Deborah Fuhr: understanding the counterparty risks-continued

March 29, 2012--We have seen over the past two years a significant increase in regulatory concerns due to the rapid growth in exchange traded funds (ETFs) and other types of exchange traded products (ETPs).
Broadly, those concerns may be categorised under four headings. First, ETFs that use derivatives to replicate their index and especially so where the product provider and the derivative counterpart are part of the same corporate group. Second, the risks associated with securities lending, which is more typically confined to physically replicating funds, and third, the increased complexity of products and exposures, especially leveraged and inverse offerings.

Fourth, and to a significantly lesser emphasis, the risks associated with unregulated exchange traded products.

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Source: CityWire

Global ETP News
IMF Working paper-First-Time International Bond Issuance-New Opportunities and Emerging Risks
July 18, 2014-- Summary: International bond issuance by debut issuers has risen in recent years. The uptick was a result of both demand and supply factors. The search for yield and demand for portfolio diversification have resulted in demand-driven easy financing conditions. At the same time,rising financing needs for many debut issuers,coupled with reduced access to concessional financing,relatively undeveloped domestic markets,and a favorable interest rate environment have made international bonds an attractive financing alternative for many countries.
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July 18, 2014--Bank of New York Mellon, under pressure to boost flagging returns to shareholders including the activist investor Nelson Peltz, has shelved the sale of its corporate trust business
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Wealth gaps lead investors to rethink risk in emerging markets
July 16, 2014--Middle-class anger at not seeing enough of the fruits of economic growth is growing in developing economies, and that anger is forcing the world's biggest investors to rethink how they rank emerging markets.
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iShares architect to leave Barclays (again)
July 16, 2014--Rory Tobin, one of the Barclays executives instrumental in the development of the iShares exchange-traded funds business that was acquired by BlackRock in late 2009, is to leave the UK bank for a second time.
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9th quarterly BNY Mellon ETF Services Newsletter
July 14, 2014--Market Commentary
At the end of May 2014, the global ETF industry had 3,749 ETFs, with 8,015 listings and total assets of $2.40 trillion. The global ETF asset growth YTD 2014 through the end of May is 6.6%. This is from a total of 192 ETF providers on 57 exchanges.
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World Gold Council-Investment Commentary: First half 2014
July 14, 2014-- This Investment Commentary explores the main macroeconomic drivers behind gold's price performance.
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DECPG Weekly Economic Brief--July 10, 2014
July 11, 2014--The post crisis recovery in imports has been uneven. Developing countries have recorded robust growth across all import groups, whereas in high-income countries, reflecting weaker domestic demand conditions, growth especially in durable and capital goods imports has been relatively weaker.
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Fidelity loses ground to index trackers
July 11, 2014--The world's largest active fund managers, Fidelity and Capital Group, are losing market share to index trackers and niche rivals, as changing investor demands reshape the $30tn global mutual fund industry.
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Barclays index business could worth $1bn
Business, which boasts more than 98 major indexes, could be worth more than double what Barclays had been expecting to sell it for
July 11, 2014--Barclays' planned sale of its index business could yield close to $1bn, more than double what the bank had expected.
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Investors Flock to Government Bonds
Concerns Rise Over Health of Portuguese Bankz
July 10, 2014--Investors piled into haven government bonds in the U.S., Germany and the U.K. on Thursday, driven by fresh signs of uneven global growth and concerns over the health of a major Portuguese bank.
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Bank Trading Revenue May Improve in Second Quarter
Fixed Income, Currencies and Commodities Trading in U.S., Europe May Do Better Than Expected
July 10, 2014--Bank revenues from fixed income, currencies and commodities trading, or FICC, might not be as bad as some expect when the sector reports second-quarter results starting Friday, senior executives and bankers said.
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Netagio launches first British Bitcoin, gold & sterling exchange
Netagio exchange enables domestic and international customers to trade all three asset classes against each other on a single platform.
