New Regulations Spark Investor Interest in Europe

New Regulations Spark Investor Interest in Europe

Over the past four months, the BHA analyst team has seen an increase in the number of mandates for funds of hedge funds, especially from European investors. The analysts have also noted a change in these investors’ liquidity requirements: it seems they have become more comfortable with having their money locked up for a longer period of time.

The increasing interest in funds of funds can be traced to a change in European investment regulations. On November 11, 2010, the European Parliament adopted the Directive on Alternative Investment Fund Managers (AIFM). The directive will not only harmonize the marketing rules of alternative products but also radically modify the regulatory framework for non-UCITS funds. This will have an enormous effect on all alternative markets and provide greater transparency and protection for investors.

BHA analysts have also documented a change in liquidity requirements for fund of hedge funds investors based in Europe. During the first quarter, the number of investors that required quarterly redemptions increased by 10% when compared with data from the third quarter 2010. This is a sign that investors are feeling more comfortable with the market and the new investment regulations.
Recently, a BHA analyst spoke to a London-based consultant representing family offices, pension funds, charities, universities, and large institutional investors. The advisory firm has intentions to allocate to funds of hedge funds in the second half of 2011. The firm used to require monthly redemptions, but now it feels comfortable evaluating funds that provide quarterly liquidity.
As new regulations begin to take effect, and as funds of funds and other non-UCITS funds monitor systemic risks and implement investor protection policies, interest from European investors should continue to increase.

http://www.brightonhouseassociates.com/investor-monitor/2011/04/new-regulations-spark-investor-interest-in-europe/

NFA Use of Social Media interpretive notice

9063 - USE OF ON-LINE SOCIAL NETWORKING GROUPS TO COMMUNICATE WITH THE PUBLIC
(Board of Directors, November 19, 2009; effective December 24, 2009)
INTERPRETIVE NOTICE
On-line social networking groups have changed the way people make trading decisions. A number of NFA Members sponsor blogs, chat rooms, and forums (also called message or bulletin boards), and some use sites like Facebook or Twitter for business purposes. Associates may also sponsor or participate in these groups. Unfortunately, these on-line communities provide opportunities for posters to spread unsubstantiated rumors and intentional misrepresentations. The form of communication does not change the obligations of Members and Associates who host or participate in these groups, and electronic communications must comply with Compliance Rules 2-9, 2-29, 2-36, and 2-39.
NFA’s interpretive notice entitled NFA Compliance Rule 2-9: Supervisory Procedures for E-Mail and the Use of Web Site,” (NFA Manual, ¶ 9037) provides guidance on how NFA’s promotional material and supervision rules relate to e-mail and web sites but does not specifically address other types of electronic communications.¹ This notice discusses a Member or Associate’s responsibilities in connection with on-line social networking facilities such as blogs, chat rooms, forums, Facebook, and Twitter.
Obviously, any electronic content that can be viewed by the general public, or even by a more closed community that includes current and potential customers, can be promotional material. For example, blogs dealing with commodity futures or options are promotional material when written by an NFA Member or Associate, and forex blogs are promotional material when written by a Member or Associate subject to the forex rules. Therefore, content generated by the Member or Associate is subject to the requirements of NFA Compliance Rules 2-29, 2-36, or 2-39. The same is true for futures, options, or forex content written by a Member or Associate and posted on a third party’s site.
The issue becomes more complicated for user-generated comments responding to a Member or Associate’s blog and for Members and Associates who host chat rooms or forums. What is their responsibility for posts from customers or others over whom the Member or Associate has no direct control? When inadequately monitored, social networking sites may contain misleading information, lure customers into trades that they would not normally make, or be used in an attempt to manipulate prices.
If a Member or Associate hosts a blog, a chat room, or a forum where futures or forex are discussed, the Member or Associate is required to supervise the use of that community. This requires, at a minimum, that the Member or Associate regularly monitor the content of the sites it hosts, take down any misleading or otherwise fraudulent posts, and ban users for egregious or repeat violations. Not only are these actions required by NFA’s supervision rules, they are both common sense and common practice. Similar requirements apply to Facebook and other sites that allow others to post to the Member or Associate’s “wall” or other assessable area.
Audio pod-casts and videos on the Internet—whether on the Member or Associate’s Web site or on an independent site such as You-Tube—are similar to radio and television advertisements. If they make specific trading recommendations or refer to profits that have been obtained in the past or can be achieved in the future, NFA Compliance Rule 2-29(h) requires the Member or Associate to submit them to NFA for approval ten days prior to use.
Members should have policies regarding employee conduct. These policies could require employees to notify the employer if they participate in any on-line trading or financial communities and provide screen names so that the employer can monitor employees’ posts periodically. Alternatively, the policy could simply prohibit participation in such communities. The Member must, of course, take reasonable steps to enforce whatever policies it adopts.
http://www.nfa.futures.org/nfamanual/NFAManual.aspx?RuleID=9063&Section=9

