Tag Archives: marketsmuse blog

ETF News, Global Macro Strategy

Risk Off or Risk On for Sweden ETF $EWD As Riksbank Takes Rates Deeper Into Negative Territory

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MarketsMuse.com update profiling iShares MSCI Sweden ETF ($EWD) and a global macro view is courtesy of extract from March 18th coverage by ETFtrends.com’s Todd Shriber

Shares of the iShares MSCI Sweden ETF (NYSEArca: EWD) were modestly higher Wednesday after the Riksbank, the world’s oldest central bank, surprisingly took Sweden’s repo rate deeper into negative territory with a cut of 15 basis points to -0.25% from -0.1%

ETFTrends-logoSome of Sweden’s larger companies are struggling due to weak demand from Europe, the country’s largest export market, as the krona currency appreciated against the euro. However, lower central bank rates has helped stimulate household spending.

The Swedish central bank recently cut its benchmark rate below zero for the first time and started buying bonds to combat deflationary pressures. However, if the krona continues to strengthen, the Riksbank could be forced to implement more aggressive measures. [Loose Monetary Policy Could Lift Sweden ETF]

In its efforts to stimulate inflation, Riksbank may not be done employing accommodative monetary policy.

“For us, we will pay close attention to the door they opened to launching a scheme to channel monetary support directly to corporations via lending. While no details were provided for the second meeting, we have for some time believed that a funding-for-lending program (FLS), a measure already used by the Bank of England, or a public-private investment program (PPIP), a liquidity tool used by the US Federal Reserve, are transmission mechanisms that have much greater and immediate impacts on the real economy than quantitative easing,” said Rareview Macro founder Neil Azous in a note out Wednesday. Continue reading →

ETF News, Fixed Income

BlackRock New Bond ETF To Trade Like Common Stock

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BlackRock is the world’s largest asset manager with over $4.59 trillion in assets under management. iShares is a section of BlackRock that is in control of hundreds of ETFs. As noted on iShares page and continued to ring true today, Many people are turning to ETFs for diversified, low-cost and tax efficient investing. ETFs can be a powerful addition to your investment portfolio.

MarketMuse blog update is courtesy of the New York Times’ Landon Thomas Jr. with an extract from Thomas’s article, “BlackRock’s New Breed of Exchange-Traded Bond Fund Prizes Stability Over Swagger“

While he may not live the life of a swaggering bond market pro, Mr. Radell, a bond manager at the fund giant BlackRock, is challenging a strategy that has rewarded some of his flashier peers: the pursuit of high-risk, high-return investments.

The weapon that Mr. Radell will be using is a new variety of exchange-traded fund, or E.T.F., which tracks an index of stocks or bonds but trades like a common stock, allowing investors to jump in and out.

For years now, these funds have been a hit with passive investors. Now, BlackRock is introducing a new breed of bond E.T.F. that aims to blend the best of active investing (security selection) with index investing (cost and consistency).

Scott Radell has been with BlackRock since 2003 and currently is in charge of more than 80 ETFs for BlackRock’s iShares. 

To read the entire article on the new bond ETF from BlackRock found in the New York Times, click here.

ETF News

Hedged Vs. Unhedged International Currency ETFs

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MarketMuse blog update courtesy of CNBC. With investing overseas being so dangerous right now, because of enormous moves in currency, buying stocks overseas—including ETFs, why are people so keen on doing it. CNBC reporter, Bob Pisani’s ask the question:

Why doesn’t everyone buy hedged international ETFs when they want international exposure, rather than unhedged ETFs?

There are several reasons:

1) Until recently, it was almost impossible for the average investor to do so. There simply were no ETFs that enabled an investor to hedge out currency. A professional could hedge, of course, but at considerable cost.

Now that more hedged ETF products are becoming available, investors are taking note. In fact, the biggest European ETF is now a hedged product, the WisdomTree International Hedged, which recently surpassed its biggest unhedged rival, the Vanguard European ETF.

