Aluminum ETFs, and a family of Brazil sector-specific ETFs, among others.
Source: Global X
CFTC’s Division of Market Oversight Issues Advisory Regarding Intraday Speculative Position Limits
May 7, 2010-- The U.S. Commodity Futures Trading Commission’s (“CFTC”) Division of Market Oversight (“DMO”) today issued an Advisory to alert market participants with respect to their ongoing legal obligations to comply with speculative position limits. Speculative position limits apply to positions held on designated contract markets (“DCMs”) and on exempt commercial markets (“ECMs”) with significant price discovery contracts (“SPDCs”) (collectively, “exchanges”).
Speculative position limits provide for the maximum size of the net long or short position that any one person may hold or control in futures at any point in time. In enforcing speculative position limits, the Commission and exchanges rely on information generated by the Commission’s Large Trader Reporting System (“LTRS”) or on equivalent large trader reporting systems maintained by individual exchanges. Under the LTRS, daily reports are filed at the end of the trading day (“as of the close of the market”).
In this Advisory, DMO reaffirms that, irrespective of the end-of-day applicability of the LTRS, speculative position limits apply on an intraday basis as well as an end-of-day basis. This applies to both Federal limits for certain agricultural commodities, set out in Commission regulation 150.2, and any exchange limits imposed in accordance with the core principles for DCMs or ECMs with SPDCs. A trader whose position exceeds the applicable speculative position limit at any time during the day is in violation of the Commodity Exchange Act and CFTC regulations, even if the position is subsequently reduced to a level within the applicable limit by the close of the market for that day. Accordingly, intraday speculative position limit violations have been and continue to be subject to Commission enforcement action as violations of the Act.
view text of CFTC's Division of Market Oversight Advisory Regarding Compliance with Speculative Position Limits
Source: CFTC.gov
Franklin Resources CEO Rules Out ETFs
May 6, 2010--The chief executive of mutual-fund giant Franklin Resources Inc. (BEN) said Thursday his firm won't be part of the rush to embrace exchange-traded funds.
Greg Johnson said that while he thinks ETFs are likely to continue to grow faster than traditional, actively-managed mutual funds, his firm doesn't plan on entering the space.
Johnson said that despite the growth of ETFs, Franklin doesn't want to launch products that use passive strategies.
"We'd rather focus on the active side," of money management, said Johnson. "The way we see it, we're in the business of producing art, not painting-by-the-numbers."
Exchange-traded funds have been growing at a rapid pace in recent years. The subsector has seen assets rise from $300 billion at the end of 2005 to $805 billion at the end of March, according to the Investment Company Institute.
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Source: Wall Street Journal
The NASDAQ Stock Market Names Stocks With Cancelled Trades
The NASDAQ Stock Market Had No Technology or System Issues Associated With Today's Trading Between 2:00 and 3:00 p.m. Eastern Time
May 6, 2010--The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ), the world's largest exchange company, announced that The NASDAQ Stock Market had no technology or system issues associated with the trading that occurred between 2:00 and 3:00 p.m. ET today. The NASDAQ Stock Market operated continuously and its close process ran successfully.
In addition, there is no indication at this time that a NASDAQ market participant experienced a technological failure in connection with this event. NASDAQ has coordinated a process among U.S. Exchanges and therefore, pursuant to rule 11890(b), NASDAQ, on its own motion, will cancel all trades executed between 14:40:00 and 15:00:00 greater than or less than 60% away from the consolidated last print in that security at 14:40:00 or immediately prior. This decision cannot be appealed. NASDAQ has coordinated this decision with all other UTP Exchanges. NASDAQ will be canceling trades on the participant's behalf.
The stocks affected and the break points are posted on the following website: http://media.globenewswire.com/cache/6948/file/8211.htm
Source: NASDAQ OMX
Statement from SEC and CFTC
May 6, 2010--The Securities and Exchange Commission and the Commodity Futures Trading Commission today released the following statement:
“The SEC and CFTC are working closely with the other financial regulators, as well as the exchanges, to review the unusual trading activity that took place briefly this afternoon. We are also working with the exchanges to take appropriate steps to protect investors pursuant to market rules.