Barclay Inflow data shows record investment in equity hedge funds

Monthly Hedge Fund Asset Flow Data by Strategy

We estimate the hedge fund industry hauled in $34.9 billion (2.0% of assets) in February, the heaviest inflow on record. February’s huge inflow alongside steady performance - the Barclay Hedge Fund Index increased 1.1% in February, the sixth straight gain - lifted hedge fund assets to $1.7 trillion, the highest level since October 2008.

Funds of hedge funds took in $7.3 billion (1.3% of assets) in February, their heaviest inflow since March 2008, after redeeming $2.9 billion in January. Clearly, investors are not rewarding performance. The Barclay Funds of Funds Index increased only 6.4% in the past 12 months; it underperformed most asset classes. Commodity trading advisors (CTAs) are faring much better. CTAs raked in $7.5 billion (2.5% of assets) in February, the heaviest inflow since June 2009, and the Barclay CTA Index increased 7.4% in the past 12 months.

Source: http://www.barclayhedge.com/research/asset-flows.html

Stiglitz calls for Global Currency at Bretton Woods 2011

The world economy needs a new global reserve currency to help prevent trade imbalances that are reflected in the national debt of the U.S., said Nobel-prize winning economist Joseph Stiglitz.

A “global system” is needed to replace the dollar as a reserve currency and help avoid a weakening of U.S. credit quality, said Stiglitz, a professor at Columbia University in New York. The dollar fell to an almost 15-month low against the euro last week, and the U.S. trade deficit widened more than forecast in January to the highest level in seven months.

“By taking off the burden of any single country, we don’t have to have trade deficits,” Stiglitz said in an interview in Bretton Woods, New Hampshire. “Things would be much worse if it were not the case that Europe was having even more of a problem, but winning a negative beauty pageant is not the way to create a strong economy.”

http://www.bloomberg.com/news/2011-04-10/stiglitz-calls-for-new-global-reserve-currency-to-prevent-trade-imbalances.html

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Gold & Silver now legal tender in Utah

http://www.thenewamerican.com/economy/markets-mainmenu-45/6894-gold-silver-now-legal-tender-in-utah

With Gov. Gary Herbert’s signature on March 25, the state of Utah became the first in recent times to officially accept gold and silver coins as legal tender at their true value, prompting praise from sound-money advocates warning about the future of the Federal Reserve System and its fiat money. The "Utah Legal Tender Act," as the new law is known, “recognizes gold and silver coins that are issued by the federal government as legal tender in the state and exempts the exchange of the coins from certain types of state tax liability,” according to the bill. The law does not force anyone to accept or pay in precious metals, but rather provides the option for those who wish to do so voluntarily.

In essence, the bill legalizes currency competition in Utah by removing punitive state taxes on individuals and businesses trading in precious-metal coins. Among the taxes that federally minted gold and silver coins are now exempt from are state sales and capital gains. Federal taxes, however, still apply — despite the U.S. Constitution’s clear language stating that no state shall make anything except gold or silver a tender in payment of debts.

Massive Cyber Attack affects millions of sites

PC World - Hundreds of thousands -- and possibly millions -- of websites have been hit with a cyberattack that some are calling "one of the biggest mass-injection attacks we've ever seen."

