The NYSE Euronext has received approval from the SEC to launch an incentive programme aimed at market makers in exchange-traded products (ETPs). It has been devised to enhance liquidity and reduce trading costs, and is expected to launch in the second half of the year. The programme offers an alternative for incentivising lead market makers (LMM) to be the primary market maker in certain ETPs selected by issuers.
ETF and Index News
The European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) have published a series of principles for improving the calculation of key benchmark indices. The principles, which relate to index users, administrators, calculation agents, publishers and data submitters, address problems identified with benchmark-setting processes and are intended to instil market confidence and guarantee benchmark accuracy and integrity. However, while the principles have broadly been accepted by industry participants, some feel they fall short in key areas.
For providers of exchange-traded products (ETPs), 2013 is fast becoming a vintage year. Year-to-date net inflows reached a record $107 billion through the end of May 2013, a whopping 31% higher than the $82 billion seen during the same period last year, according to data from ETFGI. When added to the existing ETP pile, total assets under management in the industry now stand at an all-time high of $2.14 trillion across some 4,849 products from more than 200 providers.
MSCI, the world’s second largest provider of indices to exchange-traded funds (ETFs), has launched two new environmental, social and governance (ESG) indices – the MSCI Emerging Markets ESG Index and the MSCI ACWI ESG Index. The new indices, which have been designed to act as benchmarks for actively managed funds or underlyings for index-linked products such as exchange-traded funds (ETFs), reflect an increased emphasis among investors to incorporate ESG practices into investments.
BlackRock, the firm behind iShares, the world’s largest provider of exchange-traded funds (ETFs), and Euroclear, a leading provider of post-trade services, have unveiled plans to revolutionise ETF trade processing and settlement across Europe. At present, all cross-exchange listed ETFs in Europe settle in the national central securities depository of the exchange where the trade is executed, often causing inefficiencies when ETFs are traded across borders. BlackRock and Euroclear are looking to circumvent the current arrangement by piloting an ETF with an international security structure.
MSCI, one of the world’s largest providers of indices to exchange-traded funds (ETFs), has introduced the MSCI China A High Dividend Yield (HDY) Index, a new index measuring the performance of high yielding China A-shares. The new index includes stocks with a track record of sustainable and consistent dividend payouts and dividend growth, and is designed to serve as a benchmark for investors targeting the high-dividend yielding domestic China opportunity set or as the basis for index-linked financial products such as ETFs.
RobecoSAM, a sustainable investment specialist, and S&P Dow Jones Indices, one of the world’s leading index providers, have announced the launch of the Dow Jones Sustainability Diversified Indices Family. The indices’ diversified approach selects the most sustainable companies from the global or regional S&P BMI universe while ensuring that the resulting index has minimal country, sector or size biases relative to its reference S&P BMI benchmark.
Markit, a London-headquartered provider of financial data, analytics and indices, has announced the launch of Markit ETP Analytics, an independent analytics service for the global exchange-traded products (ETP) market. The service is built on the foundation of Markit’s encyclopaedia and composition data, which spans over 5,100 unique ETPs.
VTL Associates, the parent company of RevenueShares, a US-based sponsor of exchange-traded funds (ETFs), has received an injection of capital from Suzhou Industrial Park Kaida Venture Capital, a Chinese venture capital firm. The investment will be used to support the expansion of RevenueShares, which is known for its line-up of revenue-weighted ETFs. In addition to new products, RevenueShares will expand its staff and marketing efforts for the firm’s six existing ETF products.
By David Stevenson – The sector’s enthusiasm for acronyms has actually tipped over into hubris as it tries to explain why the term ETP is the best catch-all descriptor as opposed to index trackers, ETFs, ETCs, ETNs or any other combination involving the letters E.T. The problem is that very few people in the wider world of normal sentient human beings actually care! Worse still, they find the whole debate completely confusing and counterproductive. I’ve had countless conversations with IFAs who have given up on these products because they can’t quite understand the difference.