Americas ETP News
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Effective swaps oversight undercut by inaccurate data reporting
December 26, 2013--The Commodity Futures Trading Commission's efforts to create a system for tracking derivatives trading is running into trouble because it relies on what is turning out to be bad data.
The regulator is trying to correct errors that have caused much of the information it produces to be unreliable. The agency has already incorrectly reported the size of some swaps used in interest-rate hedging.
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Source: smartbrief.com
Federal Court Gives Regulators Until Dec. 30 to Respond in Volcker Case
Regulators Want Additional Time to Respond to ABA's Demand to Halt Provision of Volcker Rule
December 26, 2013--A federal court Thursday partially granted banking regulators' request for additional time to respond to an industry group's demand that they halt a provision of the Volcker rule.
The Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency have until Monday to respond to the American Bankers Association's request to delay the provision, according to an order filed in the U.S. Court of Appeals for the District of Columbia Circuit.
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Source: Wall Street Journal
CFTC.gov Swaps Report Update
December 26, 2013--CFTC's Weekly Swaps Report has been updated, and is now available.
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Source: CFTC.gov
DB-Synthetic Equity & Index Strategy-North America-US ETF Market Weekly Review- Growth ETPs led Equity weekly inflows of $9.6bn
December 23, 2013--Data in this report is as of Fri, Dec 20th
Market and Net Cash Flows Review
The US (S&P 500) edged higher by 2.42%; while, outside the US, the MSCI EAFE (in USD) rose by 2.57% and the MSCI EM (USD) dropped by 0.21%. In the meantime, performance was positive across US sectors; the Industrials (+3.39%) and Materials (+2.80%) sectors recorded the largest weekly gains.
The DB Liquid Commodity Index rose by 1.02%; similarly, the Agriculture sector (DB Diversified Agriculture Index) and the WTI Crude Oil rose by 0.42% and 2.82%, respectively; while Gold and Silver prices fell by 2.87% and 1.40%, respectively. Moving into other asset classes, the 10Y US Treasury Yield rose 1bps ending at 2.89%. Last but not least, Volatility (VIX) dropped by 12.50% during the same period.
The total US ETP flows from all products registered $7.9bn (+0.5% of AUM) of inflows during last week vs. $7.6bn (+0.5%) of inflows the previous week, setting the YTD weekly flows average at +$3.5bn (+$176.9bn YTD in total cash flows).
Equity, Fixed Income and Commodity ETPs experienced flows of +$9.6bn (+0.7%), -$0.7bn (-0.3%) and -$1.1bn (-1.7%) last week vs. +$7.4bn (+0.6%), +$0.7bn (+0.3%) and -$0.5bn (-0.9%) in the previous week, respectively.
Among US sectors, Industrials (+$0.6bn, +4.5%) and Materials (+$0.4bn, +3.7%) received the top inflows, while Energy (-$0.2bn, -0.8%) and Utilities (-$0.1bn, -1.5%) experienced the largest outflows.
Top 3 ETPs & ETNs by inflows: VO (+$1.3bn), VXF (+$1.0bn), VB (+$0.9bn)
Top 3 ETPs & ETNs by outflows: SPY (-$1.9bn), GLD (-$0.5bn), QQQ (-$0.5bn)
New Launch Calendar: USD, JGB, US HY Corporate and US broad bonds
There were six new ETFs listed by WisdomTree during the previous week. The new products offer exposure to the US broad bond market (AGZD; AGND) and below investment grade corporate bonds (HYZD; HYND) while seeking to manage interest rate risk through the use of short positions in US Treasuries; changes in Japanese interest rates (JGBB), and the value of the US dollar against a basked of developed and emerging market currencies (USDU).
Turnover Review: Floor activity increased by 32.4%
Total weekly turnover increased by 32.4% to $369.4bn vs. $279.0bn from the previous week; Furthermore, last week's turnover level was 37.0% over last year's weekly average. Equity, Fixed Income and Commodity ETPs turnover increased by $81.9bn (+32.8%), $4.2bn (+23.6%) and $3.4bn (+38.6%) during the same period, respectively.
Assets under Management (AUM) Review: assets increased by $28.3bn
US ETP assets rose by $28.3bn (+1.7%) totaling $1.650 trillion at the end of the week. As of last Friday, US ETPs had accumulated an asset growth of +23.8% YTD. Assets for Equity, Fixed Income and Commodity ETPs moved +$31.2bn, -$0.7bn and -$2.2bn during last week, respectively.
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Source: Deutsche Bank-Synthetic Equity & Index Strategy-North America
US ETF shop for sale (ETFs not included)
December 23, 2013--A private equity group has put its exchange traded fund business on the auction block, soliciting offers for an entity without products or assets but with regulatory approval to launch them.
It is the latest example of an entity selling its ETF regulatory approval to the highest bidder, an undertaking that is meeting with varying degrees of success, sources say.
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Source: FT.com
NYSE proposes 'kill switch' to help catch trading errors
December 23, 2013--IntercontinentalExchange Group's NYSE Euronext unit has filed a plan with regulators to offer firms that trade on the New York Stock Exchange a "kill switch" that could cut off trading if preset levels were breached.
Risk controls have been a major focus for the securities industry in the wake of high-profile snafus like the August 2012 glitch at Knight Capital Group, now a part of KCG Holdings Inc, that sent a flood of errant orders to the NYSE, nearly sank the firm and led to its takeover by rival Getco. Knight was one of the biggest executors of U.S. trades.
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Source: Reuters
FINRA may bar brokers from selling investments they can't explain
December 23, 2013--The Financial Industry Regulatory Authority is giving new emphasis to the role of brokers in financial frauds that involve complex investments.
The regulator is considering restricting the ability of brokers to sell a product if they cannot explain its risks to potential investors.
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Source: Smartbrief.com
CFTC's Division of Swap Dealer and Intermediary Oversight Issues No-Action Relief Regarding Introducing Brokers' Compliance with Certain Financial Reporting and Capital Computation Requirements
December 23, 2013--The U.S. Commodity Futures Trading Commission's (Commission) Division of Swap Dealer and Intermediary Oversight (DSIO) today issued a no-action letter that provides relief for certain Introducing Brokers (IBs) registered with the Commission from certain financial reporting and capital computation requirements.
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Source: CFTC.gov
CFTC's Division of Market Oversight Provides Conditional No-Action Relief from Limitations on Execution Methods for Required Transactions that Involve Basis Risk Mitigation Services Provided by a SEF
December 23, 2013--The U.S. Commodity Futures Trading Commission's (CFTC or Commission) Division of Market Oversight (DMO) today announced the issuance of a no-action letter providing swap execution facilities (SEFs) relief, under certain conditions, in connection with a SEF's provision of certain "basis risk mitigation services," i.e.,
a service that manages the basis risk from reference price quarterly re-pricing timing mismatches on swaps.
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Source: CFTC.gov
CFTC's Division of Swap Dealer and Intermediary Oversight Issues No-Action Relief Regarding Swaps Entered Into by Persons Registered as Floor Traders
December 23, 2013--The U.S. Commodity Futures Trading Commission's (Commission) Division of Swap Dealer and Intermediary Oversight (DSIO) today issued a no-action letter that provides relief from certain conditions of the swap dealer exclusion for registered floor traders.
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Source: CFTC.gov
