All posts by MarketsMuse Staff Reporter

Tech Talk

Big Data and the New Twist In Algorithms: BrokerDealer Big Brother

Leave a comment

While the title could be “Big Data Bags BrokerDealers”, MarketsMuse.com Tech Talk update is courtesy of extract from the 07 April Bloomberg LP story by Hugh Son profiling the recent initiative by JPMorgan (and presumably their bulge bracket brethren, and likely, a select band of black box-centric buysiders from the Hedge Fund world) to keep closer tabs on their respective ‘human assets’ via stealth “algorithmic” software designed to predict what’s going on inside the heads of traders, sales folks and well, everyone else that logs into a device monitored by JP’s surveillance sleuths.

We preface Son’s story with “Unless you’ve been asleep at your trading screen for the past 10 years, you already know that Algorithms aka Algorithmic Trading aka HFT are all the rage and that “algo-based trading” accounts for approximately 70% of daily US equity market trading, as well as increasing percentages across fixed income, FX and currency markets. Simply put, Wall Street quants were arguably the first to turn “big data” into big bucks via algorithmic models, which are now ubiquitous across an assortment of industries that are relying evermore on digital data to drive decisions that are neuroscience-based. Well, Wall Street is once again ahead of the curve, as we’re now in the Big Brother phase of this algo evolution..

With this new chapter, its safe to presume that whatever you type into a keyboard is not only going to be stored by compliance wonks, its going to be analyzed by predictive Surveillance Dept. software to determine if you are prone to crashing planes into the side of mountain or likely to pose an assortment of other risks to the enterprise.

Here’s the opening extract of Son’s report:

Hugh Son, Bloomberg LP
Hugh Son, Bloomberg LP

Wall Street traders are already threatened by computers that can do their jobs faster and cheaper. Now the humans of finance have something else to worry about: Algorithms that make sure they behave.

JPMorgan Chase & Co., which has racked up more than $36 billion in legal bills since the financial crisis, is rolling out a program to identify rogue employees before they go astray, according to Sally Dewar, head of regulatory affairs for Europe, who’s overseeing the effort. Dozens of inputs, including whether workers skip compliance classes, violate personal trading rules or breach market-risk limits, will be fed into the software.

“It’s very difficult for a business head to take what could be hundreds of data points and start to draw any themes about a particular desk or trader,” Dewar, 46, said last month in an interview. “The idea is to refine those data points to help predict patterns of behavior.”

JPMorgan’s surveillance program, which is being tested in the trading business and will spread throughout the global investment-banking and asset-management divisions by 2016, offers a glimpse into Wall Street’s future. An industry reeling from billions of dollars in fines for the actions of employees who rigged markets, cheated clients and aided criminals is turning to technology to police itself better. Failure to do so will provide ammunition for those pushing to separate trading operations from retail banks. Continue reading →

Fixed Income, People Profiles, Tech Talk

Trading Technology, Fintech and “Fuhget About It!” A Cynic’s Soliloquy

Leave a comment

The senior curator for MarketsMuse.com Tech Talk section was so inspired by a recent article “A Cynic’s Guide to Fintech” by Dan Davies, the Senior Research Advisor at Frontline Analysts and published via Medium.com, we wanted to share the opening elements with our audience..For those of you following the various forays into fixed income electronic trading platforms, Davies has a pernicky point of view worth considering. Dan Davies’ twitter feed is worth following as well.

Dan Davies, Frontline Analysts
Dan Davies, Frontline Analysts

A Cynic’s Guide To Fintech

Several business models that are bound to fail — and a few that might have a chance.

A pal working in and around the VC industry asked me the other week what I thought about financial technology, or as the unlovely abbreviation has it, “fintech”. Here are my edited thoughts, from the point of view of someone who spent many years as a banks and diversified financials analyst, and who has some fairly strong prejudices about what works and what doesn’t work in financial services industry. In my view, the portmanteau term “fintech” groups together a number of different business models; I haven’t included “something something Bitcoin” in the list because that’s a slightly different debate. Here’s my partial list …

Fintech business model #1. Reinventing past mistakes of the banking industry because you don’t know about adverse selection

There are a lot of people out there who have expertise in data science, and who think that the incumbents in the industry don’t have sophisticated risk-based pricing because their technological skills aren’t up to the task of identifying risks. These people tend to think that they can go into the credit cards business, or the payday lending business or even the car insurance business, and pick up market share from the dumb old banks by using algorithms! and social media data! and so on.