The attack was discovered on March 29 by security firm WebSense, and the injected domain was called lizamoon.com -- thus, the name of the mass-injection is "LizaMoon." According to WebSense, LizaMoon uses SQL Injection to add malicious script to compromised sites. While the first injected domain was lizamoon.com, additional URLs have since been injected in the attack (WebSense has a full list here).
The method of using an injected script redirects users to a rogue AV site, which tries to get people to install a fake anti-virus program called Windows Stability Center.
When WebSecurity discovered the attack on March 29, 28,000 URLs had been compromised. The number quickly grew to 226,000, including many iTunes URLs (though the malicious code is neutralized by Apple).

http://www.computerworld.com/s/article/9215428/Millions_of_sites_hit_with_mass_injection_cyberattack 


 

Radioactivity 10,000 times the limit found from groundwater: TEPCO

URGENT: Radioactivity 10,000 times the limit found from groundwater: TEPCO

TOKYO, April 1, Kyodo

A radioactive substance about 10,000 times the limit was detected from groundwater around the No. 1 reactor of the Fukushima Daiichi nuclear power plant, plant operator Tokyo Electric Power Co. said Thursday.

A Tokyo Electric official said the radiation level is ''extremely high.''

==Kyodo

The cooling system is not online, pumps are not working, and as much as forty-five tons of sea-salt has accumulated as a result of the desperate decision to flood the reactors with sea-water in the hopes of avoiding a worst-case scenario. The salts are crystallizing at hot-spots and forming a layer of insulation. There are also 3,450 still-fervid spent fuel rods sitting in half-empty pools and therefore exposed to the air. Compounding the issue, the wind changed on Friday...  http://www.israelnationalnews.com/News/News.aspx/143242

There are 77,000 people in ad hoc emergency shelters. Another 62,000 live within the 30-kilometer zone. The United States Regulatory Agency (NRC) had advised extending the evacuation zone to 80 kilometers, which would require relocating 2 million.

There are more than 2,500 tons of uranium and plutonium in Fukushima. And Japanese emergency release valves for radioactive steam generated for active fuel rods do not have filters like plants in Germany and the United States. The Japanese, due to radiation levels, have not released the steam in a week, but that can't go on forever.

"This is not an exaggeration," German nuclear expert Helmut Hirsch says. "There is a gigantic radioactive inventory at Fukushima. At least 20 times as much as there was at Chernobyl."

Ministry spokesman Taku Ohara says the cesium was found in a cow slaughtered March 15 more than 70 kilometres from the plant. People within a 20-kilometre radius have been evacuated...  http://www.thestar.com/news/world/article/966333--radioactivity-in-slaughtered-cow-nuclear-plant-slightly-higher-than-legal-limit?bn=1

A spokesman for plant operator Tokyo Electric Power Co. said Thursday that radioactive contamination in groundwater 15 metres under one of six reactors there had been measured at 10,000 times the government standard.

beta radiation spike in California today - see www.llrc.org

Water Sources

Surface water (including dam, river and lake) consists 72% of total annual intake, and ground water (including river-bed, shallow and deep well) consists 26% (2006). Therefore, most of the water supply sources can be easily influenced by pollutions such as eutrophication, oil spill accidents, etc....    http://www.mhlw.go.jp/english/policy/health/water_supply/1.html

 “Professor Christopher Busby, of the European Committee on Radiation Risks, says that what we are witnessing in Japan is even worse than Chernobyl and [will] probably be an end to nuclear industry worldwide. ‘I have said right from the beginning that this was a Chernobyl-level disaster,’ he said. ‘I would hope that it means that the nuclear industry is finished… But then I thought about Chernobyl and what happened there –there was a massive international cover-up by the nuclear lobby of all the health effects of the Chernobyl accident, which is only coming out now.’ “  http://rt.com/news/japanese-government-fukushima-tepco/

Tohoku disaster may bring automakers to their knees

The auto industry disruptions triggered by the disaster in Tohoku are about to get worse.

Temporary shutdown: The General Motors Corp. assembly plant in Shreveport, La., appears in this aerial photo from 2003. AP PHOTO

In the weeks ahead, car buyers will have difficulty finding the model they want in certain colors, thousands of auto plant workers will likely be told to stay home, and companies such as Toyota Motor Corp., Honda Motor Co. and others will lose billions of dollars in revenue. More than two weeks since the natural disaster, inventories of crucial car supplies — from computer chips to paint pigments — are dwindling fast as Japanese factories that make them struggle to restart.

Because parts and supplies are shipped by sea, the real drop-off has yet to be felt by factories in the U.S., Europe and Asia. That will come by the middle of April.

"This is the biggest impact ever in the history of the automobile industry," said Koji Endo, managing director at Advanced Research Japan in Tokyo.