2) There was not a huge demand for such a product because currency moves like we have seen in euro this year (down 5 percent against the dollar) are very rare. Oh sure, maybe if you were investing in Argentina, but not the euro, not the yen. Most years did not involve anywhere near such dramatic moves.

This year, for example, the yen has barely moved against the dollar, so the difference between a hedged Japan ETF and an unhedged Japan ETF is very small:

That was not the case last year, when there was an enormous move in the yen versus the dollar, and investors made the DXJ the hottest ETF in years.

For the entire article from CNBC’s Bob Pisani’s story “Why currency-hedged ETFs are hot”, click here.

ETF News, Global Macro Strategy

China ETF: One From Column A, One From Column B :$AFTY

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MarketsMuse ETF market update profiling the latest A-Shares initiative out of China is courtesy of extract from coverage by ETFTrends’ Todd Shriber..

Todd Shriber, ETFtrends.com

CSOP Asset Management is not a household name in the U.S., but the Hong Kong-based asset manager could change that with today’s launch of its first U.S-listed exchange traded fund, the CSOP FTSE China A50 ETF (NYSEArca: AFTY).

The CSOP FTSE China A50 ETF is first ETF to be listed independently in the U.S. by a Chinese asset management company. Previous versions of A-shares ETFs to list in the U.S. have been partnerships between a U.S.- or Europe-based ETF issuer and a China-based asset manager. Those partnerships are pivotal to ETF issuers being able to offer U.S. funds that feature physical access to China’s A-shares because a Renminbi Qualified Foreign Institutional Investor (RQFII) meets Chinese regulatory requirements to be a foreign owner of A-shares.

For the full story from ETFtrends.com, please click here

ETF News

California-based Lattice Jumps Into ETF Issuer Role with Three Fresh Products

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MarketsMuse update profiling Lattice Strategies roll-out of three new exchange-traded fund products is courtesy of extract from Zacks.com.. Here’s the snippet:

San Francisco-based investment management firm – Lattice Strategies – which believes that disciplined, intentional and systematic allocation of risks is the most influential contributor to long-term growth of capital, has recently forayed into the ETF world with three new products.

The products – Lattice U.S. Equity Strategy ETF (ROUS), Lattice Emerging Markets Strategy ETF (ROAM) and Lattice Developed Markets (ex-US) Strategy ETF (RODM) –charge 35 basis points, 65 basis points and 50 basis points respectively.

ROUS in Focus

ROUS tracks the investment results of the Lattice Risk-Optimized U.S. Equity Strategy Index to provide exposure to U.S. equities. The index seeks to improve returns by improving the factor-attributes of the portfolio along the dimensions of value, quality, and momentum. Also, the constituents of the index are risk-and factor-adjusted twice annually and also screened for liquidity.

Moreover, the index seeks to reduce concentration risk in large and mega cap stocks by diversifying well across individual stocks. This strategy ensures that none of the individual holdings have more than 1.5% exposure in the fund and the top ten holdings form just 10.47% of total fund assets. Currently, Best Buy, Kroger and Valero are the top three holdings in the fund.

Sector-wise, Financials dominates the fund with 19.3% allocations, closely followed by Technology, Consumer Discretionary, Healthcare and Industrials, each with double-digit exposure The fund is likely to face competition from a number of large-cap value ETFs. iShares Russell 1000 Value Index Fund (IWD) with an asset base of $26.3 billion and Vanguard Value ETF (VTV) with an asset base of $18.3 billion are some the popular products in the space.

To continue reading the story from Zacks.com, please click here

Fixed Income

Euro Bond Issuers and The Rate Race To Sub-Zero

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MarketsMuse.com fixed income coverage profiling below zero interest rates being offered on a growing assortment of freshly-minted European corporate bonds, as well as sovereign debt issues is courtesy of extract from WSJ story by Josie Cox, Ben Edwards and Anupreeta Das.