This is not true. It is true that banking IT is generally terrible, but actually, if you look into the digital archives of any large incumbent player, you will tend to find an extremely sophisticated, cutting-edge algorithmic risk pricing system which was thrown away a couple of years ago because it worked great in testing and then fell apart really badly in the real world.

There are two reasons why fine-grained risk based pricing has been such a catalogue of failure. First, banks almost never lose money on bad risks. They lose money on good risks, which go bad. The nature of algorithm-driven pricing is that you are searching out profitable niches, Moneyball style, in the form of customers which have some set of characteristics in common which marks them out as statistically better than the average. Unfortunately, this tends to mean that you get a book of business which has loads of little concentrations in them — you’ve got all the mixed-race dentists in Yorkshire, or something. And this, in turn, means that when the world changes, your risks tend to be very correlated and you lose years’ worth of profit in one lump. Continue reading →

ETF News

Coca Cola, Procter & Gamble, and Walmart ETF Is Promising

Leave a comment

MarketsMuse blog update profiles a safe ETF that thrives with the market during the good times and is safe during the bad times. The Consumer Staples Select Sector SPDR ETF (XLP), whose top three holdings are Procter and Gamble, Coca Cola, and Walmart, is the best ETF to invest in. This MarketsMuse blog update is courtesy of Investopedia with an excerpt below. 

If you’re looking for a safe investment that’s highly likely to appreciate during good times and capable of holding its own during the worst of times, then you have come to the right place. The Consumer Staples Select Sector SPDR ETF (XLP) is one of the most appealing exchange-traded funds (ETF) in the ETF universe for those who are looking for an investment opposed to a trade.

XLP Basics

IPO Date: Dec. 16, 1998 (Up 82.65% since IPO)

Total Assets: $8.10 billion (as of 4/2/15)

Yield: 2.33% (fairly generous)

Expense Ratio: 0.15% (well below average)

Annual Holdings Turnover: 3.94% (not too actively managed, demonstrates poise)

Purpose: Tracks the performance of the Consumer Staples Sector Index

Top 3 Holdings:

The Procter & Gamble Co. (PG): 12.39% of assets

The Coca-Cola Co. (KO): 8.93% of assets

WalMart Stores Inc. (WMT): 7.28% of assets

To read more about XLP from Investopedia, click here.

Fixed Income, Global Macro Strategy

Convergence of Credit Markets and GeoPolitics-Its All Greek This Week

Leave a comment

MarketsMuse.com Fixed Income Fix update is courtesy of extract from 06 April commentary from Mischler Financial Group’s “Quigley’s Corner”, Wall Street Letter’s 2015 winner of “Best Research-BrokerDealer.”

How Low Will Greece Go?

Ron Quigley Mischler Financial
Ron Quigley
Mischler Financial

When one broaches the subject of German war reparations, it opens up perhaps modern civilization’s most sensitive human drama to one-sided debate.  But when the cries come from the Hellenic Republic, it also points to an audacity on the part of Greece to hold back nothing for money.  Is it a callous, cowardly blackmail of Germany or is it an appropriate claw-back provision?  You be the judge, I am merely putting it out there.  Last March, Alex Tsipras accused Germany of reneging on World War II compensation owed his nation by Germany which occupied his country from the year 1941 thru 1944.  Angela Merkel’s office reiterated several times that Germany had made good on those payments – end of story!  Clearly a case to stir up emotions against Germany and to garner support from laggard nations like France and Italy to secure additional financial recompense and negotiation leverage for the nearly bankrupt Greece.  Continue reading →

ETF News

ETF Investors Look For Success Outside The US

Leave a comment

MarketsMuse blog update is courtesy of CNBC’s Jeff Cox. As we have seen so far this year, ETFs have been becoming increasingly popular among all investors. MarketsMuse blog update profiles the biggest trends in ETF investing, including investing in international currencies. An excerpt from CNBC’s Jeff Cox’s article, “Hottest ETFs are currency hedges, non-US funds” is below. 

