Global ETF News Older than One Year
IOSCO Consults On Transparency of Structured Finance Products
September 23, 2009--The International Organisation of Securities Commissions (IOSCO) Technical Committee has published a consultation report on Transparency of Structured Finance Products. The Report sets out a number of factors to be considered by market authorities when considering enhancing post-trade transparency of structured finance products in their respective jurisdictions.
The Technical Committee is seeking input from financial services practitioners, industry participants and other relevant stakeholders.
The closing date for responses is 13 November 2009.
Summary
The report was prepared following the Subprime Task Force’s mandate in 2008 to the Technical Committee Standing Committee on the Regulation of Secondary Markets to examine the viability of a secondary market reporting system for structured finance products (SFPs), with a particular focus on the nature of the market and its participants as well as on the potential benefits and drawbacks of such a reporting regime. In preparing the report information was solicited from a variety of sources in the financial services industry across several jurisdictions.
Currently, a mandated post-trade transparency regime for SFPs does not exist in any member jurisdiction, although some pricing information on SFPs is available from a number of sources. Whilst there are divergent views on the possible benefits and drawbacks of a post-trade transparency regime, the Technical Committee believes that greater information on traded prices of SFPs could be a valuable source of information for market participants. It therefore encourages each member jurisdiction to actively consider enhancing post-trade transparency in its own jurisdiction.
view the TRANSPARENCY OF STRUCTURED FINANCE PRODUCTS report
Source: IOSCO
WFE Board urges consistent regulation and more transparency from G20 market reform efforts
September 22, 2009--The World Federation of Exchanges (WFE) Board of Directors urged leaders of the G20 nations at their upcoming summit in Pittsburgh, Pennsylvania (USA), to press for market reforms that enhance transparency and create more uniform rules between exchange-traded and less-regulated markets.
In a letter to the G20 signed by WFE Chairman William J. Brodsky, the WFE Board applauded the efforts of the G20 leaders to improve unregulated markets and products by advocating the use of clearing houses and exchanges where risks can be better managed and prices are transparently set. Mr. Brodsky is Chairman and CEO of the Chicago Board Options Exchange.
“At the end of the day, all investors need to have confidence in the reliability of information reflected in the prices at which securities transactions occur,” said Mr. Brodsky. “The heightened opacity of certain market operations in many countries inhibits price discovery and may lead to negative outcomes, such as increased volatility.”
Specifically, the WFE urged G20 leaders to focus on the following points:
Absence of a Level Playing Field:
WFE recommends that the G20 leaders consult with investor organizations about how they would wish to see orders executed in the markets, and determine whether alternative trading venues have reduced the total costs of transacting by investors.
WFE also asks G20 leaders to assure a level playing field for the responsibilities assumed by all securities market order execution venues. This would remedy many capital markets uncertainties, assuring greater transparency, greater fairness and a more level competitive field.
Reduced Market Transparency:
Impact of Dark Pools The WFE Board asks that G20 also focus on issues related to dark pools and take remedial action in those countries concerned.
WFE, the Financial Stability Board (FSB), and global financial standards bodies: the WFE Board expressed its support for many of the capital markets reforms being circulated by the Financial Stability Board; WFE also supports the FSB objective of having independent financial standards bodies set robust norms for our global financial system.
Importantly WFE asked that the G20 should agree on ways to avoid regulatory arbitrage between national financial market regulations around the world.
“Since the first months of the financial crisis, the WFE Secretariat has regularly made itself available to the FSB as an information resource on exchange-operated markets – reviewing the key statistics, and also commenting on the changing composition of those numbers. We stand ready to continue to play this role and to assist in any way that we can in the reform and rebuilding of the global financial system” Mr. Brodsky concluded.
A full copy of the WFE’s letter to G20 can be accessed at here
Source; World Federation of Exchanges
FTSE Group Launches First In The Range Of Currency FRB Indices
September 21, 2009--FTSE Group (“FTSE”), the award winning global index provider, and Record Currency Management (“Record”), the specialist currency investment manager, have today launched the first set of indices within the new and innovative FTSE Currency Forward Rate Bias (FRB) Index Series, allowing investors to access this alternative beta within FTSE’s range of alternative indices.
