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Agencies Approve Interim Final Rule Authorizing Retention of Interests in and Sponsorship of Collateralized Debt Obligations Backed Primarily by Bank-Issued Trust Preferred Securities
January 14, 2014--Five federal agencies on Tuesday approved an interim final rule to permit banking entities to retain interests in certain collateralized debt obligations backed primarily by trust preferred securities (TruPS CDOs) from the investment prohibitions of section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act,
known as the Volcker rule.
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Source: CFTC.gov
CFTC Extends Public Comment Period on Proposed Amendment to Aggregation Policy Under Part 150
January 14, 2014--The Commodity Futures Trading Commission (Commission) announced today that it will extend the comment period on its proposed amendment to rules on aggregation for the position limits in part 150 of its regulations to February 10, 2014.
The comment period had been set to close on January 14, 2014.
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Source: CFTC.gov
Morgan Stanley-US ETF Weekly Update
January 14, 2014--Weekly Flows: $949 Million Net Outflows
ETF Assets Stand at $1.7 Trillion, up 25% since end of 2012
Nine ETF Launches Last Week
ProShares Announces Share Splits on 22 ETFs
US-Listed ETFs: Estimated Flows by Market Segment
ETFs posted net outflows of $949 mln last week
Last week’s net outflows ended four consecutive weeks of net inflows; International-Emerging ETFs posted net outflows of $2.7 bln, the most of any category we measured
International-Developed Market ETFs had net inflows this past week at $2.4 bln as demand for exposure to Europe remains strong
Ten of the 15 categories we measured posted net inflows last week
ETF assets stand at $1.7 tln, up 25% since the end of 2012
13-week flows remain mostly positive among asset classes; combined $58.8 bln in net inflows
Large-Cap ETFs have exhibited the strongest net inflows over the last 13 weeks at $28.9 bln with five ETFs posting net inflows of at least $1 bln; specifically, the SPDR S&P 500 ETF (SPY) has generated $13.4 bln in net inflows over the this period
Over the last 13 weeks, International-Emerging ETFs have posted net outflows at $7.9 bln, the most of any category we measure, as investors remain cautious about the ability of the space to deliver on needed structural reforms
US-Listed ETFs: Estimated Largest Flows by Individual ETF
Utilities Select Sector SPDR (XLU) posted net inflows of $563 mln this past week, the most of any ETF
XLU's inflows were its largest since August 2011 and coincided with strong performance as the ETF returned 2.6% last week
The United States Natural Gas Fund (UNG) generated net inflows of $450 mln, which increased its market cap by almost 169% to $1.6 bln
Broad, market-cap weighted equity benchmark indices accounted for the four ETFs that had the largest outflows this past week and were led by the SPDR S&P 500 ETF, which posted net outflows of $2.1 bln; the Vanguard FTSE Emerging Markets ETF (VWO) and the iShares MSCI Emerging Markets ETF (EEM) combined for net outflows of $2.7 bln this past week
US-Listed ETFs: ETF Dollar Volume
ETF monthly $ volume as a % of listed trading volume increased to 26% in December, which is in-line with the one- year average
Over the last five years, ETF monthly $ volume as a % of listed trading volume peaked in August 2011 at 36%
ETF $ volume was $292 bln last week, up $68 bln from the prior week
Leveraged/Inverse ETFs accounted for 8.2% of ETF $ volume last week, but make up only 1.9% of ETF market share; this is not surprising as daily compounding makes Leveraged/Inverse ETFs more appropriate for active traders
US-Listed ETFs: Short Interest Data Changed: Based on data as of 12/31/13
The Utilities Select Sector SPDR (XLU) had the largest increase in USD short interest at $527 mln
XLU's shares short are at their highest level ever after increasing to 80.2 mln from 66.3 mln on 12/13/13
628 ETFs exhibited short interest increases while 610 experienced short interest declines over the last period
Aggregate ETF USD short interest decreased by $14.3 bln over the period ended 12/31/13
The average shares short/shares outstanding for ETFs is currently 4.2%, down from 4.3% last period
Two of the 10 most heavily shorted ETFs as a % of shares outstanding are commodity/currency related, which is down from five last period
The SPDR Oil & Gas Exploration & Production ETF (XOP) is the most heavily shorted ETF with a shares short as a % of shares outstanding of 273%
Based on multiple borrowings and the ability to continuously create new shares, shares short as a % of shares outstanding can exceed 100% (only nine ETFs exhibited shares short as a % of shares outstanding greater than 100%)
US-Listed ETFs: Most Successful Recent Launches by Assets
$7.1 bln in total market cap of ETFs less than 1-year old
Active and Fixed Income ETFs each account for 24% of the market capitalization of ETFs launched over the past year, the most of any categories
Of the 22 Active ETFs that were launched over the past year, Fixed Income focused funds account for 11 of the ETFs and 84% of the market cap
YTD, 9 ETFs have been issued and there have been no announced liquidations
The top 10 most successful launches make up 48% of the market cap of ETFs launched over the past year
Seven ETF sponsors and two asset classes (equities and fixed income) represented in top 10 most successful launches; we note that the representation of funds with an income orientation is currently five (down from seven at the end of the second quarter)
Last week was a modest one for inflows into recently launched ETFs as the Vanguard Total International Bond ETF (BNDX) led all recently launched ETFs with net inflows of just $15 million; BNDX provides broad exposure to international investment grade fixed income securities and hedges the currency risk
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Source: Morgan Stanley
Exclusive: NASDAQ, S&P eye acquisitions to build index businesses
January 14, 2014--Exchange operator Nasdaq OMX Group (NDAQ.O) and index provider S&P Dow Jones Indices (MHFI.N) said they are interested in acquisitions to grow their index businesses, in a sign the sector could see a wave of deals as investors pour tens of billions of dollars into portfolios that track benchmarks.