Exchange-traded funds have surged in popularity in 2015, but it’s not U.S. equities that are leading the charge.

Investors poured $97.2 billion into various ETFs and other similar products in the first quarter, marking the $2.9 trillion industry’s biggest start ever despite a wobbly U.S. stock market and a testy geopolitical climate, according to data from BlackRock, the world’s largest provider of such funds. (U.S.-based ETFs have about $2.1 trillion in assets.)

There essentially have been three major investment themes this year, and players in the exchange-traded market have made each work: A quest for investment themes outside the U.S.; the offshoot of that, which has seen domestic attention turn away from large caps and toward mid- and small-sized companies, and capitalizing on the big moves in currency markets, particularly an appreciation of the U.S. dollar and the decline of its global competitors. The greenback has gained 7 percent so far against a trade-weighted basket of other leading currencies.

Some $59 billion has found its way into products that focus on currency hedging, according to ETF.com, which said the group represented four or the top 10 funds for investor flows during the first three months of the year.

To read the rest of the article on ETF investment trends from CNBC, click here.

Global Macro Strategy, People Profiles

Global Macro Trading: The Trend is Your Friend, Until It’s Not

Leave a comment

MarketsMuse.com global macro trading snapshot is courtesy of excerpt from 7 April edition of macro strategy commentary from “Sight Beyond Sight”, a publication of Rareview Macro LLC and authored by 20-year industry expert, Neil Azous.

Neil Azous, Rareview Macro
Neil Azous, Rareview Macro

Over the past two trading days, three major trends that have been the backbone of asset markets over the past 9 to 15 months have come under attack. As highlighted in yesterday’s edition of Sight Beyond Sight, and despite our call for an immediate reaction lower in risk assets turning out to be wrong, we are now working under the assumption that a larger corrective event in key investment themes is underway.

To be clear, just because we are working under this assumption does not make us feel comfortable about going against the grain as trend-following pays better and is more scalable than counter-trend trading

The first, and most prominent, trend shock is the shift in the US dollar. The uptrend that has been in place for the last nine months is in jeopardy.

The second is the US Treasury curve.

The third is the downtrend in crude oil. Whether it is the trades of commodity exporters against importers, problems surrounding capital account deficit countries with large levels of commodity-dependent debt, or the shale oil-based capital expenditures decline in the United States, there are quite a few negative narratives linked to the decline in crude oil prices.

What we are now considering is this: If crude oil is able to sustain a rally or has finally “found a bottom” then what the consequences are of all of these release valves being opened at once?

To read the finer points of this morning’s edition of Rareview Macro LLC’s “Sight Beyond Sight” inclusive of a detailed distillation of the above talking points and a view of Rareview’s model portfolio, please visit this global macro strategy think tank’s website via this link

Tech Talk

Bitcoins Become Trading Firms’ Focus

Leave a comment

MarketsMuse blog update profiles how the increasing interest in bitcoins is leading some investors in opening bitcoin financial services firms. Many believe that this move can help reduce the volatility and increases favorability of bitcoins.  This update is courtesy of the Wall Street Journal’s article, “Big Investor Involvement Could Boost Bitcoin“, with an excerpt below.

Some of the U.S.’s biggest proprietary traders and investors are testing the waters for a bigger move into bitcoin, giving a potential boost to the fledgling virtual-currency industry.

While still cautious of becoming exposed to “cryptocurrencies,” some of the firms, which trade with their own money on the.ir own behalf, say they see potential for big profits in trading bitcoin as more investors enter the market and financial-services firms use the currency to streamline transactions.

Their involvement could help reduce volatility in the market for bitcoin, which has struggled to gain legitimacy in part because of concerns about wild swings in its price.

Among the companies at the forefront of this move is DRW Holdings LLC, a high-frequency trading firm in Chicago founded by former options-pit trader Donald Wilson in 1992. DRW is a founding investor in a new bitcoin financial-services firm called Digital Asset Holdings that launched last month. Cumberland Mining & Materials LLC, a DRW subsidiary, has “begun to experiment with cryptocurrency trading,” DRW said.

