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SEC Cautions Exchanges and Investment Professionals to Monitor Composition of Indices When Offering Futures Products
August 7, 2013--August 8, 2013--The Securities and Exchange Commission today issued a report cautioning exchanges and investment professionals to monitor the composition of indices used in offering financial instruments to determine if they are security futures products and ensure they are complying with the federal securities laws.
The SEC’s report of investigation stems from an inquiry into a foreign derivatives exchange that was offering and selling futures to U.S. customers on what was initially a broad-based index not subject to the registration requirements of the federal securities laws. The index later transitioned to a narrow-based security index, leaving it without a valid exemption from the securities laws. The SEC’s report reminds exchanges and investment professionals to establish policies and procedures to consistently monitor the composition of indices on which futures are based to establish whether or not they are offering security futures products.
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Source: SEC.gov
Global X Funds Launches Tax Pass-Through MLP & Energy Infrastructure ETF (MLPX)
August 7, 2013--Global X Funds, the New York based provider of exchange traded funds (ETFs, today launched the Global X MLP & Energy Infrastructure ETF (NYSE Arca: MLPX).
MLPX is the lowest cost ETF1 with Master Limited Partnership (MLP) and midstream energy infrastructure exposure, taking advantage of a fund structure unique to MLP ETFs to provide greater tax efficiency for shareholders. Due to its structure as a Regulated Investment Company, MLPX is not subject to corporate taxes, yet still provides access to the popular MLP sector. MLPX has the added advantage of not requiring K-1 tax filings from investors, only 1099s. At just 0.45%, MLPX has the lowest cost among ETFs with similar MLP exposure1.
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Source: Global X
SEC, European Regulators Establish Supervisory Cooperation Arrangements Related to the Asset Management Industry
August 7, 2013--The Securities and Exchange Commission today announced that it has established supervisory arrangements with financial regulators of the member states of the European Union (EU) and the European Economic Area (EEA) as part of long-term strategy to improve the oversight of certain entities in the asset management industry that operate across national borders.
The memoranda of understanding (MOUs) signed this week provide a framework for supervisory cooperation and exchange of information between SEC and the EU/EEA member state national regulators in the area of asset management. These MOUs were negotiated between the SEC staff and staff of the European Securities and Markets Authority (ESMA). ESMA negotiated the MOUs required under the EU Alternative Investment Fund Managers Directive on behalf of the EU/EEA member-states’ national regulators.
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Source: SEC.gov
ISE Gemini(TM) Announces Successful Launch
August 6, 2013--The International Securities Exchange (ISE) announced that ISE GeminiTM, ISE's second options exchange, successfully completed its first day of trading yesterday. ISE Gemini launched trading with six symbols--Walt Disney Co. (DIS), NetApp Inc. (NTAP), Texas Instruments Inc. (TXN), Goldcorp Inc. (GG), NVIDIA Corp. (NVDA), and Dow Chemical Co. (DOW)--and plans to add additional products over the next several weeks until it has ultimately listed all of the most active options classes.
The new exchange offers maker-taker pricing combined with ISE’s patented pro-rata and customer priority market structure.
“The ISE Gemini name represents technology, innovation and working together as a team to accomplish a milestone,” said Gary Katz, President and CEO of ISE. “With yesterday’s successful launch of ISE Gemini, we reached that milestone. We are proud to offer a new trading venue to the market with the same high standards in technology and customer service that members have come to expect of ISE.”
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Source: International Securities Exchange (ISE)
CFTC's Division of Market Oversight Issues an Amendment to Previously Issued No-Action Relief for Certain Commodity Trading Advisors and Investment Advisors from the Prohibition of Aggregation for Large Notional Off-Facility Swaps
August 6, 2013--The Commodity Futures Trading Commission's (CFTC) Division of Market Oversight (Division) today issued an amendment to CFTC No-Action Letter No. 13-48 previously issued by the Division on July 30, 2013 (Letter 13-48).
Letter 13-48 grants relief from grants relief from the aggregation prohibition in § 43.6(h)(6) for certain commodity trading advisors (CTAs) and investment advisors (IAs) with respect to large notional off-facility swaps. The no-action letter provides that until October 1, 2013 at 11:59 pm EST, the Division will not recommend that the Commission take enforcement action against CTAs and IAs that aggregate orders for the purpose of executing large notional off-facility swaps, provided they meet specified conditions.
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Source: CFTC.gov
Insurance assets opening up to ETFs
August 6, 2013--Exchange traded fund providers can increase their potential for success in tapping the relatively untouched pool of insurer investment by embracing risk-based capital designations from the National Association of Insurance Commissioners.<
The risk-based capital requirements provide a capital adequacy standard for the insurance companies operating within the US based on criteria set by the NAIC, a US standard-setting organisation of state insurance regulators. Through obtaining an NAIC designation, an investment is given a regulatory stamp of approval for certain risk requirements.
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Source: FT.com
First Asset Leading the Canadian ETF Industry in Growth
August 6, 2013--First Asset Investment Management Inc. (First Asset), an independent Canadian investment management company, has seen the highest percentage of growth among Canadian Exchange Traded Fund (ETF) companies during the months of June and July, with $47.5 million in ETF asset inflows.
First Asset launched its ETF product line two years ago with a focus on delivering superior risk -adjusted returns. They have found great success in both the fixed income and equity categories through collaboration with DEX Universe Bond Indices and Morningstar Indices.
