Americas ETP News
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CFTC's Division of Swap Dealer and Intermediary Oversight Responds to Questions Regarding Recent Amendments to Compliance Obligations for Commodity Pool Operators and Commodity Trading Advisors
Responses Intended to Provide Additional Guidance to Affected Market Participants
August 14, 2012--The Commodity Futures Trading Commission's (CFTC) Division of Swap Dealer and Intermediary Oversight (DSIO) today issued a set of responses to frequently asked questions (FAQs) regarding compliance obligations for Commodity Pool Operators (CPOs) and Commodity Trading Advisors (CTAs).
The FAQs address a variety of issues/concerns related to the compliance obligations for CTAs and CPOs that were raised over the past several months by a number of market participants.
view the Division of Swap Dealer and Intermediary Oversight Responds to Frequently Asked Questions- CPO/CTA: Amendments to Compliance Obligations
Source: CFTC.gov
Knight $440 Million Loss Sealed by Rules on Canceling Trades
August 14, 2012--Regulations put in place to protect investors after $862 billion of market value was briefly erased on May 6, 2010, were the same rules that almost ruined Knight Capital Group Inc. (KCG) this month.
Knight, whose market-making unit executes 10 percent of U.S. equity volume, lost $440 million on Aug. 1 and its stock has plunged 73 percent after a computer malfunction bombarded the market with errant orders that exchanges declined to cancel. A decade ago, the firm suffered almost no consequences in a similar breakdown when officials agreed to void trades after Knight unintentionally sold 1 million of its own shares.
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Source: Bloomberg
PowerShares files with the SEC
August 14, 2012--PowerShares has filed a post-effective amendment, registration statement with the SEC for the PowerShares S&P 500 Downside Hedged Portfolio (PHDG)
view filing
Source: SEC.gov
Schwab launching ETFs to seize on money fund turmoil
August 14, 2012--With the cloud of potential reforms hanging over money funds, not to mention an extremely low interest rate environment, a growing number of firms seem to be planning alternative vehicles to bring to market
Charles Schwab has filed for exemptive relief from the Securities and Exchange Commission for exchange traded funds or fund-of-funds ETFs that seek “maximum current income, consistent with preservation of capital and daily liquidity”.
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Source: FT.com
2 ETF Launches: Emerging Global Advisors
August 13, 2012--Summary:
NYSE Euronext (NYSE:NYX) is pleased to announce that on Wednesday, August 15, 2012, the following ETFs will be listed on NYSE Arca and will begin trading as new issues:
Security Name:EGShares Beyond BRICs ETF
Short Name:EGA Beyond BRICs ETF
CUSIP: 268461 63 9
Trading Symbol:BBRC
Security Name: EGShares Emerging Markets Domestic Demand ETF
Short Name: EGA EM Dmestc Demand
CUSIP: 268461 62 1
Trading Symbol:EMDD
The Consolidated Tape Association (CTA) will disseminate real time trade and quote information for the ETFs to Tape B. All ETP-Related Indexes will be disseminated via the NYSE Euronext Global Index Feed.
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Source: NYSE Euronext
Pershing launches UK wealth manager service to boost businesses
August 13, 2012--Pershing, a subsidiary of BNY Mellon, is launching its practice management programme in the UK, offering services to wealth managers to help grow their businesses.
The services, which are already established in the US, include business health checks, presentations from Pershing executives and group discussions and information on new services.
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Source: Wealth Manager
DB-Equity Derivatives and Quantitative Strategy Research-North America-US ETF Market Weekly Review :ETP assets at new all-time highs of $1.21 trillion
August 13, 2012--Net Cash Flows Review
Markets moved higher during last week. The US (S&P 500) edged higher by 1.07%. While, outside the US, the MSCI EAFE (in USD) and the MSCI EM (USD) rose by 1.94% and 2.84%, respectively.