Investors snapped up a half-billion euros of French utility bonds that will pay them no interest, a groundbreaking deal that shows how corporations are rushing to take advantage of Europe’s efforts to keep interests rates low to try to revive the Continent’s economy. (Further reading: ECB gives start date for bond buying).

Next to tap the market may be Berkshire Hathaway Inc., which plans to raise around €3 billion, or $3.4 billion, in its first euro-denominated bond sale as soon as Thursday, according to a person familiar with the company.

The €500 million bond sale by GDF Suez SA came a day before the European Central Bank was scheduled to spell out details of how it will buy €60 billion a month in government and corporate bonds to fuel economic growth by pumping money in the region’s financial system.

In anticipation, investors have piled into European debt markets, pushing yields on some government bonds below zero. Yields fall as bond prices rise. The GDF Suez deal raises the prospect that companies may soon find investors willing to accept negative yields on bonds, essentially paying the borrowers to hold their debt.

With government bonds that trade at negative yields, investors are betting that further price gains will make up for the lost interest.

For the full story from the WSJ, please click here

 

Strike Price

Add One More Options Exchange To Your Menu-Its About Rebates, Silly!

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MarketsMuse options market update courtesy of extract from our friends at MarketsMedia LLC and their profile of yet another proposed options exchange with yet another “rebate” scheme intended to capture market share in the very competitive world of order routing.

International Securities Exchange will have its ISE Mercury exchange ready for trading by the end of the second quarter, though the launch remains subject to approval by the U.S. Securities and Exchange Commission.

New York-based ISE is the ‘s flagship ISE options exchange has market share of about 10.5%, 3rd-most of 12 U.S. options exchanges, while its Gemini exchange, launched in August 2013, has a 3.1% share, according to the OCC.

Gary Katz, ISE
Gary Katz, ISE

ISE has said Gemini is differentiated by offering transaction rebates to liquidity providers and prioritizing orders based on price, rather than prioritizing orders based on price and time. Mercury is expected to have its own differentiated market structure, though details have yet to be specified.

“We look at our exchanges as a group because they’re intended to work together,” said ISE Chief Executive Officer Gary Katz. “They address certain segments of the market, and offer pricing to attract different types of customers, whether they be professionals or priority customers. This strategy is working well in a super-competitive environment.

For the full story from MarketsMedia, please click here.

ETF News, People Profiles

What’s Next? Celeb Investment-Manager Licenses NextShares in Bid to Join Actively-Managed ETF Craze: Gabelli

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MarketsMuse update courtesy of below extract from Institutional Investor’s profile of Mario Gabelli and his investment vehicle GAMCO’s foray into the actively-managed ETF fracas.

InstitutionalInvestor (1)Now that exchange-traded funds are a better fit for active managers, Mario Gabelli is signing on. The seasoned investor — who eschews index funds — says he can’t afford to miss out on ETFs any more than he can ignore social media.

Gabelli, 72, remains a staunch advocate of actively managed funds. He’s a regular and outspoken commentator on raucous stock-picking shows like CNBC’s Halftime Report, on which he recently said he “took a dumb pill” by not buying Netflix stock at a fraction of its current price. (Shares in the Los Gatos, California–based online movie and TV streaming provider closed at $474.91 on February 27, up 39 percent since January 12.)

Although investors’ love affair with ETFs has so far been part of a bigger move to indexing strategies, active managers are thinking about how to leverage these products’ tax, cost and other advantages. Last year U.S. investors sent more money to passive funds than active ones for all equity categories, according to Chicago-based research firm Morningstar. In fact, active U.S. equity experienced outflows for ten months in 2014, even as its passive counterpart saw inflows for 11 months.

