ETFs Now Can Be Placed in Retirement Plans Reply

ETF News • Tags: , , ,

tradersmag Courtesy of Tom Steinert-Threlkeld

 

MidAtlantic Trust Company said it had resolved record-keeping problems that have kept exchange-traded funds from being part of holdings in 401(k) and other retirement plans.

The state-chartered trust company said it has resolved a problem with fractional shares that result from trading in ETFs that have kept such funds from being kept in retirement plans. The firm said it will buy and sell whole shares in the market and hold fractional shares as necessary. This will allow “dollar certain” transactions that until this have prevented the information systems that keep track of funds from recognizing and tracking ETF shares.

Shares will be bought at end-of-day prices, allowing same-day settlement for record-keeping purposes. Mutual funds historically have determined the value of their assets at the end of each trading day, for their investors. ETFs, however, follow the three-day settlement cycle of equities markets.

In postings to its Web site, MidAtlantic said this will “allow record keepers the ability to handle ETFs using the same systems and processes they already have in place for trading mutual funds.’’

A technology unit of the company, Mid Atlantic Financial Platforms, has introduced what it calls the ETFxChange, to resolve the record-keeping issues and spur their use in retirement plans.

Shares of ETFs from BlackRock’s family of iShares products, as well as ETFs from PowerShares, Wisdom Tree, State Street and Vanguard also can be handled by the system. Stadion Money Management in Watkinsville, Ga., confirmed that it will use the platform on behalf of its customers.

Roughly 90% of the assets under management at Stadion are placed into exchange-traded funds, according to vice president and portfolio manager Will McGough. But, until now, participants in the plan only see that a portion of their assets are held in the Stadion 2010 Target Date Fund, for instance. Now, investors will see the individual ETFs being bought and sold, as McGough or another manager allocates the purchases or sales across all participants.

Two-thirds of the assets placed in funds managed by Stadion are held in qualified retirement plans, McGough said.

MidAtlantic also launched a related ModelxChange that allows money managers, investment advisors and plan record-keepers to create and maintain investsing models for 401(k) plans that mix ETFs with mutual funds.

BOX Exchange Gets SEC OK to Trade Jumbo S&P 500 ETF Options Reply

ETF News, Strike Price • Tags: ,

bloomberg logo bw   Courtesy of Nina Mehta/Bloomberg LP

BOX Options Exchange, the third- smallest of 11 U.S. options venues, will be the first to begin trading larger-size contracts on the most-active U.S. equity derivatives product, according to a company executive.

BOX will list and trade contracts based on 1,000 shares of the SPDR S&P 500 ETF Trust starting May 10, according to Ed Boyle, senior vice president for strategy at the Boston-based exchange. The so-called jumbo options, approved May 3 by the Securities and Exchange Commission, will be 10 times larger than existing contracts on the Standard & Poor’s 500 Index exchange- traded fund, known by the ticker symbol SPY.

The contract is designed to give institutional investors another way to trade the S&P 500 at a time when many asset managers are increasing their use of ETFs as part of their investment strategies. Institutions often use larger-size contracts like S&P 500 options that enable them to buy or sell bigger positions without signaling their intentions and moving the market.

“We see customer demand for the product because it offers flexibility to institutions and traders looking for larger notional size in trades,” Boyle said by phone. “It also provides additional price competition across indexes and ETFs.”

The contracts, which will be a separate product from the regular-size options based on 100 shares of the S&P 500 ETF, also offer an alternative to indexes such as the S&P 500, which trades exclusively on the Chicago Board Options Exchange, Boyle said.    For the full story from Bloomberg LP, click here.

Un-Employment Data Means…(?); Feeding Frenzy For Fixed Income: NASDAQ OMX Headed to Debt Capital Markets. Reply

People Profiles • Tags: , ,
Ron Quigley, Mischler Financial

Ron Quigley, Mischler Financial

Courtesy of Guest Contributor Ron Quigley, Managing Director of U.S. Syndicate and Primary Sales for Mischler Financial Group.

 May 3-2013–We need 200k new jobs a month, or 2.4 million annually just to put a dent in unemployment.  It takes, on average, about 125k new jobs per month to keep up with population growth! …..we would need to add 360k new jobs per month or just shy of 13 million jobs across three years to take unemployment to 6%.  The last time we ever had 516k new jobs in one month was May 2010.  Since then, that’s 36 months folks, we’ve averaged 119k new jobs per month.  So, by 2020, when my 6-year old daughter becomes a teenager, we will have taken unemployment down from 7.6% to 5.4%.