Moving on to other asset classes, the 10Y US Treasury Yield rose by 5bps last week; while the DB Liquid Commodity Index was higher by 1.4%. The Agriculture sector (DB Diversified Agriculture Index) pulled back by 0.38% and the WTI Crude Oil rose by 1.61%, while Gold and Silver prices advanced by 1.04%, and 1.16%, respectively. Last but not least, Volatility (VIX) dropped by 5.75% during the same period.
The total US ETP flows from all products registered $0.6bn of inflows during last week vs $4.9bn of inflows the previous week, setting the YTD weekly flows average at +$2.6bn (+$82.5bn YTD in total cash flows).
Equity, Fixed Income, and Commodity ETPs experienced flows of -$0.2bn, +$0.5bn, and +$0.3bn last week vs. +$1.9bn, +$2.6bn, and +$0.4bn previous week, respectively.
Within Equity ETPs, US sector products experienced the largest inflows (+$1.3bn); while large cap products had the largest outflows (-$2.6bn). Within Fixed Income ETPs, corporate products had the largest inflows (+$0.3bn); while sovereign ETPs experienced the largest outflows (-$0.1bn), respectively. Within Commodity ETPs, precious metals products experienced the largest inflows (+$0.2bn), while the other sectors experienced less relevant flows.
Top 3 ETPs & ETNs by inflows:
XLE (+$0.4bn), XLI (+$0.4bn), VWO (+$0.3bn)
Top 3 ETPs & ETNs by outflows: SPY (-$1.4bn), IVV (-$0.9bn), IWM (-$0.7bn)
New Launch Calendar: new active hedge fund replication fund
There was 1 new ETF listed during last week. The new product offers exposure to an active long/short strategy and aims to deliver better risk-adjusted return than the S&P 500 with a high correlation to the HFRI Equity Hedge Total Index.
Turnover Review: floor activity decreased by 32.0%
Total weekly turnover decreased by 32.0% to $192bn vs. $282bn in the previous week. Last week's turnover level was 48.8% below last year's weekly average. Equity ETPs experienced a decrease of $76.0bn or -31.2% to $167bn along with Fixed Income ETPs which dropped by 27.3% (-$5.5bn) and Commodity ETPs which experienced the biggest decline (-47.9%).
Assets Under Management (AUM) Review: new all-time highs
Positive markets drove ETP assets up by 1.2% or +$14.1bn, ending the week at $1.21 trillion. As of last Friday, US ETPs have accumulated an asset growth of 15.6% YTD. Assets for equity, fixed income and commodity ETPs moved +$12.3bn, +$0.4bn, and +$1.4bn during last week, respectively.
The following link will be available for 90 days. For more information, please click on the link for the full PDF. If you have any trouble viewing the link, copy and paste the link in a browser.
http://pull.db-gmresearch.com/p/629-23EA/35185734/US_ETF_Market_Weekly_Review.pdf
Source: Deutsche Bank - Equity Derivatives and Quantitative Strategy Research-North America
Morgan Stanley-US ETF Weekly Update
August 13, 2012--Weekly Flows: $530 Million Net Inflows
ETF Assets Stand at $1.2 Trillion, up 16% YTD
One ETF Launch Last Week
FocusShares Announces Liquidation of 15 ETFs
WisdomTree to Change Investment Objective on Hedged Equity Fd
US-Listed ETFs: Estimated Flows by Market Segment
ETFs posted net inflows of $530 mln last week, the second consecutive week of net inflows
Despite US Equity ETF outflows, US Sector & Industry ETFs exhibited $1.4 bln in net inflows last week
67% of ETFs exhibited no net flows last week (offsetting flows or no creation/redemption activity)
ETF assets stand at $1.2 tln (up 16% YTD) and have posted net inflows 24 out of 32 weeks YTD ($87.0 bln in net inflows)
13-week flows were mostly positive among asset classes; combined $34.0 bln net inflows
Fixed Income ETFs have generated net inflows 51 out of the past 52 weeks ($11.7 bln net inflows over the last 13 weeks)
Over the last 13 weeks, US Mid-Cap ETFs have exhibited net outflows of $648 mln, the most of any category we measured
US-Listed ETFs: Estimated Largest Flows by Individual ETF
Energy Select Sector SPDR (XLE) generated net inflows of $391 mln last week, the most of any ETF
Prior to last week, XLE had posted four straight weeks of net outflows (totaling $905 mln)
Seven out of 10 of the ETFs to post the largest net outflows last week track broad US Equity indices
