Global ETF News Older than One Year
IMF Working paper-The Redistributive Effects of Financial Deregulation
December 17, 2013--Summary: Financial regulation is often framed as a question of economic efficiency. This paper, by contrast, puts the distributive implications of financial regulation center stage. We develop a model in which the financial sector benefits from risk-taking by earning greater expected returns. However, risktaking also increases the incidence of large losses that lead to credit crunches and impose negative externalities on the real economy.
We describe a Pareto frontier along which different levels of risktaking map into different levels of welfare for the two parties. A regulator has to trade off efficiency in the financial sector, which is aided by deregulation, against efficiency in the real economy, which is aided by tighter regulation and a more stable supply of credit. We also show that financial innovation, asymmetric compensation schemes, concentration in the banking system, and bailout expectations enable or encourage greater risk-taking and allocate greater surplus to the financial sector at the expense of the rest of the economy.
view IMF Working paper-The Redistributive Effects of Financial Deregulation
Source: IMF
Commodity funds head for record outflow
December 17, 2013--Commodity-linked investment funds are headed for record outflows in 2013, with an $88bn decline in assets under management in the year to November, according to a Barclays report.
Investors have withdrawn a net $36.3bn from commodity funds this year -also a record- as prices fell across the market, from coffee to nickel. The bulk of the sell-off came through gold exchange traded funds (ETFs), as the decade-long bull run for the yellow metal ended, with prices falling 26 per cent this year.
Source: FT.com
ETFS Precious Metals Weekly-Gold Treads Water Ahead of the FOMC meeting
December 16, 2013--Some tapering clarity is expected this week. Precious metals marked time last week in anticipation of this week's FOMC meeting as most US economic data
continued to surprise on the upside. The key exception has been inflation though, with the PPI reading coming in at only 0.7% in November and market
expectations of only 1.3% for tomorrow's CPI release.
With inflation remaining so tame, the urgency in tapering the Fed's bond buying programme remains elusive. However some investors saw the budgetary compromise approved by the House of Representatives as a reason for the Fed not to wait till 2014 to taper. Gold remained generally under pressure, with a large short base and backwardation in the futures market giving rise to negative GOFO rates. Some investors are harvesting loses for tax reasons following the first down year in 13 years, which has added volatility to the market.
Source: ETF Securities
Asset managers under fire
December 16, 2013--The European Parliament has voted in favour of proposals that could lead to large asset managers being classified as "systemically important", a move that would subject them to tighter regulations and require costly changes to their operating models.
US regulators are also currently considering whether large asset managers should be subject to stricter rules as systemically important financial institutions, or SIFIs.
Source: FT.com
Gold ETFs face unprecedented 31% slump
December 16, 2013--A further 311 tons will be withdrawn next year from gold-backed ETFs, according to the median of 11 analyst estimates, Bloomberg reports.
Investors are dumping gold-backed exchange-traded products at the fastest pace since the securities were created a decade ago, mirroring the steepest price drop in 32 years.
Source: MineWeb
SPDR-Weekly Market Report- Quarterly Forecast
December 13, 2013--Global growth reaccelerates in 2014. Inflation continues to moderate slightly. Administered interest rates remain at unusually low levels.
Global growth has decelerated progressively from 5.2% in 2010 to just 3.0% this year, but reaccelerates to 3.6% next year, as the advanced economies finally improve.
Headline inflation has decelerated from 4.9% in 2011 to just below 4.0% this year. It slows a little more next year as oil prices continue to trend sideways and core inflation remains benign.
Monetary policy will become marginally less accommodative in 2014, but administered interest rates should not rise until 2015.
The risks to global growth appear skewed slightly to the downside, largely reflecting policy decisions in a number of major advanced and developing economies.
The risks to inflation seem broadly balanced reflecting potential disruptions to oil supply on the one hand and growth disappointments on the other
GLOBAL OVERVIEW
Global growth reaccelerates in 2014. Inflation continues to moderate, albeit slightly. Administered interest rates remain at unusually low levels.
