FiNETIK – Asia and Latin America – Market News Network

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LEI (Legal Entity Identifier) set to arrive in waves

A new system giving financial institutions standardized Legal Entity Identifiers (LEIs) will start to be phased in next year after an international organization finalizes new standards in January 2012.

LEI requirements for a Global Legal Entity Identifier (LEI) Solution May 2011
LEI industry progress and  recommendation July 2011

The Geneva-based International Organization for Standardization (ISO) is expected to approve a plan for LEIs at the beginning of next year, calling for them to consist of 20 alphanumeric characters. After that happens, the infrastructure is already in place to start issuing the IDs early in 2012, according to officials with the Securities Industry and Financial Markets Association.

“Assuming the standard is approved by early January, our expectations are that legal entities will be able to register in short order for an LEI,” said Tom Price, managing director and head of SIFMA’s technology, operations and business continuity planning group.

During the financial crisis, both regulators and institutions realized they did not have the information available to quickly address issues of counterparty risk. LEIs aim to change that by using a universal code that would allow counterparties to be easily identified.

The United States has provided much of the leadership behind the push for LEIs, but the concept enjoys broad support around the globe. The registering authority for LEIs will not come from any government, but rather from the Society for Worldwide Interbank Financial Telecommunications (SWIFT).

After the ISO finalizes the standard, the next step will be rule writing, which is already underway at the Commodity Futures Trading Commission with respect to swaps. Price said LEIs will be used first for swaps participants and then gradually adopted for transactions involving other types of assets until they are required for all trades.

David Strongin, who is also a managing director at SIFMA, said the U.S. will be the first country to require LEIs, but Hong Kong and Canada will likely follow fairly quickly. The European Union has committed to adopting LEIs as well, though it is unclear whether Europe will adopt the system all at once or phase it in country by country.

Strongin stressed, however, that there is a global consensus to move forward, even if not every nation and region mandates LEIs at the same time.

“The G20, both the finance ministers and leaders, have all endorsed this,” Strongin said. “From a very high level, you don’t see disagreement that an LEI is needed. I think everyone agrees that it’s an important tool to build the foundation for risk management.”

Strongin said that while many traders might not see it right now, most firms are currently working hard to prepare for LEIs. Eventually, however, the changes will touch every facet of the industry. “There’s a lot of work going on, though there’s only so much you can do until you see the final rules,” Price added.

Source: Traders Magazine, 18.11.2011

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Filed under: Data Management, Reference Data, Risk Management, Standards, , , , , , , , , , , , ,

ETF Industry Highlights – April 2011 – BlackRock

Global ETF and ETP industry:

Record April net inflows with US$25.3 Bn.

Record YTD net inflows in the first four months with US$67.2 Bn through the end of April 2011.

The global ETF industry had 2,670 ETFs with 6,021 listings and assets of US$1,469.8 Bn, from 140 providers on 48 exchanges around the world at the end of April 2011. This compares to 2,189 ETFs with 4,354 listings and assets of US$1,113.1 Bn from 122 providers on 42 exchanges, at the end of April 2010.

The global ETF and ETP industry combined, had 3,819 products with 7,893 listings, assets of US$1,670.9 Bn from 176 providers on 52 exchanges around the world. This compares to 2,967 products with 5,453 listings, assets of US$1,295.1 Bn from 150 providers on 44 exchanges, at the end of April 2010.

United States ETF and ETP industry:

Record April net inflows with US$22.4 Bn.
Record YTD net inflows in the first four months with US$51.5 Bn through the end of April 2011.
The ETF industry in the United States had 972 ETFs and assets of US$997.3 Bn, from 29 providers on two exchanges at the end of April 2011. This compares to 839 ETFs and assets of US$764.0 Bn, from 28 providers on two exchanges at the end of April 2010.
US$22.4 Bn of net new assets went into United States listed ETFs/ETPs in April 2011. US$16.7 Bn net inflows went into equity ETFs/ETPs, of which US$9.8 Bn went into ETFs/ETPs tracking US equity indices and US$3.5 Bn went into ETFs/ETPs tracking emerging markets equity indices. Fixed income ETFs/ETPs saw net inflows of US$2.9 Bn, of which US$0.7 Bn went into corporate bond ETFs/ETPs and US$0.6 Bn went into Government bond ETFs/ETPs. Commodity ETFs/ETPs saw net inflows of US$1.8 Bn, of which US$2.4 Bn went into ETFs/ETPs providing exposure to precious metals, while ETFs/ETPs providing exposure to energy experienced US$0.9 Bn net outflows in April 2011.
Of the US$45.5 Bn of net new assets in United States listed ETFs in April 2011, Vanguard gathered the largest net inflows with US$13.2 Bn, followed by iShares with US$12.7 Bn net inflows, while Bank of New York had the largest net outflows with US$1.4 Bn in 2011 YTD.