To continue reading the article on bitcoin firms from the Wall Street Journal, click here.

 

ETF News, Fixed Income

Bull Week For High Yield Bonds, Thanks To ETFs

Leave a comment

MarketMuse blog update profiles the positive market conditions bringing a good cash flow to high yield bonds, some say both are due to the ETF market. MarketMuse blog update is courtesy of Forbes’ article “High Yield Bond Funds See $315M Cash Inflow, Thanks To ETFs” with an excerpt below. 

Retail cash flows for U.S. high-yield funds were positive $315 million for the week ended April 1, down from positive $856 million last week, according to Lipper. Both were essentially all related to the exchange-traded-fund segment, with this week’s ETF inflow of $318 million dented by a small, $3 million outflow from mutual funds.

The two-week inflow total of approximately $1.2 billion follows two weeks of outflows totaling $3 billion in mid-March. Those were the first outflows after six weeks of heady inflows.

Even with the fresh inflow this week, the trailing-four-week average holds fairly steady, at negative $446 million per week, from negative $448 million per week last week, as an inflow five weeks ago was essentially the same as this week’s inflow. Recall that the trailing-four-week reading of positive $2.5 billion seven weeks ago was the largest in this measure on record.

To read the full article from Forbes, click here.

ETF News

How To Score In The 2nd Quarter: Which ETFs To Invest In

Leave a comment

With all of first quarter’s numbers in seeing the success of some ETFs, like the solar ETFs, where should you invest for the second quarter? MarketMuse blog update looks to panel of investment strategists with experience of managing billions of dollars for which ETFs to invest  in this quarter. MarketsMuse blog update is courtesy of Reuter’s Trang Ho and her article, “Q2 Investing Strategies: Top Five ETF Buys From Powerhouses With $1 Billion+ In Assets Under Management“, with an excerpt below.

If you were stranded on an island in the second quarter and could only take one exchange traded fund with you, what would it be? We asked a panel of investment strategists whose firms manage more than a billion in assets to share their best ETF investing idea for Q2.

1. Market Vectors Agribusiness ETF (MOO)

The Market Vectors Agribusiness ETF (MOO) should do well when we have a bad weather summer. The constituents of this ETF are lagging because grain prices have been so low. The May 2015 futures contract for corn is $3.92 a bushel. In 2012, a bushel was almost $8. The May 2015 contract for soybeans is $9.63 a bushel. In 2012, it was close to $18. So when will this change? When we have a summer that is way too dry or way too wet. Or, as with any commodity, the cure for low prices is low prices–farmers will stop planting grains if the prices are too low and supplies could fall, thus increasing prices. Seven billion people can’t be wrong. Those seven billion people need to be fed.

The fund only has a fee of 0.55%. Not bad. It is truly global with companies from Israel to Russia, denominated in every currency from the Norwegian kroner to the Russian ruble. You won’t find that type of diversity too often. The SEC dividend yield is 1.58%. Not horrible.

– Holmes Osborne, principal of Osborne Global Investments with $1.5 billion in assets under management in Santa Monica, Calif.

2. iShares Currency Hedged MSCI Germany ETF (HEWG)

The European Central Bank (ECB) has embarked on an ambitious quantitative easing program in the Eurozone, creating investment opportunities in European equities. We think European equities represent a good value relative to expensive US stocks, both from a price-to-earnings and price-to-book perspective.

Furthermore, Germany, the strongest economy in Europe, represents a potentially attractive way to access the driving forces behind Europe’s momentum higher-quality, cyclical tilt. First, there are few attractive opportunities for German investors outside of stocks as most German sovereign bonds currently offer negative real yield. Second, Germany, as the fifth largest exporter to the U.S., appears poised to capitalize on a strong dollar/weak euro and an improving American economy.

U.S. dollar-based investors can consider accessing the strong momentum and potential opportunities presented by Europe’s quantitative easing and seek to mitigate the risk of a depreciating euro through the iShares Currency Hedged MSCI Germany ETF (HEWG). HEWG invests in large- and mid-cap German equities and seeks to mitigate exposure to fluctuations in the value of the euro and the U.S. dollar. Investors should consider risks including a potential global economic slowdown, strengthening of the euro, and a rally in European bonds. We will also be watching the outcome of the ECB’s bond buying program, Greece’s economic situation and its impact on the eurozone, and European debt issues.

