Sunday 21st December 2014
NEWS TICKER: FRIDAY DECEMBER 19TH 2014: Scotiabank’s Commodity Price Index dropped -4.8% m/m in November (-6.1% yr/yr) and will end 2014 in a ‘deflationary’ mode, says economist Patricia Mohr. "Significant capacity expansion and the defence of market share by major oil and iron ore producers— against a backdrop of lacklustre world economic growth — account for the softness at the end of the year," she says. Mohr adds that the decision by Saudi Arabia not to reduce output to shore up international oil prices, but instead to allow prices to drop to levels curbing US shale development appears to be having a negative impact on confidence in a wide variety of other commodity as well as equity markets. She predicts prices will fall further this month, but will start to rebound in mid 201 - Jonathan Hill, the EU's financial-services commissioner, says he plans to pursue rules that separate a bank's proprietary trading from retail operations. "The sensible thing to do is to seek to make progress quickly" on the issue, Hill said. "There are still areas of risk in some of the biggest and most complicated banks,” reports Bloomberg- CME Group, said yesterday that it will change daily price limits in its CME Feeder Cattle futures effective today, pursuant to its emergency action authority. The current daily price limit for CME Feeder Cattle futures is $3.00 per hundredweight and will change to $4.50 per hundredweight effective on trade date December 18th Additionally, effective December 19th (tomorrow) these limits will have the ability to expand by 150% to $6.75 per hundredweight on any business day in the event that one of the first two contract months settles at limit on the previous trading day. CME Feeder Cattle futures have been locked limit for five consecutive days as a result of various factors. The change to daily price limits is necessary to ensure continued price discovery and risk transfer, says the CME. Daily price limits for CME Live Cattle futures will remain unchanged at $3.00 per hundredweight. Effective Friday, December 19th, these limits will have the ability to expand by 150 percent to $4.50 per hundredweight in the event that one of the first two contract months settles at limit on the previous trading day - The Straits Times Index (STI) ended +16.42 points higher or +0.51% to 3243.65, taking the year-to-date performance to +2.49%. The FTSE ST Mid Cap Index gained +0.29% while the FTSE ST Small Cap Index gained +0.71%. The top active stocks were Keppel Corp (+2.68%), SingTel (-1.02%), DBS (+2.36%), Global Logistic (-3.21%) and UOB (+0.30%). The outperforming sectors today were represented by the FTSE ST Basic Materials Index (+3.13%). The two biggest stocks of the FTSE ST Basic Materials Index are Midas Holdings (+6.38%) and Geo Energy Resources (unchanged). The underperforming sector was the FTSE ST Telecommunications Index, which declined -0.98% with SingTel’s share price declining -1.02% and StarHub’s share price declining-0.73%. The three most active Exchange Traded Funds (ETFs) by value today were the IS MSCI India (+2.56%), DBXT CSI300 ETF (+0.42%), STI ETF (+0.61%). The three most active Real Estate Investment Trusts (REITs) by value were Ascendas REIT (-0.42%), Keppel DC REIT (unchanged), Suntec REIT (+0.26%). The most active index warrants by value today were HSI23400MBeCW150129 (+7.32%), HSI22600MBePW150129 (unchanged), HSI24000MBeCW150129 (+12.50%). The most active stock warrants by value today were KepCorp MBeCW150602 (+21.95%), DBS MB eCW150420 (+29.29%), DBS MB ePW150402 (-18.03%) - Spain’s Director of Public Prosecutions, Eduardo Torres Dulce, has resigned from the post for “personal reasons”, Spanish daily El Mundo reported this morning. A spokesman for the Public Prosecutor’s office confirmed the news by telephone to The Spain Report, saying that Mr. Torres Dulce had informed Justice Minister Rafael Catalá of his decision: “but that it perhaps would not come into effect until they find a replacement”. That decision is taken at cabinet level. The next cabinet meeting for Rajoy’s government is tomorrow morning - Hedge funds including Marshall Wace, Odey Asset Management and Lansdowne Partners are shorting OTP Bank Plc, a Hungarian lender with a Russian subsidiary whose shares have fallen almost 6% this month reports Albourne Village. All three London-based funds took or increased their position this month in OTP, Hungary’s largest lender, according to data compiled by Bloomberg. The ruble rose today in Moscow after plunging as much as 19%against the dollar yesterday, when Russia’s central bank increased interest rates to 17% percent from 10.5 percent in an attempt to stem the decline. The ruble is down 52% this year and has taken a disproportionate beating in the wake of sanctions and falling oil prices. The country still has the third largest currency reserves in the world and so is unlikely to default. According to Eric Chaney, Manolis Davradakis and Greg Venizelos from AXA IM’s Research and Investment Strategy team Russia will likely resort to fiscal stimulus to contain the risk of social and political unrest. Capital controls, political unrest and even default on private hard currency debts are possible outcomes they say. They credit default swaps market is pricing a one-third probability of sovereign default within five years - Indonesia is ramping up financing for its $439bn development program, planning an almost fivefold increase in sales of project sukuk. The government is seeking to raise IDR7.14trn rupiah (around $568m) from notes that will fund particular construction ventures next year, compared with IDR1.5trn this year, which say local press reports, will help finance its estimated spending of about IDR5,519trn from 2015 to 2019 to build roads, railways and power plants.