European ETF and ETP industry:

The European ETF industry had 1,128 ETFs with 3,952 listings and assets of US$328.2 Bn, from 39 providers on 23 exchanges at the end of April 2011. This compares to 932 ETFs with 2,748 listings and assets of US$234.3 Bn from 36 providers on 18 exchanges, at the end of April 2010.
US$3.6 Bn of net new assets went into European listed ETFs/ETPs in April 2011. US$2.8 Bn net inflows went into equity ETFs/ETPs, of which US$1.6 Bn went into ETFs/ETPs providing emerging markets exposure while ETFs/ETPs providing broad European exposure saw net outflows of US$1.2 Bn. Fixed income ETFs/ETPs saw net outflows of US$0.4 Bn, of which money market ETFs/ETPs experienced US$0.3 Bn net outflows while high yield ETFs/ETPs saw net inflows of US$0.2 Bn. US$1.1 Bn net inflows went into commodity ETFs/ETPs, of which US$0.5 Bn went into ETFs/ETPs providing exposure to precious metals and US$0.4 Bn went into ETFs/ETPs providing broad commodity exposure.
Of the US$2.8 Bn of net new assets in European listed ETFs in April 2011, Source Markets gathered the largest net inflows with US$0.9 Bn, followed by db x-trackers with US$0.6 Bn net inflows, while iShares and Lyxor Asset Management had the largest net outflows with US$0.2 Bn.


Asia Pacific (ex-Japan) ETF industry:

The Asia Pacific (ex-Japan) ETF industry had 250 ETFs with 362 listings and assets of US$58.6 Bn, from 63 providers on 13 exchanges at the end of April 2011. This compares to 168 ETFs with 267 listings and assets of US$44.4 Bn, from 53 providers on 13 exchanges, at the end of April 2010.


Japan ETF industry:

The Japanese ETF industry had 84 ETFs with 88 listings and assets of US$29.4 Bn, from seven providers on three exchanges at the end of April 2011. This compares to 70 ETFs with 73 listings and assets of US$26.3 Bn from six providers on two exchanges, at the end of April 2010. There are 178 ETFs which have filed notifications in Japan.


Latin America ETF industry:

The Latin American ETF industry had 27 ETFs, with 407 listings and assets of US$10.4 Bn, from four providers on three exchanges at the end of April 2011. This compares to 21 ETFs, with 243 listings and assets of US$9.1 Bn from three providers on three exchanges, at the end of April 2010.


Canada ETF industry:

The Canadian ETF industry had 180 ETFs and assets of US$43.1 Bn, from four providers on one exchange at the end of April 2011. This compares to 134 ETFs and assets of US$33.0 Bn from four providers on one exchange, at the end of April 2010.

Source: BlackRock, Carral, May 2011

Filed under: Asia, Latin America, News, , , , , , , , , , ,

Mexico: safer than Canada ? safer than Brazil!

K, so the headline is a bit of a fib. But a report on Mexico’s security situation has painted a more detailed picture than the one we hear about in the news most of the time. When I told friends I was moving to Mexico City, some asked if I would be provided with a bodyguard (no). Business travellers are thinking twice about coming, according to chambers of commerce here. But a detailed breakdown of violence released this week shows that, if you pick your state, you’re as safe—or safer—than in any other North American country.

Mexico’s overall homicide rate is 14 per 100,000 inhabitants: fearsomely high (and possibly an underestimate, given the drugs cartels’ habit of hiding bodies in old mines), but quite a lot lower than its great Latin rival Brazil, whose rate is more like 25. As the chart below shows, Mexico’s death rate is bumped up by extraordinarily high levels of violence in four states: Chihuahua (home of Ciudad Juárez, widely labelled the world’s most murderous city), Durango, Sinaloa and Guerrero (see p.29 of this document). Of the rest, some are blissfully serene: Yucatán, where tourists flock to swim with whale sharks and clamber over Chichen Itzá, has a murder rate of 1.7—slightly lower than Canada’s average of 2.1.

Read full article in the Economist

Before I am buried an avalanche of polite Canadian emails, I should acknowledge that comparing an entire country with one quiet state is hardly fair: there are no doubt parts of Canada where no-one has been so much as kicked in the shin for decades. But Mexico’s predicament is worth highlighting, because the extreme violence around its border with the United States colours people’s view of the rest of the country, though much of it is pretty quiet. A third of Mexico’s states hover around 5 murders per 100,000, about the same rate as the United States. Another third are around 8 per 100,000, similar to Thailand, for instance. A handful of states have rates in the teens—like Russia, say—and a couple are in the low twenties, a little lower than Brazil’s average. Then you have the chaos of the four very violent states, which sends the average soaring.

The carnage in Mexico’s badlands is not to be underestimated, and nor does it seem to be getting any better. Business travellers should certainly watch out in places such as Juárez and, these days, even in cities such as Monterrey. But people doing business south of the Rio Grande should remember that, even on average, Mexico is a less murderous country than places such as Brazil, and that once you avoid the hotspots, it’s downright safe.

Source: The Economist, 27.08.2010

Filed under: Brazil, Latin America, Mexico, News, Thailand, , , , , , , , ,