Today was a well-deserved breather for fixed income syndicate desks, but rest assured origination and syndicate is hard at work on next weeks’ calendar of visitors to the IG DCM.  This week we witnessed one of the single most impressive lists of high quality issuers in a long time, if not ever!  Demand has been very strong with concessions non-existent on the week. (See below chart).  Primary market mechanics are actually pretty simple though – liquidity is defining the global credit marketplace.  For the week ending May 1, Lipper reported an inflow of $1.33 billion into corporate investment grade funds.  When products are so heavily bought, prices go up and yields go down.  Hence this week, we’ve seen CDX.IG.20 tighten another 3.96 bps as of yesterday’s close to its firmest level in 5.5 years.   Meanwhile the VIX or “fear factor” ratcheted in 0.71 points in the same time period.  Blue chip issuers dominated the leaderboards and I strongly suspect we’ll be seeing utilities entering the arena VERY shortly. More…

Hedge Funds’ 10 most popular ETFs Reply

ETF News • Tags: , , , , , , , , , , ,

marketwatchCourtesy of Meena Krishnamsetty, Jake Mann and Alexandr Oleinic

Exchange-traded funds like the SPDR Gold Trust (ETF) have many similarities with regular stocks. However, even though it trades like a stock on the market, an ETF is a security that follows an index, a commodity or a basket of assets, so it has some particularities as an index fund. Because it acts like a stock on the market, but also because of the low cost and tax efficiency, an ETF can represent an interesting investment opportunity.

With ETFs on the brain, we’ve compiled a list of the 10 most popular ETFs among hedge funds, because it’s crucial for investors to know how the big boys are trading their portfolio holdings. We’ve also discovered a few strategies with market-beating potential by following hedgies, and it’s possible to do so without paying an arm and a leg.

1. SPDR Gold Trust ETF

It’s no surprise that the SPDR Gold ETF is numero uno, as 67 of the 450 hedge funds we track were long at the end of the last 13F filing period, the fourth quarter of 2012. While overall fund interest shrank from 76 one quarter earlier, some of the top hedge funds invested were John Paulson’s Paulson & Co, Jean-Marie Eveillard’s First Eagle Investment Management, and Michael A. Price & Amos Meron’s Empyrean Capital Partners. To the dismay of this group, the SPDR Gold Trust’s year-to-date return sits at around -12%.

2. Financial Select Sector SPDR

There was a large disparity between hedgies’ favorite ETF, and their second favorite. Twenty-seven of the funds we track are bullish on Financial Select, up slightly from 26 in the third quarter, and this increase in interest has been met with solid appreciation. The ETF is up nearly 14% since the start of 2013, rewarding Jim Simons’s Renaissance Technologies, Louis Bacon’s Moore Global, Paul Tudor Jones’s Tudor Investment Corp, among others. More…

Follow-On: Major Exchange Slug Fest in Battle for ETFs Reply

ETF News, Tech Talk • Tags: , , , , ,

tradersmag Courtesy of Tom Steinert-Threlkeld

Nasdaq, NYSE and BATS are slugging it out with incentives, new order types and a new exchange to resuscitate trading in ETFs…

Once it worked. Now, not so much.

For years, the Nasdaq Stock Market designated a single market maker for each exchange-traded product. Later, the BATS Exchange treated exchanged-traded products no differently than other equities. No special treatment for trading in ETFs.

Meanwhile, NYSE Arca created lead market makers and gave them premium rebates for trading in exchange-traded funds, and gave other market makers rebates as well.

Both models worked fine, as institutional and retail investors pulled out of mutual funds that invested in stocks and rushed in droves into exchange-traded funds that also held baskets of stocks-and could be traded like them, too.

Only about 82 million shares of ETFs were traded in an average day in 2004, accounting for 2.15 percent of consolidated volume. By 2008-at the height of the credit crisis-that had surged to 1.1 billion shares and 12.5 percent of all trading. By 2011, the 1.2 billion shares traded every day in exchange-traded products of all kinds accounted for 15.4 percent of all trading.

Then, the hammer dropped. Daily volume fell 22.0 percent last year, to 941,000 shares a day. And the share of trading went down to 14.3 percent, by Rosenblatt Securities’ count.

The bloom was off the boom-even as investors keep pouring money into the funds, adding another $16.6 billion into North American ETFs in the first quarter of 2013, with $1.4 trillion invested all told in ETFs, in the United States.

“Investing in ETFs is continuing to increase. It’s just happening in places other than the secondary markets, like NYSE Arca or Nasdaq or BATS,” said Laura Morrison, senior vice president for global indices and exchange-traded products at NYSE Euronext.

