Global ETF News Older than One Year
Response to IOSCO consultation on the Impact of Technological Changes
August 19, 2011--Significant technology advancements have such as high frequency trading (HFT) which allows more accurate, granular and faster pricing of securities. As pointed out in the consultation report, there is no clear evidence of consistent negative effects of HFT. Following the US Flash Crash - the roots of which are, for various reasons, specific to the US - the focus has shifted to HFT and the potentially detrimental effects it may have on already volatile markets. In this regard, FESE welcomes this opportunity to outline the provisions taken by its members to foresee such problems and the tools that they have put in place to safeguard against this.
FESE believes that due to the high fragmentation in European capital markets brought about by competition, and the significant growth of dark trading in European equity markets, any failure to fully implement the correct trading venue rules will see a significant number of venues in Europe, such as Broker Crossing Networks/Broker-Dealer Platforms, which are not regulated in the same manner and to the same standards as trading venues. This unexpected increased fragmentation will no doubt have a negative effect on price formation. The fact that not all trading platforms are regulated in the same way also needs to be taken into account when designing policies to address the potential risks of HFT, which, in different forms, takes place in all venues, including OTC.
Source: FESE
ESMA published updated list of registered and certified credit rating agencies
August 19, 2011--According to the Credit Rating Agencies Regulation ((EC) No 1060/2009), ESMA publishes today the list of those credit rating agencies that as of today were either registered or cirtified in the European Union
To access the list, view List of registered and certified credit rating agencies
Source: ESMA
Investors back Hedge Funds Amid Turbulence
August 19, 2011--Investors are largely sticking with hedge funds to guide them through the summer's highly volatile markets, data showed on Thursday, despite lacklustre performances so far this year from these freewheeling portfolios.
The GlobeOp Forward Redemption Indicator -- a monthly snapshot of clients giving advance notice they want their money back as a percentage of GlobeOp's assets under administration -- was 2.71 percent, the third lowest figure seen this year. Whilst up from July's 2.08 percent, it is still well below the 4.01 percent seen in June and well below the 19.27 percent recorded in November 2008 shortly after the collapse of Lehman Brothers.
Source: Reuters
West shows worrying signs of ‘Japanisation’
August 19, 2011--The big question for many investors these days is one that could scarcely have been thought about a few years ago: is the west turning into Japan?
The response to that will determine the future direction of western economies as well as of shares and bonds. To date, the tentative answer has been that the developed world is heading Japan’s way as government bonds have far outperformed equities.
Source: FT.com
BlackRock New ETF Landscape Report: Industry Review – H1 2011
August 17, 2011--ETP and ETF industry overview, as at H1 2011:
At the end of H1 2011, the global ETF industry had 2,825 ETFs with 6,229 listings and assets of US$1,442.7 Bn, from 146 providers on 49 exchanges around the world. This compares to 2,252 ETFs with 4,570 listings and assets of US$1,025.9 Bn from 130 providers on 42 exchanges at the end of H1 2010.
Additionally, at the end of H1 2011, there were 1,162 other ETPs with 1,798 listings and assets of US$183.4 Bn from 57 providers on 23 exchanges. This compares to 823 ETPs with 1,161 listings and assets of US$132.6 Bn from 47 providers on 18 exchanges, at the end of H1 2010.
Combined, there were 3,987 products with 8,027 listings, assets of US$1,626.1 Bn from 182 providers on 52 exchanges around the world. This compares to 3,075 products with 5,731 listings, assets of US$1,158.4 Bn from 156 providers on 44 exchanges, at the end of H1 2010.
Source: Global ETF Research & Implementation Strategy Team, BlackRock
Don’t Let Fiscal Brakes Stall Global Recovery
A Commentary by Christine Lagarde, Managing Director, International Monetary Fund
August 16, 2011 --The current market turmoil, marked by a huge spike in uncertainty, has shaken confidence across the global economy and prompted many to conclude all policy options have been exhausted. That impression is wrong – and could lead to paralysis.
After the crisis unfolded in late 2008, global policymakers came together to act with common purpose. Their efforts saved us from a second Great Depression, by supporting growth, attacking sclerosis of the financial arteries, rejecting protectionism and providing resources to the International Monetary Fund. It is time to rekindle that, not only to avoid the risk of a double-dip recession, but also to put the world on the path of solid, sustained and balanced growth.