July 10, 2014--Netagio, the UK-based digital currency broker, has announced the launch of the first British exchange enabling retail customers and institutional investors to trade gold,
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Bloomberg Acquires RTS Realtime Systems
RTS delivers high-performance, multi-asset trading solutions to enhance speed and geographic reach of Bloomberg trading technologies
July 9, 2014--Bloomberg announced today that it has acquired RTS Realtime Systems, a global provider of low-latency connectivity and trading support services.
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Qatar to sell down stake in LSE
July 9, 2014--The Qatar Investment Authority is to sell down a third of its stake in the London Stock Exchange Group ahead of the bourse's $1.6bn rights issue to help purchase Frank Russell, the US index compiler.
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Brics bank set to launch next week
July 9, 2014--Leaders of the Brics nations-Brazil, Russia, India, China and South Africa- will launch their long-awaited development bank at a summit next week and decide whether the headquarters should be in Shanghai or New Delhi, Russian Finance Minister Anton Siluanov said on Wednesday.
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Eurex Clearing publishes White Paper on the systemic role of central counterparties
Central Counterparties (CCPs) reduce systemic risk in financial markets/ Specific recovery and resolution frameworks for Financial Market Infrastructures support the benefits of the CCP model
July 8, 2014--Central clearing significantly reduces systemic risk and their amplifying factors in financial markets. This is a key finding of the White Paper "How central counterparties strengthen the safety and integrity of financial markets" which was published today by Eurex Clearing, the CCP of Deutsche Börse Group.
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Deutsche to scrap db X-trackers name
July 8, 2014--Deutsche Asset & Wealth Management is scrapping the db X-trackers and DWS fund names as part of its efforts to develop a "global brand identity".
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IMF Working paper-Why Complementarity Matters for Stability-Hong Kong SAR and Singapore as Asian Financial Centers
July 8, 2014-- Summary: There is much speculation regarding a "race for dominance" among financial centers in Asia, arising from the anticipated financial opening up of China. This frame of reference is, to an extent, a predilection that results from a traditional understanding of financial centers as possessing historical, geographic, and scale economy advantages.
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Fund managers hold the potential for systemic risk
If they amplify market cycles they contribute to broad-based risk
July 8, 2014--Could fund managers pose a systemic risk? Regulators round the world started to ask the question, and answered "perhaps".
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Good returns bring investors back to commodity ETFs
July 8, 2014--The best commodities performance in years has rekindled interest in exchange traded funds that allow investors to trade the price of energy, metals and grains on stock markets.
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State Street Global Advisors Appoints Chief Operating Officer of US Intermediary
July 8, 2014--State Street Global Advisors (SSgA), the asset management business of State Street Corporation, has announced the appointment of Nick Good to senior managing director and chief operating officer of the US intermediary business. Good joins from BlackRock, where he served as head of strategy and business development for the Asia-Pacific region.
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Germany Gets 80 Billion-Yuan Investor Quota for China
July 7, 2014--China awarded Germany a quota of 80 billion yuan ($12.9 billion) that will allow domestic investors to buy securities in China under the Renminbi Qualified Foreign Institutional Investor program.
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State Street moving ETF range from France to Ireland
July 7, 2014--State Street Global Advisors is set to redomicile 13 of its exchange traded funds from France to Ireland, according to a person familiar with the situation.
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BlackRock ETP Landscape: Strong June caps best quarter in 5 years
July 7, 2014--Year-to-date global ETP flows of $123.9bn were up 25% vs. the first half of last year following a Q2 total of $90.6bn that exceeded any quarter in the past 5 years
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ETFs And ETPs Listed Globally Reached Record 2.64 Trillion U.S. Dollars In Assets At End Q2 2014
According to ETFGI: ETFs and ETPs listed globally reached US$2.64 trillion in assets, a new record high, at the end of Q2 2014
July 7, 2014--ETFs and ETPs listed globally gathered U.S. $34.8 billion in net new assets in June and U.S. $126.6 billion YTD, which outpaces the previous high of U.S. $106.4 billion at this point set in 2012.
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BATS Global Markets June Highlights: Market Share Remains Strong Globally; Company Plans New York, Chicago Expansion
BATS Chi-X Europe Reports 20.3% Market Share
July 7, 2014--BATS Global Markets (BATS) today reported June volume, market share, and monthly highlights:
In the U.S., BATS earned 19.2% U.S. equities market share in June, up from 10.4% a year ago. BATS Options recorded 3.9% market share vs. 3.8% one year ago.