Both Nasdaq Chief Executive Robert Greifeld and S&P Dow Jones Indices Chief Executive Alex Matturri told Reuters in recent interviews that they would be interested in looking at bidding on index businesses that come to market, including the index businesses run by Russell Investments and Barclays Plc.
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Source: Reuters
Agencies Approve Interim Final Rule Authorizing Retention of Interests in and Sponsorship of Collateralized Debt Obligations Backed Primarily by Bank-Issued Trust Preferred Securities
January 14, 2015--Five federal agencies on Tuesday approved an interim final rule to permit banking entities to retain interests in certain collateralized debt obligations backed primarily by trust preferred securities (TruPS CDOs) from the investment prohibitions of section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, known as the Volcker rule.
Under the interim final rule, the agencies permit the retention of an interest in or sponsorship of covered funds by banking entities if the following qualifications are met:
the TruPS CDO was established, and the interest was issued, before May 19, 2010;
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Source: SEC.gov
Federal Reserve Board Seeks Comment To Help Inform Consideration Of Physical Commodity Activities By Financial Holding Companies
January 14, 2014-- The Federal Reserve Board on Tuesday sought comment to help inform its consideration of physical commodity activities conducted by financial holding companies, including current authorizations of these activities and the appropriateness of further restrictions.
The Board is considering whether additional restrictions would help ensure that physical commodities activities authorized for financial holding companies are conducted in a safe and sound manner and do not pose a threat to financial stability. The Board, in an advance notice of proposed rulemaking, addresses commodity activities conducted under different sections of the Bank Holding Company Act, including section 4(k) complementary authority, section 4(o) grandfathered authority, as well as merchant banking authority.
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Source: FBR
BNY Mellon-Consultant 360-Mobilizing Collateral For Your Clients
January 13, 2014--The Commodity Futures Trading Commission (CFTC) now permits Swap Dealers to comply with local market rules. As of December 20, 2013 the CFTC allows swap dealers in six jurisdictions to satisfy their obligations by complying with "comparable" local requirements.
These actions will relieve some concerns of swap dealers and their counterparties that dealers would be obliged to comply with U.S. rules, rather than local standards when transacting with non-U.S. swap counterparties.
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Source: BNY Mellon
Horizons ETFs Launches Two Leveraged Japan ETFs
January 13, 2014--Horizons ETFs Management (Canada) Inc. ("Horizons ETFs") is pleased to announce the launch of the Horizons BetaPro MSCI Japan Bull Plus ETF ("HPU") and the Horizons BetaPro MSCI Japan Bear Plus ETF ("HPD").
HPU and HPD (known collectively as "the ETFs") will seek to provide Canadian investors with exposure to two times (200%) the daily long and two times (200%) the daily inverse performance, respectively, of the MSCI Japan Index, before fees and expenses. The ETFs do not seek to achieve their stated investment objectives over a period of time greater than one day.
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Source: Horizons ETFs Management (Canada) Inc.
UBS Announces Redemption of ETRACS Oil Futures Contango ETN and ETRACS Natural Gas Futures Contango ETN
January 13, 2014--UBS AG announced today that it will redeem all of the outstanding securities in each of the series set forth in the following table (collectively, the "Affected Securities"):
Securities: UBS AG Exchange Traded Access Securities (ETRACS) Oil Futures
Contango ETN linked to the ISE Oil Futures Spread(TM) Index due June 14, 2041
Cusip: 90267B815
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Source: UBS AG
NYSE Euronext -1 ETF listing: AdvisorShares
January 13, 2014--Summary:
NYSE Euronext is pleased to announce that on Wednesday, January 15, 2014, the following ETF will be listed on NYSE Arca and will begin trading as a new issue:
Security Name: AdvisorShares Sage Core Reserves ETF
Short Name: Sage Core Reserves
Trading Symbol: HOLD
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Source: NYSE Euronext