– Heidi Richardson, global investment strategist, BlackRock with $4.652 trillion AUM in New York City.

To see the complete list from Reuters, click here.

Uncategorized

MarketsMuse: This ETF Trading Expert Has This To Say About That…

Leave a comment

MarketsMuse.com ETF update is pleased to share an informative perspective about best practices and “best execution” that institutional investment managers, RIAs and others should consider when using ETFs, courtesy of insight from one of the more widely respected members of ETF “agency-only” execution space. Here’s the excerpt of the ETFdb.com interview:

etfdb logoAll walks have come to embrace the exchange-traded product structure as the preferred vehicle when it comes to building out low-cost, well diversified portfolios. Furthermore, active traders have also taken note of the inherent advantages associated with the ETF wrapper, embracing the product structure for its unparalleled ease-of-use and intraday liquidity.

ETFdb.com recently had the opportunity to talk with Mohit Bajaj, Director of ETF Trading Solutions at WallachBeth Capital, about his firm’s role in the industry as well as the evolution of ETF trading in recent years.

ETF Database (ETFdb): What’s your firm’s story? What role do you play in the ETF industry?

Continue reading →

ETFs, solar
ETF News

Solar ETFs Shine Bright

1 Comment

You might need some SPF 100 after the 1st Quarter. MarketsMuse blog update profiles the huge come back solar stocks and ETFs have had after a rocky year, last year. MarketsMuse blog update is courtesy of ETFTrends’ Max Chen’s article, “Solar ETFs Perform Radiantly in Q1“. An excerpt from ETFTrends is below.

Solar stocks and related exchange traded funds have powered ahead and are among the leading sectors over the first quarter after underperforming the equities market last year.

The Guggenheim Solar ETF (NYSEArca:TAN) is the third best performing ETF for the first three months of the year. TAN has increased 31.6% year-to-date. [Solar ETFs: Industry Growth Not Reflected in Market]

Additionally, other clean energy ETFs were among the top ten performing non-leveraged ETFs so far this year, including the iShares Global Clean Energy ETF (NYSEArca:ICLN), which rose 22.8%, and the Market Vectors Solar Energy ETF (NYSEArca:KWT), which gained 22.6%. ICLN tracks a broader exposure to clean energy stocks, including solar, wind and other renewable resources.

To read the full article from ETFTrends, click here.

Fixed Income, Tech Talk

Finra, Fixed Income and FinTech—Fixing What Folks Keep Saying is Broken

Leave a comment

MarketsMuse blog update profiles a proposal from FINRA which proposes pre-trade transparency for fixed income automatic trading systems operators. This update is courtesy of  Traders Magazines’ article, “A Step Closer to a Fixed-Income NBBO” with an excerpt from the article below.

A modest proposal made by the Financial Industry Regulatory Authority (FINRA) aims to have fixed-income alternative trading system (ATS) operators to submit a weekly report that contains all of their quotation data for TRACE-eligible corporate and agency debt-securities to the regulator.

Such data would help FINRA better surveil the growing electronic fixed-income market, especially retail trades, according Robert Colby, the chief legal officer at FINRA.

“We would love to have this information,” he said when speaking the Investment Company Institute’s capital markets conference. “We do not get them now, so we are not super familiar with it. We’ve gotten it in batches at times but are not familiar with it enough to know how to work it into our surveillance system, which is our primary line of interest.”

FINRA officials declined to comment on the proposal further citing that it was still out for comment at press time.

According to the proposal’s text, FINRA would not disseminate the ATS-provided data publicly and use it solely for regulatory and surveillance purposes. However the text also states that FINRA may analyze the data for “the potential value and feasibility of public dissemination in the future.”

To read the entire article from Traders Magazine, click here.

Tech Talk

What’s Next For Wall Street’s FinTech Czars? Bitcoin Exchanges!

Leave a comment

MarketsMuse.com FinTech update profiles Wall Street’s trading system technology push into the next frontier: Bitcoin Exchanges. Below is courtesy of March 24 column “Legacy Exchange Players Rush To Aid Bitcoin Exchanges.”