For the full article courtesy of TradersMagazine, please click here

PSX to Re-Launch as ETP Market in May Reply

ETF News, Tech Talk • Tags: , ,

tradersmagCourtesy of Tom Steiner-Threlkeld

Nasdaq OMX Group said it expects the re-launch of its PSX exchange as an exchange-traded fund marketplace to take place in May.

Final approval of the refashioning the “price size exchange” as a “price time” exchange focused on exchange-traded products must come from the Securities and Exchange Commission.

The exchange operator hopes to encourage trading in a wider variety of ETPs by created two types of market participants — Registered Market Maker and PSX Supplemental Liquidity Providers — which will take ”affirmative quoting” obligations.

PSX also intends to create competition among market makers, by offering the largest rebate to a Lead Market Maker. Other registered market makers can compete for that designation and while making markets in ETPs receive rebates, at a lower level.

Rebates to liquidity providers can be as high as $.0028 per added share, according to a PSX pricing page. Fees to remove liquidity start at $0.0030 per .

”PSX is a key piece of our larger strategy to better service the ETP industry with a platform designed to incent high-quality liquidity, market incentive programs and ETP-specific functionality.” said Eric Noll, Executive Vice President of Transaction Services U.S. and U.K. at Nasdaq OMX, in a statement Monday.

The relaunch of PSX will create a second market that is focused on ETPs. NYSE Euronext’s Arca exchange currently operates as an ETF-focused exchange. NYSE Arca has both the largest market share in exchange-traded trading among national exchanges and 93 percent of ETP listings.

The move comes roughly 2 1/2 years after PSX was created as a Price Size Exchange that would give priority to the size of an order over the speed of arrival.

Nasdaq OMX CEO Robert Greifeld at the time called this the “most fundamental change in market structure” since the launch of the all-electronic Nasdaq Stock Market itself in 1971.

But the idea that “size matters’’ never took hold. In February, PSX accounted for three-fourths of one percent of total equities trading in the United States.  For the entire story from TradersMagazine, please click here

SSgA Launches World’s 1st Inflated-Linked ETF for EM Bonds Reply

ETF News • Tags: , ,

Courtesy of Chris Flood at FT.com

State Street Global Advisors has launched the world’s first exchange traded fund that provides exposure to inflation-linked debt inimages emerging markets, a rapidly growing asset class that is attracting interest from international investors.

The SPDR Barclays EM Inflation-Linked Local Bond Ucits ETF has been listed on the Deutsche Börse, with a further listing on the London Stock Exchange expected shortly. Scott Ebner, global head of product development for SSgA, said the new ETF would provide a simple solution for investors keen to access a previously difficult segment of the fixed income market.

“Investors are increasingly looking for ways to diversify their emerging markets exposure beyond traditional equity allocations and are cognisant of prospective inflationary pressures,”said Mr Ebner. SSgA surveyed 128 pension professionals and asset managers across Europe in March and found that three-quarters expected global inflation to rise over the next three years. Nearly 70per cent said that inflationary pressures would be higher in emerging markets than in the developed world.

Fewer than a fifth (19 per cent) of those surveyed by SSgA said that it was easy to access EM inflation-linked bonds. However, almost half (47 per cent) said that they planned to increase their exposure to emerging market debt over the next three years.

The market for EM inflation-linked debt has grown strongly over the past 10 years. The outstanding total of debt is at almost $600bn, providing sufficient size, depth and liquidity for an index-based investment approach. The new ETF tracks the Barclays EM inflation-linked 20% capped index, which includes inflation-linked sovereign bond issued by Brazil, Mexico, Chile, South Africa, Poland, Turkey, Israel, Korea and Thailand.

ETF Titan Trader Joins Spartan Race To Battle Leukemia & Lymphoma; Obstacle Course Competition To Raise Cash For Cures Reply

ETF News, People Profiles • Tags: , , , ,
mccormondlls

Spartan Andrew McOrmond

Editors Note: MarketsMuse is not just an ETF and Options market news aggregator, as we take pride in spotlighting the off-market activity of trading Industry professionals who “do good by giving back.”

MarketsMuse is pleased to extend a Bravo! and a “bid on” to WallachBeth Capital Managing Director and ETF Execution Specialist Andrew McOrmond as he completes his rigorous 8-week training  in advance of his race to raise money and awareness for the Leukemia & Lymphoma Society Team, as they compete in the June 2  Spartan Race in Tuxedo, NY.

For those not familiar with the Spartan Race format, think “Special Forces on Steroids”;  these are 5 kilometer events in which competing Spartans race against the clock over a military-style obstacle course replete with mud pits, rope climbing, rock climbing, and barbed wire barriers, before crossing the finish line.