Gabelli, the founder, chairman and CEO of $47.5 billion, publicly traded GAMCO Investors, isn’t reinventing the ETF wheel to get into the business. His Rye, New York–based firm is licensing NextShares’ ETFs. Offered by Navigate Fund Solutions, a subsidiary of Boston-based Eaton Vance Management, the NextShares funds protect the confidentiality of portfolio information.

Traditional ETF portfolios are completely transparent to the market, not a concern for index trackers. But active managers don’t want to broadcast their unique securities picks on a daily basis, giving others a chance to profit from the information. For example, if traders know that GAMCO is building a position in a certain stock — say, Twentieth Century Fox Film Corp. — they can buy shares and drive up the price. “We do small-cap, nanocap, microcap investing,” Gabelli says. “We don’t want our portfolio exposed daily. It defeats what we do — to provide incremental valued-added.”

Part of Gabelli’s motivation for licensing NextShares is to make his active funds as low cost as possible. The tax efficiency of exchange-traded products is particularly appealing because traditional fund investors get treated unfairly, he says. When real estate investors sell a property and roll the proceeds into a new investment, they don’t pay tax. Fund investors pay tax on capital gains distributions even if they reinvest the money in the fund. But through so-called in-kind redemptions, ETFs can remove stocks that have significantly increased in value and could trigger large capital gains taxes.

“We have research,” Gabelli says. “While the rest of the world is going the other way, we’ll get an advantage. Now we have an outlet for that in a nontransparent ETF.”

For the full story from II, please click here

ETF News

Nuveen, Now Under TIAA-CREF Umbrella Takes On ETF Issuers..Again

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Nuveen, known as one of the exchange-traded-fund industry’s first pioneers is back, and now they’re loaded for bear with a fresh angle courtesy of parent company TIAA-CREF.

Courtesy of InvestmentNew.com, here’s the long and the short of the Nuveen’s reincarnation:

investmentnews.com logo Nuveen Investments Inc. is rebooting a campaign that may culminate in the firm offering its own ETFs for the first time, 15 years after it pioneered, then dropped, efforts to bring the first bond exchange-traded funds to market.

Nuveen’s about-face, disclosed last Friday in filings with securities regulators, comes as a stampede of adviser-facing asset management firms without ETFs rush to capitalize on the fast growth in that market, which now manages $2 trillion in the U.S.

But unlike some of its peers that are joining the stampede for the first time, Nuveen was an early pioneer of the structure. It first asked for permission to offer index-based ETFs in 2000, at the time developing proposals for what could have been the very first bond ETFs. Both areas now enjoy tremendous popularity, a boon to BlackRock Inc., the Vanguard Group Inc. and State Street Corp., among other firms.

But Nuveen shuttered its ETF unit in 2002, facing pressure to focus on businesses that could make more money, according to ETFs for the Long Run, a 2008 book on the industry’s history by Lawrence Carrel.

Greg Bottjer, a Nuveen executive who leads product development for the firm’s retail mutual funds, said the firm is exploring the possibility of adding to its product set, which includes mutual funds and some ETFs run in collaboration with State Street.

“The active ETF market is much further advanced,” Mr. Bottjer said. “There’s a lot more familiarity, comfort and exposure to active ETFs, and there are some large active asset management firms out there doing this. The momentum is really there today compared to where it was over 10 years ago.”

TIAA-CREFcompleted its acquisition of Chicago-based Nuveen in October, merging two companies with distinct cultures but a common goal to increase their sales among advisers. ETFs may be key to doing that as the investments have been a popular option deployed in accounts on which investors pay a fee to their adviser, in part because of their perceived cost advantages.

If the regulatory process matches that of previous applicants, it could take several months or longer for Nuveen to get an approval, and Nuveen is under no obligation to produce the funds once it gets the go-ahead. But an approval would give the firm an advantage over competitors who haven’t gone through the process.

There were 14 applications for new brands in the space last year, according to a database

No ETF issuer has been given permission yet to build actively managed ETFs that do not disclose underlying holdings regularly, but Eaton Vance Corp. recently won approval for a mutual fund-ETF hybrid called NextShares that would enjoy that ability.