The new FRB5 indices utilise the five most widely-traded currencies (US Dollar, Euro, Japanese Yen, Pound Sterling and Swiss Franc) in a forward rate bias (also referred to as ‘carry’) strategy. Forward rate bias is the observed tendency of higher interest rate currencies to outperform lower interest rate currencies. This outperformance is captured through a series of rolling one-month forward contracts, equally-weighted across all ten currency pairs.
The indices come at a time when investors are increasingly looking at opportunities for diversification. Research from Record shows that FRB provides a fundamental and sustainable return stream that rewards the risks associated with holding higher interest rate currencies. With a low long-term correlation to other asset classes such as equities and bonds, the indices uniquely allow investors access to a pure source of alternative beta in currency markets. Based on market spot and forward prices going back to 1978, the index series is one of very few to demonstrate a long-term return over 30 years that is comparable to that of global equities and superior to that of global bonds, with volatility comparable to bonds and lower than equities. The annualised return of the FTSE Currency FRB5 total return index in USD is 9.7% p.a. since 1978.
Neil Record, Chairman and CEO of Record, said: “The FTSE Currency FRB Index Series will enable investors to develop new diversification strategies as the series returns show low correlations with established asset classes such as equities and bonds. Taken together with the scalability inherent in the currency markets and the universe of investable managers, this should help the investment community recognise the currency forward rate bias as an alternative beta.”
Imogen Dillon Hatcher, Executive Director of Global Sales at FTSE said: “The Foreign Exchange market is the largest market in the investment world, with USD 3 trillion traded daily, allowing for both retail and wholesale investment. FTSE is committed to offering investors a complete suite of index products to measure and analyse all facets of the investment landscape. The FTSE Currency FRB Index Series will allow clients to access the currency market and has been created in response to market demand.”
The new indices will be calculated on a fully-investable basis and published daily by FTSE (both excess return and total return) and are the first in a range of currency indices that FTSE and Record will work together on. These indices can be used for portfolio construction, index-tracking management, including within financial products such as ETFs and benchmarking active currency strategies.
Source: FTSE
ISDA Announces Further CDS Market Practice Changes
September 21, 2009-The International Swaps and Derivatives Association, Inc. (ISDA) today announced market practice changes to the trading convention for credit default swaps (CDS) in Emerging Markets as an additional step towards achieving increased standardization, transparency and liquidity. These changes, which will take effect on Monday, September 21, include the adoption of standardized trading coupons and a move from monthly to quarterly payment dates in emerging market CDS transactions.
“ISDA and the industry continue to work on standardizing the way in which credit default swaps are traded and settled,” said Robert Pickel, Executive Director and Chief Executive Officer, ISDA. "These changes have increased market transparency, robustness and confidence in the privately negotiated derivatives business.”
Changes will include the following:
· With regard to trades for Emerging Markets in Central and Eastern Europe, the Middle East, Africa and Latin America:
Firms will adopt standardized coupons of 100bp and 500bp. Additional coupons for trading or back-loading could be introduced at a later time if and when the need arises;
Firms will switch from semi-annual to quarterly payments and full first coupons. The move to quarterly payments applies to both the existing EM Transaction Types as well as the new Standard EM Transaction Types and has no impact on trades prior to September 21, which will maintain their semi-annual payments even upon novation or assignment.
With regard to trades for emerging markets in Australia and New Zealand, firms will adopt standardized trading coupons of 100bp and 500bp. Additional coupons for trading or back-loading could be introduced at a later time if and when the need arises.
Source: INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION
Overseas Investment Plunging, Says UN
September 21, 2009--Foreign direct investment will fall as much as 29 percent this year from 2008 as a result of the global economic crisis, a United Nations body forecast Thursday, keeping a lid on global growth.
Global inflows of F.D.I. — purchases of controlling interests in productive assets overseas — will fall below $1.2 trillion, from $1.7 trillion last year, the United Nations Conference on Trade and Development predicts in its annual World Investment Report.
Source: Various
Barclays Capital Takes Equity Stake In Tradeweb
September 17, 2009-Tradeweb, a leading global provider of online markets, today announced that Barclays Capital, the investment banking division of Barclays Bank PLC, has taken a minority equity stake in its business. In connection with the transaction, Thomson Reuters and its dealer-owners will invest an additional $68 million in total, reinforcing their commitment to Tradeweb’s electronic markets.
Tradeweb’s combined business is majority-owned by Thomson Reuters, along with now 10 active dealer-owners. In total, more than 35 dealers provide liquidity to Tradeweb’s online fixed income and derivatives markets.