The recovery from the Great Recession began well enough, with global GDP surging 5.2% in 2010, but that simply reflected a "policy kick," and proved short-lived. In the advanced economies, wealth destruction led to balance sheet repair, retarding consumer spending; capitalization problems and tight lending standards restricted bank lending, hindering capital spending; and concerns about public-sector budget deficits and debt led to fiscal austerity, restricting government spending. In the developing economies, the initial policy response to the recession produced rapid rebounds, which quickly generated inflationary pressures and prompted monetary tightening. This combination of factors slowed global growth to 3.9% in 2011, 3.2% last year, and 3.0% this year. However, this should prove the nadir, with growth reaccelerating to 3.6% next year as the emerging markets stabilize and the advanced economies finally gain some traction.
While it is not impossible that growth surprises to the upside, the risks seem more skewed to the downside. The single largest one reflects further disappointments in the developing economies. Those economies fell short of our initial expectations in 2013. Indeed, we now project growth of just 4.8% this year, compared to 5.2% back in June and 5.6% in March. But, with Chinese policy makers hinting that they could live with even lower growth, and inflation remaining problematic in a number of countries, a further slowing next year cannot be ruled out. The European crisis could flare-up again. Despite the various aid packages and European Central Bank (ECB) steps to improve confidence in the single currency, the crisis is only contained not solved.
For more information, including product fact sheets and related whitepapers, visit spdrs.com.
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Source: SSgA
IOSCO Issues Report on Regulatory Issues Raised by Changes in Market Structure
December 13, 2013--The International Organization of Securities Commissions today published its final report on Regulatory Issues Raised by Changes in Market Structure, which makes four recommendations that seek to promote market liquidity and efficiency, price transparency, and investors' execution quality in a fragmented environment.
The report identifies possible outstanding issues and risks posed by existing or developing market structures and it describes how these risks should be addressed. Finally, it recommends that regulators monitor the impact of fragmentation on market quality.
view the Regulatory Issues Raised by Changes in Market Structure-Final Report
Source: IOSCO
IOSCO Issues Report on the Impact of Trading Fee Models on Trading Behaviour
December 13, 2013--The International Organization of Securities Commissions today published its final report on Trading Fee Models and their Impact on Trading Behaviour, which provides a comprehensive overview of trading fees and trading fee models around the globe and how they influence trading behaviour.
In recent years, securities regulators in many jurisdictions have introduced regulatory frameworks that foster competition among trading venues. Advances in technology also have played a critical role in enhancing competition among trading venues by reducing the cost of establishing new trading venues and providing access to new pools of liquidity.
view the Trading Fee Models and their Impact on Trading Behaviour-Final Report
Source: IOSCO
Annual Changes To The NASDAQ-100 Index
December 13, 2013--The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) today announced the results of the annual re-ranking of the NASDAQ-100 Index (Nasdaq:NDX), which will become effective prior to market open on Monday, December 23, 2013.
"The NASDAQ-100 Index is a globally recognized brand that includes 100 of the world's most dynamic non-financial stocks listed on The NASDAQ Stock Market,"" said NASDAQ OMX Executive Vice President John L. Jacobs. "The objective, transparent re-ranking process ensures that the NASDAQ-100 remains a relevant investable index that is the underlying benchmark for approximately 7,200 products in 23 countries with a notional value of $1 trillion."
Source: NASDAQ OMX
Revised policy framework for banks' equity investments in funds issued by the Basel Committee
December 13, 2013--The Basel Committee on Banking Supervision has today published a final standard that revises the prudential treatment of banks' investments in the equity of funds within the Basel risk-based capital framework.
The revised policy framework is scheduled to take effect from 1 January 2017 and will apply to banks' equity investments in all funds (eg hedge funds, managed funds and investment funds) that are not held for trading purposes.
The revised framework includes three approaches for setting capital requirements for banks' equity investments in funds. This hierarchy of approaches provides varying degrees of risk sensitivity and has been adopted to incentivise due diligence by banks and transparent reporting by the funds in which they invest.
view the BIS Capital requirements for banks' equity investments in funds
Source: BIS