Much of Japan's auto industry — the second-largest supplier of cars in the world — remains idle. Few plants were seriously damaged by the quake, but with supplies of water and electricity fleeting, no one can say when factories will crank up. Some auto analysts said it could be as late as this summer.

Hitachi Automotive Systems, which makes parts such as airflow sensors and drive control systems, is waiting for its suppliers to restart while dealing with its own problems. Its plants are without water and gas, and have rolling electricity blackouts. Workers are repairing crumpled ceilings, fallen walls and cleaning up shattered glass. A spokesman said he doesn't know when its plants will reopen.

The uncertainly has suppliers, automakers and dealers scrambling. And it exposes the vulnerability of the world's most complex supply chain, where 3,000 parts go into single car or truck. Each one of those parts is made up of hundreds of other pieces supplied by multiple companies. All it takes is for one part to go missing or arrive late, and a vehicle can't be built.

When General Motors briefly shut a pickup plant in Shreveport, La., due to a lack of parts, it caused the partial closing of a New York factory that supplies engines for those trucks. Sweden's Volvo has warned that its production could be disrupted because it is down to a week's worth of some parts.

Car buyers will soon see higher prices and fewer choices. Some car colors will be harder to get because a paint pigment factory in Japan was damaged and shut production. As a result, Ford is telling dealers to stop ordering "tuxedo black" models of its F-150 pickup and Expedition and Navigator SUVs. It's also shifting away from some reds. The moves are precautionary, Ford said. Chrysler told dealers it was temporarily restricting orders of vehicles in 10 colors.

That worries some dealers, especially when popular colors like black could be in short supply.

"It's hard enough to sell a $60,000 Navigator in this economy," said Fortunes O'Neal, general manager at Park Cities Ford in Dallas. "We don't want to have to tell customers, 'You've got to pick another color."'

Customers also face rising prices for models like Toyota's Prius, which is made only in Japan. Fears of falling supply have some dealers driving a hard bargain with customers who want the fuel-efficient hybrid as gasoline prices rise. Recent discounts of 5 to 10 percent on that car are disappearing.

Japanese carmakers, who have shut most of their domestic plants, are warning that some of their overseas factories will stop running, too, in an effort to conserve supplies. Toyota and Honda expect shutdowns at North American plants. Honda said production could be interrupted after April 1. Even though most of its parts are sourced in the region, a few critical ones still come from Japan.

Goldman Sachs estimates the shutdowns are costing the Japan automakers $200 million a day, which adds up to $2.8 billion for just the past two weeks. Each week of continued shutdowns costs $1.4 billion. By comparison, Toyota made $2.3 billion in all of 2010, and its sudden acceleration recalls cost $2 billion. The cost of damage from Japan's natural disaster could dwarf that recall, which was considered Toyota's biggest crisis ever. http://search.japantimes.co.jp/cgi-bin/nb20110329a1.html

Osaka May Trump Tokyo as Energy Surplus Meets Quake Risk

Japanese companies may rethink their century-long trend of concentrating resources in Tokyo after the nation’s record earthquake crimped power supply to the capital and radiation concern spurred some residents to flee.
Production hubs in Japan should be shifted to the western part of the country and away from the Tokyo region to minimize disruptions to the country’s supply chain, Masamitsu Sakurai, head of the Japan Association of Corporate Executives, the nation’s second-largest business lobby, said in Tokyo yesterday.
A shift in offices to Osaka and its Kansai hinterland would benefit an area that was for centuries Japan’s commercial center. Itochu Corp. (8001), an Osaka-based trading company, said it may move some people out of Tokyo and companies from Servcorp Ltd. (SRV), an office-lease and management firm, to recruiter Robert Walters Plc (RWA), anticipate a pick-up in business in the city.
“People may start to think it’s better to disperse their risks, that it’s better not to put all your eggs in one basket,” Hideo Hayakawa, the Bank of Japan’s Osaka branch chief, said in an interview last week. “These completely unanticipated threats will continue to hit us, as was the case with the tsunami and the nuclear power plants this time.”

http://www.bloomberg.com/news/2011-03-29/osaka-may-end-tokyo-s-century-long-lure-as-energy-surplus-meets-quake-risk.html 

Special Cloth proposed to contain radiation

Media reports said that the government and the experts have been studying the feasibility of new steps such as covering reactors of the plant with special cloth to reduce the amount of radioactive particles flying away from the facility and using a big tanker to collect the contaminated water...    http://english.kyodonews.jp/news/2011/03/81894.html

Plutonium detected in Soil

Japan on high alert over nuke plant

2011-03-29 07:33 Sendai - Japan said on Tuesday the government is on "maximum alert" over a crippled nuclear plant where highly radioactive water has halted repair work and plutonium has been found in the soil.