Source: IMF
ETFS Precious Metals Weekly: Gold Shrugs off CME Margin Hike, Hits New All-Time High of $1800/oz
August 15, 2011--Gold spot price hits record high above $1800/oz as central banks pledge continued loose monetary policy to prop up flagging global growth. The US Fed pledged to keep official rates at rock-bottom levels until 2013, the ECB stepped
in to purchase Italian and Spanish bonds and the Swiss and Japanese central banks intervened to weaken their currencies. Short selling equity bans were introduced in France, Spain, Italy and Belgium after shares in European banking giant Societe
Generale slumped back to credit crisis levels last week.
CME raises gold futures trading margin requirements 22%, but volatility levels suggest more modest impact than May’s silver margin hikes. Current gold price volatility is approximately half the levels seen in the sharp run up in silver margins prior to May, although historical patterns suggest scope for a possible further 15% rise in margins. Such a cumulative rise would still be less than half the hike in silver margins seen in May. It also comes against strong fundamental price drivers for gold – e.g. ongoing sovereign debt uncertainty, extraordinary monetary easing and strong central bank and strategic investor demand.
Precious metal speculative futures positioning cut after gold, palladium positioning hit records prior to gold futures margin hike. COMEX silver net speculative futures positioning dropped back to half its peak levels over the past year as NYMEX platinum and palladium counterparts were also dialled back down to around 1 year average levels. COMEX gold net speculative futures positioning saw a modest drop below previous peaks in H2 2010, though still above long run average.
Gold price rallies to record above $1800/oz as growth fears continue to stalk markets ahead of key European leaders meet next week. German chancellor Merkel and French president Sarkozy meet on Aug 16 to discuss European governance as the contentious issue of creating jointly sold ‘Eurobonds’ gathers momentum. European leaders are looking to individual governments to ratify the €440 billion European Financial Stability Facility (EFSF) by as early as September to relieve the ECB of front-line bond purchasing responsibilities. Private sector appetite for European sovereign debt remains extremely weak, with market speculation that France’s AAA rating could come under threat last week as investors begin to increasingly question debt servicing capabilities of the larger European economies.visit www.etfsecurities.com for more info
Source: ETFS Securities
External Adjustment and the Global Crisis -IMF Working paper
August 15, 2011--Summary: After widening substantially in the period preceding the global financial crisis, current account imbalances across the world have contracted to a significant extent.
This paper analyzes the factors underlying this process of external adjustment. It finds that countries whose pre-crisis current account balances were in excess of what could be explained by economic fundamentals have experienced the largest contractions in their external balance. External adjustment in deficit countries was achieved primarily through demand compression, rather than expenditure switching. Changes in other investment flows were the main channel of financial account adjustment, with official external assistance and ECB liquidity cushioning the exit of private capital flows for some countries.
view the IMF working paper-External Adjustment and the Global Crisis
Source: IMF
LCH.Clearnet Goes Exclusive With Markit
August 15, 2011--LCH.Clearnet, the embattled Anglo-French clearing house, has entered into exclusive negotiations with Markit, the credit information and market infrastructure provider, regarding a potential takeover of the clearing house,
according to two sources familiar with the situation.
The LCH.Clearnet management approached shareholders at the end of June to seek permission to enter into exclusive discussions with ...
Source: Wall Street Journal
ETF Securities-Research Update: CME Hikes Gold Margins 22% - What Does it Mean for the Gold Price?
August 12, 2011--Summary:
The CME raised margin requirements on COMEX gold futures positions 22% effective 11 August 2011. The
increase has been compared to the margin requirement increases on COMEX silver futures in May 2011 that
precipitated a sharp fall in the silver price during that period. Below we take a closer look at the current
situation and assess the likelihood of a similar situation developing for gold.
Key points:
The CME increased margin requirements on US gold futures positions by 22%. The hike went into effect at
the end of trade on 11 August 2011. There is some concern that the rise may be a precursor to more
aggressive margin increases that might spark a sell-off similar to the silver price correction in May 2011
following an 84% increase in COMEX silver futures margin requirements in the April-May period.
Based on current volatility levels, gold margin requirements are unlikely to be increased as sharply as those for silver in May. On our calculations, based on current volatility, average gold margin requirements have the potential to be increased by up to another 16% or so, bringing total margin increases to around 38%, less than half the rise faced by silver futures investors in May. Over the past two and a half years, similar levels of volatility have historically been associated with an average margin requirement equivalent to around 4.2% of the front month gold futures price. After the most recent increase, the ratio stands at approximately 3.6%, indicating a possible 0.6% further increase as a proportion of current futures pricing if the historic relationship between volatility and margin requirements hold. This would be equivalent to a total potential average margin requirement rise of around 38%.
visit www.etfsecurities.com for more info.
Source: ETF Securities