Noted McOrmond, “From a competition standpoint, this is going to be a real fight to the finish, but we’re fighting to help save lives–particularly the hundreds of thousands of people who are diagnosed with blood cancer. ” McOrmond says that his take-away objective from this event is “to raise at least $12,500, and be able to get out of bed the next day!” So far, courtesy of friends, co-workers and even trading desk competitors, McOrmond’s “pre-market order book” has already reached $7500 in commitments. MarketsMuse encourages our visitors to click on this link and “bid on”

BlackRock Opens Bond ETFs Aimed at Institutional Clients Reply

ETF News • Tags: , ,

bloombergCourtesy of Bloomberg LP

BlackRock Inc. (BLK), the largest provider of exchange-traded funds, is opening four fixed-income ETFs today with defined maturity dates to appeal to institutional investors such as bank treasurers.

BlackRock’s iSharesBond ETFs, which invest in a basket of investment-grade corporate bonds, have set expiration dates when the portfolios will be liquidated and payouts made to investors, according to Matt Tucker, head of iShares’ fixed-income strategy team at New York-based BlackRock. The funds, maturing in 2016, 2018, 2020 and 2023, provide monthly income and may be favored by clients with specific liquidity needs in a climate of low yields and volatile interest rates, according to the firm.

“For some institutional investors, the idea that an ETF never matures or liquidates has been a hurdle,” Tucker said in a telephone interview yesterday. “These funds have the pricing and liquidity of an ETF plus the finite life you get with an individual bond portfolio.”

BlackRock, whose $3.9 trillion in assets make it the world’s biggest money manager, said first-quarter profit rose 10 percent as investors flocked to its equity iShares products. President Robert Kapito said in February the firm will continue to grow through fixed-income ETFs, which represent less than 0.5 percent of the $98 trillion global bond market. BlackRock created a series of lower-fee ETFs in 2012, and in March it announced a partnership with Fidelity Investments to sell more iShares funds directly to retail investors.

For the full story from Bloomberg LP, please click here

Wall St. Traders Take a Break to Jump Through Hoops; Bloomberg LP Shout-Out for Autism Speaks Raises Big Bucks Reply

Destinations, ETF News, People Profiles • Tags: , , , , , , , , , , ,

According to Nielsen Ratings, Bloomberg LP’s 1st Annual Market Madness 3-on-3 Charity Basketball Tourney, which took place on April 8th at Pier 36’s Basketball City, did not draw as many eyeballs as the NCAA Men’s National Basketball Championship held on the same night, but the event did bring out 25, 3-man teams representing the top trading and broking desks on Wall Street in a one night event that attracted 200 spectators and raised tens of thousands of dollars for Autism Speaks™.

bloomberg3x3

Bloomberg LP’s April 8 Market Madness at Basketball City in NY

In a post-event 360, Carrie Cliggett, the Bloomberg LP Market Madness event coordinator stated, “We’re thrilled to have had Wall Street’s top firms participate and so many fans turn out for what we look forward to be the first of many charity-focused seasons for Market Madness.” Ms. Cliggett was unable to comment as to whether Bloomberg TV might carry next season’s tournament on its broadcast network.

derschbloomberg

Former UVa Champ and WallachBeth Mgn.Dir. Willie Dersch

Mixed in among squads from the “6-Pack firms”, there were more than a dozen trading and brokerage desks on the court, including 2 squads from ETF and options broker WallachBeth Capital. The team’s 6’6 player-coach Willie Dersch, a former co-captain of University of Virginia’s men’s basketball team (’00) was side-lined for the event due to injury, but inspired his team from the bench by offering tips to WB’s senior squad members Gene Cushman, Dana Martin, and Scott Saunders.

Noted Dersch, “Nobody can discount the talent that came out to compete; the best part was helping a really important cause.” WallachBeth also courted a junior team of rising Wall Street stars, comprised of 6’5 options desk associate Luke Greene, 6’2 power forward and ETF trader David Shaw, and trading desk guards Derek Sellhausen and Lee Blieberg.

Bloomberg LP underwrote all of the costs associated with producing the event and each team contributed a minimum of $1000 to participate. Bloomberg’s Cliggett would not comment on rumored matching contributions made by Bloomberg LP, its founder and New York City Major Michael Bloomberg, or Bloomberg CEO Daniel Doctoroff, but it is widely-known that Bloomberg executives have a propensity to ‘bid on’ in connection with company-endorsed philanthropic programs. The final tally raised for Autism Speaks ™ is therefore expected to be in the tens of thousands for this single-night program.