The earthquake and tsunami that ravaged Japan's northeast coast and left over 28 000 dead or missing also knocked out reactor cooling systems at the Fukushima plant, which has leaked radiation into the air and sea.

Prime Minister Naoto Kan conceded that the situation at the coastal atomic power station remained "unpredictable" and pledged that his government would "tackle the problem while in a state of maximum alert".

Emergency crews braving the radiation threat have used fire engines and pumps to pour thousands of tons of water onto reactors where fuel rods are assumed to have partially melted, and also topped up pools for spent fuel rods.

But the run-off from the stop-gap operation is now making it too dangerous for workers to go near several of the reactor buildings - already charred by explosions - to repair the cooling systems needed to stabilise the plant.

For now, however, they have no choice but to keep pumping water into the stricken reactors, said top government spokesperson Yukio Edano.

http://m.news24.com/news24/World/News/Japan-on-high-alert-over-nuke-plant-20110329

http://english.kyodonews.jp/news/2011/03/81702.html

Japanese Prime Minister Naoto Kan has said his government is in a state of maximum alert over the crippled Fukushima nuclear plant...   http://www.bbc.co.uk/news/world-asia-pacific-12889541

Elite Meta Sync released as stand-alone product

EES releases Elite Meta Sync as a standalone product.

Elite Meta Sync synchronizes your files between MT4 installations as well as creating a backup in your My Documents folder. Clients of EES FX will use this tool to get the latest updates from EES FTP server on a regular basis. For non-clients, this tool is a free tool that can keep your MT4 folders synced up.
Elite Meta Sync will sync your experts, indicators, dlls, libraries, and other files between all MT4 terminal installations.

For more information, visit http://elitemetasync.com/

The story behind JPY volatility

Throughout much of the day Wednesday, the yen was on the rise but failed to cross the 80 level. Just before 5 p.m., however, the Japanese currency suddenly broke through. At first it bounced off its all-time high of 79.75, but then a wave of yen buying, predominantly against the U.S. dollar but also against the Australian dollar, swept through the markets.

Integral Development, which operates electronic trading networks, saw a flood of yen buying out of Japan. Volumes were eight times normal, said Harpal Sandhu, president of Integral. Some 90% of the trades were for less than $100,000. Typically at that time of day, 40% of the trades are from individual investors, Mr. Sandhu said.
"We think there were Japanese retail traders who were placing orders prior to going to work," Mr. Sandhu says.
Many of the trades appeared to have been stop-loss orders left in the market which would automatically buy yen as the currency hit certain levels. Others were unwinding so-called carry trades, which required them to buy yen and sell other currencies.
Conditions quickly deteriorated. Banks widened the gap between the prices where yen could be bought or sold to 50 or 100 so-called pips—tiny increments of currency prices. In normal trading, spreads are around 0.8 to one pip.

At Barclays Capital, the bank's electronic trading system went offline for its routine 15-minute reset at 5 p.m. Amid the heavy trading, the bank's risk management systems delayed the restart until 5:29 p.m.

http://online.wsj.com/article/SB10001424052748704261504576205564007066134.html

Last minute USD short covering

* 25 Mar 11: 16:55(LDN) - FX NOW! EUR/USD, USD/JPY Flows - Last minute USD short covering made difficult by Plosser

USD's gradual rate of appreciation into Friday's close, which was fuelled most by dealers squaring positions in advance of the weekend, has accelerated in reaction to another Fed officials comments. Phil Fed's Plosser has made the simple observation that the Fed will need to tighten policy "soon". EUR/USD moved down through the 1.4100 level, where the sovereigns that were noted earlier have apparently gone home for the day/week. USD/JPY jumped up to highs of 81.45-50 and if it goes further the buyers will probably be making a number of exporters very happy. While the moves are dramatic, on the day, the extent of the moves are due mostly to the limited liquidity that is always the case in late Friday trading. Watch for technical support on EUR/USD at 1.4052 and resistance on USD/JPY up at 82.03. M.B.