Following news that Nasdaq will offer trading technology to Noble Markets, legacy exchanges and executives are helping to make the trading of the virtual currency very real indeed.

Phil Albinus, TradersMagazine
Phil Albinus, TradersMagazine

Another day, another step forward to Bitcoin’s road to legitimacy. Yesterday, the Wall Street Journal reported that market maker Nasdaq will provide trading technology to Noble Markets, the start-up firm that aims to allow hedge funds to trade bitcoin and “related digital-currency assets.”

[Is the Buyside Ready to Trade Bitcoin?]

Earlier in the day, news broke that former NYSE CEO Duncan Neiderauer had joined Tera Group, a  bitcoin derivatives trading platform and virtual currency bourse. The former head of the Wall Street trading floor will serve as an advisory director for the newish bitcoin firm.

Wall Street is seeing real opportunities in the virtual currency. As the Wall Street Journal cites, “The New York Stock Exchange’s investment in bitcoin exchange Coinbase; regulatory approval of public trading in the Digital Currency Group’s Bitcoin Investment Fund; former J.P. Morgan Chase & Co. executive Blyth Masters’ appointment to a lead new digital-asset settlement service…” Continue reading →

ETF News

The Merging of Kraft and Heinz Makes Investor ETF Hungry

Leave a comment

MarketMuse blog update profiles the jolt the food and beverage ETFs received on Wednesday when Kraft Foods and the H.J. Heinz Company announced a merge making the new company the world’s fifth-largest food company. This MarketMuse update is courtesy of Benzinga’s 25 March article “Heinz-Kraft News Lifts Food & Beverage ETF“, with an excerpt from the article below. 

This week it was announced that Kraft Foods Group Inc KRFT 4.49% would combine with H.J. Heinz Co. in a move engineered by Brazil-based 3G Capital and Berkshire Hathaway Inc (NYSE: BRK-B).

The combination of these two iconic brands will create a powerhouse consumer staples company with far reaching global exposure.

On Thursday, Kraft rose more than 35 percent on news of the deal, which will include a special cash dividend and 49 percent ownership share in the new combined company.

This jump also impacted a specialty ETF designed to capitalize on the strength of food, beverage, and restaurant stocks.

The PowerShares Dynamic Food & Beverage Portfolio PBJ 0.63% invests in a portfolio of 30 U.S. food and beverage companies based on strict selection criteria that includes price and earnings momentum, quality and value.

Kraft is the eighth largest holding in PBJ, with a 4.69 percent allocation, that sent the fund soaring to new 52-week highs on Thursday.

Read more: http://www.benzinga.com/etfs/sector-etfs/15/03/5356681/heinz-kraft-news-lifts-food-beverage-etf#ixzz3VbblOTeG


To read the entire article from Benzinga on the boost in food and beverage ETFs, click here.

Fixed Income, Global Macro Strategy

Global Macro Trading Theme: Focus on Fixed Income

Leave a comment

MarketsMuse.com update provides insight for those who are focused on the global macro approach to a topic that many of the world’s leading hedge funds and professional investment managers are fixated on: fixed income. Below thoughts are courtesy of the 27 March a.m. edition of “Sight Beyond Sight”, the  investment newsletter authored by Neil Azous and published by global macro think tank Rareview Macro LLC.

Neil Azous, Rareview Macro
Neil Azous, Rareview Macro

A few weeks ago we stated that fixed income will provide a greater opportunity to generate positive P&L this year and that we would look to increase our time spent on this asset class. In “fund speak” fixed income would be given a larger portion of the risk budget. In that spirit, we are adding two new strategies to the model portfolio today. Unlike the strategies we’ve outlined over the last few weeks, this is more volatility arbitrage than relative value trading. Specifically, we looked at two Different strategies .The first strategy focuses on 6-month options on Eurodollar futures contracts (symbols: EDU5, EDU8) that are six months and three years from expiration, respectively.

The second strategy focuses on the cross-regional volatility difference between German Bunds and US Treasuries (symbols: RXM5, TYM5). Both strategies were executed earlier this morning in the model portfolio. The updates were sent in real-time via Twitter (@rareviewmacro).