To read the full article from InvestmentNews, please click here

ETF News, Fixed Income

Investors Use of Corporate Bond ETFs On The Rise

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MarketsMuse.com blog update courtesy of press release from Tabb Group and profiles new research report focused on institutional investors’ growing use of corporate bond ETFs.

NEW YORK & LONDON–(BUSINESS WIRE)–In new research examining accelerating growth in the corporate bond exchange-traded fund (ETF) market, which has seen assets under management (AuM) rise more than $90 billion from 2009 to 2014, a nine-fold increase in aggregate and an annual 42% compound growth rate, TABB Group says bond ETFs can help institutional investors manage investment flows, enhance returns and limit transaction costs in the current liquidity environment.

“This is a way to achieve market beta while the single-name search process carries on.”

Regulatory burdens of the Volcker Rule, Basel III and the Liquidity Coverage Ratio (LCR) have handicapped large banks and altered their secondary market-making businesses, forcing them to change the manner in which they provide liquidity to investors, wreaking havoc on the process of building and expanding portfolios. Institutional investors navigating this new landscape need to leverage every tool available, say Anthony Perrotta, a TABB principal, head of fixed income research and research analyst Colby Jenkins, co-authors of “Bond Market Entropy: Bringing Order to the Cash Bond Crisis,” which is why they have been embracing the corporate bond market.

“Bid/ask spreads for large bond ETFs are substantially more stable than their underlying cash bonds,” says Perrotta. They’re also being used as a means of exchanging credit risk during times of stress in the underlying market.”

According to Jenkins, “A 5-10% liquidity sleeve in corporate bond ETFs that tracks to a diversified portfolio of bonds is becoming a popular tool among asset managers to efficiently manage their investment flows.” In the past two years, he says, large single-name portfolio managers have begun utilizing ETFs as a means to smooth out their exposure during redemption periods. Alternatively, they are using ETFs to gain interim exposure to the market when receiving an investment inflow from a client such as a pension fund, insurance company or other long-term oriented investor. Instead of waiting some elongated period of time to find the appropriate cash bonds, they turn to ETF shares that correspond to their core portfolio. “This is a way to achieve market beta while the single-name search process carries on.”

Although 60% of the corporate bond notional trading activity in the second half of 2014 took place in just 8% of the CUSIPs traded, there are more than 260 bond ETFs available to investors today, up from 62 in 2008, a 326% increase. And despite regulatory approval and entrenched pre-ETF investment mandates being the two greatest barriers currently to institutional corporate bond ETF adoption, “a larger pool of National Association of Insurance Commissioners (NAIC) credit-rated bond ETFs that have unique economic advantages over non-rated bond ETFs, such as more lenient risk-based capital requirements, will be a key stepping stone to the next threshold of institutional adoption,” Perrotta says.

Continue reading →

ETF News, Fixed Income

New Rules: SEC Set to Level Playing Field for ETF Issuers

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Are you beginning to wonder why there is an avalanche of news stories profiling corporate bond ETFs? As we’ve posted here at MarketsMuse.com, one good reason might be rising concerns that when interest rates tick up and bond prices tick down, there could be a rush to the exits on the part of investment managers seeking to sell their corporate bond ETFs (or looking to sell select ETFs so as to hedge portfolio exposure in underlying issues held by these managers). Reuters’ Jessica Toonkel and Ashley Lau touch on that topic in recent story profiling a plan on the part of the SEC to “level the playing field” for newer firms entering the ETF Issuer club.