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Source: First Asset
Blair Hull and Company Slated To Launch Active ETF
August 6, 2013--New active ETF seeks to provide investors with access to proprietary trading strategy
August 6, 2013--HTAA, LLC (Hull Tactical Asset Allocation), in conjunction with Exchange Traded Concepts, LLC (ETC), announces the filing of a registration statement and preliminary prospectus with the Securities and Exchange Commission for an active ETF.
HTAA, LLC utilizes advanced algorithms as well as macro and technical indicators to anticipate future market returns. Their strategies are continually stress-tested with over 20 years of historical data and evolved from tactical allocation models and systems developed and traded by Hull Investments, LLC over the last 6 years.
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Source:HTAA, LLC (Hull Tactical Asset Allocation)
Morgan Stanley-US ETF Weekly Update
August 5, 2013--Weekly Flows: $4.2 Billion Net Inflows
ETF Assets Stand at $1.5 Trillion, up 15% YTD
Five ETF Launches Last Week
Guggenheim Canadian Energy ETF Changes Benchmark
US-Listed ETFs: Estimated Flows by Market Segment
ETFs posted net inflows of $4.2 bln last week, the sixth consecutive week of net inflows
Over the last six weeks, ETFs have generated net inflows totaling $45.2 bln
Net inflows were led by US Large-Cap ETFs at $2.1 bln; conversely, Fixed Income ETFs posted net outflows of $2.0 bln, the most
of any category we measured
ETF assets stand at $1.5 tln, up 15% YTD; $111.4 bln net inflows YTD
13-week flows remain mostly positive among asset classes; combined $47.2 bln in net inflows
Net inflows of $17.4 bln into the SPDR S&P 500 ETF (SPY) over the last 13 weeks has been a significant contributor to the US
Large-Cap category; US Large-Cap ETFs have exhibited net inflows of $27.3 bln over the last 13 weeks
International – Emerging ETFs have posted net outflows of $8.6 bln over the last 13 weeks, the most of any category; the
category’s market share has shrunk two percentage points to 9% over the past year
Source: Bloomberg, Morgan Stanley Wealth Management ETF Research. Data estimated as of 8/2/13 based on daily change in share counts and daily NAVs.
US-Listed ETFs: Estimated Largest Flows by Individual ETF
iShares Core S&P Mid-Cap ETF (IJH) posted net inflows of $2.0 bln, the most of any ETF
IJH has posted net inflows for 13 consecutive weeks totaling $2.7 bln; over this time period, IJH has outperformed the S&P 500
Index by nearly 150 basis points
Notably, ETFs with European exposure exhibited meaningful net inflows last week; the Vanguard FTSE Europe ETF (VGK),
iShares MSCI EMU ETF (EZU), and Vanguard FTSE Developed Markets ETF (VEA), with 60% allocated to Europe, posted a
combined $1.1 bln in net inflows
The iShares 3-7 Year Treasury Bond ETF (IEI) and the WisdomTree Japan Hedged Equity Fund (DXJ) exhibited their largest
weekly net outflows since we began tracking weekly flows in 2010
US-Listed ETFs: Short Interest Data Unchanged: Based on data as of 7/15/13
United States Oil Fund (USO) had the largest increase in USD short interest at $299 mln
USO’s shares short are at their highest level since 10/31/11 and more than 100% above their one-year average
Shares short for the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) have declined for the second straight period amid a
renewed bid for the high yield asset class
Aggregate ETF USD short interest decreased by $3.7 bln over the period ended 7/15/13
The average shares short/shares outstanding for ETFs is currently 4.1% down from 4.6% the prior period
Three of the 10 most heavily shorted ETFs as a % of shares outstanding are currency based; interestingly, over the last month
(6/14-7/15), all three have posted negative returns
Based on multiple borrowings and the ability to continuously create new shares, shares short as a % of shares outstanding can
exceed 100% (only five ETFs exhibited shares short as a % of shares outstanding greater than 100%)
US-Listed ETFs: Most Successful Recent Launches by Assets Source: Bloomberg, Morgan Stanley Wealth Management ETF Research. Data estimated as of 8/2/13 based on daily change in share counts and daily NAVs.
$8.7 bln in total market cap of ETFs less than 1-year old
Over the last year, 22 Fixed Income ETFs have come to market, more launches than any other category; recently launched Fixed
Income ETFs have a market cap of $2.0 bln, trailing only International – Emerging with a total market cap of $2.4 bln
81 new ETF listings and 30 closures/delistings YTD
The top 10 most successful launches make up 68% of the market cap of ETFs launched over the past year
Five ETF sponsors and two asset classes represented in top 10 most successful launches; we note that the representation of
funds with an income orientation has declined (currently six)
Notably, the iShares 2018 Investment Grade Corporate Bond ETF (IBCC) generated net inflows of $58 mln last week, the most
of any recently launched ETF; last week, IBCC also cracked the top 10 most successful launches over the past year with a market
cap of $166 mln
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Source: Morgan Stanley
NASDAQ Bulletshares-linked ETFs Cross $3B
August 5, 2013--Announced in June, NASDAQ OMX partnered with Accretive Asset Management (AAM) to co-brand and expand the NASDAQ BulletShares(R)Indexes, a pioneering and innovative family of target-maturity corporate and high yield bond indexes.
Assets of the NASDAQ BulletShares-linked Guggenheim ETFs have grown nearly 60% in 2013 ? from $1.7B as of 12/19/2012 to over $3B as of 8/2/2013.
To put this in perspective, U.S. Fixed Income ETF assets were virtually unchanged YTD through 6/30/13 ($243.1B as of year-end 2012 and $243.6B as of the end of the second quarter in 2013*).By contrast, over this same six-month period, the BulletShares ETFs are up $1B.
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Source: NASDAQ OMX
