Global ETF News Older than One Year
Capital requirements for banks' equity investments in funds revised by the Basel Committee
July 5, 2013--The Basel Committee on Banking Supervision today published a set of proposals that would revise the prudential treatment of banks' equity investments in funds.
In reviewing the existing standard for banks' equity investments in funds, the Committee's objective was to develop an appropriately risk sensitive and consistently applied risk-based capital regime. The existing standard would benefit from further clarity in some areas. In addition, it does not require banks to reflect a fund's leverage when determining capital requirements associated with their investments in a fund, even though leverage is an important risk driver. The Committee believes the revised standard will more appropriately reflect the risk of a fund's underlying investments and its leverage.
Source: BIS
Institutional investors need access to long-term instruments to finance real economy, says EDHEC-Risk
July 5, 2013--Policy makers increasingly wish to see institutional investors become more involved in the financing of the real economy, but matching the supply of long-term capital provided by such investors with long-term investment demand is not self-evident.
EDHEC-Risk Institute says there needs to be a policy and regulatory focus on the type of instruments that long-term investors need, rather than which sectors of the economy qualify as “long-term” investment. In its recent responses to the European Insurance and Occupational Pension Authority's (EIOPA) consultation on the design and calibration of the Solvency II Standard Formula for long-term investment (May 2013), and to the European Commission's Green Paper on long-term financing (June 2013), EDHEC-Risk Institute has highlighted three important points.
Source: EDHEC-Risk
According to ETFGI: Globally ETFs and ETPs had outflows of US$3.98 billion in June 2013, their first net outflows in over two years
July 5, 2013--Globally ETFs and ETPs had outflows of US$3.98 billion in June 2013, their first net outflows in over two years. Assets invested globally in Exchange Traded Funds (ETFs) and Exchange Traded Products (ETPs) are at US$2.04 trillion, down from their all-time high of US$2.13 trillion at the end of May 2013, according to preliminary figures from ETFGI's Global ETF and ETP industry insights report for first half 2013.
There are now 4,849 ETFs and ETPs, with 9,878 listings, assets of US$2.04 trillion, from 209 providers listed on 56 exchanges. Year to date assets in ETFs and ETPs have increased by 4.9% from US$1.95 trillion to US$2.04 trillion.
Average daily trading volumes in ETFs/ETPs in June were US$92.2 billion, representing an increase of 31.1% from May and the highest level since October 2011.
“Market uncertainty surrounding the future of QE programs and volatility in the markets caused investors to withdraw US$3.98 billion from ETFs and ETPs in June” according to Deborah Fuhr, Managing Partner at ETFGI.
Fixed income ETFs/ETPs experienced the largest net outflows with US$7.1 billion, followed by commodity ETFs/ETPs with US$3.8 billion, while equity ETFs/ETPs gathered net inflows with US$4.8 billion. Year to date through end of H1 2013, ETFs/ETPs have seen net inflows of US$103.9 billion, which is slightly lower than the US$107.2 billion of net inflows at this time last year.
Source: ETFGI
Flows bounce back ascentral bankers hit some of the right notes in early July
July 5, 2013--The first week of July saw central bankers in the Eurozone and UK adding their voices to those of US Federal Reserve members arguing that the death of quantitative easing may be a lot less imminent than markets are suggesting.
Enough investors were persuaded by these remarks to snap the four week, $57.8 billion outflow streak compiled by EPFR Global-tracked Bond Funds and end the five week, $22 billion streaks recorded by both Emerging Markets Equity and High Yield Bond Funds/
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Source: EPFR
Institutional investors won't provide long-term financing without adequate instruments
July 4, 2013--Institutional investors will not provide long-term financing to the real economy, such as investments into infrastructure projects and SMEs, in the absence of "genuinely long-term instruments", according to financial research institute EDHEC-Risk.
If European governments’ desire for pension funds and insurance companies to fund infrastructure is to be realised, there must be “policy and regulatory focus on the type of instruments” they need, rather than which sectors of the economy qualify as "long-term", said EDHEC. Its intervention in the debate about alternative sources of long-term capital following the banking crisis came in the form of written responses to two ongoing consultations.
Source: EDHEC-Risk
ETF Securities: Gold Sparks Decline In Global Commodity ETP Assets During 2Q
July 4, 2013--Assets under management for global commodity exchange-traded products posted a record quarterly decline in second quarter mainly due to a fall in both prices and holdings for one specific market-gold, ETF Securities said Thursday.
Total TOT +0.33% commodity ETP assets fell to $127 billion in the last three months, down from $186 billion at the end of the first quarter, said the provider of exchange-traded funds.
Source: Forbes
Dow Jones-UBS Commodity Index June 2013
July 4, 2013--KEY HIGHLIGHTS
DJ-UBS Natural Gas, the largest commodity in the index, lost 11.2% for the month and 1% for the year, essentially giving back all the gains it had accrued YTD.
DJ-UBS Agriculture was adversely affected by the warming weather, down 4.2% MTD and 7.5% YTD.
DJ-UBS Livestock was up 3.1% for the month, but down 4.4% YTD as lean hogs gained.
DJ-UBS Nickel declined 7.7% MTD and 20.1% YTD largely due to a decrease in demand from China.
DJ-UBS Precious Metals was the worst-performing sector, down 12.3% MTD and 29.6% YTD.
MARKET SNAPSHOT
On June 20th, after the Federal Reserve said it might slow bond purchases this year, all 22 commodities in the DJ-UBS Commodity Index crashed, bringing a 3% decline in the index for the day and a 2% decline MTD. Gold, silver, coffee and nickel entered bear markets. DJ-UBS Agriculture was adversely affected by the warming weather; the index was down 4.2% MTD and 7.5% YTD—more than twice the loss in May.
The declines were driven by the “risk off” environment, with a strengthening dollar making USD-priced commodities expensive to other currencies. Fundamentals like weather, pipeline capacity and uncertainty about Chinese demand also contributed to commodities’ poor performance in June.
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Source: S&P Dow Jones Indices
End to warehouse war threatens metals prices
The buzz among metals traders this week was not about Chinese growth or US monetary policy, but a proposed change in warehousing rules by the London Metal Exchange.
Source: FT.com
Basel Committee updates its assessment methodology for global systemically important banks and issues disclosure requirements
When the initial assessment methodology for global systemically important banks (G-SIBs) was issued in November 2011, the Basel Committee noted that certain elements would be developed further before implementation. In particular, it was highlighted that outstanding data issues would be addressed by re-running the assessment framework using updated data and that reporting guidance would be issued to ensure the transparency of the methodology.
Source: BIS
IMF Working paper-Country Transparency and the Global Transmission of Financial Shocks
We provide a simple model where, in the presence of ambiguity (uncertainty about the probability distribution of returns), prices in emerging markets react more strongly to signals from the developed market, the more opaque the emerging market is. The second contribution is empirical evidence for bond and equity markets in line with this prediction. Increasing the availability of information about public policies, improving accounting standards, and enhancing legal frameworks can help reduce the unpleasant side effects of financial globalization.
July 4, 2013--Warehousing sounds dull. But investors should pay attention: it may be about to reshape the global metals markets.
July 3, 2013--The Basel Committee on Banking Supervision has today issued Global systemically important banks: updated assessment methodology and the higher loss absorbency requirement.
July 3, 2013-Summary: This paper considers the role of country-level opacity (the lack of availability of information) in amplifying shocks emanating from financial centers. If you are looking for a particuliar article and can not find it, please feel free to contact us for assistace.