Despite exhibiting net outflows of $1.4 bln last week, the SPDR S&P 500 ETF (SPY) has generated net inflows of $4.5 bln over the last 13 weeks, the most of any ETF
US-Listed ETFs: Short Interest
Data Updated: Based on data as of 7/31/12
SPDR Gold Trust (GLD) had the largest increase in USD short interest at $758 mln
Aggregate ETF USD short interest marginally increased $29 mln over the past two weeks ended 7/31/12
For the fourth consecutive period, SPDR S&P 500 ETF (SPY) short interest declined; SPY’s 201.7 mln shares short is its lowest level since 12/31/09
The average shares short/shares outstanding for ETFs is currently 4.8%
Out of the 10 ETFs with the highest % of shares short, only one has a market cap greater than $1 bln (IWM)
Based on multiple borrowings and the ability to continuously create new shares, shares short as a % of shares outstanding can exceed 100% (only five ETFs exhibited shares short as a % of shares outstanding greater than 100%)
US-Listed ETFs: Most Successful Recent Launches by Assets
Source: Bloomberg, Morgan Stanley Smith Barney Research.
Data estimated as of 8/10/12 based on daily change in share counts and daily NAVs.
$8.4 billion in total market cap of ETFs less than 1-year old
Over the past 13 weeks, newly launched Active ETFs generated most net inflows at $1.7 bln (specifically the PIMCO Total Return ETF-BOND)
120 new ETF listings and 18 closures YTD (additional 26 liquidations have been announced)
Over the past year, many of the successful launches have an income/dividend orientation
Five different ETF sponsors and three asset classes represented in top 10 most successful launches
The iShares MSCI All Country World Minimum Volatility Index Fund (ACWV) posted net inflows of $122 mln last week, the most of any recently launched ETF (ACWV’s largest ever weekly net inflows)
Top 10 most successful launches account for 71% of market cap of ETFs launched over the past year
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Source: Morgan Stanley
Active ETFs Come Into View
New funds are mostly designed to balance core positions. Still lots of room for competition in traditional equity space.
August 11, 2012--The long incubation of actively managed exchange-traded funds may be ending. A spate of active-equity releases has landed on U.S. exchanges recently-all of them hoping for even half the success Pimco's Total Return ETF (ticker: BOND) has seen since its launch this spring
The active ETF universe is "heterogeneous," says Morningstar ETF analyst Robert Goldsborough, though heavily skewed toward fixed income. "There are a lot of unique strategies, but not a lot of mainstream equity entries yet." It's also still just a tiny sliver of the industry: Active ETFs have just under $7 billion altogether, Goldsborough says. There's $1.2 trillion in U.S. ETFs.
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Source: Barrons
Knight Capital Group Calls In Consultants To Review Systems After August 1 System Snafu
August 10, 2012--Knight Capital Group in a 10-Q quarterly filing made on 9 August said that it had initiated an internal review into its August 1 system malfunction at the opening of trading at the NYSE on August 1, 2012.
In the filing Knight said:
"We experienced a technology issue at the open of trading at the NYSE on August 1, 2012. This issue was related to the installation that day of trading software and resulted in us sending numerous erroneous orders in NYSE-listed and NYSE Arca securities into the market. Although this software was subsequently removed from our systems and clients were not negatively affected by the erroneous orders, it resulted in us realizing a pre-tax loss of approximately $440.0 million. This event severely impacted our capital base and business operations, and we experienced reduced order flow, liquidity pressures and harm to customer and counterparty confidence. As a result, there was substantial doubt about our ability to continue as a going concern. Following the event of August 1, 2012, we have begun an internal review into such event and associated controls.
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Source: Placing Traders