Barclays Capital’s investment reflects the continued expansion of the Tradeweb business since January 2008, when Thomson Reuters and nine banks completed a capital restructuring of the firm.
“Partnering with Tradeweb underscores the firm’s commitment to delivering best-in-class service, liquidity and reliability in the electronic trading space to our clients,” said Harry Harrison, Head of Rates at Barclays Capital. “Our stake in Tradeweb also complements our strategy for improving market efficiency and transparency alongside our market-leading electronic trading platform, BARX."
Source: Mondovisione
Curious’ case of Barclays assets sale
September 17, 2009--“Curious” and “largely cosmetic” were two of the opinions offered by analysts on Thursday as they sought to explain Barclays decision to sell more than $12.3bn (£7.5bn) of risky credit assets to a new company.
Barclays loaned the new company, Protium, the money to buy the assets, thus replacing the volatility caused by owning risky assets with regular cash flows from interest payments.
Source: FT.com
Fox River Execution Launches New ETF Trading System
September 16, 2009--Fox River Execution, a leading broker/dealer that provides unique algorithmic
trading technology and execution solutions today announced the launch of Fox
SpotlightTM, a new exchange traded fund (ETF) trading platform that provides a
comprehensive system for competitive, real-time price and size discovery in the
ETF market.
Employing proprietary trading technology pioneered by Fox River Execution, and in research collaboration with iShares, the world`s largest manager of ETFs, Fox Spotlight allows traders to access an accurate picture of real-time ETF liquidity and pricing. Fox Spotlight is the first to display the liquidity in an ETF along with the liquidity in the ETF`s underlying securities, minimizing market impact for ETF trades of any size as never before.
Source: Fox River Execution
SEC and UK FSA Discuss Approaches to Global Regulatory Requirements
September 16, 2009--Securities and Exchange Commission Chairman Mary Schapiro and Hector Sants, Chief Executive of the UK Financial Services Authority (FSA), today announced plans to explore common approaches to reporting and other regulatory requirements for key market participants such as hedge funds and their advisers. In particular, they agreed to identify a common, coherent set of data to collect from hedge fund advisers/managers to help the SEC and FSA identify risks to their regulatory objectives and mandates.
This announcement came out of a meeting of the SEC-FSA Strategic Dialogue, through which SEC and FSA leaders meet periodically to discuss areas of mutual interest. Other issues discussed at the meeting included over-the-counter derivatives markets and central clearing; accounting issues; regulatory reform; credit rating agency oversight; short selling; and corporate governance and compensation practices.
Chairman Schapiro said, "As the regulators of two of the world's major market centers, the SEC and the FSA have a strong interest in collaborating with respect to OTC markets and hedge funds, credit rating agencies and other market participants with cross-border operations. Only through strong cooperation can we achieve coherent oversight of global actors and limit opportunities for playing the regulatory seams. I look forward to continuing this successful dialogue between the SEC and FSA."
Chief Executive Sants said, "The global crisis has underlined how intertwined financial markets and institutions are and regulators around the world have to work together to ensure appropriate oversight. We are all working alongside the Financial Stability Board and other international regulatory committees to drive forward global financial reforms. The strategic dialogue with the SEC is a valuable component of the discussions around these reforms, particularly in areas of joint interest and in identifying potential regulatory gaps."
The SEC and FSA have worked together closely to address the recent financial crisis, both on a bilateral basis as well as in international organizations, such as the International Organization of Securities Commissions. Recently, the SEC and FSA have worked to promote the use of central counterparties (CCPs) for the clearance of credit default swaps and are actively cooperating in the oversight of CCPs
. This was the fourth meeting of the SEC-FSA Strategic Dialogue, which began in June 2006.
The purpose of the Dialogue is to engage at senior levels on current matters impacting the U.S. and UK capital markets and areas of future collaboration.
Source: SEC.gov
Thomson Reuters launches global range of indices
September 15, 2009--Thomson Reuters has launched a global range of indices to help monitor global markets, benchmark specific countries, regions and sectors, and develop investment vehicles.
This is the first time the company has provided indices under the Thomson Reuters brand.
Thomson Reuters Indices cover 44 countries and 18 regions, and have an overlay of global, regional and country indices by economic sector.
Source: ETF Express