“We will make public the findings of our review along with recommendations for appropriate action.”
Source: SEC.gov
BNY Mellon ADR Index Monthly Performance Review is Now Available Freddie asks for additional $10.6bn bail-out
Since September 2008, both Fannie and Freddie have been operating under a legal framework known as conservatorship. Together they have eaten up $136bn in taxpayer money. The final bill could be much higher. The government has pledged to provide unlimited support to the companies over the next three years. The Congressional Budget Office estimates that taxpayer aid could approach $400bn over the next decade, making the bail-out of Fannie Mae and Freddie Mac far more costly than the rescue of big Wall Street banks.
read more Morningstar Bond Commentary: Greece Goes Junk view report S&P Launches First Commodity Index Comprised Solely of Futures Contracts Traded on International Exchanges
The S&P WCI is a rules-based, world-production-weighted commodity index. It includes 22 commodities covering the Agriculture, Energy and Metals sectors, listed on eight international exchanges and traded in six currencies in Asia, Europe, and North America. While the S&P GSCI is comprised of only U.S. dollar based commodities, the S&P WCI is multi-currency.
To preserve the tradability of the Index, the S&P WCI limits eligible commodity contracts to those that are the subject of active, liquid futures markets. Also, to replicate actual commodity market performance, the S&P WCI includes a "rolling" procedure designed to replicate the rolling of actual positions in the designated contracts.
The S&P WCI is calculated in U.S. dollars. While the underlying futures contracts prices are traded in local currencies, using WM/Reuters' spot exchange rates, these local currencies are converted to U.S. Dollars. There is no limit on the number of contracts that may be included in the S&P WCI, as long as they satisfy the eligibility criteria.
For complete eligibility criteria, as well as index calculation guidelines, please reference the S&P World Commodity Index's methodology found at www.indices.standardandpoors.com.
May 6, 2010--The BNY Mellon ADR Index Monthly Performance Review for April 2010 is Now Available.
Source: BNY Mellon
May 6, 2010--Freddie Mac, the second-largest US mortgage finance company, said on Wednesday it would need an additional $10.6bn from the US Treasury Department to staunch losses on bad loans.
The company said it had lost $8bn, or $2.45 per share, in the first three months of 2010. The amount includes a $1.3bn dividend payment to the Treasury Department on senior preferred stock issued as part of a 2008 government-led bail-out. Along with larger rival Fannie Mae, Freddie is propping up the housing market by purchasing mortgages in the secondary market.
Source: FT.com
May 6, 2010--
Greece Goes Junk
Greetings
European sovereign downgrades dominated the headlines last month, prompting a weakening of the euro and sending stock markets plunging throughout the region. The unprecedented rescue package compiled by Euro-zone partners has, for the time being, staved off a protracted sell-off.
Even with mounting global sovereign credit concerns, including concerns about U.S. creditworthiness, investors are still running to Treasuries in these times of crisis. Goldman Sachs’s headlines turned out to be only a minor hiccup for corporate credits, as strong earnings, a growing faith in the recovery, and sovereign debt woes, kept the appetite for credit healthy.
Source: Morning Star
May 6, 2010--Providing greater access and insight into the performance of international commodity markets, Standard & Poor's, the world's leading index provider, announced today the launch of the S&P World Commodity Index ("S&P WCI"). The S&P WCI is the first index to consist solely of listed commodity futures contracts that trade outside of the U.S.
"The launch of the S&P WCI is the result of Standard & Poor's meeting the market's needs for an international commodity index that would complement the U.S. focused S&P GSCI, providing all-world commodity exposure," says Michael McGlone, Director of Commodity Indexing at S&P Indices. "The S&P WCI is a natural extension of the S&P GSCI, and reflects S&P Indices' commitment to extending its reach beyond U.S. equity indices and into alternative areas of the global market."
Source: Standard & Poors
