Americas ETP News
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CFTC's Division of Clearing and Risk Issues an Advisory Pertaining to the Effective Date of the Clearing Exemption for Swaps Between Certain Affiliated Entities
June 7, 2013--The Division of Clearing and Risk (DCR) of the Commodity Futures Trading Commission (CFTC) today issued an Advisory notifying market participants that the effective date of the final rule adopting the "Clearing Exemption for Swaps Between Certain Affiliated Entities"
has been automatically extended by operation of law, to June 18, 2013.
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Source: CFTC.gov
CBO-Monthly Budget Review for May 2013
June 7, 2013--The federal government ran a budget deficit of $627 billion from October 2012 through May 2013 (the first eight months of fiscal year 2013), according to CBO's estimates.
That amount is almost $220 billion less than the shortfall recorded during the same period last year, primarily because federal revenues have risen by 15 percent, while the government’s spending has risen by less than 1 percent. For fiscal year 2013 as a whole, according to CBO’s updated estimates based on current law (which were released last month), the deficit will total $642 billion.
view the CBO Monthly Budget Review for May 2013
Source: Congressional Budget Office (CBO)
H.R. 1341, Financial Competitive Act of 2013
As ordered reported by the House Committee on Financial Services on May 7, 2013
June 7, 2013--The Third Basel Accord, the latest in a series of international agreements among central banks and financial regulators to standardize capital requirements for banks, directs financial institutions to, among other things, set aside additional capital reserves to account for the risk that counterparties participating in certain derivative agreements could default on the transaction.
This additional capital requirement is known as the credit-value adjustment (CVA). H.R. 1341 would direct the Financial Stability Oversight Council (FSOC) to complete a study of the likely effects that differences between the way the United States and foreign regulators implement the CVA would have on financial institutions, users of derivatives, and derivatives markets. The study would include, among other things, an examination of the effect those differences would have on the pricing and cost of derivatives as well as the competitiveness of United States derivatives markets. H.R. 1341 would direct the FSOC to prepare a report of its findings for the Congress within 90 days of the date of enactment of the bill.
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Source: Congressional Budget Office (CBO)
U.S. SEC mulls streamlining launch of exchange-traded funds
June 6, 2013--The U.S. Securities and Exchange Commission will consider a proposal this year that would sweep away regulatory barriers to launching certain types of exchange-traded funds, a senior official said.
Norm Champ, director of the SEC's Division of Investment Management, told the Reuters Global Wealth Management Summit that a move to simplify procedures for approving "plain vanilla" ETFs would help the industry and the agency use its resources wisely.
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Source: Reuters
SEC Renames Division Focusing On Economic and Risk Analysis
June 6, 2013--The Securities and Exchange Commission today announced that it has changed the name of its Division of Risk, Strategy, and Financial Innovation to better reflect its core responsibilities and focus. Starting today, it will be called the "Division of Economic and Risk Analysis."
The division was created in 2009 as the successor to three then-existing offices: the Office of Economic Analysis, Office of Risk Assessment, and Office of Interactive Data. These offices and other functions were combined to leverage expert staff and to provide sophisticated and data-driven economic and risk analyses to help inform the agency's policymaking, rulemaking, enforcement, and examinations.
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Source: SEC.gov
AdvisorShares Announces the Closing of the Rockledge SectorSAM ETF (SSAM)
June 6, 2013--AdvisorShares, a leading sponsor of actively managed exchange-traded funds (ETFs), announced today that the AdvisorShares Rockledge SectorSAM ETF (NYSE Arca: SSAM) will be closed.
The AdvisorShares Board of Trustees approved the closing and subsequent liquidation of SSAM. Following its last day of trading on June 14, 2013, the ETF will cease operations, withdraw its assets, and distribute the remaining proceeds to shareholders on or after June 21, 2013.
Noah Hamman, CEO of AdvisorShares, said, "We carefully review the entire AdvisorShares actively managed ETF suite on an ongoing basis. After consulting with the Rockledge team, we determined that it was in the best interest of shareholders to close SSAM due to its performance and associated costs. As a leading innovator of actively managed ETFs, AdvisorShares remains steadfastly committed to providing a diversified line-up of alternative and core strategies to help investors realize their financial goals."
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Source: CNBC
ProShares Announces Two Senior Hires
Crucial Roles Support Firm's Expansion
June 6, 2013--ProShares announced today two key new hires: Ramesh Babu as chief technology officer and William Poulin as head of product management.
Both positions provide key support to ProShares' rapid expansion as a premier provider of alternative ETFs.
Mr. Babu, former chief technology officer, NY for Allianz Global Investors, is responsible for providing strategic direction and management of ProShares' technology infrastructure. He reports to Tim Coakley, chief financial officer.