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ETF Securities-Precious Metals Weekly-Platinum Breaches US $1,500/oz on Strong Auto Sales and Supply Constraints
July 7, 2014--Platinum and palladium prices hit new 2014 highs. Strong global vehicle sales, coupled with news of a new strike in South Africa and continued tensions in the Ukraine supported 1.6% and 1.9% gains in platinum and palladium (PGMs) last week.
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IMF Working paper-Banks, Government Bonds, and Default: What do the Data Say?
July 7, 2014--Summary: We analyze holdings of public bonds by over 20,000 banks in 191 countries, and the role of these bonds in 20 sovereign defaults over 1998-2012. Banks hold many public bonds (on average 9% of their assets), particularly in less financially-developed countries.
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July 4, 2014--BlackRock's exchange traded funds business past the $1tn milestone for assets for the first time in June, helped by a strong performance in Europe where the ETF industry registered record breaking growth in the first half of 2014.
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Investors favour equity ETFs: report
July 4, 2014--Investors had found comfort in equity exchange-traded funds (ETF), with the products experiencing nearly US$84 billion in inflows in 2013 so far, according to a State Street Global Advisors (SSgA) report.
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Bitcoin Faces Regulatory Backlash as EU Tells Banks to Stay Away
July 4, 2014--The European Commission signaled it will try to impose rules on virtual currencies such as Bitcoin after the bloc's banking regulator ordered lenders to shun them.
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ETFs back on song in second quarter
July 4, 2014--Exchange-traded fund inflows shot up to $123.9 billion in the first half of the year, a rise of 25% compared with the same period in 2013, after a strong performance in the second quarter, according to data compiled by BlackRock.
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Morgan Stanley buys Deutsche's bulk commodities trading book
July 3, 2014--Morgan Stanley has bought Deutsche Bank's bulk commodities trading book dealing in coal, iron ore and freight forward contracts to expand in commodities derivatives, a source familiar with the matter said on Thursday.
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DB Markets Research-The Flow Whisperer TAARSS says increase equities, but still prefer fixed income in Q3
Tactical Asset Allocation Relative Strength Signal (TAARSS) Monthly Update
July 2, 2014--Market review
Global equities (ACWI) extended their May rally into the month of June by adding 1.82%. In turn, US bonds (AGG) were mostly flat during the same period (-0.06%); while,Commodities recovered from the previous month losses by recording a 2.11% gain in June.
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Average daily volume of 8.0 million contracts at Eurex Group in June
July 2, 2014--In June, the international derivatives exchanges of Eurex Group recorded an average daily volume of 8.0 million contracts (June 2013: 10.1 million). Of those, 6.0 million were Eurex Exchange contracts (June 2013: 8.1 million), and 2.0 million contracts (June 2013: 2.7 million) were traded at the U.S.-based International Securities Exchange (ISE). In total, 126.0 million contracts were traded at Eurex Exchange and 42.0 million at the ISE.
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IMF Working-Growth: Now and Forever?
July 2, 2014--Summary: Forecasters often predict continued rapid economic growth into the medium and long term for countries that have recently experienced strong growth.
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Concern over siloed approaches to collateral
July 2, 2014--While regulation increases collateral needs, particularly as the derivatives market moves toward central clearing, market participants are cobbling together fragmented systems, manual processes, and siloed approaches to ensure compliance, creating significant inefficiencies,says Sapient Global Markets in a recent whitepaper.
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Global growth to slow as wage inequality rises over coming decades, says OECD
July 2, 2014--A slowdown in global economic growth and a continuing rise in income inequality are projected for the coming decades, according to a new OECD study which looks beyond the crisis at what the world could look like by 2060.
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BlackRock ETFs near $1 trillion as it loses market share to Vanguard
June 30, 2014--Even as BlackRock Inc is set to amass $1 trillion in exchange-traded fund assets in its iShares business, US Retail investors increasingly prefer to send their money to low-cost leader Vanguard Group, highlighting a weak spot for the world's biggest money manager.