Here’s the extract:

By Jessica Toonkel and Ashley Lau

Reuters – The U.S. Securities and Exchange Commission may strip Vanguard Group, BlackRock Inc and State Street Corp, the oldest and biggest providers of exchange-traded funds, of an advantage they hold over newer rivals in how they assemble the shares of their funds, said sources familiar with the SEC.

etf-issuer-sec-level-playing-fieldsBut BlackRock, Vanguard and a few others, who were among the first to apply with the SEC to create ETFs, are allowed greater leeway: if they need a difficult-to-find security to create shares of their funds, they are permitted to use a similar security – not necessarily the same one – in the fund. This greater flexibility makes it easier and cheaper to run the older funds, and harder for newer entrants into the market such as Northern Trust, Van Eck Global and Charles Schwab Corp to compete.

The agency’s tentative plan – still in its early stages – would affect how companies manage their portfolios in illiquid markets, such as bonds. It may result in allowing the likes of Schwab to compete better with their older rivals, as well as manage their existing bond products at a lower cost.

The agency’s tentative plan – still in its early stages – would affect how companies manage their portfolios in illiquid markets, such as bonds. It may result in allowing the likes of Schwab to compete better with their older rivals, as well as manage their existing bond products at a lower cost.

For the full story from Reuters’ Jessica Toonkel and Ashley Lau, please click here

ETF News

Leveraged ETFs Chapter 12: Levered and Lightly Levered: Which Direxion To Choose?

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MarketsMuse update courtesy of extract from Olly Ludwig’s ETF.com profile of Direxion Shares’ latest levered product. Continuing in the direction of embracing RIAs, Direxion is hoping the latest incarnation will further innovate and provide investment advisors with a new tool. Here’s the opening from ETF.com’s profile….

ETF_OllyLudwig100x100
Olly Ludwig, ETF.com

Just when you thought that the leveraged ETF niche has been carved out and accounted for, New York-based Direxion Shares has come out with what it calls “lightly levered” ETFs that have 1.25X exposure.

To hear Direxion President Brian Jacobs speak to this new ripple in the world of leveraged ETFs, the company aims to give investors a more easily managed investment tool than the 2X and 3X ETFs that have ruled the leveraged roost so far. But, no less, Jacobs told ETF.com that Direxion is looking to reinvent the leveraged ETF for an advisory channel increasingly focused on asset allocation in portfolio construction.

For the full story from ETF.com, please click here

 

ETF News, Fixed Income, People Profiles

Bond Guru Gundlach Launches Actively-Traded Bond ETF

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MarketsMuse update profiling the debut of bond guru and DoubleLine Capital’s founder Jeff Gundlach’s first foray into the ETF space is courtesy of ETF.com.The SPDR DoubleLine Total Return Tactical ETF (TOTL) is launching today (Tuesday, Feb. 24).

The $TOTL exchange-traded fund invests in just about every type of debt security, including investment-grade and junk debt—both sovereign and corporate—from issuers around the globe. The portfolio management team is led by none other than Gundlach himself, and will be advised by State Street, according to the prospectus. TOTL costs a net of 55 basis points in expense ratio, or $55 per $10,000 invested.

Gundlach, founder of Los Angeles-based DoubleLine Capital, is one of the most well-known fixed-income investors in the market today, but until now an absent presence in the quickly growing ETF market.

Partnership With SSgA

Last summer, he joined forces with State Street Global Advisors to bring to market an actively managed bond ETF that would go head-to-head with the Pimco Total Return ETF (BOND | B), which at the time was still managed by Bill Gross. Gross has since left Pimco to join Janus.

Replicating BOND’s success will be no small feat, considering that BOND gathered its first $1 billion in assets in less than three months after launch, and grew to become one of the biggest active bond ETFs in the market. BOND’s success was part Gross himself, part a solid track record of outperformance. TOTL has a powerhouse name behind it, but performance only time will tell.  Continue reading →

Fixed Income, Global Macro Strategy

And The Winner of “World’s Fastest Growing Asset Class” Is…

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Below is courtesy of Feb 23 commentary from “Quigley’s Corner”, aka debt capital market observations from Mischler Financial Group’s Head of Fixed Income Syndicate, Ron Quigley. Mischler Financial Group is also an award winner; a panel of industry judges assembled by financial industry publication Wall Street Letter voted to award the firm “WSL 2015 Award for Best Research/BrokerDealer.”