Hedge Fund Association asks SEC for clearer rules on vetting investors; supports hedge fund advertising in comment letter

Wednesday, 06 June 2012
Hedge Fund Association asks SEC for clearer rules on vetting investors; supports hedge fund advertising in comment letter The Hedge Fund Association (HFA), an international organisation that represents hedge funds, service providers and investors, says liberalised advertising and solicitations rules contained in the new Jumpstart Our Business Startups (JOBS) Act could help hedge funds raise assets and “encourage emerging managers to continue to enter the industry.”  The HFA has also asked the SEC for clearer rules to verify that potential investors are indeed accredited as a way to “add further stability to the industry.” http://www.ftseglobalmarkets.com/

The Hedge Fund Association (HFA), an international organisation that represents hedge funds, service providers and investors, says liberalised advertising and solicitations rules contained in the new Jumpstart Our Business Startups (JOBS) Act could help hedge funds raise assets and “encourage emerging managers to continue to enter the industry.”  The HFA has also asked the SEC for clearer rules to verify that potential investors are indeed accredited as a way to “add further stability to the industry.”

The HFA’s position is outlined in a comment letter submitted to the Securities and Exchange Commission on June 6th.  The SEC is soliciting comments before implementing regulations, scheduled to be published July 5th this year, which are expected to allow hedge fund management companies to communicate directly with potential investors for the first time in their history. Hedge funds would still be restricted to selling their securities to accredited investors such as individuals with a minimum $1m net worth and qualified institutional investors.

Hedge funds have been banned from soliciting or advertising their private offerings to the general public in exchange for being exempt from having to register their interests or shares with the SEC under Rule 506 of Regulation D. The lack of a clear definition of a solicitation has created confusion about what hedge fund managers can disclose in their marketing materials, at conferences or in the media.



Richard Heller, chairman of the HFA’s Regulatory and Government Advisory Board and author of the letter on behalf of the HFA, says the JOBS Act provision lifting the advertising ban does not weaken existing anti-fraud provisions forbidding people from using false or misleading statements to induce investors to invest in hedge funds. If anything, he wrote, “providing rules to strengthen a manager's decision to accept a subscriber's investment by following the rules to be drafted by the SEC that will for the first time provide a road map for managers to rely upon will, we believe, add further levels of compliance that the Dodd-Frank Act initiated.” 

The HFA’s comment letter comes two months after the historic signing of the JOBS Act, which the association praised at the time as being a boon to emerging hedge fund managers.  The HFA’s comment letter, says the association’s President, Mitch Ackles, ensures that regulators are able to consider the views of the whole industry, including its service providers, investors and those smaller managers which represent a majority of hedge fund firms.

“In addition to promoting a better understanding of and education about hedge funds, our association’s mission is to give a voice to the concerns of industry participants who may not otherwise have been heard,” says Ackles.  “That’s why we include all of our members in developing policy initiatives,” he adds.

A transcript of the letter, addressed to Elizabeth M Murphy at the SEC is provided below:


The HFA believes that amending the rules that relate to capital formation is fundamental to the continued growth of the hedge fund industry and that allowing general solicitations to further that outcome will encourage emerging managers to continue to enter the industry. Further, providing rules to strengthen a manager's decision to accept a subscriber's investment by following the rules to be drafted by the SEC that will, for the first time, provide a road map for Managers to rely upon will, we believe, add further levels of compliance that the Dodd-Frank Act initiated. While Managers have had subscription agreements in place (and internal policies to provide checks and balances for the manager), having rules in place to verify that potential investors are indeed accredited will add further stability to the industry.

The HFA recognises that the SEC may be concerned that opening the door to general solicitation may, to some degree, open the door to people who wish to perpetrate fraud in connection with false or misleading statements to induce investors to invest in hedge funds. We would remind the SEC that the JOBS Act in no way limits Section 10b-5 promulgated under Section 10 of the Exchange Act, nor does it limit Section 17(a)0 of the Securities Act. All of the state securities or "Blue Sky" rules relating to fraud remain unaffected by the JOBS Act and hedge fund managers continue to be subject to the anti-fraud provisions of the Investment Advisers Act.

Lastly, we note and support the changes to Section 3(c)(7) and would hope that the SEC will amend the language of the Investment Company Act as being available only to offerings not involving a public offering to be consistent with the JOBS Act.

The letter is signed by Mitch Ackles, president of the Hedge Fund Association and
Richard Heller,  chairman, Regulatory & Government Advisory Board, at the Hedge Fund Association.

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