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Chinese lenders made 30% of global bank profits
June 30, 2014-China's top banks have accounted for almost one-third of a record $920bn of profits made by the world's biggest 1,000 banks in 2013,
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Time to step out of the shadow of the crisis, says BIS in 84th Annual Report
June 29, 2014--A new policy compass is needed to help the global economy step out of the shadow of the Great Financial Crisis, writes the Bank for International Settlements (BIS) in its 84th Annual Report, released today. In its main economic review for the year, the BIS calls for adjustments to the current policy mix and to policy frameworks with the aim of restoring sustainable and balanced economic growth.
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LSE to Buy Frank Russell to Expand Play in Indexes, ETF
June 26, 2014--London Stock Exchange Group Plc (LSE) agreed to buy Frank Russell Co., a unit of Northwestern Mutual Life Insurance Co., for $2.7 billion to bolster its FTSE International Ltd. business.
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IOSCO Issues Report on Risk Identification and Assessment Methodologies
June 26, 2014--The International Organization of Securities Commissions (IOSCO) today published a report on Risk Identification and Assessment Methodologies for Securities Regulators, which provides a practical overview of the methods, approaches and tools that IOSCO and securities regulators have developed to identify and assess emerging and potential systemic risks.
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SEI Study: Active Exchange Traded Funds Remain On Growth Trajectory In 2014
Market Grew by 30 Products, $2.5 Billion AUM in Past Year
June 25, 2014--Actively managed exchange traded funds (ETFs) have seen significant growth in the number of products offered and assets under management over the past year and continue to gain popularity as an investment vehicle, according to a paper released today by SEI.
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Chinese to liberalize renminbi, but will do it its way
June 25, 2014--For several years, a great dilemma has surrounded China's drawn-out campaign to open up its financial markets, liberalize capital flows and allow the renminbi (yuan) to become a much more important trade and investment currency on the world stage.
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China expands plans for World Bank rival
June 24, 2014--China is expanding plans to establish a global financial institution to rival the World Bank and the Asian Development Bank, which Beijing fears are too influenced by the US and its allies.
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Vanguard: 50% of advisers plan to increase ETF usage
June 24, 2014--Nearly all advisers surveyed by Vanguard Asset Management plan to maintain or increase their Exchange Traded Funds (ETFs) allocation over the next 12 to 24 months.
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New Study Adds Up the Benefits of Climate-Smart Development in Lives, Jobs, and GDP
June 23, 2014--STORY HIGHLIGHTS: With careful design, the same development projects that improve communities, save lives, and increase GDP can also fight climate change.
A new study examines the multiple benefits for a series of policy scenarios addressing transportation and energy efficiency in buildings and industry in five countries and the European Union.
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"Thousands of firms" could quit EU trading
June 23, 2014--Mifid II plans could force thousands of foreign firms out of Europe
Provisions within Mifid II to regulate direct electronic access could result in thousands of non-EU firms ceasing trading on European derivatives markets.
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Fears mount over asset managers' shadow banking operations
June 23, 2014--The shrinking banking sector is creating a "major opportunity" for asset managers to step into the lending breach, but concern is mounting over their "shadow bank" operations and rising systemic importance.
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Central Bank Reserve Managers More Cautious as Fed Tapers
June 23, 2014--Central bank reserve managers across the world are ready to take a more cautious approach to investment as the U.S. Federal Reserve continues to reduce its monetary stimulus, with the full effect of such tapering still to be felt so far as demand for riskier assets is concerned.
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Expansion Into the Vast World of Commodities
June 23, 2014--From lean hogs to gold, the world of commodities is as vast as the world around us. On July 1, Bloomberg will take control of UBS's leading commodity index, a diversified index that provides investors with exposure to the most widely followed commodities in the world.
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ETF Securities-Precious Metals Weekly--Silver Leads Precious Metals Price and Volatility Recovery
June 23, 2014--Gold and silver surge as the Fed keeps rates low, against a backdrop of geopolitical instability. Sparked by a dovish FOMC meeting announcement, precious metals rallied sharply last week, led by the 5.3% gain in silver, with gold posting a 3.1% increase.
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