The Big Four Central Banks as the World’s Fastest Growing Asset Class

Ron Quigley, Mischler Financial Group
Ron Quigley, Mischler Financial Group

I had a wonderful conversation over dinner this weekend with a highly intellectual and personable Russian player in our markets.  We discussed Greece and the additional overtime round of “kick-the-can” that postpones pain by four more months.  But what seemed even more compelling was the notion of the Big Four Central Banks as the world’s fastest growing “asset class.”  (The Fed, the ECB, BOJ and PBoC).  Deutsche Bank illustrated in a recent research piece, the staggering numbers of Big Four Central Bank purchases.  The Central Banks have clearly become an asset class all its own.  It’s right up there the with cumulative total of U.S. pension funds!  Digest that for a second readers!  As my friend wrote to me: Continue reading →

Global Macro Strategy, Strike Price

A Safer Options Bet For Arbing $AAPL and $GOOG : Think “Dividend Strategy”

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MarketsMuse update profiling a very intriguing options strategy for professional traders is courtesy of a.m. edition of “Sight Beyond Sight” , the global macro strategy-centric publication from Rareview Macro LLC. The MM editors include former option market-makers and we’re reasonably confident that the following idea has not yet been considered by those who pride themselves on innovative, yet low risk option strategies. Caveat: for professionals only.

Neil Azous, Rareview Macro
Neil Azous, Rareview Macro

New Idiosyncratic Situation in Apple & Google…Avoiding the Mainstream Noise

There is no overnight recap today. Instead, we are going to present an equity idea on Apple Inc. (symbol: AAPL) and Google Inc. (symbol: GOOG).

If a discretionary money manager looks at their portfolio construction through the lens of “return streams” one such bucket would be called “idiosyncratic”. It is debatable what type of investment qualifies as “idiosyncratic” but we would argue “option conversion arbitrage” falls into this category nicely.

Option conversion arbitrage does not typically find its way into books about options trading. That is not surprising, given that the term alone would prompt most eyes to glaze over. With a little extra effort, however, this stock and options combination strategy should not be too difficult to fully understand.

Furthermore, demystifying conversion arbitrage does not require an advanced degree in finance or being a veteran market maker. All it will require is a basic understanding of put and call options (both buying and selling), familiarity with stock buying/shorting and knowledge of the stock dividend process. Conversions incorporate these elements, and a few others, in their cost and profitability structures and in the dimension of risk assessment, so you should brush up on them before getting started. Continue reading →

Strike Price, Tech Talk

Options Market-Makers Migrate to Miami: Trading Firms Increase Stake in MIAX Options Mart

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MarketsMuse options market coverage of MIAX, the latest entrant to the continuously fragmented world of securities exchanges is courtesy of Traders Magazine

Options industry market makers, Citadel Securities LLC, KCG Americas LLC, Morgan Stanley & Co. LLC, Optiver US LLC, Susquehanna Securities, Timber Hill LLC, and Wolverine Trading, LLC have closed an equity rights transaction between themselves and MIAX. This is the second equity rights transaction MIAX has completed.

The structure of the new second transaction provides the MIAX members with the right to invest in the MIAX’s parent holding company Miami International Holdings, Inc. (MIH) in exchange for payment of an initial purchase price or the prepayment of certain transaction fees and the achievement of certain liquidity volume thresholds on the Exchange.

“The launch of this equity rights program is another major milestone for MIAX,” said Thomas Gallagher, MIAX’s chairman and chief executive. “Following the success of our first equity rights program, we wanted to again provide MIAX Exchange Member firms with the ability to acquire an equity interest in MIH through a unique transaction.”