Mr. Poulin, former head of product strategy and development for Columbia Management, is charged with product positioning and targeting, and ensuring product-related initiatives are prioritized and supported in an integrated fashion. He reports to Steve Cohen, managing director and head of strategy.
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Source: ProShares
DB-Synthetic Equity & Index Strategy-North America-US ETF Market Monthly Review-US ETP assets continue moving forward driven by Equity ETPs
June 6, 2013--US ETP assets added $10bn in May for a total growth of 11.1% YTD
ETP assets in the US rose by $9.7bn to $1.48 trillion (YTD +11.1%) last month. Global ETP industry assets closed at $2.01 trillion (YTD +9.1%)
Flows Review: still interested in equities, but avoiding defensives
US ETP experienced strong inflows of $18.1bn during May (+1.2% of the previous month’s AUM).
Within long-only ETPs, total flows were +$17.6bn in May vs. +$8.1bn in April. Equity, Fixed Income, and Commodity long-only ETPs experienced flows of +$17.5bn, +$3.8bn, and -$4.0bn, respectively.
May flow trends were similar to April, with the main difference being the rotation away from defensives into domestic cyclicals. Long-only Equity ETP flows experienced a strong month, gathering $17.5bn in new cash and setting the YTD flows at +$75.5bn. Developed markets (+$18.7bn) flows, with special emphasis in the US (+$12.3bn) remain in uptrend while EM equity flows saw outflows of $2.0bn. Japanese ETPs continued to amass new assets (+$3.8bn, +$13.5bn YTD); meanwhile, Dividend ETPs kept capturing investors’ attention, with $2.2bn in fresh cash. Sector wise investors rotated backed into domestic cyclicals (+$5.9bn) and away from defensives (-$1.5bn) during last month. Fixed income ETPs experienced decent inflows of $3.8bn (+$18.4bn YTD), with a tilt towards quality and a strong preference toward medium-termed debt; Last but not least, Long-Only ETPs which offer exposure to commodities saw another bad month, with outflows of $4.1bn, mostly due to Gold ETPs (-$3.4bn) outflows.
New Launch Calendar: income, EM debt, and leverage
There were 9 ETFs and 2 ETNs launched during May. Most of the new ETF listings continue to focus on income strategies; some of the themes cover senior loans, free cash flow to shareholders, high yield with interest rate hedging, fundamentally-screened EM debt, global dividends, and dividend growth. Other strategies also included daily leverage bear exposures to Brazil and Korea, inflation protection, Euro-hedged Germany exposure, and levered custom equity strategies in the case of the two ETNs.
Turnover Review: Floor activity edged lower by 3% in May
ETP turnover totaled $1.349 trillion last month, -2.8% (-$38.9bn) lower than the previous month figure of $1.388 trillion, and 15.5% above last year’s monthly average of $1.168 trillion. Equity and Commodity ETPs turnover decreased by 1.9% (-$22.5bn), and 31% (-$28.8bn) during May; while Fixed Income ETPs turnover rose by 15.9% (+$13.9bn).
ETP trading made up 26.8% of all US cash equity trading in April, down from last year’s peak of 28.8% in June, and still below its 3-year monthly average of 28.4%.
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Source: Deutsche Bank-Synthetic Equity & Index Strategy- North America
IMF-Brazil: Technical Note on Stress Testing the Banking Sector
June 6, 2013--This note summarizes the stress tests undertaken for the Brazilian banking system as part of the Financial Sector Assessment Program (FSAP) Update. The focus was on tail risks and medium-term structural trends.
The stress tests, which were run in a top-down (TD) manner based on granular supervisory data, were undertaken in close cooperation with the Central Bank of Brazil (BCB).
All banks were assessed against solvency, liquidity, and contagion risks. The solvency tests assessed the resilience of the system under three adverse macroeconomic scenarios as well as baseline conditions for the period from 2012 till 2016. The tests considered different definitions of capital adequacy (total capital, tier 1, core tier 1), and simulated the impact of upcoming changes in the regulatory rules (Basel III). Bank behavior conditional on stress conditions was captured by profit retention and credit growth. The liquidity tests simulated banks’ resilience against a sudden withdrawal of funding and, to some degree, maturity mismatch. Contagion risk was analyzed by simulating potential knock-on effects through interbank exposure.
view the Brazil: Technical Note on Stress Testing the Banking Sector
Source: IMF
SEC Proposes Money Market Fund Reforms
June 5, 2013--The Securities and Exchange Commission today voted unanimously to propose rules that would reform the way that money market funds operate in order to make them less susceptible to runs that could harm investors.
The SEC’s proposal includes two principal alternative reforms that could be adopted alone or in combination. One alternative would require a floating net asset value (NAV) for prime institutional money market funds. The other alternative would allow the use of liquidity fees and redemption gates in times of stress. The proposal also includes additional diversification and disclosure measures that would apply under either alternative.
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Source: SEC.gov