Trade #1: Eurodollar Calendar Ratio Spread

Trade #2: Bund-UST Volatility Arbitrage Continue reading →

Fixed Income, People Profiles, Tech Talk

Electronifying Corporate Bond Trading Chapter 12: Electronifie

1 Comment

MarketsMuse.com merges Fixed Income and FinTech with continuing coverage of the corporate bond market’s effort to evolutionize via electronification with a focus on yet the latest innovator initiative courtesy of Goldman Sachs alumni Amar Kuchinad and his start-up“Electronofie.” Our hats are off in salute to the catchy company name and extracts below are courtesy of recent profile in Fortune Magazine. Roger Daltry adds: “Dealers, Can You Hear Me?” Or, As Victor Hugo once wrote, “nothing is stronger than an idea whose time has come.”

Fortune Mag’s Shawn Tulley “takes it away” starting here:

It sure looks like the Golden Age for bonds. The $7.7 trillion U.S. corporate fixed income market is the largest source of liquidity on the planet for companies, and individual investors, pension funds, and endowments are flocking to bonds as never before.

So it’s hard to believe that anything this important could be so trapped in the past. At America’s biggest, most-tech savvy asset managers, traders speed-dial their favorite Wall Street salesman to place their biggest orders over their trademark headphones, just as in the Liar’s Poker era. The electronic platforms that transformed the equity markets decades ago mainly never arrived for the bond market. Relative to stocks, big-ticket fixed-income trading is stuck in the Stone Age.

Naturally, the beneficiaries are the investment banks who charge fat markups and, frequently, their hedge fund clients, who feast off of the constant leaks on who’s buying and selling big chunks of bonds, information that Wall Street firms use to cement their most lucrative relationships. Continue reading →

ETF News

LSE Scores Listing of China’s First ETF

Leave a comment

MarketMuse blog update profiles the London Stock Exchange’s (LSE) Wednesday announcement that it had welcomed their first China ETF, Commerzbank CCBI RQFII Money Market UCITS ETF. This is an exciting new step as China hopes to have more offshore trading in the very near future. This ETF offers the abiltiy for those in the LSE to invest in China’s inter-bank market. This MarketMuse update is courtesy of BloombergBusiness’s Will Hadfield. An excerpt of the article, “The Yuan Comes to Europe as LSE Hosts ETF Tracking Chinese Money” is below.

A Chinese bank has launched the first money-market fund denominated in yuan that’s based in Europe, a milestone in the currency’s emergence as a major force in world markets.

China Construction Bank Corp.’s new exchange-traded fund, which is listed on the London Stock Exchange and available to investors throughout the European Union, is the first product to give Western investors access to securities in China’s interbank bond market. The fund, called the Commerzbank CCBI RQFII Money Market UCITS ETF, started trading Wednesday.

The ETF could be the first of many Chinese-currency funds to launch in developed markets as the country’s banks seek to attract investors with higher returns than they could get from dollar-, euro- or pound-denominated accounts.

To read the rest of the article from BloombergBusiness, click here

ETF News

London Likes The Dollar-PowerShares Lists New ETFs on LSE

Leave a comment

MarketsMuse ETF update profiles the latest entry to land of exchange-traded-funds with spotlight on Invesco PowerShares listing of U.S. dollar share class versions of its three exchange traded funds (ETFs) on the London Stock Exchange, allowing investors to access U.S. equity markets and trade in the rising domestic currency. Giving credit when due, below is extract from ETF.com

Its three funds – the PowerShares EQQQ NASDAQ-100 UCITS ETF, the PowerShares FTSE RAFI US 1000 UCITS ETF and the PowerShares Dynamic US Market UCITS ETF now all trade in USD and GBP, in response to growing client demand, according to PowerShares. A note from the provider said that in 2014, there was over $110 billion worth of trades in USD across the LSE’s 600 ETP listings, which made up the vast majority of such ETP trades across Europe.

Bryon Lake, head of Invesco PowerShares – EMEA, said the trend for USD listings is increasing and that is why the provider now offers dual listings of its products.

“This is all part of our strategy to broaden our offering in Europe and to enable investors to gain further exposure to key investment strategies,” he said.