Five of the firms, KCG Americas LLC, Morgan Stanley & Co. LLC, Susquehanna Securities, Timber Hill LLC, and Wolverine Trading all were part of the exchange’s first equity rights program.

Coverage of this story is credited to Traders Magazine and John D’Antona

ETF News, Global Macro Strategy

Currency-Hedged ETFs In Demand by Global Macro-Focused Traders

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MarketsMuse update courtesy of reporting by Reuters’ Gertrude Chavez-Dreyfuss and Ashley Lau

NEW YORK (Reuters) – U.S. investors spooked by wild swings in the foreign exchange market are piling into exchange-traded funds that strip out the local currency on their international equity portfolios, making them one of the most sought-after financial products in 2015.

With the dollar having rallied more than 19 percent since the beginning of 2014, investors are seeing gains in overseas stock markets eaten up by losses against the greenback.

“People are voting with their feet,” said Luciano Siracusano, chief investment strategist for WisdomTree Investments in New York. “They’re putting billions of dollars into these funds, and what they’re saying is, ‘We don’t want to be 100 percent unhedged.’”

Some say there aren’t enough of these products for investors looking for international exposure. These ETFs have about $31.5 billion in assets, up nearly five-fold from 2011. But assets in international equity ETFs exceed $275 billion, according to WisdomTree.

“There are 40 countries with stock markets deep enough to have a currency-hedged product,” said David Kotok, chairman and chief investment officer of Cumberland Advisors in Sarasota, Florida, which oversees $2 billion, and whose firm’s equity investments are solely through ETFs. Continue reading →

Fixed Income, Global Macro Strategy

Fixed Income Guru Says This About Interest Rate Outlook-

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ron quigley
Ron Quigley, Mischler Financial Group

MarketsMuse fixed income fix for Feb 5 is courtesy of Industry Veteran and debt capital markets guru Ron Quigley, Managing Director and Head of Fixed Income Syndicate for Mischler Financial Group, the sell-side’s first and foremost investment bank/institutional brokerage boutique that is owned and operated by service-disabled veterans.  Mr. Quigley is also the author of “Quigley’s Corner”, a daily debt capital market commentary distributed to 1000+ Fortune treasurers, investment managers and public plan sponsors.  Mischler Financial Group is the winner of the 5th Annual Wall Street Letter Award for “Best Broker-Dealer/Research”

The Guy-in-the-Corner’s Take on Interest Rates (Feb 4 Quigley’s Corner)

So, I was asked by a Senior Managing Editor of an anonymous multi-billion dollar global financial news operation for my thoughts on interest rates. When I began my response to him, it just seemed to continue as there are so many factors that influence that discussion. My response turned out to be a feature unto itself so without further ado, I thought I’d feature it in today’s “QC.”

As concerns your question about how recent jumbo deals (think “Apple”) have raised speculation of interest rates rising, there is a POV out there claiming issuers are quick to print in anticipation of higher rate action. I, however, lean the other way…….FAR the other way and here’s why:

I have always been a proponent of “lower-for-longer”. Yellen added language in her last minutes flagging the EU as a potential impact on keeping U.S. rates lower. In the prior minutes, she didn’t mention the EU at all (which I thought was egregious not to at least mention the worst and most impactful economic story on our planet).

o On any given day a slew of news would be headliners in their own right. Aside from MENA unrest and the dramatic ISIS killings and impact in the world’s most sensitive hotbed – MENA – there are myriad factors that can all impact our rate environment:

o The Swiss National Bank’s action to remove its cap with the euro is a red flag or bad sign to the markets. It means the Swiss (unknown for surprises and bastions of stability) do not like what they see in on the horizon for for the EU. Did someone say “currency wars?” Remember history and NEVER forget it. We are dealing with severe currency volatility between the USD, EURO, YEN et al. These are reminders of the economic dislocation circa the 1930s……and we know what that led to. Continue reading →